How the Impeachment Frenzy Could Block Bad Health Care Policies

House Democrats’ headlong rush to impeach President Trump will have many implications for American politics and the presidential election. On policy, it could have a salutary effect for conservatives, by precluding the enactment of harmful policies that would push our health care system in the wrong direction.

Congress should of course do something about our health care system, particularly the millions of individuals priced out of insurance by Obamacare, also known as the Unaffordable Care Act. But in recent weeks, it appears that Republicans have fallen into the typical definition of bipartisanship—when conservatives agree to do liberal things. As a result, if the controversy over impeachment leads to a legislative stalemate over health care, it will at least prevent Congress from making our current flawed system any worse.

Renewed Impeachment Push

The emerging controversy over Trump’s interactions with Ukraine, and whether those actions constituted an impeachable offense, resulted in analyses of whether and how the impeachment push will affect the legislative agenda on multiple issues, including health care.

Multiple Republicans suggested impeachment could bring Congress’ other work to a halt, whether by consuming the time and energy of members of Congress and staff, poisoning the proverbial well for negotiations and compromise, or a combination of the two. Consider the following quotes from Republicans in a Wednesday story:

  • House Ways and Means Committee Ranking Member Kevin Brady (R-Texas): “Impeachment makes a toxic environment more toxic.”
  • Former House Freedom Caucus Chairman Mark Meadows (R-N.C.): “There is more oxygen on impeachment than there is on legislation….My Democratic colleagues have put everything on hold to try to make sure that this President is not the one that signs any proposed bills.”
  • President Trump: Nancy Pelosi has “been taken over by the radical left. Unfortunately, she’s no longer the Speaker of the House.”
  • The White House: Democrats have “destroyed any chances of legislative progress” with their focus on impeachment.

Ultimately, whether any major legislation passes in this environment, whether on health care or other issues, will depend on two factors. First, will President Trump want to strike legislative bargains with House Democrats at the same time the latter are working to impeach and remove him from office? On that front, color me skeptical, at best.

Second, at a time when Trump will need Republicans to support him in an impeachment fight, will he aggressively push policies that many of them oppose?

Controversial Agenda in Congress

In July, the Senate Finance Committee approved drug pricing legislation over the concerns of many Republicans. A majority of Republicans voted against the Finance Committee bill, believing (correctly) that its provisions limiting price increases for pharmaceuticals amounted to price controls, which would have a harmful impact on innovation.

Since that time, House Speaker Nancy Pelosi (D-Calif.) has taken ideas from Senate Finance Committee Chairman Chuck Grassley (R-Iowa), and the Trump administration, and put them on steroids. The drug pricing legislation she recently introduced as H.R. 3 would force drug companies into a “negotiation” with defined price limits, confiscating virtually all their revenues if they do not submit to these government-imposed price controls.

Likewise, Congress’ action on “surprise” billing appears ominous. While Washington should allow states to come up with their own solutions to this issue, some Republicans want Congress to intervene.

Save Us from ‘Socialism-Lite’

If Congress’ legislative agenda grinds to a halt over a combination of the impeachment food fight and the impending 2020 presidential campaign, it would mean that lawmakers at least did not make the health care system worse via a series of socialist-style price controls.

The American people do deserve better than the failed status quo. They need the enactment of a conservative health care agenda that will help lower the skyrocketing cost of health care.

But if Republicans have failed to embrace such an agenda, as by and large they have, at least they can stop doing any more damage through new policies that will push us further in the direction of government-run health care. Thankfully, Pelosi’s newfound embrace of a march towards impeachment may slow the march towards socialized medicine—at least for the time being.

This post was originally published at The Federalist.

Rant by Congressional Spouse Illustrates the Problem Facing American Health Care

Last week, the wife of Rep. Joe Cunningham (D-S.C.) went on a self-described “rant on social media” about her health coverage.

Amanda Cunningham’s comments echo claims by Democratic lawmakers like Reps. Alexandria Ocasio-Cortez (D-N.Y.) and Rep. Cindy Axne (D-Iowa) about the problems with their health coverage. For many members of Congress that comes via Obamacare-compliant policies sold on health insurance exchanges.

The comments raise one obvious question: If Democrats don’t like Obamacare plans for themselves, then why did they force all Americans to buy this insurance under penalty of taxation? But beyond demonstrating the bipartisan dissatisfaction with Obamacare, Amanda Cunningham’s story illustrates the larger problems plaguing the American health care system.

Mental Health Parity

In her Instagram post, Cunningham complained that under her Blue Cross Blue Shield policy, “all of my mental health therapy sessions are denied, in addition to all of our marriage counseling sessions.” She continued: “It’s just mind-blowing to me that these basic well-known needs, that mental health is health care, are still being denied, that we’re still fighting for these absolutely basic things—it’s unbelievable to me.”

Cunningham didn’t go into many specifics about her case, but on one level, her argument sounds compelling. The opioid crisis has shone a brighter spotlight on the people who need treatment to cover mental illness or substance use disorders. Congress passed mental health parity legislation (as part of the TARP bill, of all things) in 2008, and Section 1311(j) of Obamacare extended these provisions to exchange plans.

Other People’s Money

On the other hand, consider that members of Congress receive a salary of $174,000 annually—more than most Americans (myself included). Consider also that unlike all other Americans purchasing coverage on Obamacare exchanges (myself included), Cunningham, other members of Congress, and their staff receive (likely illegal) subsidies offsetting much of the cost of their health insurance premiums.

More importantly, consider that each coverage requirement on insurers—whether to cover a certain type of treatment (e.g., mental health, in-vitro fertilization, etc.) or treatments provided by a certain type of provider (e.g., marriage counselor, podiatrist, etc.)—raise the price of health insurance each month. Collectively, the thousands of mandates imposed nationwide increase premiums by hundreds of dollars per year.

They also send a paternalistic message to Americans: The policy-makers who impose these coverage requirements would rather individuals go uninsured, because their premiums have become unaffordable, than purchase a plan without the covered benefit or treatment in question.

She didn’t say it outright, but in her “rant,” Cunningham wanted to raise premiums on other Americans—most of whom earn far less than her family—so she would receive “free” therapy. Viewed from this perspective, her objections seem somewhat self-serving from a family in the upper tier of the income spectrum.

Therein lies the problem of American health care: Everyone wants to spend everyone else’s money rather than their own. Everyone wants “their” treatments—in this case, Cunningham’s counseling sessions—covered, even if others pay more. And if their chosen therapies are covered by insurance, with little to no cost-sharing, patients will consume more health care, because they believe they are spending their insurer’s money rather than their own.

Obamacare Made It Worse

The 2010 health care law didn’t cause this problem. However, as the Congressional Budget Office (CBO) noted in its November 2009 analysis of the legislation’s premium impacts, the federal benefit requirements included in the measure raised insurance rates significantly:

Because of the greater actuarial value and broader scope of benefits that would be covered by new nongroup policies sold under the legislation, the average premium per person for those policies would be an estimated 27 percent to 30 percent higher than the average premium for nongroup policies under current law (with other factors held constant). The increase in actuarial value would push the average premium per person about 18 percent to 21 percent above its level under current law, before the increase in enrollees’ use of medical care resulting from lower cost sharing is considered; that induced increase, along with the greater scope of benefits, would account for the remainder of the overall difference.

In CBO’s view, the law required people to buy richer insurance policies, and those richer policies encouraged people to consume more health care, both of which led to a rise in premiums. Unfortunately, that rise in premiums over the past several years has led millions of individuals who do not qualify for insurance subsidies (unlike Amanda Cunningham) to drop their coverage.

Get the Incentives Right

Sooner or later, our country will run out of other people’s money to spend on health care. Despite her impassioned plea, only a movement away from the solutions Cunningham advocated for can prevent that day from coming sooner rather than later.

This post was originally published at The Federalist.

Another Study Confirms Obamacare as the Unaffordable Care Act

Despite the high level of partisanship in the United States, both sides can agree on something even as controversial as health care: Both Democrats and Republicans believe Obamacare has failed to deliver.

Based on their last primary debate, Democrats running for the 2020 presidential nomination can’t give away more health care subsidies fast enough. Some of them want to abolish Obamacare outright. But all of them agree the law has not lived up to Barack Obama’s claims during the 2008 campaign, when he repeatedly promised that hisplan would reduce premiums by $2,500 for the average family.

Shrinking Without Subsidies

The CMS analysis of risk adjustment data submitted by insurers focuses on the unsubsidized marketplace. These individuals, who make more than 400 percent of the federal poverty level ($103,000 for a family of four in 2019), do not receive any subsidies from the federal government to offset their premiums.

The analysis concludes that, while the subsidized marketplace has remained steady for the past several years, the number of unsubsidized people purchasing insurance has steadily shrunk as premiums continue to decline. In 2018, even as average monthly subsidized enrollment increased by a modest 4 percent, average monthly unsubsidized enrollment plummeted by 24 percent.

From 2016 through 2018, the unsubsidized market shrank by an even larger amount. Successive price increases — an average 21 percent premium rise in 2017, followed by another 26 percent jump in 2018 — priced many people out of the market.

During those two years, the average monthly enrollment by unsubsidized people fell by 40 percent, from 6.3 million to 3.8 million. Six states saw their unsubsidized enrollment drop by more than 70 percent, with Iowa’s unsubsidized enrollment shrinking by a whopping 91 percent.

The large percentages of unsubsidized people dropping coverage in many states — in most cases, because they could not afford their rapidly escalating premiums — show the unstable nature of the Obamacare “marketplaces.” With only people who qualify for subsidies able to afford their premiums, most states’ insurance markets have become dependent on the morphine drip of subsidies from Washington.

‘Popular’ Preexisting Conditions?

Why have premiums skyrocketed so that only people receiving federal subsidies can afford to pay their insurance rates? A Heritage Foundation analysis from last year provides a clear answer:

A cluster of [Obamacare] insurance-access requirements — specifically the guaranteed-issue requirement and the prohibitions on medical underwriting and applying coverage exclusions for pre-existing medical conditions — accounts for the largest share of premium increases.

In other words, the preexisting condition provisions have proven the largest factor in pricing literally millions of people out of their health insurance coverage. This means, ironically enough, such people now have no coverage should they develop any such condition.

The left does not want to talk about these people. While the liberal Kaiser Family Foundation will survey Americans about the supposed popularity of the preexisting condition provisions, the organization refuses to survey Americans about the cost of these regulations — for instance, whether people think those “protections” are worth spending an extra several thousand dollars a year in higher insurance premiums. As the old legal saying goes, “Don’t ask a question to which you don’t want to know the answer.”

But the American people need to know the answers and need to understand the effects of Obamacare. Liberals wouldn’t have you know it, but families care more about the affordability of health coverage than about losing their coverage due to a preexisting condition. Reforms codified by the Trump administration will help provide portable and more affordable coverage to many Americans and represent one of several better solutions to tackle the preexisting condition problem.

The left’s “solutions” to Obamacare’s skyrocketing premiums represent more of the same — more taxes, more spending, and more subsidies to make coverage “affordable” for a select few. But sooner or later, the left will eventually run out of other people’s money. The Unaffordable Care Act’s failure to deliver demonstrates that the American people need and deserve a better approach than the left can devise.

This post was originally published at The Federalist.

Six Things about Pre-Existing Conditions Republican “Leaders” Still Don’t Get

“If at first you don’t succeed, go ahead and quit.” That might be the takeaway from excerpts of a conference call held earlier this month by House Minority Leader Kevin McCarthy (R-CA), and published in the Washington Post.

McCarthy claimed that Republicans’ “repeal and replace” legislation last Congress “put [the] pre-existing condition campaign against us, and so even people who are [sic] running for the very first time got attacked on that. And that was the defining issue and the most important issue in the [midterm election] race.” He added: “If you’ll notice, we haven’t done anything when it comes to repealing Obamacare this time.”

Problem 1: Pre-Existing Condition Provisions In Context

I first noted this dilemma last summer: Liberals call the pre-existing condition provisions “popular” because their polls only ask about the policy, and not its costs. If you ask Americans whether they would like a “free” car, how many people do you think would turn it down? The same principle applies here.

When polls ask about the trade-offs associated with the pre-existing condition provisions—which a Heritage Foundation study called the largest driver of premium increases under Obamacare—support plummets. Cato surveys in both 2017 and 2018 confirmed this fact. Moreover, a Gallup poll released after the election shows that, by double-digit margins, Americans care more about rising health premiums and costs than about losing coverage due to a pre-existing condition.

The overall polling picture provided an opportunity for Republicans to push back and point out that the pre-existing condition provisions have led to skyrocketing premiums, which priced 2.5 million people out of the insurance marketplace from 2017 to 2018. Instead, most Republicans did nothing.

Problem 2: Republicans’ Awful Legislating

The bills’ flaws came from a failure to understand how Obamacare works. The law’s provisions requiring insurers to offer coverage to everyone (guaranteed issue) and price that coverage the same regardless of health status (community rating) make insurers want to avoid covering sick people. Those two provisions necessitate another two requirements, which force insurers to cover certain conditions (essential health benefits) and a certain percentage of expected health costs (actuarial value).

In general, the House and Senate bills either repealed, or allowed states to waive, the latter two regulations, while keeping the former two in place. If Republicans had repealed all of Obamacare’s insurance regulations, they could have generated sizable premium savings—an important metric, and one they could tout to constituents. Instead, they ended up in a political no man’s land, with people upset about losing their pre-existing condition “protections,” and no large premium reductions to offset that outrage.

Looking at this dynamic objectively, it isn’t surprising that McCarthy and his colleagues ended up with a political loser on their hands. The true surprise is why anyone ever thought the legislative strategy made for good politics—or, for that matter, good (or even coherent) policy.

Problem 3: Pre-Existing Conditions Aren’t Going Away

Within hours after Sen. Thom Tillis (R-NC) introduced a bill last year maintaining Obamacare’s pre-existing condition provisions—the requirement that all insurers offer coverage at the same rates to all individuals, regardless of health status—liberals weighed in to call it insufficient.

As noted above, Obamacare encourages insurers to discriminate against people with pre-existing conditions. Repealing only some of the law’s regulations would exacerbate that dynamic, by giving insurers more tools with which to avoid enrolling sick people. Liberals recognize this fact, and will say as much any time Republicans try to modify any of Obamacare’s major insurance regulations.

Problem 4: Better Policies Exist

According to the Post, McCarthy said he wants to recruit candidates who would “find a solution at the end of the day.” A good thing that, because better solutions for the problems of pre-existing conditions do exist (I’ve written about several) if McCarthy had ever bothered to look for them.

Their political attacks demonstrate that liberals focus on supporting “insurance” for people once they develop a pre-existing condition. (Those individuals’ coverage by definition really isn’t “insurance.”) By contrast, conservatives should support making coverage more affordable, such that people can buy it before they develop a pre-existing condition—and keep it once they’re diagnosed with one.

Regulations proposed by the Trump administration late last year could help immensely on this front, by allowing employers to subsidize insurance that individuals hold and keep—that is, coverage that remains portable from job to job. Similar solutions, like health status insurance, would also encourage portability of insurance throughout one’s lifetime. Other options, such as direct primary care and high-risk pools, could provide care for people who have already developed pre-existing conditions.

Using a series of targeted alternatives to reduce and then to solve the pre-existing condition problem would prove far preferable than the blunt alternative of one-size-fits-all government regulations that have made coverage unaffordable for millions. However, such a solution would require political will from Republicans—which to date they have unequivocally lacked.

Problem 5: Republicans’ Alternative Is Socialized Medicine

Instead of promoting those better policies, House Republican leaders would like to cave in the most efficient manner possible. During the first day of Congress, they offered a procedural motion that, had it been adopted, would have instructed the relevant committees of jurisdiction to report legislation that:

(1) Guarantees no American citizen can be denied health insurance coverage as the result of a previous illness or health status; and (2) Guarantees no American citizen can be charged higher premiums or cost sharing as the result of a previous illness or health status, thus ensuring affordable health coverage for those with pre-existing conditions.

Guaranteeing that everyone gets charged the same price for health care? I believe that’s called socialism—and socialized medicine.

Their position makes it very ironic that the same Republican committee leaders are pushing for hearings on Democrats’ single-payer legislation. It’s a bit rich to endorse one form of socialism, only to denounce another form as something that will destroy the country. (Of course, Republican leaders will only take that position unless and until a single-payer bill passes, at which point they will likely try to embrace it themselves.)

Problem 6: Health Care Isn’t Going Away As An Issue

The federal debt this month passed $22 trillion, and continues to rise. Most of our long-term government deficits arise from health care—the ongoing retirement of the baby boomers, and our corresponding obligations to Medicare, Medicaid, and now Obamacare.

Any Republican who cares about a strong national defense, or keeping tax rates low—concerns most Republicans embrace—should care about, and take an active interest in, health care and health policy. Given his comments about not repealing, or even talking about, Obamacare, McCarthy apparently does not.

But unsustainable trends are, in the long run, unsustainable. At some point in the not-too-distant future, skyrocketing spending on health care will mean that McCarthy will have to care—as will President Trump, and the Democrats who have gone out of their way to avoid talking about Medicare’s sizable financial woes. Here’s hoping that by that point, McCarthy and Republican leaders will have a more coherent—and conservative—policy than total surrender to the left.

This post was originally published at The Federalist.

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

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

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

Overwhelming Concern about Premiums

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Not a Surprise Outcome

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

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

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

This post was originally published at The Federalist.

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

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

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

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

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

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

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

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

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

This post was originally published at The Federalist.

Ocasio-Cortez Suddenly Realizes She Doesn’t Like Paying Obamacare’s Pre-Existing Condition Tax

On Saturday evening, incoming U.S. representative and self-proclaimed “democratic socialist” Alexandria Ocasio-Cortez took to Twitter to compare her prior health coverage to the new health insurance options available to her as a member of Congress.

It shouldn’t shock most observers to realize that Congress gave itself a better deal than it gave most ordinary citizens. But Ocasio-Cortez’ complaints about the lack of affordability of health insurance demonstrate the way liberals who claim to support Obamacare’s pre-existing condition “protections”—and have forcibly raised others’ premiums to pay for those “protections”—don’t want to pay those higher premiums themselves.

She’s Paying the Pre-Existing Condition Tax

I wrote in August about my own (junk) Obamacare insurance. This year, I have paid nearly $300 monthly—a total of $3,479—for an Obamacare-compliant policy with a $6,200 deductible. Between my premiums and deductible, I will face paying nearly the first $10,000 in medical costs out-of-pocket myself.

Of course, as a fairly healthy 30-something, I don’t have $10,000 in medical costs in most years. In fact, this year I won’t come anywhere near to hitting my $6,200 deductible (presuming I don’t get hit by a bus in the next four weeks).

As I noted in August, my nearly $3,500 premium doesn’t just fund my health care—or, more accurately, the off-chance that I will incur catastrophic expenses such that I will meet my deductible, and my insurance policy will actually subsidize some of my coverage. Rather, much of that $3,500 “is designed to fund someone else’s medical condition. That difference between an actuarially fair premium and the $3,500 premium my insurer charged me amounts to a ‘pre-existing conditions tax.’”

Millions of People Can’t Afford Coverage

Because I work for myself, I don’t get an employer subsidy to pay the pre-existing condition tax. (I can, however, write off my premiums from my federal income taxes.) Ocasio-Cortez’s tweet referred to her coverage “as a waitress,” but didn’t specify where she purchased that coverage, nor whether she received an employer subsidy for that coverage.

However, a majority of retail firms, and the majority of the smallest firms (3-9 workers), do not offer coverage to their workers. Firms are also much less likely (only 22 percent) to offer insurance to their part-time workers. It therefore seems likely, although not certain, that Ocasio-Cortez did not receive an employer subsidy, and purchased Obamacare coverage on her own. In that case she would have had to pay the pre-existing condition tax out of her own pocket.

That pre-existing condition tax represented the largest driver of premium increases due to Obamacare, according to a March paper published by the Heritage Foundation. Just from 2013 (the last year before Obamacare) through 2017, premiums more than doubled. Within the last year (from the first quarter of 2017 through the first quarter of 2018) roughly 2.6 million people who purchased Obamacare-compliant plans without a subsidy dropped their coverage, likely because they cannot afford the higher costs.

Lawmakers Get an (Illegal) Subsidy to Avoid That Tax

Unsurprisingly, however, members of Congress don’t have to pay the pre-existing condition tax on their own. They made sure of that. Following Obamacare’s passage, congressional leaders lobbied feverishly to preserve their subsidized health coverage, even demanding a meeting with the president of the United States to discuss the matter.

Senators and representatives do have to purchase their health insurance from the Obamacare exchanges. But the Office of Personnel Management (OPM) issued a rule allowing members of Congress and their staffs to receive an employer subsidy for that coverage. That makes Congress and their staff the only people who can receive an employer subsidy through the exchange.

Numerous analyses have found that the OPM rule violates the text of Obamacare itself. Sen. Ron Johnson (R-WI) even sued to overturn the rule, but a court dismissed the suit on the grounds that he lacked standing to bring the case.

Liberals’ Motto: ‘Obamacare for Thee—But Not for Me’

Take, for instance, the head of California’s exchange, Peter Lee. He makes a salary of $436,800 per year, yet he won’t buy the health insurance plans he sells. Why? Because he doesn’t want to pay Obamacare’s pre-existing condition tax unless someone (i.e., the state of California) pays him to do so via an employer subsidy.

Ocasio-Cortez’ proposed “solution”—fully taxpayer-paid health care—is in search of a problem. As socialists are wont to do, Ocasio-Cortez sees a problem caused by government—in this case, skyrocketing premiums due to the pre-existing condition tax—and thinks the answer lies in…more government.

As the old saying goes, when you’re in a hole, stop digging. If Ocasio-Cortez really wants to get serious, instead of complaining about the pre-existing condition tax, she should work to repeal it, and replace it with better alternatives.

This post was originally published at The Federalist.

Four Better Ways to Address Pre-Existing Conditions Than Obamacare

n a recent article, I linked to a tweet promoting alternatives to Obamacare’s pre-existing condition regulations, which have raised health insurance premiums for millions of Americans.

I offered those solutions when asked about a Republican alternative to Obamacare, and specifically the pre-existing condition provisions. While I no longer work in Congress, and therefore cannot readily get legislative provisions drafted and scored, I did want to elaborate on the concepts briefly mentioned, to show that other solutions to the pre-existing condition problem do exist.

1. Health Status Insurance

I mentioned both “renewal guarantees” and “health status insurance,” two relatively interchangeable terms, in my tweet. Both refer to the option of buying coverage at some point in the future—insurance against developing a health condition that makes one uninsurable.

Other forms of insurance use these types of riders frequently. For instance, I purchased a long-term disability policy when I bought my condo, to protect myself if I could no longer work and pay my mortgage. The policy came with two components—the coverage I have now, and pay for each year, along with a rider allowing me to double my coverage amount (i.e. the monthly payment I would receive if I became disabled) without going through the application or underwriting process again.

Since I bought that policy in 2008, my doctors diagnosed me with hypertension in 2012, and I went through two reconstructive surgeries on my left ankle. I don’t know if these ailments would prevent me from buying a disability policy now if I went out and applied for one. But because I purchased that rider with my original policy in 2008, I don’t need to worry about it. If I want more disability coverage, I can obtain it by paying the additional premium, no questions asked.

Health status insurance would complement employer-sponsored coverage. Most people get their coverage through their employers. Because employers heavily subsidize the coverage, and the federal government provides tax breaks for employer-sponsored plans, more than three in four people who are offered employer-sponsored insurance sign up for it.

But employer-based insurance by definition isn’t portable. When you switch your job, or (worse yet) lose your job because you’re too sick to work, you lose your coverage. Health status insurance would get around that portability problem. Individuals could sign up for their employer plan but pay for health status insurance “on the side.”

This coverage, which they and not their employer own, would protect them in case they develop a pre-existing condition or move to a job that doesn’t provide health insurance. It would also cost a lot less than buying a complete insurance plan—remember, they’re paying for the option to purchase insurance at a later date, not the insurance itself.

2. Insurance Portability

A proposed regulation issued by the Trump administration last month would permit just that. Under the proposal, employers could provide fixed sums to their employees to buy individually owned insurance—that is, a policy the employee buys and holds—through Health Reimbursement Arrangements (HRAs). Employees could pay any “leftover” premiums not covered by the employer subsidy on a pre-tax basis, as they do with their current, employer-owned coverage, through paycheck withholding.

I recently wrote about the regulation; feel free to read that article for greater detail. But as with health status insurance, better portability of individual coverage would allow people to buy—and hold, and keep—coverage before they develop a pre-existing condition, reducing the number of people who have to worry about losing their coverage when battling a difficult illness.

3. High-Risk Pools

Of course, health status insurance only helps those who purchase it prior to becoming sick. For people who already have a pre-existing condition, perhaps because of an ailment acquired at birth or in one’s youth, high-risk pools provide another possible solution.

Critics of risk pools generally cite two reasons to argue against this model as a workable policy solution. First, risk pools prior to Obamacare were not well-funded—in many cases, a true enough criticism. While some state pools worked well and offered generous subsidies (even income-based subsidies in some states), others did not.

It would take a fair bit of federal funding to set up a solid network of state high-risk pools. One article, published in National Affairs a few months after Obamacare’s enactment, estimated that such pools would require $15-20 billion per year in funding—probably more like $20-30 billion now, given the constant rise in health care costs. This figure represents a sizable sum, but less than the overall cost of Obamacare, or even its insurance subsidies ($57 billion this fiscal year alone).

Second, risk pool critics dislike the surcharges that many risk pools applied. Most pools capped monthly premiums for enrollees at 150 or 200 percent of standard insurance rates. Of course, individuals with chronic heart failure or some other costly condition generally incur much higher actual costs—costs that the pool worked to subsidize—but some believe that making individuals with pre-existing conditions pay a 50 to 100 percent premium over healthy individuals discriminates against the sick.

Personally, when designing a high-risk pool, I would distinguish between individuals who maintained continuous coverage prior to joining the pool and those who did not. Charging higher premiums to individuals who maintained continuous coverage seems unfair. On the other hand, it seems very reasonable to impose a surcharge for individuals who joined a high-risk pool because they didn’t purchase insurance until after they became sick.

As a small government conservative, I generally oppose intrusive attempts like an individual mandate to require individuals to behave in a certain manner. While I view going without health insurance an unwise move, I believe in the right of people to make bad decisions. However, I also believe in people paying the consequences of those bad decisions—and a surcharge on individuals who sign up for a high-risk pool while lacking continuous coverage would do just that.

4. Direct Primary Care

Direct primary care, which encompasses a personal relationship with a physician or group of physicians, can help manage individuals with chronic (and potentially costly) diseases. In most cases, patients pay a monthly or annual subscription fee to the practice, which covers unlimited doctor visits, as well as phone or electronic consultations and some limited diagnostic tests. Patients can get referrals to specialist care, or purchase a catastrophic insurance policy to cover expenses not included in the subscription fee.

Of course, primary care would not work well for a patient with advanced cancer, who needs costly pharmaceutical therapies or other very specialized care. But for patients with chronic conditions like diabetes, COPD, or chronic heart failure, direct primary care may offer a way better to manage the disease, potentially reducing health care costs while improving patient access to care and quality of life—the most important objective.

As noted above, these types of solutions are not one size fits all. Health status insurance would not work for patients born with genetically based diseases, and direct primary care might not help patients with advanced tumors.

But in some respects, that’s the point. Obamacare took a comparatively small universe of truly uninsurable patients—a few million, by some estimates—and uprooted the individual market of about 20 million people (to say nothing of other Americans’ health coverage) for it. Unfortunately, millions of Americans have ended up dropping insurance as a result, because the changes have priced them out of coverage.

A better way to reform the system would use a more specialized approach—a scalpel instead of a chainsaw. Health status insurance, improved portability, high-risk pools, and direct primary care represent four potential prongs of that better alternative.

This post was originally published at The Federalist.

What the Press Isn’t Telling You about the Politics of Pre-Existing Conditions

For months, liberals have wanted to make the midterm elections about Obamacare, specifically people with pre-existing conditions. Of late, the media has gladly played into that narrative.

Numerous articles have followed upon a similar theme: Republicans claim they want to protect people with pre-existing conditions, but they’re lying, misrepresenting their records, or both. Most carry an implicit assumption: If you don’t support Obamacare, then you cannot want to protect individuals with pre-existing conditions, because defending the law as holy writ has become a new religion for the left.

Covering People Before They Develop Conditions

The Kaiser Family Foundation noted in a study earlier this year that the off-exchange individual insurance market shrank by 38 percent in just one year, from the beginning of 2017 to the beginning of 2018. Overall, enrollment in Obamacare-compliant plans for people who do not qualify for income-based subsidies fell by 2.6 million:

Most of these individuals likely dropped their plan because the rapid rise in insurance rates under Obamacare has priced them out of coverage. As a Heritage Foundation study from March noted, the pre-existing condition provisions represent the largest component of those premium increases.

Or consider the at least 4.7 million people who received cancellation notices a few short years ago, because their plan didn’t comport with Obamacare’s new regulations. The father of a friend and former colleague received such a notice. He lost his plan, couldn’t afford a new Obamacare-compliant policy, then got diagnosed with colon cancer. His “coverage” has consisted largely of a GoFundMe page, where friends and colleagues can help his family pay off tens of thousands of dollars in medical debt.

How exactly did Obamacare “protect” him—by stripping him of his coverage, or by pricing the new coverage so high he and his wife couldn’t afford it, and had to go without at the exact time they developed a pre-existing condition?

In fact, by getting politicians of both parties to claim that they want to cover people with pre-existing conditions, this campaign may actually encourage more healthy people to drop their insurance, thinking they can easily buy coverage if they do develop a costly condition.

Obamacare Plans Discriminate Too

The left’s messaging also ignores another inconvenient truth: Because they must accept all applicants, Obamacare plans have a strong incentive to avoid sick people. They can accomplish this goal through tactics like narrow provider networks. Because plans must offer rich benefits and accept all applicants, shrinking doctor and hospital networks provides one of the few ways to moderate premiums. Of course, keeping a clinic like the M.D. Anderson Cancer Center out of one’s network—which all Texas-based Obamacare plans do—also discourages cancer patients from signing up for coverage, a “win-win” from the insurer’s perspective.

Some plans have used more overt forms of discrimination. For instance, in 2014 a group of HIV patients filed a complaint against several Florida insurers. The complaint alleged that the carriers placed all their HIV drugs into the highest formulary tier, to discourage HIV-positive patients from signing up for coverage.

Problem with Pre-Existing Condition Provisions

More than 18 months ago, I wrote that Republicans could either maintain the status quo on pre-existing conditions, or they could repeal Obamacare, but they could not do both. That scenario remains as true today as it did then.

Also true: As long as the pre-existing condition “protections” remain in place, millions of individuals will likely remain priced out of coverage, and insurers will have reason to discriminate against the sick. In fact, the last several years of premium spikes have already turned the exchanges into a de facto high-risk pool, where only the sickest (or most heavily subsidized) patients bother enrolling.

For individuals with pre-existing conditions, there are several—and, in my view, better—alternatives to both the status quo and the status quo ante that preceded Obamacare. But we will never have a chance to have that conversation if few will examine the very real trade-offs the law has created. Based on the past few months, neither the left nor the media appear interested in doing so.

This post was originally published at The Federalist.

Why Smaller Premium Increases May Hurt Republicans in November

Away from last week’s three-ring circus on Capitol Hill, an important point of news got lost. In a speech on Thursday in Nashville, Secretary of Health and Human Services (HHS) Alex Azar announced that benchmark premiums—that is, the plan premium that determines subsidy amounts for individuals who qualify for income-based premium assistance—in the 39 states using the federal healthcare.gov insurance platform will fall by an average of 2 percent next year.

That echoes outside entities that have reviewed rate filings for 2019. A few weeks ago, consultants at Avalere Health released an updated premium analysis, which projected a modest premium increase of 3.1 percent on average—a fraction of the 15 percent increase Avalere projected back in June. Moreover, consistent with the HHS announcement on Thursday, Avalere estimates that average premiums will actually decline in 12 states.

On the other hand, however, given that Democrats have attempted to make Obamacare’s pre-existing condition provisions a focal point of their campaign, premium increases in the fall would remind voters that those supposed “protections” come with a very real cost.

How Much Did Premiums Rise?

The Heritage Foundation earlier this year concluded that the pre-existing condition provisions collectively accounted for the largest share of premium increases due to Obamacare. But how much have these “protections” raised insurance rates?

Overall premium trend data are readily available, but subject to some interpretation. An HHS analysis published last year found that in 2013—the year before Obamacare’s major provisions took effect—premiums in the 39 states using healthcare.gov averaged $232 per month, based on insurers’ filings. In 2018, the average policy purchased in those same 39 states cost $597.20 per month—an increase of $365 per month, or $4,380 per year.

Moreover, the trends hold for the individual market as a whole—which includes both exchange enrollees, most of whom qualify for subsidies, and off-exchange enrollees, who by definition cannot. The Kaiser Family Foundation estimated that, from 2013 to 2018, average premiums on the individual market rose from $223 to $490—an increase of $267 per month, or $3,204 per year.

Impact of Pre-Existing Condition Provisions

The HHS data suggest that premiums have risen by $4,380 since Obamacare took effect; the Kaiser data, slightly less, but still a significant amount ($3,204). But how much of those increases come directly from the pre-existing condition provisions, as opposed to general increases in medical inflation, or other Obamacare requirements?

The varying methods used in the actuarial studies make it difficult to compare them in ways that easily lead to a single answer. Moreover, insurance markets vary from state to state, adding to the complexity of analyses.

However, given the available data on both how much premiums rose and why they did, it seems safe to say that the pre-existing condition provisions have raised premiums by several hundreds of dollars—and that, taking into account changes in the risk pool (i.e., disproportionately sicker individuals signing up for coverage), the impact reaches into the thousands of dollars in at least some markets.

Republicans’ Political Dilemma

Those premium increases due to the pre-existing condition provisions are baked into the proverbial premium cake, which presents the Republicans with their political problem. Democrats are focusing on the impending threat—sparked by several states’ anti-Obamacare lawsuit—of Republicans “taking away” the law’s pre-existing condition “protections.” Conservatives can counter, with total justification based on the evidence, that the pre-existing condition provisions have raised premiums substantially, but those premium increases already happened.

If those premium increases that took place in the fall of 2016 and 2017 had instead occurred this fall, Republicans would have two additional political arguments heading into the midterm elections. First, they could have made the proactive argument that another round of premium increases demonstrates the need to elect more Republicans to “repeal-and-replace” Obamacare. Second, they could have more easily rebutted Democratic arguments on pre-existing conditions, pointing out that those “popular” provisions have sparked rapid rate increases, and that another approach might prove more effective.

Instead, because premiums for 2019 will remain flat, or even decline slightly in some states, Republicans face a more nuanced, and arguably less effective, political message. Azar actually claimed that President Trump “has proven better at managing [Obamacare] than the President who wrote the law.”

Conservatives would argue that the federal government cannot (micro)manage insurance markets effectively, and should not even try. Yet Azar tried to make that argument in his speech Thursday, even as he conceded that “the individual market for insurance is still broken.”

‘Popular’ Provisions Are Very Costly

The first round of premium spikes, which hit right before the 2016 election, couldn’t have come at a better time for Republicans. Coupled with Bill Clinton’s comments at that time calling Obamacare the “craziest thing in the world,” it put a renewed focus on the health-care law’s flaws, in a way that arguably helped propel Donald Trump and Republicans to victory.

This year, as paradoxical as it first sounds, flat premiums may represent bad news for Republicans. While liberals do not want to admit it publicly, polling evidence suggests that support for the pre-existing condition provisions plummets when individuals connect those provisions to premium increases.

The lack of a looming premium spike could also neutralize Republican opposition to Obamacare, while failing to provide a way that could more readily neutralize Democrats’ attacks on pre-existing conditions. Maybe the absence of bad news on the premium front may present its own bad political news for Republicans in November.

This post was originally published at The Federalist.