Archive for the 'Healthcare' Category

Yes, Obamacare and Minimum Wage Increases Have Some Negative Impact

When a politician says that their proposed big policy change will be nothing but positive, it’s very likely he/she isn’t telling you the entire story. Almost no major policy changes are purely positive and without negative consequences. That’s okay; we can and should debate whether positive effects outweigh negative ones in any policy proposal. But some people, including the President, have chosen to dismiss negative effects and misleadingly suggest that their proposals are good for everyone (e.g., “If you like your plan you can keep it.”).

Still others, like Paul Krugman, choose to ignore negative effects even as they actually occur (and this is far from the only such example). Krugman, who has apparently put his foot into his mouth with his latest column, suggests that Obamacare opponents are just scaring people. Krugman asserts (astonishingly) that Obamacare opponents are struggling to come up with actual examples showing harm caused by Obamacare, even though every day one can find a major news source reporting such an example. Some elected Democrats who support Obamacare are also trying, uselessly, to pretend no actual Obamacare harms exist.
Maybe some people don’t want to make the cost-benefit argument, but it’s not credible to argue that there are no costs to Obamacare. Nor can one deny that there are costs to raising the minimum wage. As Robert Samuelson explains, there are real harms that will be caused by Obamacare and by raising the minimum wage, and maybe smaller benefits to doing so (Douglas Holtz-Eakin and Keith Hennessey also explain negative impact, in addition to the Congressional Budget Office). We should at least have that discussion rather than being so dishonest in order to get what we want and even later denying the consequences of getting it.

Republicans Offer Serious New Healthcare Proposals

Finally, we can move on from repeal vs. fix and “Obamacare is the law of the land” to constructive healthcare policy debate. A few Senate Republicans have offered some serious healthcare policy proposals that would effectively replace or “fix” Obamacare. The PATIENT Care Act is not yet on paper in the form of a bill (at least I haven’t seen it available in such form yet), but is a reasonable proposal that should at least advance the conversation of how to replace Obamacare.

This proposal is a solid attempt to improve our healthcare system and undermine the main criticisms offered by Obamacare supporters to Obamacare opponents. Fix Obamacare instead of repealing it? This proposal includes repealing the ACA, but it effectively replaces it. It doesn’t “go back to where we used to be.” Deny young adults their parents coverage? This plan would keep the popular feature of Obamacare that allows young adults to stay on their parents’ plans. Deny coverage to people with preexisting conditions? This plan would do something similar to help people gain coverage while potentially not causing the same price increases that Obamacare does.

Here’s a quick summary of the plan:

  • Preserve lifetime bans on insurance plan payouts
  • Preserve ability of young adults to stay on parents’ plans until age 27
  • Adjust age-rating bands to 5:1 to reduce Obamacare’s price increases on less expensive customers
  • Repeal the mandate to buy insurance
  • Replace guaranteed issue with continuous coverage and federal assistance to states for high-risk pools (more on this below)
  • Incentivize medical malpractice reform at the state level
  • Cap employer tax exclusion for employee insurance payments at 65% of the average plan’s cost (and grow the cap at a rate tied to CPI)
  • Offer tax credits to the uninsured up to 300% of the poverty line, with larger subsidies as people are older and less wealthy (more on this below)
  • Grant federal money to states for Medicaid on a per-capita basis

There are two areas of this plan that I’ve already seen Obamacare supporters criticize. The first is that Obamacare offers more subsidies to the uninsured. That is true, but the point of this plan would be to reduce the number of people needing subsidies and the amount of subsidies required by reducing the cost of insurance plans under Obamacare.

The second complaint so far is the repeal of guaranteed issue. This is a sticky issue because while guaranteed issue is arguably poor policy, it is very popular politically. But this proposal doesn’t simply ignore people with preexisting conditions or throw them into high-risk pools; it would prohibit insurers from dropping coverage from anyone who had it,  would offer subsidies to some of the uninsured, and would work to improve high-risk pools at the state level.

One of the big questions, I think, will concern the number of people in the middle class who don’t qualify for subsidies. With the employer tax break capped at 65%, how much of the uncapped money would still be paid into an employee plan or paid to the employee in wages, and how would that compare to any price changes a customer might see in his/her plan? We don’t want a lot of people to get stuck with a higher bill as we’re seeing in Obamacare, and we want to make sure high-risk customers have some good options that will help them access healthcare rather than simply having a plan that insurers are forced to provide.

This plan is a good start. It should advance our healthcare policy debate from keeping Obamacare to how to replace it.

ObamaCare Chronicles: Canceled Insurance, Democrat Panic, and Obama Conceding Failure of the Exchanges

That didn’t take long.

Merely a month after the Obamacare exchanges launched, President Obama effectively conceded their failure and probable demise. All of the warnings from people like me who read and understood the bill are no longer theoretical, but are being vindicated now that major parts of the law have become reality.

Make no mistake about it: President Obama would not have announced that insurance plans canceled due to Obamacare’s requirements could be reissued unless he believed that the exchanges were unlikely to work and achieve sustainable enrollment numbers. Whether the exchanges can be operational soon enough for this enrollment period is still uncertain, but early numbers suggest that not enough young and healthy customers will sign up, especially in light of a terrible rollout and the sticker and access shock people are seeing from the offered Obamacare plans.

There are other serious questions to consider than the enrollment numbers. First, is President Obama actually going to have the HHS and IRS enforce Obamacare by allowing canceled and non-compliant insurance plans? Second, does the text of the statute even allow President Obama to do this without Congressional authorization?

Will insurance companies even be able to reisusse those plans at this point (some state insurance commissioners are saying no, and some states have notification requirements that can’t be met this late in the year)? How much would an allowance of non-compliant insurance plans undermine the new plans with higher-risk customers? Would a person with a non-compliant plan still be taxed by Obamacare? President Obama made an attempt to shift blame to insurance companies that can’t or won’t reissue canceled plans, but he created a mess of uncertainty by unilaterally contradicting his own law. He sees a disaster and is now in blame mode.

There are plenty of reasons for Democrats to panic about Obamacare. The law is crumbling, and quickly. If the insurance exchanges fail, then they will be added to a pile that includes long-term care (CLASS Act), the 1099 tax requirement, and the employer mandate. What would be left of Obamacare other than Medicare cuts and Medicaid expansion, and would the remainder of the law be something to celebrate?

I don’t think many people would say yes, but then again, I’ve predicted and warned about this failure from the beginning.

UPDATE: Yuval Levin appears to agree with my assessment of why the Obama administration has taken this course of action, and how the action seems to spell doom for the exchanges.

Obamacare Chronicles: Exchange Rollout and Hidden Prices

While the shutdown debacle may have overshadowed the official launch of the Affordable Care Act’s insurance exchanges (a major component of the law), one could not have missed how disastrous the rollout was without having buried his or her head in the sand.

The commencement of the insurance exchanges — online marketplaces designed to let individuals shop for insurance plans — went so poorly that ACA supporters even had to admit how troubling the start was. Ezra Klein, an ardent ACA advocate, interviewed insurance expert Bob Laszewski to discuss the problems with the exchanges. Laszewski, who has since written that he has not seen any improvement to the exchange websites and has not seen significant enrollment increases, suggests that part of the problem with the rollout was the political motivation of the Obama administration.
Laszewski specifically infers that the Obama administration unintentionally hampered the functioning of the websites as a result of being afraid of showing the prices of insurance plans up front. What the websites require a user to do is to create an account first, then see what the insurance options are. This politically-motivated design resulted in a lot of people having problems getting into the system, and those who did seem to have enrolled in a plan at very low rates (perhaps less than 1% of website visitors actually signed up for a plan).
It is not unreasonable or surprising that this kind of website design to delay showing insurance prices would be intentional, as Laszewski suggests. Studies like this one show that prices in most states for large ranges of individuals will see significant price increases under the ACA insurance plans, so it’s plausible that the administration was sensitive to the likely reaction of consumers seeing high prices before they went into the process of signing up (and the websites are having major privacy issues).
While this disastrous exchange rollout does not necessarily spell doom for the exchanges, let alone the ACA at large, it is a legitimate cause for concern. After all, there is an approaching deadline to purchase qualified insurance in order to avoid paying the ACA’s tax for not having such insurance. That tax starts in 2014, which is right around the corner. If the exchanges are not running properly and soon, they might not achieve the type of enrollment that they need to support them, which could not only look bad for the ACA, but could actually harm the insurance market while leaving a lot of people unwillingly stuck without insurance and paying a tax for it.
The timeline presents interesting hypothetical questions that could soon become applicable ones. If the exchanges are not ready soon, should the individual mandate be delayed? Should insurance regulations that could harm insurers and the market be delayed? What would a delay mean to the ACA and to the insurance market? Could harmed insurers sue the government over a failure to implement the exchanges? These questions soon might not be so hypothetical.
It’s possible that the exchanges are simply off to a rough start and will be fixed in time to prevent further complications, and that enrollment numbers will sufficiently increase as fixes are made and more people learn about the exchanges. But early indications suggest the problems might not be easy to fix quickly, and all these problems might deter a lot of people from using the exchanges.
So there are some very real issues that may force the hands of the President and the Senate Democrat majority as the major deadlines approach at the end of this year and early next year. It’s not implausible that the President and many in his own party, after refusing to delay the insurance mandate in the shutdown debacle, would want to do so if the exchanges are not running smoothly in another month or two.
The law may be here to stay, for now, but that does not mean it will work or that it should not be changed as its problems become more glaring and harmful.

ObamaCare Chronicles: Losing Family Insurance Coverage, but Sparing Congress

Is there a better example of the ruling class versus everyone else environment that we’re living in than the IRS employees union wanting to avoid Obamacare? The IRS is set to gain a lot of jobs and authority to enforce the new healthcare law, yet it doesn’t want to be subject to it. Does anyone feel bad for the IRS? Didn’t think so.

Perhaps the IRS can get a pass like Congress and Congressional staff members received from the administration. So not only did the people who created and voted for the healthcare law get a waiver from its requirements, but a major agency tasked with enforcing the law wants one. What about non-government employees? Too bad. Also, too bad for families of those not on the government insider list.

The AP is reporting that many small businesses will drop dependent coverage for employees’ families due to the increased insurance cost caused by Obamacare. No, you don’t necessarily get to keep your coverage if you like it, and even if you do, it’ll cost more and may not cover your family.

Obamacare is apparently not for the people in charge of it, but for the rest of the country that can’t get a special government deal. This is the world in which we now live. The President and Democrat majority in the Senate were reelected, so that’s how it’s going to be.

ObamaCare Chronicles: Employer Insurance Mandate Delayed

With President Obama having only one more Congressional election to get a Democrat majority in both the House and Senate before he leaves office, bad news about ObamaCare hasn’t been helping his chances.  But today the White House announced that it would delay enforcement of the employer insurance mandate.  The delay means that employers of over 50 employees will not be required to provide health insurance to employees.

It should be noted that the individual mandate requiring individuals to purchase health insurance has not been delayed; that mandate will still go into effect in 2014. Go figure. Business can lobby much more easily than individuals, and many young individuals who are going to be forced to buy much more expensive insurance plans than exist now are probably going to support Obama and Democrats no matter what. He knows it. You know it. And I know it.

Think about what this delay means. Employers who would have been faced with a choice of how to pay for more expensive health insurance due to ObamaCare can simply not provide any. This means many employees could lose their employer-sponsored insurance and have to get their own instead. In theory, it’s a good thing that the state exchanges are to be set up under ObamaCare, but many are way behind schedule and officials are having trouble figuring out how to operate them. Plus, prices of plans in those exchanges have already been estimated to be much higher on average than for existing health plans.

The White House likely hopes that this delay will spur more hiring and more support from the business community, both of which could help Democrats in the 2014 election. Democrats may just want to delay the mandates until after 2016 so that they won’t be a drag for Hillary either…

ObamaCare Chronicles: California and State Insurance Exchanges

There has been some interesting and insightful debate in the past week or so due to a report by California’s health insurance exchange estimating only a modest increase in premiums for people in the individual insurance market. Armed with a quote from the state exchange’s Executive Director stating, “This is a home run for consumers in every region of California,” lefty commentators took to social media and the airwaves to essentially claim that ObamaCare would be a good deal. Ignoring for a moment that one prospective report on one state’s insurance exchange hardly vindicates the over two thousand pages of ObamaCare, the argument among some smart commentators on both the right and left is worth considering. I’ve summarized the arguments from both sides and will address them below. Continue reading ‘ObamaCare Chronicles: California and State Insurance Exchanges’

Senator Rubio on the Obama Administration’s Scandals and Intimidation

Let’s see, in the past week or so we have learned that Obama administration officials in Libya knew that a video had nothing to do with Benghazi, that the IRS has been targeting conservative political organizations, that the Health and Human Services Secretary has been asking private industry to pay for Obamacare, and that the Department of Justice has been tracking phones of journalists. Senator Rubio is calling this a culture of intimidation.

I’ll let him speak for himself, but his point is this: when a government administration is concerned primarily with politics and will divide people to win politically, it easily turns into an abusive operation that intimidates the people whom it represents.

Even David Axelrod had it right today when he admitted that it’s impossible for a President to be aware of what’s going on in a government this large. Too bad this large government is what this President has pushed for. Axelrod may not know it, but he made a very powerful defense of conservatism by accident.

Contrasting Center-Right Healthcare with the Affordable Care Act

Ezra Klein has considered an outlined center-right healthcare plan offered by Ramesh Ponnuru and Yuval Levin, and a summary of Republican healthcare priorities provided by Bob Domenech. In response, Klein displays a misunderstanding of (or just misrepresents) the true center-right market approach to healthcare while still highlighting the important contrast between such an approach and the Affordable Care Act. As Klein suggests, the center-right approach to healthcare isn’t a direct replacement policy to achieve the same goal as the Affordable Care Act, but is directed to a different goal. That goal, however, is actually better than the one the Affordable Care Act is meant to achieve.

Continue reading ‘Contrasting Center-Right Healthcare with the Affordable Care Act’

Obamacare Chronicles: New CBO Estimates and State Medicaid Struggles

As more of Obamacare rolls out, we learn more about what’s in it as then-Speaker Nancy Pelosi suggested. Unfortunately, much of what we are learning isn’t exactly what we were told would be the case as a result of this healthcare law. The two latest newsworthy stories concerning Obamacare are the CBO’s new (increased) cost estimate and estimate of people losing insurance due to Obamacare, and the difficult decision of governors about whether or not to accept Obamacare’s coercive (in the words of the Supreme Court) Medicaid expansion.

Starting with the latest CBO report, it’s no surprise that the 10-year cost estimates continue to increase. It was well-known by those who understood how the bill was scored in the legislative process that the first 10-year cost of the law was understated. This was because of various reasons, including the delayed benefits that drive the cost of the law. The law started taking in money to pay for itself before many of its benefits started adding to the cost of the law, meaning that the first ten years of the law would cost less than later sequences of ten years after the costs became applicable. There are other assumptions about the cost of the law, including the half a trillion dollars that are supposed to be cut from Medicare, CLASS Act payments that will not occur now that that long-term care portion of the bill has been removed, and a myriad of other estimates about the cost impact of some of the reforms whose many details are yet to be determined.
The bottom line is that the CBO now says Obamacare will cost over $1.3 trillion for the next ten years. The CBO also estimates that seven million people will lose their employer-sponsored insurance due to Obamacare. In other words, if you like your health plan, you can’t necessarily keep it. In addition, the media has been forced to report on the coming “sticker shock” for health insurance premiums, as insurance companies and analysts sound the alarm. Reforms like band compression, guaranteed issue, and medical loss ratio requirements are going to increase insurance costs for many, especially the young (who just guaranteed this by reelecting Obama). It remains to be seen if Obamacare’s other potential reforms will ultimately reduce government healthcare expenditures enough to offset increased costs and if any such spending reductions would be worth the losses in benefits in which they may result, but for now it’s clear that the law is going to cost more than originally marketed.
Much of the cost estimates will depend on how various pieces of the law are implemented and what impact they have. One glaring issue is over Medicaid expansion, which was one of the issues dealt with in the 2012 Supreme Court decision on the new law. The Supreme Court held that Obamacare’s Medicaid expansion plan was too coercive to be constitutional, and so governors may opt out. While avoiding the federal government’s coercion of states is a reasonable goal, the choice for governors isn’t simple.
Obamacare intentionally expanded Medicaid to provide more people with insurance, with the promise to hospitals and providers being less unreimbursed emergency room care. Reasonably rejecting the Medicaid expansion could mean exacerbating the free-rider problem that will come with guaranteed issue and could mean perpetuating the problem of unreimbursed emergency care. In addition, more people may turn to the state exchanges, which the IRS suggests could require steep increase in premiums when compared to the current average insurance plan. So the choice is between bad and worse, with each state left to determine which option is the least bad one. Republican governors like John Kasich in Ohio and Rick Snyder in Michigan have apparently weighed the issue in favor of Medicaid expansion, and while such decisions are met with derision from the media and the left and with frustration from the right, they are somewhat justified in a climate of mostly negative choices.
The main counterargument to all of the negatives of Obamacare is that it will help insure the people who were uninsured, but even that claim is being scaled back. The CBO now estimates that seven million less people than originally estimated will be covered by Obamacare. Coupled with higher costs, higher rates, and bad situations for states, it’s safe to say that Obamacare isn’t off to such a hot start.



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