Paul Ryan Flip-Flops on Fiscal Responsibility to Prop Up Obamacare

What a difference eight years makes. In February 2010, Rep. Paul Ryan (R-WI), then Ranking Member of the House Budget Committee, spoke at the White House health care summit decrying Obamacare as “a bill that is full of gimmicks and smoke-and-mirrors.” His comments became a viral sensation, so much so that the Wall Street Journal published a condensed version of his remarks as an op-ed. (Here’s the video.)

Reporters confirmed as much on Monday, when an article claimed that the Congressional Budget Office (CBO) believes appropriating funds for cost-sharing reduction payments (CSRs) for three years would save the federal government $32 billion, when compared to a scenario in which Congress does not appropriate CSR payments. Not coincidentally, the article noted that a separate bill by Rep. Ryan Costello (R-PA) — “which House leaders have embraced” — would create a $30 billion “Stability Fund” for insurers, purportedly paid for by the $32 billion in “savings” caused from appropriating CSRs.

The article doesn’t say so outright, but it’s not hard to figure out what happened behind the scenes:

  1. House Republican leadership directed CBO to score the fiscal effects of making CSR payments to insurers compared to not making the payments.
  2. House Republican leaders leaked results of the score to insurer lobbyists.
  3. Those insurer lobbyists then leaked the results to reporters — to claim their bill would generate “savings” for the federal government.

The end result sounds like a Broadway musical: “How to Spend $60 Billion in Taxpayer Funds without Really Trying.” If insurers have their way, Congress would spend roughly $30 billion in CSR payments for the next three years, and that $30 billion in spending would “save” another $32 billion — which Congress would turn right around and send to insurers, via the $30 billion “Stability Fund.”

Compare this maneuver to Obamacare — or, more specifically, Paul Ryan’s 2010 critique of Obamacare. At the White House health care summit, Ryan told President Obama in regard to Obamacare’s proposed reductions to Medicare: “You can’t say that you’re using this money to either extend Medicare solvency and also offset the cost of this new program. That’s double counting.” If claiming that Medicare savings both enhance Medicare’s solvency and pay for Obamacare constitutes double counting — and it does — then what exactly is jiggering the budgetary baseline solely to generate “savings” that Republicans can turn around and spend…?

There’s another problem too: The fraudulent “savings” are also illegal. As I previously noted, the Gramm-Rudman-Hollings statute requires CBO to assume full payment of CSRs — meaning the scenario that House Republicans asked CBO to score violates the statutory requirements.

Some might claim that, since President Trump stopped making CSR payments last October, a scenario in which CBO does not assume the federal government makes those payments represents a more realistic fiscal approach than that currently required by Gramm-Rudman-Hollings. To which I have one simple retort: If you don’t like the law, then Change. The. Law.

Ryan and House Republican leaders don’t want to change the Gramm-Rudman-Hollings law — just like they don’t want to pay for the insurer bailout. Such efforts would take time and effort, necessitate legislative transparency — as opposed to closed-door meetings and selective leaks to K Street lobbyists — and require difficult decisions about how to pay for new spending. Why make those tough choices now, when Republicans can just charge the tab for the insurer bailout on to the national credit card, and let the next generation pay the bill instead?

Congressional Republicans spent eight years decrying Obamacare’s fiscal gimmickry, and President Obama’s executive lawlessness. If they follow the example of the House Republican leadership, and engage in their own illegal budgetary gimmicks, they will have no grounds to complain about Democrats’ spending sprees or overreach. And they shouldn’t be surprised if no one believes their claims of fiscal responsibility come November 6.

This post was originally published at The Federalist.

Obamacare, Health Costs, and Jobs

Yesterday, the Brookings Institution released updated statistics on the role of health care jobs in the broader economy. The study’s findings provide interesting grist for the ongoing debate about Obamacare’s impact on jobs. Three theories follow from the data.

1. Obamacare Has Not Affected Health Care Jobs

The chart showing a steady-state rise in health care employment over the past decade illustrates this point perfectly. As costs continue to rise, and our society continues to age with the impending retirement of the baby boomers, health care employment has steadily grown.

But the fact that health care hiring has increased at virtually the same pace since 2003 demonstrates the law’s minimal to nonexistent effect on employment trends that preceded its enactment.

Brookings Institution

Brookings Institution

2. Obamacare: Little Effect on Health Care Jobs, Little Effect on Health Care Costs

Labor costs comprise one of the major components of health care spending. A report from the American Hospital Association last year found that labor costs were the largest single driver of health cost growth, accounting for more than one-third of the overall rise in hospital prices—a percentage that has remained fairly constant over time.

It’s therefore difficult to assert that Obamacare has permanently “bent the curve” on health costs if the largest driver of health costs—the labor force—has grown unabated. Rather, it seems more likely that the recent slowdown in costs stems largely from the recession and struggling families forgoing health expenses, as a recent Kaiser Family Foundation study concluded.

3. Not Reducing Health Costs = Reducing Non-Health Jobs

Nancy Pelosi’s infamous claim at the White House health summit that Obamacare would “create 4 million jobs–400,000 jobs almost immediately” wasn’t based on the health sector creating more jobs—in many respects, it was based on the sector creating fewer new positions.

A 2010 Center for American Progress report, the basis for Pelosi’s claim, asserted that Obamacare would create more jobs outside the health sector by slowing the growth of costs within the sector—essentially, a rebalancing of costs and jobs away from health care and toward other industries.

Of course, as other analysts have noted, the converse is also true: If health care jobs continue to grow—as they have since Obamacare’s enactment—those growing health costs will hinder the competitiveness of non-health industries, to say nothing of our massive entitlement deficits.

It’s why anyone who wants to preserve American economic preeminence should want health care growth to slow, even if it means that some new health care jobs aren’t created. It’s also why analysts should be worried that Obamacare hasn’t fixed that problem in the slightest.

This post was originally published at The Daily Signal.

Obamacare’s Funny Money

This morning the New York Times reports on the confusion and uncertainty regarding Obamacare’s medical-loss ratio rebates.  Some individuals in employer plans have received notices that their plans will receive rebates – but the rebates are paid to the plans, and not the individuals, and many employers have not decided what to do with them.  This is perhaps unsurprising, because it may not be worth a business’ time and effort to distribute $1.51 rebate checks to all its employees – particularly given that the employee’s share of the premium can often be small.  So for both employer and employee, this supposed Obamacare “benefit” may end up being more hassle than it’s worth.

Meanwhile, the Washington Post’s fact checker column this morning gave President Obama three Pinocchios for making yet another misleading claim about Obamacare.  In Colorado this week, the President again repeated his old claim that Obamacare will lower premiums by creating Exchanges.  This claim essentially riffs off his discussion with Sen. Alexander back at the White House health summit in February 2010.  But as we demonstrated at the time, it wasn’t true then, and it isn’t true now.  Kessler cites numerous actuarial studies to make his point, but the gist is this:  Obamacare FORCES people to buy richer policies, and this Washington-mandated increase in benefits will raise premiums, not lower them.  Even Jonathan Gruber, who served as a paid consultant to HHS to create Obamacare, admits that the President’s rhetoric was misleading.

Four years ago, candidate Obama repeatedly promised that he would cut premiums – not slow the rate of growth, but CUT them in absolute terms – by $2,500 per family.  No amount of measly rebate checks, or misleading rhetoric, can hide the fact that Obamacare has, by the President’s own standards, spectacularly failed to deliver.

Jonathan Gruber’s Incoherent Claptrap on Obamacare and Jobs

Writing in the New Republic, paid Obamacare consultant Jonathan Gruber puts forward a series of arguments about how the law will help jobs and the economy – several of which contradict each other.  First, Gruber says Obamacare will create jobs in the health care sector:

The Affordable Care Act will boost the economy.  By now, most people who follow politics know that the law will result in more than 30 million additional Americans getting health insurance.  But what few realize is that, by expanding insurance coverage, the law will also increase economic activity.  These newly insured individuals will demand more medical care than when they were uninsured.  While it takes many years to train a family physician or nurse practitioner, it doesn’t take much time to train the assistants and technicians (and related support staff) who can fill much of this need.  In many cases, these are precisely the sort of medium-skill jobs that our economy desperately needs—and that the health care sector has already been providing, even during the recession.

Several paragraphs later, he claims the law will reduce health costs:

Of course, the long-term goal of the Affordable Care Act is to reduce spending on health care. And the best projections suggest that it will. Although the law will boost spending initially, the effect is likely to be modest.  The official Medicare Actuary projects that, by 2019, the ACA will raise health spending by 1 percent, or 0.2 percent of GDP; this is less than one-sixth of one year’s growth in national health expenditures.  Over time, however, the multiple initiatives in the ACA will kick in to help “bend the cost curve,” through increasing consumer incentives to shop for low-cost insurance, moving towards prospective payment methodologies that reward value rather than treatment intensity, and assessing which strategies are cost effective for managing illness.

Let’s unpack these claims one by one:

  • The op-ed claims Obamacare will “boost the economy” – the New Republic’s website went so far as to say the article demonstrates “Why Obamacare Can Cure Unemployment.”  But Gruber himself claims the law will lead to only “modest” increases in spending in its first few years, which raises an obvious question: How can “modest” increases in health spending “cure unemployment?”  At minimum, the law will either result in skyrocketing costs or minimal job growth – but Gruber attempts to argue both sides of this equation.
  • Former Speaker Pelosi’s claim at the White House health summit that Obamacare would “create 4 million jobs – 400,000 jobs almost immediately” was based on a Center for American Progress report that claimed the law would create jobs by slowing the growth of health care costs – i.e., by taking away those fast-growing health care jobs Pelosi said made Obamacare a “jobs bill.”  Yet Gruber is now arguing the inverse proposition – that Obamacare will “help” the economy by leading to more hiring for health care jobs, which will RAISE, not lower, overall health care spending.
  • Gruber also claims that CBO said Obamacare’s reduction in the labor force “will be largely voluntary.”  What he didn’t mention is that CBO also said that the law’s “phaseout of the [health insurance subsidies] as income rises will effectively increase marginal tax rates, which will also discourage work.”  In other words, people will “voluntarily” choose to work less – because in some cases, earning an extra $1,000 of income could cause a family to lose thousands of dollars in insurance subsidies.  If Gruber thinks these perverse incentives will somehow boost the economy – or that it’s “voluntary” for a family to keep its income flat for fear of incurring thousands of dollars in effective penalties by working additional hours – some may say he’s spent too much time in the ivory tower.
  • Finally, Gruber admits that “newly insured individuals will demand more medical care than when they were uninsured.”  What he and other Obamacare supporters have failed to acknowledge is that this demand could well “bid up” the cost of health care services – leading to higher medical inflation.  On that count, the non-partisan Medicare actuary agrees about the threat of higher prices after 2014:

In estimating the financial impacts of the PPACA, we assumed that the increased demand for health care services could be met without market disruptions.  In practice, supply constraints might initially interfere with providing the services desired by the additional 34 million insured persons.  Price reactions—that is, providers successfully negotiating higher fees in response to the greater demand—could result in higher total expenditures or in some of this demand being unsatisfied….Either outcome (or a combination of both) should be considered plausible and even probable initially.

As with Secretary Sebelius’ op-ed this morning, some may argue that Gruber’s feeble and inconsistent claims once again demonstrate the need for repeal – because the fact that the law’s supporters have to take both sides of an argument about Obamacare’s impact on jobs and the economy shows they really don’t have an argument at all.

Pelosi, Jobs, and Obamacare

Ahead of tomorrow morning’s jobs report, it’s worth pointing out another excerpt from former Speaker Pelosi’s interview with CNBC’s Maria Bartiromo last week.  At about 8:40 of the interview (transcript available here), Bartiromo asked an obvious and telling question about why Democrats were seemingly obsessed with passing a massive health care bill at a time the economy was struggling:  “Do you regret pushing health care as aggressively as you did instead of pushing a jobs package when you had the chance?  Maybe we wouldn’t be in this position right now if you had all the guns behind this jobs package as opposed to what you had with health care?”  Pelosi’s response was telling – she claimed that “the health care bill was part of a jobs bill,” and that “health care jobs are the fastest growing element of jobs in our country…That [Obamacare] is a jobs bill.”

Unfortunately, the former Speaker’s assertions that Obamacare was a “jobs bill” are contradictory and incoherent.  Pelosi’s claim at the White House health summit that Obamacare would “create 4 million jobs – 400,000 jobs almost immediately” was based on a Center for American Progress report that claimed the law would create jobs by slowing the growth of health care costs – i.e., by taking away those fast-growing health care jobs Pelosi said made Obamacare a “jobs bill.”  Anyone who wants to preserve American economic competitiveness – and ensure entitlements won’t bankrupt the government – should WANT health care growth to slow, even if it means some new health care jobs aren’t created. (Of course, Obamacare actually increases health care spending, thus undermining this argument, but that’s a trifling inconvenience.)

It’s also worth pointing out that earlier in the interview, Pelosi claimed that the companies who received Obamacare waivers were “very, very small companies” that “will not have a big impact on the economy of our country.”  So it’s worth listing some of the corporations that did in fact receive waivers – and thus by Pelosi’s own definition do not have a big impact on the American economy*:

  • McDonald’s
  • Dish Network
  • Aetna
  • Cracker Barrel
  • Jack in the Box
  • Foot Locker
  • Pepsi
  • Cigna
  • Jamba Juice
  • The Container Store
  • Crate and Barrel

As with Pelosi’s comments about employers dropping coverage and “taking money out of Medicare,” this portion of her CNBC interview revealed the fatal flaws behind Democrats’ economic policies.  Granted an overwhelming 60-vote majority at the time the economy was struggling, the party instead focused on passing an ideologically-motivated health care law.  Having done that, those same Democrats now can’t figure out whether the law will create jobs by controlling costs, or by exploding them in such a manner that more Americans will go into health occupations.  And Pelosi does not seem aware that big-name companies have a significant impact on American economic growth.  All in all, three reasons why the former Speaker is in fact the former Speaker.

 

* Many of the other waiver recipients were union-run multi-employer plans; does Speaker Pelosi therefore believe that unions do NOT have a big impact on the American economy…?

Rhetoric vs. Reality: Health Care “Reform” and Jobs

CLAIM:  “So this bill is not only about the health security of America.  It’s about jobs.  In its life it will create 4 million jobs — 400,000 jobs almost immediately.”

— Speaker Pelosi at the White House health summit

FACT:  According to this morning’s release from the Bureau of Labor Statistics, the unemployment rate once again did not decline, remaining at 9.1 percent.  And discounting the 45,000 jobs “created” by striking Verizon workers returning back to work, the economy really only created fewer than 60,000 jobs in September – even though the economy needs about 150,000 new jobs per month just to keep up with the growth in the labor force.

Rhetoric vs. Reality: Health Care “Reform” and Jobs

CLAIM:  “So this bill is not only about the health security of America.  It’s about jobs.  In its life it will create 4 million jobs — 400,000 jobs almost immediately.”

— Speaker Pelosi at the White House health summit

FACT:  According to this morning’s release from the Bureau of Labor Statistics, the economy generated ZERO JOBS during August – even though the economy needs about 150,000 new jobs per month just to keep up with the growth in the labor force.  Job growth for the past two months (i.e., June and July) was also revised downward by 58,000 jobs.

FACT:  The alternative economic scenario released by the Administration yesterday in its mid-session review – which reflects the most recent economic data and developments – projects that unemployment will average 9 percent in 2012 – even though the Administration promised in 2009 that unemployment would not rise below 8 percent if the “stimulus” bill passed.

Today’s CBO Unemployment Projections Nearly 50% Higher Than Pre-Obamacare Estimates

It’s time for another installment examining Obamacare’s rhetoric versus reality, specifically when it comes to job creation:

CLAIM:  “So this bill is not only about the health security of America.  It’s about jobs.  In its life it will create 4 million jobs — 400,000 jobs almost immediately.”

— Speaker Pelosi at the White House health summit

FACT:  In its release of its August budget update, the Congressional Budget Office significantly downgraded its employment projections for the economy over the next five years – see the below spreadsheet providing a quarter-by-quarter comparison of the August 2011 and January 2011 projections.  While quarterly data are not available, in January 2010 – before Obamacare passed – CBO estimated that unemployment would average 6.3 percent in 2013, and 5.3 percent in 2014.  That compares with today’s CBO estimates, which project unemployment will average 8.7 percent in 2013, and remain at a stubbornly high 7.9 percent in 2014 – nearly 50 percent higher than pre-Obamacare estimates.  And once again, today’s CBO report reiterated its prior prediction that Obamacare will further reduce the labor supply by about 800,000 jobs.

 

  January 2011 CBO Unemployment Projections August 2011 CBO Unemployment Projections
2012Q1 8.9 8.9
2012Q2 8.5 8.8
2012Q3 8.2 8.6
2012Q4 8.2 8.5
2013Q1 7.9 8.6
2013Q2 7.7 8.7
2013Q3 7.5 8.7
2013Q4 7.4 8.7
2014Q1 7.2 8.5
2014Q2 7.0 8.2
2014Q3 6.7 7.7
2014Q4 6.5 7.2
2015Q1 6.2 6.7
2015Q2 6.0 6.3
2015Q3 5.8 5.9
2015Q4 5.5 5.6
2016Q1 5.4 5.5
2016Q2 5.3 5.4
2016Q3 5.3 5.3
2016Q4 5.3 5.3

 

Rhetoric vs. Reality: Health Care “Reform” and Jobs

CLAIM:  “So this bill is not only about the health security of America.  It’s about jobs.  In its life it will create 4 million jobs — 400,000 jobs almost immediately.”

— Speaker Pelosi at the White House health summit

FACT:  According to this morning’s release from the Bureau of Labor Statistics, the economy generated only 118,000 jobs during July – still below the 150,000 new jobs per month that most experts agree are needed just to keep up with the growth in the labor force.

FACT:  Former Obama Administration adviser Larry Summers, writing in an op-ed in the Washington Post earlier this week, acknowledged that “it would be surprising if growth were rapid enough to reduce unemployment even to 8.5 percent by the end of 2012” – even though the Administration promised in 2009 that unemployment would not rise below 8 percent if the “stimulus” bill passed.

Obamacare’s Effects: Rising Premiums, Fewer Jobs

A study of employers released by Mercer yesterday yielded interesting results about the health care law.  More than a quarter of employer respondents said their costs would rise by at least 3% in 2014 thanks to Obamacare’s new mandates and requirements – 15% said the increase would be more than 5%, and a further 13% said their costs would rise by about 3-4%.  And a further 29% haven’t yet calculated how much the law will increase their firms’ costs, meaning the numbers cited above likely will rise in future surveys.  That Obamacare will raise premium costs for businesses – even though candidate Obama repeatedly promised that premiums would go DOWN by an average $2,500 per family – shows once again how the law is not meeting its promises.

Worse yet, the Mercer survey also reveals one way in which the law will REDUCE jobs for the American economy, rather than creating the 4,000,000 jobs that then-Speaker Pelosi promised.  The survey found that more than a quarter of firm respondents (28%) currently cannot afford to provide coverage to some or all of their part-time workers who work more than 30 hours per week, as Obamacare requires.  And how do these affected firms plan to respond to Obamacare’s new mandate to provide insurance to all employees working more than 30 hours per week?  Half (50%) plan to “change their workforce strategy” so that fewer workers work more than the 30 hours per week that triggers the new Obamacare requirements.  That means fewer opportunities for individuals to work more hours they need to get ahead in this struggling economy.

One small business owner testified before Congress last week about the way in which Obamacare is distorting economic decision-making for businesses, discouraging them from hiring new workers and encouraging them to lay off existing ones:

Up until the passage of health reform, our plan had been that after October 2011 (this October), my wife and I would have entirely paid off the debt on our business for that purchase.  We have long anticipated and planned for the day when we could spend the money we were using to pay off this debt to expand our business and branch out further.  For my entire career, I have been working to become financially independent but now I face a very uncertain future.  I fear that everything I’ve worked for will be for naught.

The new health care law has wrecked our plans to grow our business and create jobs.  We are already taking steps to downsize our team in anticipation of the full weight of the law’s burden which will affect me most heavily in 2014.  My new focus, unfortunately, is on how to have the leanest workforce possible and, even more dismaying, my worries about the very survival of our business are emblematic of the reactions of millions of small businesses throughout our nation.  I cannot imagine that this is what the President and Congress intended, particularly as they continue to try to pull our country out of a recession and reduce the unemployment rate.  But intentions aside, it is the reality that they have created for us; it is the reality facing the very entrepreneurs that our nation needs to create the jobs to get our economy back on track.

Ironically enough, at his press conference regarding the debt ceiling yesterday President Obama asked “What are we going to do for the single mom who’s seen her hours cut back…?”  Based on the Mercer survey, and the testimony noted above, one of the best things we could do to get that single mom more hours would be to repeal Obamacare, and particularly its destructive mandates on business.