How's Obamacare Turning Out? Great If You Live in a Blue State, and 'Screw You' If You Have a Republican Governor

Obamacare implementation is becoming the latest dividing line between blue- and red-state America, with Democrat-led states making progress to expand healthcare to the uninsured and the poor—and Republican-led states saying "screw you" to millions of their most vulnerable and needy residents.

The latest sign of the Republican Party’s increasingly secessionist tendencies comes as Obamacare passed a major milestone in California, which late last week announced lower-than-expected healthcare premiums for its 5.3 million uninsured, less than many small businesses now pay in group plans.

“Covered California’s Silver Plan… offers premiums that can be 29 percent lower than comparable plans provided on today’s small group market,” the state’s new insurance exchange announced Thursday, referring to the least-expensive option of four state-administered plans and posting this price comparison chart.

In contrast, the refusal by red-state America to create these health exchanges, which would be more local control—a supposed Republican value—and to accept federal funds to expand state-run Medicaid programs for the poor, means that about half the states are turning their backs on their residents, especially millions of the poorest people.

The federal government plans to step in later this summer and offer uninsured people in recalcitrant red states the option of buying plans via federally run heath care exchanges. But the poorest people can’t afford that, meaning the refusal to expand Medicaid programs will leave them in the cold. They will see ads selling new federal healthcare options that will be unaffordable for them.

The New York Times reports that local healthcare advocates in red states are predicting a backlash once Obamacare is rolled out and the poor realize that they cannot take advantage of it because Republicans are blocking it. However, that does not change the bottom line in state-run Medicaid programs: the GOP is again penalizing the poor.

Progress in Blue States

Meanwhile, in blue states, there have been surprising developments in the cost of Obamacare for those people who currently are uninsured. There, the bottom line is insurance premiums are hundreds of dollars a month lower than what employers are now paying for their workers under existing group plans.

California, with 5.3 million uninsured adults, is the biggest state to release cost estimates for Obamacare. Its lower-than-expected estimates are in line with announcements in Washington, Oregon, Maryland and Vermont. The actual prices will be known after insurers file rate documents in coming weeks.

These estimates are a bright spot in what’s otherwise been a season of dire and all-too-partisan predictions about Obamacare implementation. Even without the political smears, there still are plenty of unknowns about the law, including in the blue states where it is on track. The biggest concern is how will it affect current healthcare costs across the economic spectrum, as the law is designed to cost less for people and small businesses via tax credits to offset its expense. This chart shows how it is expected to affect various age and income groups.

Unlike the red-state retreat from taking responsibility for its residents, California has taken an aggressive approach to building benefit plans. Its new insurance exchange told insurers what coverage their plans had to include, prompting some of the largest national health insurance companies to skip the Obamacare rollout. However, enough firms are participating to offer real options.

As important, California is one of 15 states where its insurance regulators cannot reject premium increases. That means the companies can jack up prices with impunity, even if the public protests. “As important as this progress [on cost estimates] is, there’s still more work to be done,” said Dave Jones, California Insurance Commissioner. “I remain very concerned that there is no legal authority to reject unreasonable and excessive rate hikes.”

Red State Realities

The exchanges are one of two major pathways to expanding coverage. The other is via state-run Medicaid programs, which is health care for the poorest. The New York Times reports that Republican governors have not set up exchanges—and federal officials have yet to fill that void, even though the law says that they will. Those states also rejected expanding Medicaid to “millions of poor people,” even as the law offers nearly full federal subsidies for the first half-dozen years.   

“That benefit is not just to individuals but to local economies,” said Alwyn Cassil, spokeswoman for the Washington-based Center For Studying Health System Change. “The hospitals are very angry with those folks.”

Beyond Republican Party propaganda spreading outright lies about Obamacare, there are other real implementation issues. They concern the progress of states setting up the exchanges and then how the feds will step in when states fail to act. California’s exchange told the insurers what benefits to include in its plans, but the feds might not go that far and just bundle pre-existing health plans for individuals. That may result in fewer benefits offered.

How small businesses will react is another variable. Small businesses under 50 employees are eligible for tax credits. Business with more than 50 employees that don’t offer workers healthcare can face big fines. How that will alter hiring decisions is an open question, promoting much fear-based coverage in the business press.

There are also questions about which employee groups may not be helped, notably trade unions whose members work for different employers and currently have health coverage under older federal programs. Those unions are hoping upcoming federal regulations will address their concerns.  

Getting accurate answers to these questions is difficult, Cassil said, because the most vociferous critics and boosters are invested in the law’s success or failure. “It’s very difficult to find people who don’t have a dog in this fight,” she said. 

Take outgoing Montana Democratic Sen. Max Baucus, who, along with Ted Kennedy oversaw its drafting in the Senate. Baucus has been quoted as saying Obamacare implementation is a “trainwreck.” However, he was responsible for many of the legal ambiguities that have created today’s implementation challenges. The law’s drafting did not follow the usual practice of going through a House-Senate conference committee to find and fix technical problems. In effect, it was published without being edited.

It’s important to assess Obamcare by stepping back from today’s politics. Broadly speaking, the law has three waves of reform and we are now approaching the start of the second wave. The first wave allowed adult children to stay on their parents’ policies until they were 26 and got rid of annual coverage caps. Those were popular policies, touted by Obama and helping his re-election in 2012.

The second wave is creating state insurance-buying exchanges that will offer policies to uninsured individuals and small businesses. Another piece is offering poor people care by expanding coverage under state-run Medicaid. The third wave is making changes in how Medicare, the federal program for the elderly, pays doctors. There are pilot programs to encourage teams of doctors, not specialist after specialist, to treat patients and be paid for the results—not cutting checks for every test.

Rightwing critics as recently as Thursday were issuing reports slamming Obama for missing key deadlines with writing the federal regulations that states have to follow—including how the feds will step in where states have not created their own insurance exchanges. Some of those delays have come because the GOP-controlled House has delayed funding, and because reactionary GOP governors like Texas’ Rick Perry, also have not cooperated.

If you examine the report’s fine print, such as this one on federal regulations, you find that the criticisms are aimed at public health initiatives long opposed by corporate America, such as better nutrition labeling. There also are reports by legitimate non-partisan groups that offer other glimpses of how Obamacare is likely to shape healthcare services beyond the cost issues.

Most intriguing—and possibly controversial—is this one from the Center for Studying Health System Change that suggests that Americans increasingly will be seeing more of nurse practitioners and less of doctors, at least at the start of a physician’s visit. That’s because the addition of millions of new patients will put more pressure on doctors’ flexibility to spend time with patients. There is not an increase in the number of available doctors, whereas the ranks of patients will swell.

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