Why insurance companies will undermine the Affordable Care Act

In a recent article at Truthdig, “The Public-Private Profiteers,” Barabara Garson is critical of President Obama’s reliance on public-private partnerships to solve major social problems. Such partnerships are entered into by the private sector, then deliberately undermined to prevent government from delivering services directly to constituents. Garson looks at Obama’s failed Home Affordable Modification Program (HAMP) for clues as to how the private sector may undermine the Affordable Care Act (ACA) to prevent movement toward single-payer.

How banks undermined the HAMP program

The disastrous Home Affordable Modification Program (HAMP) was “a poorly designed, deeply flawed effort to nudge lenders into rewriting the terms of homeowners’ mortgages so that they could remain in their homes.” The statistics show it was an utter disaster. Garson reports that six million nine hundred thousand Americans applied for HAMP modifications. Only 13% got one, and 22% of those had their homes foreclosed on anyway.

Unfortunately, it was a planned disaster. The banks set up separate refinancing companies to deliberately slow down and undermine the mortgage modification process by demanding massive amounts of paper work, and dragging out the process, sometimes for a year and a half.

Economics blogger Steve Randy Waldman reports that, at a Treasury Department meeting in 2010, government officials admitted HAMP was designed to help banks and not homeowners:

Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. . . . The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks.

Clearly, HAMP was a bone tossed to desperate homeowners after hundreds of billions were doled out to save the banks. In my view, it’s hard not to come to the conclusion that it was a cynical and cruel move by the Obama administration to help keep “the banks, not homeowners, afloat as the global financial system slowly recovered.” It kept desperate homeowners scraping to pay their mortgages in hopes of refinancing, while the banks, with the blessing of the administration, collected their money yet had no real obligation to help them. It also served the private sector by giving yet another “government program” a bad name.

How insurance companies will undermine the ACA

In the same way Obama delivered up desperate homeowners to the banks, he delivered those without healthcare to the insurance companies. You would think the industry would be grateful for the new business, but Garson explains how, in the months before the ACA took effect, insurance companies rushed to undermine it and why they will continue to do so. It’s a long quote but worth the read:

We’ve already seen the president take full blame for assuring people that, under the new law, they could keep their old policies if they chose.  Apparently he didn’t anticipate that, in the months between the passage of the Affordable Care Act and its implementation, insurance companies would rush to sell policies that didn’t meet the minimal standards set in the law. Insurance companies knew that they would have to cancel these and other non-compliant policies as soon as the law went into effect. In the meantime, however, what a great twofer: first you get to collect and invest the premiums, then you get to stick it to your government partner by announcing to customers that their policies are being canceled thanks to Obamacare.

For insurance companies, this blame game is more than just sport; it’s their only real defense against single-payer healthcare.  Vermont has already created a state health care plan that will go into effect in 2017.  Oregon, Massachusetts, and Washington State are seriously considering similar plans.  Seattle congressman Jim McDermott (who happens to be a doctor) hopes to attach “a patch” to the Affordable Care Act that would make it easier for governors to use the healthcare money Washington will send them to create statewide single payer options.

The insurance companies were successful in lobbying any kind of public option out of the national health care law and they will fight every local public option to the death.  For if it works anywhere, it offers Obamacare a way to evolve, state by state, into “Medicare for all.”

Private health insurance companies can only survive if people throw their hands up in horror at the thought of an incompetent and intrusive government.  Expect, then, that the untimely requests for death certificates, the delayed payments to doctors, the arbitrary denials of coverage, and all the other slings and arrows that the insured already endure will be baroquely embellished and cynically blamed on “government.”

If it was hard for underwater homeowners to distinguish between bankers and bureaucrats while they were losing their homes, it will be even harder for frustrated sick people to untangle the public and private strands so tightly braided into the Affordable Care Act. That, however, is what has to happen if Americans are to move toward a simpler, go-to-the-doctor-when-you’re-sick healthcare system.