An Obamacare “Fix” That Isn’t

Astute political observers might have noticed disconsonant views coming from Republicans on Capitol Hill recently. Even as many rightly criticized Obamacare for the massive premium increases many Americans face—and noted that the law’s framework makes Obamacare inherently unfixable—other unnamed Republican sources may be already laying the groundwork for efforts to repair the law after next week’s election. Such efforts would not only undermine the party’s pre-election messaging, they could well prove ineffective at best in solving the law’s twin problems of too many regulations and too much spending.

Two weeks ago, President Obama attempted to sell his unpopular law in Miami, encouraging people to sign up for exchange coverage in 2017 despite higher premiums for coverage of questionable quality. In response, House Speaker Paul Ryan issued a statement taking issue with the structure of the law itself:

After listening to the president’s speech, I’m not sure what health care law he’s talking about. He wondered out loud why there’s been such a fuss. It’s no secret: It’s because of Obamacare. That’s why we’ve seen record premium hikes. That’s why millions of people—including millennials—have lost their plans, or been forced to buy plans they don’t like. That’s why we’ve seen waste, fraud, and abuse. And at this point, one thing is clear: This law can’t be fixed. [Emphasis mine.]

Last week, however, a different story emerged, in a story highlighting proposed changes to the law that Congress could consider in 2017. The article in The Hill quoted unnamed congressional sources as saying that Republicans have in fact offered to help Democrats “fix” Obamacare:

A Democratic health adviser spoke to congressional Republicans recently about changing the age rating ratio, with a subsidy for older people, and said the reaction was “favorable.”

To translate the article’s policy-speak into English: Obamacare requires that insurers charge older individuals no more than three times what younger enrollees pay. In most cases, however, older individuals incur costs about five to six times what the youngest enrollees incur in medical bills. The three-to-one age rating therefore charges younger people more, so that older individuals pay slightly lower premiums.

Younger and healthier individuals aren’t enrolling in Obamacare, because they don’t see it as a good value—which, under the age rating restrictions, it isn’t. As a result, Obamacare’s exchanges face a pool of enrollees sicker than the average employer plan—one of the main reasons why insurers are losing money, and not offering exchange coverage. The unnamed Democratic staffer mooted changes that would loosen the age rating ratio—providing slightly lower premiums for younger enrollees, in the hope they will sign up in greater numbers—in exchange for richer subsidies for the older individuals who would pay more under the change.

It remains unclear whether these discussions have advanced to any degree of seriousness, or whether Speaker Ryan would in fact bring Obamacare “fixes” to the House floor after publicly stating that the law can’t be fixed. But what is clear is what new subsidies would entail—adding more spending to the nearly $2 trillion the law will already spend in the coming decade, at a time when our nation faces a staggering $19.8 trillion in federal debt. New subsidies would also likely entail new tax increases that will impede economic growth, or additional reductions in Medicare to pay for more spending on Obamacare, at a time when Medicare itself faces funding shortfalls—an inconvenient truth neither presidential candidate has bothered to consider.

Just as important, it’s also unclear whether changing the age rating regulations alone would bring premiums down enough to encourage young people to enroll. Over and above age rating, Obamacare included massive new regulations on health insurance policies, most of which raised premiums dramatically: A new list of “essential health benefits” that all plans must cover; requirements for coverage of preventive services without cost-sharing; requirements that plans cover a greater percentage of expected medical expenses. Even if more favorable age rating lowers premiums by one-third, it won’t take insurance rates much below where they were before the 25 percent premium increase facing plans this January. How will taking premiums back to they are now—when young people haven’t enrolled in Obamacare for the past three years—fix the problem?

The answer’s simple: It won’t. “Favorable” reactions from unnamed staffers aside, more spending and more taxes won’t fix an inherently unfixable law—even if accompanied by some regulatory changes that might do some good. As the old saying goes, if you’re in a hole, stop digging. When it comes to Obamacare, that means staff on both sides of the aisle shouldn’t waste time with “solutions” that involve throwing more of someone else’s money at the problem. Future generations already face a nearly $20 trillion—and counting—hole of debt; if we won’t solve that problem, let’s at least agree not to make it any bigger.

Obama Group Comes Out Swinging–And Scaremongering–On Obamacare

The Hill reports that President Obama’s campaign group, Organizing for Action (OFA), is out with a new ad campaign, which contains inaccurate claims about the fight to defund Obamacare.

First, OFA claims that those who want to defund the law “are threatening to shut down the government if Obamacare isn’t dismantled.” Nothing could be further from the truth.

Conservatives don’t want to shut the government down; they do want to shut down Obamacare. And legislation accomplishing both of these objectives—funding all of the federal government except for Obamacare—was introduced last week.

As we’ve previously noted, the only person who wants to shut down the federal government is President Obama himself. The Obama Administration has threatened to veto multiple House-passed spending bills. The Administration made these threats because liberals want to replace sequestration’s spending cuts, agreed to by both parties, with tax increases. And if they don’t get their way, the President and his advisors have pledged to shut down the federal government.

Second, OFA claims that if a shutdown occurs—and as noted above, it would occur only because President Obama wants it to occur—such a scenario “could disrupt Social Security and veterans’ benefits.” That’s just not accurate. As a previous Heritage Foundation fact sheet has noted,

The term shutdown substantially overstates the matter. The most essential services continue, such as: (1) providing for national security, (2) conducting foreign affairs, (3) providing for the continuity of mandatory benefit payments, and (4) protecting life and property. These services include military, law enforcement, veterans care, and others. Social Security checks are still mailed and self-funded agencies like the Postal Service would continue operating.

It couldn’t be more clear: Social Security checks would still get mailed, and the Postal Service would remain in business to mail them.

The President’s liberal allies are apparently worried that Congress will act to defund Obamacare now, or otherwise they would not be making such incorrect and inflammatory accusations. That’s why it’s important to get the real facts behind Obamacare and the harm it will inflict on millions of Americans.

This post was originally published at The Daily Signal.

The Obama Administration’s Fuzzy Premium Math

President Obama is scheduled to make an address talking about Obamacare this morning. He’s expected to claim that Obamacare is working to lower premiums. There’s only one problem with that claim: His math doesn’t add up.

Let’s look at the facts. In 2008, then-Senator Obama promised premiums would go down under his plan by $2,500 per family per year. But the non-partisan Congressional Budget Office estimated in 2009 that Obamacare would raise premiums on the individual health insurance market by $2,100 per family per year by 2016.

Now, according to press reports, the Administration will release a report today with claims of lower premiums:

Costs for a middle-of-the-road insurance policy average roughly $321 per month across the 11 states that have released their rate filings for next year, administration officials said — compared with initial estimates of $392 per month.

There’s one big problem with that claim: Premiums won’t actually go down—the increases will just be lower than expected.  If premiums are $71 per month ($392 minus $321), or $852 per year, lower than CBO first estimated, that still leaves them nearly $1,250 higher than they would have been without Obamacare.  Remember: CBO said individual health insurance premiums would go up by $2,100 per family.  Even if premiums are going up by less than expected, they’re still going up—in violation of Obama’s 2008 campaign promise.

There are other problems with the Administration’s claims.  As The Hill notes, the claims are based on an apples-to-oranges comparison flattering to Obamacare:

The administration is comparing the cheapest policy in the middle tier of benefits to estimates for the second-cheapest policy — not quite applies-to-oranges, and also not a direct comparison.

Additionally, next year’s premium rates themselves are based on the assumption that enough young and healthy individuals will enroll in Exchanges to offset the cost of older, sick enrollees.  If Exchanges get stuck with only individuals whose health costs are greater-than-expected—either because only sick individuals enroll, or because employers struggling with high health costs dump their workers into the exchanges—premium costs could explode in future years. That’s exactly what happened with Obamacare’s pre-existing condition insurance plan—enrollees’ health costs were greater than expected, such that the program had to take drastic measures to avoid depleting its $5 billion allotment early.

The bottom line: Then-Senator Obama promised a $2,500 premium decrease.  Nothing released today shows that Obamacare is within a country mile of delivering on that promise.  And the fact that Obamacare has failed to deliver on its central promise is yet another reason why Congress should refuse to spend a single dime on this law.

This post was originally published at The Daily Signal.

Kathleen Sebelius: The Insurance Industry’s “Big Sister”

As the Administration gears up to sell Obamacare to the American people, it’s also gearing up its regulatory apparatus to strong-arm private companies.

The Hill reports that even though the Department of Health and Human Services (HHS) previously claimed that it would not try to negotiate rates with insurance companies, in reality HHS Secretary Kathleen Sebelius is doing just that:

“The department is working with state regulators to approach insurers whose rates come in significantly higher or lower than average to make sure their filings are correct,” a senior HHS official said.

So if insurance companies don’t offer the “correct” price, officials from HHS will tell them to come back and try again. Perhaps this is what Vice President Joe Biden meant when, just before Obamacare passed, he said that “we’re going to control the insurance companies.”

Obamacare relies on a series of strong-arm tactics to “control” prices—from price controls on insurance companies to a board of 15 unelected bureaucrats empowered to keep Medicare spending below an arbitrary target. But the real problem with Obamacare is that it forces individuals to buy more insurance than they might want or need, raising premiums in the process. No amount of top-down government controls—or “encouraging” insurance companies to offer the “correct” prices—can change that fact.

So while Secretary Sebelius and HHS continue their intrusive, government-centered tactics to try to offset the premium increases many Americans will see next year, there’s another concept the Administration should try. It’s called free markets and competition.

This post was originally published at The Daily Signal.

Donald Berwick’s Rationed Transparency

Dr. Donald Berwick is back in the public eye. The former administrator of the Centers for Medicare and Medicaid Services (CMS) has announced he will run for governor in Massachusetts.

Berwick first entered the public spotlight in April 2010, when President Obama nominated him for the CMS post. But Berwick never went through the regular confirmation process. Instead, the president granted him a surprise recess appointment that July.

The president renominated him in January 2011, but it became apparent that he could not garner enough votes for Senate confirmation. That December, Berwick resigned. Now, he is pursuing office as an elected, rather than an appointed, official.

Berwick’s short tenure at CMS was defined by a series of controversial statements he made before his appointment. He defended both Britain’s National Health Service and government rationing of health care. Most famously, in a June 2009 interview, he stated that “the decision is not whether or not we will ration care — the decision is whether we will ration with our eyes open.”

After leaving CMS, Berwick said his comments were merely an attempt to argue for greater transparency in decision-making. “Someone, like your health-insurance company, is going to limit what you can get. That’s the way it’s set up,” he told the New York Times. “The government, unlike many private health-insurance plans, is working in the daylight,” he insisted. “That’s a strength.”

Unfortunately, Berwick himself, while head of CMS, went to great lengths to avoid transparency. He ducked reporters, in one instance even “exit[ing] behind a stage” to avoid press queries. Another time he went so far as to request a “security escort” to avoid questions.

Today, Berwick concedes his lack of transparency. According to a Politico report, he now “regrets listening to White House orders to avoid reaching out to congressional Republicans.”

The lack of transparency is endemic in the Obama administration. Case in point: the enactment of Obamacare. During his 2008 campaign, Barack Obama promised health-care negotiations televised on C-SPAN. Instead, we got a series of notorious backroom deals: the Cornhusker Kickback, the Louisiana Purchase, the Gator Aid.

“It’s an ugly process, and it looks like there are a bunch of backroom deals,” Obama feebly admitted in January 2010 — only to retreat again to the smoke-filled rooms two months later, where he cut the final deals to ram the legislation through Congress.

Obamacare is premised on the belief that government knows best. And those who share that belief all too often regard transparency and public accountability as inconveniences.

Consider the administration’s approach to regulating the proposed health-insurance “exchanges.” Obamacare requires state-based exchanges to “hold public meetings and input sessions,” but it fails to apply these same transparency standards to the federally run exchanges Washington will create in 33 states. The result: Many key questions remain unanswered.

Thus a law written in secret is being implemented in secret, with a maximum of opacity and a minimum of accountability from the administration.

This post was originally published at National Review.

Weekly Newsletter: April 28, 2008

  • Genetic Non-Discrimination Act Returns for House Vote

    This week, the House is expected to vote on Senate amendments made to the Genetic Information Nondiscrimination Act (H.R. 493), in order to send the bill to the President’s desk. The compromise language negotiated between Senate sponsors and Sen. Tom Coburn (R-OK) allowed the bill to pass the Senate on a 95-0 vote last Thursday.

    The compromise language corrects several issues of concern to conservatives. Insurers and employers will be prohibited from discriminating against individuals on the basis of fetal genetic information, ensuring that individuals will not feel pressured into aborting their unborn children. In addition, existing policies on insurance underwriting for diseases already manifest in individuals will be maintained, and entities subject to existing privacy regulations under the Health Insurance Portability and Accountability Act (HIPAA) will not be subject to a new regulatory regime. Lastly, the compromise language improved a conservative concern that employers will not be subject to Equal Employment Opportunity Commission (EEOC) tribunals or lawsuits for decisions they make in their capacity as an insurer for their employees.

    Full House Votes to Override Medicaid Fiscal Integrity Regulations

    This past week, the full House by a 349-62 vote approved legislation (H.R. 5613) that would impose moratoria on several proposed regulations issued by the Centers for Medicare and Medicaid Services (CMS) to restore fiscal integrity to the Medicaid program. Although the bill was approved by the Energy and Commerce Committee 46-0, seven Energy and Commerce Committee Republicans opposed House passage— because of either substantive concerns about the legislation or as a protest against the expedited procedures under which the multi-billion dollar bill was considered.

    Despite the wide margin of passage, some conservatives may remain concerned by congressional actions to block regulations that respond to more than a dozen Government Accountability Office (GAO) reports released since 1994 highlighting the various ways states have attempted to “game” the Medicaid program and increase the amount of federal matching funds received. The history of these abuses has prompted the Administration to threaten a veto of any measure attempting to block CMS’ attempts to restore the fiscal integrity of the Medicaid program.

    Action now moves to the Senate, where Minority Leader Mitch McConnell (R-KY), Minority Whip Jon Kyl (R-AZ), and Finance Committee Ranking Member Chuck Grassley (R-IA) all support allowing CMS’ regulatory actions to continue without further intrusion from Congress. In addition, the American Medical Association (AMA)—which supports legislative action to block the regulations—on Friday expressed concern that HR 5613 would utilize funds from a physician quality improvement fund to help pay for the moratoria. Some conservatives may view the AMA letter as confirming the belief that, by using a physician quality fund “in a manner inconsistent with its intended purpose,” HR 5613 relies on budgetary gimmicks not consistent with the spirit of House pay-as-you-go budgetary scoring rules.

    RSC Briefs on the federal-state Medicaid relationship can be found here, here, here, and here.

    Article of Note: Broken Promises Ahead

    This week, The Hill reported that Congressional Democrats do not believe the fundamental health care overhauls advanced by Sens. Hillary Clinton (D-NY) and Barack Obama (D-IL) have a realistic chance of enactment in the near future. The story quoted several Democratic leaders:

  • Democratic Senate Campaign Committee Chairman Chuck Schumer (D-NY): “I am not sure that we’re ready for a major national health care plan;”
  • Senate Finance Committee Member Jay Rockefeller (D-WV): “We all know there is not enough money to do all this stuff;”
  • House Ways and Means Committee Member Kendrick Meek (D-FL): “The money is not necessarily there right now” to enact comprehensive reform;
  • Senate Finance Committee Chairman Max Baucus (D-MT): “If they try to solve all the problems, it’s going to be difficult;”
  • Former Senator John Breaux (D-LA): “You don’t want to rush and do something and do it incorrectly.”

    Some conservatives may not be surprised by the skepticism from within the Democratic Party, particularly as Sen. Clinton has recently admitted her willingness to raise tobacco taxes to pay for her reform plan, while also garnishing individuals’ wages who do not comply with an individual mandate to purchase health insurance. Rep. Meek’s comments that “there is…a Congress here with feelings and experience on this issue…this is not a kingdom, this is a democracy” speak to the reluctance of Congressional Democrats to accept their Presidential candidates’ desire to raise taxes and grow government-run health care. Some conservatives would argue that, by reforming health care to create new markets, the sector could slow its soaring growth, obviating the need for additional taxes and spending to finance new public health care programs.

    Read the article here: “Dems Hedge on Health Care