Christmas Eve Vote on Obamacare Showed Washington Still Has Shame

A decade ago this morning, 60 Senate Democrats cast their final votes approving the legislation that became Obamacare. The bill took a circuitous route to enactment after Scott Brown’s surprise victory in the Massachusetts Senate contest, which occurred a few weeks after the Senate vote, in January 2010.

Brown’s election meant Republicans gained a 41st Senate seat, giving them the necessary votes to filibuster a House-Senate conference report on Obamacare. Because Democrats lacked the 60 votes to overcome a filibuster, they eventually agreed to a process amending certain budgetary and fiscal elements of the Senate bill through the reconciliation process on a 51-vote threshold.

The grubby process leading up to Obamacare’s enactment, full of parochial politics and special interest pork, cost Democrats politically. But many Americans do not realize that such machinations occur all the time in Washington—indeed, occurred just last week. When one party participates in a corrupt process, it becomes a scandal; when both parties partake, few outside the Beltway bother to notice.

Backroom Deals

The process among Democrats leading up to the final health vote resembled an open market, with each Senator making “asks” of Majority Leader Harry Reid (D-NV). Reid needed all 60 Democrats to vote for Obamacare to break a Republican filibuster, and the parochial provisions included in the legislation showed the lengths he would go to enact it:

Cornhusker Kickback:” The most notorious of the backroom deals came after Sen. Ben Nelson (D-NE) requested a 100 percent Medicaid match rate for his home state of Nebraska. The final manager’s amendment introduced by Reid included this earmark—Nebraska would have its entire costs of Medicaid expansion paid for by the federal government forever. But the blowback from constituents and the press became so great that Nelson asked to have the provision removed; the reconciliation measure enacted in March 2010 gave Nebraska the same treatment as all other states.

Gator Aid:” This provision, inserted at the behest of Sen. Bill Nelson (D-FL), and later removed in the reconciliation bill, sought to exempt Florida seniors from much of the effects of the law’s Medicare Advantage cuts.

Louisiana Purchase:” This provision, included due to a request from Sen. Mary Landrieu (D-LA), adjusted the state’s Medicaid matching formula. Landrieu publicly defended the provision—which she said reflected the state’s circumstances after Hurricane Katrina—and it remained in law for several years, but was eventually phased out in legislation enacted February 2012.

While these three provisions captivated the public’s attention, other earmarks and pork provisions abounded inside Obamacare too—a Medicaid funding provision that helped Massachusetts; exemptions from the insurer tax for two Blue Cross carriers; a $100 million earmark for a Connecticut hospital, and health benefits for miners in Libby, Montana, courtesy of then-Senate Finance Committee Chairman Max Baucus (D-MT).

Not only did senators try to keep these corrupt deals in the legislation—notwithstanding the public outrage they engendered—but Reid defended both the earmarks and the horse-trading process that led to their inclusion:

I don’t know if there’s a senator who doesn’t have something in this bill that’s important to them. And if they don’t have something in it that’s important to them, then it doesn’t speak well for them.

It was a far cry from Barack Obama’s 2008 (broken) campaign promise to have all his health care negotiations televised on C-SPAN, “so we will know who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies.” And it looked like Democrats didn’t really believe in the merits of the underlying legislation, but instead voted to restructure nearly one-fifth of the American economy because they got some comparatively minor pork project for their district back home.

Déjà Vu All Over Again

Democrats lost control of the House in the 2010 elections, and political scientists have attributed much of the loss to the impact of the Obamacare vote. One study found that Obamacare cost Democrats 6 percentage points of support in the 2010 midterm elections, and at least 13 seats in Congress.

But did the rebuke Democrats received for their behavior prompt them to change their ways? Only to the extent that, when they want to ram through a massive piece of legislation no one has bothered to read, they include Republicans in the taxpayer-funded largesse.

Consider last week’s $1.4 trillion spending package: Two bills totaling more than 2,300 pages, which lawmakers introduced on Monday and voted on in the House 24 hours later. Democrats wanted to repeal one set of Obamacare taxes—and in exchange, they agreed to repeal another set of taxes that Republicans (and their K Street lobbying friends) wanted gone. The Obamacare taxes went away, but the Obamacare spending remained, thus increasing the deficit by nearly $400 billion.

And both sides agreed to increase spending in defense and non-defense categories alike. Therein lies the true definition of bipartisanship in Washington: An agreement in which both sides get what they want—courtesy of taxpayers in the next generation, who get stuck with the bill.

It remains a sad commentary on the state of affairs in the nation’s capital that the Obamacare debacle remains an anomaly—the one time when the glare of the spotlight so seared Members seeking pork projects that they dared consider forsaking their ill-gotten gains. To paraphrase the axiom about casinos, in Washington, The Swamp (almost) always wins.

Aetna Gun Control Donation Epitomizes Crony Capitalism

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

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

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

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

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

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

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

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

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

This post was originally published at The Federalist.

What the HHS Reports on the Health Exchanges Didn’t Cover

Recent media reports have highlighted unresolved inconsistencies in applications on the new insurance exchanges, including applications for federal premium and cost-sharing subsidies. Two reports released this week by the inspector general of the Department of Health and Human Services paint a troubling picture—and things could be worse than the reports suggest.

One HHS report examined data from federally run exchanges through Feb. 23 and from state exchanges through last December. Put another way, federal auditors tallied data from the months when the exchanges experienced middling to sluggish enrollment—not the periods when the greatest number of applications were completed.

The inspector general’s report indicates that federally run exchanges had 2.9 million data inconsistencies, of which only 1% had been resolved by late February. But those figures underestimate the number of inconsistencies from the 2014 open-enrollment period—and, unless data resolution has dramatically improved in recent weeks, probably also underestimate the number of inconsistencies still pending.

A separate inspector general’s report also released on Monday found that federally run exchanges, and state-run exchanges in California and Connecticut, in many cases lacked proper procedures for verifying applicant information. As a result, applications that should have been flagged for additional inconsistencies were not. Again, the scope of the verification problem is most likely understated.

When troubles became clear with the exchanges last fall, the focus on fixing immediate technical issues led to deferred work on verification systems. Overall, the reports expose another facet of the failures of Healthcare.gov—and the after-effects of last fall’s rollout could persist for some time.

This post was originally published at the Wall Street Journal Think Tank blog.

Day One of Obamacare’s Exchanges, By the Numbers

Obamacare’s exchanges have now been “open” (such as it is) for more than 24 hours. The results are in, and they’re not promising:

0—Enrollment navigators certified in Wisconsin in time for the start of enrollment.

0—Individuals one North Carolina insurer was able to sign up for subsidized insurance.

3—Months President Obama warned Americans could face glitches when trying to sign up.

4—Hours Maryland’s exchange opening was delayed.

7—Miles one Indiana resident drove to obtain enrollment assistance; after receiving little information and a four-page paper application, the potential applicant called the trip “a waste of time.”

22—Actual enrollees in Connecticut’s exchange out of more than 10,000 individuals who visited the website by mid-afternoon, a conversion rate of 0.22 percent.

34—Minutes one Politico reporter listened to “smooth jazz” before reaching an actual call-center representative.

35­—Minutes one MSNBC reporter spent attempting to enroll online, before finally giving up.

47—States whose exchange websites “turned up frequent error messages.”

1,289—Days between the signing of Obamacare and yesterday’s launch, a gap which prompted one insurance broker to comment, “You would just think that with all this time they’ve had to get it set up and ready to go there would have been a better premiere.”

2,400—Individuals who had their Social Security numbers and other personal data disclosed even before the exchanges opened for business.

Not only were the American people faced with major glitches surrounding the exchanges, but they also faced a wall of silence from bureaucrats when looking for explanations for the delays.

The latest in a long line of Obamacare implementation glitches and failures demonstrates how the law is inherently unworkable. It’s why Congress needs to stop Obamacare now.

This post was originally published at The Daily Signal.

How Obamacare Encourages People to Drop Their Coverage

The Wall Street Journal reported yesterday that Connecticut is seeking to scale back the Medicaid expansion it embarked upon immediately after the passage of Obamacare.  Just as interesting are the reasons why the Nutmeg State wants to scale back its program:

Connecticut officials believe some parents of college-aid children are taking advantage of the state’s Medicaid health-insurance program for low-income adults, seeking government subsidies for their children’s health care so they don’t have to pay for private insurance….The agency wants to count parental income and assets for applicants under 26 years old who live with their parents or are claimed as a dependent on their parents’ tax returns.  “If your son’s or daughter’s college provides a basic medical coverage for $1,200 or $1,300, our taking on that expense is not what this program was designed for,” Democratic Gov. Dannel P. Malloy said last week.  “And certainly, it was not designed for people who have substantial assets.  So we’re just trying to get it right.”

As of December, expenditures for LIA Medicaid applicants 18-21 years old had grown to 4.3 percent of the total expenditures, according to the state’s draft application.  The caseload for that age group increased from 0.1 percent of the total caseload in June 2010 to 8.2 percent, or 6,114 cases, as of December 2011.  It is “expected to continue to climb as more parents with college-age children become aware of the availability of…coverage,” according to the state’s application.

In other words, if the government gives health insurance away for free, people will find ways to game the system to qualify.  No wonder the state’s Medicaid director called the Medicaid expansion a “self-inflicted wound” recently.  That’s because the expansion turned out to be a solution in search of a problem – the expansion led affluent families to game the system and have their college-age children obtain “free” health insurance, contributing to a 70 percent increase in enrollment in just over a year.

We previously wrote about how Obamacare’s under-26 mandate was leading millions of individuals to drop their existing health coverage to obtain “free” insurance under their parents’ health plans.  The news from Connecticut provides further evidence of this “crowd-out” phenomenon, whereby government insurance crowds out private health coverage.  But the bigger question is this:  If parents are gaming the system to obtain “free” health coverage for their students, why won’t private businesses do the same by “dumping” their workers on to Exchanges?  That would lead to trillions in new spending, undermining any notion that Obamacare  will reduce the deficit.

The preliminary evidence from the student population indicates that families are functioning as rational actors, and dumping their private coverage when the government offers them a better deal of “free” health insurance.  If businesses follow suit, Obamacare could see a “Big Dump” of employers in 2014 – and the federal fisc may never be the same again.

Obamacare’s “Self-Inflicted Wounds” on States

The Washington Post has a story out today about today’s semi-annual report on the Fiscal Survey of States.  The article notes that even as state revenues stabilize following the recession, the skyrocketing costs of Medicaid obligations are “leaving most [state] governments in dire fiscal straits.”  The report indicates that Medicaid spending rose a by 20.4 percent this fiscal year, after a double-digit increase of 10.6 percent in fiscal 2011.  Moreover, enrollment growth surged by 7.2 percent during the recession, and will continue to increase: “The implementation of [Obamacare] will greatly increase the individuals served in the Medicaid program” – by as much as 26 million people, according to the Administration’s own actuary.  As a National Governors Association press release on the survey noted, the growth in enrollees is raising Medicaid spending much faster than other areas of the budget; NGA Director Dan Crippen admitted that “spending priorities” – including things like education, transportation, and law enforcement – “will again face competition for state budget dollars” due to skyrocketing growth in Medicaid.

On a related topic, Inside Health Policy has an article (subscription required) outlining comments from Connecticut’s Medicaid director about how that state’s early expansion of Medicaid has become a “self-inflicted wound” on that state’s budget.  Using new authorities granted by Obamacare to expand Medicaid to low-income childless adults, the state experienced a 70 percent increase in enrollment in “about a year, year and a half’s time.”  Even though Connecticut was granted additional matching funds by the federal government, “our revenue expectations were eclipsed by the new obligations of a…population that rushed headlong into this new program,” according to the Medicaid director.  As the article noted, Connecticut’s experience “is a bit of a red flag, as it is indicative of the difficulty states face because they don’t really know how many people will be signing up for Medicaid in less than two years.”

Today’s state fiscal survey reveals that over the past two fiscal years, states had to close a combined $146.3 billion in budget gaps.  Yet Obamacare is about to impose new unfunded mandates on states of at least $118 billion.  And today’s stories show how Obamacare will impose more “self-inflicted wounds” on states through its misguided policies.  The state survey illustrates how skyrocketing Medicaid spending is crowding out other priorities, and Connecticut’s example shows how state budgets can be greatly impacted by millions of people “rush[ing] headlong into this new program” in 2014.  It’s more evidence why America should NOT “rush headlong” into creating this massive and unsustainable new entitlement state.

Obamacare and Premium Increases

The Administration is preparing to announce another round of rate review grants this morning, and will likely claim this new government spending shows Obamacare is lowering premiums.  However, the reality is that premiums keep going up – in many cases because of, not despite, the provisions in the law.  Just yesterday an article highlighted some of the premium increases in Connecticut:

  • “Many of [an insurance broker’s] clients are seeing average rate hikes for the fourth quarter 2011 and 2012 in the high single digits…”
  • Another insurance broker “said his small group clients are seeing average fourth quarter rate increases in the 9 to 15 percent range.”
  • A third broker for large employers said that “medical costs are still trending 11 to 12 percent higher.”
  • “Connecticare will be raising fourth quarter rates on average from 6.8 percent to 8.6 percent on its small group medical plans.”
  • “Anthem Blue Cross and Blue Shield has proposed an average annual rate increase of 5.5 percent…”
  • “Oxford Health Plans/United Healthcare had one of the higher requests, asking regulators for permission to raise its small group rates an average of 14.4 percent.”

Some may claim that these increases of “only” 5-15 percent – well above inflation – represent “successes,” because premium growth slowed in some cases.  But to the extent health care spending trends slowed, they have likely been due to the bad economy and individuals foregoing treatments – which is reflective of the “stimulus’” failure to create the jobs it promised.   Moreover, the President repeatedly promised during his campaign that he would “cut” premiums by an average of $2,500 per family – meaning premiums would go DOWN, not merely just “go up by less than projected.”

Separately, Politico reports this morning that “there’s some speculation…that HHS might not release” a rule regarding “essential health benefits” “until after the 2012 elections to avoid a political land mine.”  The rule in question is a huge one:  The “essential health benefits” definition will determine the health insurance coverage all Americans must buy under Obamacare’s constitutionally dubious individual mandate.  And the Congressional Budget Office previously found that the “essential health benefits” and related mandates in Obamacare will raise individual health insurance premiums by up to 30 percent.  Today’s report suggests HHS may punt on issuing these critical regulations – creating more uncertainty for states and businesses alike – in order to avoid showing the American people just how much Obamacare will raise premiums before President Obama faces re-election.

Last March, then-Speaker Pelosi famously said we had to pass the bill to find out what’s in it.  Given that today’s report suggests HHS will delay its ultimate verdict on how much Obamacare will raise premiums until after the election, some may wonder: If this Administration has to try and prevent American voters from finding out what’s in the law, how good can it be…?

Health Care Law’s Impact on Premiums

I wanted to pass along this article from today’s Hartford Courant about some of the premium increases being requested in Connecticut – many as a result of the health care reform law:

Anthem Blue Cross and Blue Shield in Connecticut, by far the largest insurer of Connecticut residents, said in a letter that it expects the federal health reform law to increase rates by as much as 22.9 percent for just a single provision — removing annual spending caps. The mandate to provide benefits to children regardless of pre-existing conditions will raise premiums by 4.8 percent, Anthem said in the letter. Mandated preventive care with no deductibles would raise rates by as much as 8.5 percent, Anthem said.

An Obama Administration was quoted in the article as saying that “outside groups have done estimates, including the Urban Institute and Mercer, and the credible estimates come in the 1 [percent] to 2 percent range.”  However, in reality Mercer’s survey of employers found that the mandates taking effect this year alone would raise premiums by more than 2 percent on average – and small groups would face even greater premium impacts.

The article also makes a particularly salient point with respect to premium impacts: “Among all the plans, some already deliver the provisions required by health reform, while others do not.”  In other words, some individuals choose affordable plans that provide the benefits they need without other benefits they do not want.  These plans, and these individuals, will be most impacted by premium increases under the law – and the impact in these cases may be much greater than the 1-2 percent the Administration projects.

On a related note, below is a graph we’ve prepared highlighting rhetoric versus reality on premiums.  The President promised during his campaign that his health care plan would “bring down premiums by $2,500 for the typical family.”  However, the annual Kaiser Foundation survey of employer-provided insurance found that average family premiums totaled $12,860 in 2008, $13,375 in 2009, and $13,770 in 2010.  In other words, while candidate Obama promised premiums would fall by $2,500 on average, premiums have risen by $1,090 during the Obama Administration.  That difference is manifest in the graph below.

Kaiser Health News: “New Plans for Uninsured Off to Slow Start”

Kaiser Health News published a story noting that “an unexpectedly small number of people” have signed up for the high-risk pool program established by the health care law.  “About 3,600 people have applied and about 1,200 have been approved so far in state plans,” with another 2,400 in plans operated by the federal government in 22 states.  “Connecticut could not provide an applicant total but said one person had been enrolled as of last week.”

State officials have been surprised by this poor showing for one of the health law’s “early deliverables.”  North Carolina’s pool director notes that “interest in the program has been lower than we expected;” Colorado’s risk pool director called her state’s enrollees a “very low number given that there are hundreds of thousands of uninsured in the state.”

But despite this low initial enrollment, the high-risk pool program could STILL run out of money before its scheduled end in 2014, as one expert quoted in the piece observed.  That’s because Democrats woefully under-funded the program – the Congressional Budget Office estimates by up to $10 billion – by choosing instead to fund backroom deals and “slush funds” for dubious new spending projects.

Many Republicans support high-risk pool programs to cover individuals with pre-existing conditions, but the Administration’s attempt to implement them seems to have fallen flat – thus far, many individuals aren’t getting covered, and those that do obtain insurance from the pools could have their coverage ended prematurely because Democrats failed to fund the pools adequately.  Either way, that’s not the type of health “reform” that those with pre-existing conditions deserve.

A Shaky Start for High-Risk Pool Programs

Just prior to and over the holiday weekend, there were several developments related to the federal high-risk pool program that are worth mentioning here:

  • Pennsylvania is still looking for an administrator for its risk pool program, even though HHS already approved the state’s risk pool contract, according to this article;
  • Ohio’s governor informed Hill staff that information on HHS’ new federal website regarding the state’s pool is incorrect, and that coverage for initial enrollees will not begin until September 1 (more than two months after the law’s required implementation date of June 21);
  • Connecticut’s governor directed state officials to “defer executing” the state’s contract with HHS, in light of actuarial estimates showing that premiums for a state-run pool would range from $436-$1,500 per month (letter here, and blog posting here);
  • The federal official in charge of the risk pool program said at a press event that it was unlikely funding would run out because “many people won’t be able to afford to participate in the program since premiums will range between about $140 and $900 a month.”

These implementation difficulties are unfortunate, particularly as many stem directly from Democrats’ unwillingness to spend more than $5 billion on high-risk pools for people with pre-existing conditions; the Congressional Budget Office recently found that this funding level was not enough to meet demand, and could result in up to 500,000 people with pre-existing conditions being denied access.  Republicans support high-risk pool programs – but support funding them properly – because coverage for individuals with pre-existing conditions should not take a back seat to other dubious spending priorities in the Democrat health care law, like backroom deals and a new $15 billion slush fund for jungle gyms and other pet projects.