Cautionary Notes from Obamacare’s High-Risk Pool Debacle

Several stories over the past month have focused on developments in Obamacare’s high-risk pool program for individuals with pre-existing conditions.  The Administration has released updated totals of enrollment in the program, and the Government Accountability Office released its own report analyzing the program’s first year of operations.

Two important themes have emerged.  First, the low enrollment in the program should serve as some indication that the problem of individuals with pre-existing conditions who cannot obtain insurance, while significant, is not nearly as dire as liberals would suggest.  Earlier this year, for instance, the Administration released a report alleging that 129 million individuals had pre-existing conditions and “could be denied affordable coverage.”  In reality, however, only about 27,500 individuals were enrolled in the new federal high-risk pool as of June 30 – that’s only .02% of the total number of Americans the Administration claimed suffer from pre-existing conditions.  And even the Huffington Post admitted earlier this week that 98% of funds for the risk pool program have not been spent after nearly a full year of operations.

What’s just as interesting are the stories of the people who ARE enrolling in the new federal program.  The Huffington Post article discussed one individual with a pre-existing condition who was contemplating abandoning her private insurance to enroll in the government-run program.  Despite the fact that the new federal risk pool requires a six-month waiting period – designed to discourage individuals who have coverage now from dropping it – other stories have emerged of people leaving private coverage to enroll in the taxpayer-funded risk pool program.

Unfortunately, these kinds of stories could become all too common in future years, as Obamacare’s coverage expansions come online.  Low-income individuals may drop their private coverage to obtain “free” Medicaid funded by taxpayers.  Others may look to drop their private individual coverage to receive government subsidies on Exchanges.  And the biggest change of all could come when individuals and employers mutually collude to drop health insurance, because both the employee and employer will be better off (even though taxpayers will be on the hook for trillions more in insurance subsidies).

The stories outline above provide a clear indication that the phenomenon of “crowd-out” – that is, individuals dropping private coverage to obtain a taxpayer-funded benefit – clearly exists, and is bound to plague the launch of Obamacare’s insurance subsidies in 2014.  After all, one would hardly expect individuals with pre-existing conditions to want to drop their insurance coverage, yet this week’s stories indicate that some are doing just that.  And if even the sickest individuals are dropping coverage to obtain taxpayer-subsidized benefits, what leads Democrats to think that everyone else won’t just follow?

Democrats’ Hypocrisy on Beneficiary Lawsuits

Amidst the comparative quiet of the August recess this month have come developments in the Supreme Court cases collectively known as Maxwell-Jolly.  The cases, scheduled to be heard by the Court on the first day of its new term this October, involve whether Medicaid providers and beneficiaries have a private right of action (i.e., the right to sue) against state officials regarding reimbursement rates and beneficiary access.

Earlier this month, a group of Congressional Democrats – including Leaders Pelosi and Reid, and Chairmen Baucus and Harkin – filed an amicus brief with the Court asking them to sustain a private right of action, arguing that giving beneficiaries the right to sue states “provides impoverished Medicaid patients and the medical providers who serve them a means of redress in the court system that they would often not have in the political battles over budget cuts.”  Likewise, the New York Times editorial board supported a private right of action, arguing in a leader that “beneficiaries need the right to sue…so that they can force states to consider whether reducing provider payments will limit access to care.”

These comments by the Democrat leaders and the Times are certainly very interesting, seeing as how Obamacare explicitly DENIES Medicare patients the right to sue over restricted or denied access to care.  Specifically, Section 3403 of the statute prohibits lawsuits against the rulings of Obamacare’s new board of 15 unelected, unaccountable bureaucrats.  This provision denying judicial review was put into the law despite warnings from the Medicare actuary and others that the Medicare payment reductions in the law will be “difficult to achieve” and could cause severe access problems over the long term – precisely the issue the Democrat leaders cited as providing justification for Medicaid beneficiaries to sue.

What’s more, Medicaid providers and beneficiaries currently have a form of redress – they can (and have) utilized federal administrative processes through Washington to demand changes in state Medicaid programs.  Conversely, Obamacare prohibits BOTH judicial AND administrative review of the board of bureaucrats’ Medicare rulings – making the power of these unelected officials nearly absolute.

So why do Democrats claim to support allowing lawsuits for Medicaid patients, only to vote for a bill (now law) that denies Medicare patients – many of whom are also on Medicaid – the ability to sue to stop treatments being denied them by an unelected board?  If the Democrat leaders – and the New York Times – think access to care for Medicaid beneficiaries merits patients’ right to sue, why did they take that right away from Medicare beneficiaries, while at the same time imposing Medicare payment reductions that non-partisan experts believe will impede access to care?  Any way you slice it, these contradictory statements by Democrats on Maxwell-Jolly illustrate how Obamacare doesn’t even live up to the standards Democrats themselves have set.

Wisconsin Survey a Microcosm of Obamacare’s Flaws

Late last week, the governor’s office in Wisconsin released a report analyzing the impact of Obamacare on the state and its insurance markets.  To those who predicted that the law would result in higher premiums and individuals losing their current coverage, the results are not surprising:

Losing Coverage:  According to the report, “very few” Wisconsin residents will keep their current individual market coverage thanks to Obamacare’s restrictions.  Instead, 150,000 individuals will give up their current coverage to move to the government-regulated Exchanges.  An additional 100,000 individuals will lose access to employer-sponsored coverage, because the firms they work for will decide to drop coverage instead.

Mandates Raising Price of Insurance:  Nearly two in five (38%) participants in Wisconsin’s individual market will be forced to buy richer coverage than they have now, due to the new mandates and insurance restrictions included in Obamacare.

Higher Premiums:  Government mandates will raise individual market premiums for more than four in five participants – more than 41% of participants face premium increases of more than 50% before federal insurance subsidies are applied.

Winners and Losers:  Even AFTER federal insurance subsidies are applied, 59% of individual market participants will pay more – an average of nearly 31% more – for their coverage, so that a smaller minority can pay less.  To take one example, costs in the individual market for Wisconsin residents aged 19-29 will go up by a whopping 34%, so that costs for residents aged 55-64 can go down by $31, or a mere 1%.  And Wisconsin’s more than 5.5 million residents will pay higher federal taxes – on their drugs, income, and insurance premiums, to name but a few examples – so that only about 220,000 newly insured will receive taxpayer-financed insurance under Obamacare.

Government-Forced Insurance:  340,000 individuals in Wisconsin will obtain coverage under Obamacare, but that if the individual mandate were repealed (or struck down as unconstitutional), coverage would only increase by 60,000.  In other words, nearly 300,000 Wisconsin residents will obtain health coverage not because they want to purchase it, but because the federal government is forcing them to do so.

What IS surprising however is the fact that the report was commissioned last year by the Democrat then-Governor, and completed by Jonathan Gruber, who was a paid – though undisclosed – consultant on Obamacare itself.  If even an Obamacare supporter reaches conclusions this ominous about the impact of the statute on one state, how can Democrats continue to defend their flawed, 2700-page law?

More Bad News for Obamacare Supporters

The Kaiser Family Foundation is out with their latest monthly health care tracking poll, and the results contain some revealing findings.  Overall, those who believe they will be better off thanks to Obamacare has fallen to all-time lows – even the uninsured don’t believe they’ll benefit – while concerns about premium increases remain high:

Support Slipping:  Support for the law has dropped to 39%, down seven points from 46% in April 2010, just after the law passed.  This flies in the face of remarks last year by Democrats, who said that “by November [2010] those who voted for [Obamacare] will find it an asset and those who voted against it will find it a liability.”

Americans Don’t Think They’ll Be Better Off:  The percentage of individuals thinking they will be better off under the law dropped to 24%, an all-time low.  And the percentage of individuals thinking the country as a whole will be better off under Obamacare dropped to 33%, also an all-time low.

Insured Americans Happy with Current Coverage – But Going to Lose It Anyway:  Nearly nine in ten currently insured Americans report very positive (47%) or somewhat positive (41%) experiences with their current coverage.  Yet the Administration’s own estimates have revealed that half of all employers – and as many as 80% of small businesses – will be forced to give up their current coverage within the next two years.

Higher Premiums Thanks to Obamacare:  Two-thirds (67%) of those with employer-sponsored coverage who think their employer will be changing benefits for 2012 believe their share of premiums will increase as a result.  And nearly two-third of individuals who think their employer will be changing benefits for 2012 believe that Obamacare is either a major (43%) or minor (24%) reason behind that change.

Concerns about Dropping Coverage:  Nearly three in ten Americans with employer-sponsored coverage are worried a great deal (16%) or quite a lot (13%) whether their employer is going to drop their health coverage.

Even Uninsured Skeptical of Obamacare’s Ability to Help Them:  A plurality of the uninsured (47%) believe the health law won’t make much difference in their lives, while a further 14% believe the law will hurt, not help them – largely by forcing them to buy insurance they cannot afford.

Today’s survey again illustrates how for the American people, the buyer’s remorse over Obamacare – a piece of legislation many did not want in the first place – only continues to increase.

“Most Transparent” Administration’s “Public Outreach Campaign:” More Closed-Door Meetings!

Politico reports this morning on the Administration’s “Listening Tour” regarding Exchanges, and noted that HHS is being VERY selective in deciding who it will actually listen to:

The meetings are invite-only for groups working on implementing exchanges in the states (insurers, consumer advocates, etc.).  During Monday’s session in Portland, they limited the first part of the session to a closed-door meeting just for government and state officials with the Western states, excluding California, which will participate in a September listening session.  PULSE has learned the dates for the rest of the sessions have been tentatively scheduled as follows: Atlanta, Sept. 13; New York City, Sept. 21; Sacramento, Calif., Sept. 22; and Chicago, Sept. 26.

The HHS website claims that “in the weeks ahead, the Departments of Health and Human Services and Treasury will conduct an aggressive outreach campaign and solicit public comment” on the Exchange regulations – but this “aggressive outreach campaign” apparently doesn’t apply to members of the general public, who need not bother showing up, and won’t be allowed into the meetings if they do.  It’s likely for this reason that HHS hasn’t even bothered to post on its website the dates and specific locations these forums will be taking place (although if any readers have this information, feel free to pass it on…).

There are three ironies here.  The first of course is that the “most transparent” Administration – which passed a 2,700 page bill into law using secretive negotiations – is once again conducting important regulatory business behind closed doors.  Candidate Obama promised to televise all health care negotiations on C-SPAN, but the process leading up to Obamacare was plagued with notorious backroom deals.  Yet once again HHS is slamming the door on members of both the public and the media through a closed-door process.

The second irony is the fact that the health care law was supposed to become more popular after it passed, yet HHS officials are apparently afraid of holding an open-door forum with members of the general public to solicit a broad range of views.  After all, didn’t Democrats say that “by November [2010] those who voted for [Obamacare] will find it an asset and those who voted against it will find it a liability?”  Yet one can ask whether these forums are being held behind closed doors precisely because the Administration fears a reprise of incidents where Secretary Sebelius learned what the American people think about passing 2,700 page bills “very fast” and not reading them before doing so.

That brings us to the third irony: That when it comes to implementing Obamacare, HHS would rather speak to self-appointed “consumer advocates” – i.e., liberal, pro-Obamacare organizations – rather than actual consumers.  Even though HHS claims that Exchanges “offer Americans choice and clout,” the Administration apparently has little interest in finding out what ordinary Americans actually think.  This behavior is sadly indicative of the whole philosophy of Obamacare, which focuses on having a little intellectual elite make health care decisions for everyone else.  It means that liberal groups like Families USA and AARP – which don’t represent the whole American public, and may not even represent their own members – have an outsized influence, while the American public – which didn’t want Obamacare to pass in the first place – once again will get left out.  So much for transparency and accountability from this Administration.

Ben Nelson Said WHAT on Medicare?

At a town hall meeting in Lincoln yesterday, Sen. Ben Nelson (D-NE) indicated that he would oppose extension of the payroll tax holiday due to expire in December.  He said that while he would like to support extending the payroll tax cut, “all you’re doing is taking money that otherwise would help Medicare and Social Security.”

This comment was a curious statement to make, as non-partisan budget analysts and even President Obama have admitted that the health care law the Senator voted for uses more than $500 billion in Medicare funds to pay for new entitlements:

  • Medicare actuary Foster has written that the Medicare provisions in Obamacare “cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions under the PPACA) and to extend the [Medicare] trust fund, despite the appearance of this result from the respective accounting conventions.”
  • The Congressional Budget Office agreed with the Medicare actuary, writing that the Medicare provisions in Obamacare “would not enhance the ability of the government to pay for future Medicare benefits.”
  • President Obama in an interview with Fox News last year admitted that “You can’t say that you are saving on Medicare and then spending the money twice.”

Last year then-Speaker Pelosi famously said we had to pass the bill to find out what’s in it.  Some might suggest that Democrats need to take the Speaker’s advice, to rediscover how Obamacare uses more than half a trillion dollars in Medicare savings – not to improve Medicare’s fiscal situation, but to create new and unsustainable entitlements.

Today’s CBO Unemployment Projections Nearly 50% Higher Than Pre-Obamacare Estimates

It’s time for another installment examining Obamacare’s rhetoric versus reality, specifically when it comes to job creation:

CLAIM:  “So this bill is not only about the health security of America.  It’s about jobs.  In its life it will create 4 million jobs — 400,000 jobs almost immediately.”

— Speaker Pelosi at the White House health summit

FACT:  In its release of its August budget update, the Congressional Budget Office significantly downgraded its employment projections for the economy over the next five years – see the below spreadsheet providing a quarter-by-quarter comparison of the August 2011 and January 2011 projections.  While quarterly data are not available, in January 2010 – before Obamacare passed – CBO estimated that unemployment would average 6.3 percent in 2013, and 5.3 percent in 2014.  That compares with today’s CBO estimates, which project unemployment will average 8.7 percent in 2013, and remain at a stubbornly high 7.9 percent in 2014 – nearly 50 percent higher than pre-Obamacare estimates.  And once again, today’s CBO report reiterated its prior prediction that Obamacare will further reduce the labor supply by about 800,000 jobs.


  January 2011 CBO Unemployment Projections August 2011 CBO Unemployment Projections
2012Q1 8.9 8.9
2012Q2 8.5 8.8
2012Q3 8.2 8.6
2012Q4 8.2 8.5
2013Q1 7.9 8.6
2013Q2 7.7 8.7
2013Q3 7.5 8.7
2013Q4 7.4 8.7
2014Q1 7.2 8.5
2014Q2 7.0 8.2
2014Q3 6.7 7.7
2014Q4 6.5 7.2
2015Q1 6.2 6.7
2015Q2 6.0 6.3
2015Q3 5.8 5.9
2015Q4 5.5 5.6
2016Q1 5.4 5.5
2016Q2 5.3 5.4
2016Q3 5.3 5.3
2016Q4 5.3 5.3


Another Survey Documents Rising Costs — and Employers Dropping Coverage

The HR firm Towers Watson today released a survey of large employers regarding health coverage.  Once again the results show that Obamacare is NOT following through on the promise to reduce costs – but IS encouraging employers to think about dropping their insurance offerings:

Higher Costs:  Overall plan costs are projected to rise at a 5.9% rate in 2012, well above the rate of inflation.

Lose Your Plan Now:  Seven out of 10 (70%) employers expect to lose grandfathered health status in 2012 – meaning employees will lose their current health plan, and employers will be subject to a blizzard of new regulations and mandates under Obamacare.

Lose Your Plan Later:  Nearly three in ten employers (29%) are unsure whether or not they will continue offering coverage to their current workers thanks to Obamacare.  More than half (54%) of employers currently offering coverage to retirees plan to drop that coverage.

Higher Premiums Now:   A majority of firms plan to raise the employee share of premium contributions in 2012 by at least one percentage point (66%) – with 20% planning to raise single-only coverage premiums by more than 5%, and 29% planning to raise family coverage premiums by more than 5%.  Despite candidate Obama’s repeated promises to CUT premiums for all Americans by an average $2,500 per household, only 1% of firms plan to decrease the employee share of premium contributions.

Higher Premiums Later:  Thanks to Obamacare, nearly half (47%) of employers plan to “substantially reduce the health care benefit value of active employees,” in 2014 and 2015, and an even greater percentage (57%) plan to “reduce employee contributions for lower-paid workers.”  (That is, of course, if those employers are even offering coverage at all by that point.)

Today’s survey once again documents how Obamacare has failed to live up to its promises – and continues to serve as a drag on American businesses and families.

CBO’s August Update and Health Care Spending

This morning the Congressional Budget Office released its annual August update to the budgetary baseline, which reflects changes to the economic assumptions made since CBO released its budgetary baseline last winter, as well as changes in law (e.g., passage of the Budget Control Act).

Most of the changes are economic in nature, and do not affect health care projections.  However, there are several health care-related nuggets of note in the document:

  • A ten year SGR “freeze” would have a NET cost of $298 billion.  This option would maintain Medicare reimbursement levels at 2011 rates through 2021, rather than imposing the 30 percent payment reductions scheduled to take place on January 1, 2012.  The net number cited above reflects total increased federal spending, offset in part by higher Medicare Part B premiums (because beneficiaries pay 25 percent of all increases in Medicare Part B costs through higher premiums).  Debt service costs on the SGR “freeze” would total an additional $53 billion, over and above the $298 billion in new spending. (Page 26, Table 1-8)
  • CBO has made technical revisions that lower its projections of spending for Medicare by $9 billion for 2011 and by a total of $10 billion for the 2012–2021 period.  Those revisions are based primarily on lower-than-expected spending for Part A (Hospital Insurance) and Part D (prescription drug) services during the first half of calendar year 2011.” (Page 69)  Elsewhere in the document, CBO said that this spending slowdown could be due in part to “changes in the use of health care services related to weak economic conditions, but whether such changes have occurred is not clear at this point.” (Page 11)
  • CBO has lowered its 10-year projections of spending for other health care programs by a net amount of $25 billion.  That change is mostly attributable to revisions to the agency’s methodology for estimating the amount of refundable tax credits that will be provided to subsidize the purchase of health insurance and the amount of cost-sharing subsidies that will be available for health insurance purchased through exchanges beginning in 2014.” (Page 69)  The technical reasons for this change were not specified, but it is possible that the revision could be due to an interpretation about the definition of “affordability” when it comes to eligibility for insurance subsidies – specifically, an indication that families are NOT eligible for insurance subsidies if employer-based coverage for a worker (i.e., a self-only plan) is affordable, regardless of whether or not an employer-based plan is affordable for the entire family.
  • CBO is now anticipating a one-year delay in implementing the federal long-term care insurance program, the Community Living Assistance Services and Supports program.  Based on the pace of implementation actions thus far, CBO now estimates that the program will begin collecting premiums in fiscal year 2013, lowering projected offsetting receipts (whereas, for the March baseline, CBO assumed that those collections would begin in fiscal year 2012).” (Page 69)

Latest Obamacare Gimmick: Waive the Waivers!

In a typical Friday afternoon “data dump,” the Administration quietly announced late last week it had approved 106 new waivers to Obamacare’s onerous insurance mandates.  That now means that 1,472 plans with nearly 3.4 million people have obtained waivers from just some of Obamacare’s new federal requirements.

Once again, unions continue to receive a disproportionate share of the waivers being granted.  Two-thirds of all the individuals obtaining waivers in the past month were members of union plans.  More than half of the total number of individuals who have received waivers overall – nearly 1.7 million – participate in union health plans.  The Administration has yet to explain why union members represent such a high proportion of those receiving waivers.

Just as interesting, the Administration sent an e-mail notification to Hill staff on Friday afternoon, which included the following statement:

In response to questions as to whether the restriction on annual limits applies to HRAs, CCIIO published supplemental guidance today clarifying that stand-alone HRAs in effect prior to September 23, 2010, as a class, are exempt from applying individually for an annual limit waiver.  This policy applies to plan years beginning on or after September 23, 2010, but before January 1, 2014.

In other words, any and all firms operating Health Reimbursement Arrangements (HRAs) received a blanket waiver from having to apply for individual firm waivers of the Obamacare mandates.  Reducing the paperwork requirements is undoubtedly a good thing for those particular businesses – indeed, some would argue that anyone should be able to obtain a waiver, not just those plans offering HRAs.  But it also conveniently allows the Administration to reduce the number of firms having to apply for waivers – limiting the Administration’s political embarrassment on an issue that has drawn public scrutinyWhich factor – reducing paperwork for business, or engaging in political damage control – do YOU think was the prime motivation for this about-face…?