The news that big insurance companies are dropping out of the exchanges doesn’t mean Obamacare is broken, writes Tim Mullaney. The problem is easily fixable once we realize it’s really about a few specialty drugs.
Source: How Gilead ‘broke’ Obamacare
This article, from a Marketwatch.com reporter says insurance companies are dropping out of ObamaCare due to expensive “specialty drugs”. This assertion does not pass the giggle test.
This article, and its sharing on social media, demonstrates how social media amplifies stupidity. Marketwatch publishes a lame column – and people share it with their friends on social media. Most people are unlikely to be familiar with the subject matter. Those that might understand are unlikely to post corrections – remember, friends don’t correct friends on social media.
Sharing of logical fallacies, factually incorrect articles, and outright propaganda go on every day on social media.
The result is social media is an amplifier of stupidity.
There is little to stop this onslaught except to stop reading items shared by others on social media. For the past few months, I’ve largely ignored my social media news stream but made the mistake of reading it again last night and ran across this item. All of us are being tricked into sharing nonsense (yes, I’ve done it too).
How can we stop it? If we do not find a solution, our society becomes dumber and dumber and incapable of rational discourse because much of what we know is not true. Social media propaganda trains us to view “the other side” as a low form of life, scum to which we should not interact. Just look at the implicit name calling lurking in social media posts.
Sadly, most people are not learning to think for themselves but are instead regurgitating the opinions (not even facts) of others. Few look at original sources. Few understand core issues at the basis of the beliefs and opinions spouted online. Literally, people are giving up on thinking. If you don’t go along with the popular meme du jour, you are an outcast, probably a member of “the other side” (whichever side that may be), and worse. Facts and logic no longer matter in the new world order of social media.
“Specialty drugs” is a term used to hide that drugs are expensive. Per Medicare’s definition, any drug that costs more than $600 per month is defined as a “specialty drug”. This applies mostly to drugs used in cancer, HIV, MS, etc treatment.
“Specialty drugs” account for 1% of prescriptions but 32% of drug costs – working out to about 3.1% of all health care spending (per Pew Research).
This is not the root cause of insurers dropping out of markets. For 2017, 5 states and 31% of counties nationwide are left with a single insurer. Arizona’s 3rd largest county has zero insurers.
The root cause problem in the nongroup market is the ACA turned the pre-ACA individual or “nongroup” market into a de facto high risk pool with high costs.
The patients in the 35 state run high risk pools were merged into the existing individual market. The newly insured who had pre-existing conditions (and by definition were more expensive and higher risk) were merged into the existing individual market. Several insurers say that about 1 in 5 newly enrolled at the start of the year are obtaining health services and then discontinuing making payments. This is a front-end free loader problem.
The risk pools are, in many states, too small to be sustainable. Enrollment in ObamaCare is less than half what the economic models called for.
Thus, huge risk were simply poured into a very small nongroup market, and as of 2017 those risks are contained in the small nongroup markets pools.
This leads to skyrocketing premiums, which leads to market dropouts, which leads to higher risks and rate hikes, leading to more market dropouts – aka adverse selection and the “death spiral”.
These problems are fixable – but ONLY if political leadership steps up the plate. At the Federal level, there is dead silence. Democrats are terrified to acknowledge the nongroup markets are collapsing in several parts of the country, just before a national election. Republicans are sticking to their “We will repeal the ACA” mantra, which does not solve anything either.
There is no leadership. Each side points figures and engages in name calling about the “other side”. They stomp their feet and shout like middle school kids on the playground when the country needs adult leadership. Shame on all of them.
To learn more about the risk pools problem and proposed fixes, please read my paper on the subject. This is fixable – but in the absence of leadership, the ACA’s nongroup markets are collapsing in much of the U.S.