Joe Biden’s Obamacare Gaffe Points to a Larger Truth

In Iowa just before the New Year, former Vice President Joe Biden had an interesting response to a voter’s concerns about Obamacare. The voter said his father had lost his coverage when the law’s major provisions took effect in 2014, and the “replacement” plans proved far more expensive. Asked to apologize for what PolitiFact dubbed its “Lie of the Year” for 2013—that “If you like your plan, you can keep it”—Biden demurred by claiming the following:

There’s two ways people know when something is important. One, when it’s so clear when it’s passed that everybody understands it. And no one did understand Obamacare, including the way it was rolled out. And the gentleman’s right—he said you could keep your doctor if you wanted to, and you couldn’t keep your doctor if you wanted to, necessarily. He’s dead right about that.

On its face, Biden’s comments initially resemble House Speaker Nancy Pelosi’s “We have to pass the bill so that you can find out what is in it” gaffe. But in reality, they hint at a larger truth: the federal government has gotten so big and sprawling, nobody really understands it.

Pelosi’s ‘Kinsley Gaffe’

Just before Obamacare’s passage in March 2010, Pelosi made comments that conservatives have parodied for most of the ten years since:

Upon closer inspection, though, her comments centered on the political messaging about the law, rather than the underlying policy. She prefaced her infamous quote by noting that “You’ve heard about the controversies within the bill, the process about the bill.”

But in Pelosi’s view, the American people had not heard about the substance of the bill itself: “I don’t know if you have heard that it is legislation for the future.” She went on to talk a bit about preventive care measures contained in Obamacare, which in her view would lower health-care costs. She then gave her infamous quote about passing the bill “so that you can find out what is in it, away from the fog of the controversy.”

Pelosi’s statement still seems extraordinary. She admitted that, even with Barack Obama—who won the presidency in fair measure through his rhetoric—in the White House, more than 250 Democrats in the House, and 60 Democrats in the Senate, Obamacare had proven a political failure. Democrats had lost the messaging battle in 2009 and 2010, and could only hope that enacting the legislation and allowing Americans to see its purported benefits could turn the dynamic around.

But Pelosi’s comments said “we have to pass the bill so that you can find out what is in it”—emphasis on the second person. She still claimed to know the contents of the legislation, contra the recent claims of the vice president at the time.

So Much for ‘Experts’

On one level, Biden’s comments echoed Pelosi’s. He talked about “the way it was rolled out”—a likely reference to the messaging battles of 2009-10, the “debacle” of the exchange launch in late 2013, or a combination of the two.

But unlike Pelosi—who said the public didn’t understand Obamacare—Biden said that “no one did understand Obamacare.” One wonders whether the statement meant to inoculate Obama from accepting blame for his “like your plan” rhetoric, even though Obama himself apologized for misleading the public on the issue in late 2013.

Regardless, Biden’s rhetoric echoes the example of Max Baucus, at the time the chairman of the Senate Finance Committee. Asked shortly after the legislation passed whether he had read Obamacare prior to its enactment, he responded that “I don’t think you want me to waste my time to read every single word of that health care bill,” because “we hire experts” who are the only people who “know what the heck it is:”

Except that four years later, one of those “experts” who worked on Baucus’ staff at the time, Yvette Fontenot, admitted that when drafting Obamacare’s employer mandate, “We didn’t have a very good handle on how difficult operationalizing the provision would be at that time.” So, to borrow Baucus’ own phrase, even one of his self-appointed “experts” didn’t “know what the heck it is” either.

Why Expand a Government You Can’t Even Understand?

Biden’s comments once again reveal that the federal government has become too big and sprawling for anyone to understand. Yet he and his Democratic colleagues continue to push massive, multi-trillion-dollar expansions of government as part of their presidential campaigns. Sen. Elizabeth Warren goes so far as to claim that “experts” can fix just about everything that’s wrong with the world, even though Biden’s admission shows that they need to start by fixing the problems they caused.

As the old saying goes, when you’re in a hole, stop digging. That axiom applies equally to Biden’s propensity to put his foot in his mouth and Democrats’ desire to expand a government they do not understand.

This post was originally published at The Federalist.

Democrats’ Medicare Chutzpah

One little-noticed element in the “fiscal cliff” debate hasn’t attracted much attention – the glaring hypocrisy of Democrats when it comes to the Medicare program.  Last Thursday, Democrats in the House offered a motion to recommit spending reduction legislation (full text available here) that would have required HHS to disclose:

  1. The number of Medicare beneficiaries in such district…who, at any time during the ten-year period beginning on the first day of the first fiscal year that begins after the date of the enactment of this Act, will A) lose coverage under the Medicare program… or B) experience an increase in premiums, cost-sharing, or other out-of-pocket costs under such respective program as a result of the implementation of this Act; and
  2. The name and location of each hospital and nursing facility that would experience a reduction in payments under the Medicare program…as a result of the implementation of this Act.

It’s more than a bit rich for the Democrat leadership to offer such a motion, given that Obamacare:

  • Takes “half a trillion dollars out of Medicare” to pay for Obamacare’s new programs, according to none other than Nancy Pelosi;
  • Raises Part D premiums, according to the Congressional Budget Office, so that Big Pharma can benefit from its “rock-solid deal” struck behind closed doors with President Obama and Congressional Democrats;
  • Cuts Medicare Advantage by more than $300 billion, which will reduce the program’s enrollment by half and plan choices by two-thirds, causing millions of seniors to lose their current health insurance; and
  • Makes up to 40 percent of providers unprofitable over the long-term, according to the non-partisan Medicare actuary, potentially forcing providers “to withdraw from providing services to Medicare beneficiaries.”

The Medicare program is in dire need of reform to make it fiscally sustainable.  But no one should take lessons on entitlement “reform” from the crowd that – by its own admission – raided the Medicare program to pay for yet more irresponsible entitlement spending.

Up Next: Obamacare’s Thanksgiving Turkey

According to online sources, on Wednesday President Obama plans to pardon the White House turkey in an annual Thanksgiving ceremony.  But before that happens, later today Secretary Sebelius plans to serve the American people a turkey – more regulations implementing Obamacare.  Among the possible items on “Aunt Kathy’s” Thanksgiving menu:

Reading through all these mandates and requirements is enough to give anyone a serious case of indigestion, which explains why the Administration is releasing them so close to Thanksgiving.  They don’t want the American people to read the regulations implementing the bill, just like they didn’t want the American people to read the bill itself.  Thus the spectacle of a Cabinet secretary who sat idly by as an “author” of Obamacare admitted he hadn’t read it (because Democrats had to “make judgments very fast”) engaging in a real-life version of “Take Out the Trash Day” by dumping out massive – and costly – regulations two weeks after the election, and two days before a major holiday.  It does raise one obvious question: If Obamacare is so popular, why did these major regulations implementing Obamacare sit on a shelf until after the election?  What has HHS been hiding?

Then-Speaker Pelosi spoke the truth when she famously said we had to pass the bill to find out what’s in it.  That statement is just as true with the regulations implementing the bill as it is with the 2700-page measure itself.  But a general clue about what’s to come will arrive in the form of the entrée on many Americans’ tables this Thursday.

The Siren Song of the Left’s “Competition”

As previously noted, yesterday the Center for American Progress released its platform for altering entitlements.  In fairness, the paper does include some conservative ideas, most notably additional means-testing for Medicare beneficiaries.  But mainly the report demonstrates the fundamental difference between conservatives and liberals: Not only do liberals not believe in markets, they don’t understand (and/or don’t want to understand) how markets actually work.

Take for instance the CAP proposals that will supposedly “enhance competition based on price and quality,” such as the idea to “require health insurance exchanges to offer tiered insurance plans.”  On the face of it, the idea sounds reasonable enough – encourage plans to lower premiums by offering a variety of choices.  But the catch here – as in the rest of the CAP proposals – is that “competition” is government-defined, government-mandated, and government-prescribed.  For instance, if insurers want to offer, and patients want to purchase, less expensive insurance coverage that doesn’t cover all of Obamacare’s mandated benefits – and/or insurance purchased across state lines – both CAP and Obamacare would tax those who gain coverage through such means, because this “competition” is prohibited in liberals’ new health care utopia.

Then there’s the fact that the CAP report also includes numerous other proposals that involve expanding prescription drug price controls in various forms.  One may find it ironic – and ever-so-slightly contradictory – that a report supposedly focused on “enhanc[ing] competition” simultaneously expands government-dictated price controls.

Finally, CAP’s proposals for “competitive bidding” seem little short of comical for their ideologically-based hypocrisy.  The paper states that Congress should “use competitive bidding for Medicare Advantage” – but then just as quickly states that government-run Medicare itself should not compete.   And why doesn’t CAP want government-run Medicare to compete against private plans?  Because a paper co-authored by one of CAP’s own scholars released in September found that in many parts of the country, traditional Medicare can’t compete – it’s far too costly.  The study, outlined in an article in the Journal of the American Medical Association, found that private plans would be 9% cheaper than traditional Medicare under a competitive bidding proposal.

Mind you, the Left has no problems forcing seniors to pay more for private Medicare Advantage coverage, or forcing them out of their plans entirely – Obamacare’s cuts to the program will ensure both outcomes.  But when it comes to competitive bidding for government-run Medicare itself, CAP and others on the Left want nothing to do with such an idea, clinging instead to the shibboleth of government-run Medicare as a first step towards socialized medicine for all.  And that hypocrisy – competition for thee, but not for me – explains in a nutshell why liberal ideas such as those in the CAP paper are both unrealistic and ideologically dangerous.

News on Containing Costs Goes from Bad to Worse

The employer benefits firm Mercer released its annual survey of health plans today, and for those wishing to “bend the curve” on health costs, the results were not promising.  Mercer’s survey concluded that employers’ health costs will rise 4.1% this year, and even more (5.0%) next year; if firms do not take steps (e.g., raising co-payments, etc.) to control spending, costs would rise by a whopping 7.4% in 2013.  Recall that four years ago, candidate Obama promised repeatedly that his health plan would CUT premiums by an average of $2,500 per family.  Not only has that premium reduction not happened – premiums have risen by $3,065 since Barack Obama was elected President – but cost increases continue to grow unabated.

In fact, today’s Mercer study suggests one way Obamacare will accelerate the growth of health costs – by limiting usage of consumer-driven health plans.  The survey notes that an “enrollment shift” to consumer-driven plans – which have more than tripled in popularity since 2007 – has “helped to hold down overall cost increase[s].”  Consumer-driven plans help to slow cost growth because average costs are nearly $2,200 lower per year than traditional health insurance costs.  Unfortunately, several provisions in Obamacare will move health coverage in the exact opposite direction, by restricting access to HSAs and consumer-driven plans – therefore raising, not lowering, health costs.  Three separate provisions in the statute, and regulations implementing the law, will reduce access to HSA plans:

  1. Obamacare’s essential health benefits package contains new restrictions on deductibles and cost-sharing, which will prevent at least some current HSA plans from being offered.
  2. Obamacare’s medical loss ratio regulations also impose new restrictions that studies show will hit HSA plans particularly hard, and could force individuals to change their current form of coverage.
  3. The Obamacare statute does not specify that cash contributions made to an HSA will be counted towards the new federal actuarial value standards.  And a February bulletin released by HHS in advance of upcoming rulemaking indicates that under the Administration’s approach, not all contributions into an HSA will count towards the new minimum federal standards – meaning some HSA policies will not be considered “government-approved.”

Both individually and collectively, these provisions in Obamacare will have the effect of limiting access to new and innovative consumer-directed health plans like Health Savings Accounts.  Not only will these onerous regulations prevent many Americans from keeping the plans they have and like – by limiting access to consumer-directed health plans, Obamacare will also raise, not lower, health costs for many Americans.

More Misinformation from the Obama Campaign

The President’s campaign is releasing a booklet this morning featuring the President’s re-election “plans.”  Unfortunately, many of them involve funny money and fuzzy math.  Take for instance the section on retirement security, which claims that Obamacare “strengthened Medicare by cutting overpayments to insurance companies and cracking down on billions in health care waste, fraud and abuse.  The President added eight years to the Medicare Trust Fund.”

There’s just one problem with these assertions – they aren’t true.  Take the claims about “waste, fraud, and abuse.”  First, Obamacare’s $300 billion in cuts to Medicare Advantage will reduce the program’s enrollment by half and plan choices by two-thirds.  Moreover, the non-partisan Medicare actuary said that Obamacare would have a direct impact on beneficiaries in traditional Medicare as well.  He has concluded that over the long-term, up to 40 percent of providers would become unprofitable due to Obamacare, and could “have to withdraw from providing services to Medicare beneficiaries.”  Earlier this month, an Alabama hospital took a different course – it decided to shut down entirely, due to the impact of Obamacare on its business model.

As to the claims that Obamacare extends the life of the Medicare trust fund, the Congressional Budget Office takes a dim view toward such statements.  The non-partisan CBO said that the Medicare reductions in Obamacare “will not enhance the ability of the government to pay for future Medicare benefits” – because those savings will be used to fund other unsustainable entitlements.  If the President wants to use the Medicare savings provisions to extend the life of the Medicare trust fund – and not to fund the new entitlements created by the law – the Congressional Budget Office previously estimated what the fiscal impact would be:  “A net increase in federal deficits of $260 billion” through 2019.

In 2010, President Obama himself admitted in an interview that Obamacare could not rely on double counting, when he stated that “You can’t say that you are saving on Medicare and then spending the money twice.”  The fact that the President is now reversing his own earlier claims shows how badly Obamacare has failed, and how desperate the President is to win re-election.

We Told You So…

From Alabama last night came word that a 124-bed hospital in Mobile will be shutting down – and that Obamacare is to blame for the closure.  Here’s what the CEO of the hospital system said in a statement:

We made this decision after evaluating the utilization of the facility, the healthcare needs of the community served by Infirmary West and determining how we could better utilize our resources to improve and expand health services in this area of our community…The passage of the ‘Affordable Care Act’ (Healthcare Reform), challenges hospitals and health systems to re-evaluate how to best allocate their resources to serve the needs of our community.

This development was entirely predictable – not only that, it was predicted.  Here’s what the non-partisan Medicare actuary said about Obamacare’s potential impacts not long after the law was passed:

Reductions in payment updates to health care providers, based on economy-wide productivity gains, are unlikely to be sustainable on a permanent annual basis.…Providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).  Simulations by the Office of the Actuary suggest that roughly 15 percent of Part A providers would become unprofitable within the 10-year projection period as a result of the productivity adjustments.

And so it hath proved.

A Fanciful, But Inaccurate, Premium Support Study

The Kaiser Family Foundation released a study today regarding premium support proposals, which Democrats have used to attack Medicare reform.  However, the study is an academic exercise that, by the authors’ own admission, bears little relation to reality.  First and foremost, the study assumes full implementation of premium support in 2010.  This assumption is particularly problematic, given the many changes that have taken place in Medicare Advantage since then:

In other words, by using a 2010 implementation date, the Kaiser study ignores entirely the impact of the biggest changes to both Medicare and Medicare Advantage since the programs were created.  Moreover, the study assumes a “Big Bang” model, whereby all the changes to Medicare would take place at once – even though it admits that most proposals being discussed “would gradually phase-in a premium support system in five to ten years,” allowing changes to be implemented in a way that prevents drastic adjustments.

Three other important things you need to know about the Kaiser study:

  1. The study does not do a good job delineating two separate and distinct phenomena: costs due to disparities between traditional Medicare and Medicare Advantage, and costs due to disparities within traditional Medicare itself.  To use one common example, traditional Medicare’s spending is far greater in metropolitan Miami than in many areas in the upper Midwest (for instance, Wisconsin).  Yet under current law, all enrollees in traditional Medicare pay the same Part B premium nationwide – meaning that right now, seniors in Wisconsin pay higher Part B premiums that subsidize higher levels of spending in Miami.  The premium support proposal modeled by Kaiser would eliminate this disparity – meaning that under the study, premiums in traditional Medicare would rise substantially in Miami, to reflect that area’s much higher spending.  Critics would argue these higher premiums demonstrate the flaws of the premium support model.  But in reality, that’s not an argument against premium support – that’s an argument against the status quo in traditional Medicare, under which high-cost areas have had their spending subsidized by low-cost regions for far too long.
  2. The study does not fully model the ability of plan switching to reduce costs.  The headline figure about the number of individuals who would pay more to maintain their current coverage presumes that beneficiaries would not switch plans at all – not a realistic assumption under most scenarios.  And the study also assumes that low-income individuals would not automatically be assigned to a low-cost plan – current practice in Medicare Part D.  In short, the Kaiser study under-estimates both the impact that beneficiary choices and structural design could be used to facilitate enrollment in lower-cost premium support plans.
  3. At no point does the study even attempt to quantify potential budgetary savings from premium support.  The study goes to great lengths to outline the higher costs, but doesn’t make any estimate about the savings to the federal government from such a reform – or how it would improve Medicare’s long-term solvency.  In other words, the study focuses solely on pain to beneficiaries – without examining the gains to Medicare’s sustainability.

The Obama campaign’s response to the study – claiming that seniors “would have to give up their doctors or pay extra to maintain access to their choices” – is particularly rich.  Mind you, this claim comes from an Administration that will force millions of seniors out of their Medicare Advantage plans – not to save Medicare, but to fund Obamacare instead.  It’s yet another example of why Medicare needs real reform – and why this Administration is both unwilling and unable to deliver on it.

Fact Check: Medicare Advantage

Vice President Biden just claimed that enrollment in Medicare Advantage is increasing.  But as we noted previously, that’s just because the Administration decided to create a dubious “demonstration project” to delay the impact of Obamacare’s cuts until after the election.  The Medicare actuary still believes enrollment in Medicare Advantage will decline by millions in the years ahead.  Just as important, printing money to temporarily undo Obamacare’s cuts for political reasons isn’t responsible – and it’s not health “reform.”

Washington’s Government Takeover of Health Care

The Washington Post reported yesterday of a major development in Obamacare implementation here in Washington:

The District’s small businesses may have to buy their employee health insurance through a city-run exchange come 2014, following a controversial vote by a city board.  The D.C. Health Benefit Exchange Authority, charged with implementing the federal health-care overhaul law, voted Wednesday to accept a recommendation that all health-insurance plans sold in the city for 50 members or fewer must be purchased through the exchange.

In other words, you can buy any plan you like – so long as it’s the government plan.

District officials attempted to defend this onerous mandate by saying they needed to ensure a viable marketplace: “For the exchange to be sustainable, it has to have approximately 100,000 people…If the exchange isn’t sustainable in the long haul, if it does not have enough people, then we are wasting our time and our effort.”  This is the same kind of logic that led Democrats to create the unprecedented mandate that nearly all Americans purchase a product for the first time ever – because Obamacare would be unsustainable without a large market.  Now we get word that even with an individual insurance mandate, one key element of Obamacare – the Exchange – could be “unsustainable” and a “waste of time” without even more government intrusion – telling people not just to buy something, nor just what to buy, but even where to buy it.

As one letter of opposition from the D.C. business community noted, Barack Obama repeatedly promised that “you will not have to change plans” under Obamacare.  This week’s development in the District of Columbia is yet another illustration of that broken promise.  Moreover, the fact that Washington wants to shut down the private health insurance market and replace it with a government-run Exchange further proves that Obamacare is indeed a government takeover of health care.