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Two Sides of Obamacare; Inside the Obama White House

Aired July 6, 2013 - 09:30   ET


CHRISTINE ROMANS, HOST: You, your doctor, your job, even breast- feeding mothers, Obamacare is the law of the land. Do you know how your life is about to change?

I'm Christine Romans. This is YOUR MONEY.

Complex change is coming to one of America's most basic needs: health care. You have questions, we have answers.

Forty-nine percent of Americans don't know how Obamacare will affect. That's according to a Kaiser Family Foundation. About 40 percent of Americans are unaware that the law is even being carried out.

The biggest changes will be for those Americans who don't have insurance. They'll be forced to buy insurance, or they will pay a penalty for not having it starting next year. Insurance companies will be required to sell policies to everyone. That's regardless of any preexisting conditions.

The goal here: to get coverage for the nearly 50 million Americans who are currently uninsured. Critics of the law -- and there are many, many of them -- they're warning there's going to be chaos. The Obama administration has already started a massive education push: a cost, no surprise, a matter of fierce debate.

Joining me from Los Angeles, our chief medical correspondent, Dr. Sanjay Gupta.

Good morning, Sanjay.


Now, I'll tell you, the country's largest group of actuaries I think really sounded alarm bells when they said in certain cases, the costs -- insurance costs -- may go up by more than one-third. Now, they were talking specifically about people who had to buy their own policies either as individuals or part of small businesses.

But you might imagine that caused a lot of concern. So. we decided to investigate what was happening here. We started in Milwaukee, Wisconsin.

(BEGIN VIDEOTAPE) GUPTA (voice-over): Dan Olkives runs Tease Hair Studio. It's in the trendy bay view neighborhood in Milwaukee. He estimates it takes about six of these hair cuts to pay his monthly medical insurance bill.

DAN OLKIVES, TEASE HAIR SALON: How long do you think you want to go in the long run?

GUPTA: Three hundred bucks is a big expense for Dan and he's relatively healthy, but he's self-employed and doesn't want to tempt faith.

OLKIVES: You know, growing up with a father who was a cancer patient, I definitely learned you have to have insurance. You know, whether you like or not, you do have to have it.

AMY GROSS-BRAUN, STAY AT HOME MOM: Are you all done with your banana? Are you ready to go work?

GUPTA: Amy Braun Gross (ph) is a stay at home mom in suburban Milwaukee. Her son, Spencer, has severe autism.

GROSS-BRAUN: Are you ready? It's time to work.

GUPTA: He's covered through a government program.


GUPTA: But no health insurer will cover Amy and her husband, Chris. They do have a steady income. They pay their bills, but they were rejected because of past health issues, depression and being overweight.

GROSS-BRAUN: It's very hard to get approved due to pre-existing conditions.

GUPTA: As things stand now, Amy worries if she gets hurt, it could bankrupt her family.

GROSS-BRAUN: Something as simple as spraining my ankle. None of it is covered right now, none of it. So, we would be billed. And, you know, that's just going to add to the debt that we already have. So, that's what scares me.

GUPTA: Amy and Dan share a lot in common. They live five minutes down the road from each other and they both need to buy their own health insurance.

But when it comes to Obamacare, the similarities end.

Starting next year, everyone will legally be required to have health insurance. So, thanks to Obamacare, companies will have to sell her a policy and the rules say it has to be affordable.

GROSS-BRAUN: Obama care! Exactly.

GUPTA: Now, Dan on the other hand -- OLKIVES: You're fine.

GUPTA: He's young and fit. And those things keep his payments low. He's an inexpensive risk, but that's about to change.

With Obamacare, insurance companies will have to raise rates on the young and healthy. That's to balance the expense of covering new and sicker customers like Amy.

Sara Teppema is with the Society of Actuaries. They've been running the numbers.

SARA TEPPEMA, ACTUARY: Those costs varied a lot depending on the state that the person lives in.

GUPTA: Nationally, her association estimates that cost for insurers will go up more than 30 percent.

TEPPEMA: Wisconsin was one of the higher ones.

GUPTA: In Wisconsin, she says, the cost of covering an individual will go up by some 80 percent.

OLKIVES: So, now, all of a sudden, this continues to escalate with the insurance and be like, where are we going to get this money from to cover that?

GUPTA: Now, this doesn't mean Dan will have to pay 80 percent more or that nationwide rates will go up 30 percent, but some costs will be passed on to the consumer. We just don't know how much. And even if rates rise, the federal government is giving subsidies. Family as earning up to $94,000 will get help.

JONATHAN GRUBER, PROFESSOR OF ECONOMICS, MIT: I think the key point is that victory in health care is not health care prices going down. It's going up more slowly.

GUPTA: MIT economist Jonathan Gruber is one of the primary architects of the federal health plan. Ultimately he says, the legislation makes health insurance more fair, even if the younger, healthier people do have to pay more.

GRUBER: Generally, we end discrimination in the insurance markets. Sick and healthy pay the same price and young and old pay somewhat different prices but within a limited range. And basically what we're ending is the fundamental failure of our social safety net that you can be bankrupted by high medical expenses.


ROMANS: So, Sanjay, this group of actuaries says rates will go up. But some states that are setting up their insurance markets are actually seeing lower premiums than they expected. What's really happening out there?

GUPTA: Well, you know, for example, here in California, that's exactly what's happening. The state -- they're setting up their own exchange, and insurance companies basically put in their bids to say how much they're going to charge if someone joins the exchange and picks that particular insurance company. And what they found is that these bids from the insurance companies are coming in about 25 percent lower than even the Congressional Budget Office sort of guessed -- estimated they would be.

So, for example, about $321 a month on average in California. And that's lower. There is variation, as you heard, from state to state.

ROMANS: Why does it vary so much?

GUPTA: I think a lot of it has to do with where the state was before the exchange started to get set up. So a state like Massachusetts, for example, already had a lot of regulations in place. And that helps drive costs down. In a state like Wisconsin, there weren't a lot of regulations in place.

And all of a sudden as you just heard there in the piece, there are people who had more illness already, people with preexisting conditions who are now going to join the system. And that's going to raise the rates up for everybody in the state overall.

So, it also has to do with, you know, we talk about the number of uninsured in America as a sort of broad number for the whole country. But it varies a lot state to state. So, states that had more uninsured people already in the first place, those costs are likely to go up.

ROMANS: All right. Sanjay Gupta, nice to see you this weekend. Thanks, Sanjay.

GUPTA: You, too.

ROMANS: All right. Coming up, meet the doctor who doesn't care if you have insurance because he is not taking it.


GUPTA: No co-pays, no deductibles, no premiums. I'm not talking about state-run health care in some European country. I'm talking about doctors in this country who don't take health insurance, but they charge a set price for services.

So, leave the insurance card at home and bring cash or a credit card because this doctor is not preparing for Obamacare, and he and his patients are happy.

Health insurance, but they charge a set price for services. So leave the insurance card at home and bring cash or a credit card because this doctor is not preparing for Obamacare, and he and his patients are happy.


ROMANS (voice-over): Dr. Michael Ciampi was fed up.


ROMANS: The family doctor from Portland, Maine, used to do lots of paperwork -- so much it was taking time from his patients. So earlier this year, he stopped taking Medicare and other insurance altogether.

CIAMPI: We ask patients to pay at the time of service just like you would be expected to pay at time of service at your garage, at the barber shop, or at the grocery store.

ROMANS: Under his new system, Dr. Ciampi's prices are clearly marked on his Web site: $75 for an office visit, $150 for a complete physical. That's roughly in line with how much he had been receiving from Medicare and private insurance plans. With less paperwork, his operating costs are much lower as well.

CIAMPI: We have had real cost savings already in that that we have been able to cut the staff down. We have one full-time employee to support me, and she answers phones and draws blood and so forth. And so, that's been a huge savings.

ROMANS: He says he now has more time to focus on his patients and even make house calls.

But for many patients, they can't pay out-of- pocket. Dr. Ciampi says he's lost a quarter of his roughly 2,000 patients. But he expects others to take their place.

He admits his model works best for those who either lack insurance or who have high deductibles.

An hour north of Portland, another family practitioner, Dr. Michael Clark, understands Ciampi's frustration.

DR. MICHAEL CLARK, FAMILY PRACTITIONER: The idea of a streamlined, simplified billing and collection practice is very attractive. A lot of us hunger for a simpler structure to our practices where it can just be about the care we give to patients.

ROMANS: But in this rural community, Dr. Clark felt he simply couldn't turn away as many senior patients who are reliant on Medicare. And some experts say other groups would also be vulnerable.

UWE REINHARDT, PROFESSOR, PRINCETON UNIVERSITY: There are not that many patients who are able to put up with this. Some very rich patients, of course, they could do this. But a lot of low-income people couldn't afford the fees.

ROMANS: But with endless bureaucracy and costs that often seem out of control, some doctors are trying different tactics to stay in business.


ROMANS: These cash-only practices are still quite rare, but they are on the rise. A survey from Medscape finds only 6 percent of physicians don't take insurance. But that's up a little bit. It's up from 4 percent last year.

Coming up, yummy mummy is one small business definitely not complaining about Obamacare. We're going to show you why -- get this -- breast pumps are flying off the shelves. Guys, don't squirm. We're talking about free stuff here.


ROMANS: So the most sweeping changes from Obamacare take effect next year. But some provisions are happening right now.

Alison Kosik is here to tell us about one new moms are embracing.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly, and we know having a baby brings so much joy. But along with that joy comes huge expense.

But here's one less expense you can have, but you're going to want to do your homework first.


UNIDENTIFIED FEMALE: This is our most expensive Medela pump that retails for $399.

KOSIK (voice-over): Nursing moms can shell out hundreds to rent or buy a breast pump. But now under Obamacare, you can get one, and it won't cost you anything.

SUSAN PISANO, V.P. FOR COMMUNICATIONS, AMERICA'S HEALTH INSURANCE PLANS: Under the Affordable Care Act, a number of preventive services and services for women are covered without cost sharing. And one of them is the rental or purchase of a breast pump.

UNIDENTIFIED FEMALE: Thank you so much.

KOSIK: Business glowing at New York's Yummy Mummy and Emporium for all things breastfeeding.

AMANDA COLE, FOUNDER & CEO, YUMMY MUMMY: Our phones are ringing off the hook. We outgrew our space. We opened a call center.

We started shipping pumps to a warehouse in Illinois. More than doubled our staff.

KOSIK: And through the pregnancy grapevine, word is still getting out.

UNIDENTIFIED FEMALE: I actually thought that it was just covered by, like, a flex spending account.

KOSIK: Yummy Mummy is an approved provider for several major insurer, and that's the key because most plans will only pay for your pump if it's from an in-network medical equipment provider, not a retail store. That's why across town at the Upper Breast Side, business isn't exactly gushing.

FELINA RAKOWSKI-GALLAGHER, PRESIDENT, THE UPPER BREAST SIDE: I do know there's a decrease in breast pump sales.

KOSIK: And trying to help customers get their insurance to pay for pumps is not easy.

RAKOWSKI-GALLAGHER: It is absolute chaos. You can't get a straight answer. The people that you're calling don't have answers for you.

UNIDENTIFIED FEMALE: And it was just frustrating. At one point I told the lady, I just want to pump milk for my baby. Like, you know, help me.

KOSIK: The new benefit has also created a supply crunch. Medela, one of the biggest pump makers, says it's added 50 percent more capacity to meet the increase in demand.

(on camera): Who knew there would be a rush on breast pumps?

COLE: Right. You could sort of forecast it, you know, they're free all of a sudden.

KOSIK (voice-over): But are they really? The health insurance industry says more benefits for new moms mean we'll all pay more up front.

PISANO: It is misleading to suggest to consumers that health care services are free when, in fact, the cost of that service will be reflected in their premium.

KOSIK: But the industry also says breast-feeding can mean healthier babies and lower medical costs in the long term. That's why nursing moms are embracing the new benefit.

UNIDENTIFIED FEMALE: It's very expensive in the fact that it wasn't covered before was almost ridiculous.


KOSIK: Now, I just checked back in with the other store, the Upper Breast Side. And what the owner told me, that she's actually now talking with insurance companies about becoming an in-network provider in order for her business to survive.

But that's what's key about this benefit. You really have to get the pump from an approved provider, Christine. Let's say you go to Walgreens or you go to Target to get one. You won't necessarily get reimbursed. You've got to get it from an in-network provider.

ROMANS: And that's interesting. It shows that Obamacare is already being implemented on the ground in some of these provisions.

What are provisions? There are other things happening right now --

KOSIK: There are.

ROMANS: -- too, for nursing mothers.

KOSIK: There are. You can also have access to a lactation consultant. That benefit is also covered. These are professionals who offer breast-feeding assistance and education. But once again, what sounds good on paper, it also has some hiccups in practice because we talked with some lactation consultants who said the reimbursement rate from these insurance companies is so low that they're not so gung ho to get in on being an in-network provider.

So in sum, what that means is that if you're a new mom, it's going to be tough to have more choices or define that lactation consultant under this benefit. So, yes, all of these great benefits are in practice, they sound great but they're having a few hiccups along the way.

So, do your home work.

ROMANS: All right. Do your homework. That's always the lesson.

Alison, have a great weekend. Thanks, Alison.

All right. After two elections four years in the White House, President Obama still can't shake the perception that he wasn't prepared for the presidency. I'll ask a man who was there whether that's true.

That's next on YOUR MONEY.


ROMANS: In 2008, President Obama campaigned as an outsider. His message: I'm fighting the Washington establishment on behalf of America's middle-class.

And four years at the heart of the Washington political machine, he took the White House again. You might think the occupant of the Oval Office is the ultimate Washington insider, but lawmakers, donors and journalists say, no, it's not the case.

Jonathan Alter is one of those journalists. He has tracked President Obama since he was a state senator in Illinois and he's been granted more access to the Obama White House than almost any other journalist. His new book, fantastic new book titled "The Center Holds: Obama and His Enemies."

Welcome to the program.


ROMANS: So interesting. You say the president is missing this schmooze gene, which is something that pretty much the regard for American politicians. And Conan O'Brien -- I mean, it's no secret. A lot of people have said this, but Conan O'Brien poked fun at him during a White House Correspondents dinner about it.


CONAN O'BRIEN, HOST, "CONAN": Some in this room have even accused the president of being distant and aloof. When I asked the president about it earlier, he said, "Oh", and then walked away.



ROMANS: The president has also been described as a pragmatist. So, if it's holding him back, even the perception of it, why doesn't do he something to change it?

ALTER: Well, he's starting to try to do something about it. He's playing golf more with Republicans and eating dinner with them once in a while. But it doesn't come naturally to him, you know, the president's favorite movie he says is "The Godfather" and there's this line in it from Hyman Roth where he says this is the business we have chosen, you know?

And you sometimes think that the president forgets that a little bit, that politics is about back slapping and making these other politicians feel as if they're being stroked and getting attention and he needs to pretend to be their friend.

He'd rather spend time with his real friends and in the book I do try to kind of pull back the curtain to explain what he's like when he's with those friends not --

ROMANS: What is he like with those people?

ALTER: He's joking around a lot. And --

ROMANS: He doesn't --


ALTER: There's off-color stories --

ROMANS: Really?

ALTER: -- in the book that I can't say on TV about the sorts of things that he says when he's with his real friends, and as you say he can't swing in public at all these pitches. So, he really appreciates it when other people go after his enemies for him. And so, for instance --

ROMANS: It makes him look aloof, though, and it feeds into the stereotype we were talking about.

ALTER: It does make him look aloof, he doesn't get out and make feel included enough. He understands this abstractly but because he has a kind of disdain for a lot of the normal rituals of politics, we saw that in the first debate, you know, he just doesn't like those debates, it means that he doesn't have these personal relationships that he could draw on now that he's in trouble, you know?

Because you want to be able to fall back on those relationships and he hasn't really established enough of them in Washington. I think he knows it. ROMANS: Do you think he's being attacked more for the IRS, for Benghazi, for some of the more current troubles that are after your book than he would have been because of that aloofness and he doesn't play the game the way he doesn't play the game?

ALTER: No. The obstruction is the obstruction and, you know, the reason that he hasn't gotten more done since the House went Republican in 2010 is because anything he's for the Republicans are against. So, that's the main reason he's having trouble on Benghazi and the IRS.

But I do think that particularly with Democrats when he, you know, went -- they have to go back and tell their constituents, I haven't talked to the president in 18 months, that doesn't make them look very good.

ROMANS: Right.

ALTER: And it gives him less of a cushion of support when he does get in these situations.

ROMANS: You mentioned the Democrats, you know, just this week the house minority leader Nancy Pelosi she stopped short of endorsing Hillary Clinton for president, but she said something that was interesting, encouraging her to run for president, Hillary Clinton, and she took what some insiders said was a swipe at the president.

I want you to listen to what she said --


REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER: If Hillary Clinton were to run and we think that if she ran, she would win, I believe that she would be the best prepared person to enter the White House in decades.


ROMANS: That would mean more prepared than the current president.

ALTER: Well, but that's -- I don't see that really as a swipe because the president was so inexperienced. I mean, he was only elected to the Senate in 2004, and he became president in 2008. He barely stopped by the senate for a cup of coffee. You know, Hillary Clinton has been in public life for a long time.

Nancy Pelosi actually has a good relationship with the president, as does Harry Reid. It's more the other Democrats that she doesn't schmooze with enough.

ROMANS: You know, recent memory -- I mean, the president was at a White House Correspondents dinner and nobody knew who he was, you know, that was only a few --

ALTER: He actually came up to me at dinner in 2003, he came up to my table at that dinner and he said to me, literally, just remembering this for the first time in years, he said, "You're only one of the only people I know here."

Obviously he has gotten to know an awful lot of other people in that room. And when he wants to turn on the charm, he can be very charming. But there's -- there's just this sense in Washington that he needs to use that charm more effectively.

ROMANS: In the book you say he talks, he was worried during the election, if he lost his presidency would be a footnote to history. Now that he's got the second term and the new problems and you call it obstructionism, but new problems on the Hill, will he be able to build out his legacy? You know this man, will he be able to build out his legacy?

ALTER: Well, I think what's going on right now is critical on immigration reform. It's much bigger than the various controversies that have dogged him at the beginning of this year, that would be a significant part of his legacy if he gets it and the story I try to tell in "The Center Holds" is how did he get 71 percent of the Latino vote?

ROMANS: Right.

ALTER: If he'd gotten 65 percent or 60 percent, we wouldn't even be having this conversation about immigration because none of the Republicans would be taking part.

But he delivered a message to them that they will not do well as a political party if they don't get this bill through. How did he do that?

He introduced people like the Latina Oprah. The Anglo media doesn't know who she is. She's a former Univision star who did ads with Michelle Obama in the campaign that were very appealing in the Latino community. He did this unbelievable outreach what's called The Cave which is the secret annex of the Chicago headquarters of the Obama campaign that I penetrated with, these twenty-something analytics geeks figured out all the new ways to appeal not only to Latinos right down to the different --

ROMANS: Right down to the color of the e-mails.

ALTER: Down to the color of the emails that we've seen out.

ROMANS: Right.

ALTER: Yellow got a better return than white and there are 100 other things. Everybody knows Obama did a better job on the digital front, I try to explain how.

ROMANS: "The Center Holds" is the book, and Jonathan Alter is the author. Nice to see you. Thanks for coming in. Take it easy.

ALTER: Great to see you, Christine. Thank you.

ROMANS: Thanks for joining the conversation this week on YOUR MONEY, coming up on at 2:00 p.m. Eastern on a brand-new YOUR MONEY: lack of opportunity or lack of ambition, what's really holding back America's unemployed?

I'll see you at 2:00 p.m. today. And until then, you can find me at Facebook and on Twitter, my handle @ChristineRomans.

CNN continues right now.