Three Unanswered Questions on Covered California’s Bogus Premium “Study”

On Thursday, Covered California, the state’s health insurance Exchange, released a purported study providing estimates of premium increases over the next three years. The report itself provides precious little specificity regarding premium increases — not least because no one can know such details so far in advance. It seems purposefully designed around a blaring headline — “Premium Increases of Up to 90 Percent!!!” — with the rest largely window dressing.

The report also contains premium estimates for all 50 states. There seems little reason for the California state Exchange to commission a report on premium levels nationwide — particularly because the report does not provide anything more than a possible range of premium increases in each state. Either the Exchange views itself as part of the #Resistance to President Trump, it wants to use the headlines to motivate Congress to pass a “stability” package — or both. (Probably both.)

Is Covered California’s Actuary Biased?

A footnote in the paper notes that “the leadership on the analysis” in the paper was “provided by Covered California’s Chief Actuary, John Bertko.” Bertko’s name came up in another document, one I received last summer, following a Public Records Act request to Covered California. In the September 2016 email exchange, Bertko forwarded an article to colleagues regarding the status of legal action on cost-sharing reductions (CSRs), along with a note stating that “I think the court case on CSRs is unlikely to go the wrong way.”

He was wrong factually, of course. Judge Rosemary Collyer ruled that the Obama Administration lacked a valid appropriation to make CSR payments in May 2016, and Judge Vince Chhabria last fall denied a motion by state attorneys general requiring the Trump Administration to make the payments.

Why Did Covered California Not Prepare for Instability?

When it comes to the CSR issue discussed above, I wrote back in May 2016 that the incoming administration could withdraw the payments unilaterally, and that as a result, “come January 2017, the policy landscape for insurers could look far different” than it did under President Obama.

What did Covered California do regarding that warning? Exactly nothing. My Public Records Act request for all records relating to cost-sharing reductions and rates for the 2017 plan year yielded but two documents. The first, the Bertko e-mail chain referenced above, related solely to how the federal government had addressed the CSR issue. Bertko sent it two months after Covered California announced its rates for the 2017 plan year, and the Exchange’s model contract with insurers mentioned nothing about the federal government not funding CSRs — both demonstrating that Covered California failed to conduct due diligence about whether CSRs could disappear.

The second document Covered California disclosed is an e-mail chain starting on November 21, 2016, two weeks after the election. Covered California Executive Director Peter Lee requested an urgent legal analysis of the CSR issue, allowing Covered California to redact most of the email chain on attorney-client privilege grounds. (I separately removed personal contact information that Covered California left unredacted in the document sent to me.) That said, it doesn’t take a rocket scientist to understand the general context: “Oh ^!%^@#!@—Trump actually got elected! What can he do about CSRs now…?”

Will Peter Lee Actually Enroll in Obamacare Himself?

The Covered California paper claims that regulatory actions taken by the Trump Administration “are expected to draw consumers out of the individual market, sowing market instability and raising the specter of large premium increases in 2019 and beyond.”

However, one person definitely won’t be drawn out of the individual market: Peter Lee, Covered California’s Executive Director — who never went into the individual market in the first place, because he refuses to buy the policies his own Exchange sells. As I have previously written, Lee lets taxpayers pay for his health insurance coverage, even though he makes a salary of $436,800 annually.

Alternatively, Lee believes the Exchange coverage he promotes throughout California is good enough for others to buy, but not good enough for him—a similarly offensive concept. What exactly is the point of an Executive Director going on a bus tour promoting “quality, affordable coverage” if that individual won’t purchase that same coverage — either because he finds it unaffordable or of low quality?

Lee can release all the reports about increasing Exchange enrollment that he wants, but in reality, he has failed to put his money where his mouth is — quite literally. Unless and until he swallows his pride, joins the hoi polloi, and actually purchases the coverage he himself sells, the advice Covered California gives isn’t worth the paper it’s printed on.

This post was originally published at The Federalist.

Democrats Talking Down Obamacare

It appears that analysts at the Center for American Progress (CAP) have taken up weightlifting in recent weeks, as their health-care team on Monday released a report that represented little more than an attempt to move the Obamacare goalposts. Released ahead of this morning’s start of the 2018 open enrollment period, the “analysis” claimed that, but for the Trump administration’s “sabotage” of Obamacare, enrollment in insurance exchanges would—wait for it—remain unchanged from current year levels.

So in CAP’s view, any decline in exchange enrollment lies entirely at Trump’s feet, but any increase in enrollment comes despite Trump, not because of him. (Funny that.) CAP demonstrated its complete confidence in the effect of Trump’s “sabotage” by failing to make any specific estimate or prediction about how much enrollment would decline due to the president’s actions. The paper discussed Obamacare, but its soft bigotry of low expectations—both for the exchanges and the accuracy of CAP’s own predictions—sounded straight out of the debate on No Child Left Behind.

Their Logic Says Obama Sabotaged His Own Program

But the decision to shorten the open enrollment period was first made by none other than those infamous “saboteurs” Barack Obama and Obama official Andy Slavitt. In February 2016, they announced that open enrollment in 2019 would range from November 1 to December 15. Upon taking office earlier this year, the Trump administration decided to implement this change a year ahead of time, due in part to the ways in which individuals were “gaming the system”—using the long open enrollment period and readily available special enrollment periods to sign up for coverage only after developing costly medical conditions.

A change? Sure. Sabotage? Only if you think Obama and Slavitt want to dismantle Obamacare.

Then there’s the question of funding for enrollment and outreach, which the Trump administration reduced from $100 million to $10 million. As with all organizations that believe beneficence lies solely through government, CAP claims private efforts “cannot fully make up for the wealth of information that only the government has for outreach, as well as the planning and funding that HHS dedicated to the program in past years.”

So maybe, just maybe, Hillary Clinton could cut short her walks in the woods, and raise money for Obamacare instead of hawking her own books. Who knows—maybe noted clean-energy advocate Tom Steyer will stop tilting at windmills, and run ads supporting Obamacare instead of Trump’s impeachment. Or Clinton could simply open up her checkbook and single-handedly replenish the outreach budget herself, given that she and her husband made $153 million giving speeches over their careers—a figure which puts both the Clintons’ largesse, and the outreach “cuts,” in perspective.

Regardless, having seen their profits double under the last administration, health insurers don’t need taxpayers funding ads encouraging people to buy their products. They have $15 billion in profits from 2015 to do that themselves. (With that much money, they could even reprise Andy Griffith’s ads promoting Obamacare.)

Is It Sabotage to Increase Health Coverage?

In the final category of “sabotage” comes the Trump administration’s decision to cancel cost-sharing reduction payments to insurers—payments that Judge Rosemary Collyer ruled unconstitutional nearly 18 months ago. CAP claims this decision will raise premiums for the 2018 plan year. But the decision will also lead to greater spending on insurance subsidies, and more individuals with health coverage, according to the Congressional Budget Office—outcomes CAP would ordinarily support, but somehow “forgot” to mention in its report.

If the states are so concerned that people will be scared away from the exchanges by the thought of higher premiums, perhaps they should stop yelling about higher premiums. With open enrollment just days away, perhaps the states should focus instead on communicating the message that they have devised a response to the CSR payment termination that will prevent harm to the large majority of people while in fact allowing millions of lower-income people to get a better deal on health insurance in 2018. [Emphasis mine.]

While out on the campaign trail, Obama famously told crowds: “Don’t boo—vote.” Perhaps Obamacare supporters should take the eponym’s advice, and spend less time over the next few weeks whining about “sabotage” over open enrollment and more time actually working to enroll people. And maybe, just maybe, all the Washington elites up in arms about President Trump’s “sabotage” of the law could take a truly radical step, and sign up for Obamacare coverage themselves.

This post was originally published at The Federalist.

Judge’s Ruling Prevents Sabotage…Of the Constitution

Late this afternoon, a federal judge in San Francisco issued a ruling in the recent court case surrounding cost-sharing reduction (CSR) payments. Judge Vince Chhabria—notably, an appointee of President Obama—denied a request by Democratic Attorneys General for a preliminary injunction demanding that the Trump Administration keep making the CSR payments to insurers. By denying the request for an injunction, Judge Chhabria’s ruling illustrates how the Obama Administration sabotaged the Constitution by spending money without a congressional appropriation.

Notably, Judge Chhabria’s ruling came on the merits of the case for an injunction—he rejected arguments by the Justice Department that the states lacked standing to sue, or that they should have filed their case in the District of Columbia, where the House v. Hargan lawsuit initiated in 2014 remains pending. The judge observed repeatedly that “it appears initially that the Trump Administration has the stronger argument.” Specifically, he stated that the case differed from King v. Burwell—where the Supreme Court ruled that language that appeared clear in isolation (“Exchange established by the State”) was actually ambiguous in the context of the broader statute. Judge Chhabria concluded that, at this stage of the case, it appears the Administration has the stronger argument that the cost-sharing reduction payments and premium subsidies are two separate and distinct programs—meaning that the Obama Administration violated the Constitution by using an appropriation for the latter to spend money on the former.

On whether or not the states would suffer irreparable harm without a preliminary injunction, Judge Chhabria noted (as this author has done previously) that cutting off CSR payments would actually increase overall spending on health subsidies, and reduce the number of uninsured—outcomes that liberals would normally support. He pointed out this scenario to the plaintiffs—and their response, as cited in the ruling, speaks for itself:

When counsel for the State of California was confronted at oral argument with the fact that the relief sought by the states [i.e., a preliminary injunction] could cause this harm [i.e., a reduction in subsidy spending], he responded by suggesting that perhaps the Court could order the Administration to resume the CSR payments even while the states continue to allow the insurance companies to charge higher premiums on the exchanges, with the idea that the numbers would reconciled later, through some unexplained process. In other words, allow the insurance companies to collect double payments in 2018. This argument does not even merit a response.

But it does raise the question: why, in light of this discussion, have all these Attorneys General rushed to court seeking an emergency ruling against President Trump?

The answer might best be explained by the last two words: “President Trump.” To demonstrate themselves as part of “The Resistance,” the Democratic Attorneys General were willing to bring a case that might actually harm their constituents more than it helps them.

In his conclusion, Judge Chhabria had little patience for the liberal strategy of “talking down Obamacare”—making “doom-and-gloom” predictions prior to open enrollment, just to score political points by accusing President Trump of “sabotage:”

If the states are so concerned that people will be scared away from the exchanges by the thought of higher premiums, perhaps they should stop yelling about higher premiums. With open enrollment just days away, perhaps the states should focus instead on communicating the message that they have devised a response to the CSR payment termination that will prevent harm to the large majority of people while in fact allowing millions of lower-income people to get a better deal on health insurance in 2018. [Emphasis mine.]

Which raises an important question: Do Democrats actually WANT Obamacare to succeed—or do they secretly want it to fail, because they believe President Trump will get the blame if it does?

Regardless, today’s ruling upholds the argument that Obamacare does NOT include an appropriation for cost-sharing reduction payments, and that the Obama Administration sabotaged the Constitution and the rule of law by spending funds never appropriated by Congress. Perhaps now that one of President Obama’s own judicial nominees has ratified that conclusion, people can focus on that sabotage, instead of the supposed “sabotage” of Obamacare.