This Presidential Candidate Loves Obamacare–But Won’t Sign Up for It

If the 2020 presidential campaign illustrates anything so far, it’s the yawning chasm between Democrats’ rhetoric and their reality. Not only do the party’s presidential candidates not practice what they preach, they seemingly have little shame in failing to do so.

Last Thursday evening, one of the candidates running for the Democratic nomination, Sen. Michael Bennet (D-CO), appeared on CNN for a town hall discussion. During the discussion, Bennet criticized his fellow senator and presidential candidate, Bernie Sanders (I-VT), for his single-payer health-care plan.

Qualifies for Obamacare Subsidy, Yet Won’t Buy a Plan

In his town hall comments, Bennet claimed that “what we would be better off doing in order to get to universal health care quickly is to finish the job we started with” Obamacare. Yet consider this paragraph from Bennet’s op-ed the week previously, in which he outlined health care, and his recent prostate cancer diagnosis, as the reason for announcing his candidacy: “My cancer was treatable because it was detected through preventive care. The $94,000 bill didn’t bankrupt my family because I had insurance through my wife’s employer” (emphasis mine).

Remember: The federal Office of Personnel Management promulgated an arguably illegal rule in October 2013 that makes members of Congress eligible for subsidies for Obamacare coverage. Yet even with access to these illegal subsidies, Bennet has no interest in buying an Obamacare plan. That might be because he knows—as I do by being forced onto an exchange plan—that these Obamacare plans are junk insurance, with high premiums, high deductibles, and in many cases poor access to physician networks.

Do As I Say, Not As I Do

Some may argue that because Bennet does not support Sanders’s single-payer proposal, at least he will not force others to give up their health coverage (even as he refuses to go on to Obamacare). But in 2009, one analysis of a government-run “public option,” which Bennet supports as an alternative to single-payer, concluded that it would lead to a reduction in private insurance coverage of 119.1 million people. This would shrink the employer-provided insurance market by more than half.

Even Bennet’s “moderate” proposal could lead to many millions of Americans immediately losing the coverage they have if employers drop coverage en masse. Yet will Bennet give up his employer coverage and go on to Obamacare? Not a chance.

Some may question why I write about this topic so often. After all, if every member of Congress, or every Democratic presidential candidate, suddenly decided to sign up for Obamacare, it wouldn’t significantly affect the exchange’s overall premiums and coverage numbers. But lawmakers’ coverage decisions have outsized importance because they reveal their true motivations.

Obama’s action, however, represents the exception that proves the rule. Instead, liberals want to order other people to buy Obamacare health insurance while not doing so themselves. They epitomize Ronald Reagan’s 1964 speech “A Time for Choosing,” in which he referred to a “little intellectual elite in a far-distant capital,” who believe they “can plan our lives for us better than we can plan them ourselves.”

By promising to expand Obamacare even as he fails to enroll in it himself, Bennet demonstrated himself part and parcel of that “little intellectual elite.” So have his fellow Democratic presidential candidates. Americans should take note—and vote accordingly next November.

This post was originally published at The Federalist.

The Return of the Individual Mandate

Well, that didn’t last long. Fewer than six months after Congress effectively repealed Obamacare’s individual mandate—and more than six months before that change actually takes effect, in January next year—another liberal group released a plan to reinstate it. The proposal comes as part of the Urban Institute’s recently released “Healthy America” plan.

In the interests of full disclosure: I criticized Republicans for repealing the individual mandate as part of the tax reform bill last fall. I did so not because I support requiring Americans to buy health insurance—I don’t—but because Republicans need to go further, and repeal the federal insurance regulations that represent the heart of Obamacare and necessitated enacting the mandate in the first place.

Lipstick on an Unpopular Pig?

The Urban Institute plan tries to re-brand a federal requirement to purchase insurance by never even using the term “mandate” in its proposal. Instead, the document says that “uninsured people would lose a percentage of their standard deduction (or the equivalent for the itemized deduction) when they pay income taxes….Half the lost deduction amount could be refunded the following year if the person enrolls in coverage and maintains it for the next full plan year.”

But as the saying goes, if it looks like a mandate and functions like a mandate, it’s a mandate. The paper claims that taking away a “tax benefit…would be better received politically than the additional tax penalty” under Obamacare, but functionally, that provides a distinction without a difference. Even the Urban researchers call this “loss of a tax benefit” a “penalty” later in the paper, because that’s what it is: A penalty for remaining uninsured.

The paper even includes a chart highlighting the average tax for remaining uninsured by income under the proposal, which generally mimics the tax penalties the uninsured pay under Obamacare:

Other Components of the Plan

Unfortunately, the Urban Institute plan goes well beyond merely reinstating the individual mandate, albeit in a slightly different form. It also makes other major changes to the health care system that would entrench the role of the federal government in it. It would federalize Medicaid health insurance coverage by transferring Medicaid enrollees into exchanges, supplementing benefits for low-income children and individuals with disabilities, and requiring states to keep paying their current contributions into the system. (Long-term care coverage under Medicaid would continue unchanged.)

The exchanges would have a new government-run plan—the default option for low-income enrollees automatically enrolled into coverage—and options run by private insurers. However, all plans would cap reimbursement to doctors and hospitals at Medicare rates, making premiums more “affordable” by imposing price controls that would potentially pay providers at below-market levels. The plan also proposes to “save” on prescription drugs by extending Medicaid rebates (i.e., price controls) to additional individuals.

The Urban plan also proposes much richer health coverage subsidies, consistent with its earlier 2015 proposal. Specifically:

  • Individuals with incomes below the federal poverty level would not pay either premiums or cost-sharing;
  • Individuals with incomes below 138 percent of poverty (the threshold for Obamacare’s Medicaid expansion) would not pay premiums;
  • Premium subsidies would be linked to a plan paying 80 percent of expected health care costs (i.e., actuarial value), as opposed to a 70 percent actuarial value plan under Obamacare;
  • Individuals would have to pay less of their income in premiums than under Obamacare—for instance, an individual with income just under four times poverty would pay 8.5 percent of income in premiums, as opposed to 9.56 percent under Obamacare; and
  • Unlike Obamacare, which limits eligibility for subsidies to those with incomes under four times poverty, the Urban plan would limit premium payments to 8.5 percent of income at all income levels (i.e., including for those making more than four times poverty).

Moreover, “short-term and other private insurance plans that do not comply with Healthy America regulations (consistent with [Obamacare’s] regulatory framework” would be prohibited, including association health plans and other concepts the Trump administration has proposed to give Americans more flexible coverage options.

The Urban researchers admit their plan would require significant new revenues to pay for the new subsidies—an estimated $98 billion in the first year alone. The plan only briefly discusses options to pay for this new spending, but it admits that, even if Congress hikes the payroll tax by an additional percent, raising an estimated $823 billion over ten years, “other adjustments to excise and income taxes would be needed.”

Where the Plan Fits In

At the end of their paper, the Urban researchers include a helpful chart comparing the various liberal proposals for expanded government involvement in health care—lest anyone claim that the left hand doesn’t know what the far-left hand is doing. In general:

  • Elizabeth Warren (D-MA) introduced a bill that would not go as far as the Urban plan. It incorporates the subsidy changes Urban proposed, adds a government-run plan, and imposes other regulatory changes to the exchanges, but (unlike the Urban plan) retains the status quo for Medicaid;
  • The Center for American Progress’ “Medicare Extra” proposal, which I wrote about earlier this year, goes farther than the Urban plan, by eliminating Medicaid (which the Urban plan modifies) entirely, and including more robust auto-enrollment provisions, with “Medicare Extra” the default option for all Americans; and
  • The single-payer bill introduced by Sen. Bernie Sanders (I-VT) would go farthest of all, abolishing virtually all forms of insurance (including Medicare) and creating a single-payer health system.

So much for “If you like your plan, you can keep it.” For that matter, so much for “If you like your freedom, you can keep it.” Like it or not, the Left seems insistent on terrifying the American public with what Ronald Reagan viewed as the nine most effective words to do so: “I’m from the government and I’m here to help.”

This post was originally published at The Federalist.

Is Buying Health Insurance a Political Statement?

A recent Commonwealth Fund analysis of survey data concluded that the number of uninsured Americans rose over the past two years, by the equivalent of approximately 4 million individuals. The Commonwealth researchers claim Trump administration policy decisions explain the decline in the number of Americans with health insurance.

But the data themselves suggest another theory: Some Americans may have made a political decision to drop health coverage.

But consider that Obamacare subsidizes insurance rates for low-income households, capping their premium costs as a percentage of income, and insulating them from most of the effects of premium increases. Consider too that over the past several years, only low-income individuals have purchased coverage on insurance exchanges in significant numbers, precisely because of the rich premium subsidies and lower co-payments and deductibles taxpayers provide to households with income below 250 percent of the federal poverty level.

The high subsidies for low-income individuals would not appear to explain the increase in the uninsured among this group. And a marginal decrease in the uninsured rate this year among those with incomes over 250 percent of poverty—including those who do not qualify for insurance subsidies at all—suggests premium increases may not have led affluent Americans to drop coverage (at least not yet).

What might more logically explain the increase in the number of uninsured? In a word, politics. The Commonwealth researchers note that between 2016 and 2018, the uninsured rate among Republicans aged 19-64 nearly doubled, from 7.9 percent to 13.9 percent. By contrast, the uninsured rate among self-identified Democrats actually declined, albeit not in a statistically significant fashion.

The increase in the uninsured also occurred almost exclusively in states that did not expand Medicaid. From 2016 through 2018, the uninsured rate in those states rose by more than one-third, from 16.1 percent to 21.9 percent, while the rate in states that did expand Medicaid remained relatively constant. Given that the 18 states that have not expanded Medicaid under Obamacare are overwhelmingly southern and red ideologically, this data point confirms a political tinge regarding health coverage decisions.

In all, the uninsured data suggest that a small but measurable percentage of red-state Americans have decided to drop health coverage over the past two years. Because many of those individuals come from working-class backgrounds and could qualify for sizable subsidies, affordability may not have driven their decision to forego insurance. Moreover, three times as many Republicans (6 percent) as Democrats (2 percent) plan to drop health coverage when Obamacare’s individual mandate tax disappears next year, further indicating that politics plays into Americans’ coverage decisions.

The Commonwealth researchers ignore the policy implications of a political divide over purchasing health coverage. They propose reducing the uninsured rate through the usual toolkit Obamacare supporters rely upon to bolster the law: More funding for outreach; more affordability subsidies; more “stability” funding for insurers; more government-run insurance options, including the “public option.”

But if some Americans have purposefully dropped health coverage as a political statement—in opposition to Obamacare in general, the individual mandate in particular, or in solidarity with President Trump—no increase in subsidies, or cajoling via outreach programs, will persuade them to change their decisions. In fact, further policy debates about reinforcing Obamacare may only inflame partisan passions, recalling Ronald Reagan’s famous axiom about the nine most terrifying words in the English language: “I’m from the government and I’m here to help.”

In the run-up to this November’s elections, Democrats plan to attack Republicans’ so-called “sabotage” of Obamacare. Senate Democrats’ campaign arm did just that within hours of the Commonwealth study’s release. But the evidence suggests that the partisanship of the past two years has contributed to the increase in the uninsured rate—meaning Democrats may be the ones sabotaging themselves.

This post was originally published at The Federalist.

Graham-Cassidy and Conservative Health Reform

In its February budget submission to Congress, the Trump administration endorsed legislation “modeled after” the bill Sens. Lindsey Graham (R-SC) and Bill Cassidy (R-LA) introduced last year, which would devolve much of Obamacare’s entitlement spending to the states.

The budget claims this legislation “would allow states to use the block grant for a variety of approaches in order to help their citizens.” But based on the most recent public version, the Graham-Cassidy bill needs significant changes to deliver true flexibility to states.

The administration endorsed Graham-Cassidy because it believes the legislation would give states flexibility to embrace a “variety of approaches” to health care and health insurance. But would the most recent version of the bill allow Idaho to implement its reforms without federal intrusion? In a word, no.

In at least two respects, Idaho’s plan violates the many federal requirements that would remain intact under Graham-Cassidy. Idaho’s proposal to allow annual limits of over $1,000,000, and its proposal to allow surcharges of up to 50 percent for individuals who do not maintain continuous coverage, both contravene the Washington-imposed regulatory apparatus Graham-Cassidy retains.

This raises an obvious question: If the only state-based insurance reform plan proposed to date violates Graham-Cassidy, then how much “flexibility” does the legislation really provide? To paraphrase Margaret Thatcher, conservatives have not spent the past eight years fighting to roll back a Washington-based, regulatory leviathan imposed by a Democratic Congress, only to see that leviathan reimposed by a Republican one.

To its credit, the Trump administration has worked to roll back Obamacare’s regulatory regime. Consistent with its promise in the budget to generate “relie[f] from many of [Obamacare’s] insurance rules and pricing restrictions,” the administration has proposed rules allowing greater access to short-term insurance coverage and association health plans, both of which are exempt from some or all of the Obamacare statutory restrictions.

But make no mistake: While these actions will give some individuals freedom from Obamacare’s restrictions, they will not give states the control they deserve over their own insurance markets. To give the states the freedom that the Trump administration promised, Congress must repeal the federally imposed regulatory superstructure Obamacare created. Only by doing so will Washington give states the true flexibility to explore alternative visions of health care for their citizens—Graham-Cassidy’s stated goal.

If Congress does not act to give states freedom, a future Democratic administration will reimpose each and every health care regulation the Trump administration loosened—and many more besides. The Center for American Progress made as much crystal-clear recently, when in releasing the Left’s next plan for (more) government-run health care, it proposed legislation that would “leave little to no discretion to the Administration [of the day] on policy matters.”

To the Left, Obamacare isn’t about power so much as control. As President Reagan famously stated, the “little intellectual elite in a far-distant capital” think they can “plan our lives for us better than we can plan them ourselves.” To liberals’ unquenchable desire to arrogate more power in Washington, conservatives must respond with freedom—freedom for states, and ultimately to businesses and individuals, to buy the coverage they want, and innovate in ways that can lower health spending.

The Graham-Cassidy bill has other flaws. It retains most of Obamacare’s spending (albeit disbursed to the states through the block grant) and all of its major tax increases. But at its core, the debate over health care remains one of control: Whether Washington will try to micromanage 50 states and more than 300 million people, or whether states and citizens can lead the way. We stand with the people—and hope that, after eight years of promises, the Republican Congress finally does likewise.

This post, co-written with former Sen. Jim DeMint, was originally published at The Federalist.

What You Need to Know about Invisible High-Risk Pools

Last Thursday afternoon, the House Rules Committee approved an amendment providing an additional $15 billion for “invisible high risk pools.” That surprising development, after several days of frenetic closed-door negotiations and a study on the pools released Friday, may have some in Washington trying to make sense of it all.

If you want the short and dirty, here it is: Thursday’s amendment doesn’t resemble the model cited by pool proponents, undermines principles of federalism, relies on government price controls to achieve much of its premium savings, and requires far more taxpayer funding than the amendment actually provided. But other than that, it’s great!

The Amendment Text Does Not Match Its Maine Model

The legislative text the Rules Committee adopted last week bears little resemblance to the invisible risk pool model the amendment’s proponents have described.

In response to my article last week asking whether the invisible risk pool funding differs from Obamacare’s reinsurance program, supporters cited a blog post highlighting the way such a pool works in Maine. Under Maine’s program, insurers cede their highest risks to the pool prospectively—i.e., when individuals apply for insurance. Insurers also cede to the pool most of those high-risk patients’ premium payments, to help pay for the patients’ health claims.

Conversely, insurers participating in Obamacare’s reinsurance program receive retrospective payments (i.e., after the patients incur high health costs), and keep all of the premium payments those patients make. In theory, then, those two differences do distinguish the Obamacare reinsurance program from the Maine pool.

The [Milliman] study…assumes that insurers would agree up front to surrender most of the premiums paid by high-risk enrollees, in exchange for protection against potentially costly claims down the line… Palmer included those specifics the first time he proposed adding a risk-sharing program to the [American Health Care Act], roughly two weeks ago. But they were stripped out of the final version presented Tuesday, and likely for good reason…Insurers likely wouldn’t be too enthusiastic about having that much skin in the game. Instead, the amendment essentially tells state and federal officials to sort out the details later—and most importantly, after the program is passed into law.

The federal pools may end up looking nothing like the Maine program advocates are citing as the model—because the administration will determine all those critically important details after the fact. Or, to coin a phrase, we have to pass the bill so that you can find out what’s in it.

The Amendment Undermines State Sovereignty

As currently constructed, the pool concept undermines state sovereignty over insurance markets. Paradoxical as it may sound, the amendment adopted last Thursday is both too broad and too narrow. With respect to the invisible high risk pool concept, the legislation doesn’t include enough details to allow policy-makers and insurers to determine how they will function. As noted above, all of those details were essentially punted to the administration to determine.

But the amendment is also too narrow, in that it conditions the $15 billion on participation in the invisible risk pool model. If a state wants to create an actual high risk pool, or use some other concept to stabilize their insurance markets, they’re out of luck—they can’t touch the $15 billion pot of money.

In a post last week, I cited House Speaker Paul Ryan’s February criticism of Obamacare: “They’re subsidies that say, ‘We will pay some people some money if you do what the government makes you do.’” That’s exactly what this amendment does: It conditions some level of funding on states taking some specific action—not the only action, perhaps not even the best action, to stabilize their insurance markets, just the one Washington politically favors, therefore the one Washington will attempt to make all states take.

Ryan was right to criticize the Obamacare insurance subsidy system as “not freedom.” The same criticism applies to the invisible pool funding—it isn’t freedom. It also isn’t federalism—it’s big-government, nanny-state “conservatism.”

The Pools’ Claimed Benefits Derive From Price Controls

Much of the supposed benefits of the pools come as a result of government-imposed price controls. The Milliman study released Friday—and again, conditioned upon parameters not present in the amendment the Rules Committee adopted Thursday—models two possible scenarios.

The first scenario would create a new insurance pool in “repeal-and-replace” legislation, with the invisible pools applying only to the new market (some individuals currently on Obamacare may switch to the new market, but would not have to). The second scenario envisions a single risk pool for insurers, combining existing enrollees and new enrollees under the “replace” plan.

In both cases, Milliman modeled assumptions from the original Palmer amendment (i.e., not the one the Rules Committee adopted last Thursday) that linked payments from the invisible risk pools to 100 percent of Medicare reimbursement rates. The study specifically noted the “favorable spread” created as a result of this requirement: the pool reduces premiums because it pays doctors and hospitals less than insurers would.

Under the first scenario, in which Obamacare enrollees remain in a separate market than the new participants in “replace” legislation, a risk pool reimbursing at Medicare rates would yield total average rate reductions of between 16 and 31 percent. But “if [risk pool] benefits are paid based on regular commercially negotiated fees, the rate reduction becomes 12% to 23%”—about one-third less than with the federally dictated reimbursement levels.

Under the second scenario, in which Obamacare and “replace” enrollees are combined into one marketplace, premiums barely drop when linked to commercial payment rates. Premiums would fall by a modest 4 to 14 percent using Medicare reimbursement levels, and a miniscule 1 to 4 percent using commercial reimbursement levels.

Admittedly, the structure of the risk pool creates an inherent risk of gaming—insurers could try to raise their reimbursement rates to gain more federal funds from the pool. But if federal price controls are the way to lower premiums (and for the record, they aren’t), why not just create a government-run “public option” linked to Medicare reimbursement levels and be done with it?

The Study Says This Doesn’t Provide Enough Money

According to the study, the amendment adopted doesn’t include enough federal funding for invisible risk pools. The Milliman study found that invisible risk pools will require more funding than last Thursday’s amendment provided—and potentially even more funding than the entire Stability Fund. Under both scenarios, the invisible risk pools would require anywhere from $3.3 billion to $17 billion per year in funding, or from $35 billion to nearly $200 billion over a decade.

By contrast, Thursday’s amendment included only $15 billion in funding to last from 2018 through 2026. And the Stability Fund itself includes a total of $130 billion in funding—$100 billion in general funds, $15 billion for maternity and mental health coverage, and the $15 billion specifically for invisible risk pools. If all 50 states participate, the entire Stability Fund may not hold enough money needed to fund invisible risk pools.

Remember too that the Milliman study assumes that 1) insurers will cede most premium payments from risk pool participants to help finance the pool’s operations and 2) the pool will pay claims using Medicare reimbursement rates. If either or both of those two assumptions do not materialize—and insurers and providers will vigorously oppose both—spending for the pools will increase still further, making the Milliman study a generous under-estimate of the program’s ultimate cost.

Let States Take the Reins

All of the above notwithstanding, the invisible high risk pool model could work for some states—emphasis on “could” and “some.” If states want to explore this option, they certainly have the right to do so.

But, as Obamacare itself has demonstrated, Washington does not represent the source and summit of all the accumulated wisdom in health care policy. States are desperate for the opportunity to innovate, and create new policies in the marketplace of ideas—not have more programs foisted upon them by Washington, as the Rules Committee amendment attempts to do. Moving in the direction of the former, and not the latter, would represent a true change of pace. Here’s hoping that Congress finally has the courage to do so.

This post was originally published at The Federalist.

How Bailing Out Insurers Leads to Single Payer

The bad news for Obamacare keeps on coming. Major health carriers are leaving insurance exchanges, and other insurance co-operatives the law created continue to fail, leaving tens of thousands without health coverage. Those on exchanges who somehow manage to hold on to their insurance will face a set of massive premium increases—which will hit millions of Americans weeks before the election.

Many on the Right believe Obamacare was deliberately designed to fail, and fear that we’re on a slippery slope toward single-payer. On the other side of the spectrum, the Left hopes conservatives’ fears—and liberals’ dreams—will be answered. But is either side right?

The reality is more nuanced than the rhetoric would suggest. Whether government runs all of health care is less material than whether government pays for all of health care. The latter will, sooner or later, lead to the former. That’s why the debate over bailing out Obamacare is so important. Ostensibly “private” health insurers want tens of billions of dollars in taxpayer-funded subsidies—because they claim these subsidies are the only thing standing between a government-run “public option” or a single-payer system.

But the action insurers argue will prevent a government-run system will in reality create one. If insurers get their way, and establish the principle that both they and Obamacare are too big to fail, we will have created a de facto government-run insurance system. Whether such system is run through a handful of heavily regulated, crony capitalist “private” insurers or government bureaucrats represents a comparatively trifling detail.

The Biggest Wolf Is Not the Closest

In considering the likelihood of single-payer health care, one analogy lies in the axiom that one should shoot the wolf outside one’s front door. Single-payer health care obviously represents the biggest wolf—but not the closest. While liberals no doubt want to create a single-payer health care system—Barack Obama has repeatedly said as much—they face a navigational problem: Can you get there from here?

The answer is no—at least not in one fell swoop. Creating a single-payer system would throw 177.5 million Americans off their employer-provided health insurance. That level of disruption would be orders of magnitude greater than the cancellation notices associated with the 2013 “like your plan” fiasco, which itself prompted President Obama to beat a hasty, albeit temporary, retreat from Obamacare’s mandates. Recall too that the high taxes needed to fund a statewide single-payer effort prompted Vermont—Vermont—to abandon its efforts two years ago.

Understanding the political obstacles associated with throwing half of Americans off their current health insurance, liberals’ next strategy has focused on creating a government-run health plan to “compete” with private insurers. Hillary Clinton endorsed this approach, and Democratic senators made a new push on the issue this month. When stories of premium spikes and plan cancellations hit the fan next month, liberals will inevitably claim that a government-run plan will solve all of Obamacare’s woes (although even some liberal analysts admit the law’s real problem is a product healthy people don’t want to buy).

Can the Left succeed at creating a government-run health plan? Probably not at the federal level. Liberals have noted that only one Democratic Senate candidate running this year references the so-called “public option” on his website. Thirteen Senate Democrats have yet to co-sponsor a resolution by Sen. Jeff Merkley (D-Oregon) calling for a government-run plan. Such legislation faces a certain dead-end as long as Republicans control at least one chamber of Congress. Given the failure to enact a government-run plan with a 60-vote majority in 2009, an uncertain future even under complete Democratic control.

What About Single-Payer Inside States?

What then of state efforts to create a government-run health plan? The Wall Street Journal featured a recent op-ed by Scott Gottlieb on this subject. Gottlieb notes that Section 1332 of Obamacare allows for states to create and submit innovation waivers—waivers that a Hillary Clinton administration would no doubt eagerly approve from states wanting to create government-run plans. He also rightly observes that the Obama administration has abused its authority to approve costly Medicaid waivers despite supposed requirements that these waivers not increase the deficit; a Clinton administration can be counted on to do the same.

But another element of the state innovation waiver program limits the Left’s ability to generate 50 government-run health plans. Section 1332(b)(2) requires states to enact a law “that provides for state actions under a waiver.” The requirement that legislation must accompany a state waiver application will likely limit a so-called “public option” to those states with unified Democratic control. Because Obamacare, and the 2010 and 2014 wave elections it helped spark, decimated the Democratic Party, Democrats currently hold unified control in only seven states.

Even at the state level, liberals will be hard-pressed to find many states in which to create their socialist experiment of a government-run health plan. In those few targets, health insurers and medical providers—remember that government-run health plans can only “lower” costs by arbitrarily restricting payments to doctors and hospitals—will make a powerful coalition for the Left to try and overcome. Also, in the largest state, California, the initiative process means that voters—and the television ads health-care interests will use to influence them—could ultimately decide the issue, one way or the other.

So if single-payer represents the biggest wolf, but not the one closest to the door, and government-run plans represent a closer wolf, but only a limited threat at present, what does represent the wolf at the door? Simple: the wolf in sheep’s clothing.

Too Big To Fail, Redux

The wolf in sheep’s clothing comes in the form of insurance industry lobbyists, who have been arguing to Republican staff that only making the insurance exchanges work will fend off calls for a government-run plan—or, worse, single-payer. They claim that extending and expanding the law’s current bailouts—specifically, risk corridors and reinsurance—can stabilize the market, and prevent further government intrusion.

Well, they would say that, wouldn’t they. But examining the logic reveals its hollowness: If Republicans pass bad policy now, they can fend off even worse policy later. There is of course another heretofore unknown concept of conservative Republicans choosing not to pass bad policy at all.

That’s why comments suggesting that at least some Republicans believe Obamacare must be fixed no matter who is elected president on November 8 are so damaging. That premise that Congress must do something because Obamacare and its exchanges are “too big to fail” means health insurers are likewise “too big to fail.” If this construct prevails, Congress will do whatever it takes for the insurers to stay in the marketplace; if that means turning on the bailout taps again, so be it.

But once health insurers have a clear backstop from the federal government, they will take additional risk. Insurers have said so themselves. In documents provided to Congress, carriers admitted they under-priced premiums in the law’s first three years precisely because they believed they had an unlimited tap on the federal fisc to cushion their losses. Republican efforts in Congress to rein in that bailout spigot have met furious lobbying by health insurers—and attempts by the Obama administration to strike a corrupt bargain circumventing Congress’ restrictions.

Efforts to end the bailouts and claw back as much money as possible to taxpayers would shoot the wolf at the door. Giving insurers more by way of bailout funds—socializing their risk—will only encourage them to take additional risk, exacerbating a boom-and-bust cycle that will inevitably result in a federal takeover of all that risk. When the federal government provides the risk backstop, you have a government-run system, regardless of who administers it.

While the insurance industry may view more bailouts as their salvation, Obamacare’s version of TARP looks more like a TRAP. By socializing losses, purportedly to prevent single-payer health care, creating a permanent insurer bailout fund will effectively create one. While remaining mindful of the other wolves lurking, Congress should focus foremost on eliminating the one at its threshold: Undo the Obamacare bailouts, and prove this law is not too big to fail.

This post was originally published at The Federalist.

Has Mitch McConnell Gone Wobbly on Obamacare?

In the weeks after Saddam Hussein’s August 1990 invasion of Kuwait, British Prime Minister Margaret Thatcher famously remarked to President George H.W. Bush that “this was no time to go wobbly.” The Iron Lady’s maxim could well have applied to the Senate majority leader last week, when he made comments suggesting Republicans should have a hand in “fixing” Obamacare—the law collapsing in front of our very eyes—in 2017.

In comments at a Chamber of Commerce event in Louisville last Monday, Sen. Mitch McConnell (R-Kentucky) said the law “is crashing”—an obvious statement to all but the law’s most grizzled supporters. But McConnell also “said the next president will have to work with Congress to keep the situation from worsening, though he did not specifically say the health care law would be repealed.”

Those last comments in particular—about the imperative to “fix” Obamacare—should cause conservatives to remember three key points.

1. It’s Not Conservatives’ Job to Fix Liberals’ Bad Law

A crass political point, perhaps, but also an accurate one. Barack Obama, Nancy Pelosi, and Harry Reid rammed Obamacare through on a straight party-line vote, despite Republicans’ warnings, because, in President Obama’s words, “I’m feeling lucky.” These days, it’s the American people who might not be feeling so lucky, with insurers leaving the insurance exchanges in droves and premiums ready to spike.

Some might ask the reasonable question whether Republicans, as the governing party in Congress, should come together for the good of the country to make President Obama’s disastrous law work. But ask yourself what Democrats would do if the circumstances were reversed: Do you think that, if Republicans had enacted premium support for Medicare or personal accounts for Social Security on a straight-party line vote, and those new programs suffered from technical and logistical problems, Pelosi and Reid would put partisanship aside and try to fix the reformed programs? If you do, I’ve got some land to sell you.

We know Reid and Pelosi wouldn’t come together in the national interest, because they didn’t do so ten years ago to support the surge in Iraq. Instead, they passed legislation undermining the surge and calling for a troop withdrawal. The surge succeeded despite Reid and Pelosi, not because of them. So if Democrats abandoned the national interest to score political points a decade ago, why should Republicans bail them out of their Obamacare woes now?

2. Hillary Clinton’s Proposed ‘Solutions’ Range from Bad to Worse

But McConnell’s statement that “exactly how it [Obamacare] is changed will depend on the election” implies that a Clinton victory will allow her to set the tone and agenda for negotiations on “fixing” Obamacare. It also implies that Republicans should begin negotiating against themselves, and start rationalizing ways to accept proposals coming from a President Hillary: “Well, we could live with a government-run health plan, provided it were state-based…” or “We might be able to justify billions more in spending on new subsidies if…”

In addition to representing the antithesis of good negotiation, such a strategy brings with it both policy and political risk. Negotiating changes to Obamacare on a bipartisan basis puts Republicans on the hook if those changes don’t work. Clinton’s ideas for more taxes, regulations, and spending won’t make the exchanges solvent; if anything, they will only postpone the inevitable for a while longer.

3. Ridiculous Straw Men Can’t Justify Bailouts

Insurance industry spokesmen have been flooding Republican offices on Capitol Hill making this argument: Congress has to grant insurers massive new bailouts, or the American people will end up with a government-run health plan, or worse, single-payer health care.

That argument relies on several levels of specious reasoning. Unless Republicans lose both houses of Congress in November—a possible outcome, but an unlikely one—insurers’ argument pre-supposes that a Republican Congress will vote to enact a government-run health plan, or single-payer health care. As liberals themselves have pointed out, only one Democrat running for Senate this year even mentioned the so-called “public option” on his website. So why is this government-run health plan even a concern, when Reid couldn’t enact it in 2009 with a 60-vote Senate majority?

The honest answer is it probably isn’t—insurers are just trying to scare Republicans into bailing them out. It’s the oldest straw-man argument in the book: We must do something; this is something; therefore, we must do this.

If you don’t believe me, just read the following: “Everyone in this room knows what will happen if we do nothing. Our deficit will grow. More families will go bankrupt. More businesses will close. More Americans will lose their coverage when they are sick and need it the most. And more will die as a result. We know these things to be true.”

Those words come from none other than Barack Obama, as he tried to sell Obamacare in his address to Congress in September 2009. We know where that speech led us, and we should know better than to follow such illogical reasoning again.

Phineas Taylor Barnum once famously remarked that “There’s a sucker born every minute.” Here’s hoping that Republicans will disprove that adage next year, and decline to accept the sucker’s bet associated with trying to fix an inherently unfixable law.

This post was originally published at The Federalist.

Weekly Newsletter: November 17, 2008

  • Baucus’ Plan Exposes Democrat Hypocrisy…

    Last Wednesday, Senate Finance Committee Chairman Max Baucus (D-MT) issued a 98-page report outlining his proposals for reforming the health care system. Although his introduction stated that the platform “is not intended to be a legislative proposal,” Baucus did state his hope that the ideas raised would become a starting point for discussions on comprehensive health care reform during the 111th Congress.

    In reviewing the report’s contents, some conservatives may note several glaring contradictions present within its pages:

  • The Baucus plan proposes tens of billions in unfunded mandates on states—requiring Medicaid programs to cover 7.1 million new low-income individuals, and further requiring 33 states to expand their State Children’s Health Insurance Program (SCHIP) eligibility levels—at a time when Baucus and other Congressional Democrats allege that states’ “fiscal crises” require Congress to bail them out of their current obligations.
  • While expressing his support for cutting payments to private Medicare Advantage (MA), Baucus proposes to repeal a planned premium support project within Medicare, because he wants to bring payments to private insurers in line with traditional Medicare costs while opposing a link between Part B premiums and “how much [private] insurers’ costs differ from traditional Medicare.”
  • Senator Baucus, who at a health reform conference in June questioned Congress’ role in overseeing Medicare payments—“How in the world am I supposed to know what the proper reimbursement should be for a particular procedure?”—proposes numerous attempts to tie reimbursement to various actions by physicians (IT adoption, etc.) in the hope that these will achieve purportedly desirable health outcomes.

    …While Proposing More New Spending, Little Cost Control

    Many conservatives may also be concerned by the substance of the Baucus plan’s broader proposals. Similar in many respects to the less-detailed plan offered by President-elect Obama, the platform would expand the role of government in health care in significant, and historic, ways:

  • Expansion of Medicaid and SCHIP to millions of new individuals, as referenced above;
  • Health insurance subsidies for a family of four making $85,000 per year;
  • Repeal of the current five-year waiting period for legal aliens to become eligible for government benefits, increasing government spending on non-citizens;
  • Two new “temporary” entitlement programs, including a buy-in to the Medicare program for those aged 55-64, that many conservatives may be concerned will be anything but “temporary;”
  • A new publicly-run insurance option available to all citizens, whose low reimbursement rates would likely encourage providers to raise rates for private insurers, potentially leading to a “death spiral” of privately-provided coverage options;
  • A health insurance exchange representing another layer of regulation on the health insurance industry;
  • An individual mandate to purchase insurance, requiring the government to pass judgment on the adequacy of individuals’ coverage; and
  • Tax increases on businesses through a “pay-or-play” mandate that could in future years become an easy way for the government to pass off the cost of rising health care on the private sector.

    Just as worrisome to many conservatives are the lack of true cost-containment measures present in the Baucus proposal. Two of the plan’s prime savings targets—an expansion of the Medicaid drug rebate and one-sided cuts to Medicare Advantage plans—constitute little more than government-imposed price controls, which some conservatives may believe both ineffective and detrimental to new innovation.

    Some conservatives may believe that the true answer to reforming health care and slowing the growth of costs lies in harnessing innovation and competition. Implementing, rather than repealing, the Medicare premium support program would allow insurers to compete directly with Medicare to treat seniors in the most cost-effective manner. Additional means-testing for current entitlements would ensure that scarce government resources will go to those most in need of assistance—meaning that Warren Buffett and George Soros should not pay the same prescription drug premium as a senior making $20,000 per year. These efforts, coupled with initiatives to streamline costly state benefit mandates and other regulations, would expand coverage by slowing the growth of health costs, helping to ensure the future viability of our current entitlement programs.