Tuesday, October 15, 2013

Videos make me angry

In a video clip that is being shared incessantly around Facebook is a video of financial consultant and columnist for the Conservative news site, Town Hall, Dave Ramsey laying out the "facts" of Obamacare.  The video opens with Dave Ramsey quietly talking about how he is going to lay out the math of Obamacare for Democrats and Republicans. Because we are not exempt from math.  It's not some of the crap that the government mandates.

Ramsey is a conservative columnist and media pundit, who has been critical of Obamacare in the past.  I'm sure his video will be non-partisan.

Well, I will not dignify the video by linking to it.  But you're welcome to watch it.  Ramsey equates liberalism with socialism and eventually talks about how Obamacare amounts to communism, because math.  Unfortunately, he avoids a lot of math.

He does talk a little bit about how 46% of Americans pay no federal income tax, which is true but usually intellectually dishonest.  If you look at payroll taxes for those who do not pay federal income tax, you notice that they pay a similar percentage as those who pay federal income tax.

But, oh well.  That has nothing to do with Obamacare.

So, here's some math.  There will be numbers and everything.

Ramsey talks about the inevitability of costs increasing.  But for some reason, he avoids actual data.  He relies instead on hypotheticals that leave the viewer wanting.  Well, part of why he probably avoids the numbers is because they don't look all that good.  According to Steven Hill, senior economist at the Agency for Healthcare Research and Quality, "if adults who had individual insurance from 2001-08 had instead had benefits under the Affordable Care Act, their average annual out-of-pocket spending on medical care and drugs, might have been $280 less.  The near-elderly and people with low incomes might have saved $589 and $535 respectively...The likelihood of having out of pocket expenditures on care exceeding $6,000 would have been reduced for all individuals with individual insurance, and the likelihood of having expenditures exceeding $4,000 would have been reduced for many."

In Massachusetts, Mitt Romney helped pass health care reform that has been referred to as Romneycare.  One of the criticisms of Obamacare from those who criticize it is that premiums will have to increase.  In fact, Ramsey even talks about how healthy people will be paying the same as non-healthy people, so obviously, premiums will have to increase, in general.  But, in Massachusetts, premiums did not increase as much as they did in the rest of the United States after the passage of health care reform.  In fact, in the non-group market, insurance premiums declined rapidly.  But even with that, Romneycare was not designed to control costs, but rather expand health insurance and worry about costs later.  Obamacare is built to control costs by being more conservative than Romneycare.

One of the ways Obamacare is built to control costs is to bundle payments for a medical condition.  This will likely remove the incentive for ordering more tests than necessary and increase the incentive to medical providers for doing the right thing the first time around.

Since Obamacare has been passed, even if it hasn't been fully implemented, health care costs are declining.  Estimates show that healthcare costs will decline $275 billion, compared with pre-reform estimates, in 2020.  What's more is that it shows a cumulative $1.7 trillion reduction from 2011-2020.

But that's just fancy math talk about controlling costs.  How does this affect premiums?  I mean Ramsey says that you'll be paying the same, if you're healthy, as those who are not, so obviously it has to affect the premiums.  That's math.  And stuff.  But the Congressional Budget Office disagrees, predicting that the insurance premiums for most people will not be significantly impacted.  Those in the large group market will see either no increase or 3 percent decrease in 2016.  The small group market will see, between a 1 percent increase and 2 percent decrease on the average premium.  But for those who buy insurance on their own, their premiums are likely to increase by 13% on the average premium.  Except, you're forgetting that people making up to 133% of the federal poverty level will qualify for subsidies to help cover the cost.  And oh yeah.  These new insurances will have better benefits than before.

But let's look at Massachusetts.  I wonder if there will be math there, too.  In Massachusetts, those buying insurance on their own saw their premiums decrease.  Larger employers who buy on the large group market have seen the premiums increase, but there is no clear evidence that Romneycare is the cause.  Small businesses also saw their premiums increase.  But let's look at the math for individuals buying individual insurance plans.  They saw their premiums decrease from $437 to $360 per month.  An 18 percent decrease.

So, if we see premiums decrease in the state that implemented a similar law in its state, and healthcare costs declining, even when the law was not designed to control costs, why would we expect to see healthcare costs to rise when the law is designed better to control costs or why would we expect to see premiums to increase, despite predictions from the Congressional Budget Office?  Because math, apparently.      

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