How Obamacare will die

A supernova is the end outcome not for all stars, but stars of sufficient mass, thought to be between 8 and 15 solar masses. The process is described this way:

•Gradually heavier elements build up at the center, and it becomes layered like an onion, with elements becoming lighter towards the outside of the star.
• Once the star’s core surpasses a certain mass (the Chandrasekhar limit), the star begins to implode (for this reason, these supernovas are also known as core-collapse supernovas).
• The core heats up and becomes denser.
• Eventually the implosion bounces back off the core, expelling the stellar material into space

This is the supernova, and the result is the formation of a neutron star.

When stars beyond 20-30 solar masses go supernova, the result is the formation of a black hole.

Supernovae are spectacular phenomena. This is not the fate of Obamacare.

When stars of less than 8 solar masses run out of fuel the star expands into a red giant and then finally cools into a white dwarf. This is the fate of our sun.

This is also how Obamacare will die.

Megan McArdle describes the stages of Obamacare demise:

· 2014: Small-business policy cancellations. This year, the small-business market is going to get hit with the policy cancellations that roiled the individual market last year. Some firms will get better deals, but others will find that their coverage is being canceled in favor of more expensive policies that don’t cover as many of the doctors or procedures that they want. This is going to be a rolling problem throughout the year.

· Summer 2014: Insurers get a sizable chunk of money from the government to cover any excess losses. When the costs are published, this is going to be wildly unpopular: The administration has spent three years saying that Obamacare was the antidote to abuses by Big, Bad Insurance Companies, and suddenly it’s a mechanism to funnel taxpayer money to them?

· Fall 2014: New premiums are announced.

· 2014 and onward: Medicare reimbursement cuts eat into hospital margins, triggering a lot of lobbying and sad ads about how Beloved Local Hospital may have to close.

· Spring 2015: The Internal Revenue Service starts collecting individual mandate penalties: 1 percent of income in the first year. That’s going to be a nasty shock to folks who thought the penalty was just $95. I, like many other analysts, expect the administration to announce a temporary delay sometime after April 1, 2014.

· Spring 2015: The IRS demands that people whose income was higher than they projected pay back their excess subsidies. This could be thousands of dollars.

· Spring 2015: Cuts to Medicare Advantage, which the administration punted on in 2013, are scheduled to go into effect. This will reduce benefits currently enjoyed by millions of seniors, which is why they didn’t let them go into effect this year.

· Fall 2015: This is when expert Bob Laszewski says insurers will begin exiting the market if the exchange policies aren’t profitable.

· Fall 2017: Companies and unions start learning whether their plans will get hit by the “Cadillac tax,” a stiff excise tax on expensive policies that will hit plans with generous benefits or an older and sicker employee base. Expect a lot of companies and unions to radically decrease benefits and increase cost-sharing as a result.

· January 2018: The temporary risk-adjustment plans, which the administration is relying on to keep insurers in the marketplaces even if their customer pool is older and sicker than projected, run out. Now if insurers take losses, they just lose the money.

· Fall 2018: Buyers find out that subsidy growth is capped for next year’s premiums; instead of simply being pegged to the price of the second-cheapest silver plan, whatever that cost is, their growth is fixed. This will show up in higher premiums for families — and, potentially, in an adverse-selection death spiral.

The public will indeed balk when Obama and democrats inform them that the horrible no good greedy insurers have to be reimbursed for their losses through the “risk corridors.” And wait until they see the bill:

If Congress had tried to pass a law simply transferring $1 trillion to insurance companies over the next decade, there would have been energetic resistance to its doing so. The Affordable Care Act amounts to the same transfer, even as it places insurers in the enviable position of having a federal law in place that gives Americans a choice between buying their products and being fined by the federal government.

Barack Obama wrote a check that comes straight out of the taxpayer wallet:

Especially troubling is the “risk corridor” provision of the law, under which taxpayers are on the hook for covering large portions of the losses that insurers incur on the Obamacare exchanges. If an insurer pays out claims that exceed 108 percent of its premium collections, taxpayers would cover about 75 percent of its losses.

Obamacare’s life hinges on these risk corridors:

It is important to understand how crucial the prospect of a taxpayer bailout of insurers is to the future of Obamacare. Insurers facing the prospect of participating in the exchanges in 2015 without the backstop of a taxpayer bailout would be forced either to price their products properly (and therefore likely well above their 2014 premiums) or withdraw from the exchanges altogether. Either way, the law will become even less attractive to middle-income and moderate-wage households who get little or nothing in subsidies. Insisting on budget neutrality or repealing these provisions would, like the elimination of the individual mandate, not only make good political sense but also help to speed the unwinding of Obamacare, which is essential to the ultimate repeal of the law and its replacement with a real reform of American health care.

For that very reason, the insurers and the Democrats are certain to mightily resist a repeal of the bailout provisions. But the more intense their resistance, the more it will reinforce the case against the law. A program that cannot survive without a massive taxpayer bailout of private insurers is not a program that is working. It is a program that is failing, and needs to be replaced.

democrat members of Congress have admitted that Obamacare is not getting the enrollment numbers and types it needs to be sustainable. The risk corridor provisions conveniently expire in 2016 coincidentally with the end of the Obama regime.

That’s not where the bad news ends. Obamacare doesn’t fix what’s wrong. Period.

The real problem with health care wasn’t private health care. That was all paid for. The problem with health care costs is the cost of entitlements.

Peter Orszag, Director of the Office of Management and Budget, identified the main driver of increased spending in Medicare as soaring costs in the health care system at large.

Obamacare does not fix it:

Health care entitlement spending is bypassing all other spending. Spending on Medicare, Medicaid, Obamacare subsidies, and the Children’s Health Insurance Program will be greater than all other spending—including Social Security and defense spending: “Spending for major health care programs will be nearly 5 percent of GDP [gross domestic product] in 2013, and such spending is projected to grow rapidly when provisions of [Obamacare] are fully implemented by middecade, reaching 6.2 percent of GDP in 2023.”

Obamacare makes many unrealistic expectations:

Today’s report shows Medicare costs totaling over $8 trillion from 2014 to 2023. This seems pretty bad—but the reality of the situation is much worse. CBO’s baseline scenario reflects current law, which assumes that Medicare physicians will take an enormous pay cut—about 25 percent—in 2014. But this is highly unlikely, and if paying for the override isn’t offset with other Medicare spending cuts, it will increase Medicare’s costs even further.

Moreover, Obamacare makes over $700 billion in cuts to Medicare from 2013 to 2022. In some years, these cuts will total over $100 billion in just one year. Much like the physician cuts, Congress is very likely to override these payment reductions due to the impact they would have on seniors’ ability to access care, thus further increasing Medicare’s costs.

The bottom line: Government spending on health care programs is still out of control, and Obamacare makes it worse.

Even the best case scenario is bad:

But the new estimates also show how little the ACA will do to fundamentally change the trajectory of healthcare spending. The report suggests that consumers, employers and government will continue to face higher and higher medical bills as rising costs outpace economic growth.

Very bad:

The 2010 federal health-care law, known as the Affordable Care Act, was designed to cut Medicare costs by nearly $120 billion over the next five years. [Footnote 18] But Medicare’s actuaries worry that savings from the 2010 law can’t all be relied upon. That’s because Congress has frequently canceled plans to lower Medicare fees for hospitals and physicians. [Footnote 19] As a result, the Medicare trust fund is on course to run out of money in 2024 — five years earlier than previously predicted — according to Richard Foster, the chief actuary at CMS.

Obama promised a savings of $2500 per family because of Obamacare, but that too is false. It could add as much as $7000 more per family by 2022.

You’ll want to read the entire article to see the intellectual vacuum that is the liberal mind:

UPDATE 2: Wonkette is the latest to weigh in on the purported stupidity of my post: “In other words, this is incredibly stupid. Sure, the latest Center for Medicare & Medicaid Services report [PDF] says that “Obamacare” will lead to “roughly $621 billion” in additional health spending over the next ten years. But that emphatically does not mean that you, me, and the other two members of our typical family will be paying this money out of pocket. Most of it will be paid out by insurance companies, who will have a whole bunch of new policyholders because of Obamacare. Much of it will be paid by the government in subsidies and increased Medicaid enrollment. And yes, some of it will be paid by healthy (for now), well-off (for now) young (for now!) people who would otherwise forgo insurance and roll the dice on not ever being carted to the hospital in an ambulance” (emphasis added).

It is difficult to overemphasize the pure mental vacancy of the Wonkette gibberish. Increased Medicaid enrollment will offset costs? Excuse me?

One is left incredulous at the assertion that these monies won’t be paid by “you, me, and the other two members of our typical family.”

It’ll be absorbed by insurance companies. Who will then pass it along in increased premiums.

Then there’s this beauty:

Much of it will be paid by the government

Good God.

Civics-impaired liberals think that there is “the government” that exists somewhere “over there” and it has a money tree that grows dollar bills and it is fertilized by unicorn pee.

At the next family gathering that includes your crazy liberal uncle or cousin, play a game. Insist that instead of using the term “government” use the phrase “You, me and a bunch of our friends.”

See how long it lasts when you get around to who should pay for what.

This does presume there are any liberals who pay taxes.

And how about those uninsured? Obamacare leaves as many uninsured when fully implemented as before.

Obamacare is going die slowly. It has become a giant gas bag and as the little enthusiasm that exists for it now wanes it will cool into something no longer recognizable after all the “fixes.”

Better to replace it now with something better and more reasonable. And it exists.

When Republican senators Tom Coburn (Okla.), Richard Burr (N.C.), and Orrin Hatch (Utah) proposed on Monday a plan to repeal and replace Obamacare, I called it “the most credible plan yet” devised to achieve that goal. On Thursday, a new think tank called the Center for Health and Economy provided a fiscal score of the plan. The good news? Over ten years, the Center found that the plan would reduce the deficit by $1.5 trillion. There’s only one problem: $1.1 trillion of that deficit reduction comes from curtailing the tax exclusion for employer-sponsored health insurance. But this fact doesn’t signal the death of the GOP Senate approach—but rather its potential.

The left often whines about there not being an alternative. As they are confronted with the alternatives, look for increased left wing blathering about how the GOP won’t help fix a problem they did not create. Time for democrats to board this train or their Senate rule is done.

DrJohn

DrJohn has been a health care professional for more than 30 years. In addition to clinical practice he has done extensive research and has published widely with over 70 original articles and abstracts in the peer-reviewed literature. DrJohn is well known in his field and has lectured on every continent except for Antarctica. He has been married to the same wonderful lady for over 30 years and has three kids- two sons, both of whom are attorneys and one daughter on her way into the field of education.

DrJohn was brought up with the concept that one can do well if one is prepared to work hard but nothing in life is guaranteed.

Except for liberals being foolish.