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.

How Joe Biden Deliberately Avoided Paying Obamacare Taxes

In the campaign for the 2020 Democratic presidential nomination, Joe Biden has portrayed himself as Obamacare’s biggest defender. His health care plan, released this month, pledges to “protect the Affordable Care Act” and states that he “opposes every effort to get rid of this historic law.”

However, his campaign rhetoric in support of Obamacare overlooks one key fact: For the past two years, Joe Biden structured his financial dealings specifically to avoid paying a tax that funds “this historic law,” along with the Medicare program.

While the Bidens paid federal income taxes on all their income, they did not have to pay self-employment taxes on these millions of dollars in profits. The Bidens saved as much as $500,000 in self-employment taxes by taking most of their compensation as profits from the corporation, as opposed to salary.

The Journal cited multiple tax experts who called the Bidens’ move “pretty aggressive,” and a “pretty cut and dried” abuse of the system. Given that most of their income came from writing and speaking engagements, one expert called that income “all attributable to [their] efforts” as individuals and thus wage income, rather than a broader effort by any corporation resulting in profits.

Most important to Biden’s political future is what that foregone self-employment tax revenue would have funded. Section 9015 of Obamacare increased the tax’s rate from 2.9 percent to 3.8 percent for all income above $200,000 for an individual, and $250,000 for a family. By taking comparatively small salaries from their S corporations and receiving most of their income as profits from those corporations, the Bidens avoided paying a tax that funds an Obamacare law Joe Biden claims he wants to defend.

Moreover, the other 2.9 percent in self-employment tax helps finance the Medicare program, which faces its own bleak fiscal future. According to the program trustees, the program will become insolvent by 2026, just seven years from now. If people like Joe Biden use tax strategies to avoid paying self-employment taxes, Medicare’s date of insolvency will only accelerate.

During the last presidential election cycle, Sen. Bernie Sanders repeatedly returned to Hillary Clinton’s paid speeches before companies like Goldman Sachs. Both the more than $100 million in income Bill and Hillary Clinton generated from their speeches, and Hillary Clinton’s insouciance at the vast sums she received—“That’s what they offered,” she said of the $675,000 sum Goldman Sachs paid her to give three speeches—made her look out-of-touch with the concerns of families struggling to make ends meet.

Likewise, Biden’s 2020 competitors almost certainly will use the questions about his taxes to undermine his image as “Middle Class Joe.” Few middle-class families will make in a lifetime the $15.6 million in income that the Bidens received in but two years. Moreover, how can Joe Biden claim to defend Obamacare—let alone Medicare—when he created a tax strategy specifically to avoid paying taxes that fund those two programs?

In 2014, Barack Obama, whose administration proposed ending the loophole the Bidens used to avoid self-employment taxes, attacked corporations for seeking to migrate to lower-tax jurisdictions overseas: “It is true that there are a lot of things that are legal that probably aren’t the right thing to do by the country.” In Joe Biden’s case, his tax behavior probably wasn’t the right thing to help his political future either.

This post was originally published at The Federalist.

Joe Biden’s Health Care Plan: SandersCare Lite

On Monday morning, former vice president Joe Biden released the health care plan for his 2020 presidential campaign. The plan comes ahead of a single-payer health plan speech by Sen. Bernie Sanders (I-VT) scheduled for Wednesday.

Biden’s plan includes several noteworthy omissions. For instance, it does not include any reference to health coverage for foreign citizens illegally present in the United States. That exclusion seems rather surprising, given both Democrats’ embrace of health benefits for those unlawfully present in last month’s debate, and Biden’s repeated references to the issue.

Biden said later on Monday that illegally present foreign citizens should have access to “public health clinics if they’re sick,” but not health insurance. He also claimed that last month’s debate format did not give him enough time to explain his position.

Overall, however, Biden’s plan includes many similarities to Sanders’. While both Sanders and Biden want to draw contrasts on health care—Sanders to attack Biden as beholden to corporate interests, and Biden to attack Sanders for wanting to demolish Obamacare—their plans contain far more similarities than differences.

Losing Coverage

Sanders’ bill would, as the American people have gradually learned this year, make private insurance “unlawful,” taking coverage away from approximately 300 million Americans. Biden’s plan specifically attacks single payer on this count, for “starting from scratch and getting rid of private insurance.”

As with Obamacare, Biden’s promise will echo hollow. By creating a government-run “public option” like Sanders’, the Biden plan would also take away health coverage for millions of Americans. As I have previously explained, a government-run plan would sabotage private insurance, using access to Treasury dollars and other in-built structural advantages.

In 2009, the Lewin Group concluded that a government-run health plan, available to all individuals and paying doctors and hospitals at Medicare rates (i.e., less than private insurance), would lead to 119.1 million individuals losing employer coverage:

More Spending

Biden would also expand the Obamacare subsidy regime, in three ways. He would:

  1. Reduce the maximum amount individuals would pay in premiums from 9.86% of income to no more than 8.5% of income, with federal subsidies making up the difference.
  2. Repeal Obamacare’s income cap on subsidies, so that families with incomes of more than four times the poverty level ($103,000 for a family of four in 2019) can qualify for subsidies.
  3. To lower deductibles and co-payments, link insurance subsidies to a richer “gold” plan, one that covers 80% of an average enrollee’s health costs in a given year, rather than the “silver” plan under current law.

All three of these recommendations come from the liberal Urban Institute’s Healthy America plan, issued last year. However, they all come with a big price tag. Consider the following excerpt from Biden’s plan:

Take a family of four with an income of $110,000 per year. If they currently get insurance on the individual marketplace [i.e., Exchange], because their premium will now be capped at 8.5% of their income, under the Biden Plan they will save an estimated $750 per month on insurance alone. That’s cutting their premiums almost in half. [Emphasis original.]

That’s also making coverage “affordable” for families through unaffordable levels of federal spending. By its own estimates, Biden’s plan will give a family with an income of $110,000 annually—which is approximately double the national median household income—$9,000 per year in federal insurance subsidies. Some families with that level of income may not even pay $9,000 annually in federal income taxes, depending upon their financial situation, yet they will receive sizable amounts of taxpayer-funded largesse.

Price Controls and Regulations

The drug price section of the Biden plan includes the usual leftist tropes about “prescription drug corporations…profiteering off of the pocketbooks of sick individuals.” It proposes typical liberal “solutions” in the form of price controls, whether importing price-controlled pharmaceuticals from overseas, or allowing “an evaluation by…independent board members” (i.e., bureaucrats) to determine prices.

Ironically, Biden’s plan implicitly acknowledges Obamacare’s flaws. In talking about prescription drug pricing, Biden omits any discussion of the “rock-solid deal” that the Obama administration cut with Big Pharma, so that pharmaceutical companies would run ads supporting Obamacare.

Likewise, Biden’s plan notes that “the concentration of market power in the hands of a few corporations is occurring throughout our health care system, and this lack of competition is driving up prices for consumers.” Yet it fails to note the cause of much of this consolidation: Obamacare encouraged hospitals to gobble up physician practices, and each other, to obtain clout in negotiations with insurers. Typically, after acknowledging government’s failures, Biden, like Sanders, prescribes yet more government as the solution.

In the leadup to debate on “repeal-and-replace” legislation several years ago, conservative Republicans said they did not want any replacement to become “Obamacare Lite.” Just as history often repeats itself, Democrats seem ready to embark on a similar intra-party debate. That’s because, no matter how much Biden wants to draw distinctions between his proposals and single payer, his plan looks suspiciously like “SandersCare Lite.”

This post was originally published at The Federalist.

Democrats Agree: Free Health Coverage for Undocumented Immigrants

If a picture is worth a thousand words, then three series of pictures, featuring Democrats discussing health benefits for those in this country illegally, speak volumes. First, Hillary Clinton in September 1993:

Finally, Democratic candidates for president last night:

Whereas Indiana Mayor Pete Buttigieg called coverage for illegal immigrants an “insurance program” and “not a hand out,” Clinton said in 1993—well before the most recent waves of migration—that “we do not want to do anything to encourage more illegal immigration into this country. We know now that too many people come in for medical care, as it is. We certainly don’t want them having the same benefits that American citizens are entitled to have.”

Likewise, whereas Joe Biden said “you cannot let people who are sick, no matter where they come from, no matter what their status, go uncovered,” the president whom he worked for promised the American people that “the reforms I’m proposing would not apply to those who are here illegally.” Granted, the promise had a major catch to it—Obamacare verifies citizenship but not identity, allowing people here illegally to obtain benefits using fraudulent documents—but at least he felt the need to make the pledge in the first place. No longer.

Ironically enough, even as all Democrats supported giving coverage to illegally present foreigners, the candidates seemed less united on whether, how, and from whom to take health insurance away from U.S. citizens. Only Sens. Kamala Harris and Bernie Sanders said they supported abolishing private health insurance, as Sanders’ single-payer bill would do (and as Sen. Elizabeth Warren and New York Mayor Bill de Blasio pledged on Wednesday evening). For Harris, it represents a return to her position of January, after fudging the issue in a follow-up interview with CNN last month.

As usual, Sanders made typically hyperbolic—and false—claims about his plan. He said that his bill would make health care a human right, even though it does no such thing. In truth, the legislation guarantees that individuals would have their bills paid for—but only if they can find a doctor or hospital willing to treat them.

While Sanders pledged that under his bill, individuals could go to whatever doctor or hospital they wished, such a promise has two main flaws. First, his bill does not—and arguably, the federal government cannot—force a given doctor to treat a given patient. Second, given the reimbursement reductions likely under single payer, many doctors could decide to leave the profession altogether.

Sanders’ home state provided a reality check during the debate. Candidates critical of single payer noted that Vermont had to abandon its dream of socialized medicine in 2014, when the tax increases needed to fund such a program proved too overwhelming.

Shumlin gave his fellow Democrats a valuable lesson. Based on the radical, and radically unaffordable, proposals discussed in this week’s debates—from single-payer health care, to coverage for undocumented immigrants, to “free” college and student loan forgiveness, and on and on—they seem hellbent on ignoring it.

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.

Will Democrats Shut Down the Government to Force Taxpayer Funding of Abortions?

Last week, the Hyde Amendment, which prohibits taxpayer funding of most abortions, became the focus of presidential politics. First Joe Biden said he still supported the amendment, then changed his position one day later, after tremendous political pressure from farther-left Democrats.

But the press should focus less on whether Democrats support taxpayer-funded abortion-on-demand. Virtually all Democrats running for president now support that position, as did the party’s 2016 national platform.

Democrats Don’t Want to Vote on Hyde

For all the focus last week on the Hyde Amendment, named after its prime advocate, the late Rep. Henry Hyde (R-IL), reporters have not focused on the Labor-Health and Human Services spending bill that the House of Representatives will consider this week. The committee-approved bill includes the following language:

SEC. 506. (a) None of the funds appropriated in this Act, and none of the funds in any trust fund to which funds are appropriated in this Act, shall be expended for any abortion.

In other words, an appropriations bill approved by the Democratic-run House Appropriations Committee still includes the Hyde Amendment language. (Subsequent sections exempt cases of rape, incest, or to save the life of the mother—the Hyde Amendment exceptions—from the funding ban.)

Yet the chairwoman of that Committee, Rep. Nita Lowey (D-NY), co-sponsored stand-alone legislation (H.R. 1692) repealing the Hyde Amendment protections that she included in her spending bill.

How Far Will They Go?

Even if Republicans did not control the Senate, 41 pro-life senators could filibuster any measure lacking Hyde Amendment protections, thus preventing the legislation from passing. And of course, President Trump can, and likely would, veto any appropriations bills that omitted pro-life protections on taxpayer funding of abortion.

The likelihood during this Congress of legislation passing that excludes the Hyde Amendment seems infinitesimal. Moreover, such legislation passing during the next Congress could well require 1) a Democrat to win the presidency, 2) Democrats to retake the Senate, and 3) Democrats to agree to end the legislative filibuster, which dozens of them claim they oppose.

This Is All Just Failure Theater

Events in the House this week show that liberal members of Congress are essentially “going through the motions” about repealing the Hyde Amendment. Several of them, led by Rep. Ayanna Pressley (D-MA), offered an amendment to strike Hyde from the spending bill. However, on Monday the House Rules Committee reported a rule for consideration of the underlying bill that did not make the amendment in order.

Likewise, Pressley could have omitted that authorizing language, and submitted a shorter amendment just striking the Hyde provisions. She did not—and that she did not strongly suggests that she and her colleagues wanted to give the House Rules Committee, and therefore Democratic leadership, an “out” to block consideration of her amendment.

Pressley’s office claimed “the Congresswoman believes that she and her colleagues must use every tool and tactic available to fight for reproductive justice.” But if she wanted to use “every tool and tactic,” she would have drafted an amendment without an obvious procedural flaw giving the leadership political cover to reject it. She and her liberal colleagues would also demand a vote on her amendment, and vote against the rule to consider the bill unless and until Democrats give them one.

Pressley didn’t do the former, and when the vote on the rule came on Tuesday, she and her colleagues didn’t do the latter either. Instead, she cut a deal with the leadership whereby everyone could “save face”—as evidenced by the fact that House Rules Committee Chairman Jim McGovern, on the same day he denied her amendment a vote, co-sponsored the stand-alone bill requiring taxpayer funding of abortions.

Flip-Flops Ahead

In the coming months, however, Moulton will face a flip-flop decision of his own, as will the many other Democratic presidential candidates currently serving in Congress. Will they vote for spending bills that include the Hyde Amendment—as any final appropriations package almost certainly must include its provisions to get enacted into law—even though they claim to support repealing the amendment?

On Sunday, Democratic presidential candidate Bernie Sanders (I-VT) laid the groundwork for just such a reversal. In an interview with CNN, he admitted that “sometimes in a large bill you have to vote for things you don’t like.” (That makes a good argument for Congress to stop passing massive spending bills that they don’t bother to read.)

Of course, if Democrats don’t want to flip-flop on taxpayer funding of abortion, they have another alternative: Refuse to pass any spending bills that include the Hyde Amendment provisions. If House Speaker Nancy Pelosi (D-CA) wants to shut the federal government down until Republican lawmakers approve taxpayer-funded abortion-on-demand, well, good luck with that. But if she and her Democratic colleagues don’t want to follow that strategy, then they should get ready to explain to their constituents why they voted for legislation that retained the Hyde Amendment after promising to abolish it.

In crass political terms, Biden didn’t help his candidacy by wavering over the Hyde Amendment last week. But even though they may not yet realize it, most of his fellow presidential candidates may soon have their own flip-flop moments on taxpayer funding for abortion.

This post was originally published at The Federalist.

Will the Trump Administration Help Republicans Expand Obamacare?

For all the allegations by the Left about how the Trump administration is “sabotaging” Obamacare, a recent New York Times article revealed nothing of the sort. Instead it indicated how many senior officials within the administration want to entrench Obamacare, helping states to expand the reach of one of its costly entitlements.

Thankfully, a furious internal battle took the idea off the table—for now. But instead of trying to find ways to increase the reach of Obamacare’s Medicaid expansion, which prioritizes able-bodied adults over individuals with disabilities, the Trump administration should instead pursue policies that slow the push towards expansion, by making the tough fiscal choices surrounding expansion plain for states to see.

What ‘Partial Expansion’ Means

Following the court’s decision, the Obama administration determined expansion an “all-or-nothing” proposition. If states wanted to receive the enhanced match rate for the expansion—which started at 100 percent in 2014, and is slowly falling to 90 percent for 2020 and future years—they must expand to all individuals below the 138 percent of poverty threshold.

However, some states wish to expand Medicaid only for adults with incomes below the poverty level. Whereas individuals with incomes above 100 percent of poverty qualify for premium and cost-sharing subsidies for plans on Obamacare’s exchanges, individuals with incomes below the poverty level do not. (In states that have not expanded Medicaid, individuals with incomes below poverty may fall into the so-called “coverage gap,” because they do not have enough income to qualify for subsidized exchange coverage.)

States that wish to cover only individuals with incomes below the poverty line may do so—however, under the Obama administration guidance, those states would receive only their regular federal match rate of between 50 and 74 percent, depending on a state’s income. (Wisconsin chose this option for its Medicaid program.)

How ‘Partial Expansion’ Actually Costs More Money

The Times article says several administration supporters of “partial expansion”—including Health and Human Services (HHS) Secretary Alex Azar, Centers for Medicare and Medicaid Administrator (CMS) Seema Verma, and Domestic Policy Council Director Andrew Bremberg—believe that embracing the change would help to head off full-blown expansion efforts in states like Utah. An internal HHS memo obtained by the Times claims that “HHS believes allowing partial expansion would result in significant savings over the 10-year budget window compared to full Medicaid expansion by all.”

In reality, however, “partial expansion” would explode the budget, for at least three reasons. First, it will encourage states that have not embraced expansion to do so, by lowering the fiscal barrier to expansion. While states “only” have to fund up to 10 percent of the costs of Medicaid expansion, they pay not a dime for any individuals enrolled in exchange coverage. By shifting individuals with incomes of between 100-138 percent of poverty from Medicaid to the exchanges, “partial expansion” significantly reduces the population of individuals for whom states would have to share costs. This change could encourage even ruby red states like Texas to consider Medicaid expansion.

Second, for the same reason, such a move will encourage states that have already expanded Medicaid to switch to “partial expansion”—so they can fob some of their state costs onto federal taxpayers. The Times notes that Arkansas and Massachusetts already have such waiver applications pending with CMS. Once the administration approves a single one of these waivers, virtually every state (or at minimum, every red state with a Medicaid expansion) will run to CMS’s doorstep asking for the federal government to take these costs off their hands.

Medicaid expansion has already proved unsustainable, with exploding enrollment and costs. “Partial expansion” would make that fiscal burden even worse, through a triple whammy of more states expanding, existing states offloading costs to the federal government through “partial expansion,” and the conversion of millions of enrollees from less expensive Medicaid coverage to more costly exchange plans.

What Washington Should Do Instead

Rather than embracing the fiscally irresponsible “partial expansion,” the Trump administration and Congress should instead halt another budget gimmick that states have used to fund Medicaid expansion: The provider tax scam. As of last fall, eight states had used this gimmick to fund some or all of the state portion of expansion costs. Other states have taken heed: Virginia used a provider tax to fund its Medicaid expansion earlier this year, and Gov. Paul LePage (R-ME)—who heretofore has steadfastly opposed expansion—recently floated the idea of a provider tax to fund expansion in Maine.

The provider tax functions as a scam by laundering money to generate more federal revenue. Providers—whether hospitals, nursing homes, Medicaid managed-care plans, or others—agree to an “assessment” that goes into the state’s general fund. The state uses those dollars to draw down new Medicaid matching funds from the federal government, which the state promptly sends right back to the providers.

For this reason, politicians of all parties have called on Congress to halt the provider tax gimmick. Even former vice president Joe Biden called provider taxes a “scam,” and pressed for their abolition. The final report of the bipartisan Simpson-Bowles commission called for “restricting and eventually eliminating” the “Medicaid tax gimmick.”

If Republicans in Congress really want to oppose Obamacare—the law they ran on repealing for four straight election cycles—they should start by imposing a moratorium on any new Medicaid provider taxes, whether to fund expansion or anything else. Such a move would force states to consider whether they can afford to fund their share of expansion costs—by diverting dollars from schools or transportation, for instance—rather than using a budget gimmick to avoid those tough choices. It would also save money, by stopping states from bilking the federal government out of billions in extra Medicaid funds through what amounts to a money-laundering scam.

Rhetoric vs. Reality, Take 5,000

But of course, whether Republicans actually want to dismantle Obamacare remains a very open question. Rather than opposing “partial expansion” on fiscal grounds, the Times quotes unnamed elected officials’ response:

Republican governors were generally supportive [of “partial expansion”], but they said the change must not be seen as an expansion of the Affordable Care Act and should not be announced before the midterm elections. Congressional Republican leaders, while supportive of the option, also cautioned against any high-profile public announcement before the midterm elections.

In other words, these officials want to expand and entrench Obamacare, but don’t want to be seen as expanding and entrenching Obamacare. What courage!

Just as with congressional Republicans’ desperate moves to bail out Obamacare’s exchanges earlier this year, the Times article demonstrates how a party that repeatedly ran on repealing Obamacare, once granted with the full levers of power in Washington, instead looks to reinforce it. Small wonder that the unnamed politicians in the Times article worry about conservative voters exacting a justifiable vengeance in November.

This post was originally published at The Federalist.

The Rising Costs of Medicaid Expansion in Louisiana

A recent Associated Press story claimed that Louisiana’s Medicaid program is spending less than expected. Don’t you believe it. By multiple measures, Medicaid expansion has proved a budget buster — with worse outcomes ahead.
Take the claim that “more than $535 million of the less-than-projected spending is in the Medicaid expansion program.” But Medicaid expansion’s enrollment, or costs, have not dipped below projections. Far from it, in fact.

In 2015, the state’s Legislative Fiscal Office estimated that expanding Medicaid eligibility would raise spending on benefits by $5.8 billion over five years under moderate enrollment, or $7.1 billion over five years in a high enrollment scenario — roughly $1.2 to $1.4 billion annually.

Compare those numbers to the Louisiana Department of Health and Hospitals’ January estimate. Instead of costing $3.45 billion this fiscal year, Medicaid expansion will “only” cost taxpayers $2.91 billion. In other words, rather than nearly tripling the 2015 cost estimates, expansion will instead exceed the original high-end projections by a mere 108 percent.

First, the Department of Health’s analysis touting purported “savings” to the state ignores the “woodwork effect” — individuals already eligible for Medicaid who only sign up because of the “hoopla” surrounding expansion. The analysis trumpets the individuals previously enrolled in Medicaid for whom the state can receive a higher federal match, saving the state money. However, it does not examine the opposite phenomenon — whether the publicity surrounding expansion has increased enrollment in populations for which the state must pay a larger share of costs.

In 2015, the Legislative Fiscal Office assumed no “woodwork” effect when analyzing the effects of expansion. But since then, enrollment in Medicaid expansion has skyrocketed. While the Edwards administration first claimed only 300,000 would sign up for expansion, enrollment now exceeds 460,000. A serious fiscal analysis would use the exploding enrollment numbers to study the “woodwork” issue afresh; the Department’s did not.

Second, the analysis also ignores the issue of “crowd-out” — individuals dropping private coverage to enroll in government programs. In 2015, the Legislative Fiscal Office assumed that between 67,000 and 89,000 individuals would drop their private coverage to enroll in “free” Medicaid; that coverage would cost $1.3 billion over five years, $99 million of that coming from the state general fund.

Particularly given the higher than projected enrollment since the 2015 estimate, the department should analyze the costs to taxpayers associated with individuals who dropped private coverage to join a government program. It has not.

Third, the proposed savings rest on a budget gimmick: Providers and insurers agreeing to pay higher taxes — because those “taxes” generate themselves money. The doctors, hospitals and insurers agree to give more funds to the state, the state collects federal Medicaid matching dollars on that money, and then gives both the state and federal funds right back to hospitals and insurers.

If this fiscal maneuvering — providers raising taxes on themselves to obtain more government funding — sounds like a scam to you, you’re not alone. None other than Joe Biden called it as much back in 2011. Other liberal researchers have called the gimmick “egregious” and a “national disgrace.”

President Trump’s budget endorsed legislation that would crack down on this “Medicaid tax gimmick,” and in 2010 the bipartisan Simpson-Bowles commission endorsed eliminating it entirely. With our nation facing trillion-dollar deficits, Washington will soon have to return to fiscal discipline, putting both parts of the Medicaid expansion in Louisiana — Obamacare’s enhanced federal match for able-bodied adults, and the tax gimmick used to pay Louisiana’s portion of expansion costs — under threat.

Far from small or stable, Medicaid expansion in Louisiana has become a sprawling monstrosity built on a fiscal house of cards. Policy-makers should examine ways to unwind the expansion sooner rather than later, before it starts falling down of its own weight.

This post was originally published in the Shreveport Times.

Biden Precedent Provides Roadmap for Repealing Obamacare with 51 Votes

With Congress having effectively repealed its individual mandate in the tax relief bill, what should Republicans do about Obamacare now?

While eliminating a penalty for Americans who cannot afford government-approved health insurance removes a financial burden on low-income families, it does not give people the freedom to purchase the coverage they do want to buy. Doubtless the president’s October executive order, when implemented, will provide more affordable options through regulatory relief. But ensuring that relief remains intact through future administrations will require legislative action.

How Joe Biden Used His Senate Presidency

While Democrats did not use budget reconciliation—a Senate procedure allowing bills to pass with a simple 51-vote majority, instead of the 60 votes needed to overcome a filibuster—to pass Obamacare, they did use a reconciliation bill to “fix” the law they passed. In March 2010, the Senate considered, and President Obama eventually signed, a reconciliation bill that removed the odious “Cornhusker Kickback” for Nebraska, and made other amendments to the health law.

That reconciliation bill also changed Obamacare’s regulatory regime. Specifically, Section 2301(a) of the reconciliation measure applied four insurance requirements—limiting waiting periods to join employer plans, banning lifetime limits, ending rescissions by insurers, and extending coverage to “dependents” under age 26—to “grandfathered” health plans established before the law’s enactment. In addition, Section 2301(b) of the bill amended Obamacare itself, removing language that limited under-26 “dependent” coverage to unmarried individuals.

During consideration of the reconciliation bill on the Senate floor, Iowa Republican Chuck Grassley objected to including these provisions. He argued that Section 2301 of the bill violated the Senate’s “Byrd rule,” designed to prevent the inclusion of matters with a merely incidental fiscal component on a budget reconciliation bill. In a colloquy memorialized in the Congressional Record, Vice President Biden, acting in his capacity as president of the Senate, overruled Grassley, and said the provisions in question did in fact comply with the “Byrd rule.”

“Grandfathered” plans do not qualify for Obamacare subsidies, and many do not qualify for any tax preference. Yet Biden held that the new requirements on “grandfathered” plans held enough of a fiscal nexus to comply with the “Byrd rule” for budget reconciliation. As a result, the “Biden precedent” allows the Senate to enact—or to repeal outright—health insurance rules through the reconciliation process.

Democrats Paved the Way for Obamacare Repeal

Moreover, the particular insurance requirements included in Section 2301(a)—especially the restrictions on employer waiting periods and the ban on rescissions—carry a relatively small fiscal impact. Because Vice President Biden ruled that Democrats could enact these comparatively small requirements in a reconciliation bill, Senate Republicans should have every right to repeal more costly restrictions, such as those on essential health benefits and actuarial value, outright through budget reconciliation, rather than relying upon the cumbersome state waiver processes included in last year’s bills.

Senate sources indicate that, recognizing the “Biden precedent” would allow for a robust Obamacare repeal, Democratic staffers tried to limit its impact last year. They argued to Elizabeth MacDonough, the Senate parliamentarian, that changes covered by that precedent were targeted in scope, technical in nature, and limited only to plans that qualify for subsidies.

But a textual analysis of the 2010 reconciliation bill shows that it changed requirements for all types of health insurance, not just “grandfathered” plans, and not just those that qualified for subsidies. And because Biden overruled Republican objections that these changes to insurance rules exceeded the scope of budget reconciliation in 2010, Republicans can and should use that precedent to undo Obamacare’s regulatory regime.

Obamacare’s insurance rules represent the beating heart of the law, necessitating a massive system of subsidies and tax increases to make this newly expensive coverage “affordable.” Because Democrats used the “Biden precedent” to impose some of those rules through budget reconciliation, Republicans have every opportunity to repeal these requirements outright through a reconciliation bill. They should take that opportunity, for removing the regulatory regime would effectively repeal Obamacare—and permanently restore health care freedom to the American people.

This post was originally published at The Federalist.

Obamacare’s $170.8 Billion in Insurer Bailouts

Obamacare has been in the news — and the courts — quite a lot recently. While much of the press attention has focused on the controversial contraception mandate, a potentially bigger issue remains largely unreported — namely, that the Obama administration has set in train an unholy trinity of bailouts that could pay health-insurance companies $170.8 billion in the coming decade.

Much of the litigation surrounds the legality — or more specifically, the lack of legality — of these bailouts. On May 12, the administration lost a case in United States District Court, U.S. House of Representatives v. Burwell, in which Judge Rosemary Collyer ruled that payments to insurers for cost-sharing subsidies without an express appropriation from Congress violated the Constitution. And recently, multiple insurers have filed suit against the government in the Court of Federal Claims, seeking payment for unpaid “risk corridor” funds, designed to cushion insurers from incurring major losses, or major gains, during the exchanges’ first three years.

What exactly do all these Obamacare lawsuits entail? And how much taxpayer money is the Obama administration shoveling to insurers in an attempt to keep them participating in its moribund exchanges? Herewith, a 101 tutorial on the more than $170 billion in Obamacare bailouts.

RISK CORRIDORS

What’s the issue? Risk corridors were one of two temporary programs (I discuss the other below) designed to provide stability to the law’s exchanges in their first years. From 2014 through 2016, the risk-corridor program is designed to minimize large insurer losses, as well as large insurer profits. Initially, the administration claimed risk corridors would be implemented in a budget-neutral manner — that is, outgoing payments to insurers with losses would equal incoming payments from insurers with gains. But the healthcare.gov catastrophe, coupled with policy changes unilaterally made in the fall of 2013, caused the Centers for Medicare and Medicaid Services (CMS) to float the idea of using taxpayer funds in risk corridors to offset insurer losses — in other words, bail them out.

How much has the government paid? Nothing, thankfully — at least not yet. Fearful that the administration could utilize risk corridors to implement a taxpayer-funded bailout of insurers, Congress passed in December 2014 (and subsequently renewed this past winter) appropriations language that prevents CMS from using additional taxpayer funds to pay insurers’ risk-corridor claims.

How much could the government pay? In 2014, insurers submitted $2.87 billion in risk-corridor claims, but because insurers with gains paid in only $362 million, insurers with losses received only that much in payments — approximately 12.6 percent of the requested funds. Last week insurers in North Carolina and Oregon sued to recover their unpaid risk-corridor funds, following a $5 billion class-action suit filed in February by an Obamacare co-op insurer in Oregon. While CMS has not yet settled those lawsuits seeking unpaid risk-corridor funds, in November it issued a policy memo stating that those unpaid funds represent an obligation of the federal government. Insurer losses more than doubled last year when compared with the 2014 losses.

Although CMS has not yet released data on risk-corridor claims for 2015 or 2016, it seems likely that risk corridors will incur losses similar to those for 2014. A McKinsey study released last month, “Exchanges Three Years In,” found that insurer losses more than doubled last year when compared with the 2014 losses — making $2.5 billion in claims the likely low estimate for risk corridors. A conservative assumption would estimate a total of $7.5 billion in unpaid risk-corridor claims — $2.5 billion each for 2014, 2015, and 2016.

Although the appropriations language in place currently prevents CMS from using taxpayer funds for risk-corridor claims, it is possible — even likely — that the administration could attempt to settle the insurer lawsuits as one way of getting bailout funds to insurers. Any settled lawsuits would be paid from the Judgment Fund of the Treasury, not out of a CMS budget account, thus circumventing the appropriations restrictions.

REINSURANCE

What’s the issue? The second Obamacare temporary stabilization program, called reinsurance, requires “assessments” — some would call them taxes — on all employer-provided health-insurance plans. These assessments are designed to 1) reimburse the Treasury for the $5 billion cost of a separate reinsurance program that operated from 2010 through 2013 and 2) reimburse insurers with high-cost patients from 2014 through 2016.

How much has the government paid? In 2014, insurers received nearly $8 billion in payments from the reinsurance “slush fund.” The administration still holds nearly $1.7 billion in funds from the 2014 benefit year — money that will no doubt get shoveled insurers’ way as well. While the law explicitly stated that the Treasury should get reimbursed for its $5 billion before insurers receive payments from the reinsurance fund, the Obama administration has implemented the law in the exact opposite manner — prioritizing insurer bailouts over repaying the Treasury. The Congressional Research Service (CRS) has stated that this action represents a clear violation of the text of the Obamacare statute. The Obama administration chose to violate the plain text of the law and prioritize claims to insurers over the statutory requirement to repay taxpayers.

How much could the government pay? Between 2014 and 2016, insurers appear likely to receive the full $20 billion in reinsurance payments provided for under the law. On the other hand, the Treasury will receive far less than the $5 billion it was promised, because the Obama administration chose to violate the plain text of the law and prioritize claims to insurers over the statutory requirement to repay taxpayers.

COST-SHARING SUBSIDIES

What’s the issue? The law requires insurers to reduce cost-sharing (such as deductibles and co-payments) for certain low-income individuals with incomes under 250 percent of the federal poverty level. While Section 1402 of the law authorized the Departments of the Treasury and Health and Human Services to remit payments to insurers for the cost of these discounts, it did not include an explicit appropriation for them. Judge Collyer’s May 12 ruling, though stayed pending appeal by the administration, prohibits future spending on cost-sharing subsidies by the federal government unless and until Congress enacts an explicit appropriation.

How much has the government paid? In fiscal year 2014, insurers received $2.1 billion in cost-sharing subsidies. In fiscal 2015, the cost-sharing subsidies totaled $5.1 billion, and this fiscal year, spending on the subsidies will total an estimated $6.1 billion — for a total paid out (through this September 30) of $13.9 billion. How much could the government pay? If Judge Collyer’s ruling is not upheld on appeal, this bailout program — unlike the other two — will continue without end. According to the Congressional Budget Office, spending on cost-sharing subsidies will total $130 billion over the coming decade, unless halted by a judicial ruling — or unless a new administration decides it will not spend funds that have not been appropriated by Congress.

There you have it. Combine a total of $33.3 billion paid to date ($20 billion in reinsurance plus $13.3 billion in cost-sharing subsidies) with potential future bailouts of $137.5 billion ($7.5 billion in risk-corridor funds plus an additional $130 billion in cost-sharing subsidies) and you come up with a not-so-grand total of $170.8 billion in taxpayer-funded Obamacare bailouts to insurers.

The scope of both the bailouts and Obamacare’s failures looks truly staggering. Despite literally billions of dollars coming from three separate bailout programs, insurers still cannot make money selling Obamacare products. Most insurers continue to lose funds hand over fist, while some, such as UnitedHealthGroup, the nation’s largest health insurer, have all but exited the exchanges entirely.

The scope of the bailouts put the lie to Joe Biden’s claims just prior to Obamacare’s passage, when he claimed to ABC News, “We’re going to control the insurance companies.” Au contraire, Mr. Vice President. By requiring more than $170 billion in bailouts just to keep the sputtering exchanges afloat, the insurance companies are controlling you — and us, the taxpayers, as well.

This post was originally published at National Review.