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.

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.

Obamacare Chronicles: Massive Premium Hikes Coming

So says insurance expert Bob Laszewski, who is receiving reports suggesting big rate hikes and great uncertainty about the ability to set up the state exchanges that are a mess right now. What kind of premium increases are we looking at? After all, we might tolerate a little higher price to make sure millions of people get insurance, right? Well…

On average, expect a 30% to 40% increase in the baseline cost of individual health insurance to account for the new premium taxes, reinsurance costs, benefit mandate increases, and underwriting reforms. Those increases can come in the form of outright price increases or bigger deductibles and co-pays.

In states with the least mandates or for health insurance companies with the tightest underwriting now, the increase could be a lot more.

But when you add the impact of the requirement that older consumers can be charged no more than three times as much as the youngest consumers (the usual standard is now a five times difference), premiums increase dramatically for the youngest.

For example, expect individual health insurance rates for people in their 20s and early 30s to about double.

Decide for yourself whether or not you think the benefits outweigh the costs. Polls suggest most people do not, but we just voted to keep Obamacare. Either way, don’t say you weren’t warned; we covered the details of band compression and other insurance regulations that would cause rates to dramatically increase (because we took the time to read the bill). It looks like we will be proven correct.

Obamacare Chronicles: Employment, Prices, Doctor Shortages

Now that Obamacare is more or less here to stay and will be fully implemented (at least as much as it can be), I will be chronicling its implementation. This means highlighting and analyzing stories about its effects, addressing questions and issues, projecting potential outcomes, and emphasizing outcomes that I predicted. I’ll call this “Obamacare Chronicles” for now, to make these posts easier to find. Already there are a few stories about consequences that I predicted and that concern major issues associated with the new law, including issues with employment, prices, medical innovation, and doctor shortages.

The doctor shortage issue is one of the biggest, if not the biggest potential problem associated with Obamacare. The reason doctor shortages could be a major issue goes back to the premise that I repeatedly highlighted in my criticism of Obamacare, which is that insurance does not guarantee access to quality care. If patients have insurance that does not cover or sufficiently pay for benefits in comparison to patients who can pay market prices, the patients with Obamacare insurance are going to be less likely to access doctors within reasonable time, and will be less likely to receive quality healthcare.

Guy Benson has covered some of the early reports associated with doctor shortages, emphasizing the distinction between insurance and access to care. More people will be on government healthcare programs through the expansion of Medicaid, and with more baby boomers retiring, Medicare will grow. Both programs notoriously pay less than market value for health services and benefits (with the exception of privatized Medicare plans), which has led to doctors taking less of those patients. With IPAB legally required to maintain a low growth rate for Medicare expenses, it is likely that benefits and/or payments will be cut.

In addition, Congress still needs to pass Medicare doctor payments. The formula for determining payments is broken and is an issue I’ve covered plenty, but even in the thousands of pages in Obamacare, there was no reform to the payment system to avoid the continuous battle over whether to keep passing short-term payments or to cut doctor payments as the formula requires. If Congress allows the cuts, that means less payments to doctors, exacerbating the doctor shortage and patient access problems. If Congress continues to kick the can down the road on this issue, entitlement spending will further increase at a time when Medicare is very near insolvency.

A program going insolvent is unlikely to be able to pay market prices, especially when imposed cost of business raises those market prices. This is what is happening with medical devices. Not only are device manufacturers going to have to reduce expenses (e.g., employee wages and benefits) to make up for Obamacare’s imposed cost of the medical device tax, but they may have to charge higher prices. Higher prices will be harder to pay with programs that can’t afford current market rates, and the same problem exists for pharmaceuticals, which also face an Obamacare tax (NOTE: These additional costs may also have detrimental impact on medical innovation, which is a topic I am currently researching in a legal context in relation to other provisions of Obamacare. If my research gets published, I will provide a link or citation to it for your consideration).

It’s not just providers who have to increase prices, though. Employers will pass on additional cost of business imposed by Obamacare by adding to their prices. Restaurants are announcing their plans to do this, which aren’t surprising considering the San Francisco example I highlighted a while back (where restaurants were adding to their prices to make up for imposed additional costs associated with healthcare). In addition, the employer mandate provides incentives for small businesses to keep their number of employees and their hours lower than the mandate threshold. This is why we see examples of employers cutting employee hours down to 30 or less per week to avoid the costs that the mandate imposes.

Before the election, a lot of businesses and individuals were planning on various scenarios based on whether or not the law would be implemented. Now, it appears that it will be for the most part. This means employers and doctors will have to make decisions that could negatively impact employees, patients, and customers. These issues will continue, and we’ll continue to cover them and others. The supporters of Obamacare may point to its supposed benefits (and there are some), but we will now learn firsthand about the costs and can ask if the new law is worth it. My original prediction was that it was not, and I haven’t changed that.

Democrats Will Let Medicare End By Doing Nothing

Now that Paul Ryan is Mitt Romney’s VP nominee, the Democrats will bet the election on the premise that enough people are so opposed to any change to Medicare that the Democrats only need to criticize Ryan’s efforts to reform the program. Let’s establish a few points about Medicare, and break down a simple truth that the Democrats actually have no plan to save a program that is quickly going insolvent.

• Medicare, according to its trustee report, will be insolvent by 2024. If one takes into account the double counting of Obamacare’s tax increases and spending cuts, it will likely be insolvent even sooner. In other words, Medicare as we know it will end in the next decade if we do nothing to it.
• The Democrat party has proposed no change to Medicare outside of what is in Obamacare. Find me a legislative proposal that shows otherwise; I read all the ones that are known about.
• Obamacare, not Ryan’s plans, will cut Medicare benefits. It’s not Paul Ryan who is proposing to take away Medicare benefits, but the law that the Democrats passed. Obamacare is supposed to cut half a trillion dollars from the program in order to save the government money. It then tasks an unelected executive board — IPAB — to make binding cost-reduction recommendations to maintain a low Medicare growth rate. An easy and likely way IPAB will do that is simply by recommending benefit cuts.
• The President’s attacks on Ryan’s Medicare reform proposals are dead wrong.
• The country is facing unsustainable debt that threatens more than our economy, and safety net programs are the biggest driver of that debt based on their spending and financial commitments. There is simply no way to deny that we are unable to pay for our financial commitments to these programs, and that taxes would have to rise substantially in order to theoretically support those programs in their current form (i.e., a little tax increase on the wealthy won’t fix this problem).

The Democrat party, whose Senate majority has decided for the last three years to not pass a budget during a time of economic crisis because it seems less politically risky for them to avoid one, has proposed nothing to fix Medicare other than Obamacare’s benefit cuts. Paul Ryan, on the other hand, has made several serious reform proposals. One may not like what he is proposing, but the simple truth remains: Medicare cannot last much longer without making some changes.

The Democrat party either doesn’t realize this (which would constitute willful blindness, considering the available and easily understandable evidence), or is comfortable pretending there is no problem in order to win politically. The Democrats will not tolerate cooperation with Republicans on the issue; Senator Wyden is being ostracized for trying to work with Paul Ryan on a bipartisan plan, and Wyden’s bipartisan healthcare reform plan with Senator Bennett was rejected by the Democrats while they pushed through Obamacare.

Medicare as we know it will end rapidly and uncomfortably if we do nothing. The Democrats have proposed nothing to avoid that harsh reality, while Paul Ryan has. Who is extreme, and who is leading?

Healthcare Ruling Makes 2012 A Movement Election

Last week I attended a Romney event at which Paul Ryan and Rob Portman, two potential VP nominees, spoke about competing visions for the country. Until the Supreme Court ruling on Thursday, many had considered the 2012 election a referendum on President Obama, and that seemed less risky for Romney than running a true visionary campaign like Reagan did in 1980. Well, the Supreme Court may have forced Romney’s hand and turned this election into 1980 even if Romney is not truly a movement conservative. That’s why Romney needs a movement team with a movement message.

The fact that 2013 will likely be the last realistic chance of preventing the implementation of the Affordable Care Act, the likelihood that within the next few years we will need major budgetary reform that includes entitlements, and the probability that the current Bush tax rates will be up for another vote after this election mean that 2013 is a pivotal year. Unless the Republicans control a majority in both the House and Senate while also having the White House, the ACA is going to be implemented and budget reform that saves our social safety net is not going to happen. It’s very simple: If we are to prevent the new healthcare law from changing our economy and relationship with government, and if we are to avoid the crumbling of our social welfare system, then Republicans have to sweep 2012.

The consensus among the pundits is that Romney will choose a safe VP. Safe is fine, as long as it also means conservative reformer. Mitt Romney is an adaptable, impressive executive who has been successful in both the private and public sectors. He has led a dark blue state from the center-right, has run an Olympics operation that was struggling, and has been wildly successful in the private sector. If you can adapt to lead in all of those circumstances, you have a much better case that you can succeed in the White House than someone who had never run anything with any notable success other than a political campaign. But Romney is a manager, the George H.W. Bush to Reagan’s visionary leader. Romney needs a visionary leader on the ticket, and he needs credible reformers in key positions in both his cabinet and in Congress.

Enter Paul Ryan and Bobby Jindal. Congressman Ryan is perhaps the most articulate, wonky federal legislator when it comes to budget issues and healthcare. He schooled the President at the healthcare summit a few years ago, has proposed healthcare reforms that are gaining traction with both the right and left (see his plan with Ron Wyden (D-OR)), and has the only budget plans in town that have passed any part of Congress the last few years (while the President’s plans have received no votes from either Republicans or Democrats).

Governor Jindal is one of the nation’s most popular governors, specializing in education reform and health policy (he was Secretary of Louisiana’s Department of Health and Hospitals at age 24!). He has dealt directly with the Obama administration, refusing stimulus money and the implementation of burdensome healthcare reforms, and he has some great stories about the administration’s petty and incompetent behavior during the BP Gulf oil crisis.

Both Ryan and Jindal are exciting reformers who are popular and would not alienate either the Republican base or the center. Both should be on Romney’s team, and while they are both campaigning for him, one should be on the ticket. I propose that Governor Jindal should be Mitt’s running mate, giving him another strong executive leader who can articulate healthcare and education policy (areas of general Republican weakness). Paul Ryan, on the other hand, needs to be leading tax and entitlement reform from Ways and Means.

Ryan can pass all the tax and entitlement reforms he wants, however, without doing any good if the Senate is controlled by Harry Reid, who will continue to wait until he gets a Democrat majority in the House with whom he can pass more legislation like the Affordable Care Act, Dodd-Frank, the stimulus, etc. If Republicans sweep 2012 and surprise the country with their reforms then Senator Reid and the Democrats may get their majorities back in 2014. This is why Romney needs a movement ticket that takes a clear vision into the White House and into both chambers of Congress.

(EDIT: I initially wrote about Ryan doing “budget” reform from Ways and Means, using “budget” in a loose sense. I’ve corrected so to not confuse with what the Budget Committee does.)

Obama 2012: High Taxes, High Energy Prices, High Deficits, High Unemployment, Bad Healthcare

It must be tough to be President Obama’s 2012 campaign team right now. Let’s recap some recent bad news for the President’s reelection chances.

• First, the U.S. now has the highest corporate tax rate in the world. Meanwhile, the Obama administration has been advocating a tax on multinational business that would only make us even less competitive for business while unemployment remains high.
• Speaking of unemployment, the rate remains over 8%, and the Fed is skeptical of significant improvement in the near future.
• Besides a multinational tax and a Buffett tax on upper income earners, what else has the President proposed to spur job creation and reduce the deficit? His latest budget adds trillions more to the deficit with more spending and more taxes, which makes it not surprising that it was rejected 414-0 in the House. If you are counting, that means the President’s last two budgets have failed by a combined 511-0 in both chambers of Congress. Pitching such a shutout seems difficult to do, especially when Paul Ryan’s budgets pass the House with Medicare reform that has been politically risky to propose.
• How about energy prices? The gas stations I drive by seem to be getting more expensive every week, and because the President has opposed the Keystone Pipeline, the Canadian Prime Minister says the U.S. will pay even higher prices for Canadian crude. If that’s not bad enough, the President’s previously stated plan to bankrupt the coal industry was just furthered by new EPA regulations that will effectively block new coal plants. Limiting coal plants isn’t going to reduce anyone’s electric bill.
• Lastly, the President and many on the left were dealt a dose of reality by the Supreme Court, who seemed skeptical of Obamacare’s insurance mandate at oral arguments last week. I’ve read the transcripts and am familiar with the legal questions, but if you don’t trust me, trust the legal experts I heard from last week who said that the oral arguments have made them believe there is now a significant chance of the mandate or the entire ACA being struck down. Yes, there must be a limit on Congressional power under the Commerce Clause. We’ll see if healthcare market uniqueness is constitutionally relevant and convincing enough to garner five votes from the Court. If Justice Kennedy’s questions and comments during the arguments were any indication, he wasn’t yet convinced that the mandate was authorized by the Commerce Clause in a way that limits what Congress can do under that clause. In any case, the legal opposition has been vindicated by the seriousness with which the Court has considered the issue.

So, what should President Obama’s campaign team do in these circumstances? That team must have a tough job. I guess there is always blame, which the President usually seems comfortable dishing out. Blaming others for your troubles, however, is a desperate campaign strategy.

ObamaCare Is Back: New Cost and the Supreme Court

The time has come.

On Monday, the Supreme Court will begin an unprecedented five and a half hours of oral argument on the healthcare law that helped change the dynamic of Congress, and may change the relationship between individuals and the state. Make no mistake: repealing the ACA is far from a certainty, and the Supreme Court may be the best opportunity to throw it out completely or to deal it a significant blow. The government has cleverly shifted its argument to the Necessary and Proper Clause of the Constitution in defense of the insurance mandate, a move likely designed to peel off Justice Scalia. All eyes and ears will be on the Court.

Meanwhile, the CBO recently released an updated budget estimate for the next ten years of ObamaCare, now that the benefits are beginning to kick in. Not surprisingly, this estimate is double the original estimated cost, which was a gimmick from the start as noted here and elsewhere to make the bill (at the time) appear less expensive to the public by back-loading its cost. If ObamaCare is upheld and implemented, the cost will be much higher than originally advertised, especially if a large number of employers make the logical choice of paying the mandate’s penalty rather than providing mandated insurance.

In addition, by now everyone is aware of the latest regulations that HHS is considering which would mandate insurance coverage of contraception and abortifacients. There are serious legal and constitutional questions (e.g., First Amendment, Restoring Religious Freedom Act) to consider with such regulations, regardless of one’s position on the availability of such medical products and the rights of certain religious organizations. There are surely other ways to improve access to medical products that don’t threaten longstanding and recognized rights and that don’t offend so many people. Then again, as I’ve argued, there are less controversial ways to provide insurance to people while avoiding the legal and political push-back that ObamaCare has received in its current form.

Charles Krauthammer sums up all three of the recent ObamaCare appearances, none of which look good for the law and for the President who would probably rather talk about something else in an election year.

In Defense of Romney on Federalism and Corporations

A federalist discussion was sparked by Mitt Romney when he presented his healthcare policy, distinguishing it from ObamaCare. Another federalism question was raised when Michele Bachmann, during the New Hampshire debate, said that she supports the right of states to determine their own marriage laws, but also supports a Constitutional amendment supporting traditional marriage. These discussions have generated conversations about how Romney’s Massachusetts health law is different from ObamaCare, and how someone could support both federalism and Constitutional amendments.

Fortunately, Andy McCarthy explains both issues in a federalist context. On Romney’s healthcare position, McCarthy writes:

If I were living in Massachusetts (or anyplace else), I would argue that health care is not a corporate asset and that it’s none of anyone’s business whether I choose to buy coverage. But if I lost that debate, and if the coercive mandate law bothered me enough, I could move to some state where the law was different. Or I might decide that, in the greater scheme of things, life in Massachusetts was worth enduring the nuisance and costs of state policies to which I objected. But in either event, none of my calculations would be the concern of someone living in, say, Colorado — at least as long as he wasn’t being made to pay for it.

On the Constitutional amendment issue, McCarthy writes:

If you want the federal constitution to ban something, then amend it. A constitutional amendment is not a prohibition imposed by the federal government, for the U.S. Constitution and the U.S. government are not the same thing. The Constitution is the compact of the people setting forth the terms on which we are bound together as a nation. In essence, it cannot be amended unless the provision in question garners super-majority support (two-thirds) in Congress, and then super-duper majority assent (three-fourths) in the states.

A federal Constitutional amendment does not take away states’ rights, and just because the federal Constitution does not allow the federal government to do something does not necessarily mean that states are bound in the same way.

Romney was also involved in an exchange in Iowa which has drawn a lot of attention. His assertion that corporations are people has already generated Democrat attacks. It’s important to establish a few facts about the exchange and what Romney said:

1. The exchange started with a question about whether entitlements (specifically Social Security) would be part of Romney’s deficit reduction efforts.
2. Romney’s main point in the exchange was that there are two general ways to reduce the deficit: spending cuts and tax increases.
3. Romney points out that entitlement spending is about half of federal spending, so that spending cuts would probably require entitlement reforms.
4. When Romney suggested that raising taxes on people was another way to reduce the deficit, someone in the crowd shouted that we should tax corporations instead.

It was then that Romney said that corporations are people, and he is correct. Not only has the Supreme Court upheld that, but think about what corporations are. Who runs corporations? Who invests in corporations? Who works for corporations? People. If you tax a corporation, you are taxing business owners, shareholders (think about your 401k), and employees. Corporations are not some mythical entities completely disconnected from people, and they do not represent only the super rich. They are a big part of our lives, and taxing them will likely have some impact on many people.

On another note, high tax rates on businesses are driving jobs out of this country. There are plenty of examples of how tax deductions are allowing some companies and wealthy individuals to avoid a significant tax burden. It would be one thing to reduce some of those deductions, but quite another to raise tax rates. Of course, it is a challenge to agree to the reduction of certain tax deductions, and reducing them would amount to a tax increase of some sort.

Regardless, Romney has legitimate federalist defenses for some of his policies, and he is absolutely correct about taxing corporations.