How the Impeachment Frenzy Could Block Bad Health Care Policies

House Democrats’ headlong rush to impeach President Trump will have many implications for American politics and the presidential election. On policy, it could have a salutary effect for conservatives, by precluding the enactment of harmful policies that would push our health care system in the wrong direction.

Congress should of course do something about our health care system, particularly the millions of individuals priced out of insurance by Obamacare, also known as the Unaffordable Care Act. But in recent weeks, it appears that Republicans have fallen into the typical definition of bipartisanship—when conservatives agree to do liberal things. As a result, if the controversy over impeachment leads to a legislative stalemate over health care, it will at least prevent Congress from making our current flawed system any worse.

Renewed Impeachment Push

The emerging controversy over Trump’s interactions with Ukraine, and whether those actions constituted an impeachable offense, resulted in analyses of whether and how the impeachment push will affect the legislative agenda on multiple issues, including health care.

Multiple Republicans suggested impeachment could bring Congress’ other work to a halt, whether by consuming the time and energy of members of Congress and staff, poisoning the proverbial well for negotiations and compromise, or a combination of the two. Consider the following quotes from Republicans in a Wednesday story:

  • House Ways and Means Committee Ranking Member Kevin Brady (R-Texas): “Impeachment makes a toxic environment more toxic.”
  • Former House Freedom Caucus Chairman Mark Meadows (R-N.C.): “There is more oxygen on impeachment than there is on legislation….My Democratic colleagues have put everything on hold to try to make sure that this President is not the one that signs any proposed bills.”
  • President Trump: Nancy Pelosi has “been taken over by the radical left. Unfortunately, she’s no longer the Speaker of the House.”
  • The White House: Democrats have “destroyed any chances of legislative progress” with their focus on impeachment.

Ultimately, whether any major legislation passes in this environment, whether on health care or other issues, will depend on two factors. First, will President Trump want to strike legislative bargains with House Democrats at the same time the latter are working to impeach and remove him from office? On that front, color me skeptical, at best.

Second, at a time when Trump will need Republicans to support him in an impeachment fight, will he aggressively push policies that many of them oppose?

Controversial Agenda in Congress

In July, the Senate Finance Committee approved drug pricing legislation over the concerns of many Republicans. A majority of Republicans voted against the Finance Committee bill, believing (correctly) that its provisions limiting price increases for pharmaceuticals amounted to price controls, which would have a harmful impact on innovation.

Since that time, House Speaker Nancy Pelosi (D-Calif.) has taken ideas from Senate Finance Committee Chairman Chuck Grassley (R-Iowa), and the Trump administration, and put them on steroids. The drug pricing legislation she recently introduced as H.R. 3 would force drug companies into a “negotiation” with defined price limits, confiscating virtually all their revenues if they do not submit to these government-imposed price controls.

Likewise, Congress’ action on “surprise” billing appears ominous. While Washington should allow states to come up with their own solutions to this issue, some Republicans want Congress to intervene.

Save Us from ‘Socialism-Lite’

If Congress’ legislative agenda grinds to a halt over a combination of the impeachment food fight and the impending 2020 presidential campaign, it would mean that lawmakers at least did not make the health care system worse via a series of socialist-style price controls.

The American people do deserve better than the failed status quo. They need the enactment of a conservative health care agenda that will help lower the skyrocketing cost of health care.

But if Republicans have failed to embrace such an agenda, as by and large they have, at least they can stop doing any more damage through new policies that will push us further in the direction of government-run health care. Thankfully, Pelosi’s newfound embrace of a march towards impeachment may slow the march towards socialized medicine—at least for the time being.

This post was originally published at The Federalist.

Three Obstacles to Senate Democrats’ Health Care Vision

If Democrats win a “clean sweep” in the 2020 elections—win back the White House and the Senate, while retaining control of the House—what will their health care vision look like? Surprisingly for those watching Democratic presidential debates, single payer does not feature prominently for some members of Congress—at least not explicitly, or immediately. But that doesn’t make the proposals any more plausible.

Ezra Klein at Vox spent some time talking with prominent Senate Democrats, to take their temperature on what they would do should the political trifecta provide them an opportunity to legislate in 2021. Apart from the typical “Voxplanations” in the article—really, did Klein have to make not one but two factual errors in his article’s first sentence?—the philosophy and policies the Senate Democrats laid out don’t stand up to serious scrutiny, on multiple levels.

Problem 1: Politics

The first problem comes in the form of a dilemma articulated by none other than Ezra Klein, just a few weeks ago. Just before the last Democratic debate in July, Klein wrote that liberals should not dismiss with a patronizing shrug Americans’ reluctance to give up their current health coverage:

If the private insurance market is such a nightmare, why is the public so loath to abandon it? Why have past reformers so often been punished for trying to take away what people have and replace it with something better?…

Risk aversion [in health policy] is real, and it’s dangerous. Health reformers don’t tiptoe around it because they wouldn’t prefer to imagine bigger, more ambitious plans. They tiptoe around it because they have seen its power to destroy even modest plans. There may be a better strategy than that. I hope there is. But it starts with taking the public’s fear of dramatic change seriously, not trying to deny its power.

Democrats’ “go big or go home” theory lies in direct contrast to the inherent unease Klein identified in the zeitgeist not four weeks ago.

Problem 2: Policy

Klein and the Senate Democrats attempt to square the circle by talking about choice and keeping a role for private insurance. The problem comes because at bottom, many if not most Democrats don’t truly believe in that principle. Their own statements belie their claims, and the policy Democrats end up crafting would doubtless follow suit.

Does this sound like someone who 1) would maintain private insurance, if she could get away with abolishing it, and 2) will write legislation that puts the private system on a truly level playing field with the government-run plan? If you believe either of those premises, I’ve got some land to sell you.

In my forthcoming book and elsewhere, I have outlined some of the inherent biases that Democratic proposals would give to government-run coverage over private insurance: Billions in taxpayer funding; a network of physicians and hospitals coerced into participating in government insurance, and paid far less than private insurance can pay medical providers; automatic enrollment into the government-run plan; and many more. Why else would the founder of the “public option” say that “it’s not a Trojan horse” for single payer—“it’s just right there!”

Problem 3: Process

Because Democrats will not have a 60-vote margin to overcome a Republican filibuster even if they retake the majority in 2020, Klein argues they can enact the bulk of their agenda through the budget reconciliation process. He claims that “if Democrats confine themselves to lowering the Medicare age, adding a [government-run plan], and negotiating drug prices, there’s reason to believe it might pass parliamentary muster.”

Of course Klein would say that—because he never worked in the Senate. It also appears he never read my primer on the Senate’s “Byrd rule,” which governs reconciliation procedures in the Senate. Had he done either, he probably wouldn’t have made that overly simplistic, and likely incorrect, statement.

Take negotiating drug prices. The Congressional Budget Office first stated in 2007—and reaffirmed this May—its opinion that on its own, allowing Medicare to negotiate drug prices would not lead to any additional savings.

That said, Democrats this year have introduced legislation with a “stick” designed to force drug companies to the “negotiating” table. Rep. Lloyd Doggett (D-Texas) introduced a bill (H.R. 1046) requiring federal officials to license the patents of companies that refuse to “negotiate” with Medicare.

While threatening to confiscate their patents might allow federal bureaucrats to coerce additional price concessions from drug companies, and thus scorable budgetary savings, the provisions of the Doggett bill bring their own procedural problems. Patents lie within the scope of the House and Senate Judiciary Committees, not the committees with jurisdiction over health care issues (Senate Finance, House Ways and Means, and House Energy and Commerce).

While Doggett tried to draft his bill to avoid touching those committees’ jurisdiction, he did not, and likely could not, avoid it entirely. For instance, language on lines 4-7 of page six of the Doggett bill allows drug companies whose patents get licensed to “seek recovery against the United States in the…Court of Federal Claims”—a clear reference to matter within the jurisdiction of the Judiciary Committees. If Democrats include this provision in a reconciliation bill, the parliamentarian almost certainly advise that this provision exceeds the scope of the health care committees, which could kill the reconciliation bill entirely.

But if Democrats don’t include a provision allowing drug manufacturers whose patents get licensed the opportunity to receive fair compensation, the drug companies would likely challenge the bill’s constitutionality. They would claim the drug “negotiation” language violates the Fifth Amendment’s prohibition on “takings,” and omitting the language to let them apply for just compensation in court would give them a much more compelling case. Therein lies the “darned if you do, darned if you don’t” dilemma reconciliation often presents: including provisions could kill the entire legislation, but excluding them could make portions of the legislation unworkable.

Remember: Republicans had to take stricter verification provisions out of their “repeal-and-replace” legislation in March 2017—as I had predicted—due to the “Byrd rule.” (The provisions went outside the scope of the committees of jurisdiction, and touched on Title II of the Social Security Act—both verboten under budget reconciliation.)

If Republicans had to give up on provisions designed to ensure illegal immigrants couldn’t receive taxpayer-funded insurance subsidies due to Senate procedure, Democrats similarly will have to give up provisions they care about should they use budget reconciliation for health care. While it’s premature to speculate, I wouldn’t count myself surprised if they have to give up on drug “negotiation” entirely.

1994 Redux?

Klein’s claims of a “consensus” aside, Democrats could face a reprise of their debacle in 1993-94—or, frankly, of Republicans’ efforts in 2017. During both health care debates, a lack of agreement among the majority party in Congress—single payer versus “managed competition” in 1993-94, and “repeal versus replace” in 2017—meant that each majority party ended up spinning its wheels.

To achieve “consensus” on health care, the left hand of the Democratic Party must banish the far-left hand. But even Democrats have admitted that the rhetoric in the presidential debates is having the opposite effect—which makes Klein’s talk of success in 2021 wishful thinking more than a realistic prediction.

This post was originally published at The Federalist.

Antiquated Kidney Care System Shows Single Payer’s Poor Care

Earlier this month, President Trump signed another executive order on health care, this one related to the treatment of patients with kidney disease. The administration estimates the measures will ultimately save billions of taxpayer dollars, and up to 28,000 lives per year.

Critics highlighted that Trump’s order relies upon authorities in Obamacare to reform the kidney care system, even as his administration argues that federal courts should strike down the entire law. But these critics omitted another, even greater irony: At a time the left wants to create a single-payer health care system, the deplorable condition of kidney care in this country—with high death rates, and patients unnecessarily suffering because they continue to receive outdated and inefficient treatments—illustrates perfectly all the flaws of government-run health care.

Health Care ‘Innovation,’ Circa 1973

  • Only 12 percent of American patients undergo dialysis at home, compared to 80 percent in Hong Kong. Even Guatemala has a 56 percent in-home dialysis rate.
  • A total of $114 billion in federal spending, just to treat this one condition.
  • Half of the patients who undergo dialysis die within five years.
  • We’re currently using “Decades-old models of care,” as described by one kidney care administrator: “The last 30 years as a country all we’ve done is wait for kidneys to fail and we put people on dialysis.”

As Health and Human Services Secretary Alex Azar, whose father received a transplanted kidney five years ago, noted in a speech in March: “One of the key reasons for our failing policies is that kidney care in particular has some of the worst incentives in American health care.”

Why does kidney care have some of the worst incentives in a health care system plagued with all sorts of perverse disincentives? Even Vox stumbled across the truth in an article on the issue: “Medicare has covered all end-stage kidney disease treatment since 1973.”

Because Medicare provides full coverage for most kidney care patients, providers have very little incentive to innovate. The two largest dialysis providers—DaVita and Fresenius—get paid more for providing care in clinics rather than at home. As a result, American patients (as opposed to patients in other countries) must endure the hardship of taking hours out of their day several times per week to go to dialysis clinics, rather than receiving the treatment in the comfort of their home while they sleep.

But because dialysis providers have little qualms charging the federal government beaucoup bucks for substandard care, and because the federal government does not adapt nearly as quickly to new care models as the private sector, kidney patients—and taxpayers—have suffered. It’s but another example of how government-run health care inflicts its greatest harms on the most vulnerable patients.

Health Care Run by Bureaucrats

The Trump administration’s executive order envisions new delivery models for kidney care proposed by the Center for Medicare and Medicaid Innovation (CMMI). As noted above, some pointed out that Obamacare created CMMI, meaning that if federal courts strike down all of the law, the authority to implement these changes would disappear. The critics ignore one key fact: Congress enacted Obamacare into law nearly a decade ago—yet neither Congress nor CMMI took action on kidney care issues until this point.

The fact that it took a self-proclaimed “innovation” center nearly a decade to propose reforms to kidney care reinforces the inability to change within the entire federal health care bureaucracy. Just before Obamacare’s enactment, Sen. Max Baucus (D-MT), then-chair of the Senate Finance Committee, called officials within the Centers for Medicare and Medicaid Services “hidebound, not very creative, a crank-turning bunch of folks.”

The lack of progress on kidney care for so many years reinforces the accuracy of Baucus’ assessment. Yet the left wants to empower these same “hidebound” bureaucrats with authority not just over Medicare, but all Americans’ health care treatments.

Note to American patients: If you want the best health care money could buy as of 1973—the year when Medicare began coverage of end-stage renal disease—then you’ll love single-payer health care. If, on the other hand, you prefer access to modern, 21st-century medicine, then you might want to stick with another type of health care system—one run by doctors and patients rather than government bureaucrats.

This post was originally published at The Federalist.

How Robert Francis O’Rourke Sabotaged Obamacare

On Monday night, the Wall Street Journal reported that former U.S. representative Robert Francis O’Rourke had underpaid his taxes for 2013 and 2014. When O’Rourke released his tax returns Monday night, the Journal contacted an accountant, who noticed the error:

O’Rourke and his wife, Amy, appear to have underpaid their 2013 and 2014 taxes by more than $4,000 combined because of an error in the way they reported their medical expenses, according to tax returns the couple released Monday evening.

They took deductions for those costs without regard to the limit that only allowed that break for medical and dental expenses above 10% of income for people their age. Had they not taken the nearly $16,000 in medical deductions, their taxable income would have been higher.

But why did they over-report their medical expense deduction? If you’re curious, go and fetch a copy of the Consolidated Print of the Patient Protection and Affordable Care Act. Why, lookie what we have here:

SEC. 9013. MODIFICATION OF ITEMIZED DEDUCTION FOR MEDICAL EXPENSES.

(a) IN GENERAL.—Subsection (a) of section 213 of the Internal Revenue Code of 1986 is amended by striking ‘7.5 percent’ and inserting ‘10 percent’.

(b) TEMPORARY WAIVER OF INCREASE FOR CERTAIN SENIORS.— Section 213 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

‘(f) SPECIAL RULE FOR 2013, 2014, 2015, AND 2016.—In the case of any taxable year beginning after December 31, 2012, and ending before January 1, 2017, subsection (a) shall be applied with respect to a taxpayer by substituting ‘7.5 percent’ for ‘10 percent’ if such taxpayer or such taxpayer’s spouse has attained age 65 be- fore the close of such taxable year.’

However, seniors could report at the lower 7.5 percent level for 2013 through 2016. In 2013 and 2014, Robert Francis reported at the lower 7.5 percent level, even though he and his wife aren’t seniors. Oops.

Several things come to mind upon reading this news, the first being one word: SABOTAGE. Democrats frequently like to claim that the Trump administration is “sabotaging” Obamacare. But by failing to pay an Obamacare-related tax increase, Robert Francis quite literally did just that—he sabotaged the law, failing to fund its entitlements by failing to pay his newly increased tax bill.

Second, did Robert Francis ever bother to READ Obamacare? Sure, he wasn’t a congressman when the bill passed, because he wasn’t a congressman for long, but one would think a member of Congress would bother to educate himself about such an important, and visible, piece of legislation. I talked several times with my mother, a senior who uses the medical expense deduction, about the import of this provision on her taxes. But then again, I actually bothered to read the bill.

More to the point, this episode once again reveals how Democrats want to bequeath to the nation laws that they do not understand. Recall that Max Baucus (D-MT), then the chairman of the Senate Finance Committee and a main author of Obamacare, said he didn’t need to bother reading the bill because he hired “experts” to do it for him. Except that one of those supposed “experts” admitted four years later that, on the law’s employer mandate, “we didn’t have a very good handle on how difficult operationalizing that provision would be at that time.” A government too big to manage—that’s liberals’ greatest legacy.

As James Madison reminded us in Federalist 51, “In framing a government which is to be administered by men over men, the great difficulty lies in this: You must first enable the government to control the governed, and in the next place oblige it to control itself.” Maybe Robert Francis should think about that the next time he’s out on the campaign trail—or writing that check for back taxes to the IRS.

This post was originally published at The Federalist.

How the Obama Administration Hid Facts to Pass Obamacare

Over the weekend, Politico ran a report about how a “Trump policy shop filters facts to fit his message.” The article cited several unnamed sources complaining about the office of the Assistant Secretary for Planning and Evaluation (ASPE) within the Department of Health and Human Services (HHS), and its allegedly politicized role within the current administration.

One of the article’s anonymous sources called ASPE’s conduct over the past 18 months “another example of how we’re moving to a post-fact era.” Richard Frank, a former Obama appointee and one of the few sources to speak on the record, said that he found the current administration’s “attack on the integrity and the culture of the office…disturbing.”

As a congressional staffer conducting oversight of the CLASS Act in 2011-12, I reviewed thousands of pages of e-mails and documents from the months leading up to Obamacare’s passage. Those records strongly suggest that ASPE officials, including Frank, withheld material facts from Congress and the public about CLASS’s unsustainability, because full and prompt disclosure could have jeopardized Obamacare’s chances of passage.

About the CLASS Act ‘Ponzi scheme’

The Community Living Assistance Services and Supports program, or CLASS for short, intended to provide a voluntary insurance benefit for long-term care. Included as part of Obamacare, the program never got off the ground. In October 2011, HHS concluded it could not implement the program in an actuarially sound manner; Congress repealed the program entirely as part of the “fiscal cliff” deal enacted into law in the early days of 2013.

CLASS’s prime structural problem closely resembled that of the Obamacare exchanges—too many sick people, and not enough healthy ones. Disability lobbyists strongly supported the CLASS Act, hoping that it would provide financial support to individuals with disabilities. However, its voluntary nature meant that the more people already with disabilities enrolled and qualified for benefits, the higher premiums would rise, thereby discouraging healthy people from signing up.

Moreover, although actuarially questionable in the long-term, CLASS’s structure provided short-term fiscal benefits that aided Obamacare’s passage. Because CLASS required a five-year waiting period to collect benefits, the program would generate revenue early in its lifespan—and thus in the ten-year window budget analysts would use to score Obamacare—even if it could not maintain balance over a longer, 75-year timeframe.

This dynamic led the Senate Budget Committee Chairman Kent Conrad (D-ND), to dub CLASS “a Ponzi scheme of the first order, the kind of thing Bernie Madoff would have been proud of.”

Internal Concerns Minimized in Public

A report I helped draft, which several congressional offices released in September 2011—weeks before HHS concluded that program implementation would not go forward—highlighted concerns raised within the department during the debate on Obamacare about CLASS’ unsustainable nature. For instance, in September 2009, one set of talking points prepared by ASPE indicated that, even after changes made by Congress, CLASS “is still likely to create severe adverse selection problems”—i.e., too many sick people would enroll to make the program sustainable.

Frank told me that, during one public speech in October 2009, “I spent about half my time setting out the problems with CLASS that needed to be fixed.” He did indeed highlight some of the actuarial challenges the CLASS program faced. But Frank’s remarks, at a Kaiser Family Foundation event, closed thusly:

We’ve, in the department, have modeled this extensively, perhaps more extensively than anybody would want to hear about [laughter] and we’re entirely persuaded that reasonable premiums, solid participation rates, and financial solvency over the 75-year period can be maintained. So it is, on this basis, that the Administration supports it that the bill continues to sort of meet the standards of being able to stand on its own financial feet. Thanks.

Frank told me over the weekend that his comments “came at the end of my explaining that we were in the process of addressing those issues” (emphasis mine). But Frank actually said that the Obama administration was “entirely persuaded” of CLASS’ solvency, which gives the impression not that the department had begun a process of addressing those issues, but had already resolved them.

Frank’s public comments notwithstanding, ASPE had far from resolved the actuarial problems plaguing CLASS. Two days after his speech, one of Frank’s employees sent around an internal e-mail suggesting that the CLASS Act “seems like a recipe for disaster.”

But the ‘Fixes’ Fall Short

In response to these new analyses, HHS and ASPE came up with a package of technical fixes designed to make the CLASS program actuarially sound. One section of those fixes noted that “it is possible the authority in the bill to modify premiums will not be sufficient to ensure the program is sustainable.”

However, the proposed changes came too late:

  • No changes to the CLASS Act made it into the final version of Obamacare, which then-Majority Leader Harry Reid (D-NV) filed in the Senate on December 19, 2009.
  • The election of Scott Brown (R-MA) to replace the late Kennedy in January 2010 prevented Democrats from fixing the CLASS Act through a House-Senate conference committee, as Brown had pledged to be the “41st Republican” in the Senate who would prevent a conference report from receiving a final vote.
  • While the House and Senate could (and did) pass some changes to Obamacare on a party-line vote through the budget reconciliation process, the Senate’s “Byrd rule” on inclusion of incidental matters in a budget reconciliation bill prevented them from addressing CLASS.

The White House’s own health care proposal, released in February 2010, discussed “a series of changes to the Senate bill to improve the CLASS program’s financial stability and ensure its long-run solvency.” But as HHS Secretary Kathleen Sebelius later testified before the Senate Finance Committee, the “Byrd rule” procedures for budget reconciliation meant that those changes never saw the light of day—and could not make it into law.

Kinda Looks Like a Conspiracy of Silence

By the early months of 2010, officials at ASPE knew they had a program that they could not fix legislatively, and could fail as a result. Yet at no point between January 2010, when ASPE proposed its package of technical changes, through Obamacare’s enactment, did anyone within the administration admit that the program could prove impossible to implement.

Over the weekend, I asked Frank about this silence. He responded that “when the reconciliation package was shelved”—which I take to mean that the CLASS changes did not make it into the reconciliation bill, which did pass—“we began working on regulatory remedies that might address the flaws in CLASS.” However, from the outset some of Frank’s own employees believed those changes might prove insufficient to make the program actuarially sound, as it later proved.

To put it another way: In February 2011, Sebelius testified before the Senate Finance Committee that “the snapshot [of CLASS] in the bill, I would absolutely agree, is totally unsustainable.” She, Frank, and others within the administration had known this fact one year previously: They just hoped they could arrive at a package of regulatory changes that would overcome the law’s structural flaws.

But did anyone within the administration disclose that CLASS was “totally unsustainable” as written back in February 2010? No, because doing so could have jeopardized Obamacare’s chances of passage. The law passed the House on a narrow 219-212 margin.

If HHS had publicly conceded that CLASS could become a “zombie” program—one that they could not fix, but could not remove—it would have caused a political firestorm, and raised broader questions about the bill’s fiscal integrity that could have prevented its enactment.

Was Obamacare Sold on a Lie?

Conservatives have pilloried Obamacare for the many false statements used to sell the law, from the infamous “Lie of the Year” that “If you like your plan, you can keep it” to the repeated promises about premium reductions, Barack Obama’s “firm pledge” to avoid middle-class tax increases, and on and on.

But there are sins of both commission and omission, and the CLASS Act falls into the latter category. Regardless of whether one uses the loaded term “lie” to characterize the sequence of events described above, the public statements by HHS officials surrounding the program prior to Obamacare’s enactment fell short of the full and unvarnished truth, both as they knew it at the time, and as events later proved.

Politico can write all it wants about ASPE under Trump “filter[ing] facts to fit his message.” But ASPE’s prior failure to disclose the full scope of problems the CLASS Act faced represents a textbook example of a bureaucracy hiding inconvenient truths to enact its agenda. If anonymous HHS bureaucrats now wish to attack a “post-fact era” under Trump, they should start by taking a hard look in the mirror at what they did under President Obama to enact Obamacare.

This post was originally published at The Federalist.

Republicans Were Against Reinsurance Before They Were For It

House Speaker Paul Ryan (R-WI) made comments in a January radio interview supporting a “bipartisan opportunity” to fund Obamacare’s Exchanges, specifically through mechanisms like reinsurance.

How quickly the speaker forgets — or wants others to forget. Obamacare already had a reinsurance program, one that ran from 2014 through 2016. During that time, non-partisan government auditors concluded that, while implementing that reinsurance program, the Obama administration violated the law, diverting billions of dollars to insurers that should have gone to the United States Treasury. After blasting the Obama administration’s actions as the “Great Obamacare Heist,” and saying taxpayers deserved their money back, Republican leaders have for the past eighteen months done … exactly nothing to make good on their promise.

Section 1341 of Obamacare imposed a series of “assessments” (some have called them taxes) to accomplish two objectives. Section 1341 required the Department of Health and Human Services (HHS) to collect $5 billion, to reimburse the Treasury for the cost of another Obamacare program that operated from 2010 through 2013. The assessments also intended to provide a total of $20 billion — $10 billion in 2014, $6 billion in 2015, and $4 billion in 2016 — in reinsurance funds to health insurers subsidizing their high-cost patients.

Unfortunately, however, the “assessments” on employers offering group health coverage did not achieve the desired revenue targets. The plain text of the law indicates that, under such circumstances, HHS must repay the Treasury before it paid health insurers. But the Obama Administration did no such thing — it paid all of the available funds to insurers, while giving taxpayers (i.e., the Treasury) nothing.

The non-partisan Congressional Research Service and other outside experts agreed that the Obama administration flouted the law to give taxpayers the shaft. In September 2016, the Government Accountability Office (GAO) agreed: “We conclude that HHS 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.”

At the time GAO issued its ruling, Republicans denounced the Obama Administration’s actions, and pledged to fight for taxpayers’ interests: Multiple Chairmen — including the current Chairs of the House Ways and Means Committee and Senate Budget, HELP, and Finance Committees — said in a statement that, as a matter of “fairness and respect for the rule of law clearly anchored in the Constitution,” the Obama “Administration need to put an end to the Great Obamacare Heist immediately.”

Sen. John Barrasso (R-WY), Chairman of the Senate Republican Policy Committee, said that “the Administration should end this illegal scheme immediately.”

A spokesman for the House Energy and Commerce Committee said that, “We expect the Administration to comply with the independent watchdog’s opinion, halt the billions of dollars in illegal Obamacare payments to insurers, and pay back the American taxpayers what they are owed.”

Since all this (self-)righteous indignation back in the fall of 2016 — six weeks before the presidential election — what exactly have Republicans done to follow through on all their rhetoric?

In a word, nothing. No legislative actions, no hearings, no letters to the Trump Administration — nothing. Some experts have suggested that the Trump administration could file suit against insurers, seeking to reclaim taxpayers’ cash, but the administration has yet to do so.

In September 2016, outside analysts explained why the Obama administration prioritized insurers’ needs over taxpayers’ — and the rule of law: “I don’t think the Administration wants to do anything to upset insurers right now.” That same description just as easily applies to Republican congressional leaders today, making their promise to end the “Great Obamacare Heist” yet another one that has thus far gone unfulfilled — that is, if they ever intended to make good on their rhetoric in the first place.

This post was originally published at The Federalist.

Did Orrin Hatch Call the Wrong Party “Stupid” Over Obamacare?

Republican Sen. Orrin Hatch called Obamacare “the stupidest, dumbass bill” he’s ever seen at a recent American Enterprise Institute forum. “Some of you may have loved it,” he said. “And if you do, you are one of the stupidest, dumbass people I’ve ever met.”

Hatch ended up apologizing for his comment, but the question remains: If the chairman of the Senate Finance Committee considers Obamacare the “stupidest, dumbass” law on earth, then why on earth are his fellow Republicans so desperate to bail it out?

But of course, that approach would involve actually repealing Obamacare. And instead of solving the underlying problem, by repealing the regulations that led premiums to increase, Republicans want to throw money at the problem, giving insurance companies corporate welfare payments hand-over-fist in the hope that these efforts will mitigate ever-rising premiums.

This strategy does seem like a “dumbass” approach for several reasons. First, it does not repeal Obamacare. Numerous studies have demonstrated that Obamacare’s regulations have raised premiums. Occam’s Razor concludes that, if Congress wants to solve the problem of higher premiums, it should start by fixing the underlying reason for those higher premiums.

Second, this approach not only does not repeal Obamacare, it also entrenches it by making it the federal government’s business to “lower” health insurance premiums. The federal government has no more business dictating the price of health insurance than it does the price of homes, or food, or shoes. But by throwing more money at the Exchanges, Republicans will make it the business of the federal government — and federal taxpayers — to “lower” health insurance premiums.

President Trump hinted at the fundamental problems this approach brings last month, when he tweeted about protests in Britain over the National Health Service (NHS). One need only watch Prime Minister’s Questions to observe the ways in which Members of Parliament in Britain turn the NHS into a political tool. Most opposition parties pledge to “fix” the NHS by throwing more money at it. And last month, Jeremy Corbyn, head of the Labour Party and Leader of the Opposition, attacked the Conservative Government for “refusing to give our NHS the money it needs and needs now.”

If the federal government takes political responsibility for health insurance premiums, the “stability” fund would soon turn into a perpetual — and perpetually expanding — money pit. Even with a theoretical expiration date, Congress would face pressure to renew the fund, lest premiums increase if it lapses. And if premiums continue to rise, politicians would propose even greater corporate welfare payments, to “stabilize” the markets with yet more taxpayer dollars.

That scenario leads to the third problem, which Margaret Thatcher famously described four decades ago: Socialist governments traditionally do make a financial mess. They always run out of other people’s money.

That quote, coupled with our existing $20 trillion in federal debt, explains why, in their attempts to micro-manage the health insurance system from Washington, the Republican-Socialists who wish to bail out Obamacare have proposed much the same kind of “dumbass” policies as Hatch himself criticized.

This post was originally published at The Federalist.

Republicans’ SCHIP Surrender

In spring 2015, Senate Republican leaders pressured their members to accept a clean, two-year reauthorization of the State Children’s Health Insurance Program (SCHIP) added as part of a larger health spending measure.

The SCHIP reauthorization added to a larger Medicare bill included none of the reforms Republicans had proposed that year, many of which attempted to turn the program’s focus back toward covering low-income families first, as the George W. Bush administration had done. But Republican leaders said that the two-year extension, rather than the four-year extension Democrats supported, would allow conservatives to fight harder for reforms in 2017.

The press has focused on the disputes over paying for the SCHIP program, which have held up final enactment of a long-term reauthorization. (The House passed its version of the bill in November; the Senate, failing to find agreement on pay-fors, has not considered the bill on the floor.) But the focus on pay-fors has ignored Republicans’ abject surrender on the policy behind the program, because the media defines “bipartisanship” as conservatives agreeing to do liberal things. That occurred in abundance on this particular bill.

So Much for Our Promises, Voters

On the underlying policy, all the groups who pledged to fight for conservative reforms vacated the field. Senate Finance Committee Chairman Orrin Hatch (R-UT), who brags about how he created the program as part of the Balanced Budget Act in 1997, cut a deal with Ranking Member Ron Wyden (D-OR) that, as detailed below, includes virtually no conservative reforms to the program—raising questions about whether Hatch was so desperate for a deal to preserve his legacy that he failed to fight for conservative reforms.

House Speaker Paul Ryan (R-WI) did not repudiate the agreement Hatch and Wyden struck, even though that agreement maintained virtually the provisions of the 2009 SCHIP reauthorization that Ryan himself, then the ranking member of the House Budget Committee, called “an entitlement train wreck.”

Republicans have thus suffered the worst of both worlds: getting blamed for inaction on a program’s reauthorization, while already having conceded virtually every element of that program, save for its funding.

Details About the SCHIP Proposals

A detailed examination of the Hatch-Wyden agreement (original version here, and slightly revised version in Sections 301-304 of the House-passed bill here) demonstrates how it extends provisions of the 2009 reauthorization passed by a Democratic Congress and signed by President Obama—which Republicans in large part opposed. Moreover, the Hatch-Wyden agreement and House-passed bill includes none of the reforms the House Energy and Commerce Committee proposed, but were not enacted into law, in 2015.

The only “reform” in the pending reauthorization consists of phasing out an enhanced match for states included in Section 2101(a) of Obamacare—one already scheduled to expire. Even though the enhanced match will end on its own in October 2019, the Hatch-Wyden agreement and the House-passed bill would extend that enhanced match by one year further, albeit at a reduced level, before phasing it out entirely.

Child Enrollment Contingency Fund: Created in Section 103 of the 2009 reauthorization. As I noted then, “Some Members may be concerned that the fund—which does not include provisions making additional payments contingent on enrolling the low-income children­ for which the program was designed—will therefore help to subsidize wealthier children in states which have expanded their programs to higher-income populations, diverting SCHIP funds from the program’s original purpose” (emphasis original). Section 301(c) of the House-passed bill would extend this fund, without any reforms.

Express Lane Eligibility: Created in Section 203 of the 2009 reauthorization, as a way of using eligibility determinations from other agencies and programs to facilitate enrollment in SCHIP. As I noted then, “Some Members may be concerned first that the streamlined verification processes outlined above will facilitate individuals who would not otherwise qualify for Medicaid or SCHIP, due either to their income or citizenship, to obtain federally-paid health benefits.” Section 301(e) of the House-passed bill would extend this option, without any reforms.

Citizenship Verification: Section 211 of the 2009 reauthorization created a new process for verifying citizenship, but not identity, to circumvent strict verification requirements included in the 2005 Deficit Reduction Act. As I wrote in 2009:

Some Members may echo the concerns of Social Security Commissioner Michael Astrue, who in a September 2007 letter stated that the verification process proposed in the bill would not keep ineligible individuals from receiving federal benefits—since many applicants would instead submit another person’s name and Social Security number to qualify. Some Members may believe the bill, by laying out a policy of ‘enroll and chase,’ will permit ineligible individuals, including illegal aliens, to obtain federally-paid health coverage for at least four months during the course of the verification process. Finally, some Members may be concerned that the bill, by not taking remedial action against states for enrolling illegal aliens—which can be waived entirely at the Secretary’s discretion—until states’ error rate exceeds 3%, effectively allows states to provide benefits to illegal aliens.

Legal Aliens: Section 214 of the 2009 reauthorization allowed states to cover legal aliens in their SCHIP programs without subjecting them to the five-year waiting period required for means-tested benefits under the 1996 welfare reform law.

As I wrote in 2009, “Some Members may be concerned that permitting states to cover legal aliens without imposing waiting periods will override the language of bipartisan welfare reform legislation passed by a Republican Congress and signed by a Democrat President, conflict with decades-long practices in other federally-sponsored entitlement health programs (i.e., Medicare), and encourage migrants to travel to the United States for the sole or primary purpose of receiving health benefits paid for by federal taxpayers.” The House-passed bill includes no provisions modifying or repealing this option.

Premium Assistance: Section 301 of the 2009 reauthorization created new options regarding premium assistance—allowing states to subsidize employer-sponsored coverage, rather than enrolling individuals in government-run plans. While that reauthorization contained some language designed to make premium assistance programs more flexible for states, it also expressly prohibited states from subsidizing health savings account (HSA) coverage through premium assistance. The House-passed bill includes no provisions modifying or repealing this prohibition on states subsidizing HSA coverage.

Health Opportunity Accounts: Section 613 of the 2009 reauthorization prohibited the Department of Health and Human Services from approving any new demonstration programs regarding Health Opportunity Accounts, a new consumer-oriented option for low-income beneficiaries created in the 2005 Deficit Reduction Act. The House-passed bill includes no provisions modifying or repealing this prohibition on states offering more consumer-oriented options.

Covering Poor Kids First: The 2015 proposed reauthorization looked to restore SCHIP’s focus on covering low-income children first, by 1) eliminating the enhanced federal match rate for states choosing to cover children in families between 250-300 percent of the federal poverty level ($61,500-$73,800 for a family of four in 2017) and 2) eliminating the federal match entirely for states choosing to cover children in families above 300 percent of poverty. These provisions were consistent with the policy of the George W. Bush administration, which in 2007 issued guidance seeking to ensure that states covered low-income families first before expanding their SCHIP programs further up the income ladder. The House-passed bill includes no such provision.

Maintenance of Effort: Section 2001(b) of Obamacare included a requirement that states could not alter eligibility standards for children enrolled in SCHIP through October 1, 2019, limiting their ability to manage their state programs. Whereas the 2015 proposed reauthorization would have repealed this requirement, effective October 1, 2015, Section 301(f) of the House-passed bill would extend this requirement, through October 1, 2022. (However, under the House-passed bill, states could alter eligibility for children in families with incomes over 300 percent of poverty, beginning in October 2019.)

Crowd-Out: The 2015 proposed reauthorization allowed states to impose a waiting period of up to 12 months for individuals who declined an offer of, or disenrolled from, employer-based coverage—a provision designed to keep families from dropping private insurance to enroll in a government program. The House-passed bill contains no such provision.

Program Name: The 2009 reauthorization sought to remove the “state” element of the “State Children’s Health Insurance Program,” renaming the program as the “Children’s Health Insurance Program.” While the 2015 proposed reauthorization looked to restore the “state” element to “SCHIP,” the House-passed bill includes no such provision.

Cave, Not a Compromise

For all the focus on paying for SCHIP, the underlying policy represents a near-total cave by Republicans, who failed to obtain any meaningful reforms to the program. Granted, Democrats likely would not agree to all the changes detailed above. But the idea that a “bipartisan” bill should include exactly none of them also seems absurd—unless Republicans threw in the towel and failed to fight for any changes.

The press spent much of 2017 focused on Republican efforts to unwind Obamacare. But the SCHIP bill represents just as consequential a story. The cave on SCHIP demonstrates how many Republicans, after spending the last eight years objecting to the Obama agenda, suddenly have little interest in rolling it back.

This post was originally published at The Federalist.

Bailing Out Health Insurers Now Would Only Reward Their Negligence

Upon the unveiling of another health insurance “stabilization” measure Tuesday, Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-TN) claimed he did not view it as a repudiation of his own “stability” measure, introduced last week.

“We’ve gone from a position where everyone was saying we can’t do cost sharing [reduction payments] to responsible voices like [Senate Finance Committee Chairman Orrin] Hatch and [House Ways and Means Committee Chairman Kevin] Brady saying we should.”

In the words of Margaret Thatcher, “No. No. No!” Conservatives should reject the premise that Congress must immediately open up the federal piggy bank to replenish the unconstitutional cost-sharing reduction subsidies that the Trump administration cut off earlier this month. Instead, it should first hold insurers—and insurance regulators—accountable for the irresponsible actions that got them to this point.

Insurers Disregarded a Federal Lawsuit

My May article explained how insurers sought to hold Congress hostage over cost-sharing reduction payments. Unless Congress guaranteed the payments for all of calendar year 2018, insurers claimed they would have to raise premiums to reflect “uncertainty” over the payments.

But that “uncertainty” always existed. Insurers just ignored it. They ignored a federal district court judge’s May 2016 ruling striking down the cost-sharing reduction payments as unconstitutional, because the judge stayed her ruling pending an appeal. They ignored warnings that the next presidential administration could easily cut off the payments unilaterally. And they ignored the fact that a presidential election was scheduled for November 2016, and that “come January 2017, the policy landscape for insurers could look far different” than under the Obama administration.

Upon reading my May 2017 article, a former colleague who works for an insurer responded by claiming that no one took the litigation against the cost-sharing reduction payments seriously last year. In other words, it was a risk that he and his colleagues ignored until President Trump started making threats to cut off the payments, and finally did so earlier this month.

Regulators Asleep at the Switch?

Likewise, state insurance commissioners largely disregarded until this spring and summer the possibility that cost-sharing reduction payments would disappear. At a Capitol Hill briefing last month, I asked Brian Webb of the National Association of Insurance Commissioners (NAIC) whether his members had considered the prospect of cost-sharing reduction payments disappearing last fall, when regulators examined rates for the current (i.e., 2017) plan year. By last fall, a federal court had already declared the payments unconstitutional, and every state insurance commissioner knew a new administration would take office in January and could stop the payments directly.

Webb’s response? “Under the court decision, they [the cost-sharing reduction payments] are still being paid, pending appeal.… In the meantime, payments are being made.” That is, until three weeks after the briefing in question, when President Trump stopped the payments. Oops.

It does not appear that most regulators even bothered to consider this scenario last year, just like most insurers ignored the prospect of cost-sharing reductions going away. Instead, as with banks who assumed a decade ago that subprime mortgages could never fail, the health insurance industry blindly assumed—despite significant evidence to the contrary—that cost-sharing reduction payments would continue.

Prevent ‘Too Big to Fail’

Yes, the Congressional Budget Office has indicated that cutting off the cost-sharing reduction payments would cost the federal government more in the short-term. That and other facts may give Congress a reason to restore the payments, eventually.

But most importantly, Congress should take action—by exercising its oversight authority, and through legislation if necessary—to end the “too big to fail” mentality that led insurers and their regulators to make a series of bad decisions regarding cost-sharing reductions. To instead give insurers a blank check, paid for by federal taxpayers, could cost far more in the longer term.

This post was originally published at The Federalist.

Four Questions about the Alexander-Murray Bill

Upon its unveiling last week, the health insurance “stabilization” measure drafted by Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) received praise from some lawmakers. For instance, Sen. John McCain (R-AZ) stated that “health care reform ought to be the product of regular order in the Senate, and the bill [the sponsors] introduced today is an important step towards that end.”

Unfortunately, the process to date has not resembled the “regular order” its sponsors have claimed. Drafted behind closed doors, by staff for a committee with only partial jurisdiction over health care, the bill’s provisions remained in flux as of last week. Moreover, the bill apparently will not undergo a mark-up or other committee action before the bill is either considered on the Senate floor—or, as some have speculated, “air-dropped” into a massive catch-all spending bill, where it will receive little to no legislative scrutiny.

Why didn’t Alexander know his bill provided taxpayer funding of abortion coverage?

Following my article last week highlighting how the cost-sharing reduction payments appropriated in the legislation would represent taxpayer funding of plans that cover abortion, a reporter for the Catholic-run Eternal Word Television Network interviewed senators Alexander and Murray (along with myself) about the issue.

Alexander told reporter Jason Calvi that he “hadn’t discussed” the life issue with staff, indicating he had little inkling of the effects of the legislation he sponsored:

Alexander then claimed that “I’m sure the president will address” the abortion funding issue. But executive action—which a future president can always rescind—is no substitute for legislative language. The pro-life community derided President Obama’s executive order designed to segregate abortion payments and federal funding as an accounting sham.

As I wrote in June, Republican leaders—including Senate leader Mitch McConnell (R-KY), and Mike Pence, the current vice president—clearly noted during debates on Obamacare that the law would provide for taxpayer funding of abortion coverage. The Alexander-Murray bill would do likewise unless and until the legislation includes an explicit ban on abortion funding.

Who inserted the earmark for Minnesota into the legislation?

Call it the “Klobuchar Kickback,” call it the “Golden Gopher Giveaway,” but Section 2(b) of the bill contains provisions relevant only to Minnesota. Specifically, that provision would allow a state’s basic health program—which states can establish for individuals with incomes between 133 and 200 percent of the federally defined poverty level—to receive “pass-through” block grant funding under a waiver.

Currently, only New York and Minnesota have implemented basic health programs, and of those two states, only Minnesota has also sought a state innovation waiver under Obamacare. Last month, the federal Centers for Medicare and Medicaid Services (CMS), in approving Minnesota’s application for an innovation waiver, said it could not allow the state to receive “pass through” funds equal to spending on the basic health program, because the statute did not permit such an arrangement. The Alexander-Murray bill would explicitly permit basic health program spending to qualify for the “pass through” arrangement, allowing Minnesota—the only state with such an arrangement—to benefit.

Will a committee mark up the Alexander-Murray bill?

Alexander notably demurred on this topic when asked last week. One reason: As Politico has noted, it remains unclear whether or the extent to which Alexander’s committee has jurisdiction over the legislation he wrote. Revisions to the Obamacare state innovation waiver process comprise roughly half of the 26-page bill, yet the Senate HELP Committee shares jurisdiction over those matters with the Senate Finance Committee, whose chairman has derided legislation giving cost-sharing payments to insurers as a “bailout.”

Even as he praised the Alexander-Murray bill as a return to “regular order,” McCain—himself a committee chairman—doubtless would take issue with another committee “poaching” the Senate Armed Services panel’s jurisdiction, or failing to hold a mark-up entirely. Yet the process regarding the Alexander-Murray bill could include two noteworthy legislative “shortcuts”—which some may view as a deviation from “regular order.”

Are HELP Committee staff still re-writing the legislation?

A close review of the documents indicates that HELP Committee staff made changes to the bill even after Alexander and Murray announced their agreement last Tuesday. The version of the bill obtained by Axios and released last Tuesday evening—version TAM17J75, per the notation made in the top left corner of the bill text by the Office of Legislative Counsel—differs from the version (TAM17K02) publicly released by the HELP Committee on Thursday.

The revisions to the legislation, coupled with Alexander’s apparent lack of understanding regarding its implications, raise questions about what other “surprises” may lurk within its contents. For all the justifiable complaints regarding the lack of transparency over Republicans’ “repeal-and-replace” legislation earlier this year, the process surrounding Alexander-Murray seems little changed—and far from “regular order.”

This post was originally published at The Federalist.