Lowlights of Democrats’ New Single-Payer Bill

Some might think that, having embraced socialism and taking away the health coverage of millions of Americans, the Democratic Party couldn’t move further to the left. Think again.

House Democrats introduced their single-payer bill on Wednesday, and claimed that it’s a “significantly different” bill compared to versions introduced in prior Congresses. It definitely meets that definition—because, believe it or not, it’s gotten significantly worse.

What Remains

Abolition of Medicare—and Most Other Insurance Coverage: As I noted last year, the bill would still eliminate the current Medicare program, by prohibiting Title XVIII of the Social Security Act from paying for any service (Section 901(a)(1)(A)) and liquidating the current Medicare trust funds (Section 701(d)). Likewise, the bill would eliminate the existing insurance coverage of all but the 2.2 million who receive care from the Indian Health Service and the 9.3 million enrolled veterans receiving care from the Veterans Administration.

Taxpayer Funding of Abortion: As before, Section 701(b)(3) of the bill contains provisions prohibiting “any other provision of law…restricting the use of federal funds for any reproductive health service” from applying to the single-payer system. This language would put the single-payer system outside the scope of the Hyde Amendment, thereby permitting taxpayer funding for all abortions.

Lack of Accountability: As with the prior bill, the legislation would give massive amounts of power to bureaucrats within the Department of Health and Human Services (HHS). For instance, the legislation would establish new regional directors of the single-payer system—none of whom would be subject to Senate confirmation.

What Lawmakers Added

More Spending: Section 204 of the new bill federalizes the provision of long-term supports and services as part of the single-payer benefit package. Prior versions of the bill had retained those services as part of the Medicaid program, implemented by states with matching funds from the federal government.

In addition, the revised bill eliminated language in Section 202(b) of the Sanders legislation, which permitted co-payments for prescription drugs to encourage the use of generics. With the co-payments (capped at an annual maximum of $200 in the Sanders bill from last Congress) eliminated, the bill envisions the federal government providing all health services without cost-sharing. This change, coupled with the federalization of long-term supports and services, will result in increased spending—as more people demand “free” health care.

Faster Elimination of Private Coverage: Rather than envisioning a four-year transition to the single-payer system, the revised bill would eliminate all private health insurance within a two-year period. Over and above the myriad philosophical concerns associated with single-payer health care, this accelerated transition period raises obvious questions about whether the new system could get up and running so quickly. After all, Obamacare had an implementation period of nearly four years—yet healthcare.gov failed miserably during its initial launch phase.

In theory, moving away from a fee-for-service method of paying medical providers would eliminate their incentive to perform more procedures—a worthy goal. But in practice, global budgets could also lead to de facto rationing, as hospitals that exceed their budgets might have to stop providing care to patients—just as under-funding within Britain’s National Health Service (NHS) has led to chronic hospital overcrowding.

Compensation Caps: Section 611(b)(5) of the new bill would limit “compensation costs for any employee or any contractor or any subcontractor employee of an institutional provider receiving global budgets,” by applying existing pay restrictions on government contractors to hospitals and facilities in the single-payer program. These restrictions might lead some to wonder whether hospitals could truly be considered independent entities, or merely an arm of the state.

Effective Abolition of For-Profit Medicine: Section 614(a) of the revised bill states that “payments to providers…may not take into account…or be used by a provider for” marketing; “the profit or net revenue of the provider, or increasing the profit or net revenue of the provider;” any type of incentive payment—“including any value-based payment;” and political contributions prohibited by government contractors.

Liberals would argue that eliminating the profit motive will encourage doctors to provide better care, by focusing on patients rather than ways to enrich themselves. But the profit motive also encourages individuals to invest in health care—as opposed to other sectors of the economy—by allowing them to recover a return on their investment.

Effective Elimination of Patents: Section 616(c)(1) of the bill states that “if the manufacturer of a covered pharmaceutical, medical supply, medical technology, or medically necessary assistive equipment refuses to negotiation a reasonable price, the Secretary shall waive or void any government-granted exclusivities with respect to such drug or product,” and shall allow other companies to manufacture the product. By allowing the federal government to march in on a whim and seize a company’s intellectual property, the bill would discourage individuals from investing in such intellectual property in the first place.

“Reasonable” Prices and Rationing: As noted above, Section 616 of the bill requires HHS to determine when the prices of drugs and medical devices are “not reasonable,” by taking into account among other things “the therapeutic value of the drug or product, including cost-effectiveness and comparative effectiveness.” This provision could lead to the federal government denying patients access to drugs deemed too expensive, as occurs currently within Britain’s National Health Service.

This post was originally published at The Federalist.

House Health Care Bills Show Misplaced Priorities

Why would House Republican leadership place the concerns of gym owners over those of pro-lifers? And why would that same leadership embrace a policy suggestion from the liberal group Families USA that could entrench Obamacare while raising premiums for young people?

While the House will consider legislation this week providing tax breaks to individuals who buy gym memberships, the House has yet to consider legislation cutting off tax breaks for abortion this Congress. On the latter front, an expansion of “copper” catastrophic insurance plans would effectively eliminate a regulatory provision that has lowered premiums for young Americans—another misplaced priority that could cause consternation for some conservatives.

What’s Inside Some Health Savings Account Legislation

However, Section 8 of one of the bills would allow for a $500 deduction for gym memberships or instruction, and a $250 deduction for safety equipment, as a qualified medical expense. The amounts would double for joint returns.

While just about everyone supports increasing Americans’ levels of physical activity, the provision seems questionable at best. The tax reform bill enacted not eight months ago attempted to eliminate these kinds of deductions from the tax code, creating a simpler, fairer process. This proposal would turn right around and add more complexity, by requiring the IRS to issue new regulations “to determine…what does not constitute a qualified physical activity, including golf, hunting, sailing, horseback riding, and other similar activities.”

The federal government already tries to do too many things, and has too great a role in Americans’ lives as it is. Do we really need the IRS determining what is, and is not, a “qualified physical activity?”

As for Abortion and HSAs

In fact, some pro-life leaders have opposed provisions that would allow individuals to use HSA dollars to fund insurance premiums, because pro-lifers want to prohibit those funds from being used to pay for abortion coverage (or abortions period). But the House has yet to vote this Congress on limiting abortion as a qualified medical expense.

The pro-life legislation that the House voted on in January 2017, H.R. 7, sponsored by Rep. Chris Smith (R-NJ), prohibited taxpayer dollars from funding abortion in all cases, including Obamacare exchange plans. However, it did not address preferences in the tax code relating to abortion, such as the qualified medical expense deduction.

It seems that the House Ways and Means Committee, which marked up the bills in question, cares more about satisfying lobbyists than responding to their large pro-life constituency. From gym owners to device makers—who have lobbied intently for the Obamacare device tax repeal that the House will also consider this week—the series of health care bills contains myriad provisions, some good and some not-so-good, advocated by business lobbyists. Unfortunately, pro-life advocates have yet to receive similar consideration.

Unintended Consequences of Expanding ‘Copper’ Plans

However, because only certain individuals currently qualify for “copper” plans, insurers can adjust their premiums downward accordingly. Section 1312 of Obamacare contains a single risk pool requirement, meaning that insurers must rate all their products in a given state as a single book of business in determining premium rates. But a rule the Obama administration released in 2013 included a special exception to that provision for “copper” plans. These catastrophic plans may adjust their rates to reflect “the expected impact of the specific eligibility categories.”

In other words, because primarily young individuals enroll in catastrophic plans, insurers can at present lower their premiums to reflect that fact. However, by making everyone eligible for “copper” coverage, the House bill would effectively eliminate this adjustment, thus raising premiums for the 18- to 29-year-old individuals enrolled in the plans.

Effects of the ‘Copper’ Change

Catastrophic plans have not proven particularly popular on the exchange market, with only 1 percent of enrollees purchasing them as of earlier this year. However, that lack of popularity arises because individuals receiving premium subsidies (i.e., most of the people buying coverage directly from the exchange) cannot apply those subsidies to “copper” plans.

Paradoxical as it may sound, expanding these popular plans to all age groups could actually curb their appeal. While a recent eHealth analysis claims that an expansion of “copper” plans could save near-seniors (i.e., those aged 55-64) an average of $4,608 per year, it likely will not do so. eHealth’s analysis compares the current 41 percent differential between “copper” premiums and bronze premiums to arrive at its figure.

However, as noted above, the current “copper” rates assume enrollment primarily by individuals under 30. eHealth’s analysis thus compares rates for a market of individuals aged 18-29 to a market of individuals aged 18-64—which explains the 41-percentage point difference in premiums. But if “copper” plans expand to all ages, that premium differential will narrow—and premiums for the 18-29 population will likely increase.

Single Risk Pool Bolsters Obamacare

More to the point: The “copper” plan provision includes language reinforcing Obamacare’s single risk pool. It also undermines the intent of last year’s Consumer Freedom Amendment, offered in the Senate by Sen. Ted Cruz (R-TX), which would have allowed for the sale of non-compliant plans alongside Obamacare-compliant plans.

The difference on this one provision speaks to a broader philosophical debate. Moderates want to support Obamacare’s exchanges by passing “stability” legislation and expanding subsidies. So does Families USA, which in December 2012 submitted a comment to the Department of Health and Human Services opposing the rate adjustment provision for catastrophic plans, because it could tend to segment the market.

By contrast, conservatives want to offer people lifeboats away from the exchanges—options such as short-term insurance plans, association health plans, and the like. On that front, this week’s legislation does not advance the ball, and expanding “copper” plans could on balance represent a step back.

Thankfully, House leadership did not end up attaching attach an insurer bailout to this week’s HSA bills, after early rumblings in that direction. But the fact that conservatives even need to have these discussions speak to the ways in which many House Republicans want to strengthen Obamacare rather than repealing it.

This post was originally published at The Federalist.

Liberals’ Ridiculous Health Care Charges Against Brett Kavanaugh

So much for subtle. On Tuesday, Senate Minority Leader Chuck Schumer (D-NY) placed health care at the top of the list of reasons to oppose Brett Kavanaugh’s nomination to the Supreme Court, throwing in some over-the-top rhetoric in the process:

We Democrats believe the No. 1 issue in America is health care and the ability for people to get good health care at prices they can afford. The nomination of Mr. Kavanaugh would put a dagger through the heart of that cherished belief that most Americans have.

Put aside for a moment that Obamacare itself has “put a dagger through the heart” of people’s ability “to get good health care at prices they can afford” by more than doubling individual insurance premiums during President Obama’s second term. The idea that a pending lawsuit would allow the Supreme Court to strike down Obamacare, and that a Justice Kavanaugh would cast the deciding vote to do so, ranges from implausible to ridiculous, for at least three reasons.

Second, as I previously noted, Kavanaugh wrote an opinion in 2011 that, while deferring a definitive judgment on the merits, suggested an inclination to uphold Obamacare’s mandate as constitutional. In one footnote of his opinion, Kavanaugh noted that “the fact that an exaction is not labeled a tax does not vitiate Congress’s [sic] power under the Taxing Clause.” To Kavanaugh, it mattered not that Congress said the mandate was not a tax to justify it as such under the Constitution—the same logic that troubled conservatives about Roberts’ ruling in the mandate case.

Kavanaugh did seem troubled by the fact that Obamacare contains both a statutory requirement to buy coverage and a penalty (“tax”) for those who fail to do so. But another footnote suggested a way out:

At oral argument, counsel for the Government argued that a citizen who refused to obtain health insurance would still be acting lawfully. If that were true, the mandate would presumably pass muster under the Taxing Clause. But it is not evident that the statutory language is fairly susceptible to such an interpretation. That said, perhaps the canon of constitutional avoidance would allow such an interpretation of this provision and thereby squeeze it within the Taxing Clause.

Roberts did exactly what Kavanaugh suggested, eliminating the “perhaps” from Kavanaugh’s last sentence, and defending the mandate as permissible under Congress’ Taxing Clause power.

Wall Street firms often note that past performance does not equate to future results, a motto worth noting here. But it seems highly unlikely that a judge willing to justify what Congress itself termed a “penalty” as a tax, and who cited the “canon of constitutional avoidance” as a way to uphold Obamacare, would suddenly vote to strike down the entire law—after Congress just last year declined to do so. (In fact, the Supreme Court may not even vote to hear the case at all.) All this makes Schumer’s talk of “dagger[s] through the heart” so much noise.

Schumer’s Strategy Could Be Improved

One could make a compelling argument that, if Schumer really wanted to defeat the Kavanaugh nomination, he would take the opposite tack, and “hug him close” on Obamacare. An exercise in trolling conservatives could cause them some serious discomfort: “We know Judge Kavanaugh would uphold Obamacare at the Supreme Court, because he laid the roadmap for saving Obamacare there six years ago.”

But Schumer has instead tried to play the health care card against Kavanaugh, for any number of potential reasons.

  • He worries about over-emphasizing abortion rights during the confirmation process, which could cause political heartburn for several Senate Democrats running for re-election this year in states Donald Trump won in 2016;
  • He wants to preview themes Democrats will push in the election campaign this fall;
  • He doesn’t want to anger Democrats’ base by conceding the health care issue, as they want him to fight Kavanaugh’s nomination and support Obamacare, even if doing so could improve the chances of defeating the nomination; and/or
  • He thinks it unlikely he can defeat Kavanaugh, and wants to keep his caucus united rather than make a long-shot tactical gamble that could divide Democrats.

This post was originally published at The Federalist.

Republicans Hide Obamacare Bailout Inside Health Savings Account Bill

Cue the scene from “Poltergeist”: “They’re baa-ack.” The Obamacare bailout seekers, that is.

Multiple Capitol Hill sources confirmed to me on Wednesday morning that the House Ways and Means Committee’s markup of health savings account (HSA)-related legislation later in the day comes with a potential ulterior motive: Committee and leadership staff want to resurrect this spring’s failed Obamacare “stability” legislation—and see the HSA provisions as a way to do so.

This Is a Bad Deal for Conservatives

The leadership gambit seems simple: with the HSA provisions, placate conservatives who (rightly) don’t want to bail out Obamacare, and allow the package to pass the House solely with Republican votes—because Democrats likely won’t vote to support any “stability” legislation imposing robust pro-life protections. With Democrats intending to make Obamacare premium increases an issue in the November elections, House leaders think the vote would inoculate vulnerable Republicans from political attacks by the Left.

But a “stability” vote would demoralize the Right, by showing how completely Republicans have caved on their repeal promises. It would also set a horrible precedent, officially declaring Obamacare “too big to fail,” which would put taxpayers on the hook for an ever-increasing flow of bailout funds.

That flow would soon vastly overwhelm any small amount of HSA incentives that conservatives received in exchange for their vote. Eventually, lawmakers would run out of other people’s money to spend propping up Obamacare.

Questionable Policies

The best bills on the Ways and Means agenda contain broad policies that will expand HSAs’ reach. In this group: A bill increasing HSA contribution limits; another bill allowing seniors eligible for (but not enrolled in) Medicare Part A to continue making HSA contributions; and legislation ensuring that all Obamacare bronze and catastrophic plans qualify for HSA contributions.

Other, more targeted measures that would expand the types of services HSA plans can cover could have a mixed effect. By allowing coverage for more services below a plan’s high deductible, they could draw more people to choose HSA coverage, but could also raise premiums for HSA plans.

Non-HSA Legislation Bears Attention, Too

Most troubling: The two pieces of legislation on the committee’s agenda not directly related to HSAs. The description of one bill hints at its inherent flaw:

The bill provides an off-ramp from Obamacare’s rising premiums and limited choices by allowing the premium tax credit to be used for qualified plans offered outside of the law’s exchanges and Healthcare.gov. In addition, it expands access to the lowest-premium plans available (‘catastrophic’ plans) for all individuals purchasing coverage in the individual market and allows the premium tax credit to be used to offset the cost of such plans.

Another bill suspending two Obamacare taxes sounds appealing on its face, but would have negative consequences. Suspending Obamacare’s “Cadillac tax” for two more years (until 2022) would further weaken an effort in that law (albeit a poorly designed one) to change current incentives that encourage people to over-consume employer-provided health insurance and thus health care. In short, it would encourage the growth of health care costs, rather than working to lower them.

The bill’s effort to repeal the employer mandate for years 2014 through 2018 likewise could have unintended consequences. The bill only repeals the employer mandate retrospectively likely because doing so prospectively (i.e., for 2019 and future years) could encourage employer “dumping”—businesses dropping coverage and sending their workers to the exchanges, which could raise spending on Obamacare insurance subsidies. While the retrospective nature of that legislation could mitigate any “dumping” in the short term, if employers think Congress will continue to weaken the mandate in future years, they could view that as an incentive to drop coverage.

This Is Not a Good Deal

The Ways and Means Committee package includes some very good HSA-related bills, some potentially harmful bills that could further entrench Obamacare, and some bills that may not have much effect. Regardless of the individual bills’ specific merits, they certainly do not warrant conservatives’ approval for a massive “stability” package in the tens of billions of taxpayer dollars.

This post was originally published at The Federalist.

Summary of Health Care “Consensus” Group Plan

Tuesday, a group of analysts including those at the Heritage Foundation released their outline for a way to pass health-care-related legislation in Congress. Readers can find the actual health plan here; a summary and analysis follow below.

What Does the Health Plan Include?

The plan includes parameters for a state-based block grant that would combine funds from Obamacare’s insurance subsidies and its Medicaid expansion into one pot of money. The plan would funnel the block grant funds through the State Children’s Health Insurance Program (SCHIP), using that program’s pro-life protections. In general, states using the block grant would:

  • Spend at least half of the funds subsidizing private health coverage;
  • Spend at least half of the funds subsidizing low-income individuals (which can overlap with the first pot of funds);
  • Spend an unspecified percentage of their funds subsidizing high-risk patients with high health costs;
  • Allow anyone who qualifies for SCHIP or Medicaid to take the value of their benefits and use those funds to subsidize private coverage; and
  • Not face federal requirements regarding 1) essential health benefits; 2) the single risk pool; 3) medical loss ratios; and 4) the 3:1 age ratio (i.e., insurers can charge older customers only three times as much as younger customers).

Is That It?

Pretty much. For instance, the plan remains silent on whether to support an Obamacare “stability” (read: bailout) bill intended to 1) keep insurance markets intact during the transition to the block grant, and 2) attract the votes of moderate Republicans like Alaska Sen. Lisa Murkowski and Maine Sen. Susan Collins.

As recently as three weeks ago, former Sen. Rick Santorum was telling groups that the proposal would include the Collins “stability” language. However, as I previously noted, doing so would likely lead to taxpayer funding of abortion coverage, because there are few if any ways to attach pro-life protections to Obamacare’s cost-sharing reduction payments to insurers under the special budget reconciliation procedures the Senate would use to consider “repeal-and-replace” legislation.

What Parts of Obamacare Would the Plan Retain?

In short, most of them.

Taxes and Medicare Reductions: By retaining all of Obamacare’s spending, the plan would retain all of Obamacare’s tax increases—either that, or it would increase the deficit. Likewise, the plan says nothing about undoing Obamacare’s Medicare reductions. By retaining Obamacare’s spending levels, the plan would maintain the gimmick of double-counting, whereby the law’s payment reductions are used both to “save Medicare” and fund Obamacare.

Insurance Regulations: The Congressional Research Service lists 22 separate new federal requirements imposed on health insurance plans under Obamacare. The plan would retain at least 14 of them:

  1. Guaranteed issue of coverage—Section 2702 of the Public Health Service Act;
  2. Non-discrimination based on health status—Section 2705 of the Public Health Service Act;
  3. Extension of dependent coverage—Section 2714 of the Public Health Service Act;
  4. Prohibition of discrimination based on salary—Section 2716 of the Public Health Service Act (only applies to employer plans);
  5. Waiting period limitation—Section 2708 of the Public Health Service Act (only applies to employer plans);
  6. Guaranteed renewability—Section 2703 of the Public Health Service Act;
  7. Prohibition on rescissions—Section 2712 of the Public Health Service Act;
  8. Rate review—Section 2794 of the Public Health Service Act;
  9. Coverage of preventive health services without cost sharing—Section 2713 of the Public Health Service Act;
  10. Coverage of pre-existing health conditions—Section 2703 of the Public Health Service Act;
  11. Summary of benefits and coverage—Section 2715 of the Public Health Service Act;
  12. Appeals process—Section 2719 of the Public Health Service Act;
  13. Patient protections—Section 2719A of the Public Health Service Act; and
  14. Non-discrimination regarding clinical trial participation—Section 2709 of the Public Health Service Act.

Are Parts of the Health Plan Unclear?

Yes. For instance, the plan says that “Obamacare requirements on essential health benefits” would not apply in states receiving block grant funds. However, Section 1302 of Obamacare—which codified the essential health benefits requirement—also included two other requirements, one capping annual cost-sharing (Section 1302(c)) and another imposing minimum actuarial value requirements (Section 1302(d)).

Additionally, the plan on two occasions says that “insurers could offer discounts to people who are continuously covered.” House Republicans offered a similar proposal in their American Health Care Act last year, one that imposed penalties on individuals failing to maintain continuous coverage.

However, the plan includes no specific proposal on how insurers could go about offering such discounts, as the plan states that the 3:1 age rating requirement—and presumably only that requirement—would not apply for states receiving block grant funds. It is unclear whether or how insurers would have the flexibility under the plan to offer discounts for continuous coverage if all of Obamacare’s restrictions on premium rating, save that for age, remain.

This post was originally published at The Federalist.

Does the Heritage Health Plan Include Taxpayer Funding of Abortion?

When lawmakers write legislation, little details matter—a lot. In the case of a health plan that the Heritage Foundation and former Sen. Rick Santorum (R-PA) are reportedly preparing to release in the coming days, a few words indicate the plan has not considered critically important details—like how Senate procedure intertwines with abortion policy—necessary to any substantive policy endeavor.

A few short words in a summary of the Heritage plan leave the real possibility that the plan, if enacted as described, could lead to taxpayer funding of abortion coverage. Either Heritage and Santorum—both known opponents of abortion—have undertaken dramatic changes in their pro-life positions over the past few months, or they have failed to think through the full import of the policies they will release very shortly.

However, multiple individuals participating in the Heritage meetings told me that the concepts and policies Spiro’s document discusses align with Heritage discussions. Spiro may have created that document based on verbal descriptions given to him of the Heritage plan (just as the New York Times’ list of questions Robert Mueller wants to ask President Trump likely came via Trump’s attorneys and not Mueller). But regardless of who created it, people in the Heritage group told me it accurately outlined the policy proposals under discussion.

What Cost-Sharing Reductions Do

The summary describes many policies, but one in particular stands out: Under “Short-term stabilization/premium relief,” the plan “Adopts the [Lamar] Alexander and [Susan] Collins appropriation for CSRs [cost-sharing reductions] and state reinsurance/high risk pool programs for 2019 and 2020.”

On one level, this development should not come as a surprise. Party leaders often incorporate recalcitrant members’ pet projects (or, in the old days, earmarks) into a bill to obtain their votes: “See, we included the language that you wanted—you have to vote for our bill now!” Given that Collins as of last week had not even heard about the Heritage-led effort, one might think she would need some incentive to support the measure, which attaching her “stability” language might provide.

About the Hyde Amendment and Byrd Rule

The reference to CSRs takes on more importance because of the way Congress would consider Heritage’s plan. As with the Graham-Cassidy bill and other “repeal-and-replace” bills considered last year, the Senate would enact them using expedited budget reconciliation procedures.

Those procedures theoretically allow all 51 Senate Republicans to circumvent a Democratic filibuster and pass a reconciliation bill on a party-line vote. However, as I outlined last year, the reconciliation process comes with procedural restrictions (i.e., the “Byrd rule”) to prevent senators from attaching “extraneous” and non-budgetary matter to a bill that cannot be filibustered.

“Hyde amendment” restrictions—which prevent federal funding of abortion coverage, except in the cases of rape, incest, or to save the life of the mother—represent a textbook example of the “Byrd rule,” because they have a fiscal impact “merely incidental” to the policy changes proposed. Former Senate Parliamentarian Bob Dove said as much about abortion restrictions Congress considered in 1995:

The Congressional Budget Office determined that it was going to save money. But it was my view that the provision was not there in order to save money. It was there to implement social policy. Therefore I ruled that it was not in order and it was stricken.

After pushing for a vote for months, Collins suddenly backed off and didn’t force the issue on the Senate floor. She knew she didn’t have the votes—everyone knew she didn’t have the votes—because Democrats wouldn’t support a measure that restricted taxpayer funding of abortion coverage. Exactly nothing has changed that dynamic since Congress considered the issue in March.

Why We Can’t Fund CSRs

Republicans recognize the problems the abortion funding issue creates, and the Graham-Cassidy bill attempted to solve them by providing subsidies via a block grant to states. Graham-Cassidy funneled the block grant through the State Children’s Health Insurance Program (SCHIP), largely because the SCHIP statute includes the following language: “Funds provided to a state under this title shall only be used to carry out the purposes of this title, and any health insurance coverage provided with such funds may include coverage of abortion only if necessary to save the life of the mother or if the pregnancy is the result of an act of rape or incest.”

Because SCHIP already contains full Hyde protections on taxpayer funding of abortion, Graham-Cassidy ran the block grant program through SCHIP. Put another way, Graham-Cassidy borrowed existing Hyde amendment protections because any new protections would get in a budget reconciliation bill. It did the same thing for a “stability” fund for reinsurance or other mechanisms intended to lower premiums by subsidizing insurers, also referred to in Spiro’s document.

Creating a pot of money elsewhere in law—for instance, through the SCHIP statute, which does contain Hyde protections—and using that money to compensate insurers for reducing cost-sharing would prove just as unrealistic. The CSR payments reimburse insurers for discrete, specific discounts provided to discrete, specific low-income individuals.

If the subsidy pool gave money to all insurers equally, regardless of the number of low-income enrollees they reduced cost-sharing for, then insurers would have a ready-built incentive to avoid attracting poor people, because enrolling low-income individuals would saddle them with an unfunded (or only partially funded) mandate. If the subsidy pool gave money to insurers based on their specific obligations under the Obamacare cost-sharing reduction requirements, then the parliamentarian would likely view this language as an attempt to circumvent the Byrd rule restrictions and strike it down.

Not Ready for Prime Time

Four participants in the Heritage meetings told me the group has discussed appropriating funds for CSR payments to insurers as part of the plan. Not a single individual said the Senate’s “Byrd rule” restrictions—which make enacting pro-life protections for such CSR payments all-but-impossible—came up when discussing an appropriation for cost-sharing payments to insurers.

That silence signals one or more potential problems: A lack of regard for pro-life policy; an ignorance of Senate procedure, and its potential ramifications on the policies being considered; or a willingness to fudge details—allowing people to believe what they want to believe. Regardless, it speaks to the unformed nature of the proposal, despite meetings that have continued since the last time “repeal-and-replace” collapsed” nearly eight months ago.

Earlier this month, Santorum claimed in an interview that while the original “Graham-Cassidy was a rush…this time we have the opportunity to get the policy better.” But any serious attempt to “get the policy better” wouldn’t have major lingering questions about tens of billions of dollars in “stability” funding, and whether such funds would subsidize abortion coverage, mere days before its public release. In this case, eight months of deliberations may not lead to a deliberative and coherent policy product.

This post was originally published at The Federalist.

Republicans Omit Obamacare Bailout from Omnibus — DO NOT CONGRATULATE

Congressional leaders finally released the massive, 2,232-page omnibus spending bill late Wednesday, a measure they want Congress to pass within 24 hours. The version released Wednesday night omits language of an Obamacare “stability” package that Republican lawmakers released separately on Monday.

But, to borrow a phrase echoing throughout the Capitol since a Washington Post story appeared Tuesday night, “DO NOT CONGRATULATE” Republicans for leaving the bailout provisions out of the draft. On both process and on substance, congressional leaders did not cover themselves in glory. Far from it.

Republicans Bad on Substance…

A cynic would question why Republican leaders found this particular issue non-negotiable. After all, Republicans ran for four straight election cycles—in 2010, 2012, 2014, and 2016—on repealing Obamacare, only to turn around and propose more than $60 billion in spending to prop it up. From Democrats’ perspective, since Republicans did a complete 180 on repealing Obamacare, why not expect the GOP to perform a similar U-turn on taxpayer funding of abortion?

…And Just as Bad on Process

In general, the process surrounding the omnibus—as with most appropriations legislation, and most major legislation in general—stinks. After completing a secretive drafting process among a small group of staff behind closed doors—the swamp personified—leaders now will turn to ramming the legislation through Congress.

Facing a potential government shutdown at midnight on Friday, they will rush through the massive bill spending trillions of dollars in a matter of hours, well before members of Congress or their staff will have time to read, let alone digest and understand, its contents.

One specific issue stands out: As I previously wrote, Senate Majority Leader Mitch McConnell (R-KY) wants to grant Sens. Susan Collins (R-ME) and Lamar Alexander (R-TN) a separate vote on bailing out Obamacare. He apparently will attempt to do so despite the fact that:

  1. Other Republican senators never agreed to give Collins a vote. McConnell spoke only for himself in his colloquy with Collins last December.
  2. Collins demonstrably moved the goalposts on the size of her bailout. McConnell agreed to support $5 billion in reinsurance funds in December, while now she has demanded more than six times as much, or more than $30 billion.
  3. McConnell literally shut down the federal government rather than grant Sen. Rand Paul (R-KY) a vote on his amendment to an appropriations bill just last month—and Paul’s colleagues publicly trashed his attempts to obtain a vote as a “stunt” and “utterly pointless.”

To most individuals outside Washington, Republicans moving to bail out Obamacare, and attempting to pass 2,200-plus page bills in mere hours, signifies a degree of insanity. Unfortunately, however, Congress seems to engage in these types of activities (at least) every year, raising the specter of the trite saying that defines insanity as doing the same thing over and over while expecting different results.

This week’s spectacle should raise one obvious question: How many more of these sorry affairs will it take before conservatives summon the will to end it, once and for all?

This post was originally published at The Federalist.

Legislative Bulletin: Updated Summary of Obamacare “Stability” Legislation

On Monday, Sen. Lamar Alexander (R-TN) and others introduced their latest version of an Obamacare “stability” bill. In general, the bill would appropriate more than $60 billion in funds to insurance companies, propping up and entrenching Obamacare rather than repealing it.

Also on Monday, the Congressional Budget Office released its analysis of the updated legislation. In CBO’s estimate, the bill would increase the deficit by $19.1 billion, while marginally increasing the number of insured Americans (by fewer than 500,000 per year).


Stability Fund
: Provides $500 million in funding for fiscal year 2018, and $10 billion in funding for each of fiscal years 2019, 2020, and 2021, for invisible high-risk pools and reinsurance payments. The $500 million this year would provide administrative assistance to states to establish such programs, with the $10 billion in each of the following three years maintaining them.

Grants the secretary of Health and Human Services (HHS), in consultation with the National Association of Insurance Commissioners, the authority to allocate the funds to states—which some conservatives may be concerned gives federal bureaucrats authority to spend $30.5 billion wherever they choose.

Includes a provision requiring a federal fallback for 2019 (and only 2019) in states that choose not to establish their own reinsurance or invisible high-risk program. Moreover, these federal fallback dollars must be used “for market stabilization payments to issuers.” Some conservatives may be concerned that this provision—which, like the rest of the $30 billion in “stability funds,” did not appear in the original Alexander-Murray legislation—undermines state flexibility, by effectively forcing states to bail out insurers, whether they want to or not.

Cost-Sharing Reduction Payments: The bill appropriates roughly $30-35 billion in cost-sharing reduction (CSR) payments to insurers, which subsidizes their provision of discounts on deductibles and co-payments to certain low-income individuals enrolled on insurance exchanges.

Last October, President Trump announced he would halt the payments to insurers, concluding the administration did not have authority to do so under the Constitution. As a result, the bill includes an explicit appropriation, totaling roughly $3-4 billion for the final quarter of 2017, and $9-10 billion for each of years 2019, 2020, and 2021, based on CBO spending estimates. This language represents a change from the original Alexander-Murray bill, which appropriated payments for 2018 and 2019 only.

For 2018, the bill appropriates CSRs only for 1) states choosing the Basic Health plan option (which gives states a percentage of Obamacare subsidies as a block grant to cover low-income individuals) and 2) insurers for which HHS determines, in conjunction with state insurance commissioners, that the insurer assumed the payment of CSRs when setting rates for the 2018 plan year. This language represents a change from the original Alexander-Murray bill, which set up a complicated system of rebates that would have allowed insurers potentially to pocket billions of dollars by retaining “extra” CSR payments for 2018.

Some conservatives may be concerned that, because insurers understood for well over a year that a new administration could terminate these payments in 2017, the agreement would effectively subsidize their flawed assumptions. Some conservatives may be concerned that action to continue the flow of payments would solidify the principle that Obamacare, and therefore insurers, are “too big to fail,” which could only encourage further risky behavior by insurers in the future.

Hyde Amendment: With respect to the issue of taxpayer dollars subsidizing federal insurance plans covering abortion, the bill does not apply the Hyde Amendment protections retrospectively to the 2017 CSR payments, or to the (current) 2018 plan year. With respect to 2019 through 2021, the bill prohibits federal funding of abortions, except in the case of rape, incest, or to save the life of the mother. However, the bill does allow states to use state-only dollars to fund other abortions, as many state Medicaid managed care plans do currently.

According to the pro-abortion Guttmacher Institute, with respect to coverage of abortions in state Medicaid plans:

  • 32 states and the District of Columbia follow the federal Hyde Amendment standard, funding abortion only in the cases of rape, incest, or to save the life of the mother;
  • One state provides abortion only in the case of life endangerment; and
  • 17 states provide coverage for most abortions—five voluntarily, and 12 by court order.

State Waiver Processes: The bill would streamline the process for approving state innovation waivers, authorized by Section 1332 of Obamacare. Those waivers allow states to receive their state’s exchange funding as a block grant, and exempt themselves from the individual mandate, employer mandate, and some (but not all) of Obamacare’s insurance regulations.

Specifically, the bill would:

  • Extend the waivers’ duration, from five years to six, with unlimited renewals possible;
  • Prohibit HHS from terminating waivers during their duration (including any renewal periods), unless “the state materially failed to comply with the terms and conditions of the waiver”;
  • Require HHS to release guidance to states within 60 days of enactment regarding waivers, including model language for waivers—a change from the 30 days included in the original Alexander-Murray bill;
  • Shorten the time for HHS to consider waivers from 180 days to 120—a change from 90 days in the original Alexander-Murray bill;
  • Allow a 45-day review for 1) waivers currently pending; 2) waivers for areas “the Secretary determines are at risk for excessive premium increases or having no health plans offered in the applicable health insurance market for the current or following plan year”; 3) waivers that are “the same or substantially similar” to waivers previously approved for another state; and 4) waivers related to invisible high-risk pools or reinsurance, as discussed above. These waivers would initially apply for no more than three years, with an extension possible for a full six-year term;
  • Allow governors to apply for waivers based on their certification of authority, rather than requiring states to pass a law authorizing state actions under the waiver—a move that some conservatives may be concerned could allow state chief executives to act unilaterally, including by exiting a successful waiver on a governor’s order.

State Waiver Substance: On the substance of innovation waivers, the bill would rescind regulatory guidance the Obama administration issued in December 2015. Among other actions, that guidance prevented states from using savings from an Obamacare/exchange waiver to offset higher costs to Medicaid, and vice versa.

While supporting the concept of greater flexibility for states, some conservatives may note that, as this guidance was not enacted pursuant to notice-and-comment, the Trump administration can revoke it at any time—indeed, should have revoked it last year. Additionally, the bill amends, but does not repeal, the “guardrails” for state innovation waivers. Under current law, Section 1332 waivers must:

  • “Provide coverage that is at least as comprehensive as” Obamacare coverage;
  • “Provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable” as Obamacare coverage;
  • “Provide coverage to at least a comparable number of [a state’s] residents” as under Obamacare; and
  • “Not increase the federal deficit.”

Some conservatives have previously criticized these provisions as insufficiently flexible to allow for conservative health reforms like Health Savings Accounts and other consumer-driven options.

The bill allows states to provide coverage “of comparable affordability, including for low-income individuals, individuals with serious health needs, and other vulnerable populations” rather than the current language in the second bullet above. It also clarifies that deficit and budget neutrality will operate over the lifetime of the waiver, and that state innovation waivers under Obamacare “shall not be construed to affect any waiver processes or standards” under the Medicare or Medicaid statutes for purposes of determining the Obamacare waiver’s deficit neutrality.

The bill also makes adjustments to the “pass-through” language allowing states to receive their exchange funding via a block grant. For instance, the bill adds language allowing states to receive any funding for the Basic Health Program—a program states can establish for households with incomes of between 138-200 percent of the federal poverty level—via the block grant.

Some conservatives may view the “comparable affordability” change as a distinction without a difference, as it still explicitly links affordability to Obamacare’s rich benefit package. Some conservatives may therefore view the purported “concessions” on the December 2015 guidance, and on “comparable affordability” as inconsequential in nature, and insignificant given the significant concessions to liberals included elsewhere in the proposed legislative package.

Catastrophic Plans: The bill would allow all individuals to purchase “catastrophic” health plans, beginning in 2019. The legislation would also require insurers to keep those plans in a single risk pool with other Obamacare plans—a change from current law.

Catastrophic plans—currently only available to individuals under 30, individuals without an “affordable” health plan in their area, or individuals subject to a hardship exemption from the individual mandate—provide no coverage below Obamacare’s limit on out-of-pocket spending, but for “coverage of at least three primary care visits.” Catastrophic plans are also currently subject to Obamacare’s essential health benefits requirements.

Outreach Funding: The bill requires HHS to obligate $105.8 million in exchange user fees to states for “enrollment and outreach activities” for the 2019 and 2020 plan years—a change from the original legislation, which focused on the 2018 and 2019 plan years. Currently, the federal exchange (healthcare.gov) assesses a user fee of 3.5 percent of premiums on insurers, who ultimately pass these fees on to consumers.

In a rule released in December 2016, the outgoing Obama administration admitted that the exchange is “gaining economies of scale from functions with fixed costs,” in part because maintaining the exchange costs less per year than creating one did in 2013-14. However, the Obama administration rejected any attempt to lower those fees, instead deciding to spend them on outreach efforts. The agreement would re-direct portions of the fees to states for enrollment outreach.

Some conservatives may be concerned that this provision would create a new entitlement for states to outreach dollars. Moreover, some conservatives may object to this re-direction of funds that ultimately come from consumers towards more government spending. Some conservatives may support taking steps to reduce the user fees—thus lowering premiums, the purported intention of this “stabilization” measure—rather than re-directing them toward more government spending, as the agreement proposes.

The bill also requires a series of biweekly reports from HHS on metrics like call center volume, website visits, etc., during the 2019 and 2020 open enrollment periods, followed by after-action reports regarding outreach and advertising. Some conservatives may view these myriad requirements first as micro-management of the executive, and second as buying into the liberal narrative that the Trump administration is “sabotaging” Obamacare, by requiring minute oversight of the executive’s implementation of the law.

Cross-State Purchasing: Requires HHS to issue regulations (in consultation with the National Association of Insurance Commissioners) within one year regarding health care choice compacts under Obamacare. Such compacts would allow individuals to purchase coverage across state lines.

However, because states can already establish health care compacts amongst themselves, and because Obamacare’s regulatory mandates would still apply to any such coverage purchased through said compacts, some conservatives may view such language as insufficient and not adding to consumers’ affordable coverage options.

Consumer Notification: Requires states that allow the sale of short-term, limited duration health coverage to disclose to consumers that such plans differ from “Obamacare-approved” qualified health plans. Note that this provision does not codify the administration’s proposed regulations regarding short-term health coverage; a future Democratic administration could (and likely will) easily re-write such regulations again to eliminate the sale of short-term plans, as the Obama administration did in 2016.

CBO Analysis of the Legislation

As noted above, CBO believes the legislation would increase the deficit by $19.1 billion, while increasing the number of insured Americans marginally. In general, while CBO believed that changes to Obamacare’s state waivers program would increase the number of states applying for waivers, they would not have a net budgetary impact.

However, the bill does include one particular change to Obamacare Section 1332 waivers allowing existing waiver recipients to request recalculation of their funding formula. According to CBO, only Minnesota qualifies under the statutory definition, and could receive $359 million in additional funding between 2018 and 2022. Some conservatives may be concerned that this provision represents a legislative earmark that by definition can only affect one state.

With respect to the invisible high-risk pools and reinsurance, CBO believes the provisions would raise spending by a net of $26.5 billion, offset by higher revenues of $7 billion. The budget office estimated that the entire country would be covered by the federal fallback option in 2019, because “it would be difficult for other states [that do not have waivers currently] to establish a state-based program in time to affect premiums.”

For 2020 and 2021, CBO believes that 60 and 80 percent of the country, respectively, would be covered by state waivers; “the remainder of the population in those years would be without a federally-funded reinsurance program or invisible high-risk pool.” The $7 billion in offsetting savings referenced in CBO’s score comes from lower premiums, and thus lower spending on federal premium subsidies. In 2019, CBO believes “about 60 percent of the federal cost for the default federal reinsurance program would be offset by other sources of savings.”

CBO believes that, under the bill, premiums would be 10 percent lower in 2019, and 20 percent lower in 2020 and 2021, compared to current law. Some conservatives may note that lower premiums relative to current law does not equate to lower premiums relative to 2018 levels. Particularly because CBO expects elimination of the individual mandate tax will raise premiums by 10 percent in 2019, many conservatives may doubt that premiums will go down in absolute terms, notwithstanding the sizable spending on insurer subsidies under the bill.

CBO noted that premium changes would largely affect unsubsidized individuals—i.e., families with incomes more than four times the federal poverty level ($100,400 for a family of four in 2018)—a small portion of whom would sign up for coverage as a result of the reductions. However, “in states that did not apply for a waiver, premiums would be the same under current law as under the legislation starting in 2020.”

Moreover, even in states with a reinsurance waiver, CBO believes that insurers will “tend to set premiums conservatively to hedge against uncertainty” regarding the reinsurance programs—meaning that CBO “expect[s] that total premiums would not be reduced by the entire amount of available federal funding.”

As noted in prior posts, CBO is required by law to assume full funding of entitlement spending, including cost-sharing reductions. Therefore, the official score of the bill included no net budget impact for the CSR appropriation. However, Alexander received a supplemental letter from CBO indicating that, compared to a scenario where the federal government did not make CSR payments, appropriating funds for CSRs would result in a notional deficit reduction of $29 billion.

The notional deficit reduction arises because, in the absence of CSR payments, insurers would “load” the cost of reducing cost-sharing on to health insurance premiums—thus raising premium subsidies for those who qualify for them. CBO believes these higher subsidies would entice more families with incomes between two and four times the federal poverty definition ($50,200-$100,400 for a family of four in 2018) to sign up for coverage. Compared to a “no-CSR” baseline, appropriating funds for CSRs, as the bill would do, would reduce spending on premium subsidies, but it would also increase the number of uninsured by 500,000-1,000,000, as some families receiving lower subsidies would drop coverage.

Lastly, the expanded sale of catastrophic plans, coupled with provisions including those plans in a single risk pool, would slightly improve the health of the overall population purchasing Obamacare coverage. While individuals cannot receive federal premium subsidies for catastrophic coverage, enticing more healthy individuals to sign up for coverage will improve the exchanges’ overall risk pool slightly, lowering federal spending on those who do qualify for exchange subsidies by $849 million.

This post was originally published at The Federalist.

“Stability” Bill Likely Will Not Lower Premiums in 2019

In the debate over an Obamacare “stability” bill, advocates of such a measure contend that it will lower premiums, throwing around studies and numbers to make their case. Sen. Lamar Alexander (R-TN) released a handout earlier this week claiming that Oliver Wyman forecast a 40 percent reduction in premiums from a “stability” package, and that the Congressional Budget Office (CBO) gave preliminary estimates of a 10 percent premium reduction in 2019, and a 20 percent reduction in 2020 and 2021.

However, all these numbers avoid — wittingly or otherwise — answering the critical question: Premium reduction compared to what? Barack Obama ran into this problem when trying to sell Obamacare. In 2008, he said repeatedly that his health care plan would “cut” people’s premiums — and then, after signing the bill into law, tried to argue that when he had said “cut,” he really meant “slow the rate of increase.”

But would a “stability” bill actually prevent those premium increases for 2019, particularly for unsubsidized enrollees? (Federal subsidies insulate individuals with incomes under 400 percent of the poverty level — $100,400 for a family of four — from much of the effects of premium hikes.) Would premiums remain flat, or even decline, next year compared to 2018 rates? Based on the studies released to date, most indications suggest otherwise — which should give conservatives pause before embracing a measure that would further entrench Obamacare, making repeal that much less likely.

Factors Affecting Premiums For 2019

Over and above annual increases in medical costs, multiple unique factors will impact premiums for the coming year:

Cost-Sharing Reductions: President Trump’s October decision to stop Obamacare’s cost-sharing reduction (CSR) payments to insurers had a large theoretical impact — but in most states, little practical effect on unsubsidized enrollees. Estimates released prior to the President’s decision suggested that insurers would need to raise premiums for 2018 by roughly 20 percent to account for loss of the CSR payments.

An analysis of states’ decisions regarding CSRs shows that only six states applied the CSR charges to all health insurance plan rates—thereby forcing unsubsidized enrollees to pay higher premiums. Because comparatively few unsubsidized enrollees paid higher premiums due to the CSR decision, the inverse scenario applies: Few unsubsidized enrollees will receive any premium reduction from appropriating CSRs.

Individual Mandate Repeal: As I noted last fall, eliminating Obamacare’s individual mandate tax, while retaining its costly regulations, will put upward pressure on premiums — the only question is how much. Without getting taxed for not purchasing Obamacare-compliant insurance, some healthy individuals will drop coverage, raising average premiums for the remainder.

In its most recent estimate last November, the CBO stated that eliminating the tax would raise exchange premiums “by about 10 percent in most years of the decade.” The administration likewise believes that eliminating the mandate penalty will raise premiums by a similar amount. Its proposed rule on short-term health plans estimated an average monthly premium of $649 with the individual mandate penalty, and $714 without—an increase of $65 per month, or exactly 10 percent.

The administration’s proposed rule on short-term health insurance admitted that exchange premiums would rise as a result of healthy individuals choosing short-term coverage over exchange plans, but by very modest amounts. In the administration’s estimates, premiums would rise by only $2-4 per month for exchange coverage — far less than the $65 monthly estimated premium increase due to elimination of the mandate tax, as noted above. However, the administration’s estimates only assume that 100,000-200,000 individuals enroll in short-term coverage.

By contrast, the liberal Urban Institute estimated much higher take-up of short-term plans by healthy individuals, and therefore much greater premium increases for the sicker individuals who would remain in Obamacare-compliant coverage. According to Urban, 4.3 million individuals would enroll in short-term coverage — more than 20 times the administration’s highest estimate. Because of these healthy individuals migrating to short-term coverage, the Urban researchers assume much larger premium increases for Obamacare-compliant plans, averaging 18.3 percent in the 45 states (plus the District of Columbia) that currently allow the sale of short-term coverage.

The proposed regulatory action on short-term plans — which the administration hopes insurers will start selling by this fall — could have minimal impact on premiums, or lead to sizable premium increases. In general, however, the more that short-term plans succeed in attracting many (healthy) customers, the higher premiums will climb for the (sicker) individuals who maintain exchange coverage.

Premium Tax Suspension: In the January continuing resolution, Congress suspended Obamacare’s health insurance tax — currently in effect for 2018 — for 2019. An August 2017 study, paid for by health insurer UnitedHealthGroup and conducted by Oliver Wyman, found that the insurer tax would raise premiums by about 2.7 percent. Removing the tax next year would lower 2019 premiums by roughly the same amount.

Premium Estimates — Comparing 2018 And 2019

Given the above factors, will premiums go down in 2019 compared to their current 2018 levels? Based on the analyses conducted to date, most indicators suggest they will not.

Oliver Wyman: As I noted on Wednesday, the 40 percent headline figure in the Oliver Wyman study relies on an assumption that Oliver Wyman itself finds dubious. That premium reduction assumes that states apply for and receive a waiver to create their own reinsurance pool on top of the federal reinsurance funds. However, Oliver Wyman concedes that “states that have not already begun working on a waiver will be challenged to get [one] filed and approved under the current regulatory regime in time to impact 2019 premiums.”

The report continues: “In those states that are not able to obtain [a waiver]…we estimate that premium [sic] would decline by more than 20 percent across all metal levels. Those estimates include an average 10 percent reduction due to the funding of CSRs, with the remaining reduction coming from the reinsurance program.”

However, most individuals will NOT receive a 10 percent premium reduction in 2019 if Congress funds CSRs — because, as noted above, most unsubsidized individuals are not paying higher premiums in 2018 due to the non-funding of CSRs. Moreover, while Oliver Wyman said its modeling “reflects elimination of the mandate penalty,” it does not consider the impact of regulatory action on short-term plans or AHPs.

Therefore, the study conducted by Oliver Wyman — which frequently does work for the insurance industry — suggests that, at best, the “stability” package would reduce premiums in 2019 compared to current law for the average enrollee by 10 percent. However, would it actually reduce premiums compared to 2018 levels for the average enrollee? Only if one assumes that 1) health costs do not rise significantly and 2) few individuals enroll in short-term plans or AHPs. If either scenario occurs, a slight premium decrease could turn into a premium increase — and if both scenarios occur, a sizable increase at that.

Congressional Budget Office: Neither Alexander nor the CBO have released their full analysis of a “stability” package. However, according to Alexander’s characterization of the CBO score, the budget office assumes a more modest premium impact than Oliver Wyman — a 10 percent reduction in 2019, followed by a 20 percent premium reduction in 2020 and 2021. Like Oliver Wyman, the CBO likely believes that tight deadlines would make it difficult for the funds provided by the “stability” bill to lower premiums in time for the 2019 plan year. Unlike Oliver Wyman, however, the CBO does not take into account whether and how funding CSRs would lower premiums — because, as I have written previously, federal budget law requires the CBO to assume full funding for CSRs (and all other entitlements) when conducting its analyses.

As noted above, the CBO believes that eliminating the mandate penalty would raise premiums by roughly 10 percent. Put another way, then, in CBO’s estimation, the entire “stability” package would only cancel out the effect of eliminating the mandate penalty on premiums in 2019. If health costs rise — as they do every year — then premiums will rise in 2019. And if the short-term plans succeed in attracting many customers away from the exchanges, then premiums for Obamacare-compliant plans could rise substantially — by double digits — even after the “stability” package.

Conservatives have many good reasons to oppose this “stability” measure — budgetary gimmicks, potential federal funding of abortion coverage, Congress’ total lack of oversight for the bad decisions made by insurers and insurance commissioners, to name just a few. But the fact that the measure looks unlikely to achieve its central goal of lowering premiums seems the most damning indictment of the proposal — failing to solve its intended problem, while causing so many others.

This post was originally published at The Federalist.

Ten Conservative Concerns with an Obamacare “Stability” Bill

A PDF version of this document is available online here.

1.     Taxpayer Funding of Abortion Coverage.             As Republicans themselves correctly argued back in 2010, any provision preventing taxpayer dollars from funding abortion coverage must occur in legislation itself—executive orders are by their nature insufficient. Therefore, any “stability” bill must have protections above and beyond current law to ensure that taxpayer dollars do not fund abortion coverage.

2.     Potential Budget Gimmick.       Press reports indicate that House Republican leaders have considered adjusting the budgetary baseline to fund a “stability” package. Congress should not attempt to violate existing law and create artificial “savings” to fund a reinsurance program.

3.     Insurers Still Owe the Treasury Billions.    The Government Accountability Office concluded in 2016 that the Obama Administration violated the law by prioritizing payments to insurers over payments to the U.S. Treasury. The Trump Administration and House Republicans should focus first on reclaiming the billions insurers haven’t repaid, rather than giving them more taxpayer cash in a “stability” package.

4.     Doesn’t Repeal Obamacare Now.        Instead of repealing the onerous regulations that caused health insurance rates to more than double from 2013-17, a “stability” bill would lower premiums by giving insurers additional subsidies—throwing money at a problem rather than fixing it.

5.     Undermines Obamacare Repeal Later.   House Republican leaders reportedly support a bill (H.R. 4666) by Rep. Ryan Costello (R-PA). That bill appropriates “stability” funds to insurers for three years (2019 through 2021), eliminating any incentive for the next Congress to consider “repeal-and-replace” legislation.

6.     Budgetary Cliff Opens Door to Perpetual Bailouts.    Whereas Obamacare’s reinsurance program phased out over three years—with funding of $10 billion in 2014, $6 billion in 2015, and $4 billion in 2016—H.R. 4666 contains $10 billion in funding for each of three years. This funding cliff would create a push for additional “stability” funding thereafter—turning the Costello bill into a perpetual bailout machine.

7.     Bails Out Insurers’ Bad Decisions.    During the period 2015-17, most insurers assumed they would continue to receive cost-sharing reduction (CSR) payments, despite growing legal challenges over their constitutionality. Before even considering appropriating CSR funds, Congress should first investigate insurers’ bad business decisions to assume unconstitutional payments would continue in perpetuity.

8.     Bails Out Insurance Commissioners’ Bad Decisions.    Likewise, in the summer and fall of 2016, virtually all state insurance commissioners failed to consider whether the incoming Administration would unilaterally withdraw CSR payments—which the Trump Administration did last year. Before making CSR payments, Congress first should investigate insurance commissioners’ gross negligence.

9.     Doesn’t Hold Obama Officials Accountable.        In 2016, the House Energy and Commerce and Ways and Means Committees released a 158-page report highlighting abuses over the unconstitutional appropriation of CSRs by the Obama Administration. Since then, neither committee has acted—contempt citations, criminal referrals, or other similar actions—to uphold Congress’ constitutional prerogatives.

10.  Could Undermine Second Amendment Rights.  Last week, health insurer Aetna made a sizable contribution to fund this month’s gun control march in Washington. Some may question why insurers need billions of dollars in taxpayer cash if they can contribute to liberal organizations, and whether some of this “stability” package will end up in the hands of groups opposed to Americans’ fundamental liberties.