Alexandria Ocasio-Cortez Doesn’t Understand How Obamacare’s Exchanges Work

On Twitter Sunday evening, Rep. Alexandria Ocasio-Cortez (D-N.Y.) complained about what she viewed as the daunting prospect of having to choose her health insurance plan for 2020.

It’s not the first time Ocasio-Cortez has taken issue with the health coverage for members of Congress. She griped about the process last year, as a newly elected official just taking her seat.

But, as someone who has gone through the process of buying health insurance as a DC resident for years, I can characterize most of the points she makes in the tweet as inaccurate, or rooted in the special privilege she receives as a member of Congress.

She’s Not Buying ‘Off the Exchange’

To start with, Ocasio-Cortez claimed that “Members of Congress also have to buy their plans off the Exchange.” That statement contains numerous false elements. Most obviously, she cannot buy her insurance off the exchange because the District of Columbia abolished its private insurance market “off the Exchange.”

Upon seeing her tweet, I went to eHealthInsurance, a private market away from the government-run exchange, and tried to search for a plan. (Disclosure: I used to represent eHealth more than a decade ago as a paid lobbyist.) When I typed in a DC-based ZIP code, I found the following:

eHealth doesn’t offer insurance plans in the District of Columbia, because it can’t offer them. DC law prohibits anyone but the exchange from selling insurance to individuals.

Rather than purchasing coverage “off the Exchange,” Ocasio-Cortez buys her health insurance through DC’s small business exchange, as opposed to its marketplace for individuals. As a Congressional Research Service paper on health coverage for members of Congress and their staff explains, both groups buy insurance through the DC small business exchange to obtain their (illegal) employer subsidy.

Admittedly, Ocasio-Cortez may have meant “from the Exchange” when she said “off the Exchange.” But her imprecise language implies that she does not understand the important distinction between buying plans from the Exchange directly and not doing so. (Only Exchange-purchased plans qualify for subsidies under the Obamacare statute.)

She Gets Access to More Plans as a Member of Congress

Ocasio-Cortez complained about having to choose from 66 different insurance plans. She wouldn’t have that problem if she weren’t a member of Congress. People who buy insurance on DC’s individual exchange have far fewer options. I know, because I have to buy coverage there. Take a look at the “choices” my personalized webpage presented to me: Only 23 plans—about one-third the number available to Ocasio-Cortez:

Some may think that 23 plans still represent a large number to choose from, but my reality proved far different. To begin with, those plans come from only two carriers: CareFirst Blue Cross Blue Shield and Kaiser Permanente, which only offers HMO options. If you don’t want to get locked into an HMO’s provider network—and I don’t—you have exactly one choice of carrier: CareFirst.

Couple my preference for non-HMO coverage with my desire for insurance that includes a health savings account option, and I ended up with only two plans to choose from: CareFirst’s Bronze HSA plan, and its Gold HSA plan.

I would prefer more choices for health insurance. I would particularly appreciate the opportunity to buy coverage that doesn’t need to comply with the Obamacare insurance regulations that have driven up premiums and priced millions of people out of coverage. But DC’s insurance regulators have prohibited carriers from offering non-complaint plans, because they’re from the government and they’re here to help.

She Gets Special Privileges as a Member of Congress

To say that members of Congress and congressional staff receive kid-glove treatment from the DC small business exchange would put it mildly. This flyer (from 2013) shows that the DC exchange conducted no fewer than 12 separate in-person enrollment events for members and staff during Obamacare’s first open enrollment period.

Congressional staff confirmed to me that the in-person enrollment sessions continued on Capitol Hill this year. Congressional staff also confirmed that House and Senate benefits counselors can walk them through the entire enrollment process.

Even as an individual DC exchange participant, I received no fewer than five separate e-mails, starting on Friday afternoon, reminding me that Sunday represented the last day to sign up for coverage taking effect on January 1. The timing of Ocasio-Cortez’ tweet suggests that she waited until the last minute to examine her coverage options, but she can’t say she wasn’t warned. Maybe if she and her colleagues spent less time focused on impeachment, Ocasio-Cortez could have found more time to select her plan sooner?

Ocasio-Cortez Gets an Illegal Subsidy

I and others have made this point before: members of Congress and their staff represent the only group that can receive a subsidy from their employer on the exchange. That subsidy came through a rule promulgated by the Office of Personnel Management in 2013, but several analyses have called that rule illegal.

Ocasio-Cortez claimed that “Members of Congress have to buy their plans off the Exchange.” Just as the off-exchange claim holds no basis in fact, she and other members of Congress do not have to buy plans via the DC small business exchange. Nothing in law forces them to do so—unless they want to receive the (illegal) subsidy.

In fact, at least one member of Congress has turned down the (illegal) congressional subsidy. Dr. Michael Burgess frequently mentions at hearings, including the House Energy and Commerce Committee hearing on single payer last week, that he buys his own coverage with his own money, not taxpayer funds. As someone who earns less than members of Congress do, and has no access to (illegal) insurance subsidies, I appreciate Burgess’ integrity in this regard.

If Ocasio-Cortez wanted to do something other than complain—and if she didn’t want so many choices—she could ditch the special, and illegal, subsidies she receives as a member of Congress, and buy coverage with the hoi polloi like me. She’s welcome to do so any time she likes, but I’m not holding my breath.

UPDATE: This post was updated after publication to clarify potential interpretations of Ocasio-Cortez’ comments about “off the Exchange” coverage.

This post was originally published at The Federalist.

Elizabeth Warren’s Health Plan and the Limits of “Experts”

By one count, Sen. Elizabeth Warren used 9,275 words in her health care plan (that is, her original health care plan, not the one she released two weeks later, to overcome the political obstacles she created in the first version). Of that lengthy verbiage, one word stands out: “Expert” appears no fewer than 18 times in the document.

According to Warren, “the experts conclude” that her plan would cost $20.5 trillion over a decade; other “top experts…examine[d] options” to pay for that new federal spending. She cited experts in triplicate for emphasis, noting “the conclusions of expert after expert after expert” that a single-payer health care system can cover all Americans while lowering costs. Warren even pledged that “no for-profit insurance company should be able to stop anyone from seeing the expert…they need.”

Therein lies her biggest problem: In farming out every policy issue for “experts” to solve, Warren effectively insults the intelligence of American voters—telling them they’re not smart enough to solve their own problems, or even to understand the details of her proposed solutions.

‘Experts’ Couldn’t Even Build a Website

The Massachusetts senator’s reliance on experts jives with her campaign’s unofficial slogan. No matter the issue, Warren has a plan for that—blessed by the experts—to enact her agenda. But as Mike Tyson once said, “Everyone has a plan until they get punched in the mouth.” For reasons both practical and philosophical, Warren and her technocratic ilk might benefit from some humility as they seek to remake the health care system—and the nation.

Six years ago this fall, the failure of healthcare.gov provided a searing example of the limits of expertise. After years of planning and countless federal dollars, what Health and Human Services Secretary Kathleen Sebelius called a “debacle” played out in slow-motion on national television. Half a century on from Halberstam’s best and brightest, Barack Obama had to concede that government was “generally not very efficient” at procurement and technology.

Another politician who invoked “experts” regarding health policy, Max Baucus, did so in August 2010. Then the chairman of the Senate Finance Committee, Baucus said he did not bother to read the Obamacare legislation he helped to draft because “It takes a real expert to know what the heck it is. We hire experts.”

Nearly four years later, one of those experts—Yvette Fontenot, who worked on Baucus’ staff during the Obamacare debate—admitted that when drafting the law’s employer mandate, “we didn’t have a very good handle on how difficult operationalizing the provision would be at that time.” Here again, remaking a health system approaching $4 trillion in size brings unintended consequences lurking at every corner.

Yet Warren and her “experts” see no such reason for caution. One of the authors of her health care paper, former Obama administration official Donald Berwick, once said, “I want to see that in the city of San Diego or Seattle there are exactly as many MRI units as needed when operating at full capacity. Not less and not more.” Implicit in his statement: Federal officials, sitting at desks in Washington, or at Medicare’s headquarters in Baltimore, can quantify and assess the “right” number of machines, facilities, and personnel in every community across the land.

Liberals Act Like Voters Are Stupid

A belief that administrators should, let alone can, effectively micromanage an entire health system requires no small amount of hubris. Indeed, Berwick said in a 2008 speech that “I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care. That is for leaders to do.”

In this vein, Berwick echoed his Obama administration colleague Peter Orszag, who in advocating for an unelected board to make recommendations reducing health spending—a change included in Obamacare, but repealed by Congress last yearargued that “we might be a healthier democracy if we were slightly less democratic.”

From the 2004 work “What’s the Matter with Kansas?” to the post-mortems after the last presidential election, liberals continue to question why some households vote against their supposed financial interests. The “expert” mentality—as Orszag wrote, “relying more on…depoliticized commissions for certain policy decisions”—likely plays a role, as by its very nature and through its soft paternalism it disenfranchises Americans.

For instance, studies suggest most low-income individuals do not particularly value Medicaid coverage, yet neither Warren nor others on the left spend much time debating whether expanding health insurance represents the best way to help the poor. As Reagan would note, they’re from the government, and they’re here to help.

Warren thinks that to win the presidency, she must convince voters she has a plan for everything. In reality, her campaign’s hopes may rest instead on developing a plan to narrow the growing gap between the rulers—her beloved “experts”—and the ruled.

This post was originally published at The Federalist.

Kamala Harris Discovers Liberals’ New Health Care Motto

More than a decade ago, Barack Obama ran for president repeatedly pledging that under his health care platform, “If you like your plan, you can keep it.” Of course, that promise turned out not to be true—millions of Americans received cancellation notices as Obamacare took effect, and PolitiFact named Obama’s campaign pledge its “Lie of the Year.”

Given that tortured history, liberals appear to have come up with a simple and succinct slogan to explain their next round of health “reform:”: “If you like your current plan, go f— yourself.”

Medicare for None

Moderator Jake Tapper claimed during the discussion that Harris supports “Medicare for All,” but in reality, the legislation she co-sponsored during the last Congress would eliminate Medicare, along with every other existing form of health insurance save two: the Indian Health Service and Veterans Administration coverage. In short, Harris supports nearly 300 million Americans losing their current form of health coverage.

Patronizing Paternalism

Just as telling: Harris’ blithe dismissal of Americans who might prefer to keep their existing insurance. She claimed that, under single payer, “You don’t have to go through the process of going through an insurance company, having them give you approval, going through the paperwork.” Never mind that single payer systems have long waiting lists, which bring paperwork of their own. Harris then brushed away Americans’ concerns about losing their health coverage with a flick of the wrist: “Let’s move on.”

There are a number of Americans—fewer than 5 percent of Americans—who’ve got cut-rate plans that don’t offer real financial protection in the event of a serious illness or an accident. Remember, before the Affordable Care Act, these bad-apple insurers had free rein every single year to limit the care that you received, or use minor preexisting conditions to jack up your premiums or bill you into bankruptcy. So a lot of people thought they were buying coverage, and it turned out not to be so good.

Obama minimized both the number of people with cancelled plans—“only” a few million—and the quality of the coverage they held. The message was clear: You may think you had good health coverage, but I know better.

It’s Not About Health Care

Some people wonder why I continue to write about the well-heeled Obamacare supporters—including heads of exchanges—who refuse to buy Obamacare coverage for themselves. For a very simple reason: Those individuals, and Harris, and Obama’s remarks all get at the very same point. Obamacare, and single-payer coverage, aren’t really about health care—they’re about power.

Liberal elites consider themselves intellectually superior to the great unwashed masses, whom they must protect from themselves. That reasoning motivates Obamacare’s “consumer protections,” which act to prevent people from becoming consumers, because liberals don’t want individuals to buy health plans lacking all the features they consider “essential.”

An Ironic Campaign Start

The day before her CNN town hall, Harris launched her campaign in Oakland. At the event, which included her campaign slogan, “For the People,” Harris claimed she will “treat all people with dignity and respect.” In making those comments, Harris likely wanted to contrast herself with President Trump’s tone—his temperament, tweets, and so forth.

But one can make an equally compelling argument that Harris’ platform, and her comments one day later, belied her own rhetoric. Pledging to terminate the health coverage of nearly 300 million people might strike some as treating the American people with a distinct lack of respect.

While Democrats may want to make the 2020 campaign a referendum on Trump, elections also present voters with choices. If their party nominates a candidate who reprises liberals’ past mistakes of talking down to voters—“deplorables,” anyone?—they might face a second straight election night shocker.

This post was originally published at The Federalist.

Exclusive: D.C. Exchange Website Misled Customers about Individual Mandate

Last year, in response to Congress repealing the Obamacare individual mandate penalty beginning this January, the D.C. Council established its own requirement for District residents to maintain health coverage. If D.C. leaders wished to replicate Obamacare on the local level, they have succeeded beyond their wildest expectations—right down to the non-functioning website.

For nearly six months—including the first month of open enrollment—the District failed to inform visitors to its online insurance exchange about the new coverage requirement. When District officials finally discovered their webpage fail, what did they do to admit their fault, and tell the public? Nothing.

The Webpage Fail, Explained

At the start of the open enrollment period in early November, I went to the District’s health insurance exchange website, D.C. Health Link, to evaluate my coverage options for 2019. While there, I found an intriguing—and misleading—webpage. When discussing whether individuals should purchase coverage, the webpage noted that “federal law requires most Americans to have a minimum level of health coverage,” a requirement that was “still in effect for the 2017 and 2018 tax years.”

By stating that the requirement remained in effect for 2017 and 2018, the webpage implied that the mandate will disappear in 2019. But while the federal penalty disappeared on January 1, the District’s own insurance mandate replaced the federal requirement on that date. However, the webpage I saw did not mention the D.C. mandate at all.

By discussing the expiring federal mandate and not the new D.C. requirement, the webpage I viewed did not just provide misleading statements about the need to maintain coverage in 2019, it contained inaccurate information, too. The webpage noted that the federal mandate did not penalize individuals with short gaps of coverage of under three months—but the District’s stricter law requires individuals to maintain health coverage every single month.

The webpage also directed individuals seeking exemptions from the mandate to apply to federal authorities, even though the D.C. exchange has assumed that role for the District’s mandate, effective January 1.

In fairness, I, and presumably other prior customers, did receive a mailer from D.C. Health Link discussing the District’s new coverage requirement for 2019. However, the mailer did not mention the mandate until the top of its second page—an area where casual readers could easily miss it. Instead, the mailer spent prime real estate on the first page discussing “our award-winning reputation as one of the best health Exchange websites in the nation:”

Which do you think is more important for District residents to know: That the website won some awards, or that if they do not buy “government-approved” coverage, they could have their property seized and sold?

Why District Officials Don’t Care

District officials seem more pre-occupied with bragging about their website than updating their website. For instance, during the November meeting of the D.C. Health Benefit Exchange Authority, no one discussed the flawed webpage about the District’s individual mandate, even though D.C. Health Link staff conducted a presentation for the board explaining the website that showed a link to the flawed webpage.

The November board meeting also showed a video of D.C. Mayor Muriel Bowser’s appearance at the launch event for open enrollment. During that event, Bowser gave remarks claiming that “D.C. Health Link has made navigating its website even easier.” Bowser failed to mention that, even as she spoke, that “easier” website included incorrect, flawed, and misleading information about the individual mandate she had signed into law months previously.

Ignoring the ‘Debacle’

Nearly one month into open enrollment, on November 28, it appears D.C. Health Link finally discovered their error. Officials removed access to the page discussing the expiring federal mandate—the Internet Archive captured the old page—and created a new page discussing the District’s new coverage requirement for 2019.

But did District officials publicly admit that their website included incorrect information, try to inform the public, or make things right with those who viewed that incorrect information? No, no, and no. The Exchange Authority board held their most recent monthly meeting in mid-December, and the incident did not come up at all.

When healthcare.gov famously crashed and burned in 2013, then-Health and Human Services Secretary Kathleen Sebelius publicly accepted responsibility for the website “debacle.” By contrast, Mila Kofman, executive director of the Exchange Authority, apparently wants to pretend that the problems with the website she runs never took place.

Congress Should Fix This Mess

Beyond raising obvious questions of competence, the flawed webpage could have very real consequences for District residents. Any individuals who went to the incorrect webpage during the first month of open enrollment, and used its erroneous information to decide not to purchase health coverage for 2019, will face tax penalties when filing their 2019 returns in April 2020—penalties directly resulting from the bungling of District bureaucrats.

While District officials may try to give individuals who suffered from the incorrect webpage exemptions from the mandate penalty, it does not appear they can do so. The District’s mandate uses the same criteria as the federal one to determine hardship exemptions, namely, whether circumstances “prevented [an individual] from obtaining coverage.”

But in this case, circumstances didn’t prevent individuals from obtaining coverage—they prevented individuals from understanding the consequences of not doing so. D.C. Health Link therefore may not have the authority to solve a problem its own staff caused.

To ensure that no one incurs financial penalties because of the botched exchange website, the D.C. Council—or, better yet, Congress—will have to intervene. They should take the opportunity presented by this affair to repeal the mandate entirely.

Or Congress could use the pending appropriations legislation to include the provisions adopted last summer defunding the District’s mandate. Rep. Gary Palmer (R-AL), who sponsored the defunding amendment last summer, once again offered his amendment earlier this month, when the House considered anew the District of Columbia appropriations measure. Unfortunately, however, the new House Democrat majority refused to make a vote on the amendment in order. This means that, absent additional action, individuals may face sizable tax penalties due to a website mess caused entirely by District officials.

No matter what form it takes, the website mess demonstrates that the District’s insurance mandate should go. Given that D.C. Health Link spends $11 million on IT, yet took six months to update a webpage, it should spend less time ordering District residents to buy insurance and more time getting its own house in order.

This post was originally published at The Federalist.

Bill Clinton’s Right: Pre-Existing Condition Vote IS “The Craziest Thing in the World”

The new House Democratic majority is bringing to the floor a resolution on Wednesday seeking to intervene in Texas’ Obamacare lawsuit. The House already voted to approve the legal intervention, as part of the rules package approved on the first day of the new Congress Thursday, but Democrats are making the House vote on the subject again, solely as a political stunt.

I have previously discussed what the media won’t tell you about the pre-existing condition provisions—that approval of these Obamacare “protections” drops precipitously when people are asked if they support the provisions even if they would cause premiums to go up. I have also outlined how a Gallup poll released just last month shows how all groups of Americans—including Democrats and senior citizens—care more about rising premiums than about losing their coverage due to a pre-existing condition.

Bill Clinton Got This One Right

The current system works fine if you’re eligible for Medicaid, if you’re a lower income working person, if you’re already on Medicare, or if you get enough subsidies on a modest income that you can afford your health care. But the people that are getting killed in this deal are small business people and individuals who make just a little too much to get any of these subsidies. Why? Because they’re not organized, they don’t have any bargaining power with insurance companies, and they’re getting whacked. So you’ve got this crazy system where all of a sudden 25 million more people have health care, and then the people who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half. It’s the craziest thing in the world.

Why did people “who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half”? Because of the pre-existing condition provisions in Obamacare.

Clinton knew of which he spoke. Premiums more than doubled from 2013 to 2017 for Obamacare-compliant individual coverage, only to rise another 30 percent in 2018. A Heritage Foundation paper just last March concluded that the pre-existing condition provisions—which allow anyone to sign up for coverage at the same rate, even after he or she develops a costly medical condition—represented the largest driver of premium increases due to Obamacare.

The Congressional Budget Office concluded that the law would reduce the labor supply by the equivalent of 2.5 million workers. Because so many people cannot afford their Obamacare coverage without a subsidy now that the law has caused premiums to skyrocket, millions of Americans are working fewer hours and earning less income precisely to ensure they maintain access to those subsidies. Obamacare has effectively raised their taxes by taking away their subsidies if they earn additional income, so they have decided not to work as hard.

Why Do Republicans Support This ‘Crazy’ Scheme?

Given this dynamic—skyrocketing premiums, millions dropping coverage, taxes on success—you would think that Republicans would oppose the status quo on pre-existing conditions, and all the damage it has wrought. But no.

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.

I’ve said it before, but I’ll say it again: As a matter of policy, any proposal that retains the status quo on pre-existing conditions by definition cannot repeal Obamacare. In essence, this Republican proposal amounted to a plan to “replace” Obamacare with the Affordable Care Act.

Even more to the point: What’s a good definition for a plan that charges everyone the exact same amount for health coverage? How about “I’ll take ‘Socialized Medicine’ for $800, Alex”?

There are better, and more effective, ways to handle the problem of pre-existing conditions than Obamacare. I’ve outlined several of them in these pages of late. But if Republicans insist on ratifying Obama’s scheme of socialized medicine, then they are—to use Bill Clinton’s own words—doing “the craziest thing in the world.”

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.

How an Obscure Regulatory Change Could Transform American Health Insurance

Between the election campaign and incidents of terrorism ranging from attempted bombings to a synagogue shooting, an obscure regulatory proposal by the Trump administration has yet to captivate the public’s attention. However, it has the potential to change the way millions of Americans obtain health insurance.

In the United States, unique among industrialized countries, most Americans under age 65 receive health coverage from their employers. This occurs largely due to an Internal Revenue Service (IRS) ruling issued during World War II, which excluded health insurance coverage from income and payroll taxes. (Businesses viewed providing health insurance as one way around wartime wage and price controls.)

The Trump administration’s proposed rule would, if finalized, allow businesses to make a pretax contribution towards individual health insurance—that is, coverage that individuals own and select, rather than employers. This change may take time to have an impact, but it could lead to a much more portable system of health insurance—which would help to solve the pre-existing condition problem.

How Would It Work?

Under the proposed rule, employers could provide funds through a Health Reimbursement Arrangement (HRA) to subsidize the purchase of individual health insurance. Employers could provide the funds on a pretax basis, and—provided that the workers purchase their coverage outside of the Obamacare exchanges—employees could pay their share of the premiums on a tax-free basis as well.

In practical terms, some employers may choose to provide a subsidy for health coverage—say, $300 per month, or $5,000 per year—in lieu of offering a firm-sponsored health plan. Individuals could go out and buy the plan they want, which covers the doctors whom they use, rather than remaining stuck with the plan their employer offers. And employers would get better predictability for their health expenses by knowing their exposure would remain fixed to the sums they contribute every year.

Could Employers Game the System?

The proposed rule acknowledged the possibility that employers might try to “offload” their costliest patients into individual health coverage, lowering expenses (and therefore premiums) for the people who remain. The rule contains several provisions designed to protect against this possibility.

Employers must choose to offer either an HRA contribution towards individual coverage or a group health plan. They cannot offer both options, and whatever option they select, they must make the same decision for an entire class of workers.

A “class” of workers would mean all full-time employees, or all part-time employees, or all employees under one collective bargaining agreement. Hourly and salaried workers would not count as separate “classes,” because firms could easily convert workers from one form of compensation to another. These provisions seek to ensure that firms will offer some employees health insurance, while “dumping” other employees on to individual coverage.

Can Workers Buy Short-Term Coverage with Employer Funds?

Yes—and no. The proposed rule would allow HRA funds to purchase only individual (i.e., Obamacare-compliant) health insurance coverage, not short-term insurance.

However, the rule creates a separate type of account to which employers could contribute that would fund workers’ “excepted benefits.” This term could include things like long-term care insurance, vision and dental insurance, and the new short-term plans the Trump administration has permitted. But employers could only fund these accounts up to a maximum of $1,800 per year, and they could create these special “excepted benefits” accounts only if they do not offer an HRA that reimburses workers for individual insurance, as outlined above.

Will Firms Drop Health Coverage?

Some firms may explore the HRA option over time. However, the extent to which businesses embrace defined-contribution coverage may depend upon the viability of the individual health insurance market, and the status of the labor market.

However, if and when more insurers return to the marketplace, firms may view the defined-contribution method of health coverage as a win-win: employees get more choices and employers get predictability over health costs. Particularly if unemployment ticks upward, or one firm in an industry makes the move towards the HRA model, other businesses may follow suit in short order.

Will the Proposal Cost Money?

It could. The proposed rule should cost the federal government $29.7 billion over the first ten years. That estimate assumes that 800,000 firms, offering coverage to 10.7 million people, will use the HRA option by 2028. (It also assumes an 800,000 reduction in the number of uninsured Americans by that same year.)

The cost, or savings, to the federal government could vary widely, depending on factors like:

  • Whether firms using the HRA option previously offered coverage. If firms that did not offer coverage take the HRA option, pretax health insurance payments would increase, reducing tax revenues. (The rule assumes a reduction in income and payroll tax revenue of $13 billion in 2028.)
  • Whether individuals enrolling in individual market coverage via the HRA option are more or less healthy than current enrollees. If the new enrollees are less healthy than current enrollees, individual market premiums will rise, as will spending on Obamacare subsidies for those individuals. (The rule assumes a 1 percent increase in individual market premiums, and thus exchange subsidies.)
  • The extent to which HRAs affect eligibility for Obamacare subsidies. If some low-income individuals whose employers previously did not offer coverage now qualify for HRA subsidies, they may lose eligibility for Obamacare subsidies on the exchanges. (The rule assumes a reduction in Obamacare subsidies of $6.9 billion in 2028.)

Given the many variables in play, the rule has a highly uncertain fiscal impact. It could cost the federal government billions (or more) per year, save the federal government similar sums, or have largely offsetting effects.

An Overdue (and Welcome) Change

The proposed rule would codify the last element of last October’s executive order on health care. It follows the release of rules regarding both short-term health insurance and association health plans earlier this year.

Ironically, the Trump administration represents but the most recent Republican presidency to examine the possibility of defined-contribution health insurance. While working on Capitol Hill in 2008, I tried to encourage the Bush administration to adopt guidance similar to that in the proposed rule. However, policy disagreements—including objections raised by, of all places, scholars at the Heritage Foundation—precluded the Bush administration from finalizing the changes.

Since I’ve fought for this concept for more than a decade, and included it in a series of regulatory changes the administration needed to make in a paper released shortly before Trump took office, I can attest that this change is as welcome—and needed—since it is overdue. Although overshadowed at the time of its release, this rule could have a substantial effect on Americans’ health insurance choices over time.

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.

Is Donald Trump “Sabotaging” Obamacare?

Is Donald Trump “sabotaging” Obamacare? And are he and his administration violating the law to do so?

Democrats intend to make this issue a prime focus of their political messaging ahead of the November elections. And several developments over the month of August — a Government Accountability Office (GAO) report, a New York Times op-ed by two legal scholars, and a lawsuit filed by several cities — all include specific points and charges related to that theme.

1. The GAO Report

The most recent data point comes from the GAO, which at the behest of several congressional Democrats analyzed the administration’s outreach efforts during the most recent open enrollment period last fall. Those efforts culminated in a report GAO released Thursday.

The report made a persuasive case that the administration’s decision to reduce and re-prioritize funding for enrollment navigators utilized flawed data and methods. While the Department of Health and Human Services (HHS) based navigators’ 2018 funding on their effectiveness in enrolling individuals in coverage in prior years, GAO noted that HHS lacked solid data on navigators’ enrollment on which to base 2018 funding, and that enrollment was but one of navigators’ stated goals in prior years. HHS agreed with GAO’s recommendation that it should provide clearer goals and performance metrics for navigators to meet.

GAO also recommended that the administration reinstitute an overall enrollment target, as one way to determine the adequate distribution of resources during open enrollment. However, a cynic might note that Obamacare advocates, including the Democratic lawmakers who requested the report, may want the Trump administration to publicize an enrollment target primarily so they can attack HHS if the department does not achieve its goals.

Even though reporters and liberals like Andy Slavitt cried foul last year when HHS announced planned maintenance time for healthcare.gov in advance, actual downtime for the site dropped precipitously in 2018 compared to 2017. Which could lead one to ask who is sabotaging whom.

2. The New York Times Article

In The New York Times piece, law professors Nicholas Bagley and Abbe Gluck provide an overview of the lawsuit filed against the Trump Administration (about which more below). As someone who has cited Bagley’s work in the past, I find the article unpersuasive, even disappointing.

Take for instance some of the article’s specific allegations:

Here’s one: “To make it harder for people to enroll in Obamacare plans, for example, the administration shortened the open enrollment period on the health care exchanges from three months to six weeks.”

This charge would have evaporated entirely had Bagley specified which Administration first proposed shortening the open enrollment period to six weeks. The Obama Administration did just that.

This rule also establishes dates for the individual market annual open enrollment period for future benefit years. For 2017 and 2018, we will maintain the same open enrollment period we adopted for 2016—that is, November 1 of the year preceding the benefit year through January 31 of the benefit year, and for 2019 and later benefit years, we are establishing an open enrollment period of November 1 through December 15 of the year preceding the benefit year.

The Trump administration merely took the shorter open enrollment period that the Obama team proposed for 2019 and accelerated it by one year. If shortening the enrollment period would make it so much “harder for people to enroll in Obamacare plans,” as Bagley and Gluck claim, then why did the Obama Administration propose this change?

Another allegation: “To sow chaos in the insurance markets, Mr. Trump toyed for nine months with the idea of eliminating a crucial funding stream for Obamacare known as cost-sharing payments. After he cut off those funds, he boasted that Obamacare was ‘being dismantled.’”

This charge seems particularly specious — because Bagley himself has admitted that Obamacare lacks a constitutional appropriation for the cost-sharing reduction payments to insurers. Bagley previously mentioned that he took no small amount of grief from the left for conceding that President Obama had exceeded his constitutional authority. For him to turn around and now claim that Trump violated his constitutional authority by ending unconstitutional payments represents a disingenuous argument.

Here and elsewhere, Bagley might argue that Trump’s rhetoric — talk of Obamacare “being dismantled,” for instance — suggests corrupt intent. I will gladly stipulate that presidential claims Obamacare is “dead” are both inaccurate and unhelpful. But regardless of what the President says, if the President does what Bagley himself thinks necessary to comport with the Constitution, how on earth can Bagley criticize him for violating his oath of office?

A third allegation:

This month, the Trump administration dealt what may be its biggest blow yet to the insurance markets. In a new rule, it announced that insurers will have more latitude to sell ‘short-term’ health plans that are exempt from the Affordable Care Act’s rules. These plans … had previously been limited to three months.

Under Mr. Trump’s new rule, however, such plans can last for 364 days and can be renewed for up to three years. … In effect, these rules are creating a cheap form of ‘junk’ coverage that does not have to meet the higher standards of Obamacare. This sort of splintering of the insurance markets is not allowed under the Affordable Care Act as Congress drafted it.

This claim also fails on multiple levels. First, if Congress wanted to prohibit “short-term” health plans as part of Obamacare, it could have done so. Congress chose first to allow these plans to continue to exist, and second to exempt these plans from all of Obamacare’s regulatory regime. If Bagley and Gluck have an objection to the splintering of insurance markets, then they should take it up with Congress.

Second, the so-called “new rule” Bagley and Gluck refer to only reverts back to a definition of short-term coverage that existed under the Obama Administration. This definition existed for nearly two decades, from when Congress passed the Health Insurance Portability and Accountability Act (HIPAA) through 2016. The Obama administration published a rule intended to eliminate much of the market for this type of coverage — but it did so only in the fall of that year, more than two years after Obamacare’s major coverage provisions took effect.

As with the shortening of the open enrollment period discussed above, if Bagley and Gluck want to scream “Sabotage!” regarding the Trump administration’s actions, they also must point the finger at Barack Obama for similar actions. That they did not suggests the partisan, and ultimately flawed, nature of their analysis.

3. The Lawsuit

The 128-page complaint filed by the city plaintiffs earlier this month makes some of the same points as the New York Times op-ed. It also continues the same pattern of blaming the Trump administration for actions previously taken by the Obama administration.

The lawsuit criticizes numerous elements of the administration’s April rule setting out the payment parameters for the 2019 Exchange year. For instance, it criticizes the removal of language requiring Exchanges to provide a direct notification to individuals before discontinuing their eligibility for subsidies, if individuals fail to reconcile the subsidies they received in prior years with the amount they qualified for based on their income. (Estimated subsidies, which are based on projected income for a year, can vary significantly from the actual subsidy levels one qualifies for, based on changes in income due to a promotion, change in life status, etc.)

As part of this charge, the lawsuit includes an important nugget: The relevant regulation “was amended in 2016 to specify that an Exchange may not deny [subsidies] under this provision ‘unless direct notification is first sent to the tax filer.’” As with the New York Times op-ed outlined above, those claiming “sabotage” are doing so because the Trump administration decided to revert to a prior regulatory definition used by the Obama administration for the first several years of Obamacare implementation.

The lawsuit similarly complains that the Trump administration is “making it harder to compare insurance plans” by eliminating support for “standardized options” from the Exchange. Here again, the complaint notes that “prior rules supported ‘standardized options,’” while mentioning only in a footnote that the rules implementing the “standardized options” took effect for the 2017 plan year. In other words, the Obama administration did not establish “standardized options” for the 2014, 2015, or 2016 plan years. Were they “sabotaging” Obamacare by failing to do so?

The suit continues with these types of claims, which collectively amount to legalistic whining that the Trump administration has not implemented Obamacare in a manner the (liberal) plaintiffs would support. It even includes this noteworthy assertion:

Maryland has been cleared by state legislators to petition CMS to ‘establish a reinsurance program that would create a pot of money for insurers to cover the most expensive claims,’ but a health economist ‘said he would be shocked if the Trump administration approved such a request, given its efforts to weaken Obamacare’: ‘It just seems very unlikely to me that Trump would approve this. … Maryland is easily saying we want to help prop up Obamacare, which the Trump administration doesn’t want to have anything to do with.’

Fact: The Trump administration just approved Maryland’s insurance waiver this week. So much for that “sabotage.”

A review of its “prayer for relief” — the plaintiffs’ request for actions the court should take — shows the ridiculously sweeping nature of the lawsuit’s claims. Among other things, the plaintiffs want the court to order the defendants to “comply with their constitutional obligation to take care to faithfully execute the ACA,” including by doing the following:

  • “Expand, rather than suppress, the number of individuals and families obtaining health insurance through ACA exchanges;
  • “Reduce, rather than increase, premiums for health insurance in the ACA exchanges;
  • “Promote, rather than diminish, the availability of comprehensive, reasonably-priced health insurance for individuals and families with preexisting conditions;
  • “Encourage, rather than discourage, individuals and families to obtain health insurance that provides the coverage that Congress, in the ACA, determined is necessary to protect American families against the physical and economic devastation that results from lesser insurance, with limits on coverage that leaves them unable to cover the costs of an accident or unexpected illness…
  • “Order Defendants to fully fund advertising under the ACA;
  • “Enjoin Defendants from producing and disseminating advertisements that aim to undermine the ACA;
  • “Order Defendants to fully fund Navigators under the ACA;
  • “Enjoin Defendants from incentivizing Navigators to advertise non-ACA compliant plans;
  • “Order Defendants to lengthen the open enrollment period;
  • “Order Defendants to resume participation in enrollment events and other outreach activities under the ACA…
  • “Order Defendants to process states’ waiver applications under the ACA so as to faithfully implement the Act.”

In other words, the lawsuit asks a court to micro-manage every possible element of implementation of a 2,700-page law — tell HHS what it must say, what it must do, how much it must spend, and on and on. It would create de facto entitlements, by stating that HHS could never reduce funding for advertising and outreach, or lower spending on navigators, or reject states’ waiver applications — potentially even if those applications violate the law itself. And it asks for impossible actions — because HHS cannot unilaterally “expand, rather than suppress” the number of people with coverage, just as it cannot unilaterally “reduce, rather than increase, premiums.”

Despite its questionable claims, and the highly questionable remedies it seeks, the lawsuit may yet accomplish some of its goals. The complaint spends much of its time alleging violations of the Administrative Procedure Act, claiming that HHS did not “meaningfully” or “adequately” consider comments from individuals who objected to the regulatory changes in question. While I have not examined the relevant regulatory dockets in any level of detail, the (pardon the pun) trumped-up nature of elements of the complaint makes me skeptical of such assertions. That said, the administration has suffered several setbacks in court over complaints regarding the regulatory process, so the lawsuit may force HHS to ensure it has its proverbial “i”s dotted and “t”s crossed before proceeding with further changes.

Words Versus Actions

On many levels, the “sabotage” allegations try to use the president’s own words (and tweets) against him. Other lawsuits have done likewise, with varying degrees of success. As I noted above, the president’s rhetoric often does not reflect the actual reality that Obamacare remains much more entrenched than conservatives like myself would like.

But for all their complaints about the administration’s “sabotage,” liberals have no one to blame but themselves for the current situation. Obamacare gave a tremendous amount of authority to the federal bureaucracy to implement its myriad edicts. They should not be surprised when someone who disagrees with them uses that vast power to accomplish what they view as malign ends. Perhaps next time they should think again before proceeding down a road that gives government such significant authority. They won’t, but they should.

This post was originally published at The Federalist.

Bill Cassidy’s “Monkey Business”

Last we checked in with Louisiana Republican Sen. Bill Cassidy, he was hard at work adding literally dozens of new federal health care requirements to a Republican “repeal-and-replace” bill. This week comes word that Cassidy continues to “monkey around” in health care — this time quite literally.

STAT reports: “Sen. Bill Cassidy is trying to help hundreds of chimpanzees enjoy an easy retirement in his home state of Louisiana. The Republican is pushing for an amendment to a major appropriations bill winding its way through Congress this week that would force the National Institutes of Health to make good on a 2015 promise to move all its chimps out of research facilities.”

Don’t get me wrong: I oppose animal cruelty as much as the next person. If NIH lacks a compelling scientific justification to conduct research on chimpanzees, or any other animal, then it should cease the research and provide alterative accommodations for the creatures affected.

But on at least three levels, Cassidy’s amendment demonstrates exactly what’s wrong with Washington D.C.

Problem 1: Skewed Priorities

The federal debt is at more than $21 trillion and rising — more than double its $10.6 trillion size not ten years ago, on the day Barack Obama took office. American troops remain stationed in Afghanistan, and elsewhere around the world. Russia still looks to undermine American democracy and to meddle in this year’s midterm elections. The situation with North Korea remains tenuous, as the North Koreans continue to develop intercontinental ballistic missile technologies and their nuclear program.

So why is Cassidy trying to consume Senate floor time with a debate and vote on the chimpanzee amendment, after having already sent a letter to NIH on the subject? On a list of America’s top policy issues and concerns, the fate of 272 chimpanzees wouldn’t register in the top 100, or even in the top 1,000. So why should members of Congress (to say nothing of their staffs) spend so much time on such a comparatively inconsequential issue?

Problem 2: Cassidy Doesn’t Want to Repeal Obamacare

Rather than spending time on a chimpanzee amendment, Cassidy — like his Senate Republican colleagues — should focus on keeping the promise they made to their voters for the past four election cycles that they would repeal Obamacare. But unfortunately, many of the people who made that promise never believed it in the first place.

Based on his record, Cassidy stands as one of those individuals opposed to Obamacare repeal. As I noted in June, Cassidy does not want to repeal the federal system of regulations that lies at the heart of the health care law. In fact, a health care plan released earlier this summer seemed designed primarily to give lawmakers like Cassidy political cover not to repeal Obamacare’s most onerous regulations — even though a study by the Heritage Foundation indicates those regulations are the prime driver of premium increases since the law passed.

Problem 3: Cassidy Just Voted to Entrench Obamacare

Earlier this month, I noted some Republicans in the Senate would likely vote to allow the District of Columbia to tax individuals who do not purchase health insurance, after having voted to repeal that mandate in last year’s tax bill. After I wrote that story, Cassidy became one of five Senate Republicans to do just that, by voting to table (or kill) an amendment defunding Washington’s new individual mandate.

Because Cassidy voted to keep the mandate in place in D.C., he voted to allow District authorities to seize and sell individuals’ property if they do not purchase “government-approved” health coverage. Rather than voting to repeal Obamacare, Cassidy and his colleagues voted to entrench Obamacare in the nation’s capital — for which they have sovereign jurisdiction under the Constitution.

Even apart from Cassidy’s flip-flopping on repeal of Obamacare and its individual mandate, the contrast with the letter to NIH raises its own questions. In that letter, Cassidy emphasized that former research chimpanzees should have “the opportunity to live in mixed-sex groups and … daily access to nesting materials.”

This all sounds well and good, but why does Cassidy seemingly care so much about giving freedom to chimpanzees and so little about giving freedom to District of Columbia residents to buy (or not buy) the health coverage they wish to purchase?

Congress, Stop Monkeying Around

Five years ago, Democratic Rep. Frank Pallone famously called a congressional hearing on the healthcare.gov debacle a “monkey court.” Five years later, the Cassidy amendment on chimpanzee research demonstrates how Congress continues to “monkey around.”

Republicans should stop the primate-related sideshows and focus on things that really matter. Like sticking to the promise they made to voters for eight years to repeal Obamacare.

This post was originally published at The Federalist.