A Retiree Health Care “Fix” That Isn’t

Since the Affordable Care Act became law in 2010, supporters and opponents have argued about whether the measure would lead employers to drop health coverage for workers. This issue has returned to the news; Wal-Mart recently decided to drop coverage for some of its part-time workers, and The Wall Street Journal reported this week that some firms, seeking to avoid employer penalties under the law, have encouraged employees to enroll in Medicaid.

While their private-sector counterparts have received more attention, public-sector employees–particularly retirees–could face similar problems with dropped coverage. The Atlantic reported last week on the trend of cities in financial distress, from Detroit to Chicago to Sheboygan, Wis., reducing or eliminating coverage and seeking to use the insurance exchanges to get out of their health-care obligations to retirees. As one pension expert quoted in the Atlantic noted, “every public-sector employer is looking at the exchanges as a potential way to get out of the unfunded liabilities that the public sector is bearing.”

But transferring state and municipal retirees to insurance plans on the exchanges doesn’t reduce the amount of unfunded liabilities; it shifts the cost from state and local governments to Washington. Many of the retirees in question could qualify for federal premium and cost-sharing subsidies for their exchange insurance policies. Even by Washington standards, the magnitude of the problem is daunting: A 2012 Pew study found that state governments held $627 billion in unfunded retiree health obligations; adding local government health plans could push those obligations toward $1 trillion.

State governments are grappling with a difficult revenue environment, while the federal government faces long-term fiscal challenges caused by demographic shifts. Given these dynamics, what looks to some mayors like a quick fix to their budget woes–shifting retirees to the federal exchanges–could, in the broader fiscal sense, amount to shifting deck chairs on the Titanic. If efforts by cities and states ultimately encourage private-sector firms to drop health coverage for their workers and retirees, they will add to our nation’s collective entitlement obligations—and could end up sinking our federal fiscal ship.

This post was originally published at the Wall Street Journal Think Tank blog.

Gov. Jindal Op-Ed: The Facts about Ebola Funding

Yet another American has contracted Ebola, a grim reminder of just how important it is that our public health systems function at the highest possible level. Unfortunately, much of the rhetoric about this deadly disease is misleading, if not dishonest.

In a paid speech last week, former Secretary of State Hillary Clinton attempted to link spending restraints enacted by Congress—and signed into law by President Obama—to the fight against Ebola. Secretary Clinton claimed that the spending reductions mandated under sequestration “are really beginning to hurt,” citing the fight against Ebola: “The CDC [Centers for Disease Control and Prevention] is another example on the response to Ebola—they’re working heroically, but they don’t have the resources they used to have.”

Consider the Prevention and Public Health Fund, a new series of annual mandatory appropriations created by Obamacare. Over the past five years, the CDC has received just under $3 billion in transfers from the fund. Yet only 6 percent—$180 million—of that $3 billion went toward building epidemiology and laboratory capacity. Especially given the agency’s postwar roots as the Communicable Disease Center, one would think that “ detecting and responding to infectious diseases and other public health threats” warrants a larger funding commitment.

Instead, the Obama administration has focused the CDC on other priorities. While protecting Americans from infectious diseases received only $180 million from the Prevention Fund, the community transformation grant program received nearly three times as much money—$517.3 million over the same five-year period.

The CDC’s website makes clear the objectives of community transformation grants. The program funds neighborhood interventions like “increasing access to healthy foods by supporting local farmers and developing neighborhood grocery stores,” or “promoting improvements in sidewalks and street lighting to make it safe and easy for people to walk and ride bikes.” Bike lanes and farmer’s markets may indeed help a community—but they would do little to combat dangerous diseases like Ebola, SARS or anthrax.

Make no mistake: These types of projects may represent worthwhile endeavors—when funded by states, localities or private charities. And I certainly believe in the goals of wellness as one way to improve health and reduce costs. Here in Louisiana, we’ve launched the Well-Ahead Louisiana program, working with local businesses and organizations on ways to promote healthy lifestyles.

But, as the old saying goes, to govern is to choose. Unfortunately, this administration seems intent on not choosing, instead trying to insinuate Washington into every nook and cranny of our lives. It’s a misguided and dangerous gambit, for two reasons. First, a federal government with nearly $18 trillion in debt has no business spending money on non-essential priorities. Second, a government that attempts to do too much will likely excel at little. And the federal government has one duty above all: To protect the health, safety and well-being of its citizens.

Our Constitution states that the federal government “shall protect each of [the States] against Invasion”—a statement that should apply as much to infectious disease as to foreign powers. So when that same government prioritizes funding for jungle gyms and bike paths over steps to protect our nation from possible pandemics, citizens have every right to question the decisions that got us to this point.

In her speech, Secretary Clinton said, “too often our health care debates are clouded by ideology, rather than illuminated by data.” I couldn’t agree more. But in this case, the data show not that the CDC faced a lack of funding, but misplaced priorities for that funding based on choices made by the Obama administration. I urge Secretary Clinton to put her partisan politics aside, and ensure instead that the federal government focus first and foremost on our most important goal: to keep America, and Americans, safe.
This post was originally published at Politico.

In Some States, a Cost Crunch over Expanded Health Benefits

President Barack Obama promised that his Affordable Care Act would work to reduce health costs. But a recent Kaiser Health News article outlined one way in which the law–and the way the administration and states have implemented it–is helping to increase costs.

The issue surrounds benefit mandates at the state level, which require insurers offering policies in that state to cover a particular type of treatment, provider, or service. While many of these mandates may sound appealing, they incrementally raise the cost of insurance–for procedures that some people might not wish to purchase, feel they need, or find morally objectionable. A 2009 Congressional Budget Office analysis found that the ACA’s package of mandated benefits would raise premiums on the individual health insurance market 27% to 30% because individuals would be required to purchase richer coverage and because that richer coverage would induce additional consumption and demand for care.

The Affordable Care Act contains a provision designed to dissuade states from enacting additional benefit mandates. Section 1311(d)(3)(B) of the law directs states to reimburse the federal government for its costs, in the form of additional exchange insurance subsidies, associated with any new benefit mandates enacted. However, as Kaiser Health News reported last month, “some states are simply excluding from the mandates plans that the states would have to pay for.” The end result: conflicting requirements and benefit packages for different categories of coverage, creating confusion for consumers and insurance companies.

In addition, the federal Web site offering information on state-mandated benefit packages reveals that the administration has exempted many types of mandates from the Section 1311 repayment requirement. For example, states can enact provider requirements mandating coverage by a particular type of health professional, as well as dependent coverage requirements (e.g., for newborn coverage, domestic partners, etc.), without having to pay the federal government for the additional subsidy costs associated with the new requirements.

Obamacare raised individual market insurance premiums by mandating additional benefits, but some states now view these stronger insurance requirements not as a ceiling but as a new floor. Yet by imposing new mandates that will raise premiums further, their actions may make the Affordable Care Act increasingly unaffordable for consumers—and for the taxpayers funding insurance subsidies.

This post was originally published at the Wall Street Journal Think Tank blog.

Obamacare Enrollment and Low Expectations

The infamous bungled launch of HealthCare.gov came exactly a year ago. While this year’s open enrollment doesn’t start until Nov. 15, administration officials, mindful of last year’s “debacle,” are already working to lower expectations.

Health and Human Services Secretary Sylvia Mathews Burwell declined, when speaking with reporters last week, to endorse the Congressional Budget Office’s enrollment target of 13 million participants in insurance exchanges next year. She also declined to say when a new target might be announced.

It’s perhaps not surprising that the administration is seeking to tamp down expectations. This year’s open-enrollment period starts later than last year’s did; it runs for only three months, compared with six in 2013; and it falls in the middle of the Thanksgiving and Christmas holidays. When it comes to enrollment and outreach, most of the “low-hanging fruit“–individuals with a strong desire to purchase health insurance–have already signed up.

The fact that this year’s open-enrollment period is also the first Obamacare re-enrollment period will also drive traffic to the online exchanges–and could create confusion. Even advocates of the law have talked about the “massive technological challenges” associated with such an effort. And individuals who do not actively re-enroll through HealthCare.gov and choose instead to remain in their 2014 plans through 2015 could face significant premium increases.

President Barack Obama came into office hoping to restore Americans’ faith in government. Yet last fall the federal government’s ability to provide basic functionality to a Web site was viewed as nothing short of miraculous, and this fall the administration has declined to say whether 2015 insurance enrollment will meet expectations. The administration appears to be hoping that Obamacare will benefit from low expectations–and that in itself says a lot about the status of President Obama’s legacy.

This post was originally published at the Wall Street Journal Think Tank blog.