Warren Advisor Admits Her Health Plan Raises Middle Class Taxes

That didn’t last long. Five days after Sen. Elizabeth Warren released a health plan (chock full of gimmicks) that she claimed would not raise taxes on the middle class, one of the authors of that plan contradicted her claims.

In an interview with Axios published on Wednesday, but which took place before the plan’s release, Warren advisor and former Centers for Medicare and Medicaid Services Administrator Donald Berwick said the following:

Q: Many people may not know their employers cover 70% or more of their entire premium — money that otherwise would go to their pay. Is this the main problem when talking about reforms?

DB: The basics are not that complicated. Every single dollar — every nickel spent on health care in this country — is coming from workers. There’s no other source. [Emphasis mine.]

Compare that phraseology to what Joe Biden’s campaign spokesperson said on Friday about Warren’s plan and its effects:

For months, Elizabeth Warren has refused to say if her health care plan would raise taxes on the middle class, and now we know why: Because it does….Senator Warren would place a new tax of nearly $9 trillion that will fall on American workers. [Emphasis mine.]

In response to the Biden campaign’s criticism, Warren said last Friday that her health plan’s projections “were authenticated by President Obama’s head of Medicare”—meaning Berwick. Unfortunately for Warren, Berwick, by virtue of his comments in his interview with Axios, also “authenticated” Biden’s attack that her required employer contribution will hit workers, and thus middle-class families.

Warren also tried to defend her plan on Friday by claiming that “the employer contribution is already part of” Obamacare. Obamacare does include an employer contribution requirement, but that requirement:

  • Is capped at no more than $3,000 per worker, far less than the average employer contribution for workers’ health coverage—$14,561 for family coverage as of 2019— which will form the initial basis of Warren’s required employer contribution;
  • Does not apply to employers at all if the firm offers “affordable” coverage—an option not available under Warren’s plan, which would make private insurance coverage “unlawful;” and
  • Will raise an estimated $74 billion in the coming decade, according to the Congressional Budget Office—less than 1 percent of the $8.8 trillion Warren claims her required employer contribution would raise.

While Obamacare and Warrencare both have employer contributions, the similarities pretty much end there. Calling the two equal would equate a log cabin to Buckingham Palace. Sure, they’re both houses, but differ greatly in size. Warren’s “contribution”—which Berwick, her advisor, admits will fall on middle-class workers—stands orders of magnitude greater than anything in Obamacare.

Public Accountability?

In the same Axios interview, Berwick highlighted what he termed a tradeoff “between public accountability and private accountability.” He continued: “By not having a publicly accountable system, we are paying an enormous price in lack of transparency.”

His comments echo prior justification of his infamous “rationing with our eyes open” quote in a 2009 interview. As he explained to The New York Times as he departed CMS in late 2011, “Someone, like your health insurance company, is going to limit what you can get….The government, unlike many private health insurance plans, is working in the daylight. That’s a strength.”

Except that Berwick, as CMS administrator, went to absurd lengths to hide from public scrutiny after his series of remarks. He would gladly meet with health-care lobbyists behind closed doors, but refused to answer questions from reporters, going so far as to duck behind curtains and request security escorts to avoid doing so.

Warren apparently has taken a lesson in opacity from Berwick’s time as CMS administrator. At first, she avoided releasing a specific health care proposal at all, only to follow up by issuing a “plan” containing so many absurd assumptions as to render it irrelevant as a serious blueprint for legislating.

Unfortunately for her, however, Berwick committed the unforgivable sin of speaking an inconvenient truth about the effects of her proposal. Eight years after leaving office as CMS administrator, Berwick, however belated and however unwittingly, delivered some much-needed public accountability for Warren’s health plan.

This post was originally published at The Federalist.

Analyzing the Gimmicks in Warren’s Health Care Plan

Six weeks ago, this publication published “Elizabeth Warren Has a Plan…For Avoiding Your Health Care Questions.” That plan came to fruition last Friday, when Warren released a paper (and two accompanying analyses) claiming that she can fund her single-payer health care program without raising taxes on the middle class.

Both her opponents in the Democratic presidential primary and conservative commentators immediately criticized Warren’s plan for the gimmicks and assumptions used to arrive at her estimate. Her paper claims she can reduce the 10-year cost of single payer—the amount of new federal revenues needed to fund the program, over and above the dollars already spent on health care (e.g., existing federal spending on Medicare, Medicaid, etc.)—from $34 trillion in an October Urban Institute estimate to only $20.5 trillion. On top of this 40 percent reduction in the cost of single payer, Warren claims she can raise the $20.5 trillion without a middle-class tax increase.

We Told You So: Companies Hiring Fewer Full-Time Workers

The Wall Street Journal has a must-read article this morning highlighting one of Obamacare’s effects – companies are replacing full-time workers with part-time employees to avoid the law’s soon-to-be-imposed $2,000 employer mandate penalty.  Because full-time employees working more than 30 hours will incur a penalty while part-time workers will not, many firms are in the process of shifting their workforce, as the article outlines:

Some low-wage employers are moving toward hiring part-time workers instead of full-time ones to mitigate the health-care overhaul’s requirement that large companies provide health insurance for full-time workers or pay a fee.  Several restaurants, hotels and retailers have started or are preparing to limit schedules of hourly workers to below 30 hours a week.  That is the threshold at which large employers in 2014 would have to offer workers a minimum level of insurance or pay a penalty starting at $2,000 for each worker.

Pillar Hotels & Resorts this summer began to focus more on hiring part-time workers among its 5,500 employees, after the Supreme Court upheld the health-care overhaul, said Chief Executive Chris Russell.  The company has 210 franchise hotels, under the Sheraton, Fairfield Inns, Hampton Inns and Holiday Inns brands.  “The tendency is to say, ‘Let me fill this position with a 40-hour-a-week employee.’”  Mr. Russell said. “I think we have to think differently.”…

CKE Restaurants Inc., parent of the Carl’s Jr. and Hardee’s burger chains, began two months ago to hire part-time workers to replace full-time employees who left, said Andy Puzder, CEO of the Carpinteria, Calif., company.  CKE, which is owned by private-equity firm Apollo Management LP, offers limited-benefit plans to all restaurant employees, but the federal government won’t allow those policies to be sold starting in 2014 because of low caps on payouts.  Mr. Puzder said he has advised Mr. Romney’s campaign on economic issues in an unpaid capacity.

Home retailer Anna’s Linens Inc. is considering cutting hours for some full-time employees to avoid the insurance mandate if the health-care law isn’t repealed, said CEO Alan Gladstone.  Mr. Gladstone said the costs of providing coverage to all 1,100 sales associates who work at least 30 hours a week would be prohibitive, although he was weighing alternative options, such as raising prices….

Benefits consultants said most retail and hotel clients have explored shifting toward part-time workers.  Those industries are less likely to offer health coverage now, and if they do, the plans typically are too skimpy to meet the minimum-coverage requirements.  “They’ve all considered it,” Matthew Stevenson, a workforce-strategy principal at Mercer.  In a July survey, 32% of retail and hospitality company respondents told the consulting firm that they were likely to reduce the number of employees working 30 hours a week or more.

Not only is this response predictable – it was predicted, and not just by Republicans but by non-partisan experts.  Here’s what the Congressional Budget Office wrote more than two years ago about the Obamacare mandate taxes:

Those penalties…will, over time, generally be passed on to workers through reductions in wages…However, firms generally cannot reduce workers’ wages below the minimum wage, which will probably cause some employers to respond by hiring fewer low-wage workers.  Alternatively, because firms are penalized only if their full-time employees receive subsidies from exchanges, some firms may instead hire more part-time or seasonal employees.

CBO also said that “the expansion of Medicaid” and the health insurance subsidies “will encourage some people to work fewer hours or to withdraw from the labor market.  In addition, the phaseout of the subsidies as income rises will effectively increase marginal tax rates, which will also discourage work.”

Two years ago, Speaker Pelosi famously said we had to pass the bill to find out what’s in it.  It turns out what’s in Obamacare is exactly what non-partisan experts said – provisions that will cost jobs and harm the American economy.

Fact Check: Slowing Cost Growth

The President attempted to take credit for the slowdown in health costs of late, attributing it to Obamacare.  But estimates of national health spending released by the non-partisan Medicare actuary in July suggest otherwise.  The actuary’s report confirmed that – contrary to the President’s assertions – the private sector is NOT doing fine, and that the economic downturn continues to affect the health care sector.  Specifically, health spending in 2011 rose by a comparatively small amount due to the “lingering effects of the recent recession and modest recovery,” as high unemployment and stagnant wages often result in financially strapped individuals putting off elective surgeries and trips to the doctor.  Just as prior studies from the non-partisan actuary have concluded, spending growth was slower than projected NOT because Obamacare worked, but because the Obama “stimulus” didn’t.

Two Math Lessons for President Obama

In his speech to the Democratic National Convention a few weeks ago, President Clinton said that one of the new ideas Democrats brought to Washington was “arithmetic.”  Which is particularly ironic, given two developments associated with yesterday’s updated CBO estimates of the mandate taxes associated with Obamacare:

  1. The Administration claimed that the tax increase wouldn’t harm middle-class families because the tax “will only affect people who can afford health care but choose not to buy it.”  But the Congressional Budget Office estimated that 600,000 people with incomes UNDER the federal poverty level – that’s $15,130 for a family of two in 2012 – would pay higher taxes due to the Obamacare mandate.  CBO has also projected that the average premium in the Exchange will be $15,200 per family per year.  Last time I checked, $15,200 was greater than $15,130 – meaning some people may face higher taxes because Obamacare forces them to buy health insurance whose total premium could cost more than their family’s entire income.
  2. CBO also admitted that “most of the increase—about 85 percent—in the number of people who are expected to pay the penalty tax [since CBO’s April 2010 estimate] stems from changes in CBO and JCT’s baseline projections since April 2010, including the effects of legislation enacted since that time, [and] changes in the economic outlook, primarily a higher unemployment rate and lower wages and salaries.”  I could be wrong, but I thought it was better for unemployment to be going down, not up, and for wages to be going up rather than down.  In which case a President running for re-election on a slogan of moving “Forward” has in reality moved the American economy backward since CBO made its initial estimates two years ago.

CBO Report Exposes Record of Obamanomics

The Congressional Budget Office released its updated economic forecasts this morning and, today as before, the results reflect the Obama Administration’s “stewardship” of the economy.  In the health care sector, CBO made some significant updates to its baseline, reflecting both economic and technical changes.  With respect to the former, because economic productivity has lagged, and because most Medicare payment rates for hospitals and other providers are linked to “market-basket” updates of goods and services, CBO raised projected Medicare spending based on this economic factor.  From page 52 of the report:

CBO’s current projections of productivity are lower than they were in its previous forecast, and its projected prices for goods and services (including the cost of both labor and non-labor inputs) are now higher.  Consequently, CBO now anticipates higher payment rates for Medicare than it forecast in March, a change that raises projected outlays by $136 billion (or about 2 percent) over the 2013–2022 period.  In the Medicaid program, higher projected prices for medical services and the cost of labor are also expected to boost spending, by $27 billion, between 2013 and 2022.

Admittedly, CBO made a larger downward adjustment ($169 billion) in projected Medicare spending, which it termed a technical adjustment to reflect the current slowdown in health spending.  However, the Medicare actuary and others have said much of this slowdown is linked to the poorly recovering economy – which means spending could pick up whenever the economy fully recovers.

Either way, however, the report reflects an indictment on the Obama economy – lower productivity growth raising Medicare spending, offset only by people cutting back on health expenditures because they can’t afford to go to the doctor.  That’s not evidence Obamacare is working – that’s evidence the “stimulus” didn’t.

A couple of other related points from the CBO report:

  • According to the updated baseline, the federal government will in 2022 spend a total of $1.064 trillion on Medicare, and $592 billion on Medicaid (not counting the state share of Medicaid payments).  The vast – and vastly increasing – amounts of money the federal government is spending on these programs makes the best case for comprehensive entitlement reform.
  • The update projects the decade-long cost of a freeze in Medicare physician payments at $245 billion.  If said legislation is not paid for, CBO estimates debt service payments on the $245 billion would total an additional $36 billion.

Obamacare Bad for Businesses

In the past 24 hours, two new polls have once again demonstrated that Obamacare is causing uncertainty for businesses, thereby hindering economic growth.  In a Gallup survey, 57% of Americans thought Obamacare would make things worse for businesses — a margin just short of the 60% of Americans who thought the law would make things worse for taxpayers as a whole.

A separate survey of small businesses conducted by the US Chamber of Commerce echoes the Gallup findings.  That survey found that 72% of small business owners concluded that Obamacare makes it harder for their firms to take on new workers, compared to only 3% who said that the clarity of the Supreme Court’s decision on the law would lead to new hiring.  Many owners also commented that the law would encourage their firm to reduce the size of their labor force, and/or cancel health insurance entirely and dump their workers on to Obamacare Exchanges.

President Obama has attracted controversy in recent days on the basis of remarks he made Friday implying that government is the source for businesses’ success.  Yesterday’s Obamacare surveys reveal, however, that under Obamanomics, those businesses who still can succeed aren’t succeeding because of government intrusion — but despite it.

Obamacare’s Medicaid Shambles

The Washington Post has a new story this morning on Democrat governors’ concern about Obamacare’s massive Medicaid expansion, coming ahead of this weekend’s National Governors Association summer meeting.  Among the story’s highlights:

  • “At least seven Democratic governors have been noncommittal about their willingness to go along with expanding their Medicaid programs, the chief means by which the law would extend coverage to millions of Americans with incomes below or near the poverty line.”
  • “‘Unlike the federal government, Montana can’t just print money,’ Gov. Brian Schweitzer (D) said in a statement Wednesday.”
  • “Asked at a forum Wednesday to describe state reactions to the Supreme Court ruling, Dan Crippen, executive director of the National Governors Association, offered a one word reply: ‘confusion.’”
  • “Last week, [Democrat Arkansas Governor Mike] Beebe asked officials at the Centers for Medicare and Medicaid whether, in the event of an unforeseen future fiscal calamity, Arkansas would be able to tighten its eligibility rules and still get the full federal match for those who continued to qualify for its Medicaid program.  To date, Beebe has received no answer.”
  • “In a letter to the governors Tuesday, [HHS Secretary Kathleen] Sebelius assured them, ‘I appreciate that states have questions.’  However, she offered little in the way of specific guidance, promising instead to address their concerns at a series of meetings scheduled in various cities across the country beginning July 31.”

Liberal advocacy groups have attempted to claim that states should not turn down the “free” money Obamacare will offer to the states in the form of a higher Medicaid match.  But this money is NOT free, in two respects.  First, the federal match comes from the massive new federal taxes needed to fund Obamacare – taxes which will harm economic growth and jobs nationwide.  Second, the state share of the Medicaid spending – including new administrative costs that easily could exceed $10 billion – will have to come from somewhere too: From cuts to education, transportation, and other state priorities, or from yet more destructive tax increases imposed at the state level.

Even some Democrat governors understand that money does not grow on trees, and the massive Medicaid expansions included in Obamacare will have major costs.  Unfortunately, the Administration and its liberal allies continue to ignore the fiscal implications of this unsustainable law, resulting in the current implementation shambles less than 18 months before Obamacare’s coverage expansions are scheduled to “go live.”

Just the Facts, Mr. President…

Campaigning in Ohio yesterday, President Obama – in typically modest fashion – said this about the health care law: “The law I passed* is here to stay.”  He followed that up by making the following statement at another campaign event:  “We don’t have to re-litigate the last two years.  I don’t want us to keep having political arguments that are based on politics and not on facts.”  Herewith, two compelling facts:

Fact No. 1:  The Supreme Court upheld the law’s individual mandate as a tax – and ONLY as a taxIf the President doesn’t want to re-litigate the past two years, as he claims, then why doesn’t he acknowledge that the mandate is a tax increase?  Because some would argue that to do otherwise might be based on politics – not on facts.

Fact No. 2:  More Americans think the law will harm the economy than will help it.  So said a new Gallup poll released yesterday.  Which means that if the law really is here to stay, as the President claims, then the American people think the current economic malaise is here to stay as well.  Not an ideal platform on which to run for re-election.

 

* One could also point out Fact No. 3:  Presidents don’t pass laws, Congress does.  While all the Democrat Members of Congress who lost thanks to Obamacare might thank the President for his implicit assertion that he can unilaterally waive his wand and pass a law, it doesn’t actually work that way.  One wouldn’t think a constitutional law professor would make such casual yet incorrect statements.  But then again, one wouldn’t think a constitutional law professor would put half of the health care law’s coverage expansions in jeopardy by signing a bill with unconstitutional provisions either.

News Flash: Obamacare Did NOT Lower Health Costs

We interrupt this wall-to-wall coverage of the Supreme Court’s ruling to point out yet more evidence that Obamacare did nothing to reduce health costs.  Reuters reported yesterday on a report on health spending from the Organization for Economic Cooperation and Development (OECD):

Growth in health spending reversed a long-term trend of rapid increase and either slowed or fell in real terms in most OECD countries in 2010…Overall health spending grew by nearly 5 percent a year in real terms in the 34 countries…between 2000-2009, but this was followed by zero growth in 2010…The OECD also said preliminary figures for a limited number of countries suggest there was little or no growth in health spending in 2011.

In other words, the slowdown in American health care spending is nothing unusual – it’s happening worldwide.  And it is NOT occurring because of Obamacare; it’s taking place because of the global economic downturn.  Spending growth has been slower than projected NOT because Obamacare worked, but because the Obama “stimulus” didn’t.

What IS unusual about American health care is the growth in government spending on health programs.  The OECD found that “the health in total health spending in 2010 was driven by a fall of 0.5 percent in public spending for health, following an increase of over 5 percent per year in 2008 and 2009.”  So while other governments are reducing spending on health programs and entitlements, the United States – at a time of trillion-dollar deficits – is embarking on a $2.6 trillion coverage expansion.  It’s one more sign that under Obamacare, government spending really is doing fine.