A Misleading and Highly Incomplete ‘Study’ Continues the GOP Attack on Obamacare


The latest reason to repeal Obamacare? Medical claim costs are projected to rise by 100 jillion dollars. That number will be 14 jillion in California; 9 jillion in Ohio and by the year 2017, 29 quadrillion in the United States as a whole.

Yes, I’m exaggerating by a few dollars, but the latest “the sky is falling” study of the Patient Protection and Affordable Care Act (ACA) has just been released by the Society of Actuaries (SOA) and its message is clear. Insurance companies are going to take it on the chin starting in 2014 and every year thereafter.

SOA tells us that by 2017 medical claims costs will increase an estimated 62% in California, 67% in Maryland and 80% in the Buckeye state with numerous other states feeling the pinch as well. That’s because sicker uninsured people are expected to join the pool. There are also those who are currently being prohibited from obtaining insurance because of pre-existing conditions and those people who simply can’t afford the current pricing.

Let’s take the magnifying glass to this story. I’ll save the mischief (and there is mischief) for later. First, let’s see how comprehensive this study really is. It covers medical claims for only “individual health policies.” No estimates were included for employer plans, the source of the majority of health insurance coverage. And what is meant “by 2017.” Is SOA factoring in the years 2014-2017? If so, the society should know that in the 10 years before ACA was signed into law, there was a 131% increase in premiums. That’s an average of 13% per year. So with a few exceptions premiums won’t increase by any more than they were before ACA took effect.

In an AP story, one of the SOA actuary’s who worked on the study admitted that the effect of subsidies, insurer competition (a huge factor given the state exchanges with the primary purpose of fair pricing) and other unidentified factors were not taken into consideration. Administration officials pointed out more shortfalls in the design of the study; a design whose parameters in my opinion were intentionally drawn to result in a preordained conclusion. Tax credits and other special payments to companies that would in all likelihood insure most of the sicker clients were ignored.

Here comes the juicy part. John Haley, an influential “Fellow” in the SOA is CEO and President of Towers Watson & Company. TW & C specializes in health and group benefits. Tasty when you can get the outfit you serve as a “Fellow” to do the heavy statistical lifting for your company. And, wouldn’t you know it, Haley’s company is the daddy to Extend Health, America’s largest private Medicare Exchange. There’s that competition I was talking about that was left out of the study. The health insurance industry must not be hurting too much; 2011 total compensation for Haley was $6,288,629; for 2012 a “healthy” $7,617,513 including stock awards and options. He also draws money from several boards he sits on.

Here’s the payoff. I called the folks at SOA and asked them if this was an in-house study or was it commissioned by an outside source? Turns out 2 companies combined their resources in ordering the ACA chop-job. One of the companies was “The Lewin Group.” It’s a health care consulting firm with at least a dozen health plans and the far right American Legislative Council (ALEC)-connected Heritage Foundation among its clients.

The other money contributor that commissioned the study is where it really gets interesting. The company is called OptumRX (at least as of this submission). It has also answered to Ingenix and OptumInsight in the past. Part of the name changes has to do with a $350 million dollar class-action restitution fund growing out rigging a database to underpay doctors and patients. The Optum parent company is UnitedHealth, a company that, according to Kaiser Health News has a reputation for denying or underpaying claims, especially to out-of-network physicians. I guess that’s how you become the #1 health insurance company in the country.

It should come as no surprise to any thinking human being that United Health is a major ALEC player that has been a $50,000 “Chairman” level sponsor and exhibitor at an ALEC annual conference.

So that’s how it works. The special interests bent on destroying Obamacare, keep the pressure building, oft-times through legitimate “non-partisan” organizations like the Society of Actuaries. Such organizations have expenses. For SOA there’s rent to pay at their Schaumburg, Illinois Martingale Rd. Suite and the tab for the Queensland Hong Kong office and staff (still semi-capitalist after nearly 16 years of Chinese rule), neither locale’s staff works for nothing. There are research and education projects undertaken by SOA itself plus conferences to go to and ordering in (Chinese?) for top management.

You’ve got to get that money somewhere and if the bills have a bit of a stench to them, as long as they’re bankable, that’s all that counts and ACA takes another misleading and disingenuous hit.

Reason number 1,619,014 to vote Democrat in 2014.

Dennis S

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