Charles Krauthammer suggested that the demise of the American Health Care Act is not the end of Republican attempts to undo Obamacare:
“I don’t think there’s a reason why it had to be pronounced dead. The president had an ultimatum. He decided he would stick to it. He decided that, as a result, he would not be involved. That’s fine. It’s still an open question whether they Republicans in the House and in the Senate can negotiate among themselves. They were not that far apart. I have been advocating this other alternative where you abandon the restrictions that are imposed by the reconciliation process, meaning you stuff the bill with all the kind of stuff you were going to add later, stuff that would appeal to the Freedom Caucus.”
“You put that in the bill and toss it over to the Senate, and if Senate Democrats want to filibuster, fine. So, I think there are several options. I don’t think they are that far apart. I think it’s perfectly reasonable they could negotiate a deal among themselves. And I do think that in the fall, when Obamacare’s problems are going to really come to the surface again — spiking premiums and deductibles, and it gets worse every year — there will be less nostalgia for Obamacare then you have found in the current debate.”
Health Reform: The need for an overhaul of ObamaCare just got more acute, as a new survey shows that satisfaction rates among those enrolled in ObamaCare plans has taken a steep nose-dive this year amid premium hikes and reduced choices.
The new coverage of ObamaCare these days has been all about protests against repeal and the alleged increase in public support for the law.
But a survey of actual ObamaCare customers released this week paints an entirely different picture.
It found that just 22% of the 44,200 ObamaCare enrollees polled rate their health plan as good to excellent. That’s down from 77% who gave their ObamaCare plans high marks last year.
The reason for the sharp decline was higher premiums, worse service and lack of choice. The survey, conducted by Black Book Market Research, found that 96% reported a decline in customer service support, 90% noted premium increases, 80% said their plans had narrower provider networks, and 77% said their plans’ benefits had been trimmed. Nearly two-thirds (61%) complained about lack of competitors in their market.
In other words, the collapse of competition in the ObamaCare exchanges — which left five states and a third of U.S. counties with only one ObamaCare insurer — has led to the rapid deterioration in quality.
Black Book managing partner Douglas Brown says that the remaining plans “failed to congruently ramp up member services support to process claims, respond to enrollment issues, answer provider questions, denials, authorizations, and payment.” Read the rest of this entry »
Sara Gonzales reports: The Washington Post marked the end of the Obama administration with a list Thursday that likely didn’t please the outgoing president’s supporters.
For the last five years, the Post has made its political Fact Checker a staple of the publication. Ranked by “Pinocchios,” contenders receive one Pinocchio for a little lie and can earn up to four Pinocchios for the most outrageous of fibs.
Though the Post ran its trademark Fact Checker during President Barack Obama’s first campaign, it wasn’t until 2011 that it became a fixture there, so admittedly the publication missed some blatant dishonesty.
Included on the list, unsurprisingly, was Obama’s statement to the American public while rallying for Congress to pass his signature health-care legislation, Obamacare: “If you like your health care plan, you can keep it.”
“If you like your health-care plan, you can keep it”
This memorable promise by Obama backfired on him in 2013 when the Affordable Care Act went into effect and at least 2 million Americans started receiving cancellation notices. As we explained, part of the reason for so many cancellations is because of an unusually early (March 23, 2010) cutoff date for grandfathering plans — and because of tight regulations written by the administration. So the uproar could be pinned directly on the administration’s own actions.
Another whopper was Obama’s claim that all but 10 percent of the federal deficit was due to former President George W. Bush’s policies. Pushing back against criticisms of running up the deficit at an unparalleled rate with stimulus packages and bailouts, Obama made this claim during his 2012 campaign.
“90 percent of the budget deficit is due to George W. Bush’s policies”
During the 2012 campaign, Obama repeatedly reminded voters that he became president during a grim economic crisis. But he went too far when he claimed that only 10 percent of the federal deficit was due to his own policies. About half of the deficit stemmed from the recession and forecasting errors, but a large chunk (44 percent in 2011) were the result of Obama’s actions. At another point, Obama also falsely suggested that the Bush tax cuts led to the Great Recession.
And throughout Obama’s two terms in office, he has been quick to dismiss clear acts of terrorism — using phrases like “workplace violence” or blaming a YouTube video for an attack on the American consulate in Benghazi, Libya. The Post also included his categorization of the Benghazi attack as “an act of terror” and his reference to ISIS as a “JV team.”
President Obama entered office in 2009 with the twin goals of expanding the role that government plays in the lives of individuals and businesses and proving to Americans that the government could be trusted to achieve big things. He was only half successful.
…Through sweeping legislation and strong-armed use of executive power, Obama broadened the reach of government more than any president since Lyndon Johnson. Congress passed a national healthcare program, ramped up regulation of the financial sector, and spent hundreds of billions of dollars on infrastructure and alternative energy projects.
“As the Obama epoch wanes, trust in government has reached historic lows. A Pew poll last fall found that just 19 percent of Americans said they could trust the government to do the right thing most of the time — a lower percentage than during Watergate, Vietnam or the Iraq War.”
Rules issued by his administration now determine what type of health insurance everyone must have and how many miles per gallon their cars will need to average. Other rules, such as a far-reaching plan to curb carbon emissions, await legal challenges before formal implementation.
So Obama undoubtedly moved the ball down the field for liberalism, but the gulf between his promises and the reality of what was implemented dramatically hardened public skepticism about government. Under Obama, the nation found out that “shovel ready” stimulus projects weren’t shovel ready, and discovered that they were not allowed to keep the doctors and health insurance that they liked.
As the Obama epoch wanes, trust in government has reached historic lows. A Pew poll last fall found that just 19 percent of Americans said they could trust the government to do the right thing most of the time — a lower percentage than during Watergate, Vietnam or the Iraq War.
James C. Carpetta and Scott Gottlieb write: Donald Trump announced this week that he had chosen Rep. Tom Price (R., Ga.), a leader in the efforts to replace ObamaCare, to be his secretary of Health and Human Services. This is a consequential choice. Mr. Trump’s election, and the political realignment it represents, offers a generational opportunity to pursue a new direction for American health care. Mr. Price will now be leading the charge.
The new system should be fully consumer driven, empowering individuals to be the surveyors and purchasers of their care. Past reforms in this direction became stilted and ultimately incomplete, but the current moment offers a chance to truly rebuild from the ground up. If Messrs. Trump and Price want to make the most of this short window, they should keep four central reforms in mind.
1. Provide a path to catastrophic health insurance for all Americans. There’s ample evidence that enrollment in insurance doesn’t always lead to improvements in health—but access to health insurance is important nonetheless. A 2012 study from the National Bureau of Economic Research found higher insurance enrollment from reforms in Massachusetts led to better results in several measures of physical and mental health.
Health insurance is also important for financial security. The ObamaCare replacement should make it possible for all people to get health insurance that provides coverage for basic prevention, like vaccines, and expensive medical care that exceeds, perhaps, $5,000 for individuals.
Those Americans who don’t get health insurance through employers, or Medicare and Medicaid, should be eligible for a refundable tax credit that can be used to enroll in a health-insurance plan. The credit would be set at a level comparable to the tax benefits available to individuals with employer-sponsored insurance plans. The subsidy would be enough to make a basic level of catastrophic coverage easily affordable for all Americans.
2. Accommodate people with pre-existing health conditions. The price of insurance naturally reflects added risk. That’s why beach houses cost more to insure than a typical suburban home. Yet there is a reasonable social consensus that people should not be penalized financially for health problems that are largely outside of their control.
So as long as someone remains insured, he should be allowed to move from employer coverage to the individual market without facing exclusions or higher premiums based on his health status. If someone chooses voluntarily not to get coverage, state regulation could allow for an assessment of the risk when the person returns to the market. Read the rest of this entry »
When it comes to the Affordable Care Act, nearly every stakeholder involved has voted with their feet. Consumers, providers, and even the insurers who helped create Obamacare to profit from a government mandate have all begun to flee from it.
Edward Morrissey writes: The 2016 election cycle will come to a close on Tuesday, and its conclusion will probably have little significance on the issues that face the nation. The three months in which Republicans and Democrats (and others) fought for the presidency focused almost entirely on personalities and personal qualities rather than substantive policy.
Republicans want people to vote to keep Hillary Clinton and vast corruption out of the White House, while Democrats argue that voters have to block a temperamentally unsuited and unprepared Donald Trump from having his finger on the nuclear button. Independent candidates Gary Johnson and Jill Stein want voters to protest against the two-party system by supporting their campaigns.
That will be America’s misfortune because we do face serious choices in the next four years – and this election will tell us nothing about the direction voters want about any of them. The stakes of this election cycle will only determine which candidate turned out to be least unfavorable on personal qualities.
On issues such as the war on ISIS, the economy, and national debt, both major-party nominees offered nothing but vague ambiguities while focusing almost all of their time and attention on each other’s peccadilloes. No matter the result, the winner will have no claim on a mandate from the electorate on almost any policy direction.
Rather than look to the election results for policy direction on one key issue, perhaps the next president should look to the voters themselves. When it comes to the Affordable Care Act, nearly every stakeholder involved has voted with their feet. Consumers, providers, and even the insurers who helped create Obamacare to profit from a government mandate have all begun to flee from it.
Late last week, earnings reports from major health insurers Aetna and UnitedHealth showed a greater-than-expected decline in enrollments from an already disappointing 2016 result. Jed Graham reported at Investors Business Daily that over 113,000 enrollees had stopped paying their premiums in the third quarter, a 6.6 percent drop that left a combined enrollment of 1.6 million consumers. The two companies account for a sixth of all ACA exchange enrollees, and the trend indicates that national Obamacare enrollment has dropped below 10 million – again. Read the rest of this entry »
It has not worked all that well, and that is at least partly to blame for soaring premiums next year on some of the health law’s insurance exchanges.
The full weight of the penalty will not be felt until April, when those who have avoided buying insurance will face penalties of around $700 a person or more. But even then that might not be enough: For the young and healthy who are badly needed to make the exchanges work, it is sometimes cheaper to pay the Internal Revenue Service than an insurance company charging large premiums, with huge deductibles.
“In my experience, the penalty has not been large enough to motivate people to sign up for insurance,” said Christine Speidel, a tax lawyer at Vermont Legal Aid.
Some people do sign up, especially those with low incomes who receive the most generous subsidies, Ms. Speidel said. But others, she said, find that they cannot afford insurance, even with subsidies, so “they grudgingly take the penalty.”
The I.R.S. says that 8.1 million returns included penalty payments for people who went without insurance in 2014, the first year in which most people were required to have coverage. A preliminary report on the latest tax-filing season, tabulating data through April, said that 5.6 million returns included penalties averaging $442 a return for people uninsured in 2015. Read the rest of this entry »
Official response to @GovWaste ethics complaint about Senate calling itself a small business to dodge Obamacare.
(Washington, D.C.) – The Senate Ethics Committee has cavalierly dismissed a June 25, 2015 complaint from the Council for Citizens Against Government Waste (CCAGW) and nine other signatories alleging that senators or Senate employees committed fraud and broke federal laws when they submitted applications to the Washington, D.C. Small Business Exchange, claiming status as a “small business.” As a result, rather than being subjected to the Obamacare healthcare exchange as individuals, senators and their staff were able to buy insurance and qualify for taxpayer-funded subsidies as employer and employees. The September 21, 2016 response from the committee stated that the allegations had been “carefully evaluated” and “that there had been no violation of Senate Rules.” The committee made clear that it would not reconsider its decision or take any further action.
“The Senate and Senate offices are plainly not small businesses. The falsified documents were a blatant attempt by senators to shield themselves from the harmful effects of Obamacare. This committee’s arbitrary and capricious decision is another sad example of why taxpayers have such contempt for their elected officials.”
The Affordable Care Act (ACA), better known as ObamaCare, required members of Congress and their staff to enroll in individual plans through the new healthcare exchanges. As open enrollment approached in 2014, members and staff realized that by enrolling as individuals, they would no longer receive generous taxpayer-funded contributions to help pay their insurance premiums as they had for decades under the Federal Employees Health Benefits Program. They would instead only qualify for subsidies if their household income was less than 400 percent of the federal poverty level, just like tens of millions of other Americans who had to purchase insurance in the individual market.
To get around this problem, senators from both sides of the aisle worked with the White House and the Office of Personnel Management to convince the agency to issue special guidance permitting them and their staff to enroll in the Small Business Health Options Program (SHOP), which was also created under Obamacare. The applications that were submitted to the D.C. Small Business Exchange farcically claimed that the Senate and/or each Senate office is a small business with fewer than 50 employees. The employer was identified as “Twenty Congress,” and the statements were sworn to be true. Read the rest of this entry »
Lawmakers, press and the public need to understand the strength of this “doubling down” phenomenon of and guard against it when adopting policy positions.
Charles Blahous writes: Frustrated voters often wonder why, after electing well-intended lawmakers to office, so many subsequent government economic policies prove damaging. Part of the answer lies in the nearly irresistible public policy dynamic of “doubling down” on mistakes. Lawmakers, press and the public need to understand the strength of this phenomenon and guard against it when adopting policy positions.
In simplified form, the dynamic runs as follows:
1) Government, in response to a perceived need, takes action to meet that need in a manner that distorts economic behavior and produces predictable adverse effects.
2) The public consequently experiences problems and expresses concern.
3) The problems themselves become justification for additional government actions that worsen the distortions and the resultant problems.
4) As problems worsen, the public more urgently demands corrective actions.
5) Steps #3 and #4 are repeated ad infinitum.
We have seen and continue to see this dynamic operate in many areas of economic policy. To cite but a few:
Worker Health Benefits
With the best of intentions the federal government has long exempted worker compensation in the form of health benefits from income taxation. Lawmakers aren’t scaling back the flawed policy that fuels these problems.There is wide consensus among economists that the results of this policy have been highly deleterious. As I have written previously, this tax exclusion “depresses wages, it drives up health spending, it’s regressive, and it makes it harder for people with enduring health conditions to change jobs or enter the individual insurance market.” Lawmakers have reacted not by scaling back the flawed policy that fuels these problems, but rather by trying to shield Americans from the resulting health care cost increases. This has been done through the enactment of additional health programs and policies that further distort health markets and which themselves drive personal and government health spending still higher.
Federal Health Programs
The federal government has enacted programs such as Medicare and Medicaid to protect vulnerable seniors and poor Americans from ruinous health care costs.
The positive benefits of these programs co-exist with well-documented adverse effects. For example, it is firmly established that creating these programs pushed up national health spending, driving health costs higher for Americans as a whole. Consumer displeasure over these health cost increases subsequently became a rationale for still more government health spending, rather than reducing government’s contribution to the problem. Examples of this doubling down include the health exchange subsidies established under the Affordable Care Act (ACA), as well as its further expansion of Medicaid. As the problem of high health care costs remains, proposals have proliferated to expand government’s role still further; for example, some have proposed making Medicare available to the entire US population. Though intended to provide relief, such legislation inevitably adds to national health spending growth. Read the rest of this entry »
RADDATZ: What’s broken in Obamacare that needs to be fixed right now, and what would you do to fix it?
CLINTON: Well, I would certainly build on the successes of the Affordable Care Act and work to fix some of the glitches that you just referenced. Number one, we do have more people who have access to health care. We have ended the terrible situation that people with pre-existing conditions were faced with where they couldn’t find at any
affordable price health care. Women are not charged more than men any longer for our health insurance. And we keep young people on our policies until they turn 26. Those are all really positive developments. But, out-of-pocket costs have gone up too much and prescription drug costs have gone through the roof. And so what I have proposed, number one, is a $5,000 tax credit to help people who have very large out-of-pocket costs be able to afford those. Number two, I want Medicare to be able to negotiate for lower drug prices just like they negotiate with other countries’ health systems. We end up paying the highest prices in the world. And I want us to be absolutely clear about making sure the insurance companies in the private employer policy arena as well as in the affordable care exchanges are properly regulated so that we are not being gamed. And I think that’s an important point to make because I’m going through and analyzing the points you were making, Martha. We don’t have enough competition and we don’t have enough oversight of what the insurance companies are charging everybody right now.
RADDATZ: But you did say those were glitches.
RADDATZ: Just glitches?
CLINTON: — Well, they’re glitches because —
RADDATZ: –Twenty-seven percent in the last five years, deductibles up 67 percent?–
CLINTON: It is. Because part of this is the startup challenges that this system is facing. We have fought as Democrats for decades to get a health care plan. I know. I’ve got the scars to show from the effort back in the early ‘90s. We want to build on it and fix it. And I’m confident we can do that. And it will have effects in the private market. And one of the reasons in some states why the percentage cost has gone up so much is because governors there would not extend Medicaid. And so people are still going to get health care, thankfully, in emergency rooms, in hospitals. Those costs are then added to the overall cost, which does increase the insurance premiums.
Enrollment is falling short. The Obama administration projects that it will have roughly 10 million people on the state and federal exchanges by the end of next year, a staggering climb-down from prior expectations.
Rich Lowry writes: For the press, the debate over ObamaCare is over. There may be a few proverbial Japanese soldiers wandering on isolated islands yammering on about the failure of ObamaCare, but word will eventually filter down to them, too. This assumption is so deeply embedded that it is impervious to new evidence that ObamaCare is an unwieldy contraption that is sputtering badly.
“ObamaCare is a monopoly. It gives money to people to buy its product and through the individual mandate punishes those who don’t. And yet it’s still having trouble making the sale.”
Yes, ObamaCare has covered more people and has especially benefited those with pre-existing conditions (to be credible, Republican replacement plans have to do these things, as well), but the program is so poorly designed that, surely, even a new Democratic president will want to revisit it to try to make it more workable.
“Premiums are rising. Not everywhere, but steeply in some states. Indiana is down 12 percent, but Minnesota is up 50 percent.”
Enrollment is falling short. The Obama administration projects that it will have roughly 10 million people on the state and federal exchanges by the end of next year, a staggering climb-down from prior expectations. The Congressional Budget Office had predicted that there would be roughly 20 million enrollees.
Premiums are rising. Not everywhere, but steeply in some states. Indiana is down 12 percent, but Minnesota is up 50 percent. Health care expert Robert Laszewski points out that it’s the insurers with the highest enrollment and therefore the best information about actual enrollees that have tended to request the biggest increases — a sign that they don’t like what they’re seeing in their data. Read the rest of this entry »
AWR Hawkins writes: When the Supreme Court of the United States (SCOTUS) ruled that every state must recognize same sex marriages, they used a basis for judgement that will not easily stop at same sex marriage. In fact, it is a basis for judgement that should offer itself to national reciprocity of concealed carry permits and permit holders.
Under the Due Process Clause of the Fourteenth Amendment, no State shall “deprive any person of life, liberty, or property, without due process of law.” The fundamental liberties protected by this Clause include most of the rights enumerated in the Bill of Rights.
Rep. Brian Babin (R-Texas) said that his SCOTUScare Act would make all nine justices and their employees join the national healthcare law’s exchanges.
“As the Supreme Court continues to ignore the letter of the law, it’s important that these six individuals understand the full impact of their decisions on the American people. That’s why I introduced the SCOTUScare Act to require the Supreme Court and all of its employees to sign up for ObamaCare.”
— Rep. Brian Babin
“As the Supreme Court continues to ignore the letter of the law, it’s important that these six individuals understand the full impact of their decisions on the American people,” he said.
“That’s why I introduced the SCOTUScare Act to require the Supreme Court and all of its employees to sign up for ObamaCare,” Babin said.
“They deserve an Olympic medal for the legal gymnastics.”
“By eliminating their exemption from ObamaCare, they will see firsthand what the American people are forced to live with,” he added.
His move follows the Supreme Court’s ruling Thursday morning that upheld the subsidies under ObamaCare that are provided by the government to offset the cost of buying insurance. Read the rest of this entry »
“If only there was some branch of government designed to review legislative actions, thwarting the intentions of Congress if they conflict with the law… oh, wait, that branch does exist…”
Robby Soave writes: In his 1946 essay, Politics and the English Language, George Orwell observed that “the slovenliness of our language makes it easier for us to have foolish thoughts.” Today is Orwell’s birthday; it’s also the day the Supreme Court released its 6-3 decision in King v. Burwell, which preserves the Affordable Care Act at the expense of plain English.
“The majority opinion explains away this blatant contradiction by expressing confidence that architects of the law intended something other than what they wrote—the opposite of it, in fact.”
The majority, led by Chief Justice John Roberts, ruled that the provision of the law mandating an “Exchange established by the State” should be interpreted to include an Exchange not established by any state, but instead by an agency of the federal government, the U.S. Health and Human Services Department.
The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal
Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.…
Faced with overwhelming confirmation that “Exchange established by the State” means what it looks like it means, the Court comes up with argument after feeble argument to support its contrary interpretation. None of its tries comes close to establishing the implausible conclusion that Congress used “by the State” to mean “by the State or not by the State.”
The majority opinion explains away this blatant contradiction by expressing confidence that architects of the law intended something other than what they wrote—the opposite of it, in fact. Intent should trump plain English—even when the two directly oppose each other—writes Roberts, because the Court’s job is to defer to the will of lawmakers, and even contort logic to assist them, “if at all possible”: Read the rest of this entry »
The ruling marks the second time President Barack Obama’s signature domestic policy achievement has survived a near-death experience in the courts, and leaves the law on a firmer footing for the remainder of his time in office.
The court ruled contested language in the 2010 health-care law allows the administration to offer subsidies in the form of tax credits to people in all states, including those who buy health coverage on the federal insurance site HealthCare.gov.
Roughly 6.5 million Americans in around three dozen states stood to lose credits if the Supreme Court had ruled against the administration. The court was deciding whether the tax credits could only go to people in the minority of states running their own online insurance marketplaces, where people compare policies and apply for coverage.
At issue was language in the Affordable Care Act that says insurance subsidies are available for coverage purchased on an insurance-exchange “established by the state.”
Challengers who sued the administration—four residents of Virginia—argued the wording of the law authorized insurance subsidies only when an individual buys coverage on a state-run insurance site. Read the rest of this entry »
Bigger insurance, bigger medicine, and a health consolidation frenzy
The five largest commercial health insurers in the U.S. have contracted merger fever, or maybe typhoid. UnitedHealthis chasing Cignaand even Aetna; Humanahas put itself on the block; and Anthem is trying to pair off with Cigna, which is thinking about buying Humana. If the logic of ObamaCare prevails, this exercise will conclude with all five fusing into one monster conglomerate.
“The danger is that ObamaCare is creating oligopolies, with the predictable results of higher costs, lower quality and less innovation.“
This multibillion-dollar M&A boom is notable even amid the current corporate-financial deal-making binge, yet insurance is only the latest health-care industry to be swept by consolidation. The danger is that ObamaCare is creating oligopolies, with the predictable results of higher costs, lower quality and less innovation.
“More important, the economics of ObamaCare reward scale over competition. Benefits are standardized and premiums are de facto price-controlled.”
The business case for the insurance tie-ups among the big five commercial payers, which will likely leave merely three, is straightforward. Credit is historically cheap, and the insurers have built franchises in different areas that could be complementary. As for antitrust, selling coverage to employers doesn’t overlap with, say, managing Medicaid for states. (Expect some of the Blue CrossBlue Shield nonprofits to hang for-sale signs soon for the same reasons.)
More important, the economics of ObamaCare reward scale over competition. Benefits are standardized and premiums are de facto price-controlled. With margins compressed to commodity levels, buying more consumers via mergers is simpler than appealing to them with better products, to the extent the latter is still legal. Read the rest of this entry »
Stephen Dinan reports: Obamacare exchange customers could see a significant spike in their premiums over the next few years as insurers face pressures from both the government and the marketplace, the Congressional Budget Office said Monday in a new analysis finding Obamacare is both cheaper and less comprehensive than predicted.
The CBO said the exchanges and other new medical coverage under the Affordable Care Act will cost the government slightly more than half a trillion dollars over the next five years…(read more)
What happens to the subsidies should not be the court’s concern. The only question that matters in King is whether the administration used the IRS to rewrite a law Congress passed
John Davidson writes: The U.S. Supreme Court will hear oral arguments today in what is probably one of the most straightforward questions of statutory interpretation ever to come before the court.
“Over and over, the law says premium subsidies are only to be disbursed ‘through an Exchange established by the State.’ It says this nine times.”
At the heart of King v. Burwell is whether the text of the Affordable Care Act (ACA) means what it says. Specifically, the case hinges on what the word “state” means. Does it mean one of the fifty states, or does it mean the states and the federal government?
At issue are the tax credits (subsidies) the law doles out to help Americans pay for health insurance premiums sold through the exchanges. Over and over, the law says premium subsidies are only to be disbursed “through an Exchange established by the State.” It says this nine times.
“Their assumption was that states would set up the exchanges and federal subsidies would flow through them, as described in the law. When 37 states opted instead to let the federal government set up exchanges, it exposed the weakness of the law’s reliance on cooperative federalism.”
If Obamacare is to be faithfully executed, say the challengers in King, then federal subsidies for health insurance are not allowed in the 37 states that failed or refused to set up a state-based exchange and instead have federal “default” exchanges. Two different sections of the law authorize exchanges and distinguish in statute between an exchange a state has established (section 1311) and an exchange the Secretary of Health and Human Services has established in states that fail to create one (1321). Subsidies are available only to those who purchase coverage on a state-based—section 1311—exchange.
Cooperative Versus Competitive Federalism
Suffice to say that Obamacare’s exchanges are built on the idea of cooperative federalism: the federal government, unable to simply commandeer state agencies, invites states to implement federal policies in return for federal funding or favorable regulatory treatment.
States carry out a great many federal policies and programs using cooperative federalism, like Medicaid, Common Core, and a host of environmental regulations.
“It comes down to a question about the rule of law and whether, in an advanced administrative state, laws can have a fixed meaning.”
States carry out a great many federal policies and programs using this scheme, like Medicaid, Common Core, and a host of environmental regulations. Because Obamacare meddles so much with health insurance markets, which states traditionally regulated, it relies on the practice of cooperative federalism to an astonishing degree. Congress had hoped to induce states to cooperate by making subsidies contingent on states setting up their own exchanges—a policy proposition that, like Medicaid expansion, could bring millions or even billions of federal dollars into a state. At least, that’s what the Kingchallengers contend.
That’s where Obamacare’s legislative history comes into play. When Senate Democrats passed the ACA in December 2010, they hadn’t a vote to spare. When Republican Scott Brown won a special election the very next month to fill the seat vacated by Sen. Edward Kennedy’s death, Senate Republicans gained enough votes to filibuster a conference report on the House and Senate bills. Congressional Democrats therefore had to resort to the budget reconciliation process to pass the final version of the law: they opted for an imperfect bill, one that didn’t go as far as many Democrats had originally wanted, instead of no bill at all.
“Without the tax credits, insurance-industry officials say, the individual insurance markets in those states are likely to start collapsing, as many people drop coverage they can no longer afford, leaving only those less-healthy consumers who value insurance because they’re likely to need care…”
The ruling could come in June—but insurers must make regulatory filings before then about their 2016 plans. Utah’s Arches Health Plan, for one, says it may propose an array of insurance product designs this spring. Then, depending on what the court decides, the insurer would be poised to drop some of them before they’re finalized with regulators and offered to consumers. The insurer may also come up with two different sets of rates for next year, one for each potential court outcome.
“…That would drive up premiums, because insurers would raise rates to cover the costs of this smaller, sicker pool. Then even more people would likely refuse the ever-more-expensive coverage.”
“We’re hedging our bets right now,” says Ferris W. Taylor, chief strategy officer.
The Supreme Court case focuses on federal subsidies that help lower-income consumers purchase plans. The plaintiffs argue that these tax credits aren’t authorized by the law in states where the federal government provides the online insurance exchange—which total as many as 37. Avalere Health, a consulting firm, estimated that around 7.45 million people could lose the federal financial help if the court rules against the subsidies.
“What happens is, you go into a classic death spiral…It doesn’t hang together.”
— Janie Miller, chief executive of nonprofit insurer Kentucky Health Cooperative Inc
Without the tax credits, insurance-industry officials say, the individual insurance markets in those states are likely to start collapsing, as many people drop coverage they can no longer afford, leaving only those less-healthy consumers who value insurance because they’re likely to need care. That would drive up premiums, because insurers would raise rates to cover the costs of this smaller, sicker pool. Then even more people would likely refuse the ever-more-expensive coverage.
An analysis by researchers at the Urban Institute, a liberal-leaning policy research group, projected that in states where the subsidies disappeared, individual insurance premiums would go up 35% on average in 2016. That increase would affect all consumers purchasing their own plans in those states, including people who didn’t buy through the government marketplace, the researchers suggested. The financial blow would be particularly tough for smaller insurers that can’t dilute the impact with other, unaffected business, like employer and Medicare plans.
“The impact would be substantial enough that I would expect many carriers to consider pulling from the market. There’s a question, if the subsidies are struck down, if it’s an insurable market.”
— Tom Snook, an actuary with consultants Milliman Inc. who is working with a number of insurers offering exchange plans
“What happens is, you go into a classic death spiral,” says Janie Miller, chief executive of nonprofit insurer Kentucky Health Cooperative Inc. “It doesn’t hang together.” Her nonprofit’s home state wouldn’t feel the direct impact of a ruling, because Kentucky has its own exchange. But the insurer has said that next year it will go into West Virginia, where the subsidies could potentially be affected. Ms. Miller said the co-op would have to re-evaluate its expansion plans if the court struck down tax credits there. Read the rest of this entry »
The GOP needs a politically defensible alternative if the Supreme Court overturns federal-exchange subsidies
Phil Gramm writes: On March 4 the Supreme Court will hear oral arguments in King v. Burwell, with a decision expected in late June. If the court strikes down the payment of government subsidies to those who bought health insurance on the federal exchange, Republicans will at last have a real opportunity to amend ObamaCare. Doing so, however, will be politically perilous.
“Of all potential Republican proposals, the freedom option seems the most likely to garner the six Democratic votes in the Senate needed to break a filibuster, pass the bill and put it on the president’s desk.”
The language of the Affordable Care Act states that subsidies should only be paid through state exchanges. The bill’s authors perhaps believed that pressure from citizens and the health-care providers who would benefit would entice states to set up exchanges. But, faced with mounting technical problems in setting up the exchanges, the Obama administration decided—legally or illegally—to allow subsidies to be paid through a federally run exchange. Therefore, political pressure that might have convinced states to set up exchanges never developed.
“The opposition would come solely from those who understand that ObamaCare is built on coercion—and that unless young, healthy Americans are forced into the program to be exploited with above-market insurance rates, the subsidies will prove unaffordable. That will be an exceedingly difficult case to make to the public.”
The political pressures to set up state exchanges if federal subsidies are now struck down will be enormous. The Kaiser Family Foundation used Congressional Budget Office data to estimate that 13 million people will receive subsidies in 2016 through the federal exchange. If the Supreme Court strikes down these subsidies, 13 million people would lose an average of $4,700 a year, and health-care providers would certainly fight to protect some $60 billion a year in subsidies.
The president’s most likely response to an adverse court decision would be to refuse to work with Congress to fix ObamaCare. Instead he will likely mount an effort to force the 37 states now using the federal exchange to set up state exchanges to qualify for the subsidies. His administration could make it easy for states to continue to use the federal exchange while nominally taking ownership through a shell state entity. Ten states already have some form of partnership with the federal exchange.
Absent a strong Republican alternative, the president’s strategy would unleash powerful political pressure on Republican governors and legislators and force them to establish state exchanges. Such a result would saddle Republicans with a partial ownership of ObamaCare, alienating their political base and producing substantial fallout in the 2016 elections.
Republicans have every incentive to come up with an appealing menu of health care policy alternatives to sell voters. But the notion that they need to assemble these ideas into a single Washington-centric reform plan that can be plugged into the void left by Obamacare’s demise is a puzzling one.
“They don’t need a breakthrough. The fact is, Republicans have offered a number of plans with varying levels of free-market reforms, but Americans aren’t in the mood for another wide-ranging effort from Washington.”
“The president’s comment reflects his inability to grasp what a marketplace actually is, but it’s also a reminder that one of the most distasteful aspects of ACA is its centralized structure—which, for most liberals, was the point of the project.”
What does a contrived “marketplace” built on cronyism, coercion, and rent seeking, paid for by tax subsidies and governed by a regulatory structure that makes any genuine competitive pricing impossible need to be successful? More top-down bureaucratic management, of course.
The president’s comment reflects his inability to grasp what a marketplace actually is, but it’s also a reminder that one of the most distasteful aspects of ACA is its centralized structure—which, for most liberals, was the point of the project. Even voters who aren’t directly hurt by ObamaCare tend to dislike the idea of DC dictating what their coverage looks like. For many voters, ObamaCare represents every problem with health care in the United States. Gallup’s recent polling found that Americans now say that the “biggest problem” in America is “the government.” And they’re talking about federal government. Read the rest of this entry »
A true legislative alternative to ObamaCare would support physician ownership of independent medical practices, and preserve local competition between doctors and choice for patients.
Scott Gottlieb writes: Here’s a dirty little secret about recent attempts to fix ObamaCare. The “reforms,” approved by Senate and House leaders this summer and set to advance in the next Congress, adopt many of the Medicare payment reforms already in the Affordable Care Act. Both favor the consolidation of previously independent doctors into salaried roles inside larger institutions, usually tied to a central hospital, in effect ending independent medical practices.
“ObamaCare has accelerated many of the detrimental trends doctors see in their profession, and introduced new ones.”
Republicans must embrace a different vision to this forced reorganization of how medicine is practiced in America if they want to offer an alternative to ObamaCare. The law’s defenders view this consolidation as a necessary step to enable payment provisions that shift the financial risk of delivering medical care onto providers and away from government programs like Medicare. The law’s architects believe that doctors, to better bear financial risk, need to be part of larger, and presumably better-capitalized institutions. Indeed, the law has already gone a long way in achieving that outcome.
“Reformers in Washington need to do a better job of explaining how market-based alternatives to ObamaCare are a better outcome for the structure and delivery of health care. And how they intend to preserve the entrepreneurship, autonomy and physician ownership that have long been the hallmark of American medicine.”
A recent Physicians Foundation survey of some 20,000 U.S. doctors found that 35% described themselves as independent, down from 49% in 2012 and 62% in 2008. Once independent doctors become the exception rather than the rule, the continued advance of the ObamaCare agenda will become virtually unstoppable. Read the rest of this entry »
Philip Klein writes: This month, two developments have shaken the conventional wisdom that repealing President Obama’s healthcare law is an impossibility.
First, Republicans scored a historic election victory, not only taking control of the Senate but likely winning the most House seats since 1928 — the year before Ernest Hemingway published A Farewell to Arms.
Second, the Supreme Court took up another case on Obamacare, and if the justices rule against the administration, it would force a re-opening of the law.
“Benson’s fear is that if the Supreme Court rules against the Obama administration, whatever the merits of the decision, liberal media would portray it as a right-wing court ripping health insurance away from millions over a silly typo out of animosity for the poor. And if Republicans didn’t pass a simple fix to change the wording, they’d be accused of mass murder.”
This doesn’t even account for the recently released videos of one of Obamacare’s main architects, MIT economist Jonathan Gruber, conceding that Democrats misled the public to get the legislation passed, benefiting from “the stupidity of the American voter.”
“The problem for Republicans — which I tried to convey to Benson in a spirited exchange that followed — is that going along with such a “fix” would be rightly seen as a complete surrender by Republicans that would alienate conservatives and enshrine Obamacare forever.”
“The Affordable Care Act demonstrates the phenomenon. This landmark piece of social legislation extended free or highly subsidized health insurance to millions of additional Americans. But it also, therefore, increases the loss of benefits to low-income workers after a raise.“
Sarah Hurtubise writes: Americans without health insurance have never seen Obamacare is such a negative light.
“The Obama administration’s outreach efforts to educate the uninsured on Obamacare also appear to be falling flat.”
Kaiser Family Foundation’s monthly health tracking poll found that in February, 56 percent of the uninsured view the Affordable Care Act unfavorably.
The percentage of uninsured with a positive view reached its lowest point since Kaiser began tracking reactions in March 2010 when Obamacare was passed into law. Just 22 percent of uninsured Americans have a generally favorable opinion about the law.
This pessimistic outlook isn’t all that surprising. Health industry experts have found that exchanges are more often than not selling coverage to those that were previously insured. According to reports, majority of exchange customers either had their previous coverage cancelled due to Obamacare regulations or switched over willingly to access premium subsidies.
How the president’s health reform will harm the working poor
For City Journal,Joel Zinbberg writes: The nonpartisan Congressional Budget Office (CBO) recently projected that the Affordable Care Act (ACA)—better known as Obamacare—will lead Americans to reduce the hours they work by 2 percent. This will reduce the overall labor supply by the equivalent of 2.5 million full-time workers over the next decade. The decrease in labor supply will occur because the ACA mandates that everyone buy health insurance and provides large subsidies to low-income individuals and families to buy insurance on the new exchanges. As CBO director Douglas Elmendorf recently testified, “By providing heavily subsidized health insurance to people with very low income, and then withdrawing those subsidies as income rises, the act creates a disincentive for people to work.” Thanks to this implicit tax on extra work, spending a few more hours on the job will, at the margins, result in minimal or even negative income for those qualifying for the ACA’s subsidies. The CBO reports that some will choose to work fewer hours in order to qualify for a subsidy. Others will choose not to work at all.
Normally, when the well-respected CBO finds that a law will significantly decrease the labor supply and harm economic growth, it becomes a great embarrassment to the law’s authors. But the White House insists that critics have misconstrued the CBO report. It’s not a bad thing if people work less, they say. On the contrary, the law will give workers the flexibility to leave jobs that they’re currently “locked” into because of their health-insurance benefits. According to Jason Furman, Chairman of the Council of Economic Advisors, the law will alleviate such “job lock,” giving workers the freedom to work less, enjoy more family time, or start a new business.
Late this afternoon, the Obama administration decided to delay for yet another year the health-care mandate that companies provide health insurance to their employees, this time to 2016.
“They are getting tremendous complaints from small business that they can’t do this. It will destroy their business, and that’s why it’s a delay. It’s a political delay,” Krauthammer said. “I think in the end they are going to decide they’re going to have to cancel it because there is no way it will not increase joblessness on top of the 2 million who will be leaving on their own.”