Another Chart Shows How You Will Lose Your Current Coverage

Ahead of this week’s round of Democratic presidential debates, former vice president Joe Biden continued his attacks on Vermont Sen. Bernie Sanders’ single-payer health plan. Biden said it would undermine people currently receiving coverage through Obamacare.

In response, Sanders’s campaign accused Biden of using “insurance company scare tactics.” This week’s debates will see similar sets of allegations. Opponents of immediate single-payer will attack the disruption caused by a transition to socialized medicine, while supporters call single-payer skeptics pawns of the insurance companies, pharmaceutical companies, or both.

But the dueling sets of insults amount to little more than a sideshow. As these pages have previously argued, most Democrats ultimately want to get to a government-run system—they only differ on how quickly to throw Americans off their current health coverage. A series of recently released figures provide further proof of this theory.

200 Million Americans on Government-Run Health Care

Last week, the Center for American Progress (CAP) released some results of an analysis performed by Avalere Health regarding their “Medicare Extra” proposal. That plan, first released in February 2018, would combine enrollees in Medicaid and the Obamacare exchanges into one large government-run health plan.

Under the CAP plan, employers could choose to keep their current coverage offerings, but employees could “cash-out” the amount of their employer’s insurance contribution and put it towards the cost of the government-run plan. Likewise, seniors could convert from existing Medicare to the “new” government-run plan.

More to the point: The study concluded that, within a decade, nearly 200 million Americans would obtain coverage from this new, supercharged, government-run health plan:

As the chart demonstrates, the new government-run plan would suck enrollees from other forms of coverage, including at least 14 million who would lose insurance because their employer stopped offering it. By comparison, Barack Obama’s infamous “If you like your plan, you can keep it” broken promise resulted in a mere 4.7 million Americans receiving cancellation notices in late 2013.

Neither Plan Is a Moderate Solution

Whether 119.1 million Americans losing their private coverage, or 200 million Americans driven onto a government-run plan, none of these studies, nor any of these supposedly “incremental” and “moderate” plans, shows anything but a massive erosion of private health care provision, and a massive expansion of government-run health care.

Case in point: Earlier this year, Reps. Rosa DeLauro (D-Conn.) and Jan Schakowsky (D-Ill.) introduced a version of the CAP plan as H.R. 2452, the Medicare for America bill. As I wrote in June, the version of the legislation reintroduced this year completely bans private health care.

Under their legislation, individuals could not just pay their doctor $50 or $100 to treat an ailment like the flu or a sprained ankle. The legislation would prohibit—yes, prohibit—doctors from treating patients on a “cash-and-carry” basis, without federal bureaucrats and regulations involved.

Whether the Medicare for America bill, the CAP proposal, or Biden’s proposal for a government-run health plan, all these plans will eventually lead to full-on socialized medicine. Sanders has the wrong solutions for health policy (and much else besides), but at least he, unlike Biden, wins points for honesty about his ultimate goals.

This post was originally published at The Federalist.

This Chart Explains How Democrats Will Take Away Your Current Coverage

This week, Democratic presidential candidates will gather in Miami for their first debates of the 2020 campaign cycle. Health care, including Sen. Bernie Sanders’ single-payer scheme, will surely serve as a prime point of contention.

More candidates who want to appear more moderate, such as former vice president Joe Biden, might try to contrast themselves with Vermont’s socialist senator. Because Biden and others instead want to allow people to buy into the Medicare program—the so-called “public option”—they will claim that individuals who like their current health coverage need not fear losing it.

In an April 2009 study, Lewin concluded that within one short year, a government-run health plan would eliminate the private coverage of 119.1 million individuals—two-thirds of those with employer-provided insurance:

Democrats’ proposals for a government-run health plan have slightly different details, but they share several characteristics that explain this massive erosion of private health coverage. First, most of the plans receive dollars from the Treasury—seed funding, funding for reserves, or both. These billions of taxpayer dollars, to say nothing of the possibility of additional bailout funds should it into financial distress, would give a government-run plan an inherent advantage over private insurers.

Third, and most importantly, the government-run plan would pay doctors and hospitals at or near Medicare payment levels. These payment levels fall far short of what private health plans pay medical providers, and in most cases fall short of the actual cost of care.

The Lewin Group concluded in 2009 that, by paying doctors and hospitals at Medicare rates, a government-run plan would lead to massive disruption in the employer-provided insurance market. It also concluded that the migration to the government plan would cost hospitals an estimated $36 billion in revenue, and doctors an estimated $33.1 billion. As Lewin noted, under this scenario “health care providers are providing more care for more people with less revenue”—a recipe for a rapid exodus of doctors out of the profession.

Democrats have spent the past two years criticizing President Trump for his supposed “sabotage” of Obamacare. But proposals to create a government-run health plan would sabotage private health insurance, to drive everyone into a single-payer system over time. And some of the plan’s biggest proponents have said as much publicly.

Many moderate and establishment Democrats view the government-run plan as a more appealing method to reach their single-payer goal, because it would take away individuals’ private coverage more gradually. Few believe in the efficiency of competition, or the private sector, as a policy matter; instead, they view the millions of people with private health coverage as a political obstacle, one they can overcome over time.

Senator and presidential candidate Kirsten Gillibrand (D-N.Y.) epitomizes this belief. In March, she called for “a not-for-profit public option [to] compete for the business—I think over a couple years you’re going to transition into single payer.” Of course, by making these comments, Gillibrand indicated a clear bias toward her preferred outcome. So when she said “I don’t think that [private insurers] will compete,” Gillibrand really meant that she—and her Democratic colleagues—will sabotage them so badly that they cannot.

Democrats may claim that they don’t want to take away individuals’ insurance, but the numbers from the Lewin Group survey don’t lie. Regardless of whether they support Sanders’ bill or not, the health coverage of more than 100 million Americans remains at risk in the presidential election.

This post was originally published at The Federalist.

CBO Tries But Fails to Defend Its Illegal Budget Gimmick

In a blog post released last Thursday, the Congressional Budget Office (CBO) attempted to defend its actions regarding what I have characterized as an illegal budget gimmick designed to facilitate passage of an Obamacare bailout. When fully parsed, the response does not answer any of the key questions, likely because CBO has no justifiable answers to them.

The issue surrounds the budgetary treatment of cost-sharing reductions (CSRs), which President Trump cancelled last fall. While initially CBO said it would not change its budgetary treatment of CSRs, last month the agency changed course, saying it would instead assume that CSRs are “being funded through higher premiums and larger premium tax credit subsidies rather than through a direct appropriation.”

That claim fails on multiple fronts. First, it fails to address the states that did not assume that CSR payments get met through “higher premiums and larger premium tax credit subsidies.” As I noted in a March post, while most states allowed insurers to raise premiums for 2018 to take into account the loss of CSR payments, a few states—including Vermont, North Dakota, the District of Columbia, and a few other carriers in other states—did not. In those cases, the CSR payments cannot be accounted for through indirect premium subsidies, because premiums do not reflect CSR payments.

In its newest post, CBO admits that “most”—not all, but only “most”—insurers have covered the higher costs associated with lowering cost-sharing “by increasing premiums for silver plans.” But by using that phraseology, CBO cannot assume CSRs are being “fully funded” through higher premium subsidies, because not all insurers have covered their CSR costs through higher premiums. Therefore, even by CBO’s own logic, this new budgetary treatment violates the Gramm-Rudman-Hollings statutory requirements.

Second, even assuming that (eventually) all states migrate to the same strategy, and do allow for insurers to recover CSR payments through premium subsidies, CBO’s rationale does not comply with the actual text of the law. The law itself—2 U.S.C. 907—requires CBO to assume that “funding for entitlement authority is…adequate to make all payments required by those laws” (emphasis mine).

I reached out to CBO to ask about their reasoning in the blog post—how the organization can reconcile its admission that not all, but only “most,” insurers raised premiums to account for the lack of CSR funding with CBO’s claim that the CSRs are “fully funded” in the new baseline. A spokesman declined to comment, stating that more information about this issue would be included in a forthcoming publication. However, CBO did not explain why it published a blog post on the issue “provid[ing] additional information” when it now admits that post did not include all relevant information.

In addition, CBO also has not addressed the question of why Director Keith Hall reneged on his January 30 testimony before the House Budget Committee. At that January hearing, Reps. Jan Schakowsky (D-IL) and Dave Brat (R-VA) asked Hall about the budgetary treatment of CSRs. In both cases, the director said he would not make any changes “until we get other direction from the Budget Committees.”

That’s not what happened. CBO now claims that the change “was made by CBO after consultation with the House and Senate Budget Committees” (emphasis mine). No one directed CBO to make this change—or so the agency claims. But curiously enough, as I previously noted, Hall declined to answer a direct question from Rep. Gary Palmer (R-AL) at an April 12 hearing: “Why did you do that [i.e., change the baseline]?…You would have had to have gotten instruction to” make the change.

Moreover, Brat specifically asked how the agency would treat CSRs—as if they were being paid directly, or indirectly. Hall repeated the same response he gave Schakowsky, that CBO would not change its treatment “unless we get direction to do something different”—an answer which, given the agency’s later actions, could constitute a materially misleading statement to Congress.

Reasonable as it may seem from outward appearances, CBO’s excuses do not stand up to any serious scrutiny. The agency should finally come clean and admit that its recent actions do not comport with the law—as well as who put CBO up to making this change in the first place.

This post was originally published at The Federalist.

Is the CBO Director Breaking the Law to Help Paul Ryan Bail Out Obamacare?

Why would an ostensibly nonpartisan Congressional Budget Office (CBO) director violate the law and the word he gave to Congress only a few short weeks ago? Maybe because Paul Ryan asked him to.

In late January, I wrote about how the House speaker wanted CBO to violate budget rules to make it easier for Congress to pass an Obamacare bailout. At the time, House leadership aides dismissed my theories as unfounded and inaccurate speculation. Yet buried on page 103 of Monday’s report on the budget and economic outlook, CBO did exactly what I reported on earlier this year—it changed the rules, and violated the law, to make it easier for Congress to pass an Obamacare bailout.

The Making of a Budget Gimmick

Because of the interactions between the (higher) premiums and federal premium subsidies (which went up in turn), the federal government will likely spend more on subsidies this year without making CSR payments than with them.

Therein lay the basis of the budgetary gimmick Ryan and congressional leaders wanted CBO to help them accomplish. House staffers wanted CBO to adjust its baseline and assume the higher levels of spending under the “no-CSR” scenario. By turning around and appropriating funds for CSRs, thereby lowering this higher baseline, Congress could generate budgetary “savings”—which Republicans could spend on more corporate welfare for insurers, in the form of reinsurance payments.

The Problem? It’s Illegal

As I previously noted, the House’s scheme, and CBO’s actions on Monday to perpetrate that scheme, violate the law. Section 257(b)(1) of the Gramm-Rudman-Hollings Act (available here) requires budget scorekeeping agencies to assume that “funding for entitlement authority is…adequate to make all payments required by those laws.”

Following my January post, Rep. Dave Brat (R-VA) asked CBO Director Keith Hall about this issue at a House Budget Committee hearing. Hall noted that CBO had been treating the cost-sharing reductions “as an entitlement, so it’s”—that is, the full funding of CSRs in the baseline—“remained there, unless we get direction to do something different. We’re assuming essentially that the money will be found somewhere, because it’s an entitlement.”

In a separate exchange with Rep. Jan Schakowsky (D-IL) at the same hearing, Hall went even further: He said, “We’ve treated the cost-sharing reductions actually as an entitlement, at least so far until we get other direction from the Budget Committee.”

Then Comes the Flip-Flop

Yet Monday’s document on the budget outlook did exactly what Hall said mere weeks ago that CBO would not. A paragraph deep in the section on “Technical Changes in Outlays” included this nugget:

Technical revisions caused estimates of spending for subsidies for coverage purchased through the marketplaces established under the ACA and related spending to be $44 billion higher, on net, over the 2018–2027 period than in CBO’s June baseline. A significant factor contributing to the increase is that the current baseline projections reflect that the entitlement for subsidies for cost-sharing reductions (CSRs) is being funded through higher premiums and larger premium tax credit subsidies rather than through a direct appropriation.

In the span of a few weeks, then, Hall and CBO went from “We’re assuming essentially that the money [i.e., the CSR appropriation] will be found somewhere” to the exact opposite assumption. Yet the report mentions no directive from the budget committees asking CBO to change its scorekeeping methodology, likely because the committees did not give such a directive.

In analyzing the status of the Medicare trust fund, which CBO projects will become exhausted in fiscal year 2026, Footnote A of Table C-1 notes how the baseline “shows a zero [balance] rather than a cumulative negative balance in the trust fund after the exhaustion date”—because that’s what Gramm-Rudman-Hollings requires:

CBO may try to make the semantic argument, implied in the passage quoted above, that it continues to assume full funding of CSRs, albeit through indirect means (i.e., higher spending on premium subsidies) rather than “a direct appropriation.” But that violates what Hall himself said back in late January, when he laid out CBO’s position, and said it would not change absent an explicit directive—even though the budget report nowhere indicates that CBO received such direction.

It also violates sheer common sense that the budget office should assume “funding for entitlement authority is…adequate to make all payments” by assuming that the administration does not make all payments, namely the direct CSR payments to insurers.

Coming Up: An Embarrassing Spectacle

During his testimony before the House and Senate Budget Committees this week, Hall may make a spectacle of himself—and not in a good way. He will have to explain why he unilaterally changed the budgetary baseline in a way that explicitly violated his January testimony. He will also have to justify why CBO believes Gramm-Rudman-Hollings’ direction to assume full funding for “all payments” allows CBO to assume that Congress will not make direct CSR payments to insurers.

Conservatives should fight to expose this absurd and costly budget gimmick, and demand answers from Hall as to what—or, more specifically, whom—prompted his U-turn. If Hall wants to transform himself into the puppet of House leadership, and break his word to Congress in the process, he should at least be transparent about it.

This post was originally published at The Federalist.