Ocasio-Cortez Suddenly Realizes She Doesn’t Like Paying Obamacare’s Pre-Existing Condition Tax

On Saturday evening, incoming U.S. representative and self-proclaimed “democratic socialist” Alexandria Ocasio-Cortez took to Twitter to compare her prior health coverage to the new health insurance options available to her as a member of Congress.

It shouldn’t shock most observers to realize that Congress gave itself a better deal than it gave most ordinary citizens. But Ocasio-Cortez’ complaints about the lack of affordability of health insurance demonstrate the way liberals who claim to support Obamacare’s pre-existing condition “protections”—and have forcibly raised others’ premiums to pay for those “protections”—don’t want to pay those higher premiums themselves.

She’s Paying the Pre-Existing Condition Tax

I wrote in August about my own (junk) Obamacare insurance. This year, I have paid nearly $300 monthly—a total of $3,479—for an Obamacare-compliant policy with a $6,200 deductible. Between my premiums and deductible, I will face paying nearly the first $10,000 in medical costs out-of-pocket myself.

Of course, as a fairly healthy 30-something, I don’t have $10,000 in medical costs in most years. In fact, this year I won’t come anywhere near to hitting my $6,200 deductible (presuming I don’t get hit by a bus in the next four weeks).

As I noted in August, my nearly $3,500 premium doesn’t just fund my health care—or, more accurately, the off-chance that I will incur catastrophic expenses such that I will meet my deductible, and my insurance policy will actually subsidize some of my coverage. Rather, much of that $3,500 “is designed to fund someone else’s medical condition. That difference between an actuarially fair premium and the $3,500 premium my insurer charged me amounts to a ‘pre-existing conditions tax.’”

Millions of People Can’t Afford Coverage

Because I work for myself, I don’t get an employer subsidy to pay the pre-existing condition tax. (I can, however, write off my premiums from my federal income taxes.) Ocasio-Cortez’s tweet referred to her coverage “as a waitress,” but didn’t specify where she purchased that coverage, nor whether she received an employer subsidy for that coverage.

However, a majority of retail firms, and the majority of the smallest firms (3-9 workers), do not offer coverage to their workers. Firms are also much less likely (only 22 percent) to offer insurance to their part-time workers. It therefore seems likely, although not certain, that Ocasio-Cortez did not receive an employer subsidy, and purchased Obamacare coverage on her own. In that case she would have had to pay the pre-existing condition tax out of her own pocket.

That pre-existing condition tax represented the largest driver of premium increases due to Obamacare, according to a March paper published by the Heritage Foundation. Just from 2013 (the last year before Obamacare) through 2017, premiums more than doubled. Within the last year (from the first quarter of 2017 through the first quarter of 2018) roughly 2.6 million people who purchased Obamacare-compliant plans without a subsidy dropped their coverage, likely because they cannot afford the higher costs.

Lawmakers Get an (Illegal) Subsidy to Avoid That Tax

Unsurprisingly, however, members of Congress don’t have to pay the pre-existing condition tax on their own. They made sure of that. Following Obamacare’s passage, congressional leaders lobbied feverishly to preserve their subsidized health coverage, even demanding a meeting with the president of the United States to discuss the matter.

Senators and representatives do have to purchase their health insurance from the Obamacare exchanges. But the Office of Personnel Management (OPM) issued a rule allowing members of Congress and their staffs to receive an employer subsidy for that coverage. That makes Congress and their staff the only people who can receive an employer subsidy through the exchange.

Numerous analyses have found that the OPM rule violates the text of Obamacare itself. Sen. Ron Johnson (R-WI) even sued to overturn the rule, but a court dismissed the suit on the grounds that he lacked standing to bring the case.

Liberals’ Motto: ‘Obamacare for Thee—But Not for Me’

Take, for instance, the head of California’s exchange, Peter Lee. He makes a salary of $436,800 per year, yet he won’t buy the health insurance plans he sells. Why? Because he doesn’t want to pay Obamacare’s pre-existing condition tax unless someone (i.e., the state of California) pays him to do so via an employer subsidy.

Ocasio-Cortez’ proposed “solution”—fully taxpayer-paid health care—is in search of a problem. As socialists are wont to do, Ocasio-Cortez sees a problem caused by government—in this case, skyrocketing premiums due to the pre-existing condition tax—and thinks the answer lies in…more government.

As the old saying goes, when you’re in a hole, stop digging. If Ocasio-Cortez really wants to get serious, instead of complaining about the pre-existing condition tax, she should work to repeal it, and replace it with better alternatives.

This post was originally published at The Federalist.

Putting Obamacare in a Deep Freeze

As they debate various ways to repeal and replace Obamacare, Republicans in Congress have proposed a transition between the current regime and the more market-oriented solution they wish to create. As part of that transition, Congress should explore putting an immediate freeze on new Obamacare enrollment. Such a freeze would allow currently enrolled Americans to maintain their coverage while halting the growth in spending on the law’s costly taxpayer subsidies.

Medicaid Freeze

There are good policy reasons to include a freeze on enrollment as part of repeal legislation. The “Better Way” alternative to Obamacare released by Speaker Ryan in June proposed that “states that have not expanded Medicaid under Obamacare as of January 1, 2016…would not be able to do so.” If the House intends to freeze enrollment by preventing new states from implementing Medicaid expansion, reason dictates that it should also prevent new individuals in states that have already expanded Medicaid from joining the entitlement.

Previous research suggests that the existence of a Medicaid entitlement for the able-bodied significantly decreases job-search activity, employment, and enrollment in employer-sponsored health coverage. The Foundation for Government Accountability (FGA) has demonstrated that freezing enrollment would allow individuals currently on Medicaid to transition out of poverty and into work in a relatively short period of time, and that there is broad public support for such a move.

Freezing enrollment would also begin to unwind the inequities in the current system, which rewards states that have expanded Medicaid for discriminating against the most vulnerable. Some governors have indicated their desire to preserve the expansion in their states. But keeping Medicaid expansion in some states would set up a direct conflict with other states that are explicitly prohibited from expanding under the House Republican plan. As a compromise, Congress should instead freeze enrollment in those states that have already expanded Medicaid, as a way to begin dismantling the new entitlement for the able-bodied.

King v. Burwell

When it comes to insurance Exchanges, Republicans had previously proposed freezing enrollment in Obamacare’s subsidy regime. Last year, the Supreme Court considered the case of King v. Burwell, which had the potential to strike down taxpayer-funded subsidies in states with a federally run insurance exchange (i.e.  most of them). Ahead of that case, Senators Ron Johnson and Ben Sasse both proposed different transitional arrangements that would allow individuals receiving subsidies at the time of the ruling to continue their coverage for some period of time, without allowing new individuals to qualify for taxpayer-funded coverage.

Though the Supreme Court ultimately upheld the subsidies in King v. Burwell, the transition plans by Sasse and Johnson provide just as sensible a template now as they did then. Admittedly, insurers may not want to offer coverage where only unsubsidized individuals can join exchanges, as those unsubsidized individuals would likely be the costliest to insure. But the plans laid out by Sasse and Johnson provide two possible blueprints for unwinding Obamacare, including its taxpayer-funded exchange subsidies.

Obama Precedent

In considering the practical effects of an enrollment freeze, Republicans should examine how President Obama tried to minimize the impact of his “Lie of the Year” — “If you like your plan, you can keep it.” When millions of Americans received cancellation notices in the fall of 2013, the Obama Administration allowed individuals to keep their prior coverage temporarily. This reprieve was ultimately extended until December 2017.

By allowing some individuals to keep their pre-Obamacare coverage, Obama’s plan-cancellation “fix” solved a political problem, minimizing the number of individuals thrown off their current coverage at one time. Extending the “fix” for several years also limited disruption, as natural “churning” in insurance markets will reduce the number of individuals with affected policies between now and December 2017.

Of course, President Obama’s administrative actions in 2013 violated the law. Even liberals have acknowledged that Obama abrogated his constitutional duties by publicly advertising that his Administration would not enforce the ACA’s statutory requirements. But Congress can and should seek to minimize disruption in a legal way, by explicitly including an enrollment freeze in its repeal legislation. With Obamacare’s coverage gains coming almost entirely from Medicaid expansion, freezing enrollment will allow for a smoother transition into the new system Republicans intend to create.

This post was originally published at National Review.

Losing Health Insurance Due to Obamacare

Millions of Americans are finding out they will lose their current health plan due to Obamacare. Contrary to the statements made by some, Obamacare interrupts insurance for everyone, not just the Americans who purchase coverage directly in the individual market.

These sweeping changes are why the President’s proposed actions, and alternative legislative efforts like Chairman Fred Upton’s “Keep Your Health Plan Act” (H.R. 3350), Senator Ron Johnson’s S. 1617, and Senator Mary Landrieu’s S. 1642, while well intentioned, will not solve the problem. The Upton bill, for example, would allow people to enroll in plans that currently exist in the individual market for one more year. All of these efforts are temporary and, most importantly, do not roll back the many onerous Obamacare mandates that disrupt coverage for the 49 percent of Americans with employer-provided coverage.

How Obamacare Impacts Everyone’s Coverage Employer-Provided “Grandfathered” Insurance Plans: Designed for Extinction

• While the Obamacare bill included “grandfathered” plan language theoretically allowing Americans to keep plans they have and like, other sections of the legislation undermined this promise. For instance, Section 2301 of the reconciliation legislation included provisions requiring all plans, including “grandfathered” plans, to abide by some of the law’s new benefit mandates—thus making the plans different from pre-Obamacare offerings.

• Shortly after the law’s enactment, the Obama Administration released regulations further restricting individuals’ ability to keep their pre-Obamacare plans. The regulations stated that an increase in co-payments of more than $5, or an increase in the employee’s share of premiums paid by more than 5 percent, could cause plans to lose “grandfathered” status.

• The result: the percent of covered workers in “Grandfathered plans” went from 56 percent in 2011 to 36 percent in 2013. Employer-provided coverage is impacted by Obamacare in this and many other ways.

Individual Health Insurance Plans: Upending Coverage for Millions

• Because individuals who buy their own health insurance receive no employer subsidy for their health coverage, and often receive no taxpayer subsidy, they frequently shop for the most economical plan available. However, most individual plans do not comply with Obamacare’s new mandated benefits.

• Obamacare includes a list of 10 “essential benefits” that health plans must cover—including coverage of maternity services, habilitative services, and pediatric vision care.

• The law also requires that most health plans cover at least 60 percent of expected medical expenses. A study last year suggested that more than half of individual market insurance policies do not meet these so-called actuarial value requirements.

• Because they do not comply with the law’s new required benefits, one expert has concluded that as many as 85 percent of individual health insurance policies—affecting up to 16 million individuals—will be canceled due to Obamacare.

Small Business Insurance Plans: Canceled for Nonconformity

• Obamacare’s effects will not be felt only in the individual market. The Administration’s own regulations assumed that up to 69 percent of small business plans—covering as many as 41 million Americans—could be lost, because they do not comply with Obamacare’s requirements.

• For instance, Obamacare sets maximum deductibles for small business insurance plans at $2,000 for a single person. However, nearly one-third of covered workers at small firms are in plans that do not meet this requirement—meaning these individuals could face higher costs, or the loss of their current plan, or both.

• When it comes to both individual and small business insurance policies, losing one’s policy will often come with a big price tag. A Heritage Foundation analysis concluded that Obamacare’s benefit mandates will raise individual insurance premiums in 42 out of 47 states, in many cases causing rates to double.

Just as eliminating pre-Obamacare health plans was one major result of the law, so too are the higher premiums many will face upon losing their plan. It’s why the American people need relief from this unworkable, unfair, and unpopular law.

This post was originally published by The Heritage Foundation.

Losing Your Current Coverage: 10 Million Already Have — More to Follow

Gallup is out this morning with a new survey indicating that employer-based health coverage dropped by nearly a full percentage point among American adults just in the last year.  The poll found that 45.0% of Americans reported getting employer health coverage in January through May 2011, down from 45.8% in 2010.  Since 2008, employer-based health coverage has declined by a full 4.2 percentage points; given Census estimates of an adult population of about 233 million, that means nearly 10 million adults have lost employer-based coverage since President Obama was elected President, according to the Gallup survey.

Unfortunately, Obamacare’s perverse incentives will only accelerate the slide in employer-based coverage.  Sen. Ron Johnson and former CBO Director Doug Holtz-Eakin have an op-ed this morning discussing that very point.  Dr. Holtz-Eakin had previously written a paper indicating 35 million more Americans than originally estimated could lose their current coverage – and this morning’s op-ed notes that if half of all Americans end up in Exchanges, the annual cost of Obamacare’s subsidies “would increase by $400 billion by 2021.”

Even Administration officials have acknowledged Obamacare’s incentives to drop coverage; the head of the federal office implementing Exchanges recently mused that employers may say “‘I can now dump my people into the Exchange and it would be good for them, good for me.’”  And at a recent hearing, the only defense Secretary Sebelius could give as to why employers will keep offering coverage was a “ban on large employers even considering Exchanges for at least the first five years.”  However, the Secretary’s assertion missed a critical point – Section 1312(f)(2)(B) of the statute prohibits employers from converting their employer plans to the Exchange as a group, but there is NOTHING stopping employers from dumping their coverage entirely and letting their workers migrate to the Exchange as individuals.

The bottom line is this:  Employers in a struggling economy have already been dropping coverage at a significant rate, as evidenced by the Gallup finding that nearly 10 million American adults have lost their employer coverage since President Obama was elected.  Unfortunately, given that Obamacare allows firms to pay a $2,000 fine in lieu of a $15,000 insurance premium, that decline will only accelerate – and federal taxpayers will be much the worse for it.