Cooking The Books

It isn’t hard to imagine Senator Tom Barrasso or Yahoo columnist Edward Morrissey becoming, how shall we say it, irritated were this blog to claim that they were guilty of felonies. If I were to use this space to make the unequivocal statement that Barrasso was using his authority to route money into private accounts, or that Morrissey was embezzling millions from Yahoo, they might be tempted to legal action against me.

And why not; we have freedom of speech to be sure, but we have never had the unbridled license to specifically, carefully, and with no reservations call someone a crook without having proof.

Or maybe we do. Maybe in the new United States, freedom of speech means that anyone can say anything, regardless of validity, regardless of harm done, and get away with it…providing of course that they have better lawyers, more money, or their target has a reason to not file suit themselves.

Enter the Republican Senator and the conservative media shill. Senator Barrasso went on Chris Wallace’s Sunday talk-fest and uttered the following gem:

“I don’t think [six million] means anything, Chris,” he began. “I think they’re cooking the books on this. People want to know the answers to that.

Now the phrase “cooking the books” has a very specific and very well-known meaning. Mob-owned firms cook the books to hide earnings; corporations can cook the books to hide earnings (for tax purposes) or “expand” earnings to impress investors. But what does it mean when a President cooks the books? Is he falsifying reports? Is he just pulling a Rick Scott and making up garbage on the fly? And I know that the good Senator said “I think”, but his utterance was the canary in a coal mine full of book-cooking allegations. So what gives?

Barrasso and other members of the (allegedly) pro-business Republican Party seem to have been (and maybe still are) upset, confused, or suspicious of the fact that the Administration released information monthly on enrollments regardless of whether the first premium payment had been made. Releasing information on enrollments where the first premium had not been paid was, apparently, not fair. It gave people the impression that something was working, and we just can’t have that impression allowed to run free. But worse, the members of the (allegedly) pro-business Republican Party were busy (or maybe are busy) trying to tell folks that releasing enrollments before they are paid is just wrong.

It’s book-cooking, liberal, screwiness…and we have had enough!


Of course, reporting information about economic events regardless of when the cash transactions that support those events happen is called accrual accounting. It isn’t book-cooking, isn’t unethical, isn’t immoral, and happens to be, well, good business. It is also, as I would assume the vast majority of the (allegedly) pro-business Republican Party must know, the standard practice of virtually all of the people (sorry, corporations…I was listening to Mitt Romney just now) in the Fortune 500…as well as all major health insurance firms.

That would be the same set of firms that is confirming with the Administration the receipt of all of those enrollments and, as they come due, the receipt of premium payments. Most of these firms, led most prominently by industry giant Wellpoint, are very happily telling their investors of their success both in adding new customers through the exchanges, and in achieving a healthy risk pool with those new members. Now some customers won’t pay…and their policies will be cancelled by the insurers, and the cancellations will be reported to the Administration. That is how corporations work, and since this isn’t Socialism, that is how this law works. And this is no different than any other corporation making cash adjustments to the next period’s income statement. Aren’t we supposed to, as the (allegedly) pro-business Republican Party states, run government like a business?

But Barrasso’s reckless assertions were topped by those of Yahoo columnist Edward Morrissey in a recent article. Mr. Morrissey attempts to use the results of two private studies to attack President Obama’s claims of recent success. Let’s look at some of his statements:

Before we get to these studies [Rand and Express Scripts], though, we should recognize why we need outside organizations to validate White House claims in the first place. The Department of Health and Human Services still has no way to quantify important data about those consumers signing up for health insurance through state and federal exchanges.


Exactly correct…which is why private enrollments are confirmed through the privately-owned, for-profit health insurance companies who offer QHP’s (the term for an ACA-compliant health plan.) They have investors to answer to, and no one would confuse them with allies of the Obama White House. We also have state data available to validate these numbers, as well as other independent reporting firms. But unlike Mr. Morrissey, we will read these sources for more than just the one nugget that might prove his point if kept away from context.

Without the “young invincibles” providing new funding for risk pools that now have to cover older and less-healthy consumers under “community pricing” restrictions, premiums will escalate rapidly, forcing more consumers out of the system and triggering the dreaded “death spiral” for insurers.

In order to determine the scope of the celebration, then, we need outside surveys to give us an idea of the size and composition of the actual enrollment population in Obamacare. The first of the independent studies comes from the RAND Corporation, which studied the changes in the health insurance market between September 2013 – just before the rollout of the state exchanges – and the end of the open-enrollment period at the end of last month.


Fair enough…let us point out that while the Administration is releasing information on enrollments, later adjusted for those who don’t pay and are flushed, the Rand Study is just that…a study. It is a good study using a strong methodology. But it is a poll, and one that studies only the additions to the ranks of the insured found in adults between the ages of 18-64. It tells us nothing of children, and the studies authors concede that it doesn’t measure other adults in the household (like spouses) of the folks that responded to the survey. In addition, the bulk of its responses came prior to mid-March, while at least 25% of all enrollments in QHP’s, and a much higher number of enrollments in Medicaid and CHIP came after that time.

While the White House can claim credit for a net increase of 9.3 million insured and a lowered uninsured rate from 20.5 percent to 15.8 percent, the data provides a significantly different picture than that painted by President Obama and the ACA’s advocates.

First, a significant amount of this increase comes from Medicaid enrollments, not private insurance. Almost six million people enrolled in Medicaid, and earlier studies showed that a relatively small number of those came from the expansion built into the ACA; most of these would have been Medicaid-eligible prior to the reform.

Another 8.2 million more people enrolled in employer-provided health care, as 7.1 million left the “other” category and another 1.6 million left the individual insurance markets. Only 3.9 million actually enrolled in insurance plans through state or federal exchanges – not 7.1 million as claimed by Obama. That number falls far short of even the lowered expectations issued by HHS and the White House earlier this year.


Ii is indeed interesting how quickly Mr. Morrissey demeans the addition of 9.3 million to the ranks of the insured. But more interesting is how he uses the extrapolated totals of the Rand Poll to “refute” the “claim” made by the President. It makes me wonder if he feels that pre-election polling of perhaps 1,500 folks would supersede the need for an actual vote by We the People in 2016. But if his assertions based on the Rand Study were questionable, his take on the (very good and very important in my opinion) Express Scripts study is despicable.

Moreover, those who did enroll through the state exchanges didn’t provide the demographic lift and risk-pool support needed to prevent massive increases in either premiums or deductibles, or both, in the near future.  Pharmacy benefit manager Express Scripts, which collected more data from insurers than HHS managed through its own exchanges, determined that the incoming enrollees require more medical attention than the previous risk pools, not less – which means that insurers will need to raise premiums even more than first thought.

Their new study shows, for instance, that the enrollees from state and federal exchanges have a 47 percent higher use of specialty medications than in commercial plans in general.

A quick read of the very short study shows that the data Morrissey quotes comes from January and February. Less than one third of the enrollments we have now were active during that period and insurance companies like Wellpoint and others have joined the Administration in confirming that the percentage of younger, healthier enrollees has climbed every month since then. Mr. Morrissey has no problem writing of the importance of the “young invincible”, but seems all to willing to discard the fact that most of them would not get insurance until the last minute (in other words, now.)

And it is clear in Morrissey’s article that he is stating as fait accompli that the exchanges haven’t achieved the necessary mix despite his leading assertion in the article (quoted above) that not enough information exists to make that determination. And the 47% higher use of specialty drugs in exchange plans? Express Scripts, in the study, states that the use of specialty drugs comprised 0.75% of all prescriptions in their commercial plans, but 1.1% in Exchange plans. A quick look at the math shows that this could lead to 12%-15% higher spending on pharmaceuticals nationwide. A more thorough look at the humanity without the math shows a lot of folks whose doctors thought they needed this medication, getting this medication.

And I thought ObamaCare meant coming between a doctor and their patient. Perhaps it is just coming between Republican arguments and mid-term voters.

The Rational Middle is listening…

Key Citations for this article:

Rand Study

Express Script Study

Morrissey Article

ACA Signups/Charles Gaba