President Barack Obama, July 16, 2009, in a speech to the American Medical Association, said:

“If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”

Sadly, the truth has turned out to be vastly different. Literally millions of Americans, by one report 22 million of us, have been told that they cannot keep their current health care plans, nearly 800,000 of them in New Jersey alone. The long awaited and much ballyhooed launch of the Health Care Exchanges across America came and went two weeks ago, and far too many people find themselves wondering what the heck is going on.

Where are we today with Obamacare, and what can we expect?

This article will examine that question in four ways:

1) We will present an overview of Obamacare news from across the nation as reported in the mass media.

2) We’ll explain something that almost no one has heard from any source, be it newspapers, internet articles, radio and television talk shows, or any of the politicians.  You’ll almost surely be stunned to discover that the way Obamacare charges families to cover their children will create massive premium increases, and the larger the family, the larger the premium increases will be.

3) We’ll analyze plan benefits and premiums by comparing 2013 plans with the new “post-Obamacare” plans that 2014 will bring, and see how that stacks up against Mr. Obama’s July 11, 2009 statement that his plan “would save everyone in America an average of $2,500 in Health Care costs each year.”  Here’s a hint: Don’t get your hopes up!

4) We’ll discuss the launch itself, the ease of access for consumers across America, and the leadership that has brought the President’s “signature law” to where it is today.

An Uproar Across America

San Jose: The San Jose (California) Mercury-News, the only major newspaper in the nation’s 10th largest city, ranks among the most liberal papers in the US, right up there with the NY Times, the LA Times, and the Washington Post.  But the first weekend after the Obamacare launch, even the Merc’s front page reported problems.  They featured Cindy Vinson and Tom Waschura, both of whom said they were big believers in the Affordable Care Act, and were proud that they had helped elect and re-elect President Barack Obama.

Sadly, like many other citizens across the US, they were shocked to discover that their in-force policies were being replaced with new Obamacare plans that will see their costs skyrocket.

Ms. Vinson, of San Jose, will pay $1,800 more a year for an individual policy, while Mr. Waschura, of Portola Valley, will be forced to pay almost $10,000 more to cover his family of four.

“I was laughing at Boehner – until the mail came today,” said Waschura, referring to House Speaker John Boehner, who is leading the Republican charge to defund Obamacare.

“Of course, I want people to have health care,” Ms. Vinson said. “I just didn’t realize I would be the one who was going to pay for it personally.”

Guess what, Cindy: “There ain’t no such thing as a free lunch!”

New Jersey: Bad news arrived in mailboxes across the Garden State this past week, as people discovered that many of their existing health insurance plans had been wiped out by Obamacare because they didn’t meet the provisions of the new law.

How many folks in New Jersey were hit by these cancellations?  Oh, only about eight hundred thousand or so.

Maryann White, 74, of Toms River said she was frustrated by the news. She liked the plan she had and is worried that whatever new plan she buys will cost more. Though she is engaged in the process, she said, many seniors find it difficult to understand their options.

“This is really a shame,” said Ms. White. “I’m not criticizing. I’m just saying, ‘Give us a break.’”

Funny, sounds like criticism to me!

Alabama: Alabamans got slammed with a double whammy!  First came a letter to customers from Blue Cross Blue Shield that premiums would leap upwards by 300 percent, then Blue Cross followed up by announcing that they were canceling the vast majority of their plans because they weren’t in accord with new requirements imposed by Obamacare. New plans are expect to carry a much heftier price tag than the old ones.

WSFA-TV in Montgomery reported, “[we] talked with [a] customer on one individual plan today, he’s been paying $523 a month for his family of four, but starting in January his premium is going up to more than $1,100 a month.  One of the big problems is [the new law requires] rating family costs by the number of people, so large families have to pay more.”

Rating Changes = Extra Costs for Families

One of the big problems indeed. Americans are now discovering something that has been studiously ignored by almost everyone for the past 3 ½ years. Under the new rating methodology of Obamacare, the way children’s premiums is going to be calculated from now on has changed dramatically, and that change is going to smack a huge number of families right in their bank accounts.

The current rating system for small group plans in almost all states charges the same rates for children’s coverage regardless of the number of children in a family. For individual plans, some carriers currently adjust rates upward for those with more children, but not as much as they will come January.

A couple with one child pays the same to cover their kid as does a couple with two kids to cover both of theirs.  Three, four, five…the more the merrier; no matter how many kids you have, the price to cover them is the same.

And of course this deal got even sweeter when the ACA said “you can keep your kids on your medical plan up until their 26th birthday.” The insurers couldn’t even charge more for those extra children as dependents, because of the “cheaper by the dozen” rating system described above.

But that all comes to a screeching halt on January 1.  From then on, any children from 21 to 25 will cost their parents the same as any single adult of their age.  Children under age 21 will pay a child’s rate for each child up to a total of three (over three is free!).

As we said above, the rating system for children will also impact costs for individual coverage.

We’ll examine how this can impact a small family, then a large family, in both cases comparing real Anthem Blue Cross plans currently available with real Anthem Blue Cross plans currently available on the CoveredCalifornia Exchange website for effective dates of January 1, 2014 and after.

First let’s look at Wade and Suzan, both age 45, with a 23-year-old son and an 18-year-old daughter. Bob is a programmer for an electronics firm making $90,000 a year; Suzan is a teacher earning $60,000 a year.

Let’s suppose they were to buy a plan today, October 14, 2013, from Anthem Blue Cross (the largest private health care provider in California).  The plan they select has a $1,500 deductible and a $30 copayment for office visits to a non-specialist, a $50 copayment for specialists.  They would pay $1,174 to cover the four of them, of which $380 is the cost for their kids.

But under the new system, their total cost for a $2000 deductible plan (there are no $1,500 deductible plans available from Anthem for 2014 and after) with a $45 copay for non-specialist office visits and a $65 copay for specialists will $1,478. Instead of costing $380 for their kids, it will cost them $435, $266 for their son and $169 for their daughter, because the new system charges for each child.  (Note that the per child rate will is lower than the current “one price for all” rate, so for those who have only one child, the cost to cover that child will go down.)

Nonetheless, here’s a quick summary of the costs and benefits – you tell me whether the new Obamacare plan is better and cheaper than what they could buy today.  Granted that these two plans are not identical, but they’re as close as we could come given the new requirements and guidelines of the Obamacare post-2014 plans:

2013

2014

Deductible

$1,500

$2,000

Office Visit copayment:

Non-specialist

$30

$45

Specialist

$50

$65

Maximum Out of Pocket per person

$4,500

$6,350

Premium

$1,174

$1,478

Everything is higher in 2014.  Their deductible is $500 higher, their office visit copayments are $15 higher per visit, their maximum out of pocket expense is $1,850 higher, and their premium is $304 higher per month, $3,648 per year; a 25% increase even with all the benefit reductions. Such a deal!

But Wade and Suzan are going to be the envy of their next door neighbors, Sean and Sonya, who have five kids – a son age 23, a daughter 22, a daughter 18, a daughter 15, and their youngest, a 12-year-old son.

Sean and Sonya, also both age 45, have income identical to their neighbors, Wade and Suzan. Their cost to cover their family is currently $1,343, slightly higher than Wade and Suzan because in the individual market they are charged more for additional children on their plan.  Their cost for the five kids is $549, $169 more than their neighbors.

But they now have to pay for all five of their kids, two times $266 for those over 21, and three times the per child rate of $169 for the ones under 21.  Imagine their “sticker shock” when they discover that their monthly medical insurance cost for their youngsters has just jumped from $549 to $1,039.

Their monthly premium change from Obamacare:  $738 higher every month, $8,856 per year, a 54% increase. My goodness!  And for their $8,800 more a year they get the same benefit decreases, higher deductible, higher office visit copayments, and a higher maximum out of pocket for the year.

What happened to that “my plan will save Americans $2,500 a year on their health care costs”?

The Truth About Plan Costs

Our original intent for this section of the article was to explore plan rates in several states:  California, Texas, New Jersey, and Louisiana.  One of those, California, has its own state-run Exchange, dubbed CoveredCA, while the other three, Texas, New Jersey, and Louisiana all have defaulted into federally-run Exchanges since the states themselves were uninterested in creating their own. We chose these four because of the 50 states mandated by Obamacare to have Exchanges up and running by 1/1/2014, 35 are federally run while 15 are operated by the states in which they will operate. A 3:1 ratio hence seemed reasonable for our analysis.

Interestingly, and perhaps coincidently, we were able to easily access the state operated Exchange in California and will present our findings herein.  Unfortunately, and perhaps purely by chance, the three states which are dependent on the Feds for their operation were all ultimately inaccessible via their websites.

For the Texas site, we three times got onto their login page after rather lengthy delays and submitted the information to create an account. After clicking “submit,” we eventually received the message, “Your account cannot be created at this time. Please try again later,” three separate times and eventually gave up.

For the New Jersey site, we successfully created an account, verified the account by clicking on a link sent to our email address, then returned to their site and attempted to log in.  The account was not recognized as active, and we were referred to an 800 number for service. Unsurprisingly, that number placed us on hold until we finally gave up.  We repeated the “create account, verify account, return to login” procedure twice more, only to suffer the same “account is not recognized” error both times and eventually gave up.

For the Louisiana account we thrice completed the account information and submitted it for processing, and all three times got the same message as we had on the Texas site, “Your account cannot be created at this time. Please try again later.” We surrendered to the vagaries of the Federal program signup efforts and gave up on Louisiana as well.

California’s site, in contrast, was easily accessible, easy to navigate, quick to respond and all-in-all a pleasure to work with.  We jumped back and forth between entering family data such as names, dates of birth, income, and zip code, making plan choices, examining plan benefit descriptions and plan costs with literally no lag, no delays, no time outs, and no problems. Might have had something to do with Silicon Valley being in California? Who knows…

The proverbial bottom line, however, wasn’t great news for those looking to CoveredCA for coverage. The following two spreadsheets break down rates for the same fairly standard PPO plan which we used in our analysis of increased children’s costs earlier in this article.  We looked at six different regional areas of California (there are 19 across the state) both for a single person, and then for a family of four.

The plans versions, 2013 vs. 2014 are as close as we could come to equivalent due to the new Obamacare plan categories, but are not identical.  As previously mentioned during our discussion of the children’s rates, the benefits provided by the new 2014 plan are significantly inferior to the 2013 plan, as the following chart illustrates:

2013

2014

Benefit Reduction

Deductible

$1,500

$2,000

33%

Office Visit copayment:  

Non-specialist

$30

$45

50%

Specialist

$50

$65

30%

Maximum Out of Pocket per person

$4,500

$6,350

41%

Premium

$241

$245

 

Given the 33% to 50% benefit reductions, one might anticipate at least a 33% to 50% cost reduction for the 2014 plans. Unfortunately, that is not the case.  Of the 12 plans analyzed, nine show cost increases in 2014, in spite of the benefit cuts. Three show cost reductions, one of 10%, two of 5%, but compared to the 33-50% benefit cuts, those slight cost drops seem pretty insignificant:

Anthem

CoveredCA

Rate

Anthem

CoveredCA

Rate

2013

2014

Change

2013

2014

Change

Male, 54, single – San Jose Family of 4 (both 54) – San Jose
Premium

$500

$568

14%

Premium

$1,174

$1,478

26%

Female, 28, single – San Jose Family of 4 (both 28) – San Jose
Premium

$227

$289

27%

Premium

$803

$926

15%

Male 43, single – Pasadena Family of 4 (both 43) – Pasadena
Premium

$264

$273

3%

Premium

$759

$794

5%

Female 48, single – San Francisco Family of 4 (both 48) – San Francisco
Premium

$381

$482

27%

Premium

$1,472

$1,404

-5%

Male 38, single – San Diego Family of 4 (both 43) – San Diego
Premium

$337

$303

-10%

Premium

$1,023

$970

-5%

Male 25, single – Eureka Family of 4 (both 25) – Eureka
Premium

$241

$245

2%

Premium

$789

$801

2%

 

Leadership, or the Lack Thereof

  • March 23, 2010 – President Barack Obama signs the Patient Protection and Affordable Care Act (ACA) into law.
  • October 1, 2013 – ACA Health Insurance Exchanges go live across America
  • Three years, six months, nine days – time to prepare
  • Grade Awarded – You be the judge!

Unless you’ve been in a time warp, or crossing the Atlantic by yourself in a rowboat, you’ve surely heard the complaints, stories, and glitches that have been widely reported, including here, here, here, here, and here, about the less-than-perfect October 1 launch of Obamacare.

One amazing experience came to me from a young woman who lives in New Jersey.  She went on her Exchange website, created an account, logged in and entered her personal information; date of birth, address, social security number and so forth.  Then – to her astonishment! – the system told her that she was ineligible because…she was dead.  Kind of leaves you wondering, doesn’t it? I mean, where do you go from there?

One wonders how the Obama White House, which during the 2012 Presidential Election Campaign was repeatedly lauded for its “tech savvy,” could have allowed this to happen.  One possible explanation (which is actually a compilation of four reasons) was advanced by Julien Eilperin of the Washington Post, but rings hollow in my mind.  In essence, Ms. Eilperin said that the problems were:

  • There was no Chief Technological Officer and they had a “hard launch date” of October 1, which didn’t give them enough time to get things right;
  • They couldn’t hire the same people who worked on the Obama campaign a year ago;
  • The “nuts and bolts” of the Exchange fall under the Department of Health and Human Services, not the White House, and;
  • Constructing a national Health Care Marketplace is more complex than orchestrating voter turnout.

Seriously? She has to be kidding, right?

“There’s no CTO.” Not anywhere in the US government? As of December 2012, the US government had over 21,900,000 employees. Yes, that’s right – almost twenty-two MILLION employees.  And we couldn’t find anyone who could be the CTO?  And the 3 ½ years between passage of the law and the launch date wasn’t enough time?  This woman should be on The Daily Show or Saturday Night Live – the liberals on those programs would love her humor.

“They couldn’t hire the same people who worked on the campaign.” Again, can she possibly be serious?  There are these tiny little companies called Google, Apple, Microsoft, Oracle, HP, IBM, Cisco, Amazon, Intel, and just a few others scattered about the landscape that operate in the United States. Are we really expected to believe that nowhere in any of those companies are there any people who are as qualified in website design and implementation as the people who worked on Obama’s 2012 campaign?  Initial estimates for the creation of the Federal Exchange website were just over $98 million but as we stand today, costs have surpassed $600 million. Surely for $600 million we could have recruited a few of those tech geeks to work for Obamacare.

“The ‘nuts and bolts’ are in HHS, not the White House.” So what? Obama is the President of the United States, not the President of the White House. He’s supposed to be in charge – of the entire United States!  And last time we checked, the entire United States includes the Department of Health and Human Services.  Maybe he should have kept his finger on the pulse of the development of the website and other launch mechanics to make sure that his “Signature Bill” didn’t do a belly flop on launch day.

“Constructing a national Health Care Marketplace is more complex than getting voter turnout.” Duh! Didn’t the administration know that?  Obama’s supposed to be in charge of HHS, of the entire government, and most particularly, he most certainly could have been expected to keep track of how Obamacare was proceeding towards the starting gate.  It seems he should have kept his eye on the ball a little more closely, instead of trusting Kathleen Sebilius to mind the store.  Or does “keep your eye on the ball” only apply on the golf course?

I doubt if many of those reading this article are big video game players, but this kind of problem – website overload – is not exactly unknown in that world where massive launches, and the avoidance of massive launch screw-ups is critical.  For those who think we’re still talking about financial peanuts here, let me take a quick moment to bring you up to speed.  In 2012 the video game industry generated $66 billion in revenue.  One game, Diablo 3, released by Blizzard Entertainment, sold over $150 million worth of product in its first four months on the shelves; 3.4 million copies at $50 apiece.

In the first 30 minutes after the game’s initial launch, over 200,000 people logged in from the UK alone.  200,000 in 30 minutes! Maybe Ms. Sebilius should have hired some gamers to set up her websites and run her servers.

What the game industry knows, and the White House should have known, is that when you spend months pumping up the public to go to your website, you need to be ready for the rush.  Early adopters make up a huge percentage of long-time clients.  When people like this try to register, try to join, and can’t, many of them give up and walk away forever.  What is worse, and this is something that the movie industry knows full well, word-of-mouth advertising is more impacting, more valuable to the success of a production than anything on TV, the internet, or anywhere else.

All those disillusioned, frustrated people who sighed and logged off, giving up on Obamacare in those first few days, maybe for a few days, maybe forever, are going to pass along their feelings to their friends and neighbors. Those friends and neighbors will listen to them, and many will delay or avoid going to the websites for their own exercise in futility.

The Only Thing Worse Than No Leader is A Leader You Can’t Believe

As mentioned at the start of this article, on July 16, 2009, Mr. Obama said:  “If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”

Two days later, in another speech in another city, he said: “My plan will save everyone in America an average of $2,500 in health care costs each year.”

I don’t know whether he was intentionally saying things that he knew to be untrue at the time that he made these two statements. Perhaps not.

Perhaps somehow, in some way, he lost control of events.  Perhaps as the law progressed it evolved into something beyond his ability to manage so that what he said to America, what he promised to Americans, eventually, against his initial intent, turned out to be lies.

I don’t really care. When the President says something that firmly, that unequivocally, he should stand by it, come hell or high water, and make sure it comes true.  It’s called ethics, integrity, commitment; those are the things that make a good leader.

The reality of Obamacare is upon us, and it is most emphatically not pretty.

health care emergency