Will the Uninsured Undermine the Implementation of Obamacare?

The debate between both political parties over the merits of the Patient Protection and Affordable Care Act, also known as Obamacare, has been going on for the better part of four years now with little end in sight.

With the PPACA being passed by Congress in 2010 and upheld by the Supreme Court in 2012, the hope had been that both sides of the aisle would come together to aid in its implementation, but that's been far from the case. We have less than 100 days to go until the state-run health exchanges effectively open for business and consumers become eligible to purchase health insurance through these exchanges, and pessimism in the transformative health care bill is only growing, according to the latest polls from Kaiser Health and Gallup.

Kaiser Health Tracking noted in June that only 35% of the public views the PPACA favorably, which was its lowest reading since October 2011. A more damaging poll on public pessimism was released yesterday by Gallup, which asked a random sample of 2,048 adults how Obamacare would affect their families' health care situation. Of the respondents, just 22% expected an improvement, while nearly double -- 42% -- expected the bill to worsen it. When asked the same question but given the context of the nation as a whole, 47% of respondents expect the PPACA will worsen the health care system.  

That's certainly not encouraging news for a bill ultimately designed to expand health care coverage to lower-income individuals while simultaneously driving down costs through transparent competition on the state and government-run health exchanges.

Ultimately, it's all about price
Up until now my subjective opinion of this pessimism had been based on the fact that there had to be a sizable minority of citizens that simply didn't want insurance to be a mandate, or simply felt it was unnecessary for them. A Kaiser Health poll released last week appears to have completely debunked my thesis.

Source: Images Money, Flickr.

In its poll, Kaiser Health asked adults aged 18-64 whether health insurance was something that was very important to them. A whopping 87% of respondents said "yes" with only 2% commenting that insurance was "not important at all." What I found particularly intriguing, though, was the breakdown between the insured and uninsured. 91% of insured respondents said insurance was "very important" to them compared to only 67% of the uninsured claiming the same.

Kaiser went on to further examine what the greatest objection of the uninsured was with regard to why they currently had no insurance. Of the respondents, 40% said it was "too expensive" with another 26% noting that their employment situation (e.g., being unemployed or employer not offering health insurance) was the root cause. Only 11% actually responded with the answer that they "didn't need insurance." 

To me, this demonstrates one very key point about the uninsured -- that it's ultimately about costs. The uninsured are extremely worried and skeptical about the costs associated with Obamacare. Clearly, the majority of the uninsured would prefer to have health coverage, but at what cost is the great question!

A head-banging conundrum
Call it the maddening aspect of Obamacare, but just as the uninsured are among the most skeptical of Obamacare's implementation, it's also in line to be among its greatest beneficiaries.

In the same Kaiser Health Tracking poll, 40% of the uninsured answered "No" in regards to the question of whether health care was worth the money. However, the Medicaid expansion called for in Obamacare will serve to bring some 16 million currently uninsured, low-income individuals under the umbrella of government-run health care. Many others will qualify for a partial premium subsidy based on their income. In addition, Obamacare required that the minimum coverage offered by health-benefit providers be greatly beefed up and meet a higher standard, which should result in more encompassing care for the soon-to-be-insured.

The expected influx of Medicaid patients into the health care system is precisely what prompted WellPoint (NYSE: WLP  ) to buy Amerigroup for $4.5 billion and CIGNA (NYSE: CI  ) to purchase Healthspring for $3.8 billion. Although Medicaid patients don't drive the best margins, they are guaranteed income for health-benefits providers.

What we have here is a failure to communicate
To summarize, we have a large group of uninsured citizens that are skeptical about the costs of health insurance, and transformative health reform designed to bring many of these uninsured people easier -- and in some cases, fully or partially subsidized -- access to health care. What we have here is a failure to communicate between the Centers for Medicare and Medicaid Services and uninsured citizens.

How much, if anything, have you heard about the new insurance marketplace?

Total Public

Insured

Uninsured

A lot

8%

10%

4%

Some

14%

15%

8%

Only a little

34%

33%

32%

Nothing at all

45%

42%

55%

Source: Kaiser Family Foundation Health Tracking Poll.

In fact, in the same Kaiser Health poll, when people were asked how much they'd heard about the health exchange being set up in their state, 55% of the uninsured reported hearing "nothing at all" with another 32% responding "only a little." The uninsured citizen is one of the backbones of Obamacare's success, and insurers are counting on their membership to drive their growth.

In addition, the nation's largest hospital operators, HCA Holdings (NYSE: HCA  ) and Tenet Healthcare (NYSE: THC  ) are counting on Obamacare to reduce the number of uninsured patients that it treats. Each year, these hospitals lose millions of dollars to doubtful accounts of patients that have received care but are unable to pay their bill. For HCA, that figure amounted to nearly $3.8 billion, or 10% of its total revenue, in 2012. Tenet's doubtful account provision was slightly lower at $785 million, or 8% of its total 2012 revenue. 

The only way to curb the skepticism of the uninsured and ensure they are easily integrated into the new system is through educating these people. Unfortunately, the CMS is waiting until the last possible minute to educate the public (including the uninsured) on how to obtain health insurance and utilize the health exchanges to their advantage. My concern would be that if we've gone three years since the implementation of the PPACA and 42% of citizens aren't aware it's even a law and 87% of the uninsured have heard nothing or little about the progress of their states' health exchange, then how does the CMS expect all of this to come together in just a matter of a few weeks?

Wait and see
As always, we're just going to have to wait and see how things play out. If the Kaiser Health Tracking poll is an accurate reflection of sentiment, then uninsured citizens would certainly prefer to be insured if they had the choice and consider having health insurance important. However, very few have had their health care cost fears allayed by the passing of the PPACA and it appears that the CMS is going to wait until much closer to the October 1 launch of the health exchanges before it begins it information blitz to the public about how the exchanges work and who they'll benefit.

Simply put, if the uninsured fail to get this message, there will be a big hole in Obamacare for health-benefits providers that will be missing out on new members and hospitals that likely won't see a sizable decline in doubtful provisions.

Still in the dark about how Obamacare might affect you and your portfolio? The Motley Fool's special report, "Everything You Need to Know About Obamacare," takes a 360-degree look at how the law may impact your taxes, health insurance, and investments. Click here to grab your free copy today.


Read/Post Comments (11) | Recommend This Article (3)

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  • Report this Comment On June 28, 2013, at 3:02 PM, annepavlos wrote:

    As the time draws closer to the date of implementation for Obama's "Insurance for Everyone" plan, we have been inundated with articles discussing its pros and cons, its positive and negative consequences, both direct and indirect.

    But, for those of us who are uninsured, (and unemployed) we've yet to receive ANY information about how or where to acquire it, what supporting documentation might be needed when applying, and we can only guess about the cost, whatever it might be.

    As was stated in your article, the only thing we can do is "wait and see"!

  • Report this Comment On June 28, 2013, at 3:32 PM, OdooshBag wrote:

    Seriously ?

    Wasn't the Uninsured the WHOLE POINT ?

    0bama = Fail you WILL believe in

  • Report this Comment On June 28, 2013, at 3:41 PM, RHO1953 wrote:

    This was supposed to make health care cheaper. The mandates have caused rates to skyrocket and young people will spend much, much more. A medium tier family policy will tip the scales at over 20K per year. That is NOT affordable. My friends are losing their employer health care in droves. They will be forced into the exchanges in direct contradiction of the Liar's promise that you can keep your plan if you like it. Another big Obama failure.

  • Report this Comment On June 28, 2013, at 4:43 PM, Seniorurb wrote:

    Hubby now earns 9$ hr >brings home 7$ hr after taxes.or roughly 280 a week, 1120 a month. We are blessed with a 450 a month pension, we are in our early, early 60's. Now take out 675 for rent, 40 for water, sewer and trash, 125 for electric, 50 for gas, 60 for internet(NO TV OR home phone, 240 for car payment (only have one vehicle), and about 75 for car and renters insurance, and in November his student loan comes out of forbearance and we will be paying 60 on it. Then there is the 35 a month give or take for hubby's doctor visit, labs, and discounted blood pressure and diabetes meds. That leaves us about 270 for gas to and from work for him, groceries and everything else we need. Best guesstimate for insurance has been about 1400 a month. Where do we cut to pay that? Not even our state officials can be reached to give us info on how this is going to work. By the way the only government assistance we receive is a discount on his doctor bills, and Rx assistance, we make too much. Not whining, we are making it and not asking for anything from anyone. The kids have our cell phone included in their family plan so we can stay in touch. If we make too much for any assistance at this time, are we going to make too much to get very much help with the health insurance?

  • Report this Comment On June 28, 2013, at 4:44 PM, doco177 wrote:

    1. Millions are losing the insurance Obama promised they could keep. Because ObamaCare forces employers to offer expensive Cadillac plans but also offers the option of paying a fine for not providing health insurance that can be cheaper than providing it, between seven and twenty million Americans are likely to lose their health insurance coverage according to the Congressional Budget Office. The original estimate was closer to four million.

    2. The cost of healthcare premiums is about to further skyrocket. Premium costs have already exploded, but that is a slow-motion explosion. In the near future, we could see costs double or worse. Naturally, these costs will hit an already burdened middle class hardest.

    3. Lost jobs. Lost jobs.

    The Federal Reserve's March beige book on economic activity noted that businesses "cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff."

    Human resources consulting firm Adecco found that half of the small businesses it surveyed in January either plan to cut their workforce, not hire new workers, or shift to part-time or temporary help because of ObamaCare.

    4. Potential doctor shortages that will mean rationing: The healthcare industry is already a bureaucratic quagmire. ObamaCare is about to add steroids. As the profession becomes tyrannized by government, the talented people currently practicing medicine plan to get out sooner than expected. Who knows how many will choose not to get in. Doctor shortages are what lead to the nightmare known as rationed care.

    5. Somewhere around $800 billion in tax increases will hit America's middle class. This added burden will not only further oppress a middle class already reeling from a drop in wages over the last few years, but could damage the overall economy.

    6. Inflation, the cruelest tax on the poor. When businesses get socked with added costs brought about by higher taxes and burdensome government mandates, they pass those cost along to the consumer in the form of higher prices.

    7. Added bureaucracy. Even those Obama lapdogs over at the Washington Post's Wonk Blog are admitting that applying for health care is about to get more burdensome than the byzantine paperwork involved in buying a home.

    8. To cut costs or to avoid having to provide insurance, workers on the economic margins are already losing hours, which means a lower paycheck. There are a million sad stories in ObamaVille; here are just a few of them.

    9. ObamaCare is projected to add $6.2 TRILLION to a deficit the GAO has already declared "unsustainable." That's "trillion" with a "t".

    10. More taxes than currently estimated are likely to hit because of situations like this one.

    11.Muslims, Amish, Native Americans and other groups are exempt from mandate and penalties under Obamacare that the rest of us have to pay.

    The govt becoming more involved in health care is the reason the costs have increased. So Govt creates a crisis, then provides a solution that comes at the expense of liberty and freedom, costs trillions, and by most accounts won't solve the problem but in fact make it far worse.Corruption, incompetence, disregard of the Constitution, and lying are integral to the way that this country is being run.

    Three years ago, Obama, Democrats, and his media lied to us about cutting the cost of health care, being able to keep our insurance, and not taxing the middle class.

    Today, those lies and what ObamaCare is and will do to the working and middle class are the biggest untold story in America.

    Just refuse obamacare..REFUSE..If only a mere 20% of the over 300 million population of the USA refuse Obamacare the government would be overwhelmed to even think they could lock every citizen up that refused to participate in the most corrupt and unlawful ways which it was passed that circumvented the constitution of the United States.

  • Report this Comment On June 28, 2013, at 5:25 PM, fahrenheit2014 wrote:

    Percentage of seniors (65+), with low income, who say they are

    in "excellent health":

    U.S. 12%

    England 2%

    Canada 6%

    And now for the last statistic:

    National Health Insurance?

    U.S. NO

    England YES

    Canada YES

    American's cannot and should not be "taxed" or penalized, because they cannot afford the privilege of Health Insurance. It is un Constitutional and morally vapid to do so.

  • Report this Comment On June 28, 2013, at 5:36 PM, Richard233 wrote:

    People will just do the math.

    If my choice is X per year for insurance and

    the fine is Y and X>Y, but I'm allowed to instantly

    get insured and the healthcare I need, why exactly

    would I pay more when I can get the exact same

    coverage for less?

    This is the thought process you will need to

    overcome if you want more money flowing into

    the system to cover all of the illegal aliens that

    will be, based on supreme court rulings, entitled

    to the same coverage all other people who are

    here legally.

    The DOMA ruling further reaffirms this concept,

    you are not allowed to discriminate, the idea that

    the newly legally people would magically be denied access is a joke.

  • Report this Comment On June 28, 2013, at 5:39 PM, joemelrose wrote:

    if the teabaggers had their way, WHICH THEY DON'T, affordable health care like tis law would never past, the teabaggers do what their rich campaign contributors tell them to do. the teabaggers are a vile nasty group of racist who hate America.

  • Report this Comment On June 28, 2013, at 6:53 PM, bc3b wrote:

    Thank you morons for re-electing the worst president in our nation's history. If you think ObamaCare is bad, just wait until you discover how badly amnesty negatively affects the country.

  • Report this Comment On June 28, 2013, at 6:59 PM, bc3b wrote:

    joemelrose -

    Low info voters like you got this country in the mess it is. Enjoy your ObamaPhone!

  • Report this Comment On June 28, 2013, at 11:08 PM, alamo0809 wrote:

    IN MEMORY OF BARBARA CHAFIN

    In January of 2010 the local pharmacy and gift shop had new owners and the working climate for a number of employees became negative and hostile. One of those employees, Barbara Chafin. With the encouragement of her husband, Barbara quit her job as a clerk and relinquished her employer sponsored health insurance.

    With a local State Farm Insurance agent acting as broker Barbara and her husband applied for private health insurance and were turned down, John because he had had a minor pre-cancerous lesion removed from his face and Barbara because she had had a hysterectomy 15 years earlier. ( Later the Chafins went through another local agent to apply for health insurance and would be notified that John was accepted but Barbara was turned down, again, because she had had a minor arthroscopic procedure done on her knee 2 years earlier, however the Chafin’s would not be notified of this decision until Oct. )

    In the early summer of 2011 Barbara noticed she was having difficulty swallowing. Residents of a small, rural community in Oregon, the Chafins were thrust into the competition for doctor’s appointments at the small, local clinic. Her doctor referred her to the surgeon who biopsied the mass and affirmed it was a cancerous growth. The surgeon set up the initial appointments with specialists for a myriad of diagnostic appointments that would require over night travel to Portland, 6 hours away. The news came to Chafins by way of their local doctor on August 24. Barbara had stage 4 esophageal cancer that had already progressed to her other organs, including her lungs. The oncologist explained Barbara’s prognosis would improve if the cancerous lesions on her lungs were “lung cancer” as opposed to the rapidly progressing esophageal cancer. The Chafins were given the options for treatment and further diagnosis which verified the cancer that was advancing through Barbara’s body was, indeed, the deadly esophageal cancer. Arrangements were made for treatment to take place at Oregon Health and Science University (OHSU) in Portland and scheduled to start Sept. 7th.

    The overwhelmed Chafins had two weeks to talk to family members and to assess their medical and financial situation. John was collecting a small Social Security check every month. Proceeds from 2 small rental units added to the family income. Having a realistic understanding of medical costs for cancer treatment, John called a bankruptcy attorney, fully expecting they would lose everything they owned, as many other families had, as a result of costly medical conditions. In fact, nationally, the leading cause of bankruptcy in the US is a result of catastrophic medical emergencies. The attorney explained to John that, although every state had unique provisions for filing bankruptcy Oregon was one of the worst. A medical facility had the right to take everything a person owned except for $50,000. The Chafins could be forced to sell their home and assets, keeping $50,000. to start their lives over while dealing with the aftermath of Barbara’s cancer. In Florida, the attorney claimed, an individual filing for bankruptcy was allowed to keep a million dollar house. “It is the law of the land” the attorney explained, “The medical industry can set whatever price they want, there is no control over what they can charge and they have absolute collectability . “ In the midst of everything, life threatning cancer, medical needs and financial concerns, the Chafins were overwhelmed with worry and despair.

    Later, on the night of August 25th John’s daughter called to tell him she thought he would qualify for the Federal Medical Insurance Pool, (FMIP, Obama-Care). On the morning of the 25th John called his local insurance agent who had brokered John’s medical insurance, (the same insurance that would turn down Barbara in Oct. because she had had arthroscopy on her knee.) The insurance agent told John not to bother with FMIP, that the Chafins would not qualify... But later that same evening John’s second daughter called, again, telling him she, too, had read the information on FMIP and that it appeared Barbara would indeed, qualify for FMIP benefits and faxed the application to John. John read the application and agreed, they met the criteria for FMIP. The following morning, August 26th, John called the number on the FMIP Application, expecting a long wait on “hold” along with a series of pressing 1 for this option for 2 for that option but he was surprised when a woman answered the phone directly after the second ring. He explained his situation, having lost employer sponsored health insurance, having been turned down for private health insurance and now the necessity for immediate treatment of Barbara’s catastrophic illness. To his surprise, the woman on the phone said… “Yes, it seems that you do qualify for FMIP.” John asked, “Is it really true that if you get my completed application by the end of August that we will have insurance coverage by Sept. 1.?” (Barbara’s treatment was scheduled to start on Sept. 7. If the application was not approved by August 30 they would not have health insurance until Oct. 1. Some of the most critical and expensive procedures could not be delayed, for obvious reasons.) The woman on the line said, “Yes, you should fax it to us now.” They went over the application line by line on the phone. Additional documentation had to include the insurance rejection letters along with diagnosis verification from Barbara’s doctor, among other things none of which was easy to collect on the tight time-line they had, but they did it. The woman also provided her personal line to speed up future communication and told John she would call him when she received his faxed application.

    The application and accompanying information was faxed the following day, August 27th but no call came from the woman from FMPI.

    On the morning of August 28 John called the personal line to reach the woman at FMIC. No one answered and he left a message. His call was returned within a half hour. John asked about the fax and she had not received it! This time she gave John her personal fax number, John faxed the application and documents again and this time she called to verify acceptance of the application. It was turned over to the underwriters for final approval with coverage to begin Sept. 1.

    About Sept. 1 the Oregon Health and Science University called the Chafins wanting to know how they would be paying for Barbra’s treatment. John gave them the FMIP information and the hospital financial officer verified they had the information on file and everything was a go for Barbara’s treatment to begin on Sept. 7.

    Sky, Do you have anything to add to this?? Berma

    Only how frustrated and disheartened and worried he was... of course because of the diagnosis, but also because he thought he would lose everything. I remember urging him to not accept what he had been told by the attorney and his agent; that you had to sometimes push back and find your own information, but I think he had kind of given up. He told me it was ok; they would live in a trailer by the river. It was after this conversation that I began to search for information on Obama's plan. That same night, I called him up and read the application to him. I didn't fax him a copy; I emailed it to him as a PDF. At this point in his life, he didn't know how to turn on a computer! He never did figure out how to print it. I think he got a copy from an office somewhere, but then there was some confusion because he only got the instructions booklet and not the application itself. Anyhow, there was a lot of drama and urgency and an overall sense of disbelief from him that this would actually work, but in the end it did and it was such a blessing. I remember, a month or so later, speaking to Barbara on the phone, listening to her tear up, as she told me how thankful she was that she at least didn't have to worry about leaving my dad with nothing. Obamacare rocks!

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