Are Cost-Sharing Reductions Subject to the Sequester?

Sen. Susan Collins (R-ME) thinks she has a deal with Senate Majority Leader Mitch McConnell (R-KY) to attach two provisions to a short-term spending bill later this month: The Alexander-Murray legislation to appropriate funds for cost-sharing reduction (CSR) payments to insurers, and a separate bill she and Sen. Bill Nelson (D-FL) have developed regarding reinsurance proposals.

Collins also thinks these two provisions will have a “net downward effect on premiums,” even after repealing Obamacare’s individual mandate as part of the tax bill the Senate is currently considering. However, it appears that Alexander-Murray and Collins-Nelson’s net effect on premiums could end up being a nice round number: Zero.

Cost-Sharing Reductions and the Sequester

The statute that created the budget sequester applies a list of programs and accounts not subject to sequestration spending reductions. For instance, the law exempts refundable tax credits, like those provided to low-income individuals who buy coverage on Obamacare’s exchanges, from sequestration reductions.

However, neither cost-sharing reduction payments nor reinsurance would qualify as refundable tax credits. They are paid directly to insurers, not individuals, and are not part of the Internal Revenue Code. Also, neither cost-sharing reductions nor reinsurance are on a list of other accounts and programs exempted from the sequester.

The Obama administration previously admitted that cost-sharing reduction payments were subject to the sequester, in a sequestration report to Congress in April 2013, and in testimony before the House Energy and Commerce Committee in August of that year. In a separate 2014 report, the Obama administration also admitted that Obamacare’s transitional reinsurance program (which expired in 2016, and which senators Collins and Nelson effectively want to re-create) was subject to the sequester.

However, last year Judge Rosemary Collyer ruled these actions unconstitutional, because the treasury lacks a valid appropriation to pay out CSR funds. The Trump administration last month stopped the CSR payments to insurers, citing the lack of an appropriation. While the Alexander-Murray bill would appropriate funds for the CSR payments, it would do so through the Centers for Medicare and Medicaid Services, not the treasury—meaning that the sequester would apply.

Statutory PAYGO and the Sequester

Earlier this month, the Congressional Budget Office (CBO) released a letter to Rep. Steny Hoyer (D-MD) indicating that legislation increasing the budget deficit (on a static basis, i.e., not accounting for economic growth) by $1.5 trillion would result in a sequester order of approximately $136 billion for 2018. The existing statutory formula would deliver a 4 percent, or approximately $25 billion, reduction in Medicare spending, followed by about $111 billion in reductions elsewhere.

However, because the sequestration statute exempts many major spending programs like Social Security and Medicaid, CBO believes that only about $85-90 billion in existing federal resources would be subject to the sequester. This means an additional $20-25 billion in mandatory spending, if appropriated, would immediately get sequestered to make up the difference.

On the one hand, conservatives who oppose paying CSRs to insurers may support an outcome where insurers do not actually receive these payments. On the other hand, however, some may view this outcome as the worst of all possible worlds: Having surrendered the principle that the federal government must prop up insurers—and Obamacare—without receiving any actual premium reductions, because the payments to insurers never get made.

This scenario, when coupled with repeal of the individual mandate, could result in a legislative outcome that raises premiums next year—a contradiction of the promises Republicans made to voters.

This post was originally published at The Federalist.

Six Reasons the Mandate “Deal” Is Bad Health Policy

After their member lunch Tuesday, Senate Republican leadership announced they would work to include a repeal of Obamacare’s individual mandate as part of tax reform. The Senate leaders also announced they would bring the Obamacare “stability” legislation written by Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) to the floor for a vote.

Repealing Obamacare’s tax on individuals who do not buy health coverage, and using the proceeds to reduce taxes overall, may represent sound tax policy. However, for several reasons, both the mandate repeal, and the “stability” legislation linked to it, represent unsound health policy.

1. This Will Raise Premiums

For these reasons, a tax reform bill repealing the individual mandate cannot repeal the regulations that caused premiums to more than double over the past four years, and necessitated the mandate in the first place. As I previously noted, repealing a penalty that encourages healthy people to purchase insurance, while retaining the regulations that have attracted a sicker-than-average population to Obamacare’s insurance exchanges, will raise premiums—the only question is by how much.

2. It Bails Out Insurers—And Obamacare

The “stability” legislation would provide two years of cost-sharing reduction (CSR) subsidies to health insurers, which reimburse them for the cost of discounting deductibles and co-payments to certain insurers. Three years ago, the House of Representatives sued the Obama administration challenging the constitutionality of these payments, which the House contended were being made without an explicit appropriation from Congress.

In May 2016, Judge Rosemary Collyer agreed. While she stayed her ruling stopping the payments while the Obama administration appealed, the Trump administration used her logic—that the payments lacked a constitutional appropriation—to halt the payments unilaterally last month.

3. This Establishes De Facto Single Payer

In choosing to appropriate CSR funds mere weeks after the Trump administration cancelled the payments, a Republican Congress would send a very clear message: Health insurers—and Obamacare itself—are too big to fail.

This message to health insurers, who last year ignored the risk that CSR payments would disappear, will only encourage them to take further reckless risks, knowing the federal government will provide a backstop if they fail. In other words, a Republican Congress would create a de facto single-payer health system, by establishing the principle that insurers are too big to fail.

Some might argue, as Alexander did Tuesday, that the “stability” fund will lower premiums and mitigate the effects from repealing the mandate outlined above. In one sense, throwing taxpayer funds at a problem will always “fix” it—at least in the short term. But with our nation $20 trillion in debt and repeated years of federal deficits, the federal government has a diminishing ability to spend other people’s money to “solve” problems. Moreover, in the longer term, a Republican Congress will have set an incredibly dangerous—and costly—precedent by telling insurers the federal government will cover their losses.

4. Insurers Could Reap Billions in Windfall Profits

The CBO score also provided some sense of the money insurers might keep. The Alexander-Murray bill would appropriate roughly $7-9 billion in CSR funds for the coming plan year. Yet CBO believes insurers would return only about $3.1 billion in rebates back to the federal government, meaning the insurers themselves could keep some, or all, of the remaining $4-6 billion. All this after insurer profits nearly doubled during the Obama era, to $15 billion per year.

5. There’s Not Enough Flexibility for States

Over and above the question of bailing insurers out of their strategic mistakes by making CSR payments, the Alexander-Murray bill provides nowhere near enough flexibility for states in return. The bill provides for several process improvements regarding applications for state innovation waivers under Obamacare, but it does not fundamentally change the substance of those waivers.

States must still provide as many individuals with health insurance as Obamacare, and much provide a benefit package “of comparable affordability” as Obamacare coverage. Because the Alexander-Murray bill does not substantively change Obamacare’s regulatory straight-jacket, it still will not allow states to provide consumer-driven health care options, or plans that might have lower premiums for consumers.

6. This Means Federal Funding of Plans that Pay for Abortion

If the above six reasons weren’t enough evidence of the questionable policy merits of the mandate “deal,” the video should serve as the coup de grace. That the bill’s sponsor seemed blissfully unaware of all the policy implications of a bill he sponsored—and worked feverishly to sell to his colleagues—should function as a warning to lawmakers. In their haste to pass a tax bill, they are blundering into some serious strategic and policy errors in health policy, which could come back to bite them for many years to come.

This post was originally published at The Federalist.

How Barack Obama “Sabotaged” Obamacare

To paraphrase Mark Twain, rumors of the demise of bipartisanship in health care are greatly exaggerated. While Republicans and Democrats claim different principles on health policy, their actions indicate a surprising level of agreement.

To wit: Both President Trump and President Obama took action to prevent Americans from suffering dramatic premium spikes due to Obamacare’s insurance mandates. Yet somehow the Left’s indignation over Trump’s alleged “sabotage,” in the form of his recent executive order on health care, has not extended to Obama’s actions four years ago.

It’s Cool Only If Obama Does It?

Following its initial decision to permit non-compliant plans, the Obama administration repeatedly extended these “transitional” arrangements. In March 2014, after the insurance exchanges began to function more smoothly, the Centers for Medicare and Medicaid Services extended the non-compliant plans through October 2016, followed by a further extension through October 2017. Upon taking office earlier this year, the Trump administration extended the non-compliant plans a fourth time, through December 2018.

On no fewer than three separate occasions, then, the Obama administration expressly permitted Americans to hold policies that did not comply with Obamacare’s new regulatory regime—its prohibition on pre-existing condition restrictions, its essential health benefits requirements, and its myriad other new mandated subsidies. In perpetuating these non-compliant plans, the Obama administration’s actions parallel President Trump’s recent executive order, which among other proposals would expand access to short-term insurance policies.

As with the plans that Obama thrice permitted, short-term insurance policies need not adhere to the regulations Obamacare permitted, from the pre-existing conditions requirements to age rating bands to mandatory benefits like maternity care. Short-term plans, like the non-compliant plans the Obama administration permitted, can provide a much more affordable alternative to Obamacare-compliant coverage, for which premiums have more than doubled since 2013.

Actually, Trump’s Actions Are Better than Obama’s

Conversely, Obamacare expressly exempts coverage of less than one year in duration from its regulatory requirements, allowing for lawful action by the Trump administration in this sphere. Expanding access to short-term insurance plans of up to 364 days in length, while ending the existing non-compliant plans arrangement the Obama administration started, would create more affordable coverage options, while ceasing President Obama’s sabotage of the rule of law.

Critics claim that expanding access to short-term insurance coverage would bifurcate insurance markets, thereby “sabotaging” exchange regimes. But in some states, President Obama’s actions regarding non-compliant plans undermined the exchanges well before Trump ever took office.

For instance, in 2016 90,000 Iowa residents retained non-compliant plans—compared to only 55,000 enrolled in the Obamacare-compliant exchange coverage—and the latter endured higher premium increases than the former. Liberals attacking Trump over reports he personally intervened in Iowa’s application for a federal waiver to change its insurance markets fail to recognize that executive actions by Obama, not Trump, created the conditions where Hawkeye State officials felt the need to apply for a waiver in the first place.

This post was originally published at The Federalist.

Paul Ryan and “Regular Order”

Last week, Politico published an article talking about how the Republican House of Representatives under Paul Ryan’s speakership set a new record for the number of bills approved under closed rules—which prohibit members of Congress from offering amendments. Although the Politico story didn’t use the term, it echoes the complaints of Sen. John McCain (R-AZ) surrounding Obamacare “repeal-and-replace” legislation this past summer: “I want the regular order.”

McCain’s comment invites a question: What exactly constitutes “the regular order” in Congress? Why do people keep calling for it? And if so many people keep calling for it, why doesn’t Congress just restore “the regular order” already?

‘Deem-and-Pass’

Politico quoted House Rules Committee Ranking Member Louise Slaughter (D-NY): “Under Speaker Ryan’s leadership, this session of Congress has now become the most closed Congress in history.” To call Slaughter’s complaints about a closed process ironic would put it mildly.

Seven years ago, when she chaired the Rules Committee, Slaughter proposed having the Democratic House enact Obamacare into law without voting on it. The House could merely “deem” Obamacare approved as a result of passing some other measure.

While the House has repeatedly used this “deem-and-pass” strategy under both Republican and Democratic majorities, the optics of passing such a massive and prominent piece of legislation using such dodgy procedural shortcuts led Democrats to abandon the gambit, but not before conservative bloggers noted that Slaughter, Rep. Steny Hoyer (D-MD), and others attacked the “deem-and-pass” maneuver when Republicans controlled the House in the 2000s.

Republican Manipulation

In proposing the “deem-and-pass” strategy, Slaughter looked to protect House Democrats from taking a tough vote on the unpopular health-care bill Senate Democrats approved on Christmas Eve 2009—the one with the “Cornhusker Kickback,” “Gator Aid,” “Louisiana Purchase,” and the other backroom deals that made the legislation toxic in the minds of many. When in the majority themselves, Republicans have used the same tactics, using procedural blocks to avoid politically difficult votes.

In 2015, the appropriations process ground to a halt in mid-summer, when Democrats offered an amendment preventing federal funds from being used to display the Confederate flag in national cemeteries. The amendment, offered by Rep. Jared Huffman (D-CA), originally passed by voice vote, but some Republicans pledged to vote against the bill if the amendment remained in it.

Republican leaders didn’t have the votes to strip out the amendment, and didn’t have the votes to pass the bill with the amendment in, so the Interior appropriations bill got shelved—as did the entire appropriations process, because Republicans feared Democrats would offer Confederate flag-related amendments to any spending bill that came to the House floor.

House Freedom Caucus

Yet on several occasions over the past few years—including the Confederate flag flap—conservatives and HFC members have looked to leadership to squelch debate on amendments. Earlier this year, moderate Republicans and Democrats combined to defeat an amendment that would have prohibited federal funding of soldiers’ gender-reassignment surgery. Conservatives responded a few weeks later by demanding that leadership insert such a funding prohibition into the defense spending bill—without a direct vote, via the “deem-and-pass” strategy—even though the provision would have violated the will of the House as expressed in a vote weeks before.

While the executive ultimately decided the transgender issue—at conservatives’ behest, President Trump issued an executive order prohibiting transgender troops from serving, making the House procedural dispute moot—it illustrates the problems inherent with a move to “regular order.” As with Slaughter and Democrats, conservatives support an open process in the House only up until the point when it detracts from their desired policy outcomes, at which point the legislative process quickly devolves into a game of ends justifying means.

If it wanted to, HFC could easily demand a more open floor process out of Ryan. It could vote down the rules governing floor debate on individual bills unless and until the Republican leadership allowed an open process and more amendment votes, at which point the Republican leadership would have no choice but to acquiesce to pass legislation through the House. However, a more open process would require conservatives to accept policy outcomes they might not like—federal funds being spent on gender-reassignment surgeries, for instance.

These strictures require leadership to use all manner of procedural shortcuts and chicanery to cobble together legislation that can command a majority of votes. It’s no way to run a railroad. But until members’ desires for “the regular order” are strong enough that they will vote down bills on process grounds alone, it will remain the way Washington works—or, in many cases, doesn’t.

This post was originally published at The Federalist.

Does Medicaid Expand Inequality?

Believe it or not, an incredibly powerful article about health policy mentions the word “medical” once only in passing, and “health” not at all. On Thursday, Politico ran a feature article on the University of Michigan, and how it—and many other prominent public universities—face a “crisis of confidence.” In seeking to attract affluent, and frequently out-of-state, students, these institutions have shunned working-class families, many of whom no longer feel welcome, or try to apply.

The crisis of confidence stems largely from public universities’ financial strategies. That’s where health care comes in, in a big way. Medicaid’s constant, inexorable growth in state budgets has left less money for education of all types, not least higher education. As Medicaid spending has risen, state funding of public universities has declined, leading them to raise tuition and increase their percentage of out-of-state students to help balance the books. At the end of this fiscal game of “Musical Chairs,” many children from working-class families can’t find a proverbial seat at a top-tier institution.

Numbers Don’t Lie

A review of state budget expenditure reports puts the effects in stark relief. In fiscal year 1987, Michigan spent 9.7 percent of its state budget on Medicaid, and 8.5 percent on higher education. Nearly three decades later, in fiscal year 2015, Michigan spent a whopping 30.2 percent of its budget on Medicaid, and 4.3 percent on higher education. The state more than tripled the share of the budget devoted to Medicaid, while cutting the share of spending on higher education in half.

The national spending numbers tell a similar story. In fiscal year 1987, states spent an average of 9.8 percent of their budgets on Medicaid, and 11.1 percent on higher education. In fiscal year 2015, states spent an average of 28.2 percent on Medicaid, and 10.1 percent on higher education. Here again, higher education spending declined, even as Medicaid spending nearly tripled. While in 1987, states spent roughly half as much on Medicaid as they did on primary and secondary education, Medicaid has long since supplanted K-12 education as the top spending item in states’ budgets.

The Medicaid Payment and Access Commission (MACPAC) has a chart showing the way in which Medicaid spending has grown over time. Although their graphic doesn’t include it, one could easily insert two intersecting lines showing how the share of state spending on K-12 education and higher education has declined even as Medicaid spending has risen.

How This Affects Americans

In Michigan, universities have taken it on the chin more than in most states. Primary and secondary education comprise a relatively large percentage of the state’s budget, making the share of spending on post-secondary education (4.3 percent) less than half the national average. Politico explains the effect on the University of Michigan and its students:

In the late 1960s, the state covered 70 percent of instructional costs. By the late 1990s, state support covered less than 10 percent of instructional costs, which were largely unchanged when adjusted for inflation. The trend has persisted. One recent report found that, since 2002, state support for higher education in Michigan has declined 30 percent, when adjusted for inflation.

The university, like nearly every other state school in the nation, leaned on tuition to make up the difference. In-state tuition rose, but university leaders also focused on another, more lucrative, funding stream: out-of-state students, many of them elite students from wealthy families who couldn’t get into the Ivy League. Michigan was the next best thing.

“The university had no choice but to increase out-of-state enrollments of students paying essentially private tuition levels,” [former University of Michigan President James] Duderstadt said. Tuition rose to $14,826 a year for Michigan students; room and board adds about $12,000. In the 1970s, tuition was less than $600 per year. Out-of-state students, who now pay $47,476 per year, make up roughly half of the student body at Michigan, up from 30 percent in the late 1960s.

But as tuition rose, wages stagnated. The median family income in Michigan in 1984 was $50,546, in 2016 dollars. In 2016, it was $57,091. The working class was priced out.

A Poverty Trap?

The Congressional Budget Office (CBO) has indicated its belief that Medicaid itself discourages work. Specifically, CBO wrote that “expanded Medicaid eligibility under [Obamacare] will, on balance, reduce incentives to work.” Because an extra dollar of income could cause beneficiaries to lose access to Medicaid, costing them hundreds, even thousands, of dollars in insurance premiums and co-payments, some individuals will avoid work to keep their incomes below eligibility caps.

However, few have examined the way in which Medicaid can keep people in poverty not just from its direct effects (i.e., discouraging work), but by its indirect effects—the opportunity cost associated with state spending. Every dollar a state spends on Medicaid represents a dollar not spent on rescuing a student trapped in a failing school, or on scholarships for working-class families to attend top-tier universities.

This post was originally published in The Federalist.

CBO, the Individual Mandate, and Tax Reform

This week, word that the Congressional Budget Office (CBO) was preparing to re-estimate the fiscal impact of repealing the individual mandate prompted consternation among Republican ranks. Sen. Mike Lee (R-UT) claimed the budget office was playing a game of “Calvinball,” constantly revising its estimates and making up rules a la the comic strip Calvin and Hobbes.

CBO is reassessing the effectiveness of the mandate in light of research published earlier this year by a team of researchers including Jonathan Gruber—yes, that Jonathan Gruber—that examined the effectiveness of the Obamacare mandate in the law’s first few years.

Consternation about CBO aside, the debate speaks to larger concerns about the effects on both health policy and tax policy of repealing the mandate.

Inconvenient Truths are Truths Nonetheless

Lee will find no argument from this observer about the need for CBO to increase its transparency. As previously noted, I’ve seen it up close and personal. Former CBO Director Doug Elmendorf repeatedly failed to disclose to Congress material omissions in CBO’s analysis of Obamacare’s CLASS Act—omissions that could have led the budget office to conclude that the program was financially unstable before Congress enacted Obamacare (with the CLASS Act included) into law.

That said, some people on the Right apparently think that difficulties with CBO allow them simply to ignore or dismiss its opinions. Witness this response back in July, when I noted that CBO believed one version of the Senate “repeal-and-replace” bill would raise premiums by 20 percent in its first few years:

The reconciliation bill being used as the vehicle for tax reform does not include reconciliation instructions to the House Energy and Commerce and Senate HELP Committees, the primary committees of jurisdiction over Obamacare’s regulatory regime. Because the tax reform bill cannot repeal, waive, or otherwise alter any of the Obamacare regulations, repealing the mandate as part of tax reform will definitely raise premiums.

Do Republicans Want to Repeal Obamacare’s Regulations?

This criticism shouldn’t apply to Lee, who fought hard to repeal as much of the Obamacare regulations as possible during the budget reconciliation debate in July. However, many other Republicans have demonstrated a significant lack of policy forthrightness on the issue of Obamacare’s regulatory regime. For many reasons, the claim that Republicans can “repeal” Obamacare while retaining the status quo on pre-existing conditions presents an inherent policy contradiction.

Health Policy Is Taking a Back Seat to Tax Policy

Whatever the merits of using the revenue from the mandate’s repeal to help the tax reform effort, Republicans did not campaign for four straight election cycles on enacting tax reform. They campaigned on repealing Obamacare.

From a health policy perspective, enacting a “solution” that involves repealing the mandate and walking away from the issue would represent a bad outcome—one measurably worse than the status quo. Insurance costs—the health care priority that Americans care most about—would rise, only alienating voters who objected to Democrats not delivering on the $2,500 per-family reduction in premiums Barack Obama promised in 2008.

Done right, tax reform can rise and pass on its own merits. But using repeal of the mandate to pass tax reform—which would lead to another round of high premium increases in (you guessed it!) the fall of 2018—represents a game of policy and political Russian roulette that Congress should not even contemplate.

This post was originally published at The Federalist.

Contradictory Messages on SCHIP

When the bill reauthorizing the State Children’s Health Insurance Program (SCHIP) comes to the House floor for an expected vote on Friday, it will feature numerous examples of oxymoronic policy messages from the Republican majority. Call them contradictory, call them hypocritical, but regardless, the lack of coherence sends decidedly mixed messages about what exactly Republicans consider good, conservative health policy.

Voting to Reduce Medicare Spending the Day After Voting to Increase It

On Wednesday, the House Rules Committee finally decided the on-again, off-again question of whether to include provisions expanding Medicare means-testing for the affluent in the bill. The rule the committee reported states that, upon the rule’s adoption by the House, the base bill will be replaced by a substitute amendment—as well as a separate amendment adding the means-testing language back into the bill.

Rewarding States that Expanded Medicaid 

Section 305 of the new substitute amendment would postpone by two years reductions in Obamacare’s Disproportionate Share Hospital (DSH) payments—scheduled to total $4.7 billion in both fiscal years 2018 and 2019—for two years, until 2020. Theoretically the bill would “pay for” this additional spending (i.e., cancelling spending reductions now) by increasing the size of DSH reductions in future years. However, given that Congress has already postponed Obamacare’s DSH reductions three times in as many years, some may view the move as a “can-kicking” exercise and fiscal gimmick that lawmakers do not believe will ever take effect.

More to the point: In undoing the DSH reductions, the bill makes absolutely no distinction between states that expanded Medicaid under Obamacare and those that did not. In 2009 and 2010, Democrats thought the DSH payment reductions would partially offset the increased revenues hospitals would generate as a result of gaining more insured patients under Obamacare. But by failing to target the DSH reductions only toward states that have not expanded Medicaid to the able-bodied, the Republican House would effectively allow expansion states to “double-dip,” gaining both additional revenue from the Medicaid expansion and from the postponement (or the eventual cancellation) of the DSH reductions.

Passing a Not-That-Conservative Bill with Only GOP Votes

As previously noted, the underlying SCHIP reauthorization—separate and distinct from the controversies about how to pay for the spending—deviates from prior legislative proposals designed to return SCHIP towards its original purpose: Covering low-income kids. In addition to the reward for Medicaid expansion states discussed above, the bill:

  • Extends Obamacare’s maintenance of effort requirements, which constrain states’ flexibility in managing their programs, for three years, through 2022;
  • Extends—albeit only for one-year, and at a lower rate as part of a phase-out approach—Obamacare’s enhanced match rate for SCHIP programs;
  • Omits prior language requiring states to focus their programs’ efforts on covering children from low-income households;
  • Omits prior language permitting states to impose waiting periods in SCHIP programs for people who turn down an offer of, or disenroll from, employer-sponsored health coverage, given that studies suggest as many as three in five children enrolled in programs like SCHIP do so after first dropping their prior health coverage (i.e., “crowd-out”).

Even though the bill does not contain any of these conservative proposals, Democrats claim they will not support the legislation, given their objections to the SCHIP “pay-fors.” The Democratic position raises an obvious question: If Republicans will end up passing a SCHIP reauthorization along party lines, why not ensure that the legislation includes solid conservative policies throughout, instead of just conservative offsets? It’s one of several relevant questions given the decidedly mixed messages coming from House Republicans on health care this week.

This post was originally published at The Federalist.

A Conservative’s (Sort of) Defense of IPAB

The House of Representatives will vote Thursday on whether to eliminate Obamacare’s Independent Payment Advisory Board (IPAB). I come not to praise IPAB, but not to bury it, either—at least, not yet.

Yes, Obamacare empowers this federal board to make binding recommendations to Congress about enforcing per capita spending caps within Medicare. Yes, that board undermines congressional sovereignty by empowering unelected bureaucrats, in what its own advocates transparently described as an attempt to minimize democracy. And yes, federal bureaucrats have no business interfering still further with physicians’ practice of medicine. But for multiple reasons, Congress should not repeal IPAB without first enacting a suitable replacement.

We Can’t Afford Medicare As It Is

The Medicare Trust Fund suffered $132.2 billion in deficits during the Great Recession, and faces insolvency in just more than a decade. Medicare needs fundamental reform now, but repealing IPAB without simultaneously enacting other reforms will only encourage partisan attacks when Congress finally must act. Witness the liberal ads throwing granny over a cliff in response to congressional Medicare reform proposals that would save both seniors and taxpayers billions of dollars annually.

Second, repealing IPAB would also undermine the case for reforming Medicaid. Liberals’ hue-and-cry over proposals to reform Medicaid earlier this year demonstrated an opportunistic hypocrisy, as the same groups that attacked Republican efforts to impose per capita caps on Medicaid supported per capita spending caps on Medicare when created by a Democratic president. Conservative support for IPAB repeal would reinforce this ideological incoherence, demonstrating Republicans as favoring per capita caps in Medicaid, but not Medicare, and weakening the case for reforms to either entitlement.

Third, opportunities to control spending do not come often, or easily, which should make conservatives inherently reluctant to repeal any of them. In 1985, Congress enacted the Gramm-Rudman-Hollings Deficit Reduction Act, designed to force lawmakers to live within statutory spending targets. But Congress weakened Gramm-Rudman’s statutory fiscal discipline within five years, and abandoned it altogether by 2002. It took the debt limit fight of 2011 to restore fiscal discipline through the Budget Control Act’s sequestration caps—conservatives’ major policy victory of the Obama era, and one that congressional spendthrifts have consistently worked to undermine since.

It’s Clumsy, But Better than Nothing

As someone who has criticized Obamacare’s overly regulatory structure since its enactment seven years ago, I recognize—and entirely agree with—objections to the way IPAB undermines congressional authority, and intrudes still further into the practice of medicine. But conservatives would do well to avoid conflating IPAB’s highly flawed means with its entirely proper ends.

The board imposes real caps on Medicare spending, however clumsy, and like the budget sequester mechanism represents a genuine, albeit flawed, attempt to reduce federal spending. That’s why the Congressional Budget Office estimates the board’s repeal would increase Medicare spending, and thus the budget deficit, by $17.5 billion over the coming decade and more after that.

Most health-care interest groups want an outright IPAB repeal immediately, which is one major reason the House will vote on its repeal this week. But conservatives should not take that bait, and should instead work to replace IPAB with constructive reforms that modernize Medicare and make the program more fiscally sustainable for future generations.

As the old saying goes, “Be careful what you wish for—you just might get it.” Conservatives may not wish to see spending rise on an already unsustainable entitlement. But if they follow the efforts of K Street lobbyists and repeal IPAB without an effective substitute, that’s exactly what they would end up getting.

This post was originally published at The Federalist.

Democrats Talking Down Obamacare

It appears that analysts at the Center for American Progress (CAP) have taken up weightlifting in recent weeks, as their health-care team on Monday released a report that represented little more than an attempt to move the Obamacare goalposts. Released ahead of this morning’s start of the 2018 open enrollment period, the “analysis” claimed that, but for the Trump administration’s “sabotage” of Obamacare, enrollment in insurance exchanges would—wait for it—remain unchanged from current year levels.

So in CAP’s view, any decline in exchange enrollment lies entirely at Trump’s feet, but any increase in enrollment comes despite Trump, not because of him. (Funny that.) CAP demonstrated its complete confidence in the effect of Trump’s “sabotage” by failing to make any specific estimate or prediction about how much enrollment would decline due to the president’s actions. The paper discussed Obamacare, but its soft bigotry of low expectations—both for the exchanges and the accuracy of CAP’s own predictions—sounded straight out of the debate on No Child Left Behind.

Their Logic Says Obama Sabotaged His Own Program

But the decision to shorten the open enrollment period was first made by none other than those infamous “saboteurs” Barack Obama and Obama official Andy Slavitt. In February 2016, they announced that open enrollment in 2019 would range from November 1 to December 15. Upon taking office earlier this year, the Trump administration decided to implement this change a year ahead of time, due in part to the ways in which individuals were “gaming the system”—using the long open enrollment period and readily available special enrollment periods to sign up for coverage only after developing costly medical conditions.

A change? Sure. Sabotage? Only if you think Obama and Slavitt want to dismantle Obamacare.

Then there’s the question of funding for enrollment and outreach, which the Trump administration reduced from $100 million to $10 million. As with all organizations that believe beneficence lies solely through government, CAP claims private efforts “cannot fully make up for the wealth of information that only the government has for outreach, as well as the planning and funding that HHS dedicated to the program in past years.”

So maybe, just maybe, Hillary Clinton could cut short her walks in the woods, and raise money for Obamacare instead of hawking her own books. Who knows—maybe noted clean-energy advocate Tom Steyer will stop tilting at windmills, and run ads supporting Obamacare instead of Trump’s impeachment. Or Clinton could simply open up her checkbook and single-handedly replenish the outreach budget herself, given that she and her husband made $153 million giving speeches over their careers—a figure which puts both the Clintons’ largesse, and the outreach “cuts,” in perspective.

Regardless, having seen their profits double under the last administration, health insurers don’t need taxpayers funding ads encouraging people to buy their products. They have $15 billion in profits from 2015 to do that themselves. (With that much money, they could even reprise Andy Griffith’s ads promoting Obamacare.)

Is It Sabotage to Increase Health Coverage?

In the final category of “sabotage” comes the Trump administration’s decision to cancel cost-sharing reduction payments to insurers—payments that Judge Rosemary Collyer ruled unconstitutional nearly 18 months ago. CAP claims this decision will raise premiums for the 2018 plan year. But the decision will also lead to greater spending on insurance subsidies, and more individuals with health coverage, according to the Congressional Budget Office—outcomes CAP would ordinarily support, but somehow “forgot” to mention in its report.

If the states are so concerned that people will be scared away from the exchanges by the thought of higher premiums, perhaps they should stop yelling about higher premiums. With open enrollment just days away, perhaps the states should focus instead on communicating the message that they have devised a response to the CSR payment termination that will prevent harm to the large majority of people while in fact allowing millions of lower-income people to get a better deal on health insurance in 2018. [Emphasis mine.]

While out on the campaign trail, Obama famously told crowds: “Don’t boo—vote.” Perhaps Obamacare supporters should take the eponym’s advice, and spend less time over the next few weeks whining about “sabotage” over open enrollment and more time actually working to enroll people. And maybe, just maybe, all the Washington elites up in arms about President Trump’s “sabotage” of the law could take a truly radical step, and sign up for Obamacare coverage themselves.

This post was originally published at The Federalist.