Sunday, January 19, 2014

How Retail Giants Saved the Obama Administration a World of Grief

It has gone relatively unnoticed, but the Obama administration has dodged a devastating PR bullet this month.

According to the Daily Mail, “[A]s many as one-third of new enrollees’ applications have seen problems when the government transmits them to insurance companies.” If seven million Americans have indeed signed up for Obamacare, this means that potentially millions of Americans now believe that they have insurance, but as far as the insurance companies they believe to be covered by are concerned, they are uninsured.

We have already heard (however faintly) stories about a few unfortunate Obamacare enrollees who headed to the hospital expecting to be covered for treatment, only to find that their doctors could not verify their insurance and they were liable for the entire cost. If a million or more Americans, believing to be covered by Obamacare, were to find that they could not get their needed prescriptions because an inept government broker failed to deliver their information and buying intent to their insurance company of choice, there would be a whirlwind of public disapproval that might be untenable even for the Obamacare spin team.

So retail giants rushed in and saved the Obama administration the headaches.

Both Walmart and Walgreens have, according to Reuters, said that they would “provide a month’s supply of certain prescriptions at no up-front cost to participants of U.S. President Obama’s signature healthcare law who have not yet received a plan identification number.” Kroger, Rite Aid, and CVS have introduced similar policies. Chain Drug Review reports that CVS is providing “a 15- or 30- day “bridge”” for “temporary insurance gaps,” meaning that CVS will essentially give prescription medicines to Obamacare subscribers who, by all accounts, have no insurance.

These retailers suggest that they will seek to recover these short-term losses by going to the insurance companies afterward to cover the costs. Assuming that all works out for the retailers, these products are indeed “sold,” and they will benefit in the long run.

There are elements of risk involved in that, though. Unless there is some obscure passage of Obamacare scripture which demands that they do so, there is no guarantee that these insurers will come out of pocket to pay for the medicines of customers who were not policyholders at the time of “purchase.” If insurance companies do not pay and the government cannot force their wallets open, we can assume that the customers will be asked to cover retailers’ costs, which is introduces another element of risk in offering these products at no up-front cost and no interest. Insurance companies have an assumed creditworthiness. These customers do not, and there is certainly no guarantee that these uninsured customers, without a contract or credit check, will pay the entire cost of their prescription medicines if retailers demand, particularly when they took the medicines with the expectation that they wouldn’t be liable for the entire cost.

And it’s important to understand that it is a very distinct group Americans that will benefit from this decision. You see, a consumer usually looks for three things: a desired product, a good price, and a smooth buying process. To be enrolled in Obamacare means you have invested time and effort in the notoriously painstaking buying experience on the Obamacare exchanges, and in many cases, it means you have paid more than you have in the past for a policy with more bells and whistles than you previously thought you needed. To have done all of that means that you might have a vested political interest in Obamacare’s success, or at the very least, you serve as a bulwark strengthening Obamacare’s bid for continued survival. In other words, it will largely be supporters of Obama’s healthcare legislation, ideological or otherwise, receiving this benefit. That’s a pretty focused recipient group.

It all seems curiously convenient. If you were to find yourself uninsured because your insurance broker failed in his job or your company decided to discontinue providing health insurance benefits due to Obamacare's myriad regulations and requirements, retailers wouldn’t be champing at the bit to accommodate you with prescription meds at no upfront cost or interest, but they’re doing it for Obamacare enrollees. So altruism has little, if anything, to do with it. While we might not be surprised at some future revelation that this decision somehow involved Obamacare’s social architects, there simply isn’t evidence to assume that any such collusion took place at this point.

But implicit collusion isn’t necessary to recognize the most unsettling problem this incident exposes. These are the largest pharmaceutical retailers in the nation. They are private companies, and yet they now function as a delivery system distributing a benefit to a specific, preferred group of political constituents in a way that uniquely benefits this administration by protecting its ideological sacred cow.

What is the message that Americans, particularly independents with no strong opinion on the healthcare law, might take from this? That by putting your faith in government, complying with its edicts, and enduring its incompetence, you might somehow be insulated from the potential adverse realities you would face if you choose to do otherwise.

And that’s certainly a huge win for Obama and the ideologues out there peddling government dependence.

William Sullivan

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