Do House Republicans Support Socialized Medicine?

Health care, and specifically pre-existing conditions, remain in the news. The new Democratic majority in the House of Representatives has lined up two votes — one last week and one this week — authorizing the House to intervene in Texas’ lawsuit against the Affordable Care Act, also known as Obamacare. Speaker Nancy Pelosi, D-Calif., claims that the intervention will “protect” Americans with pre-existing conditions.

In reality, the pre-existing condition provisions represent Obamacare’s major flaw. According to the Heritage Foundation, those provisions have served as the prime driver of premium increases associated with the law. Since the law went into effect, premiums have indeed skyrocketed. Rates for individual health insurance more than doubled from 2013 through 2017, and rose another 30-plus percent last year to boot.

As a result of those skyrocketing premiums, more than 2.5 million people dropped their Obamacare coverage from March 2017 through March 2018. These people now have no coverage if and when they develop a pre-existing condition themselves.

A recent Gallup poll shows that Americans care far more about rising premiums than about being denied coverage for a pre-existing condition. Given the public’s focus on rising health care costs, Republicans should easily rebut Pelosi’s attacks with alternative policies that address the pre-existing condition problem while allowing people relief from skyrocketing insurance rates.

Unfortunately, that’s not what the Republican leadership in the House did. Last Thursday, Rep. Kevin Brady, R-The Woodlands, offered a procedural motion that amounted to a Republican endorsement of Obamacare. Brady’s motion instructed House committees to draft legislation that “guarantees no American citizen can be charged higher premiums or cost sharing as the result of a previous illness or health status, thus ensuring affordable health coverage for those with pre-existing conditions.”

If adopted — which thankfully it was not — this motion would only have entrenched Obamacare further. The pre-existing condition provisions represent the heart of the law, precisely because they have raised premiums so greatly. Those premium increases necessitated the mandates on individuals to buy, and employers to offer, health insurance. They also required the subsidies to make that more-expensive coverage “affordable” — and the tax increases and Medicare reductions needed to fund those subsidies.

More to the point, what would one call a health care proposal that treats everyone equally, and ensures that no one pays more or less than the next person? If this concept sounds like “socialized medicine” to you, you’d have company in thinking so. None other than Kevin Brady denounced Obamacare as “socialized medicine” at an August 2009 town hall at Memorial Hermann Hospital.

All of this raises obvious questions: Why did someone who for years opposed Obamacare as “socialized medicine” offer a proposal that would ratify and entrench that system further?

Republicans like Brady can claim they want to “repeal-and-replace” Obamacare from now until the cows come home, but if they want to retain the status quo on pre-existing conditions then as a practical matter they really want to uphold the law. Conservatives might wonder whether it’s time to “repeal-and-replace” Republicans with actual conservatives.

This post was originally published in the Houston Chronicle.

Bill Clinton’s Right: Pre-Existing Condition Vote IS “The Craziest Thing in the World”

The new House Democratic majority is bringing to the floor a resolution on Wednesday seeking to intervene in Texas’ Obamacare lawsuit. The House already voted to approve the legal intervention, as part of the rules package approved on the first day of the new Congress Thursday, but Democrats are making the House vote on the subject again, solely as a political stunt.

I have previously discussed what the media won’t tell you about the pre-existing condition provisions—that approval of these Obamacare “protections” drops precipitously when people are asked if they support the provisions even if they would cause premiums to go up. I have also outlined how a Gallup poll released just last month shows how all groups of Americans—including Democrats and senior citizens—care more about rising premiums than about losing their coverage due to a pre-existing condition.

Bill Clinton Got This One Right

The current system works fine if you’re eligible for Medicaid, if you’re a lower income working person, if you’re already on Medicare, or if you get enough subsidies on a modest income that you can afford your health care. But the people that are getting killed in this deal are small business people and individuals who make just a little too much to get any of these subsidies. Why? Because they’re not organized, they don’t have any bargaining power with insurance companies, and they’re getting whacked. So you’ve got this crazy system where all of a sudden 25 million more people have health care, and then the people who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half. It’s the craziest thing in the world.

Why did people “who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half”? Because of the pre-existing condition provisions in Obamacare.

Clinton knew of which he spoke. Premiums more than doubled from 2013 to 2017 for Obamacare-compliant individual coverage, only to rise another 30 percent in 2018. A Heritage Foundation paper just last March concluded that the pre-existing condition provisions—which allow anyone to sign up for coverage at the same rate, even after he or she develops a costly medical condition—represented the largest driver of premium increases due to Obamacare.

The Congressional Budget Office concluded that the law would reduce the labor supply by the equivalent of 2.5 million workers. Because so many people cannot afford their Obamacare coverage without a subsidy now that the law has caused premiums to skyrocket, millions of Americans are working fewer hours and earning less income precisely to ensure they maintain access to those subsidies. Obamacare has effectively raised their taxes by taking away their subsidies if they earn additional income, so they have decided not to work as hard.

Why Do Republicans Support This ‘Crazy’ Scheme?

Given this dynamic—skyrocketing premiums, millions dropping coverage, taxes on success—you would think that Republicans would oppose the status quo on pre-existing conditions, and all the damage it has wrought. But no.

Guarantees no American citizen can be charged higher premiums or cost sharing as the result of a previous illness or health status, thus ensuring affordable health coverage for those with pre-existing conditions.

I’ve said it before, but I’ll say it again: As a matter of policy, any proposal that retains the status quo on pre-existing conditions by definition cannot repeal Obamacare. In essence, this Republican proposal amounted to a plan to “replace” Obamacare with the Affordable Care Act.

Even more to the point: What’s a good definition for a plan that charges everyone the exact same amount for health coverage? How about “I’ll take ‘Socialized Medicine’ for $800, Alex”?

There are better, and more effective, ways to handle the problem of pre-existing conditions than Obamacare. I’ve outlined several of them in these pages of late. But if Republicans insist on ratifying Obama’s scheme of socialized medicine, then they are—to use Bill Clinton’s own words—doing “the craziest thing in the world.”

This post was originally published at The Federalist.

Exclusive: Inside the Trump Administration’s Debate over Expanding Obamacare

Last August, I responded to a New York Times article indicating that some within the Trump administration wanted to give states additional flexibility to expand Medicaid under Obamacare. Since then, those proposals have advanced, such that staff at the Centers for Medicare and Medicaid Services (CMS) believe that they have official sign-off from the president to put those proposals into place.

My conversations with half a dozen sources on Capitol Hill and across the administration in recent weeks suggest that the proposal continues to move through the regulatory process. However, my sources also described significant policy pitfalls that could spark a buzz-saw of opposition from both the left and the right.

The Times reported that some within the administration—including CMS Administrator Seema Verma and White House Domestic Policy Council Chairman Andrew Bremberg—have embraced the proposal. But if the plan overcomes what the Times characterized as a “furious” internal debate, it may face an even tougher reception outside the White House.

How It Would Work

After the Supreme Court made Medicaid expansion optional for states as part of its 2012 ruling upholding Obamacare’s individual mandate, the Obama administration issued guidance interpreting that ruling. While the court made expansion optional for states, the Obama administration made it an “all-or-nothing” proposition for them.

Under the 2012 guidance—which remains in effect—if states want to receive the enhanced 90 percent federal match associated with expansion, they must cover the entire expansion population—all able-bodied adults with incomes under 138 percent of the federal poverty level (just under $35,000 for a family of four). If states expand only to some portion of the eligible population, they would only receive their regular Medicaid match of 50-76 percent, not the enhanced 90 percent match.

The Internal Debate

The August Times article indicated that, after considering partial expansion, the administration postponed any decision until after November’s midterm elections. Since that time, multiple sources disclosed to me a further meeting that took place on the topic in the Oval Office late last year. While the meeting was originally intended to provide an update for the president, CMS staff left that meeting thinking they had received the president’s sign-off to implement partial expansion.

Just before Christmas, during a meeting on an unrelated matter, a CMS staffer sounded me out on the proposal. The individual said CMS was looking for ways to help give states additional flexibility, particularly states hamstrung by initiatives forcing them to expand Medicaid. However, based on my other reporting, I believe that the conversation also represented an attempt to determine the level of conservative opposition to the public announcement of a decision CMS believes the president has already made.

Why Liberals Will Object

During my meeting, I asked the CMS staffer about the fiscal impacts of partial expansion. The staffer admitted that, as I had noted in my August article, exchange plans generally have higher costs than Medicaid coverage. Therefore, moving individuals from Medicaid to exchange coverage—and the federal government paying 100 percent of subsidy costs for exchange coverage, as opposed to 90 percent of Medicaid costs—will raise federal costs for every beneficiary who shifts coverage under partial expansion.

The Medicare actuary believes that the higher cost-sharing associated with exchange coverage will lead 30 percent of the target population—that is, individuals with incomes from 100-138 percent of poverty—to drop their exchange plan. Either beneficiaries will not be able to afford the premiums and cost-sharing, or they will not consider the coverage worth the money. And because 30 percent of the target population will drop coverage, the partial expansion change will save money in a given state—despite the fact that exchange coverage costs more than Medicaid on a per-beneficiary basis.

Why Conservatives Will Object

I immediately asked the CMS staffer an obvious follow-up question: Did the actuary consider whether partial expansion, by shifting the costs of expansion from the states to the federal government, would encourage more states to expand Medicaid? The staffer demurred, saying the actuary’s analysis focused on only one hypothetical state.

However, the CMS staffer did not tell me the entire story. Subsequent to my “official” meeting with that staffer, other sources privately confirmed that the actuary does believe that roughly 30 percent of the target population will drop coverage.

But these sources and others added that both the Medicare actuary and the Congressional Budget Office (CBO) agree that, notwithstanding the savings from current expansion states—savings associated with individuals dropping exchange coverage, as explained above—the partial expansion proposal will cost the federal government overall, because it will encourage more states to expand Medicaid.

For instance, the Council of Economic Advisers believes that spending on non-expansion states who use partial expansion as a reason to extend Medicaid to the able-bodied will have three times the deficit impact as the savings associated with states shifting from full to partial expansion.

Because the spending on new partial expansion states will overcome any potential savings from states shifting from full to partial expansion, the proposal, if adopted, would appreciably increase the deficit. While neither CBO nor the Medicare actuary have conducted an updated analysis since the election, multiple sources cited an approximate cost to the federal government on the order of $100-120 billion over the next decade.

One source indicated that the Medicare actuary’s analysis early last summer arrived at an overall deficit increase of $111 billion. The results of November’s elections—in which three non-expansion states voted to accept expansion due to ballot initiatives—might have reduced the cost of the administration’s proposal slightly, but likely did not change the estimate of a sizable deficit increase.

A net cost of upwards of $100 billion, notwithstanding potential coverage losses from individuals dropping exchange coverage in current expansion states, can only mean one thing. CBO and the Medicare actuary both believe that, by lowering the cost for states to expand, partial expansion will prompt major non-expansion states—such as Texas, Florida, Georgia, and North Carolina—to accept Obamacare’s Medicaid expansion.

Who Will Support This Proposal?

Based on the description of the scoring dynamic my sources described, partial expansion, if it goes forward, seems to have no natural political constituency. Red-state governors will support it, no doubt, for it allows them to offload much of their state costs associated with Medicaid expansion onto the federal government’s debt-laden dime. Once CMS approves one state’s partial expansion, the agency will likely have a line of Republican governors out its door looking to implement waivers of their own.

But it seems unlikely that Democratic-led states will follow suit. Indeed, the news that partial expansion would cause about 30 percent of the target population to drop their new exchange coverage could well prompt recriminations, investigations, and denunciations from Democrats in Congress and elsewhere. Because at least 3.1 million expansion beneficiaries live in states with Republican governors, liberals likely would object to the sizable number of these enrollees who could decide to drop coverage under partial expansion.

Conversely, conservatives will likely object to the high net cost associated with the proposal, notwithstanding the potential coverage losses in states that have already expanded. Some within the administration view Medicaid expansion, when coupled with proposals like work requirements, as a “conservative” policy. Other administration officials view expansion in all states as something approaching a fait accompli, and view partial expansion and similar proposals as a way to make the best of a bad policy outcome.

But Medicaid expansion by its very nature encourages states to discriminate against the most vulnerable in society, because it gives states a higher match for covering able-bodied adults than individuals with disabilities. In addition to objecting to a way partial expansion would increase government spending by approximately $100 billion, some conservatives would also raise fundamental objections to any policy changes that would encourage states to embrace Obamacare—and add even more able-bodied adults to the welfare rolls in the process.

Particularly given the Democratic takeover of the House last week, the multi-pronged opposition to this plan could prove its undoing. Democrats will have multiple venues available—from oversight through letters and subpoenae, to congressional hearings, to use of the Congressional Review Act to overturn any administration decisions outright—to express their opposition to this proposal.

A “strange bedfellows” coalition of liberals and conservatives outraged over the policy, but for entirely different reasons, could nix it outright. While some officials may not realize it at present, the administration may not only make a decision that conservatives will object to on policy grounds, they may end up in a political quagmire in the process.

This post was originally published at The Federalist.

Ocasio-Cortez Wants Congress to Stop Pretending to Pay for Its Spending

Get used to reading more storylines like this over the next two years: The left hand doesn’t know what the far-left hand is doing.

On Wednesday, incoming House Speaker Nancy Pelosi (D-CA) faced a potential revolt from within her own party. Rep.-elect Alexandria Ocasio-Cortez (D-NY) and several progressive allies threatened to vote against the rules package governing congressional procedures on the first day of the new Congress Thursday, because of proposed changes they believe would threaten their ability to pass single-payer health care.

What’s Going On?

Ocasio-Cortez and her allies object to Pelosi’s attempt to reinstate Pay-as-You-Go (PAYGO) rules for the new 116th Congress. Put simply, those rules would require that any legislation the House considers not increase the deficit over five- and ten-year periods. In short, this policy would mean that any bill proposing new mandatory spending or revenue reductions must pay for those changes via offsetting tax increases and/or spending cuts—hence the name.

Under Republican control, the House had a policy requiring spending increases—but not tax cuts—to be paid for. Pelosi would overturn that policy and apply PAYGO to both the spending and the revenue side of the ledger.

Progressives object to Pelosi’s attempt to constrain government spending, whether in the form of additional fiscal “stimulus” or a single-payer health system.

However, Pelosi’s spokesman countered with a statement indicating that the progressives’ move “is a vote to let Mick Mulvaney make across-the-board cuts.” Mulvaney heads the Office of Management and Budget, which would implement any sequester under statutory PAYGO.

Regardless of what the new House decides regarding its own procedures for considering bills, Pay-as-You-Go remains on the federal statute books. Democrats re-enacted it in 2010, just prior to Obamacare’s passage. If legislation Congress passed  violates those statutory PAYGO requirements (as opposed to any internal House rules), it will trigger mandatory spending reductions via the sequester—the “across-the-board cuts” to which Pelosi’s spokesman referred.

To Pay for Spending—Or Not?

Progressives think reinstituting PAYGO would impose fiscal constraints hindering their ability to pass massive new spending legislation. However, the reality does not match the rhetoric from Ocasio-Cortez and others. Consider, for instance, just some of the ways a Democratic Congress “paid for” the more than $1.8 trillion in new spending on Obamacare:

  • A CLASS Act that even some Democrats called “a Ponzi scheme of the first order, the kind of thing Bernie Madoff would have been proud of,” and which never went into effect because the Obama administration could not implement it in a fiscally sustainable manner;
  • Double counting the Medicare savings in the legislation as “both” improving the solvency of Medicare and paying for the new spending in Obamacare;
  • Payment reductions that the non-partisan Medicare actuary considers extremely unlikely to be sustainable, and which could cause more than half of hospitals and nursing homes to become unprofitable within a generation;
  • Tax increases that Congress has repeatedly delayed, and which could end up never going into effect.

A Bipartisan Spending Addiction

An external observer weighing the Part D and Obamacare examples would find it difficult to determine the less dishonest approach to fiscal policy. It reinforces that America’s representatives have a bipartisan addiction to more government spending, and a virtually complete unwillingness to make tough choices now, instead bequeathing massive (and growing) amounts of debt to the next generation.

In that sense, Ocasio-Cortez and her fellow progressives should feel right at home in the new Congress. Republicans may criticize her for proposing new spending, but the difference between her and most GOP members represents one of degree rather than of kind. Therein lies the problem: In continuing to spend with reckless abandon, Congress is merely debating how quickly to sink our country’s fiscal ship.

This post was originally published at The Federalist.

Poll: People Care MORE About Rising Costs Than Pre-Existing Conditions

Now they tell us! A Gallup poll, conducted last month to coincide with the midterm elections and released on Tuesday, demonstrated what I had posited for much of the summer: Individuals care more about rising health insurance premiums than coverage of pre-existing condition protections.

Of course, liberal think tanks and the media had no interest in promoting this narrative, posing misleading and one-sided polling questions to conclude that individuals liked Obamacare’s pre-existing condition “protections,” without simultaneously asking whether people liked the cost of those provisions.

Overwhelming Concern about Premiums

Ironically, a majority of 57 percent said the denial of coverage for pre-existing conditions did not constitute a major concern for them, with only 42 percent agreeing with the statement. Lest one believe that the relative insouciance over pre-existing conditions came because Democrats won a majority in the House, therefore “protecting” Obamacare, Gallup conducted the survey from November 1–11, meaning more than half the survey period came before the American people knew the election outcome.

By comparison, more than three-fifths (61 percent) of respondents viewed rising premiums as a major concern, with only 37 percent not viewing it as such. Not only did premiums register as a bigger concern by 19 percentage points overall, it registered as a larger concern in each and every demographic group Gallup surveyed:

Income under $30,000: +15 percent (70 percent said premiums were a major concern, 55 percent said pre-existing condition coverage was a major concern)

Income between $30,000-$75,000: +19 percent (63 percent premiums, 44 percent pre-ex)

Income above $75,000: +24 percent (57 percent premiums, 33 percent pre-ex)

On Medicare/Medicaid: +16 percent (60 percent premiums, 44 percent pre-ex)

On private insurance: +24 percent (60 percent premiums, 36 percent pre-ex)

Republicans: +25 percent (52 percent premiums, 27 percent pre-ex)

Independents: +19 percent (64 percent premiums, 45 percent pre-ex)

Democrats: +16 percent (68 percent premiums, 52 percent pre-ex)

Aged 18-29: +16 percent (54 percent premiums, 38 percent pre-ex)

Aged 30-49: +23 percent (65 percent premiums, 42 percent pre-ex)

Aged 50-64: +21 percent (67 percent premiums, 46 percent pre-ex)

Aged over 65: +13 percent (57 percent premiums, 44 percent pre-ex)

Men: +18 percent (56 percent premiums, 38 percent pre-ex)

Women: +20 percent (67 percent premiums, 47 percent pre-ex)

With those double-digit margins (i.e., outside the poll’s margin of error) in every demographic group—including among groups more likely concerned about pre-existing conditions, for reasons either practical (i.e., older Americans) or ideological (i.e., Democrats)—Gallup has overwhelming evidence to support its claim that “concerns are greatest about the possibility of having to pay higher premiums.”

Premiums more than doubled from 2013 to 2017, as the law’s major provisions, including the pre-existing condition requirements, took effect. They again rose sharply in 2018, causing approximately 2.5 million individuals to drop their Obamacare-compliant coverage completely.

Not a Surprise Outcome

The Gallup results confirm prior surveys from the Cato Institute, which also demonstrate that support for Obamacare’s pre-existing condition provisions drops dramatically once people recognize the trade-offs—namely, higher premiums and a “race to the bottom” among insurers, reducing access to specialist providers and lowering the quality of care:

But the polling suggests that Democrats have no such mandate, and that they should think again in their approach. Rather than making an already bad situation worse, and potentially raising premiums yet again, they should examine alternatives that can solve the pre-existing condition problem (and yes, it is a problem) by making it easier for people to buy coverage before they develop a pre-existing condition in the first place.

As the polling indicates, the American people—to say nothing of the 2.5 million priced out of the marketplace in the past 12 months—will thank them for doing so.

This post was originally published at The Federalist.

D.C. Council’s Motto: “Obamacare for Thee — But Not for Me!”

On the first of the month, D.C. Mayor Muriel Bowser held an event at Freedom Plaza to celebrate the start of Obamacare’s annual open enrollment period. She appeared with Mila Kofman, head of the District’s health insurance exchange, D.C. Health Link. In conjunction with the event, the mayor issued a proclamation declaring the open enrollment period “Get Covered, Stay Covered” months, and noting that “residents should visit [D.C. Health Link’s website] to shop for and compare health insurance.”

But in encouraging others to “get covered,” and promoting the D.C. Health Link site, Bowser omitted one key detail: She does not buy the policies that D.C. Health Link sells. My recent Freedom of Information Act request confirmed that Bowser, like most of her D.C. Council colleagues, received taxpayer-funded insurance subsidies to purchase their coverage through the District government, rather than through D.C. Health Link. Thus, DC spent nearly half a million in taxpayer funds because the mayor and council won’t be bothered to enroll in Obamacare.

Forfeiting generous employer subsidies might seem like an unreasonable request to make of the mayor and council. But earlier this year, the council passed, and Bowser signed, legislation requiring all District residents to buy health coverage or pay a tax — including tens of thousands of residents who do not qualify for subsidies.

According to public records, Bowser receives an annual salary of $200,000; council members receive $140,600 annually. This year, I will receive less income than any of them, and as a small business owner my income is far from guaranteed, unlike public officials’ salaries. Yet the mayor and council have required me to buy health coverage without a subsidy, even as they refuse to do so themselves.

I asked Bowser about this obvious inequity. Under Obamacare, an individual with income of $50,000 — one-quarter of Bowser’s salary — does not qualify for an income-based subsidy. Bowser required this individual to buy coverage without assistance, while earning much more in salary and retaining her employer subsidy. Did she see a double standard in her conduct?

When it came to the issue of equity and fairness, she didn’t have a substantive answer, nor did her council colleagues. I asked staff for each council member about their health insurance coverage, and any subsidies received. Most staff never responded to my outreach. Staff for Councilman Robert White said they would ask him about his coverage, but never sent a reply. Staff for two councilmembers, Phil Mendelson and Brandon Todd, replied with explanations about the subsidies being provided as an employer benefit.

But neither Bowser nor the council members could justify requiring other District residents, including many with lower incomes than they, from buying coverage without a subsidy even as they will not do so themselves. And how could they? Quite often, it seems liberals who preach frequently about “fairness” regarding others’ actions fall eerily silent when doing so would cost them personally. “Obamacare for thee — but not for me” doesn’t provide a particularly compelling slogan, but the mayor and council have sent that very message by their actions.

Official Washington contains numerous examples of hypocrisy and double standards, but that doesn’t make either a “D.C. value.” If Bowser wishes to abide by the D.C. values she campaigned on, she and the council members should give up their subsidies and buy health insurance just like ordinary residents do. If they find that task too difficult or costly, then perhaps they should repeal the exact same requirement they put on everyone else.

This post was originally published at The Federalist.

Three Elements of a Conservative Health Care Vision

Recently I wrote about how conservatives failed to articulate a coherent vision of health care, specifically issues related to pre-existing conditions, in the runup to the midterm elections. That article prompted a few Capitol Hill colleagues to ask an obvious question: What should a conservative vision for health care look like? It’s one thing to have answers on specific issues (i.e., alternatives to Obamacare’s pre-existing condition regulations), but what defines the vision of where conservatives should look to move the debate?

Henceforth, my attempt to outline that conservative health-care vision on a macro level with three relatively simple principles. Others may express these concepts slightly differently—and I take no particular pride of authorship in the principles as written—but hopefully they will help to advance thinking about where conservative health policy should lead.

Portable Insurance

Conversely, conservatives believe in insurance purchased by individuals—or, as my former boss Jim DeMint likes to describe it, an insurance policy you can buy, hold, and keep. With most Americans still obtaining health coverage from their employers, a move to individually owned coverage would mean individuals themselves would decide what kind of insurance to purchase, rather than a business’s HR executives.

Conservatives should also promote the concept of portable insurance that can move from job to job, and ideally from state to state as well. If individuals can buy an insurance policy while young, and take it with them for decades, then much of the problem of covering individuals with pre-existing conditions will simply disappear—people will have the same insurance before their diagnosis that they had for years beforehand.

I wrote approvingly about the Trump administration’s proposals regarding Health Reimbursement Arrangements precisely because I believe that, if implemented, they will advance both prongs of this principle. Allowing employees to receive an employer contribution for insurance they own will make coverage both individual and portable, in ways that could revolutionize the way Americans buy insurance.

A Sustainable Safety Net

As it is, the Medicare program became functionally insolvent more than a year ago. The year before Obamacare’s passage, the Medicare trustees asserted the program’s hospital insurance trust fund would become insolvent in 2017. Only the double-counting included in Obamacare—whereby the same Medicare savings were used both to “save Medicare” and fund Obamacare—has allowed the program to remain solvent, on paper if not in fact.

Reasonable people may disagree on precisely where and how to draw the line at the sustainability of our entitlements. For instance, I hold grave doubts that able-bodied adults belong on Medicaid, particularly given the way Obamacare’s expansion of Medicaid has encouraged states to discriminate against individuals with disabilities and the most vulnerable.

But few could argue that the current system qualifies as sustainable. Far from it. With Medicare beneficiaries receiving more from the system in benefits than they paid in taxes—and the gap growing every year—policy-makers must make hard choices to right-size our entitlements. And they should do so sooner rather than later.

Appropriately Aligned Incentives

Four decades ago, Margaret Thatcher hinted at the primary problem in health care when she noted that socialists always run out of other people’s money. Because third-party insurers—in most cases selected by HR executives at individuals’ place of business rather than the individuals themselves—pay for a large share of health expenses, most Americans know little about the price of specific health care goods and services (and care even less).

To state the obvious: No, individuals shouldn’t try to find health care “deals” in the ambulance on the way to the hospital. But given that much health care spending occurs not for acute cases (e.g., a heart attack) but for chronic conditions (i.e., diabetes), policymakers do have levers to try to get the incentives moving in the right direction.

Reforming the tax treatment of health insurance—which both encourages individuals to over-consume care and ties most Americans to employer-based insurance—would help align incentives, while also encouraging more portable insurance. Price transparency might help, provided those prices are meaningful (i.e., they relate to what individuals will actually pay out-of-pocket). Giving individuals financial incentives to shop around for procedures like MRIs, or even surgical procedures, also would place downward pressure on prices.

This post was originally published at The Federalist.

How Republicans Shot Themselves in the Foot on Pre-Existing Conditions

Republicans who want to blame their election shortcomings on last year’s attempt to “repeal-and-replace” Obamacare will have all the fodder they need from the media. A full two weeks before Election Day, the bedwetters caucus was already out in full force:

House Republicans are increasingly worried that Democrats’ attacks on their votes to repeal and replace Obamacare could cost them the House. While the legislation stalled in the Senate, it’s become a toxic issue on the campaign trail for the House Republicans who backed it.

In reality, however, the seeds of this problem go well beyond this Congress, or even the last election cycle. A health care strategy based on a simple but contradictory slogan created a policy orphan that few Republicans could readily defend.

A Dumb Political Slogan

Around the same time last year, I wrote an article explaining why the “repeal-and-replace” mantra would prove so problematic for the Republican Congress trying to translate the slogan into law. Conservatives seized on the “repeal” element to focus on eradicating the law, and taking steps to help lower health costs.

By contrast, moderates assumed that “replace” meant Republican lawmakers had embraced the mantra of universal health coverage, and would maintain most of the benefits—both the number of Americans with insurance and the regulatory “protections”—of Obamacare itself. Two disparate philosophies linked by a conjunction does not a governing platform make. The past two years proved as much.

A Non-Sensical Bill

In life, one mistake can often lead to another, and so it proved in health care. After having created an internal divide through the “repeal-and-replace” mantra over four election cycles, Republicans had to put policy meat on the details they had papered over for seven years. In so doing, they ended up with a “solution” that appealed to no one.

  1. Removed Obamacare’s requirements for what treatments insurers must cover (e.g., essential health benefits);
  2. Removed Obamacare’s requirements about how much of these treatments insurers must cover (e.g., actuarial value, which measures a percentage of expected health expenses covered by insurance); but
  3. Retained Obamacare’s requirements about whom insurance must cover—the requirement to cover all applicants (guaranteed issue), and the related requirement not to vary premiums based on health status (community rating).

As I first outlined early last year, this regulatory combination resulted in a witch’s brew of bad outcomes on both the policy and political fronts:

  • Because lawmakers retained the requirements for insurers to cover all individuals, regardless of health status, the bills didn’t reduce premiums much. If insurers must charge all individuals the same rates regardless of their health, they will assume that a disproportionately sicker population will sign up. That dynamic meant the bills did little to reverse the more-than-doubling of individual market insurance premiums from 2013-17. What little premium reduction did materialize came largely due to the corporate welfare payments the bills funneled to insurers in the form of a “Stability Fund.”
  • However, because lawmakers removed the requirements about what and how much insurers must cover, liberal groups raised questions about access to care, particularly for sicker populations. This dynamic led to the myriad charges and political attacks about Republicans “gutting” care for people with pre-existing conditions.

You couldn’t have picked a worse combination for lawmakers to try to defend. The bills as written created a plethora of “losers” and very few clear “winners.” Legislators absorbed most of the political pain regarding pre-existing conditions that they would have received had they repealed those regulations (i.e., guaranteed issue and community rating) outright, but virtually none of the political gain (i.e., lower premiums) from doing so.

Some people—including yours truly—predicted this outcome. Before the House voted on its bill, I noted that this combination would prove untenable from a policy perspective, and politically problematic to boot. Republicans plowed ahead anyway, likely because they saw this option as the only way to breach the policy chasm caused by bad sloganeering, and paid the price.

Lawmaker Ignorance and Apathy

That apathy continued after Obamacare’s enactment. While Suderman articulated an alternative vision to the law, he admitted that “Republicans can’t make the case for that plan because they’ve never figured out what it would look like. The GOP plan is always in development but never ready for final release.”

Emphasizing the “repeal-and-replace” mantra allowed Republicans to avoid face the very real trade-offs that come with making health policy. When a Republican Congress finally had to look those trade-offs in the face, it couldn’t. Many didn’t know what they wanted, or wanted a pain-free solution (“Who knew health care could be so complicated?”). Difficulty regarding trade-offs led to the further difficulty of unifying behind a singular policy.

Can’t Avoid Health Care

Many conservative lawmakers face something that could be described as “health policy PTSD”—they don’t understand it, so they don’t study it; they only define their views by what they oppose (e.g., “Hillarycare” and Obamacare); and when they put out proposals (e.g., premium support for Medicare and “repeal-and-replace” on Obamacare), they get attacked. So they conclude that they should never talk about the issue or put out proposals. Doubtless Tuesday’s election results will confirm that tendency for some.

Rather than using the election results to avoid health care, Republican lawmakers instead should lean in to the issue, to understand it and ascertain what concepts and policies they support. The left knows exactly what it wants from health care: More regulation, more spending, and more government control—leading ultimately to total government control.

Conservatives must act now to articulate an alternative vision, because the 800-pound gorilla of Washington policy will not disappear any time soon.

This post was originally published at The Federalist.

Will Disclosing Prescription Drug Prices in TV Ads Make Any Difference?

Why did the Trump administration last Monday propose requiring pharmaceutical companies to disclose their prices in television advertisements? A cynic might believe the rule comes at least in part because the drug industry opposes it.

Now, I carry no water for Big Pharma. For instance, I opposed their effort earlier this year to repeal an important restraint on Medicare spending. But this particular element of the administration’s drug pricing plan appears to work in a similar manner as some of the president’s tweets—to dominate headlines through rhetoric, rather than through substantive policy changes.

Applies Only to Television

The rule “seek[s] comment as to whether we should apply this regulation to other media formats,” but admits that the administration initially “concluded that the purpose of this regulation is best served by limiting the requirements” to television. However, five companies alone accounted for more than half of all drug advertisements in the past year. Among those five companies, the advertisements promoted 19 pharmaceuticals—meaning that new disclosure regime would apply to very few drugs.

If the “purpose of this regulation” is to affect pharmaceutical pricing, then confining disclosures only to television advertisements would by definition have a limited impact. If, however, the “purpose of this regulation” is primarily political—to force drug companies into a prolonged and public legal fight on First Amendment grounds, or to allow the administration to point to disclosures in the most prominent form of media to say, “We’re doing something on drug costs!”—then the rule will accomplish its purpose.

Rule Lacks Data to Support Its Theory

On three separate occasions, in the rule’s Regulatory Impact Analysis—the portion of the rule intended to demonstrate that the regulation’s benefits outweigh its costs—the administration admits it has very few hard facts: “We lack data to quantify these effects, and seek public comment on these impacts.”

It could encourage people to consume more expensive medicines (particularly if their insurance pays for it), because individuals may think costlier drugs are “better.” Or it could discourage companies from advertising on television at all, which could reduce drug consumption and affect people’s health (or reduce health spending while having no effect on individuals’ health).

Conservative think-tanks skewered several Obamacare rules released in 2010 for the poor quality and unreasonable assumptions in their Regulatory Impact Analyses. Although released by a different administration of a different party, this proposed regulation looks little different.

Contradictions on Forced Speech?

Finally, the rule refers on several occasions to the Supreme Court’s ruling earlier this year in a case involving California crisis pregnancy centers. That case, National Institute of Family and Life Advocates v. Becerra, overturned a California state law requiring reproductive health clinics, including pro-life crisis pregnancy centers, to provide information on abortion to patients.

The need for that distinction arises because the pharmaceutical industry will likely challenge the rule on First Amendment grounds as an infringement on their free speech rights. However, a pro-life administration attempting to force drug companies to disclose pricing information, while protecting crisis pregnancy centers from other forced disclosures, presents some interesting political optics.

A Political ‘Shiny Object’

Ironically enough, most of the administration’s actions regarding its prescription drug pricing platform have proven effective. Food and Drug Administration Commissioner Scott Gottlieb has helped speed the approval of generic drugs to market, particularly in cases where no other competitors exist, to help stabilize the marketplace.

Other proposals to change incentives within Medicare and Medicaid also could bring down prices. These proposals won’t have an immediate effect—as would Democratic blunt-force proposals to expand price controls—but collectively, they will have an impact over time.

This administration can do better than that. Indeed, they already have. They should leave the political stunts to the president’s Twitter account, and get back to work on more important, and more substantive, proposals.

This post was originally published at The Federalist.

What Mitch McConnell and Congressional Democrats Get Wrong about Entitlements

Sometimes, as parents often remind children in their youth, two wrongs don’t make a right. This held true on Tuesday, when Democrats erupted over comments by Senate Majority Leader Mitch McConnell (R-KY) on entitlement reform.

In returning to “Mediscare” tactics, Democrats made several false claims about entitlements. But so did McConnell, who blithely omitted what a Republican majority did earlier this year to worsen the country’s entitlement shortfall.

What McConnell Got Wrong

McConnell spoke accurately when he said in an interview that Medicare, Social Security, and Medicaid serve as the primary drivers of our long-term debt. He stood on less firm ground when he told Bloomberg that “the single biggest disappointment of my time in Congress has been our failure to address the entitlement issue.” Contra McConnell’s claim, Congress—a Republican Congress—actually did address the entitlement issue this year: they made the problem worse.

This Republican Congress repealed a cap on Medicare spending—the first such cap in that program’s history. It did so as part of a budget-busting fiscal agreement that increased the debt by hundreds of billions of dollars. It did so even though Republicans could have retained the cap on Medicare spending while repealing the unelected, unaccountable board that Democrats included in Obamacare to enforce that spending cap.

By and large, both parties have tried for years to avoid taking on entitlement reform. But Democrats included an actual cap on Medicare spending as part of Obamacare, and Republicans turned around and repealed it at their first possible opportunity. That makes entitlements not just a bipartisan problem—it makes them a Republican problem too.

What Democrats Got Wrong

But McConnell’s comments suggested just the opposite. He noted that, while entitlements serve as the prime driver of the nation’s long-term debt, any changes to those programs “may well be difficult if not impossible to achieve when you have unified government.” McConnell said the same thing in a separate interview with Reuters on Wednesday: “We all know that there will be no solution to that, short of some kind of bipartisan grand bargain that makes the very, very popular entitlement programs in a position to be sustained. That hasn’t happened since the ’80s.”

Even though Congress needs to start reforming entitlements sooner rather than later—even if that means one political party must take the lead—McConnell indicated he would do nothing of the sort. In fact, his comments implied that Congress would not do so unless and until Democrats agreed to entitlement reform, giving the party an effective veto over any changes. Yet Democrats, who never fail to demagogue an issue, attacked him for those comments anyway.

Actually, they haven’t “earned” those benefits. Seniors may have “paid into” the system during their working lives, but the average senior citizen receives far more in benefits than he or she paid in taxes, and the gap continues to grow.

Making a Tough Job Worse

In this case, two wrongs not only did not make a right, they made our country worse off. Like outgoing Speaker of the House Paul Ryan (R-WI), McConnell wishes to absolve himself of blame for the entitlement crisis, when he made the situation worse.

On the other side, Pelosi and her fellow Democrats continue the partisan demagoguery, perpetuating the myth that seniors have “earned” their benefits because they see political advantage in defending nearly infinite amounts of government subsidies to nearly infinite numbers of people. For all their love of attacking “science deniers,” much of the left’s politics requires denying math—that unsustainable trends can continue in perpetuity.

At some point, this absurd game will have to end. When it finally does, our country might not have any money left.

This post was originally published at The Federalist.