10:50 a.m. October 2, 2013

Obamacare: The Gift To Insurers That Will Keep on Giving

This week's healthcare-themed government shutdown and the much-vaunted launch of the insurance exchanges has predictably jump-started the latest season of "The Politics of Obamacare."

In this made-for-TV cartoon series, the battle over the new law has been depicted as a fight between competing small guys. Bam! Democrats insist opponents of the law don't care about the uninsured, even though the new law will leave millions of people without health coverage. Ker-pow! Republicans claim that proponents of the law don't care about struggling businesses, even though America's for-profit employer-based system puts U.S. businesses at a competitive disadvantage.

Now, as a Wile E. Coyote government hurtles toward another fiscal cliff and as cable news substitutes red-versus-blue prognostication for fact-based health policy reporting, few in D.C. bother to mention that Obamacare really isn't designed with patients, most employers or even health care in mind. It is primarily designed to further enrich one tiny handful of businesses: health insurance corporations.

There are a many ways to see this amid the capital's latest riff off a Hannah-Barbera production.

One way is to look at what Obamacare is, and what it is not. It most definitely is the legislative manifestation of the insurance industry's biggest wishes of all, providing massive no-strings-attached subsidies to the industry, and using government power to force citizens to become the industry's permanent customers. It also is not what the insurance industry most fears - it is not only not a single-payer system, it doesn't even include a public option that would allow people to altogether avoid the rapacious private-insurance industry. It also does not prevent insurance companies from employing their typical devil-in-the-details tactics - the kind that provide the patina of health insurance while limiting access to actual health services.

Asking exactly why Obamacare was structured like this is another way to see that the law is really a gift to insurers hidden in the gaudy wrapping of altruism. That's because the answer to that critical "why" question is simple: the law was written by the insurance industry.

Remember, the primary architect of Obamacare was Liz Fowler - the insurance industry executive who temporarily took a government post to write the new law, and then quickly moved back into health care lobbying. She was ably assisted by an battalion of her fellow insurance industry cronies, who in 2009 deployed their army of lobbyists to shape the underlying health care legislation. She was also backed up by many other Obama administration officials who worked on the legislation and then immediately headed to the lucrative world of insurance-industry lobbying.

Of course, the fact that the health insurance companies have so much cash lying around to pay a mercenary army is probably the Obamacare cartoon's most conspicuous smoking gun of all. Indeed, while Obama and Democrats have proudly claimed that the new law finally cracks down on insurance profiteering and attempts to reduce the health insurance industry's outsized economic footprint, the financials suggest exactly the opposite is happening.

Since the passage of the Affordable Care Act, for example, health insurance CEOs have surged to the very top of the economy's salary list. They are being handsomely remunerated for the fact that since Obamacare became law, the stock exchange has witnessed a boom in health insurance company share prices, as investors have jumped into companies whose profits are now government-guaranteed.

The visuals since the day Obama signed his health insurance bill into law tell this part of the sordid tale. Just take a gander at the stock-price graphs of major insurers like United Health, WellPoint, Aetna, Humana, Cigna, WellCare and Magellan Health Services (for starters). They all show the same thing - a sky's-the-limit curve up toward profit heaven. Forbes' Robert Lenzer notes that in just this year alone, "The value of the S& P health insurance index has gained 43%" - aka more than double the gains of the S&P 500 as a whole. It's the same trend in the last 24 hours, too. That's right, for all the talk of those exchanges finally cracking down on insurance industry profiteering, insurers saw stock price spikes the instant the exchanges went online.

It all highlights what a recent J.P. Morgan report suggests: namely, that Wall Street sees the exchanges as opportunities for even more profiteering than ever. Why? Because, in the words of one giddy investor, the launch of Obamacare represents "the moment of the sun for the (insurance) industry.” That's especially the case with the Obama administration now waiving some of the relatively few high-profile consumer protections that progressive legislators managed to sneak into law.

If this taxpayer-funded gift to the insurance industry promised to extend better, more affordable health care to more consumers over the long-haul, then perhaps you could have honestly labeled Obamacare a piece of public-interest legislation - yes, an inefficient, overly expensive piece of public-interest legislation, but public-interest legislation nonetheless. But labeling it as such today is absurd. After all, insurers are already gaming the exchanges in ways that contradict President Obama's promises of better health care choices. Meanwhile, for many Americans, costs are expected to rise. In fact, at the very moment the industry is enjoying huge profits, it is openly promising to soon use its new leverage under Obamacare to jack up premiums.

True, many low-income Americans will initially benefit from subsidized coverage. But as Barron's details in an article appropriately headlined "How to Profit From Obamacare," the growing subsidies will not necessarily be used to provide health care over the long term. Instead, they may increasingly be used to pad the profit margins of the insurers contracted by Medicaid. And with Obamacare statutorily cementing insurers role as profit-taking middlemen between taxpayer subsidies and health care providers, the only way to permanently maintain health care services will be to submit to a now-institutionalized extortion scheme. Either Obamacare coughs up more taxpayer money to pay the insurers' ever-increasing levy, or more people lose their coverage and die for lack of any health insurance whatsoever.

Summing up what this all means in practice, the Institute for New Economic Thinking's Marshall Auerback put it this way:

We’ve had a bailout for bankers and now the principle seems to be extended to the insurance industry. As Randy Wray and I discussed in a recent paper, the health care bill just signed into law entrenches the centrality of private health insurance companies and contain no serious proposals to limit costs. More people will get hit with deductions, co-pays, annual limits (for several more years), exclusions, out of pocket expenses. This will ensure that health care remains too expensive to actually take advantage of new insurance. And many currently insured people are going to get higher taxes. Premiums will rise.

Despite its opportunistic bluster, the Republican Party establishment has no substantive objections to any of this. Historically the most reliable - and reliably bought-and-paid for - ally of the insurance industry, the GOP isn't any more angry that Obamacare bails out the party's insurance industry campaign donors than it is mad that the law leaves millions of Americans uninsured. No, the Republicans' faux rage against Obamacare merely reflects a willingness to prioritize their partisan hatred of Obama. They loathe him so much that they are willing to recklessly shut down the government in protest of what is basically their beloved Heritage Foundation's health care plan (this extreme partisanship is topped only by the Heritage Foundation itself - it apparently despises the president so much it is willing to publicly campaign against its own health care ideas simply because they now have Obama's name on them).

Democrats, by contrast, are today defending the new law by diverting attention from the fact that in exchange for massive campaign contributions, their party's lawmakers actively helped torpedo real health care reform - and not just in 2009, but by their own proud admission, in the future as well. Rather than acknowledge that inconvenient truth, Democratic partisans are now storming cable television studios to try to replace conversations about health care with celebrations about the law's ostensible expansion of health insurance.

Now sure, it must be said that such an expansion isn't wholly insignificant. Banning insurance discrimination for those with pre-existing conditions and getting more people some modicum of minimal coverage should moderately improve things for some people - at least until the insurance oligopoly's premiums become unaffordable and/or the list of covered health services is whittled down to nothing.

But don't be fooled by the Democratic talking points and Obama administration reports which insinuate that the "until" part is just some nightmarish fantasy that will never materialize. It isn't a fantasy, because until the law fundamentally changes to both create elements of a single-payer system and truly disempower the insurance middlemen, Obamacare will never be fundamentally about health care. It will be mostly about private health insurance. And those are two very different things.