The Trump Administration’s Innovative Solution Regarding Pre-Existing Conditions

Last Thursday afternoon, the Trump administration released its final rule regarding Health Reimbursement Arrangements (HRAs). The 497-page document will take lawyers and employment professionals weeks to absorb and digest fully. But in a nutshell, the rule will help to make coverage more portable and affordable—while also going a long way to resolve the problem of pre-existing conditions.

As I first explained when the administration proposed this HRA rule back in October, much of the problem surrounding pre-existing conditions revolves around portability. Because most Americans don’t own their own health coverage—their employers do—when people lose their job, they lose their health coverage. The pre-existing condition problem emerges when people develop a costly medical condition while at one job, then have to switch jobs or otherwise leave their employer plan.

But if people owned their own insurance policies, they could change jobs easily, without fear of losing their coverage. Moreover, they would get to pick the kinds of benefit designs and doctor networks they want, rather than being stuck with what their employer picks for them.

The final rule accomplishes both objectives. It enhances portability by allowing employers to give their workers a (tax-free) contribution to an HRA, so employees can buy the plan that works best for them. If there’s any difference between the employer’s contribution and the total premium—for instance, an employer contributes $300 per month, and the worker selects a plan with a $350 monthly premium—the worker can pay the difference on a pre-tax basis, so long as he purchases the plan outside of the Obamacare exchanges. Best of all, because employees own the plans and not the employer, they can keep their coverage when they change jobs.

This change also improves affordability, in two key respects. First, individuals can buy just the coverage they want, rather than the coverage their employer gives them. Currently, if an employer plan offers particular benefits that an employee does not value, or a provider network a worker does not need, the worker can only buy an alternative plan by forfeiting their employer’s subsidy towards their health insurance—an unattractive and irrational option for most. The HRA option will allow workers to retain their employer’s subsidy, yet purchase more tailored coverage.

Second, more people purchasing coverage individually will create a more robust marketplace, increasing competition. Carriers may move into the market for individual coverage, and even create new options to attract additional business—both changes that will help consumers, and mitigate premium increases.

The final rule does include important safeguards to ensure that businesses don’t just try to “dump” their sickest employees onto individual insurance plans, raising premiums on the Obamacare exchanges. Most notably, if they elect the HRA option, firms must apply it to an entire class of workers—for instance, all full-time workers, or all workers in a certain geographic area. Moreover, employers cannot vary their contributions to workers’ HRAs, except by the employee’s age and number of dependents.

The rule could eventually lead to dramatic changes in Americans’ health-coverage options, but it includes provisions designed to phase those changes in over time. Under the rule, employers cannot offer traditional group health coverage to any class of workers that has access to an individual coverage HRA. In other words, employers can choose the “new” HRA model to deliver benefits to their workers, or the “old” (i.e., existing) model for their workers, but not both (at least not for the same class of workers).

However, the final rule also includes a critically important grandfathering provision, which will provide businesses the option for a smoother transition. Under this provision, an employer can apply the HRA model to new hires, while allowing existing employees to maintain their traditional group insurance. For instance, an employer could state that any worker joining the firm after the HRA rule takes effect (on January 1, 2020) would receive health coverage using the new rules, while current workers would remain on the firm’s existing employer plan.

Conservatives concerned about pre-existing conditions should study this rule closely, and cite it every time the left mounts political attacks over the issue. Liberals want the government to control all of health care, as evidenced by their single-payer push. Conversely, conservatives want doctors and patients to make their own health-care decisions. Last week’s HRA rule will accomplish just that.

This post was originally published at The Federalist.

How an Obscure Regulatory Change Could Transform American Health Insurance

Between the election campaign and incidents of terrorism ranging from attempted bombings to a synagogue shooting, an obscure regulatory proposal by the Trump administration has yet to captivate the public’s attention. However, it has the potential to change the way millions of Americans obtain health insurance.

In the United States, unique among industrialized countries, most Americans under age 65 receive health coverage from their employers. This occurs largely due to an Internal Revenue Service (IRS) ruling issued during World War II, which excluded health insurance coverage from income and payroll taxes. (Businesses viewed providing health insurance as one way around wartime wage and price controls.)

The Trump administration’s proposed rule would, if finalized, allow businesses to make a pretax contribution towards individual health insurance—that is, coverage that individuals own and select, rather than employers. This change may take time to have an impact, but it could lead to a much more portable system of health insurance—which would help to solve the pre-existing condition problem.

How Would It Work?

Under the proposed rule, employers could provide funds through a Health Reimbursement Arrangement (HRA) to subsidize the purchase of individual health insurance. Employers could provide the funds on a pretax basis, and—provided that the workers purchase their coverage outside of the Obamacare exchanges—employees could pay their share of the premiums on a tax-free basis as well.

In practical terms, some employers may choose to provide a subsidy for health coverage—say, $300 per month, or $5,000 per year—in lieu of offering a firm-sponsored health plan. Individuals could go out and buy the plan they want, which covers the doctors whom they use, rather than remaining stuck with the plan their employer offers. And employers would get better predictability for their health expenses by knowing their exposure would remain fixed to the sums they contribute every year.

Could Employers Game the System?

The proposed rule acknowledged the possibility that employers might try to “offload” their costliest patients into individual health coverage, lowering expenses (and therefore premiums) for the people who remain. The rule contains several provisions designed to protect against this possibility.

Employers must choose to offer either an HRA contribution towards individual coverage or a group health plan. They cannot offer both options, and whatever option they select, they must make the same decision for an entire class of workers.

A “class” of workers would mean all full-time employees, or all part-time employees, or all employees under one collective bargaining agreement. Hourly and salaried workers would not count as separate “classes,” because firms could easily convert workers from one form of compensation to another. These provisions seek to ensure that firms will offer some employees health insurance, while “dumping” other employees on to individual coverage.

Can Workers Buy Short-Term Coverage with Employer Funds?

Yes—and no. The proposed rule would allow HRA funds to purchase only individual (i.e., Obamacare-compliant) health insurance coverage, not short-term insurance.

However, the rule creates a separate type of account to which employers could contribute that would fund workers’ “excepted benefits.” This term could include things like long-term care insurance, vision and dental insurance, and the new short-term plans the Trump administration has permitted. But employers could only fund these accounts up to a maximum of $1,800 per year, and they could create these special “excepted benefits” accounts only if they do not offer an HRA that reimburses workers for individual insurance, as outlined above.

Will Firms Drop Health Coverage?

Some firms may explore the HRA option over time. However, the extent to which businesses embrace defined-contribution coverage may depend upon the viability of the individual health insurance market, and the status of the labor market.

However, if and when more insurers return to the marketplace, firms may view the defined-contribution method of health coverage as a win-win: employees get more choices and employers get predictability over health costs. Particularly if unemployment ticks upward, or one firm in an industry makes the move towards the HRA model, other businesses may follow suit in short order.

Will the Proposal Cost Money?

It could. The proposed rule should cost the federal government $29.7 billion over the first ten years. That estimate assumes that 800,000 firms, offering coverage to 10.7 million people, will use the HRA option by 2028. (It also assumes an 800,000 reduction in the number of uninsured Americans by that same year.)

The cost, or savings, to the federal government could vary widely, depending on factors like:

  • Whether firms using the HRA option previously offered coverage. If firms that did not offer coverage take the HRA option, pretax health insurance payments would increase, reducing tax revenues. (The rule assumes a reduction in income and payroll tax revenue of $13 billion in 2028.)
  • Whether individuals enrolling in individual market coverage via the HRA option are more or less healthy than current enrollees. If the new enrollees are less healthy than current enrollees, individual market premiums will rise, as will spending on Obamacare subsidies for those individuals. (The rule assumes a 1 percent increase in individual market premiums, and thus exchange subsidies.)
  • The extent to which HRAs affect eligibility for Obamacare subsidies. If some low-income individuals whose employers previously did not offer coverage now qualify for HRA subsidies, they may lose eligibility for Obamacare subsidies on the exchanges. (The rule assumes a reduction in Obamacare subsidies of $6.9 billion in 2028.)

Given the many variables in play, the rule has a highly uncertain fiscal impact. It could cost the federal government billions (or more) per year, save the federal government similar sums, or have largely offsetting effects.

An Overdue (and Welcome) Change

The proposed rule would codify the last element of last October’s executive order on health care. It follows the release of rules regarding both short-term health insurance and association health plans earlier this year.

Ironically, the Trump administration represents but the most recent Republican presidency to examine the possibility of defined-contribution health insurance. While working on Capitol Hill in 2008, I tried to encourage the Bush administration to adopt guidance similar to that in the proposed rule. However, policy disagreements—including objections raised by, of all places, scholars at the Heritage Foundation—precluded the Bush administration from finalizing the changes.

Since I’ve fought for this concept for more than a decade, and included it in a series of regulatory changes the administration needed to make in a paper released shortly before Trump took office, I can attest that this change is as welcome—and needed—since it is overdue. Although overshadowed at the time of its release, this rule could have a substantial effect on Americans’ health insurance choices over time.

This post was originally published at The Federalist.

How AARP Made BILLIONS Denying Care to People with Pre-Existing Conditions

On Wednesday, the U.S. Senate voted to maintain access to short-term health coverage. Senate Democrats offered a resolution disapproving of the Trump administration’s new rules regarding the more affordable plans, but the resolution did not advance on a 50-50 tie vote.

Because short-term plans need not comply with Obamacare’s restrictions on covering prior health ailments, Senate Democrats used the resolution to claim they will protect individuals with pre-existing conditions. But what if I told you that, in the years since Obamacare passed, one organization has made more than $4.5 billion in profits, largely from denying care to vulnerable individuals with pre-existing conditions?

You might feel surprised. After all, didn’t Obamacare supposedly prohibit “discrimination” against individuals with pre-existing conditions? But what if I told you that the organization raking in all those profits was none other than AARP, the organization that claims to represent seniors? Then the profits might make more sense.

Obamacare and Pre-Existing Conditions

Even though an article on AARP’s own website states that, as of 2014, “insurance companies [are] required to sell policies to anyone, regardless of their pre-existing medical conditions,” that claim isn’t quite accurate. Obamacare exempted Medigap supplemental insurance plans from all of its “reforms,” including the prohibition on “discriminating” against individuals with pre-existing conditions.

As a 2011 Washington Post article noted, individuals can apply for Medigap plans when they first turn 65 and become eligible for Medicare. “However, when Congress created this protection in 1992…it exempted disabled Medicare beneficiaries under age 65, a group that now totals 8 million people.”

In other words, the most vulnerable Medicare beneficiaries—those enrolled because they receive Social Security disability benefits—often cannot obtain Medigap coverage due to pre-existing conditions. And because traditional Medicare does not provide a catastrophic cap on patient cost-sharing (Medigap plans often provide that coverage instead), disabled beneficiaries who want to remain in traditional Medicare (as opposed to Medicare Advantage plans offered by private insurers) may face unlimited out-of-pocket spending.

The Post article conceded that Obamacare “does not address this issue. A provision to provide disabled Medicare beneficiaries better coverage was dropped from the legislation during congressional negotiations because it would have increased Medicare costs, according to a House Democratic congressional aide.” That’s where AARP comes in.

Why Didn’t AARP ‘Show Congress the Money’?

In July 2009, the Congressional Budget Office (CBO) analyzed a House Democrat bill that, among other things, would have made Medigap coverage available to all individuals, regardless of pre-existing conditions. CBO stated that the Medigap provisions in Section 1234 of the bill would have raised federal spending by $4.1 billion over ten years—a sizable sum, but comparatively small in the context of Obamacare itself.

Contrary to the anonymous staffer’s claims to the Washington Post, if House Democrats truly wanted to end pre-existing condition “discrimination” against individuals with disabilities enrolling in Medicare, they had an easy source of revenue: AARP. As Democrats were drafting Obamacare, in November 2009, the organization wrote in a letter to Rep. Dave Reichert (R-WA) that AARP “would gladly forego every dime of revenue to fix the health care system.”

Since that time, AARP has made quite a few dimes—about 45,090,743,700, in fact—from keeping the health care system just the way it was.

Billions in Profits, But Few Principles

A review of AARP’s financial statements shows that since 2010, AARP has made more than $4.5 billion in income from selling health insurance plans, and generating investment income from plan premiums:

AARP makes its money several ways. As the chart demonstrates, a large and growing percentage of its “royalty” money comes from United Healthcare. United Healthcare sells AARP-branded Medigap plans, Part D prescription drug coverage, and Medicare Advantage insurance.

However, as a 2011 House Ways and Means Committee report made clear, in AARP receiving royalty revenues, not all forms of coverage are created equal. While the organization receives a flat fee for the branding of its Part D and Medicare Advantage plans, it receives a percentage (4.95 percent) of revenue with respect to its Medigap coverage. This dynamic means Medigap royalties make up the majority of AARP’s revenue from United Healthcare, giving AARP a decided bias in favor of the status quo, even if it means continuing to discriminate against individuals with disabilities.

AARP’s Deafening Silence

So if in the seven years since Obamacare’s enactment, AARP has earned more than enough in profits and investment income to offset the cost of changes to Medigap, and AARP publicly told Congress that it would gladly forego all its profits to achieve health care reform, why didn’t AARP make this change happen back in 2010?

AARP occasionally claims it supports reforming Medigap, normally in response to negative publicity about its shady business practices. But by and large, it avoids the subject entirely, preferring to cash in on its Medigap business by flying under the radar.

As I previously noted, in the fourth quarter of 2016 AARP lobbied on 77 separate bills, including such obscure topics as lifetime National Park Service passes, but took absolutely no action to support Medigap reform.

So the next time a liberal Democrat wants to get on his or her high horse and attack conservative policy on pre-existing conditions, ask why they support AARP making $4.5 billion in profits by denying care for individuals with disabilities. Then maybe—just maybe—one day someone could get AARP to put its money where its mouth is.

This post was originally published at The Federalist.

Is Donald Trump “Sabotaging” Obamacare?

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

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

1. The GAO Report

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

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

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

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

2. The New York Times Article

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

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

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

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

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

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

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

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

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

A third allegation:

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

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

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

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

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

3. The Lawsuit

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

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

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

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

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

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

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

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

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

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

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

Words Versus Actions

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

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

This post was originally published at The Federalist.

Do Democrats Want Obamacare to Fail under Donald Trump?

In their quest to take back the House and Senate in November’s midterm elections, Democrats have received a bit of bad news. The Hill recently noted:

Health insurers are proposing relatively modest premium bumps for next year, despite doomsday predictions from Democrats that the Trump administration’s changes to Obamacare would bring massive increases in 2019. That could make it a challenge for Democrats looking to weaponize rising premiums heading into the midterm elections.

Administration officials confirmed the premium trend last Friday, when they indicated that proposed 2019 rates for the 38 states using healthcare.gov averaged a 5.4 percent increase—a number that may come down even further after review by state insurance commissioners. So much for that “sabotage.”

The messaging strategy once again illustrates the political peril of rooting for something—particularly legislation Democrats worked so hard to enact in the first place—to fail on someone else’s watch. Like officials accused of “talking down the economy” so they can benefit politically, Democrats face the unique task of trying to talk down their own creation, while blaming someone else for all its problems.

The Obamacare Exchanges’ Prolonged Malaise

While Obamacare hasn’t failed due to President Trump, it hasn’t succeeded much, either. Enrollment continues to fall, particularly for those who do not qualify for subsidies. Two years ago—long before Donald Trump had any power to “sabotage” Obamacare as president—Bill Clinton called Obamacare “the craziest thing in the world” for these unsubsidized persons, and their collective behavior demonstrates that fact.

A recent study from the liberal Kaiser Family Foundation concluded that, away from Obamacare exchanges, where individuals cannot receive insurance subsidies, enrollment fell by nearly 40 percent in just one year, from the first quarter of 2017 to the first quarter of this year. However, the rich subsidies provided to those who qualify for them—particularly those with incomes below 250 percent of the federal poverty level, who receive reduced cost-sharing as well—strongly encourage enrollment by this population, making it unlikely that the insurance exchanges will collapse on their own.

President Trump can talk all he wants about Obamacare imploding, but so long as the federal government props tens of billions of dollars into the exchanges, it probably won’t happen.

Good Reasons for Premium Moderation

Those premium subsidies, which cushion most low-income enrollees from the effects of premium increases, coupled with a lack of competition among insurers in large areas of the country, have allowed premiums to more-or-less stabilize, albeit at levels much of the unsubsidized population finds unaffordable. Think about it: If you have a monopoly, and a sizable population of individuals either desperate for coverage (i.e., the very sick) or heavily subsidized to buy your product, it shouldn’t take a rocket scientist to break even, much less turn a profit.

As a recent Wall Street Journal article notes, insurers spent the past several years ratcheting up premiums, for a variety of reasons: A sicker pool of enrollees than they expected when the exchanges started in 2014; a recognition that some insurers’ initial strategy of underpricing products to attract market share backfired; and the end of Obamacare’s “transitional” reinsurance and risk corridor programs, which expired in 2016.

While some carriers have adjusted 2019 premiums upward to reflect the elimination of the individual mandate penalty beginning in January, some had already “baked in” lax enforcement of the mandate into their rates for 2018. Some have long called the mandate too weak and ineffective to have much effect on Americans’ decision to buy coverage.

It Could Have Been Worse?

Liberals have started to make the argument that, but for the Trump administration’s so-called “sabotage” of insurance markets, premiums would fall instead of rise in 2019. (Some insurers have proposed premium reductions regardless.) The Brookings Institution recently released a paper claiming that in a “stable policy environment” without repeal of the mandate, or the impending regulatory changes regarding short-term insurance and Association Health Plans, premiums would fall by an average of approximately 4.3 percent.

But as the saying goes, “‘It could have been worse’ isn’t a great political bumper sticker.” Democrats tried to make this point regarding the economic “stimulus” bill they passed in 2009, after the infamous chart claiming unemployment would remain below 8 percent if the “stimulus” passed didn’t quite turn out as promised:

In 2011, House Minority Leader Nancy Pelosi (D-CA) tried to make the “It could have been worse” argument, claiming that unemployment would have risen to 15 percent without the “stimulus”:

But even she acknowledged the futility of giving such a message to the millions of people still lacking jobs at that point (to say nothing of the minor detail that studies reinforcing Pelosi’s point didn’t exist).

There’s No Need for a Bailout

While the apparent moderation of premium increases complicates Democrats’ political message, it also undermines the Republicans who spent the early part of this year pressing for an Obamacare bailout. Apart from the awful policy message it would have sent by making Obamacare’s exchanges “too big to fail,” such a measure would have depressed turnout among demoralized grassroots conservatives who want Congress to repeal Obamacare.

As it happens, most state markets didn’t need a bailout. That’s a good thing on multiple levels, because a “stability” bill passed this year would have had little effect on 2019 premiums anyway.

That said, if Democrats want to make political arguments about premiums in this year’s elections, maybe they can tell the American people where they can find the $2,500 in annual premium reductions that Barack Obama repeatedly promised would come from his health care law. Given the decade that has passed since Obama first made those claims without any hint of them coming true, trying to answer for that broken promise should keep Democrats preoccupied well past November.

This post was originally published at The Federalist.

About That “Junk” Insurance

On Wednesday, the Trump administration released its final rule regarding short-term, limited-duration insurance coverage. For all critics’ carping about how short-term coverage epitomizes “junk insurance,” these plans will provide another option for individuals who find Obamacare-compliant policies unattractive and unaffordable.

Pros and Cons of the Rule

The Cato Institute’s Michael Cannon lists a good summary of the rule’s benefits. At a time when the market for unsubsidized coverage away from the exchanges has dropped by nearly 40 percent, short-term plans will allow individuals who find Obamacare-compliant coverage unaffordable to purchase coverage.

Whereas the Obama administration defined “consumer protections” as “protecting people from being a consumer” of anything other than exchange plans, the Trump administration’s rule allows consumers to buy coverage that actually protects them from future harmful health events.

That said, the rule brings with it two notable drawbacks. First, the administration believes it could raise federal spending by $28.2 billion over a decade. The estimate comes because some healthy people likely will leave the exchanges to buy more affordable short-term coverage, raising premiums—and thus premium subsidies—for those who remain in Obamacare-compliant plans. While the Congressional Budget Office estimated a much smaller (and slightly positive) fiscal impact, the rule could end up increasing spending at a time when the federal government has racked up $21 trillion in debt (and counting).

Second, the rule doesn’t repeal Obamacare—an obvious statement, but one with important implications. Another president can easily revoke the Trump administration’s actions, and the next Democrat will almost certainly do just that. While helpful, the rule itself should not serve as an excuse for Congress not to take action to repeal Obamacare’s harmful regulations—because if you like your short-term plan, and Congress does nothing, you probably won’t be able to keep it.

What’s the Real ‘Junk Insurance’?

But as I wrote last week, Kofman has refused to buy an Obamacare plan, because she claims she requires an employer subsidy—this despite making more than $217,000 per year. Given her sizable income, Kofman must not think exchange policies unaffordable, even without an employer subsidy.

After all, the Exchange Authority recently endorsed, and the District enacted, a mandate requiring people with far less income than her—that is, people like me—to buy unsubsidized coverage or pay a tax. Why does she not buy the insurance policies she sells—because she considers them “junk insurance?”

She’s not alone. At a briefing last month, Sara Collins, a vice president at the Commonwealth Fund, asked whether short-term plans and other non-Obamacare policies would have “warning labels on them.” Collins neglected to provide a warning of her own: She has not purchased an exchange plan. Lest one think she cannot afford to do so, Commonwealth’s tax filings reveal that for the 12 months ending in June 2017, Collins received $334,353 in total compensation (including benefits).

I consider the very definition of “junk insurance” a policy that one encourages others to buy but refuses to purchase. On that, Corlette has a sterling track record. At a 2016 briefing, her presentation included a bullet point about the need to increase exchange sign-ups. She went further in her oral remarks: “I think it’s critical to do everything we can do boost enrollment.”

But when I asked Corlette at that same 2016 briefing if she had taken her own advice and bought an exchange plan, I received a song-and-dance about her life as a “spoiled academic.” Lest anyone think her unfeeling, however, she allowed that “I do try to think about” individuals without employer-sponsored coverage when designing insurance coverage standards.

Principles Versus Power

That’s the point. If Obamacare advocates thought achieving the law’s goals was so critical, they would have put their money where their mouths are and enrolled in exchange plans long ago. For all liberals’ talk of solidarity and “We’re all in this together,” the unwillingness for individuals making hundreds of thousands per year to enroll in exchange coverage, even though they could easily afford to do so, astounds. Given their own failures to enroll, who are they to criticize President Trump for “sabotaging” the law?

In their quiet moments, people like Kofman, Collins, and Corlette may wonder what strange confluence of events led the American people to elect Donald Trump, and empower him with the authority to dismantle their liberal paradise. But their failure to practice what they preach yields a ready answer: They need only look in the mirror.

This post was originally published at The Federalist.

House Health Care Bills Show Misplaced Priorities

Why would House Republican leadership place the concerns of gym owners over those of pro-lifers? And why would that same leadership embrace a policy suggestion from the liberal group Families USA that could entrench Obamacare while raising premiums for young people?

While the House will consider legislation this week providing tax breaks to individuals who buy gym memberships, the House has yet to consider legislation cutting off tax breaks for abortion this Congress. On the latter front, an expansion of “copper” catastrophic insurance plans would effectively eliminate a regulatory provision that has lowered premiums for young Americans—another misplaced priority that could cause consternation for some conservatives.

What’s Inside Some Health Savings Account Legislation

However, Section 8 of one of the bills would allow for a $500 deduction for gym memberships or instruction, and a $250 deduction for safety equipment, as a qualified medical expense. The amounts would double for joint returns.

While just about everyone supports increasing Americans’ levels of physical activity, the provision seems questionable at best. The tax reform bill enacted not eight months ago attempted to eliminate these kinds of deductions from the tax code, creating a simpler, fairer process. This proposal would turn right around and add more complexity, by requiring the IRS to issue new regulations “to determine…what does not constitute a qualified physical activity, including golf, hunting, sailing, horseback riding, and other similar activities.”

The federal government already tries to do too many things, and has too great a role in Americans’ lives as it is. Do we really need the IRS determining what is, and is not, a “qualified physical activity?”

As for Abortion and HSAs

In fact, some pro-life leaders have opposed provisions that would allow individuals to use HSA dollars to fund insurance premiums, because pro-lifers want to prohibit those funds from being used to pay for abortion coverage (or abortions period). But the House has yet to vote this Congress on limiting abortion as a qualified medical expense.

The pro-life legislation that the House voted on in January 2017, H.R. 7, sponsored by Rep. Chris Smith (R-NJ), prohibited taxpayer dollars from funding abortion in all cases, including Obamacare exchange plans. However, it did not address preferences in the tax code relating to abortion, such as the qualified medical expense deduction.

It seems that the House Ways and Means Committee, which marked up the bills in question, cares more about satisfying lobbyists than responding to their large pro-life constituency. From gym owners to device makers—who have lobbied intently for the Obamacare device tax repeal that the House will also consider this week—the series of health care bills contains myriad provisions, some good and some not-so-good, advocated by business lobbyists. Unfortunately, pro-life advocates have yet to receive similar consideration.

Unintended Consequences of Expanding ‘Copper’ Plans

However, because only certain individuals currently qualify for “copper” plans, insurers can adjust their premiums downward accordingly. Section 1312 of Obamacare contains a single risk pool requirement, meaning that insurers must rate all their products in a given state as a single book of business in determining premium rates. But a rule the Obama administration released in 2013 included a special exception to that provision for “copper” plans. These catastrophic plans may adjust their rates to reflect “the expected impact of the specific eligibility categories.”

In other words, because primarily young individuals enroll in catastrophic plans, insurers can at present lower their premiums to reflect that fact. However, by making everyone eligible for “copper” coverage, the House bill would effectively eliminate this adjustment, thus raising premiums for the 18- to 29-year-old individuals enrolled in the plans.

Effects of the ‘Copper’ Change

Catastrophic plans have not proven particularly popular on the exchange market, with only 1 percent of enrollees purchasing them as of earlier this year. However, that lack of popularity arises because individuals receiving premium subsidies (i.e., most of the people buying coverage directly from the exchange) cannot apply those subsidies to “copper” plans.

Paradoxical as it may sound, expanding these popular plans to all age groups could actually curb their appeal. While a recent eHealth analysis claims that an expansion of “copper” plans could save near-seniors (i.e., those aged 55-64) an average of $4,608 per year, it likely will not do so. eHealth’s analysis compares the current 41 percent differential between “copper” premiums and bronze premiums to arrive at its figure.

However, as noted above, the current “copper” rates assume enrollment primarily by individuals under 30. eHealth’s analysis thus compares rates for a market of individuals aged 18-29 to a market of individuals aged 18-64—which explains the 41-percentage point difference in premiums. But if “copper” plans expand to all ages, that premium differential will narrow—and premiums for the 18-29 population will likely increase.

Single Risk Pool Bolsters Obamacare

More to the point: The “copper” plan provision includes language reinforcing Obamacare’s single risk pool. It also undermines the intent of last year’s Consumer Freedom Amendment, offered in the Senate by Sen. Ted Cruz (R-TX), which would have allowed for the sale of non-compliant plans alongside Obamacare-compliant plans.

The difference on this one provision speaks to a broader philosophical debate. Moderates want to support Obamacare’s exchanges by passing “stability” legislation and expanding subsidies. So does Families USA, which in December 2012 submitted a comment to the Department of Health and Human Services opposing the rate adjustment provision for catastrophic plans, because it could tend to segment the market.

By contrast, conservatives want to offer people lifeboats away from the exchanges—options such as short-term insurance plans, association health plans, and the like. On that front, this week’s legislation does not advance the ball, and expanding “copper” plans could on balance represent a step back.

Thankfully, House leadership did not end up attaching attach an insurer bailout to this week’s HSA bills, after early rumblings in that direction. But the fact that conservatives even need to have these discussions speak to the ways in which many House Republicans want to strengthen Obamacare rather than repealing it.

This post was originally published at The Federalist.

Preserving Health Care Freedom in the Nation’s Capital

Two weeks ago, I described how provisions in a budget bill that the District of Columbia Council quietly passed would extend the reach of government-controlled health care in the nation’s capital. The provisions buried in that budget bill would not only reimpose the health insurance mandate penalty within the District of Columbia that Congress set to zero beginning in January, but would go further, by allowing DC authorities to place liens on, seize, and sell the property of individuals who cannot afford to pay the mandate tax.

Thankfully, my post had its intended effect in raising awareness of the issue among federal policy-makers. The office of Rep. Gary Palmer (R-AL) responded, introducing an amendment to appropriations legislation that the House of Representatives will consider this week.

Prevents Affordable Options from Qualifying 

The Palmer amendment would also allow individuals to purchase the type of health coverage they desire without getting hit with a “stealth” tax bill after-the-fact. If the District’s law goes into effect in January, individuals buying the new, more affordable coverage options proposed by the Trump administration could face exactly that.

The mandate the DC Council approved (see pages 168-82 here) effectively re-imposes on the District Obamacare’s individual mandate as it existed last December 15—the date the congressional conferees on the tax bill filed their conference report (i.e., before legislation setting the federal mandate penalty to zero was signed into law). By linking the District’s mandate to the policies and regulations in place as of last December 15, the DC mandate also prevents the new options the Trump administration is introducing from qualifying as “minimum essential coverage” for purposes of complying with the mandate.

For instance, the DC law defines “minimum essential coverage” as “minimum essential coverage as defined by section 5000A of the [federal] Internal Revenue Code of 1986 and its implementing regulations, as that section and its implementing regulations were in effect on December 15, 2017.” It further specifies that “minimum essential coverage” shall include:

Health coverage provided under a multiple employer welfare arrangement; provided that the multiple employer welfare arrangement provided coverage in the District on December 15, 2017, or complies with federal law and regulations applicable to multiple employer welfare arrangements that were in place as of December 15, 2017.

Locks Out Short-Term Coverage, Too

The District’s statute also would exclude short-term health plans from qualifying as “minimum essential coverage” for purposes of its health insurance mandate. Obamacare itself defined “minimum essential coverage” to include “coverage under a health plan offered in the individual market within a state.” But because another portion of federal law says “‘individual health insurance coverage’ means health insurance coverage offered to individuals in the individual market, but does not include short-term limited duration insurance,” short-term plans would not qualify.

Obamacare did give the secretary of Health and Human Services, along with the secretary of the Treasury, discretion in determining other forms of “minimum essential coverage” for purposes of the federal mandate. However, because the District linked its mandate to those federal definitions in effect as of December 15, 2017—well before the Trump administration first proposed its changes to the regulation of short-term plans on February 20, 2018—short-term plans would not qualify as acceptable coverage under the District’s mandate.

District residents who purchase short-term plans, like those who access the expanded association health plans, would not comply with the new coverage requirements. Particularly given the very quiet way the DC Council enacted the legislation, many individuals may not know that the District re-imposed a health insurance mandate or that certain types of coverage do not comply with it, and face an unpleasant tax “surprise” in the spring of 2020 (as they file their DC tax returns for 2019). Unless, of course, Congress enacts the Palmer amendment into law.

Congress’s Constitutional Duty

Moreover, it also belies the fact that DC officials made little attempt—one could argue purposefully made little attempt—to publicize the council’s deliberations over this change. I e-mailed three people in Mayor Muriel Bowser’s press office about the council’s actions two weeks ago, and still have yet to receive so much as an acknowledgement.

Bowser can argue all she wants about “Taxation without Representation,” but given that her office made zero attempt to represent me, she has little right to complain. The House should pass the Palmer amendment this week, and prevent the strong-arm tactics associated with government-controlled health care from taking root in the nation’s capital.

This post was originally published at The Federalist.

What’s Going on with Premium Increases under Obamacare?

Multiple articles in recent weeks have outlined the ways Democrats intend to use Obamacare as a wedge issue in November’s midterm elections. While only a few states have released insurer filings—and regulators could make alterations to insurers’ proposals—the preliminary filings to date suggest above-average premium increases have been higher than the underlying trend in medical costs.

Democrats claim that such premium increases come from the Trump administration and Republican Congress’s “sabotage.” But do those charges have merit? On the three primary counts discussed in detail below, the effects of the policy changes varies significantly.

End of Cost-Sharing Reduction Payments

The administration’s decision meant most insurers increased premiums for 2018, to recoup their costs for discounting cost-sharing indirectly (i.e., via premiums) rather than through direct CSR payments. However, as I previously noted, most states devised strategies whereby few if any individuals would suffer harm from those premium increases. Low-income individuals who qualify for premium subsidies would receive larger subsidies to offset their higher costs, and more affluent individuals who do not qualify for subsidies could purchase coverage away from state exchanges, where insurers offer policies unaffected by the loss of CSR payments.

These state-based strategies mean that the “sabotage” charges have little to no merit, for several reasons. First, the premium increases relating to the lack of direct CSR payments already took effect in most states for 2018; this increase represents a one-time change that will not recur in 2019.

Second, more states have announced that, for 2019, they will switch to the “hold harmless” strategy described above, ensuring that few if any individuals will incur higher premiums from these changes. Admittedly, taxpayers will pay more in subsidies, but most consumers should see no direct effects. This “sabotage” argument was disingenuous when Democrats first raised it last year, and it’s even more disingenuous now.

Eliminating the Individual Mandate Penalty

Repealing the mandate will raise premiums for 2019, although questions remain over the magnitude. The Congressional Budget Office (CBO) last month officially reduced its estimate of the mandate’s “strength” in compelling people to purchase coverage by about one-third. However, another recent study suggests that, CBO’s changes notwithstanding, the mandate had a significant impact on getting people to buy insurance—suggesting that many healthy people could drop coverage once the mandate penalty disappears.

To insurers, the mandate repeal represents an unknown factor shaping the market in 2019. In the short term at least, whether or not people will drop coverage in 2019 due to the mandate’s repeal matters less than what insurers—and, just as important, insurance regulators—think people will do in response. If insurers think many people will drop, then premiums could rise significantly; however, if insurers already thought the mandate weak or ineffective, then its repeal by definition would have a more limited impact.

New Coverage Options

The Trump administration’s moves to expand access to association health plans and short-term insurance coverage, while still pending, also represent a factor for insurers to consider. In this case, insurers fear that more affordable coverage that does not meet all of Obamacare’s requirements will prove attractive to young and healthy individuals, raising the average costs of the older and sicker individuals who remain in Obamacare-compliant plans.

If association plans and short-term coverage do not entice many enrollees—or if most of those enrollees had not purchased coverage to begin with—then the market changes will not affect exchange premiums that much. By contrast, if the changes entice millions of individuals to give up exchange coverage for a non-compliant but more affordable plan, then premiums for those remaining on the exchanges could rise significantly.

Estimates of the effects of these regulatory changes vary. For instance, the administration’s proposed rule on short-term plans said it would divert enrollment from exchanges into short-term plans by only about 100,000-200,000 individuals. However, CBO and some other estimates suggest higher impacts from the administration’s changes, and a potentially greater impact on premiums (because short-term and association plans would siphon more healthy individuals away from the exchanges).

But the final effect may depend on the specifics of the changes themselves. If the final rule on short-term plans does not allow for automatic renewability of the plans, they may have limited appeal to individuals, thus minimizing the effects on the exchange market.

However, those same proponents seem less interested in advertising the same study’s premium impact. The Urban researchers believe short-term plans will draw roughly 2.6 million individuals away from exchange coverage, raising premiums for those who remain by as much as 18.3 percent.

Why Prop Up Obamacare?

The selective use of data regarding short-term plans illustrates Republicans’ problem: On one hand, they want to create other, non-Obamacare-compliant, options for individuals to purchase more affordable coverage. On the other hand, if those options succeed, they will raise premiums for individuals who remain on the exchanges.

But some might argue that fixating on exchange premiums for 2019 misses the point, because Republicans should focus on developing alternatives to Obamacare. The exchanges will remain, and still offer comprehensive coverage—along with income-based premium subsidies for that—to individuals with costly medical conditions. But rather than trying to bolster the exchanges by using bailouts and “stability” packages to throw more taxpayer money at them, Republicans could emphasize the new alternatives to Obamacare-compliant plans.

Of course, if that stance presents too much difficulty for Republicans, they have another option: They could repeal the root cause of the premium increases—Obamacare’s myriad new federal insurance requirements. Of course, in Washington, following through on pledges made for the last four election cycles seems like a radical concept, but to most Americans, delivering on such a long-standing promise represents simple common sense.

This post was originally published at The Federalist.

The Return of the Individual Mandate

Well, that didn’t last long. Fewer than six months after Congress effectively repealed Obamacare’s individual mandate—and more than six months before that change actually takes effect, in January next year—another liberal group released a plan to reinstate it. The proposal comes as part of the Urban Institute’s recently released “Healthy America” plan.

In the interests of full disclosure: I criticized Republicans for repealing the individual mandate as part of the tax reform bill last fall. I did so not because I support requiring Americans to buy health insurance—I don’t—but because Republicans need to go further, and repeal the federal insurance regulations that represent the heart of Obamacare and necessitated enacting the mandate in the first place.

Lipstick on an Unpopular Pig?

The Urban Institute plan tries to re-brand a federal requirement to purchase insurance by never even using the term “mandate” in its proposal. Instead, the document says that “uninsured people would lose a percentage of their standard deduction (or the equivalent for the itemized deduction) when they pay income taxes….Half the lost deduction amount could be refunded the following year if the person enrolls in coverage and maintains it for the next full plan year.”

But as the saying goes, if it looks like a mandate and functions like a mandate, it’s a mandate. The paper claims that taking away a “tax benefit…would be better received politically than the additional tax penalty” under Obamacare, but functionally, that provides a distinction without a difference. Even the Urban researchers call this “loss of a tax benefit” a “penalty” later in the paper, because that’s what it is: A penalty for remaining uninsured.

The paper even includes a chart highlighting the average tax for remaining uninsured by income under the proposal, which generally mimics the tax penalties the uninsured pay under Obamacare:

Other Components of the Plan

Unfortunately, the Urban Institute plan goes well beyond merely reinstating the individual mandate, albeit in a slightly different form. It also makes other major changes to the health care system that would entrench the role of the federal government in it. It would federalize Medicaid health insurance coverage by transferring Medicaid enrollees into exchanges, supplementing benefits for low-income children and individuals with disabilities, and requiring states to keep paying their current contributions into the system. (Long-term care coverage under Medicaid would continue unchanged.)

The exchanges would have a new government-run plan—the default option for low-income enrollees automatically enrolled into coverage—and options run by private insurers. However, all plans would cap reimbursement to doctors and hospitals at Medicare rates, making premiums more “affordable” by imposing price controls that would potentially pay providers at below-market levels. The plan also proposes to “save” on prescription drugs by extending Medicaid rebates (i.e., price controls) to additional individuals.

The Urban plan also proposes much richer health coverage subsidies, consistent with its earlier 2015 proposal. Specifically:

  • Individuals with incomes below the federal poverty level would not pay either premiums or cost-sharing;
  • Individuals with incomes below 138 percent of poverty (the threshold for Obamacare’s Medicaid expansion) would not pay premiums;
  • Premium subsidies would be linked to a plan paying 80 percent of expected health care costs (i.e., actuarial value), as opposed to a 70 percent actuarial value plan under Obamacare;
  • Individuals would have to pay less of their income in premiums than under Obamacare—for instance, an individual with income just under four times poverty would pay 8.5 percent of income in premiums, as opposed to 9.56 percent under Obamacare; and
  • Unlike Obamacare, which limits eligibility for subsidies to those with incomes under four times poverty, the Urban plan would limit premium payments to 8.5 percent of income at all income levels (i.e., including for those making more than four times poverty).

Moreover, “short-term and other private insurance plans that do not comply with Healthy America regulations (consistent with [Obamacare’s] regulatory framework” would be prohibited, including association health plans and other concepts the Trump administration has proposed to give Americans more flexible coverage options.

The Urban researchers admit their plan would require significant new revenues to pay for the new subsidies—an estimated $98 billion in the first year alone. The plan only briefly discusses options to pay for this new spending, but it admits that, even if Congress hikes the payroll tax by an additional percent, raising an estimated $823 billion over ten years, “other adjustments to excise and income taxes would be needed.”

Where the Plan Fits In

At the end of their paper, the Urban researchers include a helpful chart comparing the various liberal proposals for expanded government involvement in health care—lest anyone claim that the left hand doesn’t know what the far-left hand is doing. In general:

  • Elizabeth Warren (D-MA) introduced a bill that would not go as far as the Urban plan. It incorporates the subsidy changes Urban proposed, adds a government-run plan, and imposes other regulatory changes to the exchanges, but (unlike the Urban plan) retains the status quo for Medicaid;
  • The Center for American Progress’ “Medicare Extra” proposal, which I wrote about earlier this year, goes farther than the Urban plan, by eliminating Medicaid (which the Urban plan modifies) entirely, and including more robust auto-enrollment provisions, with “Medicare Extra” the default option for all Americans; and
  • The single-payer bill introduced by Sen. Bernie Sanders (I-VT) would go farthest of all, abolishing virtually all forms of insurance (including Medicare) and creating a single-payer health system.

So much for “If you like your plan, you can keep it.” For that matter, so much for “If you like your freedom, you can keep it.” Like it or not, the Left seems insistent on terrifying the American public with what Ronald Reagan viewed as the nine most effective words to do so: “I’m from the government and I’m here to help.”

This post was originally published at The Federalist.