Obamacare: The Implosion Has Just Begun by Dr. Ben Carson

A New Message from Dr. Ben Carson

One Nation
American CurrentSee
By Dr. Ben S. Carson

We recently witnessed a victory lap by the Obama administration as they announced that over 8 million people had signed up for Obamacare.

 “The repeal debate is and should be over,” declared President Obama in the opening statement of his April 17 press conference. “The Affordable Care Act is working.”

But with the release of a new study by Express Scripts, the largest pharmacy benefits manager in the country, we now have our first real look behind the curtain at how the law is working thus far — and it clearly validates one of the major concerns of Obamacare critics.

With all due respect, Mr. President, it’s hard to see how the debate about Obamacare is now over, when the implosion of Obamacare has only just begun.

The new study, which looked at 650,000 actual pharmacy claims made across 25 Obamacare insurers in January and February, shows that early enrollees in Obamacare exchange plans are indeed sicker and more costly than individuals with insurance coverage in non-exchange plans. This is important because it means the Obamacare health insurance pools are well on their way to collapse.

The specific discoveries are as follows:

  • The rate of prescriptions for HIV medicines was four times higher in exchange plans than in non-exchange plans;
  • Pain medications were 35% higher in exchange plans;
  • Anti-seizure drugs were 27% higher;
  • Anti-depressants were 14% higher;

It is common sense that sicker people with higher costs are more likely to obtain health insurance when coverage is “guaranteed issue,” as it is in the Obamacare exchanges. Guaranteed issue means that anyone can buy health insurance at any time regardless of health status at the time of purchase. That may sound appealing, and it is certainly great for a few, but it results in obvious perverse incentives that can only lead to collapse.

If car insurance were guaranteed issue, it would mean you could buy a policy after your car was stolen and get reimbursed for your car. If homeowners insurance were guaranteed issue, you could buy a policy after your house burned down and be sent a check for the value of your home.

So who would buy an insurance policy in advance if they could always get a guaranteed issue policy later? The obvious answer is no one.

The problem is that if everyone is making expensive claims that exceed the incoming premiums then soon there is no money left and the insurance pool implodes. This is called a “death spiral” in industry speak. An early symptom is rapidly escalating premiums in a frantic attempt to cover higher than expected costs. We will see this when 2015 premiums are announced later this year. We will also see more desperation when the employer mandate kicks in after the election and tens of millions of people lose what they thought were safe insurance policies.

 Several states have tried guaranteed issue health insurance, and the results were  disaster. Kentucky passed guaranteed issue in 1994. Premiums in the individual market shot up 100 percent in some cases, the number of insurers selling policies declined over 90 percent, and there were more, not fewer, uninsured Kentuckians.

 Iowa, New Hampshire, South Dakota and Washington also passed guaranteed issue in the mid-1990s. All of those states immediately experienced skyrocketing premiums and fewer choices for their citizens. Consequently, all four states either repealed guaranteed issue outright or modified it significantly. New York and New Jersey maintained their guaranteed issue and ended up with the highest premiums in the country, in some cases costing many thousands of dollars per month.

 Obamacare supporters have three responses. The first is that the individual mandate will force people to buy coverage thereby ensuring sufficient money in the pools. The problem with this claim is that the tax for non-compliance ($95 or 1 percent of income in 2014, going up to 2.5 percent of income in 2016) is far less expensive than a year’s worth of premiums. A 27-year-old male in good health making $26,000 a year is unlikely to pay even $100 a month for health insurance, especially a policy with a deductible exceeding $2,000.

 The second response is a concession that the truly sick and expensive were more motivated to buy guaranteed issue coverage early. But never fear, the young and healthy are now rushing to buy coverage, and it will balance out. That is only true if you believe that younger Americans, many struggling financially, will pay hundreds of dollars a month for health insurance they are unlikely to need. Michelle Obama may call them “knuckleheads,” but most of them are capable of simple arithmetic.

The third response is to describe how the law as written provides taxpayer bailouts to insurance companies when they are saddled with increasingly bad and expensive risks. The health insurance companies lobbied strongly for this provision in the law because they knew that guaranteed issue would be a financial mess. So yes, the authors of Obamacare were so aware of its eventual failure that they built in taxpayer bailouts in advance.

This position assumes that American taxpayers will tolerate their hard-earned money going to bail out health insurers who were complicit in authoring a failed law. We won’t.

The Express Scripts study is hard evidence of what common sense told us all along. Future studies of claims data will confirm the same trend. Obamacare cannot be fixed. It can only be replaced.

It can only be replaced with a logical system that puts the responsibility for health care back in the hands of patients and their healthcare providers. The details of such a plan have been previously discussed elsewhere and will be discussed here in greater detail soon.

10 responses to “Obamacare: The Implosion Has Just Begun by Dr. Ben Carson

  1. I trully am concerned when reading this article as the author seems comfortable with people not having insurance even with severe conditions. I read an article comparing the United States health care system with ten other wealthy nations. In all the studies America comes last affordability (america is the highest in the world), access to healthcare we have one of the highest number of people with no health coverage. I urge everybody to google world healthcare rankings. Obama has atleast attempted to address the issue rather than just keep complaining. Its so sad that rather then trying to look at solutions to ammend the proposition to help our healthcare system always just shunt it and complain its not productive.

  2. The Obamacare issue will always be a problem in my eyes, there is no helping it nor stopping what it has already become. Our country is in such a huge whole that there is no way we will ever get out with the healthcare comes with a guaranteed issue like it was discussed above. I do not agree with this at all! Obama wants a perfect world and keeps trying to build it, but this country will be doomed if Obama keeps trying to build it up.

  3. Obama likes to believe in a perfect system. It will work because we are all good Americans. But is that the truth? Are we all good Americans? Or is there a lot of good responsible people being overwhelmed by people who abuse the system. Sure this would work if the majority of America was not self centered and greedy. Truly though, how can we blame them if we also believe in capitalism. America the paradox featuring the socialistic “democratic” president. Does he care about the well being of the good Americans or did he just care about the majorities vote in 2012?

  4. I know several people who have benefited from the affordable care act, many with preexisting conditions who are more than willing to pay for health insuranace for the first time. My family on the other hand have been without insurance since october 2013. We were kicked off of our Blue Shield insurance and told we would ‘probably’ qualify for medi-cal. it is July 1, 2014 and we are still without coverage. I have done eveything suggested to me by both the county offices and an insurance broker. Apparently we are on the cusp of medi-cal and affordable care program. We are caught up in the red tape and praying that no one get sick. Meanwhile, we are paying for doctor visits and prescriptions out of pocket and hoping to be reimbursed at some point in the future

  5. I never understood what Obamacare was until now. I just thought that people were complianing for all different reasons and it didn’t effect me. However, I was wrong. Obamacare does effect me and it will if it continues throughout my life. Obamacare is a quick fix. It will not work in the long run. Eventually it was break and leave our countries health care system weak.

  6. Katarina Ponomaroff

    I have never had much knowledge on Obamacare and this message from Dr. Ben Carson really helped me grasp the whole idea of what Obamacare is. It is nice that our president is trying to aid to the thousands of people who do not have health insurance but it doesn’t seem like a good idea in the long run. The demand of medications will increase because so many people will be needing it.

  7. It’s funny that we are a country that doesn’t have universal healthcare. But, in my opinion the president is trying to please as many people as he can. There is always going to be problems with bills and whatnot that are passed. I think obamacare has several problems that need to be fixed, therefore it should not have passed so quickly.

  8. Rosamaria Valdez-Lopez

    There is always going to be a good and bad side to everything, especially with this issue. Most people that do get the benefits of Obama Care like the program, but of course for those people who have no benefit but still have to endure the cost or negative effects from it do not want it.

  9. Looks like the only ones that like Obamcare are the insurance and pharmacies companies and not the American people.

  10. The author did not say anything about the lives that were saved because we something in place. He didn’t say anything about the jobs that has been and will be created. Granted there is a cost hike, but for how long. Just like with gas, for example, if there is a high demand for it then the cost will go up until the reserves levels are high again. After which prices will come down again. Now that there are more patients being treated, the demand for medications and actual doctors will be high until the reserve levels for medications are up and more doctors become available. And if Obamacare is replaced, the new health care needs to be already in place before the latter’s cession ceases.

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