Patrick B. McGuigan
Oklahoma faces significant health care challenges in almost any conceivable scenario. A new study from the New England Journal of Medicine has identified the Sooner State as one of eight where “the demand for care by newly insured patients could outstrip the supply of primary care providers in these states.”
As the controversial new health care law is implemented in 2014, roughly a quarter of a million more Oklahomans will qualify for Medicaid, The Oklahoman reported this week.
CapitolBeatOK asked two health care policy analysts to reflect on the analysis in the journal.
Jason Sutton, policy impact director for the Oklahoma Council of Public Affairs, said, “The situation with regard to access to care is actually even more bleak than the report from the New England Journal of Medicine states. Yes, Oklahoma is one of the states with the fewest primary care physicians per capita, so ‘Obamacare’ will have an even bigger disproportionate impact here than is some states. But the law also does other things that will hurt patients’ access to care.
“First, the law requires insurers to take all comers by prohibiting insurers from denying coverage for preexisting conditions, requiring guaranteed issue among all private plans and prohibiting insurers from rescinding coverage for very expensive patients.
“That is bad, but it wouldn’t be so bad if the law allowed insurers to underwrite coverage in an actuarially sound way. Instead, the law prohibits insurers from using medical history to underwrite policies, permitting only consideration of age. But those premiums cannot be more than three times higher than the insurer’s youngest customers.
“So, regardless of whether an older (and generally more unhealthy) customer would cost $50,000 annually to cover, if the insurer’s youngest and healthiest customers cost only $5,000 annually to cover, the insurer can only charge three times more in premiums to the older customer. Obviously, you can see how the insurer is likely to sustain massive annual losses under such a scheme.
“These are price controls. The government is effectively saying to insurers, ‘you must take all comers, and you can only charge this much regardless of how sick they are.’ This can quickly lead to the adverse selection ‘death spiral,’ where either there aren’t enough healthy people in the pool to spread the risk, or the insurer cannot collect enough premium to cover losses.”
As for what insurance providers can or should do in such a situation, Sutton reflected, “An insurer can’t get rid of expensive sick patients, because the law prohibits rescission of coverage. The insurer can’t charge expensive sick patients more, because the law prohibits it. The only thing an insurer can do to maintain profitability (and, therefore, stay in business) is to cut reimbursement rates to providers.
“If that happens, you will see the same thing happen to privately insured customers as you see among Medicaid patients. Reimbursement rates are so low that providers refuse to see them. Of course, they will just go to the emergency room for care, just like Medicaid patients do.”
It would be ironic, he reflected, “if everyone in the United States had access to health insurance but only 75 or 80 percent had access to primary care.
“There are two provisions of ‘Obamacare’ that will prove to be fiscally unsustainable: one for the states, the other for the federal government.
“First, the expansion of Medicaid will drive state expenditures on Medicaid far beyond what any state can afford. Second, the subsidies for people to purchase insurance will drive costs for the federal government much higher than current estimates, mainly because the government is severely underestimating the number of people to whom it will have to provide subsidies.
“The law requires employers to provide coverage for employees or pay a penalty. Unfortunately, the penalty is so light that studies show that employers are going to be dropping coverage for employees and forcing them to purchase coverage in the exchange, where they will be eligible for a federally funded subsidy.
“Currently, cost estimates don’t count these people (as many as 80 million employees could lose employer sponsored coverage) because the federal government presumes employers will maintain coverage for employees. Another example of liberals being ignorant of basic market principles.”
Then, reflecting on the impact of the new federal law on an insurance program that has enjoyed bipartisan support here in Oklahoma, Sutton told CapitolBeatOK, “there is no doubt that Obamacare will effectively kill Insure Oklahoma. Essentially everyone currently eligible for Insure Oklahoma will also be eligible for either Medicaid (under the expansion) or federal subsidies to purchase coverage when the law takes effect.”
Different analysis of the issues presented in the new study came from Kate Richey, policy analyst at the Oklahoma Policy Institute.
Richey said, “The shortage of primary care physicians in Oklahoma is neither a result of health care reform, nor a problem only for Medicaid or Insure Oklahoma patients. The new health care law will expand coverage to hundreds of thousands of uninsured Oklahomans, who will either gain health insurance coverage through Medicaid, or buy subsidized private coverage through an online Health Insurance Exchange.
“Coverage expansion will certainly put pressure on the state's health care system, which has long-suffered from a shortage of qualified health care professionals. To help alleviate the pressure, the health reform law allocates $1.5 billion to address physician shortages, including a program that forgives student loans and provides scholarships to primary care providers who choose to practice in places facing a shortage of nurses and doctors, such as Oklahoma.”
Richey told CapitolBeatOK, “Oklahoma consistently ranks last in the overall health of our citizens. As a result of the health care reform law, more and more Oklahomans will be signing up for health insurance in the coming years. This coverage expansion provides an unprecedented opportunity to improve the physical and financial health of our population.”
She concluded, “A path-breaking new study from a team of leading health care researchers and economists published by the National Bureau of Economic Research found that Medicaid coverage had wide-ranging benefits in terms of access to health care services, better physical and mental health, and financial stability.
“Whether coverage is obtained because of Medicaid expansion, or the individual mandate, getting more Oklahomans into the health care system is the only way we're ever going to get out of last place.”