Obamacare’s Fiscal Damage Comes Out of the Woodwork

Following last week’s release of CBO’s re-estimate of the health law in light of the Supreme Court’s ruling, it’s worth digging into the new numbers a bit more to examine the Congressional Budget Office’s assumptions, one of which is the “woodwork effect.”  “Woodworking” refers to uninsured individuals who were already eligible for Medicaid, but who will now come “out of the woodwork” and finally apply for benefits – due to the individual mandate, publicity surrounding the law, new efforts to streamline enrollment processes, etc.  Last week CBO revealed for the first time its belief that the “woodwork effect” will comprise more than one million more individuals, and a greater percentage of the newly enrolled, than the Medicare actuary had previously asserted.

In its updated analysis, CBO assumes that due to the Court ruling, “about one-fifth of the people who would have been eligible for Medicaid in the absence of the [law] and were, in prior estimates, projected to enroll will no longer enroll in Medicaid.”  Elsewhere in the same report, CBO concludes that these individuals – those who would have been attributed to the “woodwork effect,” but will now not enroll due to the Court ruling – comprise about one-quarter of “the 6 million people who will not have Medicaid coverage in 2022 as a result of the Court’s decision.”  These numbers allow for some simple extrapolations:

  • CBO assumes the Court ruling will reduce the “woodwork effect” by 1.5 million individuals (6 million times one-quarter);
  • CBO originally assumed the “woodwork effect” would result in 7.5 million previously eligible individuals enrolling in Medicaid (1.5 million divided by one-fifth), but now believes the effect will result in 6 million previously eligible individuals joining Medicaid in light of the Court’s ruling (7.5 million minus 1.5 million); and
  • In their March 2012 analysis prior to the Court ruling, CBO assumed that the newly eligible would constitute at least 9.5 million enrollees – 17 million total newly enrolled in Medicaid, minus 7.5 million already eligible for Medicaid but new-to-enroll thanks to the law.  (The “at least 9.5 million” designation reflects the fact that some states who had previously expanded their Medicaid population above 138 percent of poverty may now shrink their programs to be consistent with the new federal guidelines, causing some individuals currently eligible for Medicaid to lose coverage.)

Conversely, the Medicare actuary has predicted a much smaller “woodwork effect.”  In his annual Medicaid actuarial report in March, he claimed that of his estimate of 25.9 million new Medicaid enrollees in 2022, “82 percent are projected to be newly eligible (that is, eligible only under the new rules beginning in 2014), while 18 percent are projected to be eligible under the current Medicaid rules.  This latter group is expected to enroll in Medicaid as a result of the new assistance that will be available through the simplified enrollment process, the health insurance exchanges, and the publicity associated with the expansion of eligibility.”  This means that the Medicare actuary estimated a total “woodwork effect” of 4.7 million enrollees (25.9 million times 18 percent) – several million beneficiaries less than CBO’s initial 7.5 million estimate.  It also means that the actuary estimated that of the 25.9 million total new enrollees, 21.2 million (25.9 million times 82 percent) will be those newly eligible for Medicaid.  (Note that all these estimates from the Medicare actuary came before the Supreme Court ruling, and may well be reduced as a result of same.)

The size and scope of the “woodwork effect” is a critical worry for states.  While states will receive the law’s new enhanced Medicaid federal match for newly eligible individuals, states will receive only their existing federal match rate – which could be as much as 50 percentage points lower – for those who are already eligible but use the 2014 “Big Bang” as a reason to sign up.  The fact that CBO projects millions more will enroll due to the “woodwork effect” is not a good sign for state budgets struggling to cope with their existing fiscal crises – to say nothing of the additional crisis placed upon the states by Obamacare.

Why Obamacare Is NOT a Tax Cut

By now you’ve heard claims from President Obama and others that Obamacare provides a massive middle-class tax cut – largely by funding coverage for health insurance through Exchanges.  We figured we would take this opportunity to summarize why that claim doesn’t hold water:

CBO Scores Most of the “Tax Cuts” as Government Spending

We previously noted that, according to CBO’s March 2012 baseline, projected spending on insurance subsidies totaled $806 billion during FY2013-22.  As of March, $628 billion of that $806 billion was classified by CBO as government spending, NOT reduced tax revenues.  But since the Supreme Court’s ruling on Obamacare, those numbers have actually increased.  CBO now assumes more low-income people who previously would have enrolled in Medicaid will receive Exchange subsidies instead in light of the Court decision.  In its updated score of the repeal bill, CBO last week projected that $793 billion of the $1.017 trillion in subsidies represent government outlays, NOT revenue reductions.  That means that over 78% of Obamacare insurance subsidies are pure government spending to individuals who have no income tax liability.

Democrats are quick to cite CBO to claim that Obamacare will reduce the deficit – why aren’t they also quick to cite CBO when it states that the subsidies are NOT a tax cut, but instead largely comprise new government spending?

Democrat Claims on “Tax Cuts” Undermine the Social Security Trust Fund

When confronted with the fact that most of the Exchange subsidies constitute outlay spending by the federal government, President Obama and Democrats argue that these refundable tax credits – i.e., people receiving refunds even though they have zero income tax liability – offset payroll taxes paid by the low-income.  But Democrats have told Republicans for years that those payroll taxes are used solely to fund Social Security benefits, meaning those workers will get their payroll taxes back in future benefits (and especially in the case of low-income workers, will get their payroll taxes back and then some, due to the way Social Security benefits are calculated).  Do Democrats now want to admit that the Social Security Trust Fund is effectively meaningless, and that those who pay only payroll taxes are funding general government obligations rather than their own retirement benefits…?

Low-Income Individuals Don’t Pay Enough Other Taxes to Offset this “Tax Cut”

Even if you disregard points #1 and #2 above, and believe that the subsidies will offset payroll and other taxes paid by individuals, the massive subsidies will still overwhelm many individuals’ total tax liability – federal, state, AND local.  In its analysis of the fiscal impacts of the Supreme Court ruling, CBO noted that in 2022, Exchange subsidies for low-income individuals – i.e., those persons who were originally projected to enroll in Medicaid, but who will now enroll in Exchanges instead due to the Court ruling – will average about $9,000 per year.  These low-income individuals have incomes under 138% of the federal poverty level ($15,414.60 for a single person, $31,809 for a family of four in 2012).

To put it into perspective: A single person with income of 138% FPL, or $15,414.60, would pay total federal payroll taxes of $2,358.44 (that includes employee AND employer shares).  Assume also for illustrative purposes that this person would pay $1,541.46 in state and local income taxes, given a combined 10% state and local tax rate.  As noted above, this person’s average insurance subsidy will total $9,000.  Given payroll and state/local income tax liability totaling $3899.90, that means the individual in question would have to pay an additional $5100.10 in sales taxes for the federal subsidy to offset existing tax liability.  And at a 6% local sales tax rate, an individual with income of $15,414.6 would have to spend just over $85,000 – enough to buy a Platinum Edition Cadillac Escalade – to pay enough sales tax to have a net tax liability.

All this is to say that there is virtually NO WAY some of the individuals receiving subsidies will pay enough in payroll taxes, state and local taxes, sales taxes, or any other kind of taxes for the subsidies to offset taxes they actually paid – as opposed to the government spending money to buy them health insurance.

Obamacare Subsidies are Paid Directly to Insurance Companies

Democrats’ claims to the contrary, the law and record are very clear about the fact that this massive new entitlement will go straight into the pockets of the insurance industry:

  • Section 1412(c)(2)(A) of the law provides that “The Secretary of the Treasury shall make the advance payment under this section of any premium tax credit allowed under section 36B of the Internal Revenue Code of 1986 to the issuer of a qualified health plan on a monthly basis.”
  • Page 37 of the report on the Finance Committee bill states: “The Committee Bill provides a refundable tax credit for eligible individuals and families who purchase health insurance through the state exchanges.  The premium tax credit, which is refundable and payable in advance directly to the insurer, subsidizes the purchase of certain health insurance plans through the state exchanges.”

Even liberal professor Jonathan Gruber – a paid Obamacare consultantadmitted in an interview that “Most households will never actually get their hands on the credits, so their existing tax liabilities won’t actually change.  In most cases, credits will go straight to insurance companies, to pay for health benefits.”  And according to CBO’s updated estimates, Obamacare will now provide over $1 trillion in spending on subsidies, which will go directly into the pockets of insurance companies.

Of course, candidate Obama opposed sending subsidies straight to insurance companies when he ran for President, only to flip-flop on this issue when he signed Obamacare.  An Obama campaign ad derided Senator McCain’s proposal to subsidize insurance through tax credits: “That tax credit?  McCain’s own Web site said it goes straight to the insurance companies, not to you, leaving you on your own…”  Likewise, in a campaign speech, candidate Obama vilified Senator McCain for this policy: “But the new tax credit [McCain’s] proposing?  That wouldn’t go to you.  It would go directly to your insurance company – not your bank account.”

If this isn’t enough to convince you, consider a hypothetical example whereby Congress orders the IRS to send checks to Ferrari dealerships to pay for new sports cars for all Americans with incomes under $50,000 per year.  This is clearly NOT a tax cut – because the cost of the Ferrari obviously exceeds any and all taxes low- and middle-income families pay, and because the individuals in question don’t receive cash through the transaction.  It’s the same situation with health insurance.  And unfortunately for the shrinking number of Americans who DO pay taxes, giving $1 trillion in Exchange subsidies straight to insurance companies will prove to be a fiscal wreck that even loads of Ferraris couldn’t begin to match.

Liberals Believe IPAB Is the “Medicare Fairy”

The Center for American Progress recently released a paper making incoherent claims against conservative proposals for entitlement reform.  Take for instance the below paragraphs criticizing the Medicare premium support proposal included in the House-passed budget:

The House Republican premium support plan would also limit growth in Medicare spending to growth in the economy plus 0.5 percentage points.  But it’s unclear how this cap would be enforced.  As a result, it’s likely that the cap would be enforced by limiting the amount of vouchers provided to beneficiaries.  Since the proposed growth rate is much slower than the projected growth in health care costs, the voucher would leave beneficiaries to pay substantially more over time.  The CBO estimates that new beneficiaries could pay more than $1,200 more (in 2011 dollars) by 2030 and more than $5,900 more by 2050 under the House Republican budget.

What’s more, the Affordable Care Act already established an Independent Payment Advisory Board that will control the growth in Medicare spending.  While the target growth rate for the independent panel is growth in the economy plus 1 percentage point, the president has proposed reducing that growth rate to growth in the economy plus 0.5 percentage points—the same growth rate as the cap under the House premium support plan.

The premium support budget cap, therefore, would produce little or no savings compared to the president’s alternative approach.  But the cap under the premium support plan would have serious consequences for Medicare beneficiaries.

The CAP paper admits that under the House budget plan, Medicare would grow at the same rate as under the President’s budget.  But to CAP, the House premium support proposal would result in seniors paying thousands of dollars more in costs – while under the President’s budget, Medicare would grow at the exact same rate, but seniors would miraculously avoid paying higher costs, and still have the same access to care.  To some, this argument brings to mind the old phrase, “That dog won’t hunt.”

The premise behind these claims lies in CAP’s belief that only government – through Obamacare’s new Independent Payment Advisory Board and its rulings capping Medicare spending – can reduce health costs.  This belief can be found elsewhere in the paper, where CAP states that “traditional Medicare cannot provide an integrated benefit package…modify benefit designs, or offer provider network options” – all things that generally reduce health care costs – only to turn around and claim that “increasing the privatization of Medicare does not make sense because traditional Medicare costs less than comparable private coverage.”  It’s almost as if CAP believes a “Medicare fairy” can magically erase higher costs in a completely pain-free way that doesn’t affect seniors’ health care.

The problem is, most experts don’t believe CAP’s magical “Medicare fairy” exists.  An analysis from CBO released in January found that most Medicare demonstration programs implemented over the years “have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered.”  And both CBO and the Medicare actuary have concluded that Obamacare’s IPAB-driven spending reductions won’t work either: CBO concluded that the Medicare reductions will be “difficult to sustain for a long period,” and the Medicare actuary found that provisions in Obamacare “are unlikely to be sustainable on a permanent annual basis.”  The actuary went so far as to estimate that the law will cause 40 percent of hospitals and medical providers to become unprofitable in the long term.

While Democrats’ government-centric “Medicare fairy” approach has been weighed over the years and found wanting, the conservative idea that competition can help lower costs has never been truly explored.  As we noted last week, even the Obama Administration admits that competition has generated savings for parts of the Medicare program.  So instead of waiting around for a “Medicare fairy” that will never show up, why not empower patients instead of bureaucrats, and use competition to reduce costs in health care the same way it has in every other industry?

How Obamacare Just Became LESS Affordable for Millions of Americans

Hidden in CBO’s updated analysis of Obamacare in light of the Supreme Court decision is new information about a little-known provision of the law that will have major effects on how much millions of Americans pay for government-mandated health insurance.  At issue is an Obamacare provision, added during the reconciliation process, that slows the growth of Exchange insurance subsidies, beginning in 2019, if federal spending on said Exchange subsidies exceeds a pre-determined limit.  In its analysis last week, CBO concluded that the Supreme Court’s ruling means fewer people will obtain insurance through Medicaid, and more people will utilize subsidized insurance on Exchanges instead.  As a result, projected spending on Medicaid fell by $289 billion, and projected spending on Exchange subsidies rose by $210 billion.

These changes mean the indexing provision slowing subsidy growth is virtually bound to be triggered beginning in 2019.  The statute calls for the indexing provision to kick in if subsidy spending exceeds 0.504% of gross domestic product in the preceding year.  As the below chart demonstrates, in CBO’s March 2012 baseline, Exchange subsidy spending* was just slightly above the 0.504% of GDP level – meaning that while it was possible the indexing provision would be triggered, it was also possible it would not be, depending upon general cost trends, how many people enroll in Exchanges, etc.  However, the projected 20-25% increase in Exchange subsidy spending as a result of the Court ruling now virtually guarantees the subsidy indexing provision will be triggered beginning in 2019:

  Exchange Subsidy Spending March 2012 (in billions) Exchange Subsidy Spending July 2012 (in billions) Estimated GDP by Calendar Year 

(in billions)

March 2012 Percentage of GDP July 2012 Percentage of GDP
2018 106 129                              20,897 0.507% 0.617%
2019 111 137                              21,859 0.508% 0.627%
2020 116 141                              22,853 0.508% 0.617%
2021 124 148                              23,870 0.519% 0.620%
2022 129 155                              24,921 0.518% 0.622%

While this indexing provision may seem obscure, CBO admitted last month in its long-term budget outlook that it will have a major impact on millions of Americans forced to buy health insurance:

After 2018, however, an additional indexing factor will probably apply; if so, the shares of income that enrollees have to pay will increase more rapidly than in the preceding years, and the shares of the premiums that the subsidies cover will decline….A smaller percentage of people will be eligible for subsidies over time because incomes are projected to increase more quickly than the eligibility thresholds, and federal subsidies will cover a declining share of the premiums over time because of the additional indexing factor described above.

According to CBO, if Obamacare is not repealed or amended, virtually all Americans will be forced to buy health insurance – but fewer and fewer individuals will qualify for insurance subsidies over time, and those subsidies will pay a smaller and smaller share of overall insurance premiums.

Given CBO’s analysis last week, it is virtually certain that this long-term “time bomb” will detonate on millions of American families beginning in 2019.  The real question now is:  What does President Obama want to do about it?  Does he want to force Americans to buy a product that will not be affordable for many of them?  Does he want to repeal this subsidy indexing provision – thus blowing a hole in Obamacare’s supposed deficit savings?  Or does he want to ignore the issue entirely, hope the American people do the same, and dump this fiscal time bomb on the next President in 2019, hoping someone else will fix a budgetary mess he created?


* Note that the March baseline figures cited above reflect calendar-year spending, as do the GDP numbers (taken from Table E-1 of CBO’s January economic baseline).  The formula in Section 1401(a) of the statute requires that the determination whether subsidy spending exceeds 0.504% of GDP be made on a calendar-year basis.  CBO has not yet released updated calendar-year numbers since the Supreme Court ruling, and the chart above therefore uses fiscal-year data for the updated spending projections.  However, the general point still remains that the higher spending on subsidies in light of the ruling makes it a virtual certainty the indexing provisions will be triggered.

Liberal Distortion on Medicare Affordability

In an article published by Health Affairs last week, researchers for the liberal Commonwealth Fund reported on a survey that concluded seniors in Medicare were less likely than those with employer-provided coverage to encounter problems with medical bills or experience access problems due to cost.  There’s only one problem with that claim – it’s inherently illogical.  As the Congressional Research Service noted back in a 2009 report, traditional Medicare – that is, Medicare fee-for-service WITHOUT supplemental coverage – covers a percentage of expected health costs (i.e., actuarial value) between five and 15 percent LOWER than the average employer-provided health plan.  So why would seniors report their Medicare coverage – which covers a smaller percentage of health costs – results in fewer cost-related problems?

The answer is simple: Seniors responding to the Commonwealth survey weren’t just responding to their experiences in traditional Medicare – they were responding to their experiences with Medicare supplemental coverage.  This paragraph buried in the Health Affairs article tells the true story:

The Commonwealth Fund survey does not ask Medicare respondents whether they currently have any supplemental coverage.  However, respondents do list all current sources of insurance coverage, and 83 percent of adults age sixty five or older reported having Medicare as well as additional coverage through the individual market, an employer, or Medicaid.  Given the relatively small sample size of those without supplemental coverage, we chose not to compare the experiences of those with and without such coverage.

The fact is, about 93 percent of beneficiaries have Medicare supplemental coverage, or participated in Medicare Advantage plans, according to the Medicare Payment Advisory Commission.*  And with many of those supplemental policies offering first-dollar coverage, many seniors can go to any doctor they like, as often as they like, and not pay a single penny out-of-pocket for doing so.  What’s not to like?

Well, when it comes to the integrity of this study, there’s a LOT not to like.  The premise of the article – like the premise of virtually all of Commonwealth’s work – is that government-run coverage is better than private coverage.  And the fact that more than nine in ten seniors feel the need to obtain supplemental coverage to protect them from cost-sharing from the supposedly “affordable” Medicare program proved an inconvenient truth to the article’s researchers.  So Commonwealth deliberately designed their survey not to ask about Medicare supplemental policies, and “chose not to compare the experiences of those with and without such coverage” – because to do so might show that in reality, traditional Medicare on its own, WITHOUT supplemental coverage, is much less popular than private health coverage.  And the organization’s ideological objectives – “government good, private sector bad” – wouldn’t tolerate such a conclusion.

So both the survey, and the article resulting from it, are both inherently flawed and ideologically biased.  The real question is why a journal like Health Affairs would ever publish such a piece in the first place.


* The Commonwealth survey noted that 83 percent of seniors have supplemental coverage; the difference between the 93 percent MedPAC number and the 83 percent figure in the Commonwealth survey likely reflects the fact that the latter survey did not specifically ask respondents to report Medicare supplemental policies.

$1.51 of (Spare) Change You Can Believe In…

Next week the Administration will likely attempt to trumpet the medical loss rebates that some insurers must send out by August 1.  Some of these rebate checks are already arriving in the mail – in fact, we’ve seen one of them.  The amount of the check?

A whopping one dollar and 51 cents.

The mailer has further information demonstrating the absurdities of this latest Obamacare flop.  After the requisite propaganda message (“This rebate is required by the Affordable Care Act – the health reform law,”) the mailer goes on to add these helpful questions and answers:

Q.  What do I do with the rebate?

A.  Cash or deposit it.  You have the choice of how to use the rebate…

I can hear champagne corks popping all across America right now.  A whole one dollar and 51 cents people can use to splurge on themselves – hope you don’t spend it all in one place!  Of course, if someone in Washington has to go to the bank to cash the check, they won’t be able to afford the $1.80 Metrobus fare to do so – but that’s just a minor detail.  The mailer goes on:

Q.  Do I need to pay taxes on the rebate amount?

A.  Please consult your tax advisor, as situations vary.

Here again, people have a choice: They can either call their accountants and pay $50 (or more) to figure out whether or not they need to pay taxes on a $1.51 check – or they can take a chance, and hope the thousands of new IRS employees implementing Obamacare won’t decide to audit their tax returns next year.

Candidate Obama promised the American people change they could believe in – a premium cut of $2,500 per family per year.  Now Obamacare is giving people six quarters of spare pocket change, in a vain attempt to hide the fact that the law is actually raising premiums by thousands of dollars.  No wonder it’s a law the American people don’t believe in.

Democrats’ Mediscare Rhetoric Exposed

Over the past week, two articles have appeared challenging the tired allegation from President Obama and Democrats that premium support proposals would raise seniors’ Medicare premiums by $6,400.  First, the Washington Post’s Fact Checker gave Democrats Two Pinocchios for basing their allegations on the House Republican budget created in April 2011, even though that plan was substantially modified earlier this year: “The policy differences on Medicare are substantial, but that still does not justify using out-of-date figures from last year’s plan — especially because the plan has been updated and made more generous to deal with some of the original criticisms made by Democrats.”

Second, this week’s Health Matters column in CongressDaily (subscription required) pointed out another key flaw in Democrats’ allegations.  The CBO analysis on which the Democrat attacks are based assumes that Medicare premium support results in ZERO budgetary savings from plans competing head-to-head to see which can offer Medicare benefits most efficiently:

[CBO] Director Douglas Elmendorf told the House Budget Committee in 2011, his office doesn’t have the ability to account for any cost decreases (or increases, for that matter) that could come from competition between private plans.  “We are not applying any additional effects of competition on this growth rate over time in our analysis of your proposal.  And, again, we don’t have the tools, the analysis, we would need to do a quantitative evaluation of the importance of those factors,” Elmendorf said.

That’s because most health economists have no idea what really happens when insurance companies truly compete for Medicare beneficiaries.  The studies aren’t there….

CBO’s current estimate puts the effects of competition at zero, which Gail Wilensky, a former head of Medicare and Medicaid in the George H.W. Bush administration, says is an even worse assumption than making some sort of educated guess.  “You know it’s not zero, that’s the complete cop-out,” Wilensky said in an interview.  “Their assumption is zero; it’s a very specific assumption, and it’s the one thing that’s definitely not accurate.”

It’s particularly ironic that the Obama Administration is relying on an analysis that assumes no savings from competition – because the Administration is perfectly willing to trumpet savings from competitive bidding when it suits its own purposes.  Last year, the Administration sent out a press release trumpeting Medicare’s competitive bidding process for durable medical equipment.  Among the quotes in that press release:

[Then-CMS Administrator Donald Berwick:]  “By expanding our successful competitive bidding program, we can ensure that Medicare pays a fair rate for these goods.”

[Medicare head Jonathan Blum:]  “The success we’ve had in the first phase tells us that we can achieve these savings with no disruption for patients’ access and no negative effect on patients’ health.”

So if the Administration admits that competitive bidding can work for durable medical equipment purchases within Medicare – saving taxpayers (and seniors) money without harming beneficiaries – why can’t the same tactics work for the Medicare program as a whole?  Or are Democrats’ objections to premium support primarily ideological – because liberals can’t stomach the idea of seniors choosing their own private health insurance plan, rather than participating in an entitlement run by the federal government…?

$2,500 Premium Cut? How about a $2,400 Premium INCREASE…?

In their re-estimate of the health care law in light of the Supreme Court’s ruling, the Congressional Budget Office yesterday noted that the ruling would likely result in some individuals previously thought to gain Medicaid coverage receiving subsidies to buy insurance on Exchanges instead.  CBO believes that these individuals “generally have somewhat poorer health.  As a result, CBO and JCT now estimate that the premiums for health insurance offered through the exchanges, along with premiums in the individual market, will be 2 percent higher than those estimated in March 2012.” 
This 2 percent increase highlighted yesterday amounts to a little over $300 per year for a family, given an average premium on the individual market of about $15,200 per year, according to a CBO analysis published in 2009 (page 6).  And that increase comes in addition to the $2,100 per family premium increase CBO previously predicted when the law first passed – meaning that the average premium increase in the individual market thanks to Obamacare will be just under $2,500 per family per year.
Candidate Obama repeatedly promised premiums would be impacted by about $2,500 per family in his proposal – a development CBO has now confirmed.  The only problem is that candidate Obama promised premiums would go DOWN $2,500 – but under the law President Obama signed, premiums will go UP by nearly the same amount.  It’s one more reason why Obamacare is a step in the wrong direction for struggling middle class families.

White House Attempts to Have It Both Ways

Yesterday evening, the White House issued a blog post attempting to trumpet CBO’s re-estimate of Obamacare: the CBO estimate “affirms that repealing the health care law would…result in higher deficits.”  The post later went on to rebut CBO’s assumption that many states would not fully expand their Medicaid programs as provided for in the law.  The White House alleged that “history suggests that [states] will act” to implement the expansion.

There’s just one problem with that latter assertion: If all states implement the Medicaid expansion, more than three-fourths – $84 billion of approximately $109 billion – in Obamacare’s supposed deficit savings* will evaporate.  So the White House is attempting to argue both sides of the story – that the law will reduce the deficit by a wide amount, but that states will all expand Medicaid, even though their doing so would eliminate most of the law’s supposed savings.

The fact that the White House feels the need to take both sides of this argument shows how fiscally flawed the measure is – why it should be repealed, and why repeal will ultimately save taxpayers in the long run.


* Admittedly, CBO said the $109 billion figure associated with repealing the law was not an exact estimation (in reverse) of the law’s deficit impact – largely because CBO assumes a repeal bill would not take effect immediately.  That said, because CBO hasn’t re-estimated the full law, the score of the repeal measure is the closest approximation we have to the measure’s full fiscal effects.

More Liberal Scare Tactics on Pre-Existing Conditions

The liberal group Families USA released another report that supposedly makes the case for Obamacare – but in reality just demonstrates the lengths liberals will go to in order to gin up support for their flawed law.  The report claims that “64.8 million non-elderly Americans have been diagnosed with pre-existing conditions that could lead to denials of coverage, absent health reform.”

There are several problems with this claim.  First, the Administration released a report last year claiming that 129 million individuals have pre-existing conditions and “could be denied affordable coverage.”  In other words, the Families USA study also claims that the number of individuals with pre-existing conditions has just been cut in half when compared to the prior HHS report.  Which is another way of saying the Families USA report implicitly admits that the HHS study is flawed, biased, and should not be considered reputable.  (But hey, what does a difference of a mere 65 million people make among friends?)

Second, enrollment in pools for people with pre-existing conditions is nowhere near as high as the Families USA report would suggest.  According to the most recent data released by the Administration, 73,333 individuals with pre-existing conditions are enrolled in the federal high-risk pool program established under Obamacare.  These enrollment data do not come anywhere close to earlier projections – the Medicare actuary originally projected enrollment at 375,000 individuals in 2010, and Congressional Budget Office estimated up to 700,000 individuals would attempt to enroll in the program by next year.  To put it another way, the number of enrollees in pre-existing condition pools under Obamacare is .11% of the 64.8 million people Families USA claims have pre-existing conditions.

Finally, it’s worth pointing out that today’s report was conducted for Families USA by the Lewin Group.  The Huffington Post and other liberal allies called Lewin a front group for insurers back in 2009, when it released studies showing how a government-run health plan could cause millions to lose their health insurance.  Surprisingly, we have yet to see HuffPo and other liberal groups similarly criticizing today’s Families USA/Lewin study as being biased by a tainted insurer front group, when it helps trumpet the talking points of Obamacare supporters.

It’s true that the problem of individuals with pre-existing conditions is real – but nowhere near as pervasive as the types of reports produced by HHS and Families USA would have you believe.  That’s why Republicans have offered and supported targeted solutions that would solve this problem WITHOUT a 2700-page law intruding into every corner of the American health sector.  The trumped-up claims in this latest Families USA report once again illustrate that while pre-existing conditions are a problem for some Americans,  Obamacare is far from the right solution.