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Pro & Con: Is first year of health care reform law living up to promised claims? - Pacific Research Institute

Pro & Con: Is first year of health care reform law living up to promised claims?

In pressing his case for the overhaul, the president made several lofty promises — and assured Americans it would expand access to health care while improving quality and reducing costs.

Throughout the past year, Obamacare’s efforts to expand coverage have fallen flat — even as it has raised the cost of care for individuals and businesses.

Take the law’s effort to extend coverage to people with pre-existing conditions through a new federal high-risk pool.

The administration estimated last year that 375,000 people who had been previously shut out of the insurance market would turn to the new federal program for coverage. But enrollment has severely lagged expectations. Despite a comprehensive public-awareness campaign, only about 12,000 people have actually signed up.

That’s less than 5 percent of the initial projection.

Obamacare’s attempt to control the price of health insurance has also been an abject failure. The law foisted minimum medical loss ratios (MLRs) on insurance companies, mandating that they spend 80 percent of premium dollars from the individual and small-group markets — and 85 percent of premiums from the large-group market — on medical claims.

Officials hoped that the MLRs would force insurers to pare back their administrative costs and profits and devote more of consumers’ money to paying for care. Instead, they’ve undermined competition in insurance markets, leaving consumers to deal with fewer choices and higher prices.

For instance, the Principal Financial Group, an Iowa-based insurer, has quit the health insurance business entirely thanks to the new rules. And Aetna has left Colorado’s individual insurance market.

Several states — including Maine, Nevada, Kentucky, and New Hampshire — have asked the administration to exempt them from the MLR requirements. At least 10 other states have expressed interest in filing for a similar waiver.

Maine’s case is instructive. Only two insurers operate in the state’s individual insurance market. One of them has warned that it will cease writing policies if the new MLR rules go into effect — leaving the other with a de facto monopoly, free to charge whatever it wants.

Obamacare’s rules are also threatening many Americans’ current health insurance plans. The new law would invalidate low-cost, no-frills “mini-med” plans, which offer a minimal level of health coverage to beneficiaries, for not providing $750,000 in annual benefits. By 2014, no plan will be permitted to have a maximum benefit cap.

Firms with many low-wage, seasonal, or part-time workers often rely on mini-meds to furnish at least a modicum of health care to their workers. Without the plans, the workers would be uninsured.

As McDonald’s explained, “it would be economically prohibitive for our carrier to continue offering [mini-med plans]” if required to adhere to the MLRs.

The Obama administration wasn’t too wild about its signature achievement depriving millions of Americans of insurance coverage, so it has distributed more than 900 one-year waivers to corporations like McDonald’s, local labor unions, and even municipal governments. In theory, organizations would have to re-apply for a waiver every year through 2014, when the health-insurance exchanges go into effect.

If consumer protections were so crucial, then why has the administration been so quick to hand out waivers?

Last March, President Obama promised to provide less expensive, higher quality insurance coverage to all Americans. One year in, his experiment in health reform seems doomed to fail.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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