Christmas Eve Vote on Obamacare Showed Washington Still Has Shame

A decade ago this morning, 60 Senate Democrats cast their final votes approving the legislation that became Obamacare. The bill took a circuitous route to enactment after Scott Brown’s surprise victory in the Massachusetts Senate contest, which occurred a few weeks after the Senate vote, in January 2010.

Brown’s election meant Republicans gained a 41st Senate seat, giving them the necessary votes to filibuster a House-Senate conference report on Obamacare. Because Democrats lacked the 60 votes to overcome a filibuster, they eventually agreed to a process amending certain budgetary and fiscal elements of the Senate bill through the reconciliation process on a 51-vote threshold.

The grubby process leading up to Obamacare’s enactment, full of parochial politics and special interest pork, cost Democrats politically. But many Americans do not realize that such machinations occur all the time in Washington—indeed, occurred just last week. When one party participates in a corrupt process, it becomes a scandal; when both parties partake, few outside the Beltway bother to notice.

Backroom Deals

The process among Democrats leading up to the final health vote resembled an open market, with each Senator making “asks” of Majority Leader Harry Reid (D-NV). Reid needed all 60 Democrats to vote for Obamacare to break a Republican filibuster, and the parochial provisions included in the legislation showed the lengths he would go to enact it:

Cornhusker Kickback:” The most notorious of the backroom deals came after Sen. Ben Nelson (D-NE) requested a 100 percent Medicaid match rate for his home state of Nebraska. The final manager’s amendment introduced by Reid included this earmark—Nebraska would have its entire costs of Medicaid expansion paid for by the federal government forever. But the blowback from constituents and the press became so great that Nelson asked to have the provision removed; the reconciliation measure enacted in March 2010 gave Nebraska the same treatment as all other states.

Gator Aid:” This provision, inserted at the behest of Sen. Bill Nelson (D-FL), and later removed in the reconciliation bill, sought to exempt Florida seniors from much of the effects of the law’s Medicare Advantage cuts.

Louisiana Purchase:” This provision, included due to a request from Sen. Mary Landrieu (D-LA), adjusted the state’s Medicaid matching formula. Landrieu publicly defended the provision—which she said reflected the state’s circumstances after Hurricane Katrina—and it remained in law for several years, but was eventually phased out in legislation enacted February 2012.

While these three provisions captivated the public’s attention, other earmarks and pork provisions abounded inside Obamacare too—a Medicaid funding provision that helped Massachusetts; exemptions from the insurer tax for two Blue Cross carriers; a $100 million earmark for a Connecticut hospital, and health benefits for miners in Libby, Montana, courtesy of then-Senate Finance Committee Chairman Max Baucus (D-MT).

Not only did senators try to keep these corrupt deals in the legislation—notwithstanding the public outrage they engendered—but Reid defended both the earmarks and the horse-trading process that led to their inclusion:

I don’t know if there’s a senator who doesn’t have something in this bill that’s important to them. And if they don’t have something in it that’s important to them, then it doesn’t speak well for them.

It was a far cry from Barack Obama’s 2008 (broken) campaign promise to have all his health care negotiations televised on C-SPAN, “so we will know who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies.” And it looked like Democrats didn’t really believe in the merits of the underlying legislation, but instead voted to restructure nearly one-fifth of the American economy because they got some comparatively minor pork project for their district back home.

Déjà Vu All Over Again

Democrats lost control of the House in the 2010 elections, and political scientists have attributed much of the loss to the impact of the Obamacare vote. One study found that Obamacare cost Democrats 6 percentage points of support in the 2010 midterm elections, and at least 13 seats in Congress.

But did the rebuke Democrats received for their behavior prompt them to change their ways? Only to the extent that, when they want to ram through a massive piece of legislation no one has bothered to read, they include Republicans in the taxpayer-funded largesse.

Consider last week’s $1.4 trillion spending package: Two bills totaling more than 2,300 pages, which lawmakers introduced on Monday and voted on in the House 24 hours later. Democrats wanted to repeal one set of Obamacare taxes—and in exchange, they agreed to repeal another set of taxes that Republicans (and their K Street lobbying friends) wanted gone. The Obamacare taxes went away, but the Obamacare spending remained, thus increasing the deficit by nearly $400 billion.

And both sides agreed to increase spending in defense and non-defense categories alike. Therein lies the true definition of bipartisanship in Washington: An agreement in which both sides get what they want—courtesy of taxpayers in the next generation, who get stuck with the bill.

It remains a sad commentary on the state of affairs in the nation’s capital that the Obamacare debacle remains an anomaly—the one time when the glare of the spotlight so seared Members seeking pork projects that they dared consider forsaking their ill-gotten gains. To paraphrase the axiom about casinos, in Washington, The Swamp (almost) always wins.

One Way for Florida’s Legislature to Respond to a Medicaid Expansion Referendum

Last week, Politico reported on a burgeoning effort by unions and other groups to collect signatures on a ballot initiative designed to expand Medicaid in Florida. As the article notes, the effort comes after last fall’s approval of Medicaid ballot initiatives in Utah, Idaho, and Nebraska.

The effort comes as liberals try to extend “free” health care to more and more Americans. But that “free” health care comes with significant costs, and policymakers in Florida have opportunities to make those costs apparent to voters.

‘Free’ Money Isn’t Free

By contrast, the petition being circulated in Florida includes no source of funding for the state’s 10 percent share of Medicaid expansion funding under Obamacare. The failure to specify a funding source represents a typical liberal tactic. Advocates seeking to expand Medicaid have traditionally focused on the “free” money from Washington available for states that do expand. “Free” money from Washington and “free” health care for low-income individuals—what’s not to like?

Of course, Medicaid expansion has very real costs for states, without even considering the effects on their taxpayers of the federal tax increases needed to fund all that “free” money from Washington. Every dollar that states spend on providing health care to the able-bodied represents another dollar that they cannot spend elsewhere.

I have previously noted how spending on Medicaid has crowded out funding for higher education, thus limiting mobility among lower-income populations, and encourages states to prioritize the needs of able-bodied adults over individuals with disabilities, for whom states receive a lower federal Medicaid match.

Taxes Ahead? Oh Yeah, Baby

Proposing a state income tax to fund Medicaid expansion would certainly make the cost of expansion readily apparent to Florida voters, especially the retirees who moved to the Sunshine State due to its combination of warm weather and no individual income tax. Voters would likely think twice if Medicaid expansion came with an income tax—which of course lawmakers could raise in the future, to fund all manner of government spending.

Prior efforts suggest that making the costs of Medicaid expansion apparent to voters appreciably dampens support. Utah approved its ballot initiative, which included a sales tax increase, with a comparatively small (53.3 percent) approval margin. In Montana, a referendum proposing a tobacco tax increase to fund a continuation of that state’s Medicaid expansion (which began in 2016) went down to defeat in November.

New Taxes Are an Uphill Battle

Liberal groups already face challenges in getting a Medicaid ballot initiative approved in Florida. The state constitution requires 60 percent approval for all initiative measures intended to change that document, a higher bar than advocates for expansion have had to clear elsewhere. Of the four states where voters approved Medicaid expansion—Maine, Nebraska, Utah, and Idaho—only the margin in Idaho exceeded 60 percent, and then just barely (60.58 percent).

Disclosure: While the author served on the health care transition advisory committee of Florida Gov. Ron DeSantis, the views expressed above represent his personal views only.

This post was originally published at The Federalist.

Exclusive: Congress Should Investigate, Not Bail Out, Health Regulators Who Risked Billions

What if a group of regulators were collectively blindsided by a decision that cost their industry billions of dollars? One might think Congress would investigate the causes of this regulatory debacle, and take steps to ensure it wouldn’t repeat itself.

Think again. President Trump’s October decision to terminate cost-sharing reduction (CSR) subsidy payments to health insurers will inflict serious losses on the industry. For October, November, and December, insurers will reduce deductibles and co-payments for certain low-income exchange enrollees, but will not receive reimbursement from the federal government for doing so. America’s Health Insurance Plans, the industry’s trade association, claimed in a recent court filing that insurance carriers will suffer $1.75 billion in losses over the remainder of 2017 due to the decision.

As Dave Anderson of Duke University recently noted, the “hand grenade” of stopping the cost-sharing reduction payments, “if it was thrown in January or February of this year, would have forced a lot of carriers to do midyear exits and it would have destroyed the exchanges in some states.” Yet Congress has asked not even a single question of regulators why they did not anticipate and plan for this scenario—a recipe for more costly mistakes in the future.

A Brewing Legal and Political Storm

The controversy surrounds federal payments that reimburse insurers for lower deductibles, co-payments, and out-of-pocket expenses for qualifying low-income households purchasing exchange coverage. While the text of Obamacare requires the U.S. Department of Health and Human Services to establish a program to reimburse insurers for providing the discounts, it nowhere includes an explicit appropriation for such spending.

As the exchanges launched in 2014, the Obama administration began making CSR payments to insurers. However, later that year, the House of Representatives, viewing a constitutional infringement on its “power of the purse,” sued to stop the executive from making the payments without an explicit appropriation. In May 2016, Judge Rosemary Collyer ruled the payments unconstitutional absent an express appropriation from Congress.

The next President could easily wade into this issue. Say a Republican is elected and he opts to stop the Treasury making payments related to the subsidies absent an express appropriation from Congress. Such an action could take effect almost immediately….It’s a consideration as carriers submit their bids for next year that come January 2017, the policy landscape for insurers could look far different.

One week after my article, Collyer issued her ruling calling the subsidy payments unconstitutional. At that point, CSR payments faced threats from both the legal and political realms. On the legal front, the ongoing court case could have resulted in an order terminating the payments. On the political side, the new administration would have the power to terminate the payments unilaterally—and it does not appear that either Hillary Clinton or Trump ever publicly committed to maintaining the payments upon taking office.

Yet Commissioners Stood Idly By

In the midst of this gathering storm, what actions did insurance commissioners take last year, as insurers filed their rates for the 2017 plan year—the plan year currently ongoing—to analyze whether cost-sharing payments would continue, and the effects on insurers if they did not? About a week before the Trump administration officially decided to halt the payments, I submitted public records requests to every state insurance commissioner’s office to find out.

Two states (Indiana and Oregon) are still processing my requests, but the results from most other states do not inspire confidence. Although a few states (Illinois, Utah, and California’s Department of Managed Health Care) withheld documents for confidentiality or logistical reasons, I have yet to find a single document during the filing process for the 2017 plan year contemplating the set of circumstances that transpired this fall—namely, a new administration cutting off the CSR payments.

In many cases, states indicated they did not, and do not, question insurers’ assumptions at all. North Dakota said it does not dictate terms to carriers (although the state did not allow carriers to re-submit rates for the 2018 plan year after the administration halted the CSR payments in October). Wyoming said it did not issue guidance to carriers on CSRs “because that’s not how we roll.” Missouri did not require its insurers to file 2017 rates with regulators, so it would have no way of knowing those insurers’ assumptions.

Other states admitted that they did not consider the possibility that the incoming administration would, or even could, terminate the CSR payments. North Carolina said it did not think the court case was relevant, or that cost-sharing reduction payments would be an issue. Massachusetts’ insurance Connector (its state-run exchange) responded that “there was no indication that rates for 2017 were affected by the pendency of House v. Burwell,” the case Collyer ruled on in May 2016.

Despite the ongoing court case and the deep partisan disputes over Obamacare, many commissioners’ responses indicate a failure to anticipate difficulties with cost-sharing reduction payments. Mississippi stated that, during the filing process for 2017, “CSRs weren’t a problem then, as they were being funded.” Minnesota added that “it was not until the spring of 2017 that carriers started discussing the threat [of CSR payments being terminated] was a real possibility.” Nebraska stated that “I don’t think that there’s anyone who allowed for the possibility of non-payment of CSRs for plan year 2017. We were all waiting for Congress to act.”

However, as an e-mail sent by the National Association of Insurance Commissioners (NAIC) to state regulators demonstrates, federal authorities at the Centers for Medicare and Medicaid Services (CMS) stated their “serious concerns” with the Texas and New Mexico proposals. Federal law requires insurers to reduce cost-sharing for qualifying beneficiaries, regardless of the status of the reimbursement program, and CMS believed the contingency language—which never went into effect in either Texas or New Mexico—violated that requirement.

In at least one case, an insurer raised premiums to reflect the risk that CSR payments could disappear in 2017. Blue Cross Blue Shield of Montana submitted such request to that state’s insurance authorities. However, regulators rejected “contingent CSR language”—apparently an attempt to cancel the reduced cost-sharing if reimbursement from Washington was not forthcoming, a la the Texas and New Mexico proposals. The insurance commissioner’s office also objected to the carrier’s attempt to raise premiums over the issue: “We will not allow rates to be increased based on speculation about outcomes of litigation.”

Of course, had insurers requested, or had regulators either approved or demanded, premium increases last year due to uncertainty over cost-sharing reduction payments, they would not now face the prospect of over $1 billion in losses due to non-payment of CSRs for the last three months of 2017. But had regulators approved even higher premium increases last year, those increases likely would have caused political controversy during the November elections.

As it was, news of the average 25 percent premium increase for 2017 gave Trump a political cudgel to attack Clinton in the waning days of the campaign. One can certainly question why Democratic insurance commissioners who did not utter a word about premium increases and CSR “uncertainty” during Clinton’s campaign suddenly discovered the term the minute Trump was elected president.

However, at least some ardent Obamacare supporters just did not anticipate a new administration withdrawing cost-sharing reduction payments. Washington state’s commissioner, Mike Kreidler, published an op-ed last October regarding the House v. Burwell court case. He did so at the behest of NAIC consumer representative Tim Jost, who wanted to cite Kreidler’s piece in an amicus curiae brief during the case’s appeal. But despite their focus on the court case regarding CSRs, it appears neither Jost nor Kreidler ever contemplated a new administration withdrawing the payments in 2017.

Congressional Oversight Needed

The evidence suggests that not a single insurance commissioner considered the impact of a new administration withdrawing cost-sharing reduction payments in 2017, a series of decisions that put the entire health of the individual insurance market at risk. What policy implications follow from this conclusion?

First, it undercuts the effectiveness of Obamacare’s “rate review” process. That mechanism requires states to evaluate “excessive” premium increases. However, the program’s evaluation criteria do not explicitly include policy judgments such as those surrounding CSRs. Moreover, the political focus on lowering “excessively” high premium increases might result in cases where regulators approve premium rates set inappropriately low—as happened in 2017, where no carriers priced in a contingency margin for the termination of CSR payments, yet those payments ceased in October.

As noted above, Montana’s regulators called out that state’s Blue Cross Blue Shield affiliate for proposing a rate increase relating to CSR uncertainty. The state’s insurance commissioner, Monica Lindeen, issued a formal “letter of deficiency” in which she stated that “raising rates on the basis of this assumption [i.e., loss of cost-sharing reduction payments] is unreasonable.” But events proved Lindeen wrong—those payments did disappear in 2017. Yet the insurer in question has no recourse after their assumptions proved more accurate than Lindeen’s—nor, for that matter, will Lindeen face any consequences for the “unreasonable” assumptions she made.

Second, it suggests an inherent tension between state authorities and Washington. Several regulators specifically said they looked to CMS’ advice on the cost-sharing reduction issue. Iowa requested guidance from Washington, and Wisconsin said the status of the payments was “out of our hands.” But given the impending change of administrations, any guidance CMS provided in the spring or summer of 2016 was guaranteed to remain valid only through January 20, 2017—a problem for regulators setting rates for the 2017 plan year.

Obamacare created a new layer of federal oversight—and federal policy—surrounding regulation of insurance, which heretofore had laid primarily within the province of the states. The CSR debacle resulted from the conflict between those two layers. Unless and until our laws reconcile those tensions—in conservatives’ case, by repealing the Obamacare regime and returning regulation to the states, or in liberals’ preferred outcome, by centralizing more regulatory authority in Washington—these conflicts could well recur.

Third, and perhaps most importantly, it should spark Congress to examine state oversight of health insurance in greater detail. The fact that insurance commissioners escaped the equivalent of a Category 5 hurricane—the withdrawal of CSR payments in January—and struggled through a mere tropical storm with payments withdrawn in October instead, had no relevance on their regulatory skill—to the contrary, in fact.

Unfortunately, Congress has demonstrated little interest in examining why the regulatory apparatus fell so short. The same Democratic Party that investigated regulators and bankers following the financial crisis has shown little interest in questioning why insurers and insurance regulators failed to anticipate the end of cost-sharing reduction payments. With their focus on getting Congress to appropriate funds restoring the CSR payments President Trump terminated, insurance commissioners’ lack of planning and preparation represents an inconvenient truth that Democrats would rather ignore.

Likewise, Republicans who wish to appropriate funds for the cost-sharing reduction payments have no interest in examining the roots of the CSR debacle. In September, Sen. Lamar Alexander (R-TN) convened a hearing of the Health, Education, Labor, and Pensions (HELP) Committee to take testimony from insurance commissioners on “stabilizing” insurance markets.

At the hearing, Alexander did not ask the commissioners why they did not predict the “uncertainty” surrounding cost-sharing reductions last year. HELP Committee Ranking Member Patty Murray (D-WA) asked Kreidler, her state’s insurance commissioner, about regulators’ “guessing games” regarding the status of CSRs with regard to the 2018 plan year. But neither she nor any of the members asked why those regulators made such blind and ultimately incorrect assumptions last year, by not even considering a scenario where CSR payments disappeared during the 2017 plan year.

Alexander and Murray claim the legislation they developed following the hearing, which would appropriate CSR funds for two years, does not represent a “bailout” for the insurance industry. But the fact remains that last fall, when preparing for the 2017 plan year, insurance regulators dropped the ball in a big way.

Ignoring their inaction, and appropriating funds for cost-sharing reductions without scrutinizing their conduct, would effectively bail out insurance commissioners’ own collective negligence. Congress should think twice before doing so, because next time, a regulatory debacle could have an even bigger impact on the health insurance industry—and on federal taxpayers.

This post was originally published at The Federalist.

A Victory for Taxpayers — And the Rule of Law

Once again, President Obama’s vaunted pen and phone have run into trouble with the law. This time, the nonpartisan Government Accountability Office (GAO), acting in its function as comptroller general, concluded that the administration has implemented Obamacare’s reinsurance program in an illegal and impermissible manner. Rather than focusing first on repaying the Treasury, as the text of the statute requires, the administration has placed its first and highest priority on bailing out insurers.

In an opinion requested by numerous members of Congress and released this afternoon, the GAO explained:

We conclude that HHS [Health and Human Services] lacks authority to ignore the statute’s directive to deposit amounts from collections under the transitional reinsurance program in the Treasury and instead make deposits to the Treasury only if its collections reach the amounts for reinsurance payments specified in section 1341. This prioritization of collections for payment to issuers over payments to the Treasury is not authorized. 

As I have previously explained at NRO, the reinsurance funds collected from employers had two – distinct purposes: first, to repay Treasury for the $5 billion cost of a separate program in place from 2010 through 2013; and, second to subsidize insurers selling Obamacare plans to high-cost patients during the law’s first three years.

When collections from employers turned out to be less than expected, HHS prioritized the second objective to the exclusion of the first – an action that, according to the GAO, violates the plain text of the statute. As the opinion noted, “the fact that HHS’s collections ultimately fell short of the projected amounts does not alter the meaning of the statute.” The memo continued that, because agencies must “‘effectuate the statutory scheme as much as possible’ . . . HHS continues to have an obligation to carry out the statutory scheme using a method reflective of the specified amounts even though actual collections were lower than projected.” As a result, the GAO concluded that the Department has no authority to divert to insurers approximately $3 billion in reinsurance contributions that should be allocated to the Treasury.

The GAO legal team found HHS’s justification for its actions to date unpersuasive:

HHS’s position regarding prioritization of collections for reinsurance payments appears to be driven solely by the factual circumstances presented here, namely, lower than expected collections. However, a funding shortfall does not give an agency “a hinge for enlarging its discretion to decide which [priorities] to fund.” 

The law isn’t a Chinese menu, where federal bureaucrats can pick and choose which portions they wish to follow. They must follow all of the law, as closely as possible — even the portions they disagree with.

In reaching its conclusion, the GAO agreed with the nonpartisan Congressional Research Service and with other outside experts, each of whom said that HHS had violated the law in a way that was not subject to regulatory deference. And while the GAO’s reinsurance opinion is the most recent legal smackdown of the Obama administration’s craven efforts to bail out insurers, it is by no means the first: In May, Judge Rosemary Collyer ruled that the administration violated the constitution by spending funds on cost-sharing subsidies that Congress never appropriated.

More and more insurers are announcing their departure from Obamacare’s exchanges — Blue Cross Blue Shield announced this month that it is pulling out of the Obamacare marketplace in Nebraska and in most of Tennessee. Given these implosions, the return of $3 billion in taxpayer funds to the Treasury represents a blow to HHS’s bailout strategy. It demonstrates the law’s fundamentally flawed design, whereby the administration can keep insurers offering coverage on exchanges only by flouting the law to give them billions of dollars in taxpayer funds they do not deserve.

Conservatives should applaud the members of Congress who requested this ruling, which helps to staunch the flow of crony-capitalist dollars to insurers. Much more work remains, however. Congress should also act to protect its power of the purse with respect to Obamacare’s risk corridors — ensuring that the administration does not fund through a backroom legal settlement the payments to insurers that Congress explicitly prohibited two years ago. When they return in November, members should step up their oversight of both the risk-corridor and reinsurance programs: They should find out why HHS acted in such an illegal manner in the first place and whether insurance-company lobbyists encouraged the administration to violate the statute’s plain text.

For now, however, conservatives should rightly celebrate the legal victory that GAO’s opinion represents. Obamacare represented a massive increase in government spending and a similarly large increase in government authority. Today’s opinion has clipped both — a victory for taxpayers and the rule of law.

This post was originally published at National Review.

Eight Ways Obamacare Has Harmed Americans This Year

Yesterday the Administration released a blog post claiming eight ways in which Obamacare is helping Americans.  But in reality, there are far more ways in which the law is wreaking havoc on Americans’ health care and economic security.  Herewith are just eight (plus one!) of the ways in which Obamacare has harmed millions of Americans during 2011:

Higher Premiums:  One of the “success stories” cited in the White House blog post involved a premium increase in Oregon lowered to “only” about 10 percent.  But Candidate Obama repeatedly promised his health care plan would LOWER premiums by $2,500 per family, and do so within his first term.  So a 10 percent premium increase represents yet another broken promise by this Administration.  Sadly, skyrocketing premium increases remain the norm: The price of the average employer-sponsored plan ROSE by more than $2,200 per family since Obama was first elected in 2008, according to studies from the Kaiser Family Foundation.

Jobs Disappearing:  All over the country, firms are having to lay off workers as a result of Obamacare’s tax increases and regulations.  Last month, device manufacturer Stryker announced that it would be shedding “five percent of its workforce over concerns about the impending 2.3 percent medical device tax prescribed by” Obamacare.  And in October, one insurance carrier announced plans to eliminate 110 jobs in Nebraska and Iowa as a “fairly predictable consequence” of Obamacare’s regulations.  That’s a long way from the 4 million jobs Speaker Pelosi claimed Obamacare would create.

Jobs Not Being Created:  Just this week, the owner of the Carl’s Jr. franchise wrote an op-ed in which he discussed the uncertainty surrounding Obamacare, and the fact that his business will reduce capital spending and hiring in anticipation of higher health care costs.  Other experts agree: Investment firm UBS has said Obamacare is “arguably the biggest impediment to hiring,” and the President of the Atlanta Fed said “we’ve frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”

Lost Coverage:  The Galen Institute recently released a paper chronicling all the plans that have dropped coverage since Obamacare was enacted into law – literally dozens of plans affecting millions of consumers nationwide.  Sadly, these results are far from atypical; the Administration’s own estimates found that half of all employers – and up to 80% of all small businesses – would lose their current health plan by 2013.

Paperwork Galore:  Already, the Administration has released more than 10,000 pages of regulations and notices regarding Obamacare – and the effects are echoing throughout the health care system.  USA Today recently reported that some medical facilities are actually laying off clinical staff to hire more administrative employees to deal with Obamacare-related paperwork.  And one hospital in Alabama decided to start imposing a new $25 annual fee on its patients to cover the “huge increase in paperwork” and “mountains of new forms” resulting from Obamacare.

Waivers and Favors:  One obvious symbol of Obamacare’s onerous impacts on Americans’ health insurance is the myriad exemptions being granted from the law.  As of July, the Administration approved a whopping 1,578 waivers exempting 3.4 million Americans, many of whom are in union plans, from just some of the law’s mandates.  Even Senate Democrats were forced to send a letter to the Administration asking for a separate waiver from one of Obamacare’s provisions, noting that the law “may cause disruption for farmers and others in the agricultural sector.”

You Can’t Spell Insurance Without I-R-S:  The Wall Street Journal reported on the consequences of just one of Obamacare’s tax increases – restrictions on consumer-directed health accounts like Flexible Spending Arrangements (FSAs) and Health Savings Accounts (HSAs).  New paperwork requirements led physicians to revolt: “‘I am now doing the IRS’s work, and that’s what I resent most,’” said one pediatrician.  And that’s not the only IRS-related provision bogged down in paperwork: An Inspector General report recently revealed that takeup of the small business tax credit has been far short of predictions, possibly because claiming the credit involves filling out seven different worksheets.

Raising Mandates, Raising Costs:  The 15-page guidance released by HHS earlier this month gives states the “flexibility” to impose more benefit mandates, not fewer.  It does so by allowing states to mandate an extremely rich benefit package, and do so without paying for the financial consequences of their decision – because the costs instead will be foisted on federal taxpayers funding insurance subsidies in that state.  At this rate, the Congressional Budget Office estimate of a $2,100 per family increase in individual insurance premiums due to Obamacare could very well be an under-estimate.

States Saddled by Mandates:  The annual State Expenditure Report released by the National Association of State Budget Officers revealed that Medicaid is consuming an ever-larger portion of state budgets, much faster than spending on education, corrections, or transportation.  And the reason why Medicaid is crowding out other portions of state budgets is Obamacare; at a time when states face budget deficits totaling a collective $175 billion, Obamacare is imposing new unfunded mandates of at least $118 billion.  Earlier this month the non-partisan Lewin Group released an analysis of the Rhode Island Medicaid program’s global compact waiver, revealing that the state saved tens of millions of dollars through flexibility – progress made despite the Obama Administration’s efforts, not because of them.  While other states could achieve similar savings, the Administration has refused governors’ multiple requests for flexibility from the new Medicaid mandates included in Obamacare.

Senate Democrat Talks about Medicaid “Stigma”

Earlier this week, Sen. Ben Nelson – he of the infamous Cornhusker Kickback – made the startling admission that the Medicaid program, which the health care law expands dramatically, carries a “stigma for some.”  The statement came in response to Nebraska Governor Dave Heineman’s outreach to education groups encouraging them to support repealing the health law, as its Medicaid unfunded mandates would squeeze out state funds for education.

On Monday, Sen. Nelson’s office put out a release calling the Governor’s accusations overblown.  Specifically, Sen. Nelson alleged that Milliman’s independent analysis of the health care law’s impact on the Medicaid budget was “seriously flawed,” for two reasons:

The Milliman study anticipates 100 percent participation in the Medicaid program under health reform.  Medicaid is voluntary and voluntary programs never see 100 percent participation.  Also, the governor’s new study assumes that about 60,000 people who have private insurance now will switch to Medicaid.  Will that happen when private insurance generally is better than Medicaid, which also comes with a stigma for some?

This remarkable statement leads to some interesting questions for Sen. Nelson, and Democrats generally:

  1. What exactly is voluntary about forcing individuals to purchase “government-approved” health insurance, and then taxing them if they do not do so?  How is the message that Medicaid is a voluntary program consistent with the mantra of “personal responsibility” used for the past year to justify the unpopular individual mandate?
  2. Given that their supposed goal in health “reform” is universal coverage, shouldn’t Democrats WANT 100 percent participation in the Medicaid program?  Or do Democrats merely want to CLAIM they have created universal coverage, while hoping that individuals do not sign up at rates that will overwhelm the fiscal capacity of states and the federal government to finance this new entitlement?
  3. According to the Medicare and Medicaid chief actuary, most individuals obtaining new health insurance coverage as a result of the law will do so via Medicaid.  Why should these projected 18 million individuals be “stigmatized” by what Sen. Nelson himself called an inferior form of health insurance?
  4. The health law’s expansion of Medicaid PROHIBITS individuals eligible for the Medicaid expansion (i.e., those with incomes under 138 percent of poverty) from receiving federal subsidies to cover the cost of private insurance.  In other words, poor people weren’t granted a choice of health care plans, and were instead dumped on to the Medicaid rolls.  If Sen. Nelson believes that the inferior Medicaid program carries a “stigma,” why did Democrats not only not fix this troubled program, but instead perpetuate and deepen the “stigma” attached to it by giving poor people no other choice of coverage?
  5. Is Sen. Nelson’s belief that private insurance “generally is better than Medicaid” the reason why he, along with the rest of his Senate Democrat colleagues, opposed an amendment offered by Sen. LeMieux to enroll Members of Congress in Medicaid?  Do Democrats want to “stigmatize thee, but do not stigmatize me” by enrolling others – but not themselves – in what Sen. Nelson called an inferior Medicaid program?

The comments above illustrate how Democrats are attempting to “have it both ways” when it comes to the health care law – trumpeting supposedly universal coverage, while simultaneously arguing that the law will not bankrupt states and the federal government because many individuals eligible for free entitlements will not enroll in them.  Similarly, the majority consigned 18 million Americans into a health “insurance” program that they themselves refused to accept – not least because, as Sen. Nelson admitted, the program is inferior to private insurance.  This latest example of Democrats’ double-talk, and double standards, once again illustrates why the health care law does not constitute health reform.

A Reading Guide to Obamacare’s Backroom Deals

“I think the health care debate as it unfolded legitimately raised concerns not just among my opponents, but also amongst supporters that we just don’t know what’s going on. And it’s an ugly process and it looks like there are a bunch of back room deals.”

— President Obama, interview with ABC’s Diane Sawyer, January 25, 2010[i]

 

The White House recently enacted its health “reform” agenda by signing the 2,733 page legislation (H.R. 3590) that passed the Senate in December.[ii] While the Administration touts its removal of the “Nebraska FMAP provision” that saw 49 other states funding Nebraska’s Medicaid largesse (known as the “Cornhusker Kickback”), it did not address other deals negotiated by Democrats in the Senate legislation. Many other backroom agreements are included in the legislation the President has now enacted into law:

Page 428—Section 2006, known as the “Louisiana Purchase,” provides an extra $300 million in Medicaid funding to Louisiana.[iii]

Page 2132—Section 10201(e)(1) provides an increase in Medicaid Disproportionate Share Hospital (DSH) payments for Hawaii, meaning 49 other states will pay more in taxes so that Hawaii can receive this special benefit.

Page 2203—Section 10317 amends provisions in Medicare so that hospitals in Michigan and Connecticut can receive higher payments.

Page 2222—Section 10323 makes certain individuals exposed to environmental hazards eligible for Medicare coverage. The definition used in the bill ensures the only individuals eligible will be those living in Libby, Montana.

Page 2237—Section 10324 increases Medicare payments by $2 billion in “frontier states.”[iv]

Page 2354— Section 10502 spends $100 million on “debt service of, or direct construction of, a health care facility,” language which the sponsors intended to benefit Connecticut.[v]

Page 2395—Section 10905(d) exempts Medigap supplemental insurance plans from the new tax on health insurance companies; press reports indicate this provision was inserted to benefit an insurer headquartered in Nebraska.[vi]

Even after the public outrage from the “Cornhusker Kickback,” Democrats used separate legislation designed to “fix” this particular provision (H.R. 4872) to add yet more deals behind closed doors.[vii] For instance, page 71 (Section 1203(b)) of the “fixer” bill provided an increase in Medicaid disproportionate share hospital payments just for Tennessee. And Section 2213 (page 145) of the original version of the “fixer” bill[viii] included a sweetheart deal making the Bank of North Dakota the only financial facility in the country exempted from Democrats’ government takeover of student loans—a backroom deal so egregious that it was removed within hours once the bill was finally revealed to the American public.[ix]

These specific agreements and provisions also do not display the full scope of the White House’s legislative deal-making. For instance, the head of the pharmaceutical industry said the Administration approached him to negotiate a deal with his industry: “We were assured, ‘We need somebody to come in first.  If you come in first, you will have a rock-solid deal.’”[x] And former Democratic National Committee Chairman Howard Dean publicly admitted at a town hall forum that “The reason that tort reform is not in the [health care] bill is because the [Democrat Members] who wrote it did not want to take on the trial lawyers.”[xi]

The many pages of backroom deals included in the health care takeover legislation raise several questions: If the bill itself was so compelling, why did Democrats need billions of dollars in “sweeteners” negotiated in secret in order to vote for it? If President Obama was so concerned about the public perceptions created by the backroom dealing, why did he not propose to strike all the special agreements? Does he believe that this pork-barrel spending is the only reason why Democrats voted to pass his government takeover of health care in the first place?

 

[i] Full interview transcript available at http://abcnews.go.com/print?id=9659064.

[ii] Senate-passed bill text available at http://www.opencongress.org/bill/111-h3590/text.

[iii] “Dems Protect Backroom Deals,” Politico February 4, 2010, http://www.politico.com/news/stories/0210/32499.html.

[iv] Congressional Budget Office, score of H.R. 3590 including Manager’s Amendment, December 19, 2009, http://cbo.gov/ftpdocs/108xx/doc10868/12-19-Reid_Letter_Managers_Correction_Noted.pdf.

[v] “Dodd Primes Pump in Bid to Survive,” Politico December 22, 2009, http://www.politico.com/news/stories/1209/30881.html.

[vi] “How Nebraska’s Insurance Companies Stand to Profit from Ben Nelson’s Compromises in Health Care Bill,” Huffington Post 21 December 2009, http://www.huffingtonpost.com/2009/12/21/how-nebraskas-insurance-c_n_400080.html.

[vii] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.

[viii] House Rules Committee amendment in the nature of a substitute, http://docs.house.gov/rules/hr4872/111_hr4872_amndsub.pdf.

[ix] “Conrad Wants Controversial Carve-Out Axed,” Roll Call March 18, 2010, http://www.rollcall.com/news/44368-1.html. The provision was stripped by the Rules Committee prior to full House consideration of H.R. 4872.

[x] Quoted in “White House Affirms Deal on Drug Cost,” New York Times August 5, 2009, http://www.nytimes.com/2009/08/06/health/policy/06insure.html?_r=3&scp=8&sq=kirkpatrick&st=cse.

[xi] Exchange at Town Hall forum in Reston, VA, August 25, 2009, available online at http://www.youtube.com/watch?v=IdpVY-cONnM.

Obamacare: Bad for States

Would Make States’ Tough Fiscal Situations Worse. The health care takeover[i] requires all states to pay a portion of the proposed Medicaid expansion beginning in 2017—tens of billions in new state spending imposed by federal requirements. However, states cannot afford their existing Medicaid programs, which is why Congress included a $90 billion Medicaid bailout in the 2009 “stimulus” package. To make things worse, the cost of the Medicaid expansion borne by states will rise appreciably in years 2019 and beyond—further pinching state budgets.

Forces Higher State Medicaid Spending. The health care takeover gives states a higher federal match to expand the Medicaid program to all individuals earning up to 133 percent of the federal poverty level ($29,327 for a family of four). However, such an expansion—when coupled with an individual mandate to purchase insurance—is likely to increase Medicaid enrollment among individuals who are already eligible for the program—and for whom a full federal match will not be available.

Encourages States to Drop Medicaid Entirely. The health care takeover prohibits states from reducing their Medicaid eligibility standards or procedures at any point in the future. Governors in both parties have already voiced significant concerns about what Tennessee Democratic Gov. Phil Bredesen termed “the mother of all unfunded mandates” being imposed upon states.[ii]   As a result of the added restrictions in Democrats’ proposals, the head of Washington state’s Medicaid program believes that states facing severe financial distress may say, “I have to get out of the Medicaid program altogether.”[iii]

Undermines State Flexibility. Provisions in the legislation significantly erode states’ independence in managing their Medicaid programs. For instance, the health care takeover requires states to include family planning services for individuals with incomes up to the highest Medicaid income threshold in each state—undermining flexibility established by Republicans in the Deficit Reduction Act of 2005.

Supersedes State Authority. The health care takeover provides that states that do not establish health insurance exchanges will see the federal government create them on states’ behalf. Furthermore, the legislation also provides that states that prohibit abortion coverage in their insurance exchanges will see their citizens’ federal tax dollars used to subsidize insurance plans that cover elective abortions in other states.

Backroom Deals Create State Inequities. The public focus on the “Cornhusker Kickback” regarding Nebraska’s Medicaid funding omits the other backroom deals included in the legislation—most of which remain, creating additional inequities among states. The health care takeover includes provisions known as the “Louisiana Purchase,” providing an extra $300 million in Medicaid funding to Louisiana.[iv] And the legislation also provides an additional $100 million in Medicaid hospital funding solely to Tennessee. Many may wonder why citizens in other states should see their taxpayer dollars fund special deals for places like Tennessee and Louisiana.

 

[i] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.

[ii] Kevin Sack and Robert Pear, “Governors Fear Medicaid Costs in Health Plan,” New York Times July 19, 2009, http://www.nytimes.com/2009/07/20/health/policy/20health.html.

[iii] Clifford Krauss, “Governors Fear Added Costs in Health Care Overhaul,” New York Times August 6, 2009, http://www.nytimes.com/2009/08/07/business/07medicaid.html.

[iv] “Dems Protect Backroom Deals,” Politico February 4, 2010, http://www.politico.com/news/stories/0210/32499.html.

Expanding a Broken Program: Democrats’ Health “Reform”

This morning’s New York Times has a compelling piece about how states cannot afford their existing Medicaid programs and are cutting physician reimbursement levels, therefore limiting patients’ access to care.  Of course, the Senate bill would expand Medicaid coverage to 15 million more Americans, creating tens of billions of dollars of new unfunded mandates on all states (except Nebraska).  But how will adding more beneficiaries to an already leaky Medicaid boat do anything other than overwhelm both new and existing Medicaid beneficiaries?  And why should low-income people be stuck in a “Medicaid ghetto” created in the Democrat bills whereby poor families are purposely denied the choice of health plans offered to their wealthier counterparts?  How does either scenario classify as true “reform?”

David Axelrod’s Sunday Show Flip-Flops

Appearing on “This Week” yesterday, White House advisor David Axelrod attempted to claim both sides of two critical issues in the health care debate.  On the process used to enact health care legislation, he said that “we don’t want to see procedural gimmicks used to try and prevent an up or down vote” on a health bill.  However, when pressed about Democrats’ “Slaughter Solution” to enact the Senate bill into law without the House ever voting on it, Axelrod claimed that such issues really “don’t matter.”  In other words, the Administration opposes Senate Republicans using “procedural gimmicks” to prevent the passage of a Senate bill they oppose, but supports House Democrats’ “procedural gimmicks” to prevent them from voting on a Senate bill they similarly dislike.

Likewise, when questioned about the widely unpopular backroom deals included in the Senate bill, Axelrod attempted to distinguish the “Cornhusker Kickback” from the “Louisiana Purchase” and other unsavory agreements, claiming that the latter provision is not “state-specific” and that other states could qualify under “certain sets of circumstances.”  This waffling comes even as Senate Democrats attempt to preserve their backroom deals, despite the public outrage that came as a result of their inclusion in the Senate bill.  And it raises additional questions: Would the “Cornhusker Kickback” be permitted by the Administration if the language was written in a way that all states could theoretically qualify for the money, even in reality only one state could do so? (i.e. “the nation’s leading corn producer will have its Medicaid fully paid for by the federal government” – a standard any state could in theory meet, even though a state like Alaska is highly unlikely to do so).  And how desperate are Democrats to enact their government takeover of health care that they would even attempt to justify these backroom deals through such questionable posturing?

 

TAPPER: If it does not work this week, is that the last chance for health care reform?

AXELROD: Well, I believe it is going to happen this week. I think we’re going to have a vote, and the American people are entitled to an up or down vote. We don’t want to see procedural gimmicks used to try and prevent an up or down vote on this issue. We’ve had a long debate, Jake. It’s gone on for a year. The plan the president has embraced and has put forward is one that takes ideas, the best thinking from both the Republican and Democratic sides. This marketplace where people can buy insurance who don’t have it today, a competitive marketplace — that’s an idea that both sides embrace. The place where we don’t agree is on whether there should be some restraint on insurance companies and whether they should be allowed to run wild. We believe there should be some restraint, some on the other side don’t think so. …

TAPPER: House Democrats are talking about using a procedural maneuver to pass the Senate bill in the House and then the fixes without ever actually having a vote on the Senate bill. Here is Congresswoman Lynn Woolsey, a Democrat of California.

(BEGIN VIDEO CLIP)

WOOLSEY: I don’t need to see my colleagues vote for the Senate bill in the House. We don’t like the Senate bill. Why should we be forced to do that?

(END VIDEO CLIP)

TAPPER: Can the president support a procedure where members of the House pass the Senate bill without ever voting for the Senate bill?

AXELROD: Well, look, I think everybody is going to be on the record by the end of this week on these matters, and of course in answer to Congresswoman Woolsey, the president’s proposal is not the Senate proposal. With the corrections that have been made, with the improvements that have been made, some including Republican ideas, some including Democratic ideas, this is — this is a different proposal, and I think it addresses some of the concerns that people have had.

TAPPER: But when pushing reconciliation in the Senate, the president has talked about how the Senate bill deserves an up or down vote. Shouldn’t-

AXELROD: Health care, Jake, health care deserves an up or down vote, and health care will get an up or down vote. Remember, we already had up or down votes in the House and Senate, 60 votes in the Senate, the bill passed the House as well. Now the question is do we pass the requisite improvements to this bill, corrections to this bill to make it even stronger, and I think we will.

TAPPER: So the parliamentary stuff doesn’t matter. It’s just a question of whether or not the overall package–

AXELROD: What does matter is that people cast or are allowed to cast an up or down vote on the future of health insurance reform in this country. We have had a year. Enough game playing, enough maneuvering. Let’s have the up or down vote and give the American people the future they deserve. …

 

TAPPER: One of the things that the president has acknowledged the American people don’t like about the bill as it exists right now, the Senate bill with all the special deals that are in there for individual senators to win their vote. The president has directed the House and Senate to remove those from the fixes that you guys are creating, but some members of the Senate and the House are pushing back. They want those deals. Are you ready to pledge that none of those deals or any other deal that other members may be trying to get as this is being pushed through the House, that none of them will be in this final bill?

AXELROD: Well, the president does believe that state-only carveouts should not be in the bill. There are things in the bill that apply to groupings of states who satisfy — for example, in Louisiana, the — what has been portrayed as a provision relating to Louisiana says that if a state, if every county in a state is declared a disaster area, they get some extra Medicaid funds. Well, that would apply to any state that–

(CROSSTALK)

TAPPER: — talking about Montana, talking about $100 million for a hospital in Connecticut–

AXELROD: The principle should be, the principle should be, do those provisions apply to everyone? In other words, are there things that pertain, that if a state satisfies a certain set of circumstances, they would — they would qualify. And I think that is different than a special state-specific thing. In the case of Nebraska, what everyone was outraged about was that it seemed to be a special deal just for one state. That is not going to be in this bill.

TAPPER: So none of the things that are state-specific to win the votes of individual senators. Louisiana not counting as that, but none of the others will be in the final bill.

AXELROD: The principle that we want to apply is that are these — are these applicable to all states? Even if they do not qualify now, would they qualify under certain sets of circumstances. …