Pelosi Health Bill Would Expand Fraud, Undermine Federalism

Anyone who thought the defeat of Sen. Bernie Sanders in the Democrat presidential primaries ended the left’s quest for government control of health care should think again. Legislation introduced last week by House Democratic leaders, to be voted on by the House this week, would substantially expand Washington’s role in the welfare state, encouraging wasteful and fraudulent Medicaid spending and undermine the constitutional principles of federalism.

It seems bad enough that House Democrats decided to raid Medicare to the tune of nearly half a trillion dollars to fund their legislation. That these raided funds would go towards more than $200 billion in new Medicaid spending on individuals potentially ineligible for the program seems especially irresponsible.

Increased Fraud Risk

While expanding federal subsidies for exchange plans, the legislation would accelerate Obamacare’s movement to federalize Medicaid by placing additional requirements and mandates on states. For instance, the bill requires all Medicaid plans — even in states with approved Medicaid waivers — to cover individuals determined eligible for a minimum of 12 months.

Government audits have demonstrated that this policy of continuous eligibility leaves Medicaid programs ripe for waste, fraud, and abuse. In November 2018, Louisiana’s legislative auditor published a study showing individuals initially deemed eligible for Medicaid remained on the rolls despite having incomes as high as $145,146. Following the audit, Louisiana began more frequent eligibility checks and removed more than 30,000 ineligible individuals from the rolls — including at least 1,672 with incomes of over $100,000 — saving taxpayers approximately $400 million.

Broader economic studies confirm the experience of Louisiana. One report released last summer found that most of Obamacare’s coverage gains came from Medicaid and not insurance exchanges — even at income levels well above the threshold for Medicaid expansion. At a time a growing amount of evidence suggests millions of ineligible individuals are enrolling in Medicaid, the new House bill would sharply restrict states’ ability to remove ineligible individuals from the rolls.

On Friday, the Congressional Budget Office released its fiscal analysis of the Democrat legislation. The CBO concluded the continuous eligibility provision alone would result in $216.8 billion in new federal spending plus additional unfunded costs on states. A descriptive analysis of this provision was not provided by the CBO, but it is likely much of the $216.8 billion would fund Medicaid spending on individuals who beforehand would have lost eligibility for the program.

Unconstitutional Orders on States

Importantly, the bill undermines the flexibility of states in other ways, punishing any that have not accepted Obamacare’s Medicaid expansion to able-bodied adults. It would phase in a 10-percentage point reduction in non-expansion states’ federal match rate for administrative expenses — even as it imposes more administrative costs in the form of new reporting requirements. The move directly violates the Supreme Court’s 2012 opinion in NFIB v. Sebelius, which said Congress cannot “penalize states that choose not to participate in that new program [i.e., Medicaid expansion] by taking away their existing Medicaid funding.”

In permanently extending the State Children’s Health Insurance Program, the bill would eliminate the caps on federal funding that have defined the program since its creation nearly a quarter-century ago. It would also perpetually expand provisions first included in Obamacare that prohibit states from restricting eligibility. Together, these changes would essentially convert a program originally designed as a block grant into a permanent entitlement for states and individuals.

Wasteful Spending Is Obamacare on Steroids

Despite all these new restrictions on Medicaid and children’s health insurance programs, the bill does expand state flexibility in one important way: by eliminating all income eligibility thresholds for children. If states want to provide government-funded health care to the children of millionaires, the legislation would give them federal funds to do so, demonstrating that House Speaker Nancy Pelosi and her fellow Democrats only support Medicaid flexibility when states expand the number of people receiving government health care.

As Pelosi argues for a trillion-dollar bailout of state and local budgets, she has offered an excellent reason for Congress to reject both the bailout and the Obamacare “enhancement” act. Rather than giving states additional flexibility to remove ineligible individuals and narrow their budget gaps, the bill’s additional — and in at least one case, unconstitutional — mandates would cause Medicaid spending to balloon, leading to more state bailouts in subsequent years. Both taxpayers and the Constitution deserve better than this latest plan to put Obamacare on steroids.

This post was originally published at The Federalist.

The Bigger Problem with SCOTUS’ Obamacare Bailout Ruling

I’ll start with the bad news: The Supreme Court granted insurers nearly $12 billion in Obamacare bailout funds. And now the worse news: It allowed the executive to stick Congress with the bill for unconstitutional actions lawmakers never authorized.

The ruling, issued on Monday after the Court heard oral arguments in December, made the case sound simple: Obamacare created an obligation on the federal government to pay insurers’ risk corridor claims. Congress refused to appropriate the money. Therefore insurers can go to court and obtain the $12 billion in question from the Judgment Fund, which has a permanent, unlimited appropriation to pay legal claims against the government.

But the reality doesn’t match the ruling’s cut-and-dried approach. Unilateral actions by the executive paved the way for risk corridors’ massive losses, a fact neither insurers nor liberal Obamacare supporters like to admit.

The Bailout’s Origins

In many ways, the Supreme Court case has its roots in guidance released by the Obama administration in November 2013. At that point, millions of people had received plan cancellation notices, but couldn’t buy health insurance plans while healthcare.gov remained in meltdown. President Obama faced withering and justified criticism for his “Lie of the Year”—the promise that “If you like your plan, you can keep it.”

The Department of Health and Human Services (HHS) tried to stanch the political bleeding. Instead of sending cancellation notices, states and insurers could allow individuals to retain plans purchased after Obamacare’s March 2010 enactment, but before the major insurance regulations went into effect on January 1, 2014.

Coming at a very late date, HHS’s unilateral action threatened to create more chaos for insurers. The carriers had priced their policies assuming millions of individuals with pre-Obamacare policies would lose their existing plans and sign up for exchange coverage. Instead, these largely healthy individuals would remain outside of Obamacare, as millions of sicker individuals flooded onto exchanges to obtain the richer Obamacare coverage.

How did HHS propose to offset insurers’ potential losses from this late change to their enrollee profile? The same November 2013 guidance allowing pre-Obamacare policies to remain in place proposed risk corridors as the solution:

Though this transitional policy was not anticipated by health insurance issuers when setting rates for 2014, the risk corridor program should help ameliorate unanticipated changes in premium revenue. We intend to explore ways to modify the risk corridor program final rules to provide additional assistance.

In theory, risk corridors required plans with outsized profits on Obamacare policies to subsidize insurers with outsized losses. But because many insurers kept their pre-Obamacare policies in place, many more insurers suffered losses than gains. The program suffered approximately $12 billion in losses during its three years (2014-16), losses which prompted insurers’ suit, to recover the billions they consider themselves owed.

Unconstitutional Actions

But as law professor Nicholas Bagley (an Obamacare supporter) and others have pointed out, HHS’s November 2013 guidance came with a big catch: It violated the president’s constitutional duty to “take care that the laws be faithfully executed.” In essence, the Obama administration had stated that it would not enforce the law—the new insurance regulations coming into effect, which had led insurers to send the cancellation notices in the first place—because it found doing so politically inconvenient. (Sadly, the Trump administration has continued the unconstitutional behavior, by similarly allowing the plans to remain in effect.)

Those unconstitutional actions imposed major financial losses on insurers, an assertion that comes not just from the HHS guidance quoted above, but from the insurers themselves. An amicus brief submitted in the Supreme Court case by Americans for Prosperity noted that the insurer plaintiffs themselves admitted the administration’s unilateral actions represented the root cause of much of their financial losses:

As one Petitioner notes, this ‘unexpected policy change had marked and predictable effects.’ It lowered enrollment and since ‘the announcement came after premiums had been set[,]’ Petitioners were stuck with the prices they set, forced to ‘[b]ear greater risk than they accounted for[.]’ Petitioners argue that HHS recognized ‘that its unexpected policy shift could subject insurers on the exchanges to unanticipated higher average claims costs … [b]ut,’ the agency allayed their fears by providing reassurance that the risk corridors program would cover any losses. The Petitioners go through a lengthy history of HHS’s actions, pinning much of the blame on HHS’s ‘rosy scenario’ of how things would work out. [Internal citations omitted.]

Sticking Taxpayers with the Tab

Insurers could have responded in a different manner to the HHS guidance. They could have cancelled all their pre-Obamacare policies anyway, or they could have challenged the guidance in court. Some took the former action, because some states forced carriers to cancel all pre-Obamacare plans—but none took the latter course. In the main, insurers decided to take their chances, roll the dice, and not take a confrontational tack with the Obama administration, largely hoping they would receive the risk corridor bailout HHS alluded to in its guidance.

But Congress can, and should, have a say in the matter. A policy enacted unilaterally, and unconstitutionally, by HHS resulted in a financial impact (in the form of risk corridors) to the tune of billions of dollars.

Yes, Congress could have passed more stringent language blocking any appropriation for a risk corridor bailout. But following that logic to its conclusion would have effectively turned the Constitution on its head: The executive can make a unilateral, and unconstitutional, change, and both Congress and taxpayers have to pay the bill for it—unless and until Congress passes legislation by a veto-proof majority to undo the financial consequences of an action the executive never had authority to take in the first place.

A Costly ‘Bait-and-Switch’

Insurers decried the risk corridor funding shortfall as a “bait-and-switch” by Congress: Lawmakers authorized the payments as part of Obamacare, but never ponied up an appropriation for an obligation Congress created.

Risk corridors did suffer from a “bait-and-switch,” but it came from the Obama administration, not Congress. HHS changed the rules of the game, causing insurers major losses on their Obamacare plans—and sticking taxpayers with much of that tab via risk corridors.

But neither the majority opinion in the Supreme Court ruling, nor Justice Alito’s dissent, addressed the Obama administration’s “bait-and-switch.” As a result, the court created a bad precedent that empowers the executive, further diminishes the role of Congress, and places taxpayers at risk for more unilateral bailouts in the future.

This post was originally published at The Federalist.

Nancy Pelosi’s Obamacare Bailout Also Funds Abortion Coverage

In the words of her former House colleague Rahm Emanuel, Nancy Pelosi never wants to let a crisis go to waste. The House speaker not only wants to use the coronavirus pandemic to entrench Obamacare, she wants to make taxpayers fund abortion in the process.

A recent summary of the legislation Pelosi plans to introduce as an alternative to Senate Republicans’ “stimulus” bill laid out the strategy. House Democrats want to force insurers to reopen enrollment in the Obamacare Exchanges, and cover their losses via a taxpayer-funded bailout.

Leftist Wish List

The available summary of the bill—the summary!—totals 62 pages, and nearly 25,000 words. It contains a veritable menagerie of liberal big-government programs and boondoggles. For instance, it creates a “cash for clunkers” program for the government to buy old airplanes. (I’m not making this up—check out page 53 of the summary.)

Page 13 of the summary also notes that the bill would spend $400,000 so Congress’ Office of the Attending Physician can buy “N95 masks, surgical masks, gloves, swabs, test[s]…and personal protective equipment.” Somehow, the fact that Pelosi ensured Congress appropriated funds to protect itself failed to surprise this jaded observer.

New Open Enrollment Period

Division G of the 1,404-page legislation includes a variety of health-care provisions, only some of which directly relate to the coronavirus pandemic. For instance, Section 70301 (which begins on page 337) would create a “one-time special enrollment period for the [Obamacare Exchanges], allowing Americans who are uninsured to” purchase coverage.

This proposal raises an obvious problem: Moral hazard. If individuals know they can forego coverage during the usual open enrollment period and obtain coverage later, healthy individuals will do just that: only buy insurance when they need it.

Some may argue that those who lose their jobs due to coronavirus—either a temporary furlough, or a permanent layoff, during the resulting downturn—need a way to buy coverage after losing their insurance. But individuals who lose employer coverage already have a way to purchase a new plan: They automatically qualify for a special enrollment period, during which they can replace their former employer plan with exchange coverage.

Bailout Funds

News reports suggest that insurers support reopening the exchanges for a special enrollment period. However, the insurance industry also wants federal dollars to offset their potential losses from such a move.

Insurers obviously did not account for the costs of coronavirus treatments last spring and summer, when they set their 2020 premiums; no one knew of the disease at that point. The unexpected costs associated with treating the disease will likely eat into insurers’ margins for 2020.

But allowing people to buy “insurance” in the middle of a pandemic will raise insurers’ costs even further. Consider that life insurers are already imposing waiting periods for at least some applicants during the pandemic. One actuary believes life insurers will shut down applications entirely, due to the overwhelming risks they face.

By contrast, health carriers will allow anyone to apply for “insurance” during the pandemic, “if the government cover[s] anticipated losses.” Hence Section 70308 of Pelosi’s “stimulus” bill (beginning on page 404) provides for a two-year program of risk corridors.

Pelosi’s bill would recreate an Obamacare program in place from 2014 through 2016 that would have exposed taxpayers to billions of dollars in losses, but for language inserted at the insistence of Republican members of Congress. Just a few months ago, insurers took a case over risk corridors to the Supreme Court, asking for the justices to give them the bailout funds that Congress declined to pay.

Taxpayer Funding of Abortion Coverage

But as I noted nearly three years ago, when Republicans wanted to pass a “stability” bill bailing out Obamacare insurers, providing new federal dollars to insurers by definition represents taxpayer funding of abortion coverage. Only codifying the Hyde amendment’s pro-life protections for the risk corridor program would ensure that the bailout dollars will not flow to plans that cover abortion.

Separate provisions included in Section 104 of Division T of the bill (beginning on page 1089) would also substantially increase the generosity of Obamacare subsidies. The provisions would reduce the percentage of income that individuals would have to pay towards their premiums, with the federal government picking up a greater share of the tab. The same section would also eliminate the current income cap that prevents households with incomes of over 400% of the federal poverty level ($104,800 for a family of four in 2020) from receiving subsidies.

Joe Biden also included these changes to the Obamacare subsidy regime in his own health plan, released last summer, illustrating Pelosi’s attempt to exploit the coronavirus pandemic to enact Democrats’ pre-existing agenda. As with the risk corridors funding, if the legislation does not include strong pro-life protections, it means that billions of federal taxpayer dollars will flow to plans that cover abortion.

Of course, Pelosi did not include these Hyde Amendment protections in the summary of her bill, and likely would not allow a measure containing the protections to come to the House floor. Instead, the legislation represents a giveaway to both health insurers and the abortion industry.

Ironically, Senate Democrats objected to Republicans’ “stimulus” bill because they claimed it included a “slush fund” designed to bail out corporations. Perhaps they should have a conversation with Pelosi, because the Obamacare “slush fund” included in her bill would do the exact same thing.

This post was originally published at The Federalist.

This post was updated subsequent to publication with additional details regarding the introduced bill.

The Sorry Story of Congress’ Latest “Stimulus” Bill

As Yogi Berra’s infamous saying goes, it’s déjà vu all over again—and not in a good way.

I refer not just to the rapid economic slowdown, panicky markets, and multiple Federal Reserve bailouts related to the coronavirus epidemic, all of which echo the financial crisis of 2008. I speak also of Nancy Pelosi’s infamous comments a decade ago this month about Obamacare:

The House of Representatives—both Democrats and most (all but 40) Republicans—went along with legislation that not only wasn’t paid for, and didn’t contain any long-term reforms to programs desperately in need of them. They passed a bill whose cost still remains unknown (the Congressional Budget Office has yet to issue a cost estimate), which none of them had time to read—and might not even accomplish its supposed objectives.

Word emerged over the weekend that flaws in the bill require at least one, and possibly more than one, correction. The Wall Street Journal reported the House will attempt to pass “a technical fix on Monday.” But even as Treasury Secretary Steven Mnuchin, who negotiated the package with Pelosi despite being “relatively green” on such matters, tried to minimize the objections, others weighed in more strongly.

The Capitol Hill publication Roll Call said the bill may need a “do-over” regarding its paid family leave provisions. The National Federation of Independent Business weighed in with objections after the bill’s passage in the House, saying that small firms wouldn’t receive the tax credits quickly enough, and could face cash-flow problems as a result.

A congressional source confirmed to me that concerns about the family leave provisions could prompt a rewrite that’s more than technical in nature. These developments should surprise no one acquainted with prior slapdash attempts to legislate on the fly, but they should force Congress to slow down such a ridiculous process.

TARP and Obamacare

This past weekend, House leaders released the final version of their “stimulus” legislation at 11:45 p.m. Friday night. The House’s vote on the bill ended at 12:51 a.m. Saturday—just more than an hour later. Members of Congress had a whopping 66 minutes to review the 110-page bill before voting on it. Even the Republican Study Committee, a conservative caucus in the House, barely had time to issue a 10-page summary of the bill before the vote gaveled to a close.

That the legislation needs a technical fix (and possibly more than one) merely continues Congress’ practice of passing complicated legislation members do not understand. For instance, in March 2009 Sen. Chris Dodd (D-CT) had to accept responsibility for inserting a provision into the “stimulus” at the behest of Obama administration officials that allowed AIG officials to collect more than $1 billion in bonuses, despite the firm requiring a massive bailout from the federal government via the Troubled Assets Relief Program. The entire controversy demonstrated that no one, not even the lawmakers who drafted the “stimulus” and TARP bills, fully understood the bills or their effects.

Consider too this description of the infamous Obamacare bill:

The Affordable Care Act contains more than a few examples of inartful drafting. (To cite just one, the Act creates three separate Section 1563s.) Several features of the Act’s passage contributed to that unfortunate reality. Congress wrote key parts of the Act behind closed doors, rather than through ‘the traditional legislative process.’…. As a result, the Act does not reflect the type of care and deliberation that one might expect of such significant legislation.

That description comes from Supreme Court Chief Justice John Roberts’s 2015 ruling in King v. Burwell, a case about whether individuals purchasing coverage from the federal exchange qualified for subsidies. Roberts’s ruling called the language a drafting error, and permitted individuals in all states to receive the subsidies. But if an innocent drafting error, the mistake had potentially far-reaching implications, which few if any members of Congress realized when they voted for the bill—without reading it, of course.

Rushing for the Exits

To call the nascent controversy surrounding the “stimulus” legislation a fiasco would put it mildly. Worse yet, much of the controversy seems unnecessary and entirely self-inflicted.

Congress had absolutely no reason to pass the bill just before 1 a.m. on Saturday. Financial markets had closed for the weekend, and the Senate had adjourned until Monday afternoon. Voting early Saturday morning, as opposed to later in the day on Saturday, or even on Sunday, didn’t accelerate passage of the bill one bit. However, it did allow members of Congress to leave Washington more quickly.

In other words, the leaders of both parties—who agreed to the rushed process leading up to the vote—made getting members out of town a bigger priority than giving members the time to do their due diligence as lawmakers. It’s an understandable instinct, given the serious consequences of the coronavirus on all Americans, particularly the older profile of many legislators. But it’s also an abdication of Pelosi’s own claim last week that “we’re the captains of this ship.”

This post was originally published at The Federalist.

Three Ways Pete Buttigieg Is No Moderate

In recent weeks, former South Bend Mayor Pete Buttigieg has enjoyed a boomlet in polls for the Democratic presidential nomination, helped in no small part by fawning press coverage. Politico and others have examined the candidate and his supposedly “moderate” message.

Rhetoric aside, however, the substance of Buttigieg’s policy plans seem anything but moderate. On multiple issues, Pete has embraced positions far to the left of anything Hillary Clinton dared endorse in her campaign four years ago, and which seem “moderate” only in comparison to the socialist delusions of candidates like Sen. Bernie Sanders (I-Vt.).

1. Big Tax Increases on the Middle Class

As I first noted last month, Buttigieg has supported at least one, and quite possibly several, tax increases on the middle class. His retirement security plan included one explicit tax increase on working families, endorsing legislation that would raise payroll taxes as part of a new regime of paid family leave.

The retirement white paper, released just before Thanksgiving, implicitly endorsed a second tax increase on the middle class as well. The plan proposed a new entitlement program, Long-Term Care for America, designed to replace the CLASS Act included in Obamacare, but which Congress repealed prior to its implementation due to solvency concerns. Buttigieg’s paper didn’t say how it would pay for the new spending created by the program, but other studies cited by the campaign did: They proposed another increase in the payroll tax, which would also fall on middle-class families.

I wrote about Buttigieg’s tax plans in the Wall Street Journal last month. Yet following that article, no one from the Buttigieg campaign bothered to refute, smack down, or otherwise correct my assertion that their candidate wants to tax middle-class families.

The deafening silence from the Buttigieg campaign regarding my op-ed suggests the candidate does indeed want to raise taxes on the middle class—he just hopes that no one will notice that fact. It seems like an ironic bit of silence, given that Buttigieg attacked Sen. Elizabeth Warren (D-MA) for being “extremely evasive” on the issue of middle-class tax increases last fall.

2. ‘Insurance, Whether You Want It or Not’

Buttigieg likes to advertise his health care plan as “Medicare for All Who Want It,” but as several stories over the holiday revealed, it comes with an intrusive twist. While his plan says that “individuals could opt out of public coverage,” they could do so only “if they choose to enroll in another insurance plan.”

In other words, Buttigieg would compel people to buy insurance—whether they want to or not, enforcing this revived individual mandate through the tax code. On April 15, individuals who didn’t enroll in health insurance the previous year would get a bill for coverage, which could total $5,000 or more, whether they wanted that coverage or not, and whether they knew they had that coverage or not.

It’s far from clear that this new “mandate on steroids” would pass constitutional muster. In 2012, the Supreme Court under Chief Justice Roberts blessed Obamacare’s mandate as a tax in part because “for most Americans the amount due will be far less than the price of insurance…It may often be a reasonable financial decision to make the payment rather than purchase insurance.”

Roberts justified Obamacare’s mandate as a tax because it gave the public a genuine choice: Buy insurance, or pay the IRS a tax. Buttigieg’s plan would give the public a Hobson’s choice: Buy insurance, or have insurance bought for you. It represents a significant increase in federal powers—one courts could (and should) strike down.

3. ‘Glide Path’ to Socialized Medicine

Notwithstanding his use of a strengthened individual mandate, Buttigieg ultimately wants to end up with a single-payer system of socialized medicine. He has made no bones about his objective, claiming that his health-care plan would provide a “glide path” to socialism.

As with most of the 2020 Democratic candidates who haven’t endorsed single payer explicitly, Buttigieg’s plan contains several characteristics designed to promote the growth of government-run health care. For instance, he would automatically enroll millions of individuals into the government-run health plan. (He claims Americans could opt out of the government plan, but if he wants the system to end in single payer, how easy would he make it for them to do so?) And he has proposed capping the amount that both private and public insurers can pay physicians and hospitals for health treatments, another way to funnel Americans into the government-run system.

Buttigieg’s plan would create the architecture to create a government-run system of socialized medicine. He just would build that edifice slightly more slowly than Sanders would. It represents but one of the big-government dreams of a candidate who, despite soothing rhetoric, has little in the way of policies to justify the term “moderate.”

This post was originally published at The Federalist.

Analyzing the Gimmicks in Warren’s Health Care Plan

Six weeks ago, this publication published “Elizabeth Warren Has a Plan…For Avoiding Your Health Care Questions.” That plan came to fruition last Friday, when Warren released a paper (and two accompanying analyses) claiming that she can fund her single-payer health care program without raising taxes on the middle class.

Both her opponents in the Democratic presidential primary and conservative commentators immediately criticized Warren’s plan for the gimmicks and assumptions used to arrive at her estimate. Her paper claims she can reduce the 10-year cost of single payer—the amount of new federal revenues needed to fund the program, over and above the dollars already spent on health care (e.g., existing federal spending on Medicare, Medicaid, etc.)—from $34 trillion in an October Urban Institute estimate to only $20.5 trillion. On top of this 40 percent reduction in the cost of single payer, Warren claims she can raise the $20.5 trillion without a middle-class tax increase.

Why Do Louisiana Republicans Want to Replace Obamacare with Obamacare?

For the latest evidence that bipartisanship occurs in politics when conservatives agree to rubber-stamp liberal policies, look no further than Louisiana. Last week, that state’s senate passed a health-care bill by a unanimous 38-0 margin.

The bill provides that, if a court of competent jurisdiction strikes down all of Obamacare, Louisiana would replace that law with something that…looks an awful lot like Obamacare. Granted, most remain skeptical that the Supreme Court will strike down all (or even most) of Obamacare, not least because the five justices who upheld its individual mandate in 2012 all remain on the bench. Notwithstanding that fact, however, the Louisiana move would codify bad policies on the state level.

If a federal court strikes down the health-care law, the bill would re-codify virtually all of Obamacare’s major insurance regulations on the state level in Louisiana, including:

  • A prohibition on pre-existing condition exclusions;
  • Limits on rates that insurers can charge;
  • Coverage of essential health benefits “that is substantially similar to that of the essential health benefits required for a health plan subject to the federal Patient Protection and Affordable Care Act as of January 1, 2019,” including the ten categories spelled out both in the text of Obamacare and of the Louisiana bill;
  • “Annual limitations on cost sharing and deductibles that are substantially similar to the limitations for health plans subject to the federal Patient Protection and Affordable Care Act as of January 1, 2019”;
  • “Levels of coverage that are substantially similar to the levels of coverage required for health plans subject to the federal Patient Protection and Affordable Care Act as of January 1, 2019”;
  • A prohibition on annual and lifetime limits; and
  • A requirement for coverage of “dependent” children younger than age 26.

The Louisiana bill does allow for slightly more flexibility in age rating than Obamacare does. Obamacare permits insurers to charge older individuals no more than three times younger enrollees’ premiums, whereas the Louisiana bill would expand this ratio to 5-to-1. But in every other respect, the bill represents bad or incoherent policy, on several levels.

First, the regulations above caused premiums to more than double from 2013 through 2017, as Obamacare’s main provisions took effect. Reinstating these federal regulations on the state level would continue the current scenario whereby more than 2.5 million people nationwide were priced out of the market for coverage in a single year alone.

Second, the latter half of the Louisiana bill would create a “Guaranteed Benefits Pool,” essentially a high-risk pool for individuals with pre-existing conditions. Given that the bill provides a clear option for individuals with pre-existing conditions, it makes little sense to apply pre-existing condition regulations—what the Heritage Foundation called the prime driver of premium increases under Obamacare—to Louisiana’s entire insurance market. This provision would effectively raise healthy individuals’ premiums for no good policy reason.

Third, the legislation states that the regulations “shall be effective or enforceable only” if a court upholds the Obamacare subsidy regime, “or unless adequate appropriations are timely made by the federal or state government” in a similar amount and manner. Curiously, the bill does not specify who would declare the “adequa[cy]” of such appropriations. But should a court ever strike down most or all of Obamacare, this language provides a clear invitation for Democratic Gov. John Bel Edwards to demand that Louisiana lawmakers raise taxes—again—to fund “adequate appropriations” reinstating the law on the state level.

As on the federal level, conservatives in Louisiana should not fall into the trap of reimposing Obamacare’s failed status quo for pre-existing conditions. Liberal organizations don’t want to admit it, but the American people care most about making coverage affordable. Obamacare’s one-size-fits-all approach undermined that affordability; better solutions should restore that affordability, by implementing a more tailored approach to insurance markets.

Recognizing that they will get attacked on pre-existing conditions regardless of what they do, conservatives should put forward solutions that reduce people’s insurance costs, such as those previously identified in this space. Conservatives do have better ideas than Obamacare’s failed status quo, if only they will have the courage of their convictions to embrace them.

This post was originally published at The Federalist.

Examining the Origins of “Robertscare”

In the end, applesauce won over baseball. Fourteen years ago, during Senate hearings regarding his nomination as chief justice of the United States, John Roberts used a baseball metaphor to explain his view of judges’ modest role:

Judges and justices are servants of the law, not the other way around. Judges are like umpires. Umpires don’t make the rules; they apply them. The role of an umpire and a judge is critical. They make sure everybody plays by the rules. But it is a limited role. Nobody ever went to a ball game to see the umpire…I will remember that it’s my job to call balls and strikes, and not to pitch or bat.

On two major cases related to President Obama’s signature health care law, however, Roberts violated his 2005 pledge, wriggling himself into lexicographical contortions to uphold the measure passed by Congress. As his then-colleague Justice Antonin Scalia noted in the second ruling—which posited that the phrase “Exchange established by the state” applied to exchanges not established by states—upholding Obamacare caused Roberts to embrace “pure applesauce.”

Political Flip-Flop

She writes that he initially voted with the four other conservatives to strike down the ACA, on the grounds that it went beyond Congress’s power to regulate interstate commerce. Likewise, he initially voted to uphold the ACA’s expansion of Medicaid. But Roberts, who kept the opinion for himself to write, soon developed second thoughts.

Biskupic, who interviewed many of the justices for this book, including her subject, writes that Roberts said he felt ‘torn between his heart and his head.’ He harbored strong views on the limitations of congressional power, but hesitated to interject the Court into the ongoing health-insurance crisis. After trying unsuccessfully to find a middle way with Kennedy, who was ‘unusually firm’ and even ‘put off’ by the courtship, Roberts turned to the Court’s two moderate liberals, Stephen Breyer and Elena Kagan. The threesome negotiated a compromise decision that upheld the ACA’s individual mandate under Congress’s taxing power, while striking down the Medicaid expansion.

On the day of the ruling in June 2012, Chris Cillizza, then writing for The Washington Post, claimed that Roberts’ opinion “made good on his pledge to referee the game, not play it.” But the story Biskupic tells, which confirms prior reporting by Jan Crawford published shortly after the ruling, contradicts Cillizza’s view entirely. Roberts’ entire approach to the case consisted of playing games—and highly political ones at that.

The tenor of the passage reinforces how Roberts abandoned his stated principles in NFIB. Over and above talk of “the ongoing health insurance crisis” (perhaps a rhetorical flourish inserted by a liberal Atlantic writer) Roberts had no business feeling “torn between his heart and his head,” let alone stating as much to a reporter. Judges can feel both empathy and sympathy for parties in the courtroom and at the implications of their rulings. But facts remain facts, the law remains the law. Lady Justice remains blind for a reason.

An umpire—or a good umpire, at least—should make calls without fear or favor. If that means calling a third strike against the star slugger for the last out of the World Series, so be it. By his own admission, Roberts let factors outside the law determine his vote in the case. He abandoned his key test at a time when he should have followed it most closely.

Roberts’ Judicial Arrogance

I took that position not because I agree with Obamacare, but because Congress in 2017 decided to set the mandate penalty to zero while maintaining the rest of the law. Of course, Congress had taken no such action clarifying its intent on the law at the time of the ruling in NFIB v. Sebelius.

If the current lawsuit represents judicial activism, asking judges to take an action that Congress explicitly declined to embrace, then Roberts’ 2012 decision to uphold the individual mandate represents an act of judicial cowardice, running for cover and hiding rather than taking the decision that the law requires. For that reason alone, conservatives should refer to the law as “Robertscare”—for the justice who went out of his way to save it—rather than Obamacare. It shall stand as his epitaph.

This post was originally published at The Federalist.

Exclusive: Inside the Trump Administration’s Debate over Expanding Obamacare

Last August, I responded to a New York Times article indicating that some within the Trump administration wanted to give states additional flexibility to expand Medicaid under Obamacare. Since then, those proposals have advanced, such that staff at the Centers for Medicare and Medicaid Services (CMS) believe that they have official sign-off from the president to put those proposals into place.

My conversations with half a dozen sources on Capitol Hill and across the administration in recent weeks suggest that the proposal continues to move through the regulatory process. However, my sources also described significant policy pitfalls that could spark a buzz-saw of opposition from both the left and the right.

The Times reported that some within the administration—including CMS Administrator Seema Verma and White House Domestic Policy Council Chairman Andrew Bremberg—have embraced the proposal. But if the plan overcomes what the Times characterized as a “furious” internal debate, it may face an even tougher reception outside the White House.

How It Would Work

After the Supreme Court made Medicaid expansion optional for states as part of its 2012 ruling upholding Obamacare’s individual mandate, the Obama administration issued guidance interpreting that ruling. While the court made expansion optional for states, the Obama administration made it an “all-or-nothing” proposition for them.

Under the 2012 guidance—which remains in effect—if states want to receive the enhanced 90 percent federal match associated with expansion, they must cover the entire expansion population—all able-bodied adults with incomes under 138 percent of the federal poverty level (just under $35,000 for a family of four). If states expand only to some portion of the eligible population, they would only receive their regular Medicaid match of 50-76 percent, not the enhanced 90 percent match.

The Internal Debate

The August Times article indicated that, after considering partial expansion, the administration postponed any decision until after November’s midterm elections. Since that time, multiple sources disclosed to me a further meeting that took place on the topic in the Oval Office late last year. While the meeting was originally intended to provide an update for the president, CMS staff left that meeting thinking they had received the president’s sign-off to implement partial expansion.

Just before Christmas, during a meeting on an unrelated matter, a CMS staffer sounded me out on the proposal. The individual said CMS was looking for ways to help give states additional flexibility, particularly states hamstrung by initiatives forcing them to expand Medicaid. However, based on my other reporting, I believe that the conversation also represented an attempt to determine the level of conservative opposition to the public announcement of a decision CMS believes the president has already made.

Why Liberals Will Object

During my meeting, I asked the CMS staffer about the fiscal impacts of partial expansion. The staffer admitted that, as I had noted in my August article, exchange plans generally have higher costs than Medicaid coverage. Therefore, moving individuals from Medicaid to exchange coverage—and the federal government paying 100 percent of subsidy costs for exchange coverage, as opposed to 90 percent of Medicaid costs—will raise federal costs for every beneficiary who shifts coverage under partial expansion.

The Medicare actuary believes that the higher cost-sharing associated with exchange coverage will lead 30 percent of the target population—that is, individuals with incomes from 100-138 percent of poverty—to drop their exchange plan. Either beneficiaries will not be able to afford the premiums and cost-sharing, or they will not consider the coverage worth the money. And because 30 percent of the target population will drop coverage, the partial expansion change will save money in a given state—despite the fact that exchange coverage costs more than Medicaid on a per-beneficiary basis.

Why Conservatives Will Object

I immediately asked the CMS staffer an obvious follow-up question: Did the actuary consider whether partial expansion, by shifting the costs of expansion from the states to the federal government, would encourage more states to expand Medicaid? The staffer demurred, saying the actuary’s analysis focused on only one hypothetical state.

However, the CMS staffer did not tell me the entire story. Subsequent to my “official” meeting with that staffer, other sources privately confirmed that the actuary does believe that roughly 30 percent of the target population will drop coverage.

But these sources and others added that both the Medicare actuary and the Congressional Budget Office (CBO) agree that, notwithstanding the savings from current expansion states—savings associated with individuals dropping exchange coverage, as explained above—the partial expansion proposal will cost the federal government overall, because it will encourage more states to expand Medicaid.

For instance, the Council of Economic Advisers believes that spending on non-expansion states who use partial expansion as a reason to extend Medicaid to the able-bodied will have three times the deficit impact as the savings associated with states shifting from full to partial expansion.

Because the spending on new partial expansion states will overcome any potential savings from states shifting from full to partial expansion, the proposal, if adopted, would appreciably increase the deficit. While neither CBO nor the Medicare actuary have conducted an updated analysis since the election, multiple sources cited an approximate cost to the federal government on the order of $100-120 billion over the next decade.

One source indicated that the Medicare actuary’s analysis early last summer arrived at an overall deficit increase of $111 billion. The results of November’s elections—in which three non-expansion states voted to accept expansion due to ballot initiatives—might have reduced the cost of the administration’s proposal slightly, but likely did not change the estimate of a sizable deficit increase.

A net cost of upwards of $100 billion, notwithstanding potential coverage losses from individuals dropping exchange coverage in current expansion states, can only mean one thing. CBO and the Medicare actuary both believe that, by lowering the cost for states to expand, partial expansion will prompt major non-expansion states—such as Texas, Florida, Georgia, and North Carolina—to accept Obamacare’s Medicaid expansion.

Who Will Support This Proposal?

Based on the description of the scoring dynamic my sources described, partial expansion, if it goes forward, seems to have no natural political constituency. Red-state governors will support it, no doubt, for it allows them to offload much of their state costs associated with Medicaid expansion onto the federal government’s debt-laden dime. Once CMS approves one state’s partial expansion, the agency will likely have a line of Republican governors out its door looking to implement waivers of their own.

But it seems unlikely that Democratic-led states will follow suit. Indeed, the news that partial expansion would cause about 30 percent of the target population to drop their new exchange coverage could well prompt recriminations, investigations, and denunciations from Democrats in Congress and elsewhere. Because at least 3.1 million expansion beneficiaries live in states with Republican governors, liberals likely would object to the sizable number of these enrollees who could decide to drop coverage under partial expansion.

Conversely, conservatives will likely object to the high net cost associated with the proposal, notwithstanding the potential coverage losses in states that have already expanded. Some within the administration view Medicaid expansion, when coupled with proposals like work requirements, as a “conservative” policy. Other administration officials view expansion in all states as something approaching a fait accompli, and view partial expansion and similar proposals as a way to make the best of a bad policy outcome.

But Medicaid expansion by its very nature encourages states to discriminate against the most vulnerable in society, because it gives states a higher match for covering able-bodied adults than individuals with disabilities. In addition to objecting to a way partial expansion would increase government spending by approximately $100 billion, some conservatives would also raise fundamental objections to any policy changes that would encourage states to embrace Obamacare—and add even more able-bodied adults to the welfare rolls in the process.

Particularly given the Democratic takeover of the House last week, the multi-pronged opposition to this plan could prove its undoing. Democrats will have multiple venues available—from oversight through letters and subpoenae, to congressional hearings, to use of the Congressional Review Act to overturn any administration decisions outright—to express their opposition to this proposal.

A “strange bedfellows” coalition of liberals and conservatives outraged over the policy, but for entirely different reasons, could nix it outright. While some officials may not realize it at present, the administration may not only make a decision that conservatives will object to on policy grounds, they may end up in a political quagmire in the process.

This post was originally published at The Federalist.

What You Need to Know About Friday’s Court Ruling

Late Friday evening, a judge in Texas handed down his ruling in the latest Obamacare lawsuit. Here’s what you need to know about the ruling (if interested, you can read the opinion here), and what might happen next:

What Did the Judge Decide?

The opinion contained analyzed two different issues—the constitutionality of the individual mandate, and whether the rest of Obamacare could survive without the individual mandate (i.e., severability). In the first half of his opinion, Judge Reed O’Connor ruled the mandate unconstitutional.

Wait—Haven’t Courts Ruled on the Individual Mandate Before?

Yes—and no. In 2012, the Supreme Court ruled the individual mandate constitutional. In his majority opinion for the Court, Chief Justice John Roberts (in)famously concluded that, even though Obamacare’s authors proclaimed the mandate was not a tax—and said as much in the law—the mandate had the characteristics of a tax. Even though Roberts concluded that the mandate exceeded Congress’ constitutional authority under the Commerce Clause, he upheld it as a constitutional exercise of Congress’ power to tax.

However, in the tax bill last year Congress set the mandate penalty to zero, beginning on January 1, 2019. The plaintiffs argued that, because the mandate will no longer bring in revenue for the federal government, it no longer qualifies as a tax. Because the mandate will not function as a tax, and violates Congress’ authority under the Commerce Clause, the plaintiffs argued that the court should declare the mandate unconstitutional. In his opinion, Judge O’Connor agreed with this logic, and struck down the mandate.

What Impact Would Striking Down the Mandate Have?

Not much, seeing as how the penalty falls to zero in two weeks’ time. Striking the mandate from the statute books officially, as opposed to merely setting the penalty at zero, would only affect those individuals who feel an obligation to follow the law, even without a penalty for violating that law. In setting their premiums for 2019, most insurers have already assumed the mandate goes away.

Then Why Is This Ruling Front Page News?

If the court case hinged solely on whether or not the (already-defanged) mandate should get stricken entirely, few would care—indeed, the plaintiffs may not have brought it in the first place. Instead, the main question in this case focuses on severability—the question of whether, and how much, of the law can be severed from the mandate, if the mandate is declared unconstitutional.

What Happened on Severability?

Judge O’Connor quoted heavily from opinions in the prior 2012 Supreme Court case, particularly the joint dissent by Justices Anthony Kennedy, Samuel Alito, Antonin Scalia, and Clarence Thomas. He ruled that the justices viewed the mandate as an “essential” part of Obamacare, that the main pillars of the law were inseparable from the mandate.

The judge also noted that some of the lesser elements of Obamacare (e.g., calorie counts on restaurant menus, etc.) hitched a ride on a “moving target,” that he could not—and should not—attempt to determine which would have passed on their own. Therefore, he ruled that the entire law must be stricken.

Haven’t Things Changed Since the 2012 Ruling?

Last year, Congress famously couldn’t agree on how to “repeal-and-replace” Obamacare—but then voted to set the mandate penalty to zero. A bipartisan group of legal scholars argued in this case that, because Congress eliminated the mandate penalty but left the rest of the law intact, courts should defer to Congress’ more recent judgment. Judge O’Connor disagreed.

What Happens Now?

Good question. Judge O’Connor did NOT issue an injunction with his ruling, so the law remains in effect. The White House released a statement saying as much—that it would continue to enforce the law as written pending likely appeals.

On the appeal front, a group of Democratic state attorneys general who intervened in the suit will likely request a hearing from the Fifth Circuit Court of Appeals in New Orleans. From there the Supreme Court could decide to rule on the case.

Will Appellate Courts Agree with This Ruling and Strike Down Obamacare?

As the saying goes, past performance is no predictor of future results. However, it is worth noting two important facts:

1.      The five justice majority that upheld most of the law—John Roberts, Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan, and Sonia Sotamayor—all remain on the Supreme Court.
2.      As noted above, Chief Justice Roberts went through what many conservatives attacked as a bout of legal sophistry—calling the mandate a tax, even though Congress expressly said it wasn’t—to uphold the law, more than a year before its main provisions took effect.

What About Pre-Existing Conditions?

On Friday evening, President Trump asked for Congress to pass a measure that “protects pre-existing conditions.”

I have outlined other alternatives to Obamacare’s treatment of pre-existing conditions. However, as I have explained at length over the past 18 months, if Republicans want to retain—or in this case reinstate—Obamacare’s treatment of pre-existing conditions, then they are failing in their promise to repeal the law.