The Daily Show: Sebelius Swings and Misses

Last night, Secretary of Health and Human Services (HHS) Kathleen Sebelius appeared on The Daily Show to talk about Obamacare (you can watch Part 1 and Part 2 of the extended interview). She attempted to defend the Administration’s botched opening of the law’s exchanges, but like the rollout itself, most of what she said in the law’s defense ended up falling flat:

“We have a terrific market.” Thus far, the facts speak otherwise. Even Sebelius was forced to concede the exchanges’ flaws, when she admitted to host Jon Stewart that she didn’t know how many people have “fully enrolled” in exchange plans. Sebelius claimed that “this is like a Kayak site, where you might check out what plane you want to get on.” However, I’m guessing that Kayak knows exactly how many customers have purchased plane tickets from its site.

“For about 85 percent of us, we don’t have to sign up for anything, because we have insurance that works…I think the President did not want to dismantle the health care that 85 percent of the country had and start all over again.” That may not have been intent of Obamacare—but it has been one of the law’s effects. Companies are already dropping health insurance for part-time workers and for spouses, causing individuals to lose their employer-provided coverage and raising the cost of federal insurance subsidies.

“We know about 6 out of 10 people will get a policy for under $100 a month—never happened before.” We also know that most of those individuals will be dumped into the Medicaid program—a form of coverage that its own members don’t even call “real insurance,” because low reimbursement rates prevent Medicaid patients from seeing actual doctors.

“Nothing that helps an individual get health insurance has been delayed at all.” That’s simply not accurate. The insurance subsidies may not have been delayed, but many elements of the insurance shopping experience—from a choice of insurance companies for those working for small businesses, to the basic health plan, to caps on out-of-pocket spending—have been delayed. All these Obamacare features were thrown overboard in an attempt to make the core elements of the exchanges work—which they haven’t.

The sharpest part of the interview came when Stewart pressed Sebelius on the delay in the law’s employer mandate, and the disparity in treatment between big business and the rest of America: “Geez, it looks like because I don’t have a lobbying group…I would feel like you are favoring big business because they lobbied you to delay it because they didn’t want to do it this year but you are not allowing individuals that same courtesy.” That is of course consistent with the attitude the Administration has taken towards the law from the start—reward “squeaky wheels” who hire lobbyists and make political noise by exempting them from some of Obamacare’s most harmful effects.

Stewart’s opening comment summed up the exchanges’ flaws: “I’m going to try and download every movie ever made and you’re going to try and sign up for Obamacare and we’ll see which happens first.” Sebelius may have played the part of a loyal trooper, but the facts speak for themselves.

This post was originally published at The Federalist.

The Massive Costs of the Latest Obamacare Waiver

Policymakers are still recovering from yesterday’s shocking admission by the Administration that it can’t implement Obamacare’s employer mandate without destroying jobs.

The announced one-year delay in enforcement brings with it an immediate revenue loss. But by further encouraging firms to drop coverage now—allowing businesses to privatize gains and socialize losses—the change could cause federal spending on Obamacare exchange subsidies to soar.

The Congressional Budget Office (CBO) estimated in May that the employer mandate would raise $10 billion in revenue in its first year. (Because the employer mandate is a tax penalty, firms will pay the penalties the following year—penalties for 2014 will be paid in 2015; penalties for 2015 will be paid in 2016, etc.) That $10 billion in employer mandate revenue projected for fiscal year 2015 will almost certainly disappear.

Then there’s the separate question of whether, when, and how employers will drop their health insurance plans and dump their workers on the exchanges. Here’s what we know on that front:

  • In its most recent economic forecasts in February, the CBO estimated that unemployment would average 7.8 percent in 2014. That number is nearly three percentage points higher than the CBO’s estimate of 2014 unemployment at the time of Obamacare’s passage. Because unemployment will be higher than the CBO first projected when Obamacare passed, firms will have more incentive to drop health insurance now, while labor markets are more competitive and workers have fewer employment options.
  • The CBO now projects that, if firms do drop health coverage, insurance subsidies on exchanges will average $5,290 per enrollee next year. By comparison, shortly after Obamacare passed, the CBO projected subsidies would average $3,970 in 2014. In other words, the projected average subsidy for 2014 has grown by one-third since the law passed.
  • As we documented last week, since Obamacare’s enactment, the CBO has increased the number of projected uninsured and decreased the number of individuals projected to retain their employer coverage.

Over the past several years, numerous studies, papers, briefs, reports, employer questionnaires, consultant presentations, surveys, op-eds, interviews, quotes, and comments from Democrats suggest that employers will drop coverage in significant numbers, resulting in trillions of dollars of added federal costs. Even Jon Stewart, in an interview with Health and Human Services Secretary Kathleen Sebelius last year, would not believe that employers would keep offering coverage:

Is the penalty more than the [cost of] insurance?… Is there a consequence other than a fine or shame—cause I know the shame thing’s not gonna work.

Instead of facing a decision to pay more than $10,000 for a worker’s insurance policy or pay a $2,000 per-employee penalty, employers next year will now be able to raise their workers’ wages to compensate them for the loss of their health plans. And the cost of that choice—which some would argue is so obvious as to not be a choice—could result in skyrocketing federal spending.

This post was originally published at The Daily Signal.

Jon Stewart Talks about Obamacare’s “Big Dump”

Appearing on The Daily Show last night, Secretary Sebelius answered a series of questions from host Jon Stewart about employers dropping coverage that can best be described as awkward.  In the extended interview posted online, Stewart asked whether or not there would be a “big dump” of employees into Exchanges under the law.  The full exchange occurs beginning at around 3:15 of the second segment; here are the highlights:

STEWART:  “Can they [i.e., employers] dump you into the exchange?”

SEBELIUS:  “Well, at the end of the day, there is no mandate now.  In 2014, if employers don’t cover health insurance, they will pay a penalty, and they’ll pay for every employee who goes into the Exchange.”

STEWART:  “Is the penalty more than the [cost of] insurance?”

SEBELIUS:  [Long pause] “The penalty will help pay for the tax credit that the employee will get in the insurance [sic]….”

STEWART:  “Is there a consequence other than a fine or shame – cause I know the shame thing’s not gonna work.  [Laughter.]”

STEWART:  “Let’s say I’m paying, for a family plan, $1200 a month.  And my employer says, oh, we’ve got these exchanges now, I’m going to dump you into that.  And you’re going to get a tax credit.  Will my tax credit be the equivalent of the money that the employer was paying, or is that now going to come out of [unintelligible]”

SEBELIUS:  “It’s really…it’s hard to tell because employers are all over the board….”

STEWART:  “Do you think ultimately this is, a bunch of people dump to the Exchange, and it becomes sort of, a back door, of government, not a takeover necessarily, but of a government responsibility for the health care, employees, and it decouples it – I’m not saying that’s a bad thing – but decouples it from employment, and people will get it through the government – through tax credits, rather than through their employers – and then suddenly, obviously then, we’re Sweden.  Do you think that’s the case?”

Sebelius claimed that the law is “filling in the gaps in the private market.”  But the reality, as Stewart laid out and other studies have confirmed, is that it’s much cheaper for employers to drop their workers’ health plans and dump them into the Exchanges – costing the federal government trillions of dollars and turning us into Sweden (or Greece).  It also raises an obvious question:  If even liberals like Jon Stewart believe the health law will cause Americans to lose their health plans, who actually believes they will be able to keep their current coverage under Obamacare?

Most Significant Legislation Ever…?

Appearing on the Daily Show last night, President Obama defended the health care law by claiming that “most people would say [it] is as significant a piece of legislation as we have seen in this country’s history.”

If that’s the case, and the health care law is the most significant bill ever enacted into law:

  • Why did the President feel the need to follow up that exchange with a promise to “continue to make progress?”
  • Why did the President previously claim the legislation was a “middle of the road bill?”
  • Why have Democrats in Congress refused to hold hearings on it?
  • Why do a plurality (48%) of voters intending to support Democrats in the midterm elections believe the law “won’t make much difference” to the economy, according to a Harvard survey cited in a New England Journal of Medicine article published yesterday?
  • Why are House Democrats running ads admitting they’ve “disappointed” voters on things like the health care measure?