Is Donald Trump “Sabotaging” Obamacare?

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

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

1. The GAO Report

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

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

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

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

2. The New York Times Article

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

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

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

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

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

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

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

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

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

A third allegation:

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

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

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

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

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

3. The Lawsuit

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

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

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

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

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

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

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

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

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

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

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

Words Versus Actions

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

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

This post was originally published at The Federalist.

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.

Legislative Bulletin: Updated Summary of Obamacare “Stability” Legislation

On Monday, Sen. Lamar Alexander (R-TN) and others introduced their latest version of an Obamacare “stability” bill. In general, the bill would appropriate more than $60 billion in funds to insurance companies, propping up and entrenching Obamacare rather than repealing it.

Also on Monday, the Congressional Budget Office released its analysis of the updated legislation. In CBO’s estimate, the bill would increase the deficit by $19.1 billion, while marginally increasing the number of insured Americans (by fewer than 500,000 per year).


Stability Fund
: Provides $500 million in funding for fiscal year 2018, and $10 billion in funding for each of fiscal years 2019, 2020, and 2021, for invisible high-risk pools and reinsurance payments. The $500 million this year would provide administrative assistance to states to establish such programs, with the $10 billion in each of the following three years maintaining them.

Grants the secretary of Health and Human Services (HHS), in consultation with the National Association of Insurance Commissioners, the authority to allocate the funds to states—which some conservatives may be concerned gives federal bureaucrats authority to spend $30.5 billion wherever they choose.

Includes a provision requiring a federal fallback for 2019 (and only 2019) in states that choose not to establish their own reinsurance or invisible high-risk program. Moreover, these federal fallback dollars must be used “for market stabilization payments to issuers.” Some conservatives may be concerned that this provision—which, like the rest of the $30 billion in “stability funds,” did not appear in the original Alexander-Murray legislation—undermines state flexibility, by effectively forcing states to bail out insurers, whether they want to or not.

Cost-Sharing Reduction Payments: The bill appropriates roughly $30-35 billion in cost-sharing reduction (CSR) payments to insurers, which subsidizes their provision of discounts on deductibles and co-payments to certain low-income individuals enrolled on insurance exchanges.

Last October, President Trump announced he would halt the payments to insurers, concluding the administration did not have authority to do so under the Constitution. As a result, the bill includes an explicit appropriation, totaling roughly $3-4 billion for the final quarter of 2017, and $9-10 billion for each of years 2019, 2020, and 2021, based on CBO spending estimates. This language represents a change from the original Alexander-Murray bill, which appropriated payments for 2018 and 2019 only.

For 2018, the bill appropriates CSRs only for 1) states choosing the Basic Health plan option (which gives states a percentage of Obamacare subsidies as a block grant to cover low-income individuals) and 2) insurers for which HHS determines, in conjunction with state insurance commissioners, that the insurer assumed the payment of CSRs when setting rates for the 2018 plan year. This language represents a change from the original Alexander-Murray bill, which set up a complicated system of rebates that would have allowed insurers potentially to pocket billions of dollars by retaining “extra” CSR payments for 2018.

Some conservatives may be concerned that, because insurers understood for well over a year that a new administration could terminate these payments in 2017, the agreement would effectively subsidize their flawed assumptions. Some conservatives may be concerned that action to continue the flow of payments would solidify the principle that Obamacare, and therefore insurers, are “too big to fail,” which could only encourage further risky behavior by insurers in the future.

Hyde Amendment: With respect to the issue of taxpayer dollars subsidizing federal insurance plans covering abortion, the bill does not apply the Hyde Amendment protections retrospectively to the 2017 CSR payments, or to the (current) 2018 plan year. With respect to 2019 through 2021, the bill prohibits federal funding of abortions, except in the case of rape, incest, or to save the life of the mother. However, the bill does allow states to use state-only dollars to fund other abortions, as many state Medicaid managed care plans do currently.

According to the pro-abortion Guttmacher Institute, with respect to coverage of abortions in state Medicaid plans:

  • 32 states and the District of Columbia follow the federal Hyde Amendment standard, funding abortion only in the cases of rape, incest, or to save the life of the mother;
  • One state provides abortion only in the case of life endangerment; and
  • 17 states provide coverage for most abortions—five voluntarily, and 12 by court order.

State Waiver Processes: The bill would streamline the process for approving state innovation waivers, authorized by Section 1332 of Obamacare. Those waivers allow states to receive their state’s exchange funding as a block grant, and exempt themselves from the individual mandate, employer mandate, and some (but not all) of Obamacare’s insurance regulations.

Specifically, the bill would:

  • Extend the waivers’ duration, from five years to six, with unlimited renewals possible;
  • Prohibit HHS from terminating waivers during their duration (including any renewal periods), unless “the state materially failed to comply with the terms and conditions of the waiver”;
  • Require HHS to release guidance to states within 60 days of enactment regarding waivers, including model language for waivers—a change from the 30 days included in the original Alexander-Murray bill;
  • Shorten the time for HHS to consider waivers from 180 days to 120—a change from 90 days in the original Alexander-Murray bill;
  • Allow a 45-day review for 1) waivers currently pending; 2) waivers for areas “the Secretary determines are at risk for excessive premium increases or having no health plans offered in the applicable health insurance market for the current or following plan year”; 3) waivers that are “the same or substantially similar” to waivers previously approved for another state; and 4) waivers related to invisible high-risk pools or reinsurance, as discussed above. These waivers would initially apply for no more than three years, with an extension possible for a full six-year term;
  • Allow governors to apply for waivers based on their certification of authority, rather than requiring states to pass a law authorizing state actions under the waiver—a move that some conservatives may be concerned could allow state chief executives to act unilaterally, including by exiting a successful waiver on a governor’s order.

State Waiver Substance: On the substance of innovation waivers, the bill would rescind regulatory guidance the Obama administration issued in December 2015. Among other actions, that guidance prevented states from using savings from an Obamacare/exchange waiver to offset higher costs to Medicaid, and vice versa.

While supporting the concept of greater flexibility for states, some conservatives may note that, as this guidance was not enacted pursuant to notice-and-comment, the Trump administration can revoke it at any time—indeed, should have revoked it last year. Additionally, the bill amends, but does not repeal, the “guardrails” for state innovation waivers. Under current law, Section 1332 waivers must:

  • “Provide coverage that is at least as comprehensive as” Obamacare coverage;
  • “Provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable” as Obamacare coverage;
  • “Provide coverage to at least a comparable number of [a state’s] residents” as under Obamacare; and
  • “Not increase the federal deficit.”

Some conservatives have previously criticized these provisions as insufficiently flexible to allow for conservative health reforms like Health Savings Accounts and other consumer-driven options.

The bill allows states to provide coverage “of comparable affordability, including for low-income individuals, individuals with serious health needs, and other vulnerable populations” rather than the current language in the second bullet above. It also clarifies that deficit and budget neutrality will operate over the lifetime of the waiver, and that state innovation waivers under Obamacare “shall not be construed to affect any waiver processes or standards” under the Medicare or Medicaid statutes for purposes of determining the Obamacare waiver’s deficit neutrality.

The bill also makes adjustments to the “pass-through” language allowing states to receive their exchange funding via a block grant. For instance, the bill adds language allowing states to receive any funding for the Basic Health Program—a program states can establish for households with incomes of between 138-200 percent of the federal poverty level—via the block grant.

Some conservatives may view the “comparable affordability” change as a distinction without a difference, as it still explicitly links affordability to Obamacare’s rich benefit package. Some conservatives may therefore view the purported “concessions” on the December 2015 guidance, and on “comparable affordability” as inconsequential in nature, and insignificant given the significant concessions to liberals included elsewhere in the proposed legislative package.

Catastrophic Plans: The bill would allow all individuals to purchase “catastrophic” health plans, beginning in 2019. The legislation would also require insurers to keep those plans in a single risk pool with other Obamacare plans—a change from current law.

Catastrophic plans—currently only available to individuals under 30, individuals without an “affordable” health plan in their area, or individuals subject to a hardship exemption from the individual mandate—provide no coverage below Obamacare’s limit on out-of-pocket spending, but for “coverage of at least three primary care visits.” Catastrophic plans are also currently subject to Obamacare’s essential health benefits requirements.

Outreach Funding: The bill requires HHS to obligate $105.8 million in exchange user fees to states for “enrollment and outreach activities” for the 2019 and 2020 plan years—a change from the original legislation, which focused on the 2018 and 2019 plan years. Currently, the federal exchange (healthcare.gov) assesses a user fee of 3.5 percent of premiums on insurers, who ultimately pass these fees on to consumers.

In a rule released in December 2016, the outgoing Obama administration admitted that the exchange is “gaining economies of scale from functions with fixed costs,” in part because maintaining the exchange costs less per year than creating one did in 2013-14. However, the Obama administration rejected any attempt to lower those fees, instead deciding to spend them on outreach efforts. The agreement would re-direct portions of the fees to states for enrollment outreach.

Some conservatives may be concerned that this provision would create a new entitlement for states to outreach dollars. Moreover, some conservatives may object to this re-direction of funds that ultimately come from consumers towards more government spending. Some conservatives may support taking steps to reduce the user fees—thus lowering premiums, the purported intention of this “stabilization” measure—rather than re-directing them toward more government spending, as the agreement proposes.

The bill also requires a series of biweekly reports from HHS on metrics like call center volume, website visits, etc., during the 2019 and 2020 open enrollment periods, followed by after-action reports regarding outreach and advertising. Some conservatives may view these myriad requirements first as micro-management of the executive, and second as buying into the liberal narrative that the Trump administration is “sabotaging” Obamacare, by requiring minute oversight of the executive’s implementation of the law.

Cross-State Purchasing: Requires HHS to issue regulations (in consultation with the National Association of Insurance Commissioners) within one year regarding health care choice compacts under Obamacare. Such compacts would allow individuals to purchase coverage across state lines.

However, because states can already establish health care compacts amongst themselves, and because Obamacare’s regulatory mandates would still apply to any such coverage purchased through said compacts, some conservatives may view such language as insufficient and not adding to consumers’ affordable coverage options.

Consumer Notification: Requires states that allow the sale of short-term, limited duration health coverage to disclose to consumers that such plans differ from “Obamacare-approved” qualified health plans. Note that this provision does not codify the administration’s proposed regulations regarding short-term health coverage; a future Democratic administration could (and likely will) easily re-write such regulations again to eliminate the sale of short-term plans, as the Obama administration did in 2016.

CBO Analysis of the Legislation

As noted above, CBO believes the legislation would increase the deficit by $19.1 billion, while increasing the number of insured Americans marginally. In general, while CBO believed that changes to Obamacare’s state waivers program would increase the number of states applying for waivers, they would not have a net budgetary impact.

However, the bill does include one particular change to Obamacare Section 1332 waivers allowing existing waiver recipients to request recalculation of their funding formula. According to CBO, only Minnesota qualifies under the statutory definition, and could receive $359 million in additional funding between 2018 and 2022. Some conservatives may be concerned that this provision represents a legislative earmark that by definition can only affect one state.

With respect to the invisible high-risk pools and reinsurance, CBO believes the provisions would raise spending by a net of $26.5 billion, offset by higher revenues of $7 billion. The budget office estimated that the entire country would be covered by the federal fallback option in 2019, because “it would be difficult for other states [that do not have waivers currently] to establish a state-based program in time to affect premiums.”

For 2020 and 2021, CBO believes that 60 and 80 percent of the country, respectively, would be covered by state waivers; “the remainder of the population in those years would be without a federally-funded reinsurance program or invisible high-risk pool.” The $7 billion in offsetting savings referenced in CBO’s score comes from lower premiums, and thus lower spending on federal premium subsidies. In 2019, CBO believes “about 60 percent of the federal cost for the default federal reinsurance program would be offset by other sources of savings.”

CBO believes that, under the bill, premiums would be 10 percent lower in 2019, and 20 percent lower in 2020 and 2021, compared to current law. Some conservatives may note that lower premiums relative to current law does not equate to lower premiums relative to 2018 levels. Particularly because CBO expects elimination of the individual mandate tax will raise premiums by 10 percent in 2019, many conservatives may doubt that premiums will go down in absolute terms, notwithstanding the sizable spending on insurer subsidies under the bill.

CBO noted that premium changes would largely affect unsubsidized individuals—i.e., families with incomes more than four times the federal poverty level ($100,400 for a family of four in 2018)—a small portion of whom would sign up for coverage as a result of the reductions. However, “in states that did not apply for a waiver, premiums would be the same under current law as under the legislation starting in 2020.”

Moreover, even in states with a reinsurance waiver, CBO believes that insurers will “tend to set premiums conservatively to hedge against uncertainty” regarding the reinsurance programs—meaning that CBO “expect[s] that total premiums would not be reduced by the entire amount of available federal funding.”

As noted in prior posts, CBO is required by law to assume full funding of entitlement spending, including cost-sharing reductions. Therefore, the official score of the bill included no net budget impact for the CSR appropriation. However, Alexander received a supplemental letter from CBO indicating that, compared to a scenario where the federal government did not make CSR payments, appropriating funds for CSRs would result in a notional deficit reduction of $29 billion.

The notional deficit reduction arises because, in the absence of CSR payments, insurers would “load” the cost of reducing cost-sharing on to health insurance premiums—thus raising premium subsidies for those who qualify for them. CBO believes these higher subsidies would entice more families with incomes between two and four times the federal poverty definition ($50,200-$100,400 for a family of four in 2018) to sign up for coverage. Compared to a “no-CSR” baseline, appropriating funds for CSRs, as the bill would do, would reduce spending on premium subsidies, but it would also increase the number of uninsured by 500,000-1,000,000, as some families receiving lower subsidies would drop coverage.

Lastly, the expanded sale of catastrophic plans, coupled with provisions including those plans in a single risk pool, would slightly improve the health of the overall population purchasing Obamacare coverage. While individuals cannot receive federal premium subsidies for catastrophic coverage, enticing more healthy individuals to sign up for coverage will improve the exchanges’ overall risk pool slightly, lowering federal spending on those who do qualify for exchange subsidies by $849 million.

This post was originally published at The Federalist.

Democrats Talking Down Obamacare

It appears that analysts at the Center for American Progress (CAP) have taken up weightlifting in recent weeks, as their health-care team on Monday released a report that represented little more than an attempt to move the Obamacare goalposts. Released ahead of this morning’s start of the 2018 open enrollment period, the “analysis” claimed that, but for the Trump administration’s “sabotage” of Obamacare, enrollment in insurance exchanges would—wait for it—remain unchanged from current year levels.

So in CAP’s view, any decline in exchange enrollment lies entirely at Trump’s feet, but any increase in enrollment comes despite Trump, not because of him. (Funny that.) CAP demonstrated its complete confidence in the effect of Trump’s “sabotage” by failing to make any specific estimate or prediction about how much enrollment would decline due to the president’s actions. The paper discussed Obamacare, but its soft bigotry of low expectations—both for the exchanges and the accuracy of CAP’s own predictions—sounded straight out of the debate on No Child Left Behind.

Their Logic Says Obama Sabotaged His Own Program

But the decision to shorten the open enrollment period was first made by none other than those infamous “saboteurs” Barack Obama and Obama official Andy Slavitt. In February 2016, they announced that open enrollment in 2019 would range from November 1 to December 15. Upon taking office earlier this year, the Trump administration decided to implement this change a year ahead of time, due in part to the ways in which individuals were “gaming the system”—using the long open enrollment period and readily available special enrollment periods to sign up for coverage only after developing costly medical conditions.

A change? Sure. Sabotage? Only if you think Obama and Slavitt want to dismantle Obamacare.

Then there’s the question of funding for enrollment and outreach, which the Trump administration reduced from $100 million to $10 million. As with all organizations that believe beneficence lies solely through government, CAP claims private efforts “cannot fully make up for the wealth of information that only the government has for outreach, as well as the planning and funding that HHS dedicated to the program in past years.”

So maybe, just maybe, Hillary Clinton could cut short her walks in the woods, and raise money for Obamacare instead of hawking her own books. Who knows—maybe noted clean-energy advocate Tom Steyer will stop tilting at windmills, and run ads supporting Obamacare instead of Trump’s impeachment. Or Clinton could simply open up her checkbook and single-handedly replenish the outreach budget herself, given that she and her husband made $153 million giving speeches over their careers—a figure which puts both the Clintons’ largesse, and the outreach “cuts,” in perspective.

Regardless, having seen their profits double under the last administration, health insurers don’t need taxpayers funding ads encouraging people to buy their products. They have $15 billion in profits from 2015 to do that themselves. (With that much money, they could even reprise Andy Griffith’s ads promoting Obamacare.)

Is It Sabotage to Increase Health Coverage?

In the final category of “sabotage” comes the Trump administration’s decision to cancel cost-sharing reduction payments to insurers—payments that Judge Rosemary Collyer ruled unconstitutional nearly 18 months ago. CAP claims this decision will raise premiums for the 2018 plan year. But the decision will also lead to greater spending on insurance subsidies, and more individuals with health coverage, according to the Congressional Budget Office—outcomes CAP would ordinarily support, but somehow “forgot” to mention in its report.

If the states are so concerned that people will be scared away from the exchanges by the thought of higher premiums, perhaps they should stop yelling about higher premiums. With open enrollment just days away, perhaps the states should focus instead on communicating the message that they have devised a response to the CSR payment termination that will prevent harm to the large majority of people while in fact allowing millions of lower-income people to get a better deal on health insurance in 2018. [Emphasis mine.]

While out on the campaign trail, Obama famously told crowds: “Don’t boo—vote.” Perhaps Obamacare supporters should take the eponym’s advice, and spend less time over the next few weeks whining about “sabotage” over open enrollment and more time actually working to enroll people. And maybe, just maybe, all the Washington elites up in arms about President Trump’s “sabotage” of the law could take a truly radical step, and sign up for Obamacare coverage themselves.

This post was originally published at The Federalist.

Legislative Bulletin: Summary of Alexander-Murray “Stability” Bill

On Tuesday afternoon, Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-TN) announced he had reached an agreement in principle with Ranking Member Patty Murray (D-WA) regarding an Obamacare “stabilization” package. Unfortunately, legislative text has not yet been released (UPDATE: bill text was released late Tuesday evening), but based on press reports, Twitter threads, and a summary circulating on Capitol Hill, here’s what is in the final package:

Cost-Sharing Reduction Payments:             The bill appropriates roughly $25-30 billion in cost-sharing reduction payments to insurers, which offset their costs for providing discounts on deductibles and co-payments to certain low-income individuals enrolled on insurance Exchanges. Late last Thursday, President Trump announced he would halt the payments to insurers, concluding the Administration did not have authority to do so under the Constitution. As a result, the bill includes an explicit appropriation, totaling roughly $3-4 billion for the rest of this calendar year, and $10-11 billion for each of years 2018 and 2019, based on Congressional Budget Office spending estimates.

For 2018 only, the bill includes language allowing states to decline the cost-sharing reduction payments—if they previously approved premium increases that assumed said payments would not be made. If states do not decline the payments, they must certify that said payments will “provide a direct financial benefit to consumers”—that is, they will result in lower premium rates, and/or rebates to consumers. The bill also includes clarifying language regarding the interactions between any such rebates and premium tax credit levels under Obamacare.

Some conservatives may be concerned that, because insurers understood for well over a year that a new Administration could terminate these payments in 2017, the agreement would effectively subsidize their flawed assumptions. Some conservatives may be concerned that action to continue the flow of payments would solidify the principle that Obamacare, and therefore insurers, are “too big to fail,” which could only encourage further risky behavior by insurers in the future. Moreover, some conservatives may be concerned that, absent Hyde Amendment protections, these payments would subsidize federal insurance plans covering abortion.

State Waiver Processes:     The bill would streamline the process for approving state innovation waivers, authorized by Section 1332 of Obamacare. Those waivers allow states to receive their state’s Exchange funding as a block grant, and exempt themselves from the individual mandate, employer mandate, and some (but not all) of Obamacare’s insurance regulations.

Specifically, the agreement would:

  1. Extend the waivers’ duration, from five years to six, with unlimited renewals possible;
  2. Prohibit HHS from terminating waivers during their duration (including any renewal periods), unless “the state materially failed to comply with the terms and conditions of the waiver;”
  3. Require HHS to release guidance to states within 30 days of enactment regarding waivers, including model language for waivers;
  4. Shorten the time the Department of Health and Human Services to consider waivers from 180 days to 90;
  5. Allow a 45 day review for 1) waivers currently pending; 2) waivers for areas “the Secretary determines are at risk for excessive premium increases or having no health plans offered in the applicable health insurance market for the current or following plan year; and 3) waivers that are “the same or substantially similar” to waivers previously approved for another state. These waivers would initially apply for no more than three years, with an extension possible for a full six-year term;
  6. Allow governors to apply for waivers based on their certification of authority, rather than requiring states to pass a law authorizing state actions under the waiver—a move that some conservatives may be concerned could allow state chief executives to act unilaterally, including by exiting a successful waiver on a governor’s order.

State Waiver Substance:    On the substance of innovation waivers, the bill would regulatory guidance issued by the Obama Administration in December 2015. Among other actions, that guidance prevented states from using savings from an Obamacare/Exchange waiver to offset higher costs to Medicaid, and vice versa. While supporting the concept of greater flexibility for states, some conservatives may note that, as this guidance was not enacted pursuant to notice-and-comment, the Trump Administration can revoke it at any time—indeed, should have revoked it months ago.

Additionally, the bill amends—but does not repeal—the “guardrails” for state innovation waivers. Under current law, Section 1332 waivers must:

  1. “Provide coverage that is at least as comprehensive as” Obamacare coverage;
  2. “Provide coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable” as Obamacare coverage;
  3. “Provide coverage to at least a comparable number of [a state’s] residents” as under Obamacare; and
  4. “Not increase the federal deficit.”

Some conservatives have previously criticized these provisions as insufficiently flexible to allow for conservative health reforms like Health Savings Accounts and other consumer-driven options.

The bill allows states to provide coverage “of comparable affordability, including for low-income individuals, individuals with serious health needs, and other vulnerable populations” rather than the current language in the second bullet above. It also clarifies that deficit and budget neutrality will operate over the lifetime of the waiver, and that state innovation waivers under Obamacare “shall not be construed to affect any waiver processes or standards” under the Medicare or Medicaid statutes for purposes of determining the Obamacare waiver’s deficit neutrality.

The bill also makes adjustments to the “pass-through” language allowing states to receive their Exchange funding via a block grant. For instance, the bill adds language allowing states to receive any funding for the Basic Health Program—a program states can establish for households with incomes of between 138-200 percent of the federal poverty level—via the block grant.

Some conservatives may view the “comparable affordability” change as a distinction without a difference, as it still explicitly links affordability to Obamacare’s rich benefit package. Some conservatives may therefore view the purported “concessions” on the December 2015 guidance, and on “comparable affordability” as inconsequential in nature, and insignificant given the significant concessions to liberals included elsewhere in the proposed legislative package.

Catastrophic Plans:              The bill would allow all individuals to purchase “catastrophic” health plans, and keep those plans in a single risk pool with other Obamacare plans. However, this provision would not apply until 2019—i.e., not for the upcoming plan year.

Catastrophic plans—currently only available to individuals under 30, individuals without an “affordable” health plan in their area, or individuals subject to a hardship exemption from the individual mandate—provide no coverage below Obamacare’s limit on out-of-pocket spending, but for “coverage of at least three primary care visits.” Catastrophic plans are also currently subject to Obamacare’s essential health benefits requirements.

Outreach Funding:               The bill requires HHS to obligate $105.8 million in Exchange user fees to states for “enrollment and outreach activities” for the 2018 and 2019 plan years. Currently, the federal Exchange (healthcare.gov) assesses a user fee of 3.5 percent of premiums on insurers, who ultimately pass these fees on to consumers. In a rule released last December, the outgoing Obama Administration admitted that the Exchange is “gaining economies of scale from functions with fixed costs”—in part because maintaining the Exchange costs less per year than creating one did in 2013-14. However, the Obama Administration rejected any attempt to lower those fees, instead deciding to spend them on outreach efforts. The agreement would re-direct portions of the fees to states for enrollment outreach.

Some conservatives may be concerned that this provision would create a new entitlement for states to outreach dollars. Moreover, some conservatives may object to this re-direction of funds that ultimately come from consumers towards more government spending. Some conservatives may support taking steps to reduce the user fees—thus lowering premiums, the purported intention of this “stabilization” measure—rather than re-directing them toward more government spending, as the agreement proposes.

The bill also requires a series of bi-weekly reports from HHS on metrics like call center volume, website visits, etc., during the 2018 and 2019 open enrollment periods, followed by after-action reports regarding outreach and advertising. Some conservatives may view these myriad requirements first as micro-management of the executive, and second as buying into the liberal narrative that the Trump Administration is “sabotaging” Obamacare, by requiring minute oversight of the executive’s implementation of the law.

Cross-State Purchasing:     Requires HHS to issue regulations (in consultations with the National Association of Insurance Commissioners) within one year regarding health care choice compacts under Obamacare. Such compacts would allow individuals to purchase coverage across state lines. However, because states can already establish health care compacts amongst themselves, and because Obamacare’s regulatory mandates would still apply to any such coverage purchased through said compacts, some conservatives may view such language as insufficient and not adding to consumers’ affordable coverage options.

Morning Bell: The Obamacare Scams Are Already Starting

Heritage warned that the new Obamacare insurance exchanges could threaten your privacy—and it’s already happening, before the exchanges are even open.

In a new report, the House Oversight and Government Reform Committee presented these shocking findings:

there are already numerous reports of scam artists posing as Navigators and Assisters to take advantage of people’s confusion about ObamaCare. According to recent news reports, scam artists are calling individuals and asking for information to sign them up for their “ObamaCare card,” are asking seniors for their personal information to verify their Medicare and Social Security status and are going door-to-door threatening people with prison time if they do not sign up on the spot. The Administration is keenly aware of these reports and concerns, but has thus far failed to take appropriate measures.

Even when it’s not malicious, the new Obamacare system—employing “navigators” who aren’t run through background checks or adequately trained—opens up a host of opportunities for identity theft. Last week, an employee of Minnesota’s insurance exchange (MNsure) emailed out the names and Social Security numbers of 2,400 insurance agents. The insurance broker who received the email said, “If this is happening now, how can clients of MNsure be confident their data is safe?”

Indeed.

The Oversight Committee reports that the exchange system thus far is a combination of shoddy planning and bad incentives. Navigators, who are supposed to help people sign up for the exchanges, are allowed to be paid based on the number of people they enroll in Obamacare.

California’s insurance commissioner—a Democrat and strong supporter of Obamacare—raised concerns that navigators would put consumers at risk for scams: “We can have a real disaster on our hands.”

The exchanges don’t open for business until October 1, but Obamacare has already led to the release of highly sensitive personal information for thousands—and the lack of planning makes it ripe for scams. Nothing about this law is working the way it was advertised, which is why the House is voting today to defund Obamacare (while still funding normal government functions). Next week, Senators will have a chance to do the same—protect their constituents from the ravages of Obamacare.

This post was originally published at The Daily Signal.

How Obamacare Threatens Privacy in America

A PDF of this Issue Brief is available on the Heritage Foundation website.

Over the past several months, a stream of reports from government auditors and news stories has raised serious questions about the Administration’s implementation of Obamacare and its effects on the privacy of millions of Americans. The reports paint a portrait of an Administration casting aside security concerns—potentially putting Americans’ financial and health data at risk—in its push to open insurance exchanges in all 50 states by October 1. These recent developments should provide further impetus for Congress to defund the entire law before the exchanges are able to undermine personal privacy.

Security Delays, Timetables Slipping

In August, the Department of Health and Human Services (HHS) inspector general released a report highlighting many missed deadlines with respect to the security measures surrounding the Obamacare data hub.[1] The hub will provide access to government data from various government agencies—tax filings and Social Security records, for example—allowing exchanges to determine eligibility for subsidized insurance.

The inspector general’s report found that “several critical tasks remain to be completed in a short period of time” in order to ensure the data hub’s security.[2] Important elements of the security testing were delayed by two months. As a result, the official certification that the data hub is secure is not scheduled to occur until September 30, 2013—one day before the exchanges are scheduled to open for business.[3]

The inspector general’s report noted the obvious problem that this tight timetable presents: “If there are additional delays…the authorizing official may not have the full assessment of implemented security controls needed for the security authorization decision by” the time open enrollment begins.[4] In other words, government officials could face a choice about whether to open the exchanges despite the potential risk to Americans’ data security. Even if the security assessments are completed on time, there is no assurance they will work properly; the inspector general’s report “did not review the functionality of the [data] hub.”[5]

Warnings Ignored

Some government officials have warned of the privacy and security implications arising from shoddy data security—even as the Obama Administration ignored those concerns. Michael Astrue, a former general counsel of HHS, offered objections while serving as the commissioner of Social Security through February 2013. He has called the Administration’s exchange portal “an overly simplistic system without adequate privacy safeguards”:

The system’s lack of any substantial verification of the user would leave members of the public open to identity theft, lost periods of health insurance coverage, and exposure of address for victims of domestic abuse and others.[6]

Astrue dubbed the version of the portal “the most widespread violation of the Privacy Act in our history,” noting that both he and the head of the IRS “raised strong legal objections” with the Office of Management and Budget—objections that, Astrue argues, have been ignored in favor of what he calls “an absurdly broad interpretation of the Privacy Act’s ‘routine use’ exemption.”[7]

Navigators Pose a Security Risk

While the data hub creates concerns that Americans could be subjected to electronic identity fraud, Obamacare’s “navigators” could subject Americans to in-person scams.[8] HHS recently announced it was lowering by one-third—from 30 hours to 20—the minimum training time for navigators.[9] As a result, individuals can be certified as navigators with fewer than three full days’ training—and few security checks. While guidelines regarding navigators released in July permitted states to establish “minimum eligibility criteria and background checks” for navigators, it did not require them to do so.[10]

Because their job involves helping Americans figure out their insurance options, navigators will often have access to sensitive personal information—bank accounts, Social Security numbers, insurance identification, and more. Yet navigators will not be required to undergo background checks, and the process for filing complaints about unscrupulous navigators remains unclear at best. Even California’s insurance commissioner—a Democrat and strong supporter of Obamacare—raised concerns that navigators would put consumers at risk for scams: “We can have a real disaster on our hands.”[11]

Not One Dime

Federal agencies have already encountered difficulties preserving the integrity of Americans’ sensitive information. Earlier this year, a medical provider in California sued the IRS for improperly seizing 60 million records of 10 million Americans.[12] Yet under Obamacare, the IRS and other federal agencies will hold more new powers and have access to even more of Americans’ personal health and financial information.

In its mad rush to implement its unworkable law, the Obama Administration has taken a slapdash and shoddy approach to Americans’ personal security. Given these stakes, the choice for Congress could not be clearer: Congress should preserve Americans’ privacy by refusing to spend another dime implementing Obamacare.

 


[1]Gloria Jarmon, “Memorandum Report: Observations Noted During the OIG’s Review of CMS’s Implementation of the Health Insurance Exchange—Data Services Hub,” Department of Health and Human Services Inspector General Report A-18-13-30070, August 2, 2013, http://oig.hhs.gov/oas/reports/region1/181330070.pdf (accessed August 29, 2013).

[2]Ibid., p. 1.

[3]Ibid., p. 5.

[4]Ibid., p. 5.

[5]Ibid., p. 2.

[6] Michael Astrue, “Privacy Be Damned,” The Weekly Standard, August 5, 2013, http://www.weeklystandard.com/articles/privacy-be-damned_741033.html (accessed August 29, 2013).

[7]Ibid.

[8]For more information on the navigator program, see Alyene Senger, “The Cost of Educating the Public on Obamacare,” Heritage Foundation Issue Brief No. 3983, July 1, 2013, http://www.heritage.org/research/reports/2013/07/public-outreach-on-obamacare-cost-of-educating-the-public-on-health-care-reform.

[9]Amy Schatz, “Preparations for Health Exchanges on Tight Schedule,” The Wall Street Journal, August 7, 2013, http://online.wsj.com/article/SB10001424127887324170004578638100820728288.html (accessed August 29, 2013).

[10]“Department of Health and Human Services: Patient Protection and Affordable Care Act; Exchange Functions: Standards for Navigators and Non-Navigator Assistance Personnel; Consumer Assistance Tools and Programs of an Exchange and Certified Application Counselors; Final Rule,” Federal Register, Vol. 78, No. 137 (July 17, 2013), p. 42824, http://www.gpo.gov/fdsys/pkg/FR-2013-07-17/pdf/2013-17125.pdf (accessed August 29, 2013).

[11]“Fraud Fear Raised in California’s Health Exchange,” The Reporter, July 14, 2013, http://www.thereporter.com/rss/ci_23658245 (accessed August 29, 2013).

[12]Scott Gottlieb, “Suit Alleges IRS Improperly Seized 60 Million Personal Medical Records,” Forbes, May 15, 2013, http://www.forbes.com/sites/scottgottlieb/2013/05/15/the-irs-raids-60-million-personal-medical-records/ (accessed August 29, 2013).

Obamacare Is a Fraudster’s Paradise

Ever wonder why government programs are so rife with waste, fraud and abuse? Consider what’s been happening with the Affordable Care Act.

The administration recently announced that was reducing by 50 percent — from 30 hours down to 20 — the required training for the law’s navigators, individuals paid to help Americans enroll in the health care act’s new entitlements.

The administration has thrown numerous other requirements overboard in its drive to get the law’s exchanges up and running by Oct. 1. Unfortunately, many of the requirements being jettisoned were designed to ensure taxpayer dollars are spent properly.

As a result, the law is shaping up as a fraudster’s paradise — a potential “Wild West” where individual citizens and taxpayers as a whole can easily get scammed.

Take the administration’s decision to put Americans on the “honor system” when it comes to qualifying for exchange subsidies next year. That decision will have two significant effects.

The law says that only individuals who lack access to “affordable” coverage through their employers should qualify for the subsidies. But in reality, the administration will have to take applicant’s claims at face value, because they won’t be able verify their accuracy. As the Associated Press noted, “a scofflaw could lie, and there’s no easy way to check” — a great recipe for fraud.

Second, the administration will conduct limited checks of applicants’ income, giving individuals a strong incentive to under-report their earnings on their application, to receive the maximum possible insurance subsidy. Individuals can lowball their income numbers on the application, and receive thousands — even tens of thousands — of dollars in taxpayer-funded insurance subsidies. While those who receive subsidies improperly will have to pay some of the subsidies back, in many cases individuals can receive much more in improper subsidies than Obamacare ever requires them to repay.

You might think that the federal government itself, or its contractors creating the exchanges, would have the tools to protect taxpayer dollars from being abused through these loopholes. But the contractor that just won a multi-year contract valued at up to $1 billion to verify exchange applicants’ claims was just placed under investigation in Britain for over-billing the British government to the tune of tens of millions of pounds.

In addition to fraud against the federal government, the health-care law could also lead to a rise in fraud against individual Americans. The training program prescribed by the government does not require anti-fraud training for navigators. It also does not require “minimum eligibility criteria and background checks” for those participating in the program.

The lack of background checks means scam artists could easily use the navigator program to prey on vulnerable individuals. Even California’s insurance commissioner — a strong supporter of the law — said, “We can have a real disaster on our hands” when it comes to navigators.

More than three years ago, Nancy Pelosi famously claimed that we had to pass the law to find out what’s in it. Over the past several months, we have seen a series of announcements and policies that show why it could be a fraudster’s dream — and a nightmare for the American taxpayers who will pay the bill for con artists’ scams.

This post was originally published in McClatchy.

Morning Bell: The Next Threat to Your Privacy

Who has access to your Social Security number, your bank information, and your tax records?

When Obamacare’s health insurance exchanges open, your data could be exposed to shysters and hackers, thanks to serious vulnerabilities in the system.

The exchanges are scheduled to open on October 1 (just 53 days away). But the list of implementation failures keeps growing, and the security of Americans’ data is threatened.

THREAT #1: Obamacare “Navigators”

Navigators are a group of people and organizations that are going to be facilitating signups for Obamacare’s insurance exchanges.

  • Example: Planned Parenthood has applied for navigator grants to work with consumers.
  • Danger: HHS will not require navigators to undergo “minimum eligibility criteria and background checks.” The Administration’s training program does not require navigators to participate in anti-fraud classes. And many states do not have plans for investigating unscrupulous navigators who may attempt to prey on vulnerable and unsuspecting Americans. Even California’s Democratic insurance commissioner—a strong supporter of Obamacare—admitted “we can have a real disaster on our hands” if scam artists posing as navigators get access to applicants’ Social Security numbers, bank accounts, and other personal information.

THREAT #2: Obamacare’s Data Hub

The data hub is a massive compilation of tax filings, Social Security reports, and other government data that will be used to determine eligibility for subsidized insurance.

  • Insecure? The hub isn’t scheduled to be certified as secure until September 30—only one day before the exchanges open for business.
  • Cutting Corners: The HHS inspector general recently released a report highlighting major delays in implementation of Obamacare’s data hub. The report amplifies what former HHS officials have been saying for months: The Administration has been cutting corners on data privacy for the exchanges, raising major questions about whether the data on the hub can be certified as secure—or whether Obamacare will place Americans’ tax and other personal information at risk.

The Obama Administration’s shoddy, slapdash approach to Obamacare implementation is placing the sensitive personal data of millions of Americans at risk. It’s one more reason why Congress should refuse to spend a single dime implementing this unfair, unworkable, and unpopular law.

This post was originally published at The Daily Signal.

Defunding Obamacare: The Next Best Option

A PDF of this Issue Brief is available on the Heritage Foundation website.

Congressional opponents of Obamacare continue to search for the best approach to relieve the American public of the unpopular law’s burdens. Of course, the ideal solution is Obamacare’s full repeal. However, short of its full repeal, Congress’s best option is to defund the entire law to prevent its implementation.

What Defunding Does

Because the Constitution grants Congress the ultimate “power of the purse,” Congress can refuse to fund Obamacare implementation for the upcoming fiscal year. Such an action would follow a long history of amendments added by Congress to its annual appropriation bills in ways that prohibit executive action. These so-called limitation-of-funds amendments can prevent any expenditure of federal taxpayer dollars.

Limitation-of-funds amendments can apply to both mandatory (i.e., entitlement) and discretionary spending. For instance, every year since 1976, Congress has enacted the Hyde Amendment, which has restricted federal funding for abortion coverage in the Medicaid entitlement for nearly four decades—even though this amendment is passed every year as part of discretionary appropriations legislation.[1]

Defunding can prevent executive enforcement of Obamacare’s mandates, regulations, and tax increases for as long as the defunding provision remains valid. However, defunding would not change existing law or the regulations regarding Obamacare released to date. In spite of this, full defunding would represent the best interim approach to alleviating the law’s burdens now—with the goal of fully repealing the measure in the future.

Legislative Remedies

Senator Ted Cruz (R–TX) introduced the Defund Obamacare Act (S. 1292), and Representative Tom Graves (R–GA) introduced the same legislation in the House as H.R. 2682. Each version of the bill would permanently defund the law’s new entitlements and prohibit Obama Administration bureaucrats from taking any further steps to implement or otherwise advance Obamacare’s objectives.

The first provision states that “no federal funds shall be made available to carry out any provisions” of the law. This provision would stop the appropriation of funds with respect to both mandatory and discretionary spending. The blanket prohibition on funding would ensure that all federal agencies and bureaucrats would be prohibited from expending resources toward any action to implement Obamacare—whether issuing rules, meeting with special interest groups, engaging in public relations events, or any other activity related to the law.

The bill’s second provision states that “no entitlement to benefits under any provision of [Obamacare] shall remain in effect on and after the date of enactment.” This provision would stop the appropriation of the new entitlement spending for the law’s Medicaid expansion and exchange insurance subsidies.

The third provision rescinds all unobligated balances related to Obamacare. This provision would return to the Treasury all funds previously appropriated but not yet spent on Obamacare implementation. Projects that could have their funding revoked under this provision include the hundreds of millions of dollars being spent on “navigators” to enroll individuals in Obamacare programs[2] and promotional activities related to the law that include questionable sponsorships and appearances.[3]

The versions of the Defund Obamacare Act introduced in both the House and Senate would permanently defund the health law. However, defunding amendments could also be added to the annual appropriations bills moving their way through Congress. While such defunding amendments would remain in effect only for the life of the spending bills, the amendments could be renewed in future fiscal years, as the Hyde Amendment has been since 1976.

Moreover, because appropriations for the current fiscal year expire on September 30, a defunding amendment on “must-pass” legislation funding the federal government would stop Obamacare before its major coverage expansions take effect.

Not One Dime

Congress has every incentive to take action and defund Obamacare this fall. The law’s exchanges are scheduled to open for enrollment on October 1 and will start accepting applications for subsidized insurance plans taking effect on January 1, 2014. According to the Congressional Budget Office (CBO), next year federal taxpayers will subsidize exchange insurance plans for 6 million Americans and fund a Medicaid expansion covering an additional 9 million enrollees.[4] Over time, spending on Obamacare will explode. The CBO projects that spending on these two new subsidies will grow from $48 billion in fiscal year 2014 to $250 billion in 2023—a more than five-fold increase.[5]

The list of Obamacare’s failures grows by the day.[6] It is not that portions of the law are unworkable—the entire law is unworkable. Absent the law’s complete repeal, only full defunding would ensure that the American people are not subjected to any of these destructive policies. Congress can do its part in remedying these failures by using its all-important “power of the purse” to set a very clear line in the sand: not one single dime to fund Obamacare.



[1]Chuck Donovan, “Obamacare: Impact on Taxpayer Funding of Abortion,” Heritage Foundation WebMemo No. 2872, April 19, 2010, http://www.heritage.org/research/reports/2010/04/obamacare-impact-on-taxpayer-funding-of-abortion.

[2]Alyene Senger, “The Cost of Educating the Public on Obamacare,” Heritage Foundation Issue Brief No. 3983, July 1, 2013, http://www.heritage.org/research/reports/2013/07/public-outreach-on-obamacare-cost-of-educating-the-public-on-health-care-reform.

[3]See Chris Jacobs, “Roll Out the Barrels? Obamacare Funds to Sponsor Bourbon Festivals,” The Heritage Foundation, The Foundry, July 12, 2013, http://blog.heritage.org/2013/07/12/roll-out-the-barrels-obamacare-funds-to-sponsor-bourbon-festivals-2/.

[4]Congressional Budget Office, May 2013 estimate of the budgetary effects of the insurance coverage provisions contained in the Affordable Care Act, table 1, p. 1 http://cbo.gov/sites/default/files/cbofiles/attachments/44190_EffectsAffordableCareActHealthInsuranceCoverage_2.pdf (accessed July 30, 2013).

[5]Ibid., table 2, p. 2.

[6]See Chris Jacobs, “Obamacare’s ‘Dirty Dozen’ Implementation Failures,” The Heritage Foundation, The Foundry, July 8, 2013, http://blog.heritage.org/2013/07/08/morning-bell-obamacares-dirty-dozen-implementation-failures/.