Joe Biden’s Health Care Plan: SandersCare Lite

On Monday morning, former vice president Joe Biden released the health care plan for his 2020 presidential campaign. The plan comes ahead of a single-payer health plan speech by Sen. Bernie Sanders (I-VT) scheduled for Wednesday.

Biden’s plan includes several noteworthy omissions. For instance, it does not include any reference to health coverage for foreign citizens illegally present in the United States. That exclusion seems rather surprising, given both Democrats’ embrace of health benefits for those unlawfully present in last month’s debate, and Biden’s repeated references to the issue.

Biden said later on Monday that illegally present foreign citizens should have access to “public health clinics if they’re sick,” but not health insurance. He also claimed that last month’s debate format did not give him enough time to explain his position.

Overall, however, Biden’s plan includes many similarities to Sanders’. While both Sanders and Biden want to draw contrasts on health care—Sanders to attack Biden as beholden to corporate interests, and Biden to attack Sanders for wanting to demolish Obamacare—their plans contain far more similarities than differences.

Losing Coverage

Sanders’ bill would, as the American people have gradually learned this year, make private insurance “unlawful,” taking coverage away from approximately 300 million Americans. Biden’s plan specifically attacks single payer on this count, for “starting from scratch and getting rid of private insurance.”

As with Obamacare, Biden’s promise will echo hollow. By creating a government-run “public option” like Sanders’, the Biden plan would also take away health coverage for millions of Americans. As I have previously explained, a government-run plan would sabotage private insurance, using access to Treasury dollars and other in-built structural advantages.

In 2009, the Lewin Group concluded that a government-run health plan, available to all individuals and paying doctors and hospitals at Medicare rates (i.e., less than private insurance), would lead to 119.1 million individuals losing employer coverage:

More Spending

Biden would also expand the Obamacare subsidy regime, in three ways. He would:

  1. Reduce the maximum amount individuals would pay in premiums from 9.86% of income to no more than 8.5% of income, with federal subsidies making up the difference.
  2. Repeal Obamacare’s income cap on subsidies, so that families with incomes of more than four times the poverty level ($103,000 for a family of four in 2019) can qualify for subsidies.
  3. To lower deductibles and co-payments, link insurance subsidies to a richer “gold” plan, one that covers 80% of an average enrollee’s health costs in a given year, rather than the “silver” plan under current law.

All three of these recommendations come from the liberal Urban Institute’s Healthy America plan, issued last year. However, they all come with a big price tag. Consider the following excerpt from Biden’s plan:

Take a family of four with an income of $110,000 per year. If they currently get insurance on the individual marketplace [i.e., Exchange], because their premium will now be capped at 8.5% of their income, under the Biden Plan they will save an estimated $750 per month on insurance alone. That’s cutting their premiums almost in half. [Emphasis original.]

That’s also making coverage “affordable” for families through unaffordable levels of federal spending. By its own estimates, Biden’s plan will give a family with an income of $110,000 annually—which is approximately double the national median household income—$9,000 per year in federal insurance subsidies. Some families with that level of income may not even pay $9,000 annually in federal income taxes, depending upon their financial situation, yet they will receive sizable amounts of taxpayer-funded largesse.

Price Controls and Regulations

The drug price section of the Biden plan includes the usual leftist tropes about “prescription drug corporations…profiteering off of the pocketbooks of sick individuals.” It proposes typical liberal “solutions” in the form of price controls, whether importing price-controlled pharmaceuticals from overseas, or allowing “an evaluation by…independent board members” (i.e., bureaucrats) to determine prices.

Ironically, Biden’s plan implicitly acknowledges Obamacare’s flaws. In talking about prescription drug pricing, Biden omits any discussion of the “rock-solid deal” that the Obama administration cut with Big Pharma, so that pharmaceutical companies would run ads supporting Obamacare.

Likewise, Biden’s plan notes that “the concentration of market power in the hands of a few corporations is occurring throughout our health care system, and this lack of competition is driving up prices for consumers.” Yet it fails to note the cause of much of this consolidation: Obamacare encouraged hospitals to gobble up physician practices, and each other, to obtain clout in negotiations with insurers. Typically, after acknowledging government’s failures, Biden, like Sanders, prescribes yet more government as the solution.

In the leadup to debate on “repeal-and-replace” legislation several years ago, conservative Republicans said they did not want any replacement to become “Obamacare Lite.” Just as history often repeats itself, Democrats seem ready to embark on a similar intra-party debate. That’s because, no matter how much Biden wants to draw distinctions between his proposals and single payer, his plan looks suspiciously like “SandersCare Lite.”

This post was originally published at The Federalist.

How AARP Made BILLIONS Denying Care to People with Pre-Existing Conditions

On Wednesday, the U.S. Senate voted to maintain access to short-term health coverage. Senate Democrats offered a resolution disapproving of the Trump administration’s new rules regarding the more affordable plans, but the resolution did not advance on a 50-50 tie vote.

Because short-term plans need not comply with Obamacare’s restrictions on covering prior health ailments, Senate Democrats used the resolution to claim they will protect individuals with pre-existing conditions. But what if I told you that, in the years since Obamacare passed, one organization has made more than $4.5 billion in profits, largely from denying care to vulnerable individuals with pre-existing conditions?

You might feel surprised. After all, didn’t Obamacare supposedly prohibit “discrimination” against individuals with pre-existing conditions? But what if I told you that the organization raking in all those profits was none other than AARP, the organization that claims to represent seniors? Then the profits might make more sense.

Obamacare and Pre-Existing Conditions

Even though an article on AARP’s own website states that, as of 2014, “insurance companies [are] required to sell policies to anyone, regardless of their pre-existing medical conditions,” that claim isn’t quite accurate. Obamacare exempted Medigap supplemental insurance plans from all of its “reforms,” including the prohibition on “discriminating” against individuals with pre-existing conditions.

As a 2011 Washington Post article noted, individuals can apply for Medigap plans when they first turn 65 and become eligible for Medicare. “However, when Congress created this protection in 1992…it exempted disabled Medicare beneficiaries under age 65, a group that now totals 8 million people.”

In other words, the most vulnerable Medicare beneficiaries—those enrolled because they receive Social Security disability benefits—often cannot obtain Medigap coverage due to pre-existing conditions. And because traditional Medicare does not provide a catastrophic cap on patient cost-sharing (Medigap plans often provide that coverage instead), disabled beneficiaries who want to remain in traditional Medicare (as opposed to Medicare Advantage plans offered by private insurers) may face unlimited out-of-pocket spending.

The Post article conceded that Obamacare “does not address this issue. A provision to provide disabled Medicare beneficiaries better coverage was dropped from the legislation during congressional negotiations because it would have increased Medicare costs, according to a House Democratic congressional aide.” That’s where AARP comes in.

Why Didn’t AARP ‘Show Congress the Money’?

In July 2009, the Congressional Budget Office (CBO) analyzed a House Democrat bill that, among other things, would have made Medigap coverage available to all individuals, regardless of pre-existing conditions. CBO stated that the Medigap provisions in Section 1234 of the bill would have raised federal spending by $4.1 billion over ten years—a sizable sum, but comparatively small in the context of Obamacare itself.

Contrary to the anonymous staffer’s claims to the Washington Post, if House Democrats truly wanted to end pre-existing condition “discrimination” against individuals with disabilities enrolling in Medicare, they had an easy source of revenue: AARP. As Democrats were drafting Obamacare, in November 2009, the organization wrote in a letter to Rep. Dave Reichert (R-WA) that AARP “would gladly forego every dime of revenue to fix the health care system.”

Since that time, AARP has made quite a few dimes—about 45,090,743,700, in fact—from keeping the health care system just the way it was.

Billions in Profits, But Few Principles

A review of AARP’s financial statements shows that since 2010, AARP has made more than $4.5 billion in income from selling health insurance plans, and generating investment income from plan premiums:

AARP makes its money several ways. As the chart demonstrates, a large and growing percentage of its “royalty” money comes from United Healthcare. United Healthcare sells AARP-branded Medigap plans, Part D prescription drug coverage, and Medicare Advantage insurance.

However, as a 2011 House Ways and Means Committee report made clear, in AARP receiving royalty revenues, not all forms of coverage are created equal. While the organization receives a flat fee for the branding of its Part D and Medicare Advantage plans, it receives a percentage (4.95 percent) of revenue with respect to its Medigap coverage. This dynamic means Medigap royalties make up the majority of AARP’s revenue from United Healthcare, giving AARP a decided bias in favor of the status quo, even if it means continuing to discriminate against individuals with disabilities.

AARP’s Deafening Silence

So if in the seven years since Obamacare’s enactment, AARP has earned more than enough in profits and investment income to offset the cost of changes to Medigap, and AARP publicly told Congress that it would gladly forego all its profits to achieve health care reform, why didn’t AARP make this change happen back in 2010?

AARP occasionally claims it supports reforming Medigap, normally in response to negative publicity about its shady business practices. But by and large, it avoids the subject entirely, preferring to cash in on its Medigap business by flying under the radar.

As I previously noted, in the fourth quarter of 2016 AARP lobbied on 77 separate bills, including such obscure topics as lifetime National Park Service passes, but took absolutely no action to support Medigap reform.

So the next time a liberal Democrat wants to get on his or her high horse and attack conservative policy on pre-existing conditions, ask why they support AARP making $4.5 billion in profits by denying care for individuals with disabilities. Then maybe—just maybe—one day someone could get AARP to put its money where its mouth is.

This post was originally published at The Federalist.

Aetna Gun Control Donation Epitomizes Crony Capitalism

Just when conservatives couldn’t find enough reasons to oppose an Obamacare “stability” package — or the law itself — the health insurance industry generated another. Aetna’s CEO Mark Bertolini announced Tuesday the company would donate $200,000 to support the March for Our Lives gun control rally scheduled for later this month.

Which raises an obvious question: If a company like Aetna can afford to make a six-figure contribution to a liberal gun control effort, why exactly did health insurers spend some of Tuesday asking for taxpayers to provide a multi-billion dollar “stability” package for the Exchanges?

And when it comes to taxpayer largesse, Aetna has already received plenty. According to page 56 of its most recent quarterly financial filing, last year Aetna’s revenue from government business outstripped its private-sector commercial enterprises: Even as private sector revenues dropped the past two years, government business rose by over $4.5 billion, due at least in part to the additional revenues generated by Obamacare’s Medicaid expansion.

As with other health insurers, Aetna has rapidly become an extension of the state itself — a regulated utility that focuses largely on extracting more business from government. Rather than focusing on new innovations and selling product to the private sector, it instead hires more lobbyists to seek rents (e.g., a “stability” package) from government. And in exchange for such governmental payments, it promotes liberal causes that will win the company plaudits from the statists who regulate it.

Other health insurance organizations have taken much the same tack. Several years ago, the House Ways and Means Committee exposed how AARP received numerous exemptions for its lucrative Medigap plans in Obamacare. Not coincidentally, the organization had previously used its “Divided We Fail” campaign to funnel money to such liberal organizations as the NAACP, the Human Rights Campaign, the Congressional Black Caucus Foundation, and the National Council of La Raza.

(Yes, I recognize that, technically speaking, AARP is not a health insurer. Whereas health insurers might have to place money at risk, AARP faces no such barrier, and can instead reap pure profit by licensing its name and brand.)

On Twitter Thursday evening, I asked Aetna CEO Mark Bertolini if he considers abortion a public health issue — the company’s stated reason for contributing to the March for Our Lives. If Aetna purportedly cares so much about gun violence, it should similarly care about violence against the unborn. But I won’t hold my breath waiting for Aetna to contribute to the March for Life, or any other pro-life cause.

Mind you, a private company can make contributions to whichever organizations it likes or does not like. Unfortunately, however, Aetna and many other insurers aren’t acting like private companies. In constantly begging for taxpayer dollars, they’re acting like wards of the state.

That dynamic provides conservatives with the perfect reason to oppose an Obamacare “stability” package — and support the law’s full repeal. Weaning health insurers off the gusher of taxpayer dollars Obamacare created would represent a move away from the current statist status quo. And who knows? It might — just might — get some health care companies to look beyond government as the solution to all their problems.

This post was originally published at The Federalist.

AARP’s Amnesia on “Raiding” Medicare

Based on its statements the past few weeks, if Obamacare extended to non-profit organizations, AARP might need to seek coverage for memory loss. While the seniors’ group opposes House Republicans’ extension of children’s health insurance because it includes provisions means-testing Medicare benefits for wealthy seniors, the Obamacare legislation it endorsed in December 2009 did the very same thing.

Obamacare Included Means-Testing

A letter the AARP sent to the House Energy and Commerce Committee last week objected to the House’s proposals to increase Medicare means-testing, noting that wealthy seniors already pay a greater share of their Part B (outpatient care) and Part D (prescription drug) premiums. That statement is true—in part because of Obamacare, which AARP endorsed.

In addition, Section 3308 of Obamacare applied means-testing for affluent seniors to the Part D prescription drug program for the first time.

Obamacare Used Medicare Savings

Last week’s AARP letter also claimed that “not only is it wrong to continue to ask Medicare beneficiaries to shoulder the burden for non-Medicare expenditures, but it will make it harder to finance actual improvements and address long-term challenges in the Medicare program.” That statement contains no small amount of irony, considering that Obamacare, as House Minority Leader Nancy Pelosi herself admitted, “took half a trillion dollars out of Medicare in [Obamacare], the health care bill”—to spend on new entitlements.

Moreover, by using savings from the Medicare Part A (hospital insurance) trust fund, Obamacare gamed the accounting to make the program’s shortfalls look less severe. When then-Secretary of Health and Human Services Kathleen Sebelius was asked whether the Medicare savings were being used “to save Medicare, or to fund health reform [Obamacare],” Sebelius replied, “Both.”

Some would argue that Obamacare’s financial chicanery has actually undermined Medicare’s solvency by giving lawmakers an excuse to postpone needed reforms. While this year’s Medicare trustees report claimed the Part A trust fund would become insolvent in 2029, the last trustees report released prior to Obamacare measured the program’s insolvency date at 2017—this year.

If it weren’t for the double-counting in Obamacare—a bill that AARP proudly endorsed—lawmakers would likely be confronting Medicare’s structural deficits this year. Instead, comforted by the false hope of Obamacare’s accounting gimmicks, Congress seems unlikely to embark on comprehensive Medicare reform to solve those deficits in the near future, which will only exacerbate the impact of legislative changes when they do take place.

The history of Obamacare lends support to AARP’s current argument that Medicare savings not finance other government spending. But given its own history in supporting Obamacare, AARP seems singularly unqualified to make it.

This post was originally published at The Federalist.

Liberals’ Medicaid Alarmism

The Senate health care bill is dead, and that’s at least in part due to overheated rhetoric from the left about Medicaid. Many of the over-the-top claims lacked important facts or context, and seemed primarily designed to scare people rather than prompt civil debate.

For instance, liberals claimed that Republican plans to reduce the growth of Medicaid spending by nearly $800 billion in the next decade would “unravel” the program, as Clinton administration labor secretary Robert Reich put it. Yet Obamacare did nearly the exact same thing to Medicare. Obamacare reduced Medicare spending by $716 billion, according to a 2012 Congressional Budget Office estimate. And it did so not to improve Medicare’s ability to pay for care for the next generation of seniors, but instead to fund new Obamacare entitlements.

The liberals who claimed this year’s Republican health bills would “cut” Medicaid are the same ones who endorsed Obamacare’s reductions in Medicare spending. Just look at AARP’s framing of the issue: When Democrats reduce Medicare spending by hundreds of billions of dollars, the organization calls it “taking steps to reduce waste, fraud, abuse, and inefficiency.” But when Republicans reduce Medicaid spending by roughly equivalent amounts, AARP decries “unsustainable cuts” to the program.

Likewise the issue of caps on spending. A group of health care advocacy organizations sent a letter to Capitol Hill last month expressing “grave concern about potential changes to the fundamental structure and purpose of Medicaid,” saying they “vehemently oppose converting Medicaid’s funding into a capped financing structure.”

But this objection to capped payments also seems ironic at best, and disingenuous at worst. Section 3403 of Obamacare imposed per capita caps on Medicare spending, to be enforced by the Independent Payment Advisory Board — a group of unelected bureaucrats. So why did many of the same organizations who claim they “vehemently oppose” capped funding for Medicaid, endorse a health care bill that created the same funding structure for Medicare? Is it because a Democratic president proposed the former change, and a Republican Congress is debating the latter?

Then there’s the alarm raised by Andy Slavitt, a former head of Medicare, Medicaid and the Affordable Care Act during the Obama administration. He recently claimed that Republicans had a secret plan “not just to cut Medicaid, but to allow states to eliminate it.” He said a “new waiver process” in the Senate bill — really a modification of an existing Obamacare waiver — would allow states to transfer Medicaid beneficiaries to private coverage, thereby allowing them to “eliminate” Medicaid.

Yet the Obamacare waiver process explicitly prohibits changes to Medicaid — and the Senate bill would not have changed that. In addition, states have always had the ability to “eliminate” Medicaid; the federal government can’t force states to participate in the program. That’s why Arizona didn’t join until 1982, nearly two decades after Medicaid’s creation. States have remained in Medicaid because the federal government provides significant funding to them for their programs — and that funding would continue to rise, albeit more slowly, under both the House and Senate bills.

To be sure, both sides have exhibited their share of political opportunism. Republicans shouldn’t have attacked Obamacare’s Medicare savings as “cuts” — a reduction in projected growth rates should never be considered a “cut” in government spending. And conservatives were guaranteed to reap the political whirlwind sooner or later.

But the left’s hyperbolic rhetoric, coupled with some pretty apparent hypocrisy, not only helped kill the Senate health bill. It did the American people a disservice by detracting from the debate on health care that our country deserves.

This post was originally published at USA Today.

Yes, Obamacare Really Does Disadvantage Individuals with Disabilities

My article last week regarding disability groups’ political and policy views prompted some comments and criticisms on Twitter. Rather than trying to explain detailed subjects in bursts of 140-character tweets, I considered it best to compile them into a longer-form article.

To summarize my prior work: Obamacare provides states with a greater incentive to expand Medicaid to able-bodied adults than to cover services for individuals with disabilities. States receive a 95 percent match this year (declining to 90 percent in 2020 and all future years) to cover the able-bodied, but a match ranging from 50-75 percent to cover individuals with disabilities, while more than half a million are on waiting lists to receive home or attendant care.

Many of the responses I discuss in greater detail below attempt to obscure two separate and distinct issues: The question of the amount of funding for programs versus the priorities within those programs.

As a conservative, I’m likely to disagree with liberals on the ideal size of many government programs, but I thought I would at least agree with them that individuals with disabilities should receive precedence within those programs. However, Obamacare actually tilted Medicaid’s preference away from individuals with disabilities, which makes disability groups’ silence on that front surprising.

There Is No Correlation Between Waiting Lists and Medicaid Expansion

The timeliest rebuttal comes from a story on a long-term care report none other than AARP released yesterday. Susan Reinhard with that organization—no right-wing conservative group, by any stretch—said that

Many states have struggled to expand home- and community-based options for Medicaid enrollees needing long-term care because that is an optional benefit. Nursing homes are mandatory under federal law. While states focus on Medicaid coverage for children and families — as well as non-disabled adults covered by the Medicaid expansion under the Affordable Care Act — adults with disabilities have received less attention. ‘Long-term care is a stepchild of the program and not a top focus for states,’ she said. (emphasis mine.)

That statement notwithstanding, several people cited two different analyses that compare states’ decisions on expansion to the able-bodied and their waiting lists for home-based care for individuals with disabilities. But each of those “studies” (based on only one year of data available) take an overly simplistic approach, and therefore don’t get at the core issue of the extent to which the skewed incentives Obamacare created have encouraged states to prioritize the able-bodied over those with disabilities.

A state’s decision to expand Medicaid to the able-bodied, or reduce its waiting lists for individuals with disabilities, depends on myriad factors. For instance:

  • A wealthy state with a greater tax base would have more resources both to expand Medicaid to the able-bodied and to reduce its waiting list of individuals with disabilities, while a poorer state with a smaller tax base might not have resources to do either;
  • A state with “bad” demographics (e.g., an older and sicker population), or higher costs for health and personal care services, might have more difficulty reducing their Medicaid waiting lists;
  • A state may face other fiscal pressures—controversy over school funding, a natural disaster, a pension crisis—that could affect overall Medicaid spending.

Numerous variables affect states’ budget choices, and therefore their Medicaid waiting lists. The “studies” controlled for exactly none of them. They examined whether a state expanded Medicaid and the total number of people on a state’s waiting list, and that’s it.

Moreover, under Obamacare, all states receive the same (higher) federal match to cover able-bodied adults—another change in policy (prior to Obamacare, all Medicaid match rates were based on states’ relative income) skewing the balance in favor of wealthier expansion states. Yet, as noted above, the analyses claiming no correlation between expansion and Medicaid waiting lists didn’t even attempt to control for these variables—or any other.

Therefore, in the absence of a quality study examining the issue, I’ll go with something far simpler: Common sense. If you’re a state that wants to spend more money on Medicaid, and you can do something (i.e., cover the able-bodied) that gives you 95 cents on the dollar, or something (i.e., reduce waiting lists for individuals with disabilities) that gives you 50 cents on the dollar, which are you going to do first?

I thought so. The incentives in Obamacare strongly favor coverage of the able-bodied over coverage for individuals with disabilities. And no number of crude analyses attempting to provide retroactive justification for this bad policy can hide that fact.

Waiting Lists Are Worst In Two Non-Expansion States

This comment reinforces the crudeness of the analysis being cited. All else being equal, as the second- and third-largest states in the Union, Texas and Florida would be expected to have a larger number of people on its waiting lists for home- and community-based services than a smaller expansion state like Connecticut. All else isn’t equal, of course, but did the analysts attempt to control for these kinds of factors? Nope. They examined raw waiting list numbers, rather than waiting lists as a percentage of the population.

But just suppose for a second that the commenters above are correct, and there is no correlation between expansion to the able-bodied and waiting lists for home-based care. That means that the greater incentives Obamacare gives to states to cover the able-bodied—and while the advocacy community might not want to admit it, Obamacare clearly does give states greater incentives to cover the able-bodied—didn’t affect state behavior, or decisions about whether to reduce disability waiting lists at all.

In that case, why has the disability community expressed such outrage about the impact of per capita caps or block grants on Medicaid beneficiaries with disabilities? If states make decisions without considering federal incentives—the point of the claims that there is no correlation between expanding Medicaid to the able-bodied and longer waiting lists for individuals with disabilities—then why also claim that “cost-shifting to states will force massive cuts in Medicaid services?” Why wouldn’t states shift around resources to protect individuals with disabilities—what the disability community claims that states did to reduce waiting lists even while expanding Medicaid under Obamacare?

There are really only two credible possibilities:

  • States are affected by incentives, therefore Obamacare—by giving states a higher match to cover the able-bodied—encouraged discrimination against individuals with disabilities; or
  • States are not affected by incentives, and therefore the per capita caps—which generate a comparatively small amount of savings in the House repeal bill—will have little impact, because states will re-prioritize their budgets to protect the most vulnerable.

It’s therefore worth asking why some appear to be trying to argue both sides of this question, and doing so in a way that neatly lines up with partisan lines—trying to ignore Obamacare’s skewed incentives, while roundly castigating the House Republican bill for incentives that will “force massive cuts in Medicaid.”

Republicans’ Bill Would Cut Program Helping People Live at Home

This is a true statement: Section 111(2) of the American Health Care Act, House Republicans’ “repeal-and-replace” bill, would sunset the enhanced match for the Community First Choice program on January 1, 2020. That option provides states with a 6 percent increase in their federal match for home- and community-based services, including to individuals with disabilities. But here again, raising this issue demonstrates the inherent disconnect between the incentives being offered to states, and the disability community’s responses to those incentives.

  • Obamacare provides states with a match ranging from 20-45 percentage points higher to cover the able-bodied than individuals with disabilities: “No correlation between expansion and waiting lists for individuals with disabilities!”
  • Obamacare provides states with a 6 percentage point increase for home-based services: A “huge change to improve HCBS [home and community-based services] care.”
  • The Republican alternative to Obamacare would reduce Medicaid spending for traditional (i.e., non-expansion) populations by a comparatively small amount: “Massive cuts to Medicaid services.”

Isn’t there a slight contradiction in these responses—both in their tone and in their logic? And isn’t it worth noting that these contradictions all happen to align perfectly with the natural partisan response to each of these issues?

This Is A Political Problem, Not a Policy Problem

Claiming that the greater federal match to cover able-bodied adults than individuals with disabilities stems from a “political history problem” deliberately obscures its roots. This “history” did not take place half a century ago, at Medicaid’s creation, it took place in the past few years, as part of Obamacare.

When crafting that legislation, Democrats could have come up with other policy solutions that expanded Medicaid to the able-bodied without discriminating against individuals with disabilities in the process. They could have proposed increasing the federal match for coverage of individuals with disabilities, in exchange for states covering the able-bodied at the existing federal match rates. Congress enacted a similar type of “swap” in the Medicare Modernization Act. The federal government took over the prescription drug cost of Medicare-Medicaid “dual eligibles” in exchange for a series of “clawback” payments from states.

Democrats in Congress could have considered other ways to expand Medicaid without giving states a greater match to cover the able-bodied than individuals with disabilities. To the best of my knowledge, they chose not to do so. President Obama could have insisted on a more equitable Medicaid formula, but he chose not to do so. And the disability community could have pointed out this disparity to the president and leaders in Congress, but chose not to do so.

Agree or disagree with them, these were deliberate policy choices, not a mere historical accident.

How Can You Support Lower Funding While Complaining About Access?

The argument about lower funding levels misses several points. First, while the Congressional Budget Office has not released estimates of how much the per capita caps (as opposed to changes associated with scaling back Obamacare’s Medicaid expansion) will reduce federal spending, multiple estimates suggest a comparatively small amount of savings from this particular change—at most 1 or 2 percent of spending on traditional Medicaid populations over the coming decade.

Second, if given sufficient flexibility from Washington, states can reduce their Medicaid spending, rendering the discussion of “cuts” under the caps moot. Rhode Island’s Global Compact Waiver, approved in January 2009, actually resulted in a year-on-year decline of Medicaid spending per beneficiary. Moreover, the non-partisan Lewin Group concluded that Rhode Island’s waiver reduced that spending by improving beneficiary access and care, not by denying medical services.

Third, if caps on Medicaid are so harmful and damaging, then why did Obamacare cap spending on Medicare—and why did disability groups remain silent about it? Current law imposes a per capita cap on Medicare spending, one enforced by Obamacare’s Independent Payment Advisory Board (IPAB) of unelected bureaucrats.

What’s more, Obamacare imposes an annual inflation adjustment (gross domestic product growth plus 1 percent) likely to be lower than the inflation adjustment for disabled populations included in the House-passed bill (medical inflation plus 1 percent). Yet a critique of the Medicare payment caps or IPAB appears nowhere in the disability community’s 14 pages of comments regarding the bill that became Obamacare.

So the question to the disability community is obvious: Why does a Democratic proposal to impose per capita caps on Medicare raise no objections, but a Republican proposal to impose (potentially higher) per capita caps on Medicaid guaranteed to prompt “massive cuts in Medicaid services?”

Let’s Just Pay More for Everyone

This comment attempts to obscure the distinction between the amount of funding and the priorities for that funding. I might disagree with liberals about the overall level of funding for the program—not least because efforts like that in Rhode Island demonstrate the potential for Medicaid to become more efficient—but I should agree with them about the need to prioritize care for the most vulnerable. Unfortunately, Obamacare’s Medicaid expansion goes in the opposite direction.

In thinking about the important distinction between overall program funding and priorities within a program, I’m often reminded of a speech that former House Majority Leader Steny Hoyer (D-MD) gave on the House floor in September 2009: “At some point in time, my friends, we have to buck up our courage and our judgment and say, if we take care of everybody, we won’t be able to take care of those who need us most. That’s my concern. If we take care of everybody…then we will not be able to take care of those most in need in America.”

Yes, Hoyer’s speech discussed Medicare, not Medicaid, and he voted for Obamacare (and its Medicaid expansion) six months after giving it. But the speech raises an important point about the need to prioritize entitlements, one that the notion of giving higher reimbursement rates to all populations ignores.

That’s what’s wrong with focusing solely on the question on the amount of funding for a program. Reasonable people can (and will) disagree about where to draw the funding line, but it has to be drawn somewhere. “Solving” the question of funding priorities by increasing reimbursements for all populations—the equivalent of promising everyone a pony—will, by failing to choose wisely now, cause even tougher fiscal choices for generations to come.

Disability Groups Have More Important Priorities

Yes, I have worked with disability groups. For one, in 2013, I served on the Commission on Long-Term Care Congress created in the wake of the CLASS Act’s failure and repeal. We took many hours of public testimony from disability groups and others, and received dozens of other written comments—many from dedicated and passionate parents or caregivers of individuals with disabilities, and all of which I made a point to read. I won’t claim to have made disability policy my life’s work, but my jobs over the years have intersected with the disability community on several occasions.

By claiming that disability groups have “way more priorities than comparing their FMAP [i.e., their federal match rate],” this comment actually makes my point for me. The January 2010 letter by the Consortium of Citizens with Disabilities (CCD) setting out priorities for what became Obamacare was 14 pages in length, amounted to over 5,500 words, and included (by my count) 73 separate bulleted recommendations regarding the legislation. All that, and yet not one word on the bill prioritizing coverage of the able-bodied over individuals with disabilities? Frankly, the issue seems quite conspicuous by its absence.

Just Interview Someone From This Consortium

I received a series of tweetsculminating in a dramatic “Shame on you”—attacking me for not having contacted any members of the Consortium for Citizens with Disabilities (CCD) prior to writing my piece. It is correct that I didn’t reach out to any CCD member groups before printing the article. I didn’t need to because I had already spent years working with them.

The charge that I never spoke to “ONE SINGLE CCD MEMBER” is false—and demonstrably so. For nearly four years, from the spring of 2004 until the end of 2007, I worked as a lobbyist for the National Association of Disability Representatives (NADR). During that time, I spent many hours in CCD task force meetings, interacting both directly and indirectly with CCD members. The commenter’s accusation that if I had reached out to CCD members, I would know about the lengthy adjudication process for many Social Security disability claims holds no small amount of irony—I handled those issues over a decade ago.

In reality, my time working with CCD members while representing the disability representatives prompted me to write my article last week. While attending CCD meetings, I saw firsthand how some meeting participants—several of which remain in their current positions and active in CCD activities—made offhand comments of a rather partisan nature. Not everyone joined in the political commentary, but several felt comfortable enough to make clear their partisan affiliations in open discussions, even if I and others did not.

Similarly, I recall how the disability community fought against George W. Bush’s idea for personal accounts within Social Security almost uniformly, and even before Congress and the administration had an opportunity to fully develop their proposals. At the time, my client, the National Association of Disability Representatives, took an agnostic view towards the personal account concept, focusing more on the specifics of whether and how it could work for the disability community.

For instance, NADR wanted to ensure that any personal account proposal would hold the Social Security Disability Trust Fund (separate from the Old Age and Survivors Trust Fund) harmless, and that people who spent time receiving disability benefits would not be financially harmed (e.g., lack the opportunity to save wage earnings in a personal account, yet have their retirement benefits reduced) for having done so.

By contrast, most CCD members opposed the proposal from the get-go, often coordinating with Nancy Pelosi, Sander Levin, and other Democrats for events and strategy meetings. Archives on the disability coalition’s website from that era appear incomplete, but a 2005 August recess “Action Alert: Efforts to Privatize Social Security Continue!” gives a sense of the message coming from most CCD members, and the organization as a whole.

At this point any liberals still reading might applaud the disability community for having come out so strongly against the Bush proposal. But that idea focused on the Social Security retirement system, not the disability program, and the Bush administration and Republicans in Congress wanted to engage with disability groups to ensure any reforms held the disability community harmless. So how did failing to engage them—choosing instead to oppose from the outset—help the disability community?

In truth, early and vocal opposition to personal accounts may have put the disability community at greater risk had the personal account proposal been enacted without disability groups’ technical expertise on how best to structure it. And given both the partisan comments I heard from at least some CCD members at CCD meetings, it’s worth asking whether partisan or ideological concerns—separate and distinct from the interests of the disability community—unduly or improperly influenced the organization’s collective judgment back then.

Their inherent contradictions in the current debate—remaining silent about Obamacare’s unfair Medicaid match rate disparity and Medicare payment caps, while strenuously objecting to Republican attempts to impose payment caps on Medicaid—reinforce those concerns about undue partisanship.

It isn’t always easy stating inconvenient truths—pointing out that laws one doesn’t like should be enforced along with every other law, or where policies proposed by lawmakers with whom one might ordinarily be aligned fall woefully short. But such truth-telling remains an essential ingredient to authenticity and credibility. As I argued last week, I don’t think the disability community has done that in this case. I wish they had.

This post was originally published at The Federalist.

AARP’s Own Age Tax

Over the past few weeks, AARP—an organization that purportedly advocates on behalf of seniors—has been running advertisements claiming that the House health-care bill would impose an “age tax” on seniors by allowing for greater variation in premiums. It knows of which it speaks: AARP has literally made billions of dollars by imposing its own “tax” on seniors buying health insurance policies, not to mention denying care to individuals with disabilities.

While the public may think of AARP as a membership organization that advocates for liberal causes or gives seniors discounts at restaurants and hotels, most of its money comes from selling the AARP name. In 2015, the organization received nearly three times as much revenue from “royalty fees” than it did from member dues. Most of those royalty fees come from selling insurance products issued by UnitedHealthGroup.

Only We Can Profit On the Elderly

So in the sale of Medigap plans, AARP imposes—you guessed it!—a 4.95 percent age tax on seniors. AARP not only makes more money the more people enroll in its Medigap plans, it makes more money if individuals buy more expensive insurance.

Even worse, AARP refused good governance practices that would disclose the existence of that tax to seniors at the time they apply for Medigap insurance. While working for Sen. Jim DeMint in 2012, I helped write a letter to AARP that referenced the National Association of Insurance Commissioners’ Producer Model Licensing Act.

Specifically, Section 18 of that act recommends that states require explicit disclosure to consumers of percentage-based compensation arrangements at the time of sale, due to the potential for abuse. DeMint’s letter asked AARP to “outline the steps [it] has taken to ensure that your Medigap percentage-based compensation model is in full compliance with the letter and spirit of” those requirements. AARP never gave a substantive reply to this congressional oversight request.

Don’t Screw With Obamacare, It’s Making Us Billions

Essentially, AARP makes money off other people’s money—perhaps receiving insurance premium payments on the 1st of the month, transferring them to UnitedHealth or its other insurance affiliates on the 15th of the month, and pocketing the interest accrued over the intervening two weeks. That’s nearly $3.2 billion in profit over six years, just from selling insurance plans. AARP received much of that $3.2 billion in part because Medigap coverage received multiple exemptions in Obamacare. The law exempted Medigap plans from the health insurer tax, and medical loss ratio requirements.

Most importantly, Medigap plans are exempt from the law’s myriad insurance regulations, including Obamacare’s pre-existing condition exclusions—which means AARP can continue its prior practice of imposing waiting periods on Medigap applicants. You read that right: Not only did Obamacare not end the denial of care for pre-existing conditions, the law allowed AARP to continue to deny care for individuals with disabilities, as insurers can and do reject Medigap applications when individuals qualify for Medicare early due to a disability.

The Obama administration helped AARP in other important ways. Regulators at the Department of Health and Human Services (HHS) exempted Medigap policies from insurance rate review of “excessive” premium increases, an exemption that particularly benefited AARP. Because the organization imposes its 4.95 percent “age tax” on individuals applying for coverage, AARP has a clear financial incentive to raise premiums, sell seniors more insurance than they require, and sell seniors policies that they don’t need. Yet rather than addressing these inherent conflicts, HHS decided to look the other way and allow AARP to continue its shady practices.

The Cronyism Stinks to High Heaven

AARP will claim in its defense that it’s not an insurance company, which is true. Insurance companies must risk capital to pay claims, and face losses if claims exceed premiums charged. By contrast, AARP need never risk one dime. It can just sit back, license its brand, and watch the profits roll in. Its $561.9 million received from UnitedHealthGroup in 2015 exceeded the profits of many large insurers that year, including multi-billion dollar carriers like Centene, Health Net, and Molina Healthcare.

But if the AARP now suddenly cares about “taxing” the aged so much, Washington should grant them their wish. The Trump administration and Congress should investigate and crack down on AARP’s insurance shenanigans. Congress should subpoena Sebelius and Sylvia Mathews Burwell, her successor, and ask why each turned a blind eye to its sordid business practices. HHS should write to state insurance commissioners, and ask them to enforce existing best practices that require greater disclosure from entities (like AARP) operating on a percentage-based commission.

And both Congress and the administration should ask why, if AARP cares about its members as much as it claims, the organization somehow “forgot” to lobby for Medigap reforms—not just prior to Obamacare’s passage, but now. AARP’s fourth quarter lobbying report showed that the organization contacted Congress on 77 separate bills, including issues as minor as the cost of lifetime National Parks passes, yet failed to discuss Medigap reform at all.

This post was originally published at The Federalist.

How to Repeal Obamacare — And What Comes Next

Secretary of Health and Human Services Tom Price’s confirmation early Friday morning marks both an end and a beginning. While his installation after a bitter nomination battle formally begins the Trump administration’s work on healthcare, Price will also seek to bring about the end of former President Barack Obama’s unpopular and unaffordable healthcare law.

Dismantling Obamacare should be a three-fold process, involving coordination among HHS, the rest of the administration, and the Republican-led Congress. The steps can occur concurrently, but all must take place to prevent people from suffering any further from Obamacare’s ill effects.

Having assumed his post, Price should use the regulatory apparatus at his disposal to bring immediate relief from Obamacare. Press reports indicate the administration has already taken steps in that regard, sending a package of insurance stabilization rules to the Office of Management and Budget for clearance prior to their release, potentially as soon as Friday afternoon.

The reports suggest the administration is considering many of the proposals to provide regulatory flexibility that I included in a report analyzing repeal last month. Specifically, the administration may reduce the length of the annual open enrollment period and require verification of individuals seeking special enrollment periods outside of open enrollment. These are two critical steps to prevent individuals from signing up for insurance after they become sick.

In many cases, the administration and Price have significant latitude to provide flexibility, but that latitude is not unlimited. Until Congress acts, Obamacare remains on the statute books. While regulators can reinterpret the law, they cannot ignore it. Already, the liberal-leaning AARP has threatened legal action over one of the new administration’s rumored regulatory changes.

These legal constraints illustrate why Congress should act, preferably sooner rather than later, in passing legislation repealing Obamacare. Congress should use as the basis for action the repeal bill it passed in the fall of 2015, which Obama vetoed early last year. That bill repealed all of the law’s tax increases, and sunset the law’s coverage expansions after a two-year period to allow for an appropriate transition.

While the 2015 legislation should represent the initial template for Obamacare’s repeal, Congress can and should go further. Legislators should also seek to repeal the law’s insurance regulations, which have raised premiums and caused millions to receive cancellation notices.

Although some assume Congress cannot repeal the regulations using budget reconciliation — the special process that allows legislation to pass with a 51-vote majority, rather than the usual 60 votes, in the Senate — that may not be accurate. The Congressional Budget Office and others have made estimates showing the significant budgetary impact of these costly regulations. Republicans should use those cost estimates, and past Senate precedent, to enact repeal of the major insurance provisions using the special budget reconciliation procedures.

While adding repeal of the insurance regulations to the 2015 measure, Congress should also ease the transition away from Obamacare by freezing enrollment in the law’s new entitlements upon enactment of the repeal bill. It makes no sense to allow millions of individuals to continue enrolling in a program Congress has just voted to end. Especially with respect to the law’s massive expansion of Medicaid to the able-bodied, freezing enrollment would allow individuals currently on Obamacare to retain their coverage, while starting a process to transition away from the law’s spending and allow individuals to transition off the rolls and into employer-based coverage.

When thinking about a post-Obamacare world, Congress and the new administration should have three priorities: lowering costs, lowering costs and lowering costs.

Americans of all political stripes view lowering health costs as their number-one priority, and it isn’t even close. While candidate Obama promised in 2008 that his health plan would lower costs by an average $2,500 per family per year, the bill he signed into law instead raised costs and premiums for millions.

The answer to the top health concern lies not in new spending and taxes to subsidize health insurance (the failed Obamacare formula) but in reducing the underlying costs of care.

Reducing costs involves equalizing the tax treatment of health insurance, limiting current tax preferences that encourage over-consumption of health insurance and health care. But this must be done in a way that does not raise tax burdens overall. Lowering costs should include incentives for wellness and promote health savings accounts, the expansion of which could reduce health expenditures by billions of dollars.

States have a big role to play in the health debate, both in lowering costs and protecting individuals with pre-existing conditions.

Congress can and should provide states with incentives to reduce insurance benefit mandates that drive up the cost of care. Congress should guarantee that individuals with pre-existing conditions have access to coverage, but give states funding, and let them decide the best route — whether through high-risk pools, or some other risk transfer mechanism — to ensure access to care. While not the panacea President Trump and others have claimed, Congress should allow individuals to shop across state lines for the coverage that best suits their needs.

These changes will not require a 2,700-page piece of legislation like Obamacare. They should not even be considered a “replacement” for Obamacare. But they would have an impact in reducing health costs, the issue Americans care most about. They would represent a new beginning after the canceled policies and premium spikes associated with Obamacare.

This post was originally published in the Washington Examiner.

Washington Post Front Page: AARP Lobbies Against Medicare Changes That Could Hurt Its Bottom Line

A front-page story in tomorrow’s Washington Post talks about AARP’s financial conflicts of interest in the ongoing fiscal cliff debate.  The article references Sen. DeMint’s report into AARP’s business practices, including the report’s conclusion that Medigap reform could cost AARP $1.8 billion in “royalty fees” over the next ten years.  The article also includes some interesting new nuggets regarding AARP’s business practices:

  1. Former AARP executives admitted to the Post that the organization’s business model – in which AARP receives a percentage of every Medigap premium dollar paid by seniors – presents a financial conflict-of-interest, by giving AARP an incentive to keep premiums high.  Former AARP executive Marilyn Moon said: “There is a potential conflict of interest….Any way you look at changes in Medigap that people are talking about, I think it’s good for beneficiaries, and anybody who is opposing that who claims they are looking out for beneficiaries, you have to wonder why.”  And former AARP CEO Bill Novelli made a similar admission: “It’s fair to say that AARP does have a financial interest in Medigap insurance because it’s a significant revenue-raiser for them.  If Medigap were somehow reduced, then AARP would have a financial reduction.”
  2. AARP executives personally profit based on how much “royalty fee” revenue the organization generates.  According to the article:

AARP executives have a personal financial incentive to boost the group’s revenue because annual bonuses for employees are determined in part by AARP’s “gross revenues,” according to federal tax records.  They show, for example, that [CEO Barry] Rand received $140,156 in “bonus and incentive compensation” last year, about 15 percent of his total compensation of $938,553.  AARP officials said that revenue accounts for only about 5 percent of the bonus calculation and that other factors, such as serving members and promoting social change, are far more important.  A person familiar with the group’s operations said the percentage was higher in the recent past.  “Revenues are very important.  You have to make your numbers,” said the person, who spoke on the condition of anonymity to discuss internal matters.”

  1. AARP finally admitted publicly it lobbies on Medigap issues for which it has a financial conflict-of-interest, as noted above.  Two years after a senior AARP official told CNN the organization did not lobby on Medigap “at all,” the organization finally admitted to the Post that it HAS been lobbying against Medigap changes that could cost it financially.  Now it claims that Medigap “is not and was not a lobbying priority,” and that “there were no phone calls, e-mails, or robo-calls generated on Medigap proposals” – not yet anyway.  Finally, as the Post article notes, in writing about Medigap to the supercommittee last year, CEO Barry Rand “did not mention AARP’s dominant role in the Medigap market,” and the financial conflicts inherent in AARP’s business arrangements.

The REAL Fright Night: Obamacare’s Scary Impact on Americans

In an interview with the Des Moines Register last week, the President claimed that “Obamacare turns out not to be the scary monster that the other side has painted.”  Many may disagree, because on this Halloween day, it’s clear that the legislation includes several “monstrous” provisions likely to wreak havoc on the American people, their jobs, and their health care:

“Count Tax-YOU-lots:”  This creature will suck the life out of the American economy, by imposing $1 trillion in job-killing tax increases on all Americans—taxing people who can’t afford to purchase government-forced insurance, taxing businesses who want to hire new workers, taxing small businesses, even taxing health benefits.

Weird Scientists:  Bureaucrats working for a new comparative effectiveness institute, funded by a tax on health benefits, could publish the protocols needed to deny patients access to life-saving treatments on cost grounds.  In addition, the law’s Independent Payment Advisory Board (IPAB) will make binding rulings on how to reduce Medicare spending below an arbitrary cap.

Frankenstein:  Refers to the dozens of bureaucracies created by the legislation—to say nothing of the difficulties for patients to receive actual treatment—all in the name of health care “reform.”

A Ghoulish Czar:  By one count, Obamacare includes nearly 2,000 commands using the words “The Secretary shall”—allowing the federal government, in the form of the HHS Secretary, to intervene in all manner of personal health care choices taken by millions of Americans.

However, while creating new and frightful government bureaucracies for the American people, Democrats have managed to include sweet treats for themselves and their liberal allies:

  • Senate Democrats received goodies for parochial interests, including a mine in Libby, Montana;
  • ACORN and Planned Parenthood could be eligible for enrollment and outreach grants as “navigators;” and
  • AARP’s popular Medigap policies are not subject to the same pre-existing condition restrictions or price controls placed on all other private insurance plans—thus allowing the organization to continue to receive hundreds of millions of dollars in “kickbacks” by overcharging seniors for coverage.

While Halloween may come and go, many may be concerned that the monsters created in Obamacare will stay—causing permanent fright for all Americans forced to live under Democrats’ government takeover of health care.