Obamacare Did NOT Fix Medicare — It Made It Worse…

Politico reported this morning that House Minority Leader Hoyer defended Obamacare as “fixing” Medicare: “We believe that the health care bill — and very frankly CBO believes the health care bill will do something that Medicare very badly needs, and that is to constrain price escalation in health care.”  Where to begin with this statement…?

  • First, a CBO study released just last week found that prior Medicare demonstration programs designed to control costs – along the same lines as those included in Obamacare – did not work at controlling costs.  What’s more, CBO added that Medicare’s fee-for-service system presents “inherent” obstacles to reducing cost growth.
  • Second, the projections that Leader Hoyer said will “constrain price escalation” are based on arbitrary payment reductions that CBO and virtually every other non-partisan expert has concluded are unrealistic.  For instance, the Medicare actuary found that provisions in Obamacare “are unlikely to be sustainable on a permanent annual basis.”  Likewise, CBO concluded that the Medicare reductions will be “difficult to sustain for a long period.”
  • Third, the Medicare “savings” have already been spent – not to improve Medicare’s solvency, but to create Obamacare’s new entitlements.  Medicare actuary Foster noted 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,” and CBO agreed, writing that the Medicare provisions in Obamacare “would not enhance the ability of the government to pay for future Medicare benefits.”  Even President Obama, in an interview with Fox News, admitted that “You can’t say that you are saving on Medicare and then spending the money twice.”

So in sum: The demonstration projects designed to save money likely won’t work, the arbitrary payment reductions can’t be sustained – and even if either of the first two scenarios hold, the money saved will not actually help Medicare, because it’s already been spent to pay for Obamacare’s new entitlements.  That’s not saving Medicare – that’s making it worse.

Jon Stewart Talks about Obamacare’s “Big Dump”

Appearing on The Daily Show last night, Secretary Sebelius answered a series of questions from host Jon Stewart about employers dropping coverage that can best be described as awkward.  In the extended interview posted online, Stewart asked whether or not there would be a “big dump” of employees into Exchanges under the law.  The full exchange occurs beginning at around 3:15 of the second segment; here are the highlights:

STEWART:  “Can they [i.e., employers] dump you into the exchange?”

SEBELIUS:  “Well, at the end of the day, there is no mandate now.  In 2014, if employers don’t cover health insurance, they will pay a penalty, and they’ll pay for every employee who goes into the Exchange.”

STEWART:  “Is the penalty more than the [cost of] insurance?”

SEBELIUS:  [Long pause] “The penalty will help pay for the tax credit that the employee will get in the insurance [sic]….”

STEWART:  “Is there a consequence other than a fine or shame – cause I know the shame thing’s not gonna work.  [Laughter.]”

STEWART:  “Let’s say I’m paying, for a family plan, $1200 a month.  And my employer says, oh, we’ve got these exchanges now, I’m going to dump you into that.  And you’re going to get a tax credit.  Will my tax credit be the equivalent of the money that the employer was paying, or is that now going to come out of [unintelligible]”

SEBELIUS:  “It’s really…it’s hard to tell because employers are all over the board….”

STEWART:  “Do you think ultimately this is, a bunch of people dump to the Exchange, and it becomes sort of, a back door, of government, not a takeover necessarily, but of a government responsibility for the health care, employees, and it decouples it – I’m not saying that’s a bad thing – but decouples it from employment, and people will get it through the government – through tax credits, rather than through their employers – and then suddenly, obviously then, we’re Sweden.  Do you think that’s the case?”

Sebelius claimed that the law is “filling in the gaps in the private market.”  But the reality, as Stewart laid out and other studies have confirmed, is that it’s much cheaper for employers to drop their workers’ health plans and dump them into the Exchanges – costing the federal government trillions of dollars and turning us into Sweden (or Greece).  It also raises an obvious question:  If even liberals like Jon Stewart believe the health law will cause Americans to lose their health plans, who actually believes they will be able to keep their current coverage under Obamacare?

2700 Pages vs. Two Sentences

Obamacare was 2700 pages long.  In his State of the Union speech tonight, the President spent two sentences – a mere 44 words – talking about health care.  And the first reference didn’t come until 39 minutes into his speech.

When it comes to this supposedly “historic” and “majestic” law, the silence from this Administration is deafening.

American Values? Obamacare WORSENS Inequality

The White House is previewing the State of the Union message by saying the President’s agenda will renew American values, and create a country where “everyone plays by the same rules.”  But the reality is that Obamacare actually worsens inequality – by pitting similarly situated households against one other.  Some families will get vast subsidies from the federal government, while other families making the same incomes will receive little or nothing.  That’s not an America where “everyone plays by the same rules” – it’s the federal government picking winners and losers.

Take, for instance, two key numbers – the 63 percent and the 18 percent.  The 63 percent are the number of non-elderly Americans who are theoretically eligible for taxpayer-funded insurance under Obamacare.  According to the Census Bureau, there are 266.5 million individuals under age 65.  Of those, 169.2 million have incomes under 400 percent of the federal poverty level – the threshold under which individuals can receive insurance subsidies.  169.2 million divided by 266.5 million people is 63.5 percent – meaning nearly two-thirds of the population under age 65 are considered “low-income” and qualify for subsidized insurance under Obamacare.*

However, according to the Congressional Budget Office, of the nearly 110 million people theoretically eligible for taxpayer-subsidized insurance on Obamacare’s Exchanges, only 20 million – or 18 percent – will actually receive those subsidies.  The remaining 82 percent of the population with incomes between 135-400 percent of poverty will instead pay (through a dozen middle-class tax hikes) for the privilege of funding the health care of the other 18 percent.

On both fiscal and fairness levels, this Obamacare math raises serious questions:

  • How is a legislative scheme where three in five Americans are classified as “low-income” fiscally sustainable?
  • Conversely, how is a scheme where fewer than one in five Americans in eligible income brackets actually receive government benefits equitable – or even perceived as such?
  • Won’t middle-class American families who DO NOT receive subsidies, yet fund the benefits of individuals with similar incomes who DO, revolt at the inequity of the government “picking winners and losers” by deciding who will and will not receive subsidies?
  • Won’t public outrage force a rapid expansion of Obamacare’s subsidies, and/or encourage employers to drop coverage, either or both of which will quickly cause spending on subsidies to explode?

When it comes to equality, Obamacare strikes a “balance” as the worst of both worlds – making nearly two-thirds of the population eligible for subsidized insurance in practice, but giving it to only a fraction of this larger subset.  At one stroke, a majority of Americans have been classified as “low-income,” yet most of that majority will have the “privilege” of watching their hard-earned tax dollars subsidize the insurance of others with the same, or even less, income.  It’s the type of horizontal inequality – people with the same income being treated far differently – that all Americans, not just Occupy Wall Street, will view as unfair and distinctly NOT an American value.  Yet this perverse version of spreading the wealth around is one of the fundamental premises on which Obamacare is based.


* Of the 169.2 million people under age 65 with incomes under four times the poverty level, 59.3 million have incomes under 135 percent of poverty.  All these individuals – many of whom are already eligible for Medicaid – will become eligible for that program under Obamacare. (Technically the Medicaid eligibility threshold is 138 percent of poverty, not 135 percent, but the Census data have a slightly different cutoff point.)  That means 109.9 million people under age 65 – or about 41% of the non-elderly population – is eligible to receive insurance subsidies in Obamacare Exchanges, by virtue of their income. (The 59.3 million with incomes below 135 percent of poverty will be dumped into Medicaid, and will not have a choice of private plans regardless.)

White House: Hiding from Obamacare?

An hour ago, the White House released its prime talking points ahead of the President’s State of the Union Address tonight – and they are most noteworthy for what you will NOT find included.  At no point in the document do the words “health care,” “health insurance,” or anything related to Obamacare appear.  In other words, fewer than two years after signing a 2700-page law the White House dubbed “historic,” and others have called “majestic,” the White House is apparently afraid to spend even one ounce of political capital defending or promoting the measure in its prime agenda-setting opportunity for the entire year.

And with reason.  Not only is the measure still widely unpopular, it’s hurting economic growth at a time when unemployment remains stubbornly high:

  • Last week a survey of small businesses found 74% said that Obamacare makes it harder for their firms to hire new workers;
  • Analysts at UBS have stated that Obamacare is “arguably the biggest impediment to hiring, particularly hiring of less skilled workers;” and
  • The President of the Federal Reserve Bank of Atlanta has “frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”

Speaker Pelosi famously said we had to pass the bill to find out what’s in it.  Judging from their deafening silence about the matter ahead of the State of the Union, it appears the White House has finally found out what’s in the bill – or discovered that the American people don’t like what’s in it either.

Did the Obama Campaign Publicly Mislead on the Costs of Obamacare?

One more interesting nugget related to Ryan Lizza’s New Yorker piece.  This afternoon the author publicly posted the 57-page memo that the presidential transition team gave to President-elect Obama in December 2008 outlining economic and fiscal options for the incoming Administration.  Table 4 (page 28) of the memo includes a list of campaign promises, and their estimated cost in 2014.  The table shows the estimated cost of Obamacare’s subsidies at $190 billion in 2014 alone.  Below the table, a note on the next page explains “the health plan is about $10 billion more costly than the campaign estimated, and the savings are about $25 billion lower than the campaign estimated.”

So according to the memo from the Administration’s own advisors, even as the Obama presidential campaign publicly claimed its proposals would cost “50-65 billion a year when fully phased in,” the Obama campaign privately estimated the cost at $180 billion in 2014 – more than three times the public number.  It is therefore quite reasonable to ask 1) whether the Obama campaign purposefully misled the public about what they knew to be the true costs of a comprehensive health bill along the lines Obama envisioned; 2) what any attempt to hide the bill’s true costs from the public suggests about its popular appeal; and 3) how hiding important facts from the public represents “change we can believe in.”

More Obamacare Gimmickry Exposed

In addition to a discussion of rationing, the New Yorker article on the Obama presidency also includes nuggets further undermining the allegation that Obamacare was a fiscally responsible measure.  In a passage relating details of the President’s February 2010 budget submission, reporter Ryan Lizza noted that the President’s advisers “told [Obama] that he needed to cut $85 billion in spending in order to submit a fiscally credible budget to Congress.”  So what did they do?

They resorted to gimmickry.…The White House could also save billions by fiddling with the way it presented savings from Obama’s health care reform bill.  Check.”

The article doesn’t reveal what specific gimmicks the White House used regarding Obamacare in the February 2010 budget; some would argue that’s because the bill was full of so many gimmicks that it would be difficult to highlight a single one.  However, we do know – because liberal groups recently admitted this fact – that by the early 2010 timeframe discussed in Lizza’s piece, the Administration knew privately that the CLASS Act Ponzi scheme was fiscally unsustainable.  But did the Administration admit this fact publicly?  Heavens no.  Instead they relied on tens of billions of dollars in fake savings from CLASS to argue that the bill was paid for – while knowing full well these “savings” would never materialize.

Lizza’s piece also notes that the Obama domestic agenda was based upon “unrealistic assumptions made during the campaign.”  And how.  A bill estimated to cost “$50-65 billion a year when fully phased in” in reality will cost more than $200 billion by the end of the decade – and a promise to cut premiums by $2500 per family has turned into a law that will instead raise insurance premiums on the individual market by $2,100 per household.

Back in 2010, then-OMB head Peter Orszag – piqued at those who would question his fiscal self-righteousness – wrote a blog post stating that Obamacare was not relying on a “business-as-usual Washington gimmick.”  Republicans knew all along that these statements were at best highly skeptical, and at worst downright disingenuous.  As more and more time transpires, the record increasingly shows that Democrats knew the exact same thing.

Obamacare’s Next Phase: Pay for Rationing?

The New Yorker’s Ryan Lizza is out with an extended feature article chronicling key moments of the Obama presidency, based in large part on a review internal White House memoranda not publicly released.  The piece features several enlightening vignettes related to health care, including one regarding a proposal never broached in public:  “In January, 2010,… [OMB Director Peter] Orszag and Ezekiel Emanuel, the chief of staff’s brother and a health-care adviser, recommended that the government pay federal employees to participate in a pilot program to study the most effective treatments for patients.”

Many would argue that, based upon the policy description included in the article, this policy would represent the worst of both worlds – giving already-overpaid federal bureaucrats additional dollars to sign away their right to access treatments that the government might deem too expensive.  But what did President Obama think of it?

Unfortunately I think the political guys are right about how it would be characterized.  Let’s go back at it in future years, when the temperature on health care and the economy has gone down.

Sadly, this desire to restrict access to treatment is consistent with the President’s prior history – along with the positions of the advisors who proposed it.  In a famous 2009 New York Times interview, the President called for a “difficult democratic conversation” about what he perceived as too much spending on end-of-life care.  Orszag was one of the prime architects of Obamacare’s IPAB, which he admitted will have “an enormous amount of potential power” and “the largest yielding of sovereignty from the Congress” in nearly a century.  And Emanuel offered the infamous chart for prioritizing scarce medical resources, in a journal article in which Emanuel admitted that his system “discriminates against older people….[However,] age, like income, is a ‘non-medical criterion’ inappropriate for allocation of medical resources.”

As indicated by the quotes above, this Administration has shown a proclivity towards reductions in health spending based upon cost-effectiveness – as well as a willingness to grant bureaucrats virtually unlimited power in the process.  The article confirms all those beliefs, while at the same time showing yet another way in which the Administration would use government bureaucrats to restrict access to treatments.  Federal workers – and the American people – should take note.

George Will on Obamacare and Federalism

If you have some time this snowy Saturday, I would highly recommend George Will’s Sunday column as a good read.  The piece summarizes the lesser-known element of the Obamacare challenges to be heard by the Supreme Court in two months’ time – the argument that the law’s Medicaid expansion represents a commandeering of the states, in violation of the Tenth Amendment.  The article notes that any state refusing to expand its Medicaid program under Obamacare will forfeit ALL Medicaid funding; studies have demonstrated such a scenario would be so economically (therefore politically) remote as to be all but impossible.  And as the states’ brief to the Court noted a few weeks ago, the Court has already adopted the principle that federal strings attached to spending programs can become so great as to be coercive; if the Court will not reject as coercive the largest ever mandated expansion of the program that represents the largest portion of state budgets, what will it reject?  Will notes that it is this argument – limiting principles (or lack thereof) on Congressional power – that unites the challenges to the individual mandate and the Medicaid expansion:

The Obamacare issues of Medicaid coercion and the individual mandate are twins.  They confront the court with the same challenge, that of enunciating judicially enforceable limiting principles.  If there is no outer limit on Congress’s power to regulate behavior in the name of regulating interstate commerce, then the Framers’ design of a limited federal government is nullified.  And if there is no outer limit on the capacity of this government to coerce the states, then federalism, which is integral to the Framers’ design, becomes evanescent.

Therein lie the stakes for the American people that the Court will consider later this spring.

Administration Rules Against Catholic Church on Contraception

The Washington Post is reporting that the Administration “will allow religious organizations a one-year delay” before complying with a new Obamacare mandate to offer contraceptive coverage – “but the rule itself and the employers covered by it remain unchanged.”  This rule requires organizations like religious schools and Catholic hospitals to offer contraceptive coverage to employees covered by their health plans – even if doing so violates the tenets of their faith.

The rule, and the Administration’s broader dealings with the Catholic church, have generated much controversy.  Some have written that “a part of [the Obama] Administration is at war with Catholic leaders and Catholic belief.”  Moreover, an Administration that claimed to end the “war on science” has on multiple occasions related to contraceptive issues manipulated the process, and/or overridden the recommendations of non-partisan experts, to achieve political victories for its liberal allies.

The bottom line: This decision looks suspiciously like yet another political stunt designed to delay the controversy by another year, until after the President’s re-election campaignMake no mistake however – this ruling forces religious organizations to violate the fundamental tenets of their faith, or stop offering health insurance coverage to their employees.  Time will tell whether those institutions choose the former or the latter course – but neither option should be necessary, if the Administration had not taken such an unbending approach to appease its liberal base.