THE HCC BLOG

Addiction versus Withdrawal

POSTED 8 hours ago BY HEALTH CARE COMPACT

The whole sales strategy for establishing Obamacare consisted of getting the public - and the states - hooked on subsidies.  Ted Cruz used the metaphor explicitly when describing the ACA he said: “His [Obama’s] strategy is to get as many Americans as possible hooked on the subsidies, addicted to the sugar.”

The trouble was there was never enough sugar to turn the country into a nation of subsidy addicts. Moreover, the Supreme Court may strike down the delivery mechanism in the impending King vs Burwell.  Then the music stops.  This prospect has caused both the advocates and opponents of Obamacare to argue their case by focusing on either intensifying or mitigating the effects of withdrawal.

Kamala Harris told the public that an end to subsidies would be “devastating.”  That’s the talking point.  Recent actions by the IRS have coincidentally give the public a taste of what its like not to get a check in the mail. It has been delaying refunds for Obamacare policyholders.

Deana Ard wants her tax refund as soon as possible. She says she files her return in mid-January every year and receives her refund within two weeks.

This year, Ard said her refund is taking longer -- and she's blaming Obamacare.

Ard, who went without health insurance last year, doesn't mind having to pay a $160 Obamacare penalty as part of her 2014 tax return. But she says her $7,124 refund is on hold, and the IRS won't tell her why.

According to CNN Money, the IRS is deliberately not telling the taxpayers why. The mystery and the missing checks gives the public a foretaste of the withdrawal symptoms that Kamala Harris warned about.  This fortuitous circumstance seems to say to the general public, “this is what is going to happen to you if the Supreme Court finds against.”  You have been warned.

The IRS is delaying the refunds of tens of thousands of Obamacare enrollees, said Nina Olson, the National Taxpayer Advocate.

The hold up, she says, is subsidy data from state health exchanges.

What's more, Olson said the IRS told its telephone representatives not to tell callers the reason for the delay.

The doomsday theme is taken up in a Politico article by Jennifer Haberkorn who warns that millions could be plunged into financial darkness with the rapidity of an electric switch. “Halt to Obamacare subsidies could come swiftly.  The decision could affect more than 6.5 million Americans who currently qualify.”

Several lawyers consulted by POLITICO, some of whom requested anonymity because they are working on the case in some fashion, expect the tax credits to end immediately, much faster than the 25 days it takes for the official ruling to be finalized and the order formally issued.

It’s hard not to think that the administration will try to maximize the pain in some fashion in order to drive their point across. They won’t even wait for the official paperwork from the court, according to the article, before stopping the checks.  They’ll move to cut the payments as soon as they hear news on TV.

The Supreme Court won’t issue its mandate — the official copy of the decision — for about 25 days after the ruling is announced from the bench and made public. The official word then has to travel back down the legal path that took it to the Supreme Court — back to the Court of Appeals for the 4th Circuit, then to the U.S. District Court for the Eastern District of Virginia and to the trial judge, who would issue the official order, telling the government to stop issuing the checks. That would take weeks.

In reality, though, officials at Treasury will find out about the ruling instantaneously, just like everyone else: through news reports, on TV and via social media.

This has convinced some Republicans that some kind of detoxification strategy will be needed to wean voters off the cash drug. The role of methadone or nicotine gum - the so-called bridge away from Obamacare - will be a system of extensions. Sens. Lamar Alexander of Tennessee, John Barrasso of Wyoming and Orrin Hatch of Utah “said there would be financial assistance for a ‘transitional period’ and that states would be allowed the freedom to improve their health care systems.”

But there are other ways to maximize the pain besides withholding the subsidies from policyholders.  News articles are speculating that Obamacare itself will descend into a death spiral as people stay away. This spiral will inevitably reduce the profit margins of insurance companies and the incomes of doctors.  For once the music stops then so does the fun.  Ana Mathews of the Wall Street Journal describes the predicted catastrophe:

An analysis by researchers at the Urban Institute, a liberal-leaning policy research group, projected that in states where the subsidies disappeared, individual insurance premiums would go up 35% on average in 2016. That increase would affect all consumers purchasing their own plans in those states, including people who didn’t buy through the government marketplace, the researchers suggested. The financial blow would be particularly tough for smaller insurers that can’t dilute the impact with other, unaffected business, like employer and Medicare plans.

“What happens is, you go into a classic death spiral,” says  Janie Miller,  chief executive of nonprofit insurer Kentucky Health Cooperative Inc. “It doesn’t hang together.” Her nonprofit’s home state wouldn’t feel the direct impact of a ruling, because Kentucky has its own exchange. But the insurer has said that next year it will go into West Virginia, where the subsidies could potentially be affected. Ms. Miller said the co-op would have to re-evaluate its expansion plans if the court struck down tax credits there. …

Insurers offering products in the federal-exchange states are worried that they could be caught short this year. An antisubsidy ruling could potentially take effect—and prompt consumers to drop coverage—as soon as this summer. Insurers are locked into rates for 2015 and typically wouldn’t be able to raise prices midyear. And partly because of state regulations, it isn’t clear if or when insurers would be able to withdraw from the federal marketplace before January.

But for 2016, if the federal insurance tax credits are unavailable in a state, “the impact would be substantial enough that I would expect many carriers to consider pulling from the market,” says Tom Snook, an actuary with consultants Milliman Inc. who is working with a number of insurers offering exchange plans. “There’s a question, if the subsidies are struck down, if it’s an insurable market.” That could leave consumers with fewer, and far pricier, choices.

It’s all a system of hostages. Interestingly, this is an admission that all of Obamacare - including the insurance company’s profit margins - are being held aloft by taxpayer subsidies.  The thing doesn’t fly of itself.  It requires the support of wires.  Cut the wires and the contraption falls to the ground.  The bad news is this requires that everybody is addicted.  The insurance companies get their cut, the hospitals carve out their share.  Even the policyholder gets a small check - which he has to pay back at refund time - the sugar is everywhere.

The entire argument for the government in King vs Burwell reduces to this.  You can’t stop addiction.  People will need a fix, and need it bad.  The Supreme Court must be made to understand that if you strike down the government case, there will be hell to pay.  And that’s probably right.  Obamacare inevitably opened the gates of hell. Whether that inferno is one of government bankruptcy or consumer addiction matters little. Doom in one form or the other is upon us now until we fundamentally change the system from a centralized behemoth to one that allows for more choice and more accountability.

Why the GOP Can Afford to Win King vs Burwell

POSTED one day ago BY HEALTH CARE COMPACT

Obamacare may not be ready to die, but many of its advocates are starting to feel some of Elizabeth Kubler-Ross’ five stages of grief.  The denial stage has ended.  Lisa Rein’s Washington Post article on the semantic origins the of King vs Burwell lawsuit describes the moment when IRS lawyers first realized they might have a problem.

It had never occurred to the Treasury Department official responsible for making the changes in the tax code required by the law that there was more than one way to read the phrase — until she happened across an article in a trade journal.

Emily McMahon, deputy assistant treasury secretary for tax policy, read an article in Bloomberg BNA’s Daily Tax Report in January 2011 raising questions about whether federal subsidies could be paid for millions of Americans buying insurance under the Affordable Care Act, according to Treasury Department officials. The issue was whether the law allowed these payments if the coverage was bought in states that did not set up their own insurance marketplaces.

So McMahon called a meeting with two of her top lawyers, one of them recalled, and asked whether there was “a glitch in the law we needed to worry about.”

The staff lawyer’s answer was: the law can’t mean what it ostensibly says because we aren’t meant to fail.  “In the end, the Treasury and IRS officials who wrote the rules adopted the more expansive reading of the law — allowing subsidies for all marketplaces — because they concluded this was required for the new health-care initiative to succeed, according to current and former agency officials and documents they provided to congressional investigators. And, the officials reasoned, Congress would not have passed a law that it wanted to fail.” Then when the challenge wouldn’t go away they started laughing it off.

At first, the team of Treasury and IRS lawyers considered the subsidy question a minor issue, in part because it was widely expected that states would set up their own marketplaces.

“It didn’t occupy a lot of conversation, because it was not at all clear that a lot of states wouldn’t establish their own exchanges,” said Clarissa Potter, a deputy tax director at American International Group who was the IRS’s deputy chief counsel until May 2011.

When she learned that opponents of Obamacare were targeting the federal subsidies, Potter recalled, “I remember thinking: ‘Jeez, really? Is this the best you can do?’ ”

That marked the “end of denial”. Now that the problem has gone all the way to the Supreme Court, denial has been replaced by the next stage: regret. Eric Toder at TaxVox says that it  would have been so much easier if only the Republicans had cooperated from the start. He engages in a thought experiment:“What if we funded public school like Obamacare?” he asks. Toder says Obamacare like public school would still work but it would be awfully complex.  Why wasn’t it done simply? Well it had to be convoluted because they couldn’t sneak it past the GOP any other way.

it would make life much more complicated for state and local taxpayers and tax administrators.   Low-income households would need to receive subsidies in real time (perhaps in the form of tuition discounts) to pay their education bills. The subsidies would have to be based on prior year income or property values, with a subsequent reconciliation. Penalties would have to be designed for parents who refuse to pay for their kids’ schooling. …

Years ago, Princeton economist David Bradford suggested tongue-in-cheek that the federal government could cut defense spending without hurting national security if it replaced Pentagon spending on weapons procurement with a tax credit for arms manufacturers. In a more complex way, the designers of the ACA applied Bradford’s insight, substituting targeted tax credits for a fully tax-financed system that would appear to raise spending and taxes much more than does the ACA.

That may have been the only way the United States could have enacted a health law that vastly expands insurance coverage. And it may still work out in the end. But it could have been so much simpler.

It’s almost as if Toder were mentally preparing himself for bad news but rationalizing the failure as the Republican’s fault.  ‘If only they had let us run Obamacare like a public school,’ he moans,  ‘then we wouldn’t have had to write a 1,000 page bill filled with all sorts of unimportant but pesky legal defects.’

Robert Barnes, writing in the Washington Post, is even more wistful.  King vs Burwell he says, will end the dream of a “nonpartisan Supreme Court”.  Barnes argues that while John Roberts miraculously found some way to support the ACA in a nonpartisan way, should he find against Obamacare now, he will destroy his legacy forever.

In a spectacular display of spot-welding, the chief justice joined fellow conservatives on some points and brought liberals on board for others. Roberts was the only member of the court to endorse the entire jerry-rigged thing, and even he made sure to distance himself from the substance of the law. (“It is,” he wrote, “not our job to protect the people from the consequences of their political choices.”) Still, his efforts rescued President Obama’s signature achievement on grounds that many had dismissed as an afterthought….

And then here comes Obamacare II. In King v. Burwell , to be argued Wednesday, plaintiffs say the text of the law must be interpreted in a way that would neuter it, canceling health insurance subsidies for about 7.5 million Americans in at least 34 states. Can Roberts’s portrayal of the Supreme Court as above politics survive another round with the most partisan issue of the decade?

Funny how that works. Everywhere the pundits seem to be saying that even though they no longer believe Obamacare is unassailable, they are urging on the Republicans to forbear from plunging in the knife because it would ruin the GOP reputation forever.  David Frum’s article in the Atlantic is the least ridiculous of these attempts.  Frum says the Republicans don’t dare win for fear of starting chaos.

At the Washington Examiner, Byron York detailed Senate Republicans’ increasingly frantic political calculations:

Republicans are going to find a way to continue paying subsidies to the estimated 7.5 million Americans who receive taxpayer-funded help to pay their insurance premiums through the federal Obamacare exchange.

The prospect of seeing those people lose their subsidies—even though some have received them for a short period of time, and even though Obamacare has imposed burdensome costs on many other Americans—is just too much for Republican lawmakers to risk.

"We're worried about ads saying cancer patients are being thrown out of treatment, and Obama will be saying all Congress has to do is fix a typo," said one senior GOP aide involved in the work.

Precisely because the outcome of a successful challenge to the ACA will unleash such operatic chaos, it seems more likely that the Court will flinch. The Supreme Court has upheld every social program enacted by Congress since Social Security in 1937—and it would take five very bold justices to disembowel the Affordable Care Act less than three years after they upheld the constitutionality of its most controversial feature, the individual mandate.*

Yet the same considerations didn’t hold the Obama administration back when it was fundamentally transforming America.  Somehow the press only regards as radical and extremist a return to the status quo ante, which after all, has the benefit of being a known quantity.

It takes Bobby Jindal to point out the obvious: a government loss in King vs Burwell won’t cause the sky to fall.  Even if subsidies are canceled, he notes, it will only mean that less taxes will be collected.  For every person who doesn’t get the subsidy there’s someone who doesn’t pay a tax. Sometimes they’re the same person since 52% of all those who received subsidies, according to H&R Block, had to pay some or all of it back. The subsidy money that won’t be paid isn’t somehow destroyed.  Writing in the National Review Jindal explains:

As a result, a ruling in King v. Burwell striking down the subsidies would represent a sizable tax cut. The Congressional Budget Office (CBO) January baseline gives the numbers: Eliminating the employer mandate nationwide would cut taxes by $164 billion, and weakening the individual mandate — assuming it would no longer apply to any individuals who heretofore qualified for subsidies — would cut taxes nationwide by approximately $18 billion. Conversely, eliminating the subsidies would raise taxes, but only by $134 billion. That’s because most of the subsidies ($775 billion worth) come in the form of refundable credits — the government writing checks to individuals with no income-tax liability — which budget scorekeepers consider not a tax cut, but government outlay spending.

Eliminating the subsidies nationwide would therefore cut Americans’ tax liability by approximately $48 billion on net. Granted, these sums from CBO apply to all 50 states, while the King ruling would apply only to the 37 states that have not established exchanges. But the trend from the numbers is crystal clear: The tax reduction from eliminating the employer mandate, and weakening the individual mandate, outweighs any tax increase from eliminating the subsidies — meaning a favorable ruling in King v. Burwell would cut Americans’ taxes by many billions.

Which means uncollected tax money available for replacement programs, such as are suggested by John Kline, Paul Ryan and Fred Upton.  Or at the worst it would mean some kind of reversion to the status quo ante but with more money in consumer’s pockets.  Either way, it won’t be the end of the world.  It might even be the beginning of a new one.

Obamcare Driving a Stake Through Social Security’s Heart

POSTED 2 days ago BY HEALTH CARE COMPACT

The next time Obamacare advocates talk about the “free money” being passed up by states that refuse to expand Medicaid, or when you next hear about all the billions of dollars in subsidies that the ACA is handing out to policyholders, spare  thought for Social Security.  The crisis of Social Security is proof that the Federal government hasn’t got a dollar to spare.

The program that millions of Americans rely upon for retirement will so go bankrupt.  And when it does it will leave untold numbers in the lurch. According to Bankrate “one-quarter (26 percent) of retirees depend on Social Security as their only source of income.”

The problem is that the program disburses more in benefits than it receives in contributions.   According to Wikipedia, “in 2009 the Office of the Chief Actuary of the Social Security Administration calculated an unfunded obligation of $15.1 trillion for the Social Security program. The unfunded obligation is the difference between the future cost of Social Security (based on several demographic assumptions such as mortality, work force participation, immigration, and age expectancy) and total assets in the Trust Fund given the expected contribution rate through the current scheduled payroll tax.”

Investors Business Daily has a chart showing the drop-dead date of Social Security under different scenarios.  The red curve is the CBO’s estimate, the blue is Social Security’s, which the Investors Business Daily believes may be unrealistic.

In 2025, the Social Security Administration expects the economy to be nearly $2 trillion bigger than the Congressional Budget Office does: $29.6 trillion vs. $27.7 trillion. Even the White House budget office, sometimes accused of accentuating the positive, sees GDP $1.5 trillion smaller than does the SSA.

The divergence over the revenue outlook for the retirement program is even more dramatic: SSA expects revenue to grow roughly 40% faster than does CBO over the coming decade. In fiscal 2025, SSA anticipates program revenue of $1.4 trillion, up from $778 billion in 2014 and about $175 billion more than CBO projects.

webA1ssn0227.gif.cms

The difference between the two dates is driven principally by falling work force participation, one of the key variables in the Social Security income equation. According to the Congressional Budget Office  Obamacare will depress this and this will bring forward the date on which Social Security collapses. The actual CBO report says that Obamacare will shrink the number of people who will work; hence the contributions to Social Security.

CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and

other incentives they will face and the financial benefits some will receive. Because the largest declines in labor supply will probably occur among lower-wage workers, the reduction in aggregate compensation (wages, salaries, and fringe benefits) and the impact on the overall economy will be proportionally smaller than the reduction in hours worked. Specifically, CBO estimates that the ACA will cause a reduction of roughly 1 percent in aggregate labor compensation over the 2017–2024 period, compared with what it would have been otherwise. Although such effects are likely to continue after 2024 (the end of the current 10-year budget window), CBO has not estimated their magnitude or duration over a longer period.

The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024. Although CBO projects that total employment (and compensation) will increase over the coming decade, that increase will be smaller than it would have been in the absence of the ACA. The decline in fulltime-equivalent

employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours; however, CBO has not tried to quantify those two components of the overall effect. The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise  rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week).

Generally speaking, 7.65 percent of a paycheck is withheld for FICA -- 6.2 percent for Social Security and 1.45 percent for Medicare.  Fewer working people mean less money for Social Security and for Medicare.  The main point to remember is that the administration is not flush with free money.  It is on the edge of bankruptcy.  A $29 trillion dollar unfunded liability is a wall nobody knows how to get around.

In 2012, the Daily Kos predicted that Obamacare would help save Medicare! It carried an administration boast that the ACA would save Medicare $200 billion by 2020.  Unfortunately the exact opposite has happened.  By cutting employment Obamacare is starving Medicare -- and Social Security -- of funds. Now even Ezra Klein of Vox has given up on savings.  His new narrative is that the administration may be spending more money, but it is money well spent. “Cost is not the biggest problem in America's health-care system. Value is. And cutting costs may actually be counterproductive.”

If the health-care system got much better at delivering health, then it might make sense to spend what we do now — or to spend even more than that. So long as the system isn't delivering good value for the money, then yes, cutting costs makes sense. But it's important not to lose sight of the real goal: more health, not less health spending. Washington's myopic focus on costs risks doing just that.

Klein talks as if it were only a question of buying something you need even if it is expensive. But it’s money the Federal government doesn’t have.  And it makes no more sense to argue you should buy shoes you need even if you can’t pay for it than to argue Obamacare is worth every penny that isn’t there.

Margaret Thatcher famously said that socialists could never understand that you could run out of “other people’s money”.  The Federal government has run out of taxpayers money.  There is nothing spare left.  It will be lucky to avoid crashing Social Security.  Nothing justifies acting like a Big Spender and disbursing overpriced largesse like money was going out of style.

But that’s exactly what it is doing.  Economics, not King vs Burwell, is the Achilles Heel of the Affordable Care Act.

The Republican Dilemma

POSTED 3 days ago BY HEALTH CARE COMPACT

There were signs of division among Republican leadership figures over the whether -- or how hard -- to push for Obamacare’s repeal. The chief sign of vacillation came from Jeb Bush’s widely noted declaration that ‘repealing Obamacare was not one of the top 5 items’ on his agenda.  The Weekly Standard reported:

Over the past few days at CPAC, Sean Hannity has asked various prospective Republican presidential candidates to list their “top five agenda items.” Former governor Jeb Bush’s list did not include repealing Obamacare.

Bush’s list included (1) undoing President Obama’s lawless executive actions, (2) regulatory reform, (3) tax reform, (4) encouraging economic growth, and (5) sending “a signal to the rest of the world that we’re going to be their partner for peace and security.”  But it did not include repealing Obamacare or signing a conservative alternative to Obamacare into law.

Neither Governor Scott Walker nor Senator Marco Rubio listed repealing Obamacare as a stand-alone agenda item, but both did list it as a subcomponent of their first agenda item.

This was widely interpreted as suggesting that some in the GOP would not buck the lobby behind Obamacare. Mother Jones noted that “corporate America” was solidly behind their bailouts and expanded market share.

There's no better evidence of this than a brief filed on behalf of the government in King by the Hospital Corporation of America, better known as HCA, the largest health care provider in the country (once run by Obamacare foe Florida Gov. Rick Scott). HCA argues that the legal theory advanced by the plaintiffs is "absurd," but, more importantly, it presents detailed data drawn from its own operations that demonstrate that the health care law is helping patients and the company itself.

In a kind of voice from the “lesson from the past” kind of speech Ted Cruz described how the 2013 fight to defund Obamacare failed. “In a wide-ranging speech to the Club for Growth winter meeting Friday night, Sen. Ted Cruz looked back on his 2013 crusade to defund Obamacare — an effort that consumed Washington, led to bitter Republican party infighting, and resulted in a partial government shutdown — and concluded it was a fight he probably never could have won.”

The problem Cruz highlighted was a simple one: the Republican leadership was determined to sell out. They broke ranks and the resulting fragmented coalition could not hold.  Cruz implicitly conceded that the Democrats had won the media battle.

Cruz, who is considering a 2016 run for president, conceded that "I made some mistakes" in the shutdown battle. "The single biggest mistake … is I think that I and our allies did not spend enough time explaining the specific strategy to elite opinion makers," Cruz said. "And I think there was confusion that made it less effective."

Whatever mistakes he believes he made, Cruz reserved the biggest blame for the Republican Senate leadership under Sen. Mitch McConnell, whom Cruz never mentioned by name. Conceding that the defunders' plan "went awry," Cruz said the big problem stemmed from the GOP leadership. "What we did not anticipate was that Senate Republican leadership would actively, vigorously, vocally lead the fight against House Republicans," Cruz said. "Once that happened, it became almost impossible to win that battle."

But all the auguries are two sided coins.  For example, although Jeb Bush did not rate the repeal of Obamacare at the top of his list, Rubio and Scott Walker did.  At Cruz himself put the repeal of “every blasted word” of Obamacare at the head of his agenda.  This means that while some -- like Jeb Bush and Mitch McConnell -- were not onboard, the others had nailed their colors to the mast.

Bobby Jindal, who is also a 2016 presidential hopeful, frankly discussed the divisions within the party in a way that characterized them as unbridgeable.  Speaking to reporters at the Club of Growth, Jindal called “congressional Republican leaders ‘fearful’ of acting to fully repeal President Barack Obama’s health care law.”  They are caught on the horns of a dilemma, afraid of taking on the president on the one hand yet aware they owed their positions to a wave of anti-Obamcare sentiment that swept the country.

Jindal says he thinks GOP leadership in Congress and other lawmakers are fearful of being criticized “for putting anything out there that could be attacked.” He asks why there hasn’t been a vote yet.

Republicans captured the Senate, including almost every targeted race, and enlarged their House majority in part by campaigning against the health care law, Obama’s signature domestic accomplishment.

The Louisiana Governor spoke as if the GOP brand was in danger of ceasing to exist as a distinctive alternative to the Democratic party.  It had stopped being different because it was beholden to the same pressure groups and lobbies that the Democrats were controlled by.

“We don’t need a second Democratic party, we don’t need to be liberal, we don’t need to be cheaper liberal Democrats, we need to be principled conservative Republicans,” Jindal said Thursday at the Conservative Political Action Conference. …

“I don’t know about you, but I don’t remember during those campaign ads last November, I don’t remember them saying we’re just going to repeal the easy parts of Obamacare,” Jindal said. “It is time for them to govern the way they campaigned.”

He continued, “This election wasn’t about getting a nicer office for Sen. Mitch McConnell, it wasn’t about keeping a bigger office for Speaker John Boehner, this election was about taking our country back and it starts by repealing Obamacare.”

But that’s just the problem.  For many politicians elections are in fact about getting nicer offices and more personal power, not fighting some “Mr Smith goes to Washington” campaign against the establishment.  This line of reasoning is behind the cynical articles suggesting that the GOP is hoping to lose the King vs Burwell decision in the Supreme Court.

Yet despite the softness of the Republican leadership they continue to advance in spite of themselves, sucked in by the vacuum of an imploding Obamacare itself. Kimberly Strassel of the Wall Street Journal argues that the Republicans may have to face up to possibility that  they will win even if they try to lose.  Even a crooked boxer can’t actually take a dive if his opponent is lying kayoed on the floor.  “Pure, unadulterated political gifts don’t come often to Washington, and even when they do their recipients are often too busy inspecting the horse’s mouth to make use of them. The miracle gift this season is King v. Burwell, and next week will show whether Republicans have the wit to unify around an effective strategy to dismantle ObamaCare.”  She writes:

If the Supremes strike down the subsidies anyway, President Obama will be instantly on a stage, explaining that an activist court, at Republican bidding, stole health care from six million Americans. He’ll be flanked by dozens who lost subsidies and tell stories of cancer and bankruptcy. He’ll ask if Republicans really are willing to deny little Tommy chemo—out of a base desire to obstruct him—when they could make an easy and permanent fix by changing a few, tiny words in the law. He’ll pressure GOP governors to default to bad ideas that will effectively reinstate his policies.

There’s no way either Boehner or McConnell can keep their nice offices in the way of things.  Obama will attack in any event.  The only way the GOP can survive is to win.  They can’t get by just losing.

Washington Secrets

POSTED 3 days ago BY HEALTH CARE COMPACT

It’s a time for secrets in Washington. The Treasury has refused to explain where nearly $3 billion in bailouts of insurance companies have come from, despite inquiries by Congress.

The U.S. Treasury Department has rebuffed a request by House Ways and Means Chairman Rep. Paul Ryan, R- Wis., to explain $3 billion in payments that were made to health insurers even though Congress never authorized the spending through annual appropriations.

At issue are payments to insurers known as cost-sharing subsidies. These payments come about because President Obama’s healthcare law forces insurers to limit out-of-pocket costs for certain low income individuals by capping consumer expenses, such as deductibles and co-payments, in insurance policies. In exchange for capping these charges, insurers are supposed to receive compensation.

What’s tricky is that Congress never authorized any money to make such payments to insurers in its annual appropriations, but the Department of Health and Human Services, with the cooperation of the U.S. Treasury, made them anyway. …

In response, on Wednesday, the Treasury Department sent a letter to Ryan largely describing the program, without offering a detailed explanation of the decision to make the payments. The letter revealed that $2.997 billion in such payments had been made in 2014, but didn't elaborate on where the money came from. Over the next decade, cost-sharing payments to insurers are projected by the Congressional Budget Office to cost taxpayers nearly $150 billion.

There have been many warnings that hidden bailouts to insurers were in the offing. In late 2014 Scott Gottlieb wrote: “For months, there have been assertions that the mechanisms embedded in Obamacare, designed to offset losses that insurance companies will take this year on their exchange business, amount to a bailout of the insurance industry.  At the same time, it wasn’t clear where the money to pay for these “risk adjustments” would come from in the first place.”

Even if the Obama team tried to re-program slush funds that it surfaced inside the Department of Health and Human Services, a recent analysis by the Congressional Research Service makes clear that first, Congress would have to separately appropriate the funds in order for any money to be spent on the Obamacare plans. That was never likely to happen.

Where bailouts are actually coming from is still unknown -- and Treasury is not saying.  

There’s another big secret moving under the surface of the capitol.  Despite the show of confidence that the administration will prevail in King vs Burwell, it has been rumored that the administration may have a  confidential plan, operating under some unknown mechanism, to continue the subsidies by other means even if they are declared illegal by the Supreme Court.  “A Republican House subcommittee chairman is accusing the Obama administration of secretly preparing a fallback strategy if the Supreme Court strikes down a major piece of its healthcare reform law later this year, even as officials publicly maintain that no plan exists.”

Rep. Joe Pitts (R-Pa.), chairman of the House Energy and Commerce Health Subcommittee, says federal officials are hiding a roughly 100-page document on the looming court case. The case, King v. Burwell, could cut off ObamaCare subsidies in three-quarters of states and potentially collapse the national marketplace.

Pitts confronted the head of the Department of Health and Human Services (HHS) about the plan, which he says is being circulated among senior officials, for the first time on Wednesday

HHS Secretary Sylvia Mathews Burwell said she does not know of a planning document.



Rumors about the fallback plan have been swirling around for some time, yet despite Secretary Burwell’s denials the statements from the Department have been too tightly parsed to be entirely categorial.  Insurance News Net said:

The Department of Health and Human Services as a whole is unaware of any such document, a spokeswoman said by email "on background." Under the department's rules, that means statements can only be attributed to a spokesperson and not an individual. "We know of no such document. As the Secretary said, we know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage to our health care system that would be caused by an adverse decision."

But the secrets are not all on the Democratic side. The Washington Examiner reports that the GOP has its own secret plan to keep Obamacare subsidies going even if the Supreme Court rules against it.  It’s almost as if too much money, too many lobbies, and altogether too many promises have been made to stop the music now.

So Republicans are working on their own plan. "We're committed to helping the people who have been hurt by the healthcare law," said Republican Sen. John Barrasso, leader of the working group. "We're not going to help the law, but we're going to help the people, so they are not left in the lurch."

What that means is Republicans are going to find a way to continue paying subsidies to the estimated 7.5 million Americans who receive taxpayer-funded help to pay their insurance premiums through the federal Obamacare exchange.

Obamacare is a gravy train. And altogether too many people in Washington DC have hopped on hoping never to have to get off. However, they might settle for a gradual stop. The Wall Street Journal reports that “insurers and hospitals recently launched a lobbying campaign to persuade the court to preserve the tax credits and to press lawmakers to ensure an orderly transition if the justices don’t.”

In an op-ed article published in The Wall Street Journal on Thursday, Republican Sen. Ben Sasse of Nebraska called for an 18-month period of “temporary, transitional relief” if the court rules against the credits.

“Obamacare took these patients hostage. Conservatives have a duty to save them…Congress should offer individuals losing insurance the ability to keep the coverage they picked, with financial assistance, for 18 transitional months,” he wrote.

Aides to Mr. Sasse said he didn’t necessarily want to retain the tax credits in their current form.

The move is being debated privately by Republicans. Leaders, including House Ways and Means Committee Chairman Paul Ryan of Wisconsin and Senate Finance Committee Chairman Orrin Hatch of Utah say they aren’t ready to release plans.

But Sen. John Barrasso (R., Wyo.), who is working with Mr. Hatch and others on a GOP replacement plan, called it “a terrific idea. We want to protect the people, not the law.”

Sen. James Lankford (R., Okla.) said, “I do believe we have to have a bridge, but that needs to be part of a larger agreement.”

As a practical political matter the Republicans are probably looking for a way to kill Obamacare without offending too many of the interest groups which are sucking away at taxpayer money. There’s the insurance companies -- who are getting money from somewhere -- and there are the policy holder’s subsidies.

There’s also the taxpayer, but nobody really minds him.

King vs Burwell: the Propaganda Heats Up

POSTED about 5 days ago BY HEALTH CARE COMPACT

It’s full-court press time.  Articles describing the vital necessity of Obamacare are flooding the zone in anticipation of King vs Burwell.  They run the register of notes from “the sky is falling,” to “resistance is futile, you will be assimilated.”  But their intent is identical.  They are preparing the “battlespace” for the decision, framing the public debate ever so subtly so as to influence the decision.

The “sky is falling” is the theme of a Guardian article which says, Chaos could ensue if the supreme court strikes down Obamacare.  “Eight million Americans risk losing their health insurance if the supreme court sides with opponents of the Affordable Care Act next week. The court will be hearing oral arguments in King v Burwell, the latest legal challenge to the act on March 4. If the court rules against ACA, chaos in the healthcare market could ensue. Fewer people with effective access to medical care could lead to an estimated 9,800 deaths per year. And many more would undergo needless suffering and financial calamity.”

Joshua Green at Bloomberg Politics has an almost identical message. “If the plaintiffs prevail, millions of people in 34 states who bought insurance on federal exchanges would suddenly lose the subsidies that make it affordable. Consequently, most would lose their coverage. A Rand study pegged the number at 9.6 million people, with premiums soaring 47 percent for those still able to afford them. ‘Everyone agrees this would be a cataclysmic hit to the insurance market,’ Michael Kolber, a health-care attorney at Manatt, Phelps & Phillips, said at a Feb. 13 Bloomberg Intelligence panel on King v. Burwell.”

Somewhat more highbrow is a piece from Abbe R. Gluck, professor at Yale Law School.  He argues that if King should win, then the Republicans would be Democrats.  The horror, the horror.

The Supreme Court, led by its conservatives, has spent the past four decades developing a set of legal rules to protect states from federal imposition. Those rules require Congress to provide unmistakably clear notice in the text of a statute before the Court will read a statute to intrude on the states. As read by the challengers, the ACA would completely violate these Court doctrines.

In fact, these very same state-protective rules were used by those who challenged the ACA in 2012—as well as by seven Justices in that case when they concluded the ACA’s Medicaid expansion was impermissibly coercive on the states. It is thus remarkable that the King challengers—formerly staunch federalists—have suddenly adopted an interpretation of the law diametrically at odds with these protections. They do not mention these flagship cases in their briefs, even though the consequences that their reading would impose on the states are far more intrusive—and come with no explicit warning in the statute—than those at issue in Medicaid expansion.

For comic effect there is the New York Times piece which argues that Obamacare is so bad that it’s good.  Margot Sanger-Katz says that people being bumped off plans or unable to renew because their premiums have skyrocketed are shopping harder -- and that’s good.

Those high rates of shopping and switching are unusual in public health insurance marketplaces. Other government programs that allow customers to shop for health plans have had switching rates close to 10 percent. Indeed, a key policy feature of the marketplace this year was an automatic renewal process, which kept people who did nothing enrolled in the same plan from last year.

There are clear advantages for some people in staying in the same insurance plan from year to year — mainly that you can stick with the same doctors and hospitals. But an Upshot analysis of data from the McKinsey Center for U.S. Health System Reform found that people who bought the most popular plans last year often faced substantial premium increases if they stayed put.

It’s not clear from the government’s report how many people who switched saved money by doing so. But the administration has said that more than 70 percent of all customers could save money by switching, so it’s likely that most of the switchers ended up in a cheaper plan. There may be other reasons to switch, of course — maybe some people didn’t like their plan. And even some of last year’s plans are experiencing some changes that could make them less attractive to existing customers, as a ProPublica analysis published in The Upshot highlighted.

The high switching rate, a surprise, remains a bit of a mystery to experts who study insurance markets. There are a few possible reasons more people than expected may have shopped. One is that Health and Human Services worked hard to encourage people to look again at other options. The customers shopping for insurance in the Obamacare marketplaces also tend to have lower incomes than those in previous public insurance markets, and insurance premiums make up a larger proportion of their incomes. Those factors may have made them more price sensitive and motivated to find the best deal.

This sort of approach is called making a virtue out of a necessity.  The information that “the administration has said that more than 70 percent of all customers could save money by switching” really means that 70% of policies can’t be renewed at the old price.  The cost has gone up and so people are out there looking for something affordable.  Ordinarily this would be bad news, but here it is presented as an incentive to find a better deal.

This is like finding your airplane ticket on the return leg has gone up and you are now shuttling from airline counter to airline counter in a desperate search to book passage home.  Do you think that’s good news?

We learn that these price increases have largely hammered the poor who were compelled to go out and do whatever it takes to get something they could afford. “The customers shopping for insurance in the Obamacare marketplaces also tend to have lower incomes than those in previous public insurance markets, and insurance premiums make up a larger proportion of their incomes. Those factors may have made them more price sensitive and motivated to find the best deal.”  Is that good news?

Why sure it is, if you’re an advocate for Obamacare.

Yet for all the happy talk about how little chance a challenge to Obamacare has; for all the upbeat depictions of people desperate for an affordable deal, the ACA has one implacable foe: cost.  Unless Obamacare is repealed, it will simply bankrupt both the government and its policyholders.  Economics is an issue that goes beyond the legal doctrines cited by professor Gluck.  It goes to the quality of the product and its price.

The fact is Obamacare is overpriced, mediocre insurance that the government can’t afford to subsidize, and that violates American’s basic rights.  Recently, H&R Block reported that 52% of all those who received subsidies last year have to pay it back in whole or in part. Even today it is unaffordable.  In the long haul there’s not a prayer.

The assertion that cutting off the “free money” to the states suffers from the defect that the money isn’t free. In fact, it often comes from the same people who get the subsidies. Chaos could ensue if the Court upholds Obamacare.  That is probably more true than the chaos resulting from striking it down.

Costs Do Matter

POSTED about 6 days ago BY HEALTH CARE COMPACT

Ezra Klein at Vox now concedes that Obamacare is not slowing down the cost increases in healthcare, something the ACA initially promised to do.  When Klein was still at the Washington Post in 2010 he wrote that Obamacare would cost a lot up front after which it would bring down costs.

In other words, 2014 is a one-time increase in spending level as we get 30 million new people covered. After 2014, costs grow more slowly than they would without the health-care reform bill. And as some of you know, the major spending controls, like the excise tax and the Medicare board, only really start in 2018, so we can expect spending to slow even more in the years beyond this projection. And that, of course, is exactly what the Congressional Budget Office found when it looked at the bill on a longer timeframe.

So, the nickel version: Spending goes up in 2014 because we're covering 30 million new people and then down after that because we're controlling costs in the system.

But now in 2015 Klein asks: who says health care costs are important? Gone is the argument that Obamacare will control costs.  In its place is the assertion that costs aren’t really that important.

Though it often seems no one agrees on anything, both parties agree that the biggest problem in American health care is cost. The closest thing Republicans have to a health-care plan — Rep. Paul Ryan's budget — is focused on cutting costs. Now leading Democrats tell Sarah Kliff that now that Obamacare is up-and-running they're going to turn their attention to cost. It's as if the point of having a health-care system is to spend less on it.

But both parties are wrong. Cost is not the biggest problem in America's health-care system. Value is. And cutting costs may actually be counterproductive.

To see why, consider two possible futures for American health care:

  1. The federal government passes a law making all health-care services illegal. Systemwide costs drop to zero.

  2. Researchers at the National Institutes of Health invent a pill that, if taken daily, guarantees a healthy life until the age of 168. The pill is expensive, and giving it to every American requires raising health-care spending to 34 percent of GDP.

Does anyone prefer #1? Anyone? Bueller?

But Klein’s thought experiment is absurd.  One place that has actually made some health care services illegal - and only private health insurance at that - is Canada. “Six of Canada's ten provinces used to ban private insurance for publicly insured services to inhibit queue jumping in order to preserve fairness in the health care system.”

Even if US government spending on health care went to zero, people would still be able to buy insurance privately or through their employers - just like before Obamacare.  They might form health care sharing groups such as those run by religious groups.  Or they might go to Walmart clinics like they do now.  And as for #2, any hypothetical miracle pill would probably come from American pharma.  It’s private medicine that’s innovative.

In case you're wondering, the league tables look like this: the US leads in the discovery of approved drugs, by a wide margin (118 out of the 252 drugs). Then Japan, the UK and Germany are about equal, in the low 20s each. Switzerland is in next at 13, France at 12, and then the rest of Europe put together adds up to 29. Canada and Australia put together add up to nearly 7, and the entire rest of the world (including China and India) is about 6.5, with most of that being Israel.

But while the US may be producing the number of drugs you'd expect, a closer look shows that it's still a real outlier in several respects. The biggest one, to my mind, comes when you use that criterion for innovative structures or mechanisms versus extensions of what's already been worked on, as mentioned in the last post. Looking at it that way, almost all the major drug-discovering countries in the world were tilted towards less innovative medicines. The only exceptions are Switzerland, Canada and Australia, and (very much so) the US. The UK comes close, running nearly 50/50. Germany and Japan, though, especially stand out as the kings of follow-ons and me-toos, and the combined rest-of-Europe category is nearly as unbalanced.

One of the reasons - though not the major reason - why Obamacare hasn’t made health care more affordable is because it is subsidizing quacks. As Andrew McCarthy points out:

Under the so-called Affordable Care Act, the federal government will recognize and subsidize a great deal of hokum, things like naturopathic medicine and acupuncture that have no scientific basis, that have been clinically shown to be useless or worse, and that are rooted in rank mysticism, from the “qi” energy that acupuncturists claim to manipulate—and which does not, technically speaking, exist—to the “innate intelligence” underpinning chiropractic theory—which does not, in fact, exist, either. As endless peer-reviewed scientific studies document, this stuff is pure quackery. …

Senator Harkin successfully campaigned for ACA provisions that would forbid “discrimination” against any practitioner of purported healing arts who is licensed. Many states, California prominent among them (quelle surprise!) license practitioners of superstitious hokum, including naturopathic “doctors” and acupuncturists. There are many reasons for this: One is that superstitious hokum is extraordinarily popular, and the state desires to keep an eye on its practitioners; a second is that California is, as advertised, full of lunatics and the entrepreneurs who service their lunacy; the third is that reasons Nos. 1 and 2 combine to generate revenue for the state, which will—in what must be the most perfect example of progressivism in practice—yank your license to practice medically null but voguish Eastern mysticism in the state of California for failure to pay your crushing California taxes.

Even allowing for McCarthy’s literary ebullience his point is a valid one.  How can Ezra Klein talk about “value” in an program which reimburses “qi” energy?  At any rate, cost is not an irrelevant consideration in the delivery of any economic good.  Think Progress cites an actuary who argues, probably correctly, that insurers will have to raise premiums if the Supreme Court invalidates subsidies that are being paid by the federal government.  In other words Think Progress is saying that cost matters.

In an early warning of what will happen if the Supreme Court backs a legal attack on the Affordable Care Act, the American Academy of Actuaries sent a letter to Secretary of Health and Human Services (HHS) Sylvia Burwell on Tuesday asking Burwell’s department to permit insurers to raise premiums if the justices vote to defund much of the law. According to the letter, a decision against Obamacare threatens many insurance companies’ “solvency,” unless those insurers are able to raise premiums in the wake of such a decision. Needless to say, if an insurer becomes insolvent, that endangers its customers’ ability to pay for their health care.

Of course it does. Cost matters very much indeed in every purchase decision we make. It would not be unfair to point out that subsidies are derived from taxes collected from the same pool, sometimes from the exact same people the subsidies are doled out to.  According to H&R Block, 52% of customers have had to pay back Obamacare subsidies to some extent or the other.  

The more efficient a system is, the more money is available for actual medicine.  However it is quite obvious by now that Obamacare is really about massive quantities of paper shuffling in which insurers and taxmen - not doctors - are the principal actors.  That is why it is raising costs.  Ezra Klein may want to move the goal posts by saying that “costs do not matter” now that Obamacare is playing out exactly the way its critics predicted, but sadly, for Ezra Klein, rhetoric and wishful thinking are no match for reality.

The Story Behind Obamacare’s Passage

POSTED one week ago BY HEALTH CARE COMPACT

The sordid background to Obamacare came into closer focus as newspapers wondered aloud why industries like “big pharma” weren’t getting behind the faltering program.  After all the billions they had received they could at least get behind the president. The liberal Mother Jones asked: “Why Is Big Pharma Financing a Conservative Group Trying to Destroy Obamacare?”  Author Stephanie Mencimer went on to explain the Faustian bargain.

During the contentious battle to pass the Affordable Care Act, the pharmaceutical industry was a crucial partner of President Barack Obama. Big Pharma sank $150 million into an ad blitz promoting the Obamacare bill and spent millions lobbying for its passage. Backing health care reform was a no-brainer for the drug manufacturers; they stood to reap billions in revenues as a result of expanded health care coverage. Yet all of this makes one of Big Pharma's alliances highly curious: It has bankrolled the libertarian think tank trying to demolish Obamacare.

The Washington-based Competitive Enterprise Institute has been the driving force behind two high-profile anti-Obamacare lawsuits, including King v. Burwell, which will be heard by the Supreme Court in early March.

The implication was that having been bought, Big Pharma should stay bought. Mencimer details some of the ‘understandings’ that went on behind the scenes.  In exchange for support, they would be protected from competitive and cheaper drugs.

This was the deal Big Pharma cut during the legislative battle over Obamacare: The pharmaceutical companies agreed to support the law and accept about $80 billion in cost-cutting measures over the next decade, and the White House granted the industry lucrative concessions to protect its profit margins. These industry-favoring measures include provisions preventing the government from negotiating lower drug prices for Medicare and Medicaid and blocking Americans from importing cheaper prescription drugs from abroad. Those concessions were costly to taxpayers and consumers, but they were part of the grand bargain hammered out between the White House and Big Pharma. This accord ensured the industry would use its formidable lobbying clout to pass Obamacare—not destroy it.

People would pay more, but it was all for the grand cause of government-run medicine. What was in it for pharma was sales. So far Obamacare has helped push sales in ADHD drugs to astronomical levels.  Another article from Mother Jones by Luke Whelan explains that ADHD drug revenues are up almost $13 billion. The stimulants, which are major component of the medication, are now being pushed on adults.  It’s no longer just speed for kids.  It’s uppers for their parents.

One major reason for ADHD drug revenue's recent growth within the United States is health care reform. The Affordable Care Act (ACA) and Medicaid now require insurance providers to cover mental-health services, including behavioral disorder assessments and treatments. The Department of Health and Human Services reports that this expansion of mental-health benefits will affect more than 60 million people, including 27 million who were previously uninsured.

With more people assessed and diagnosed, Scheffler expects an increase in ADHD treatment to follow. According to his analysis of data from the Centers for Disease Control and Prevention (CDC), around 70 percent of children diagnosed with ADHD are prescribed medication in the United States. ACA and Medicaid also cover ADHD medication costs, which can set consumers back more than $200 a month (PDF).

The industry report cited another reason for the increase in the sales of ADHD medication: the addition of formal guidelines for diagnosing adults with ADHD in the most recent edition of the Diagnostic Statistical Manual of Mental Disorders (DSM). The American Psychiatric Association (APA), which publishes the DSM, added specific descriptions of adult ADHD symptoms for the first time, putting to rest lingering beliefs that ADHD was only a childhood condition. It also determined that only five symptoms from the DSM's symptom list need to be present to diagnose someone 17 years old or older, compared to six symptoms for children.

"Adult diagnosis is skyrocketing," Hinshaw says. A 2014 report released by prescription drug management company Express Scripts calculated that the number of adults using ADHD medication increased more than 50 percent from 2008 to 2012. The IBISWorld report expects this number to continue growing "at a rapid pace" through 2020. This year, adults older than 19 will make up approximately 44 percent of the ADHD medication market, the report says. (The ADHD rate among children plateaued at around 11 percent of school-age children in 2011.)

Medications for nausea should also be in high demand by anyone reading these revelations.  The cold, calculating swap of taxpayer dollars to sell drugs to children in exchange for political power must rank as one of the most cynical and brutal maneuvers in politics.  The Obama administration sold the rights to everything - even to the tax forms.  Better yet, they portrayed themselves as altruistic into the bargain.  Remember, it was for the children.

The Daily Caller reports how H&R Block is being handsomely rewarded with tax business in exchange for supporting Obamacare during its inception. “H&R Block Helped Shape Obamacare, Now Set For Gigantic Payday”.  Richard Pollock writes:

Five years ago, a bevy of high-priced H&R Block lobbyists worked on the tax preparation company’s behalf to shape the Affordable Care Act.

And this April 15, those efforts are set to pay off in a big way for the company.

H&R Block is well positioned to earn more than $100 million in additional fees from low-income Obamacare enrollees as they face the daunting challenge to properly file this year’s complicated health-related tax forms.

Consumers are familiar with H&R Block’s massive “Get Your Billions Back” ad campaign that includes direct appeals to Obamacare recipients who will have to file health information on this year’s IRS tax forms.

The giant tax preparation firm understood from the very beginning how complicated Obamacare would be, and was determined to cash in on it.  By supporting this Byzantine and convoluted “health care” program, H&R Block assured itself of steady stream of agonized taxpayers seeking to escape the penalties, forced to pay handsomely for the service of getting their forms readied.

H&R Block’s decision to seek windfall profits from the Obamacare law also has riled some of its competitors, which are instead providing free help to low-income enrollees in filling out the complex tax forms.

Ryan Ellis, the tax policy director at Americans for Tax Reform and a former H&R Block senior preparer told TheDC that the company hopes to profit from the plight of Obamacare enrollees and those without health insurance who, for the first time, will have to file special tax forms related to their health-care coverage.

It’s like a hospital releasing a virus to drum up business for itself.  The same H&R Block notes that more than 52 percent of those “who enrolled in insurance via the state or federal Marketplaces paying back a portion of the Advance Premium Tax Credit (APTC). The average amount paid back is $530, decreasing the tax refund on average by 17 percent.”

The taxpayers are paying back those ballyhooed “subsidies!”  And H&R Block is charging to figure out what they owe.  The taxpayers are being cooked in their own juice.  It is little wonder that Obamacare has so much clout.  It purchased the support of industry and lobbyists by making backroom deals with those who it supposed to regulate.  Obamacare is an enormously cynical arrangement which is using the power of money to get its way, which is exactly how Washington, D.C. likes it.

Is the Establishment Afraid of Fighting Obamacare

POSTED one week ago BY HEALTH CARE COMPACT

A number of news stories suggest that the establishment is closing ranks around president Obama.  Sarah Ferris in the Hill writes that while “dozens of groups, from Americans for Tax Reform to the National Association of Manufacturers, cheered the move” to repeal Obamacare, the Chamber of Commerce did not.

“The U.S. Chamber is forced to live in the reality that President Obama will veto any wholescale repeal effort of his signature health care law. It is therefore our focus to give the business community meaningful relief where we can from this onerous law,” a spokeswoman for the chamber, Blair Latoff Holmes, said.

The other bellwether is a speculative piece in Reuters by Lawrence Hurley saying that Chief Justice Roberts may once again save Obamacare they way he did by voting for the individual mandate.  “Three years ago, Supreme Court Chief Justice John Roberts cast the tie-breaking vote in a ruling that saved President Barack Obama’s signature healthcare reform. As the high court prepares to weigh another challenge that could shatter Obamacare, a review of Roberts’ recent votes and opinions suggest he could again sway the case the government's way.”

The conservative challengers in the case aim to persuade Roberts and the other eight justices that the federal government has overreached by providing tax subsidies to millions of people in 34 states that didn't create their own insurance exchanges.

Their argument will revolve around wording in the 2010 law that insurance would be provided through exchanges “established by the state,” which they argue rules out a federal role.

But in several key cases in recent years Roberts has voted in ways that could favor the government's arguments. He has raised concerns about upsetting the balance between federal and state law, particularly when there is ambiguity in a law's wording. He has also recognized the need to consider the overall context of a law, not just an isolated phrase.

In both cases the argument is similar.  The establishment is apprehensive about opening the Pandora’s box of fighting an obstinate president, and afraid of rocking the boat as they depend on taxpayer dollars doled out by the federal government, and the prestige the cronyism brings them.  And so, it is obvious that the establishment has moved from fighting against Obamacare - for something better - to neutrality on the matter, to now advocating for the status quo.  This is yet another reason to get health care decisions out of Washington, D.C., and out of the hands of people who care only for their own power and position.

The Punishment for Failure

POSTED one week ago BY HEALTH CARE COMPACT

Those who thought that Jonathan Gruber, who was nightly in the news some months back, had finally made if off the front pages, will be surprised to learn that he’s back.  The Associated Press writes:

MONTPELIER, Vt. — A Massachusetts Institute of Technology health economist who made national headlines last year for talking about “the stupidity of the American voter” was a target Monday in a report from the Vermont state auditor saying the economist may have padded his bills to the state.

Auditor of Accounts Douglas Hoffer said he referred his findings on Jonathan Gruber and his contract with the state to Attorney General William Sorrell. Hoffer said Gruber’s invoices billed Vermont $100 per hour for the work of a research assistant — 1,000 hours in 10 weeks.

The accusation is small change in a trillion dollar issue but it illustrates the ferocity with which the issue has been fought.  Individual reputations and lives have been caught up in the Obamacare controversy like pork in a meatgrinder. It is of more than passing interest to note that the state which stuck the knife into the MIT economist was Vermont, the bluest state in the union.

Perhaps it has not quite forgiven him for speaking out of turn about Obamacare and by his indiscretions providing its opponents with numerous laugh lines and sound bites all to the detriment of the program.  Gruber was fired by Vermont late last year.

Embattled former ObamaCare adviser Jonathan Gruber has been booted from his healthcare consulting gig in Vermont, according to reports on Wednesday.

Gruber had a $400,000 contract with the state, where he was charged with helping to create a single-payer system. But he has faced fierce criticism over the last two weeks for recently unearthed comments saying the “stupidity of the American voter” and a “lack of transparency” aided ObamaCare’s passage.

Gov. Peter Shumlin’s (D) decision to end Gruber’s contract reverses his own statement on Tuesday, when he said Vermont needed Gruber to finish the plan by January.

But losing a $400,000 gig may not have been punishment enough.  Now Vermont is going through his reimbursements with a fine tooth comb. Which only goes to show what lies in store for those who have failed the great leader in his dauntless enterprise.  The lesson will not be lost on anyone else who is thinking of blabbing before an audience.

The Stork is Unwelcome

POSTED one week ago BY HEALTH CARE COMPACT

The bureaucratic character of Obamacare was demonstrated by the difficulty of adding a newborn to family coverage.  A health system designed to explicitly cover abortions had no easy way of dealing with births.  The Associated Press writes, “It's Really Hard To Add A Baby To Obamacare”.

The Obama administration confirms there is no quick and easy way for consumers to update their coverage under the new health law for the birth of a baby and other common life changes.

With regular private insurance, parents just notify the health plan. Insurers still must cover new babies, officials say, but parents will also have to contact the government at some point later.

For now, the HealthCare.gov website can't handle new baby updates, along with a list of other life changes including marriage and divorce, a death in the family, a new job or a change in income, even moving to a different community.

The difficulty adding children to the plan stood in stark contrast with the almost unbreakable mandate to provide for birth control and abortions.  Recently, the Hobby Lobby company had to go all the way to the Supreme Court to oppose the contraception mandate. “The 5-4 decision, in favor of arts-and-crafts chain Hobby Lobby and one other company, marks the first time the court has ruled that for-profit businesses can cite religious views under federal law. It also is a blow to a provision of the Affordable Care Act which President Obama's supporters touted heavily during the 2012 presidential campaign.”

The GAO also reported that “in a sample of 18 insurers nationwide, all but one allowed women to pay for abortions through their healthcare plans, regardless of whether they are receiving federal subsidies, the Government Accountability Office found after a seven-month investigation.”

It’s easy to abort or prevent babies under Obamacare.  To add them to a health insurance policy, not so much.

Anatomy of a Glitch

POSTED one week ago BY HEALTH CARE COMPACT

Two recent pieces of news have put Obamacare IT back in the news.  The first was a report that a “glitch” was responsible for sending 800,000 wrong tax forms out to taxpayers. “Or, as one government health source put it, ‘an intermittent defect in code’ that may cause tens of thousands of people to have to re-file their taxes.”

The major glitch, which officials announced Friday, is yet another embarrassment for the Obama administration — and another obstacle for people trying to work their way through the confusing first tax season under the Affordable Care Act.

Hundreds of thousands of taxpayers will have to wait for at least a few weeks to get corrected versions of the form, called the 1095-A. And up to a few million Americans probably have to log onto HealthCare.gov to find out if their form was among the botched many.

HealthCare.Gov used 2015 insurance prices when it was supposed to do math with 2014 numbers. The subsidies themselves were right, federal officials said as they revealed the mess. But the tax paperwork was not.

More than a piece of paper is at stake here. The snafu immediately reopens the door to GOP jabs about competence and the unwieldiness of the big government health care law. And it comes as many taxpayers are learning for the first time that they face penalties for being uninsured or a tax bill if they overstated their income and got too big a subsidy.

How does one get an intermittent defect in the code?  If the code is correct it is always correct.  If it is defective -- which means it does not work for a certain percentages of situations -- it is defective pure and simple.  But never mind that.  Let us proceed to second piece of news about Obamacare IT.  In late January, the AP noted that Obamacare code on inspection showed it was sharing customer data with third parties.

The federal ObamaCare exchange has been sharing data about enrollees with private companies for advertising and data performance purposes, raising fresh questions about the privacy protections in place on the site.

The Associated Press reported Tuesday evening that the information shared with companies can include specific data such as a person's age, income, smoking habits, pregnancy status and ZIP code, as well as their computer's IP address, which can be used, in part, to identify their name and location.

Officials defended the flow of data to private firms, saying it is meant to improve the consumer experience and cannot be used by companies for private gain.  …

The Associated Press report was published hours before President Obama's State of the Union address Tuesday night, where he made a push to protect personal data online through cybersecurity action.

“If we don’t act, we’ll leave our nation and our economy vulnerable,” he said. “If we do, we can continue to protect the technologies that have unleashed untold opportunities for people around the globe.”

What links these two reports is an article by Peter Suderman in Reason, which says that despite the promises made during its catastrophic 2014 launch, Obamacare’s backend remains unfinished.  The backend is the code which performs the business logic, secures the data and feeds information to the browsers accessing it.  If the backend is still a work in progress it would go a long way toward explaining why wrong forms are being mailed out and sheds light on the culture which permits client information to so cavalierly be passed to third parties.

Suderman explains what having an incomplete back-end means:

These incomplete back-end systems were not minor add-ons. They were a critical part of the federal exchange. A government spec sheet from early 2014 warned that "failure to deliver" the payment functionality "by mid-March 2014 will result in financial harm to the Government. If this functionality is not complete by March 2014, the Government could make erroneous payments to providers and insurers.” The fate of the health insurance industry, the document said, was on the line.

We’re now two months into 2015. The second open enrollment period is, at least officially, over. And the systems still aren’t complete.

Instead, insurers are handling calculations manually, sending spreadsheets to the administration, and transferring funds based on those calculations. As Politico, which has consistently provided the best reporting on the outstanding problems with the exchange, reported earlier this week, payments are still being handled via what is essentially a manual workaround, the same workaround that has been used from the beginning. And at this point, Politico reports, “there’s no clear date for when the automatic process will replace it.” That sounds suspiciously like a warning that it could be a long time, if it happens at all.

Politico’s report focuses on the ways that the workaround is time consuming and expensive for insurers. No doubt it is. But it is also potentially quite expensive for the public. As that spec sheet warned, without an automated system in place to calculate the exact payments due to insurers under the labyrinthine rules regarding individual subsidies and broader insurer backstops, there’s a significant risk that the federal government will pay more than it actually owes. Right now, in essence, the insurers are handing the administration bills that cannot easily be checked or verified, and the administration is simply paying the tab, whatever it is.

The last sentence by Suderman should be restated as, “and the taxpayers are simply paying the tab, whatever it is.” The Reason article continues and details the astronomical cost.

All together, building the website cost in excess of $2.1 billion, according to a September 2014 Bloomberg News analysis. This is a $2 billion website—and not only does it still not fully work, almost a year and a half after it was supposed to have been complete, its failures are likely still costing us money.

The phrases “glitch” and “improving the user experience” may simply be PR phrases for incompetence.  Politico reports there has been a lot of effort devoted to sweeping the dirt from out of the public eye.  A lot of attention to appearances. But the dirt is there under the carpet and nobody knows what snakes, creepy-crawlies and bugs are living there.

“You’re not going to find a lot of customer-facing issues,” one insurance industry official said. “It’s more like you lift up the hood, and that’s where the problems are.”

“All of these things, it’s sort of the cost of doing business right now. And it’s not cheap,” the insurance official added, referring to the ongoing administrative expenses of doing so much of it by hand.

The dirt is where nobody is supposed to notice it, until it the squirmy things living there rise up and send out broken forms.  “Oh it’s a glitch,” and the system rumbles on.

A Teaching Moment

POSTED one week ago BY HEALTH CARE COMPACT

The way The Blaze puts the wacky situation is: “Obama Scrambles to Spare People from Obamacare Taxes”.  The subject of the article is the clamor of “advocates” to extend the enrollment period or create exemptions from deadlines and fines the law itself created. Think of it as hitting the “undo” button on your computer. If ever there was a case of people talking to themselves this is it.

Pressure is building on the Obama administration to give uninsured people a second chance to sign up for ObamaCare before they are slapped with a fine.

People without insurance in 2015 will pay a fine of $325 or 2 percent of their income, whichever is greater, during next year’s tax season.

Democrats and several advocacy groups argue that people without insurance don’t realize they’re in danger of taking a significant economic hit.

“Millions upon millions of people are unaware about these penalties,” Ron Pollack, the executive director of the nonprofit group Families USA, said in a briefing Wednesday.

Pressure from Families USA. That would be the same Families USA that received a million dollar grant to talk up how wonderful Obamacare was back in 2013, as Time reports.  Now the same people are now saying: wait.  Don’t let this wonderful program which happens to be a tax disaster descend on millions.

Families USA has received a $1 million grant from the Robert Wood Johnson Foundation, which it will use to collect and distribute to the media personal stories of those who have benefited from the new health insurance exchange rolled out by the Obama Administration October 1. The announcement is good news for the President, who has been widely criticized for the horrible launch of the online marketplace healthcare.gov. …

The unsolicited donation will “significantly expand” the story bank, which is already over 950 strong, Pollack says, and allow the organization and its partner GMMB, a communications firm, to hire six new positions in Washington, DC. Pollack says that Families USA will be providing new stories for the media and others who are interested “before the month is over.” “We have a bunch of stories that are in the hopper for vetting,” adds Pollack.

The Blaze story continues: “It’s the second time in two years that the administration has extended enrollment under Obamacare. A year ago, officials said they’d give people more time to sign up because of the several glitches that the HealthCare.gov website was having.”

This time the “glitch” was in the design of the law itself. People are confused by the compexity of the penalties.  “Peter Lee, the executive director of California’s exchange, said he has seen “thousands of cases of consumers who literally walked across the street from a tax adviser” to enroll in his state’s exchange.” Nobody can keep the timelines straight, not even the administration.

Serves ‘em right, says an editorial from the Washington Post, which sees the situation as a “teaching moment” for the public, because fortunately, the government is going to give the miscreants another chance.

As Americans fill out their tax forms over the next several weeks, millions are in for a shock. Those who lacked health insurance last year but could afford to buy it will have to pay $95 or 1 percent of income — whichever is greater — to the government.

This is the first tax season in which people are being hit with Affordable Care Act penalties. Unsurprisingly, opinion polls show that many uninsured don’t yet understand the health care law’s deadlines, subsidies and fines. To many, the penalties will come as a very unwelcome surprise. …

Thankfully, the Obama administration will reopen health insurance markets from March 15 to April 30. Though many people won’t be able to avoid one penalty, at least they will have the option of avoiding another next tax season. This is a good idea that should have been part of the schedule to begin with, and HHS has the legal flexibility to make it happen. …

An extension will allow the government to turn this April’s shock into a useful learning moment rather than just a punitive exercise. The administration should now consider proposals for a permanent calendar change, aligning the opportunity to buy coverage with the incentives to purchase insurance that tax season brings.

It’s mighty generous of the administration to lobby itself to defer penalties that it, itself promulgated.  Especially since the same administration has made a hash of the tax filing process for Obamacare policy holders.  Politico reports that Obmacare programmers used the wrong year to compute the sum on forms the government sent out, thereby invalidating it.  This means the wrong forms were sent out and tax returns can’t be filed without the right ones but the new forms -- assuming there are no more glitches -- won’t be ready for some time.  It’s a perfect Catch-22.

The 800,000 Americans who’ve just gotten erroneous tax forms for their Obamacare subsidy can blame a glitch in HealthCare.gov that used the wrong year’s data for the calculations.

Or, as one government health source put it, “an intermittent defect in code” that may cause tens of thousands of people to have to refile their taxes.

Precisely how and where that mistake was made is still being investigated. Whether it was a coding error or greater technological flaw, it’s only the latest sign that HealthCare.gov still has deep troubles despite a second enrollment season that went far more smoothly than the first.

The major glitch, which officials announced Friday, is yet another embarrassment for the Obama administration — and another obstacle for people trying to work their way through the confusing first tax season under the Affordable Care Act.

Hundreds of thousands of taxpayers will have to wait for at least a few weeks to get corrected versions of the form, called the 1095-A. And up to a few million Americans probably have to log onto HealthCare.gov to find out if their form was among the botched many.

HealthCare.Gov used 2015 insurance prices when it was supposed to do math with 2014 numbers. The subsidies themselves were right, federal officials said as they revealed the mess. But the tax paperwork was not.

This has thrown a wrench into the financial plans of many Americans.  The Politico story continues and describes the effects of this “glitch” on people’s lives.

CMS said that “[a]s soon as we discovered the error, we immediately began examining who was affected, how to communicate about the error, and how to make the corrections process as simple as possible for consumers … We are focused on making sure that every Marketplace consumer understands how taxes and health care intersect and if they need to get a corrected form, the steps they need to take.”

Deputy Administrator Andy Slavitt said all of the affected individuals are being notified by phone and email and will receive corrected forms early next month. About 50,000 of those 800,000 Americans have already filed their taxes based on the wrong subsidy amount. The rest are being asked to hold off until they get the right information.

CMS said that people who need to file immediately should contact its call center or use an online tool at HealthCare.gov to identify the correct cost of the benchmark plan on which their subsidy is based.

That’s little consolation, suggested Mark Ciaramitaro, vice president of health care services at H&R Block.

“The unfortunate reality is that for many of these impacted taxpayers, the tax refund could be the single largest financial payout of the year,” he said. “For those who have not filed, through no fault of their own, they are being told to wait to file a tax return, further delaying access to their tax refund.”

A Republican Congressman ranted that it was lies, lies and more lies, one piled upon the other, as the program staggered from disaster to disaster.  Of course a political opponent would say that, but the delays and “glitches” seemed to add credence to his accusations.  After all, even Families USA is complaining.

Like most Republicans in the U.S. House of Representatives, Rep. Jim Jordan of Champaign County  is no fan of the Affordable Care Act.  And like most Republicans in the U.S. House of Representatives, he has voted dozens of times to repeal provisions of the health insurance law he calls "Obamacare."

"Obamacare was a bad bill, sold deceptively to the American people, and we've been having buyer's remorse ever since," said a statement Jordan released after a repeal vote on Feb. 3.

"From the beginning, what President Obama told Americans about his health care law proved false," said Jordan, who chairs a House Oversight and Government Reform Subcommittee on Health Care, Benefits and Administrative Rules. "In many cases, you couldn't keep your plan if you liked your plan; you couldn't keep your doctor, if you liked your doctor; the Obamacare website didn't work smoothly; the Obamacare website wasn't secure; health insurance premiums did not go down by an average of $2,500 for families.

If this snafu is a “useful learning moment” in the phrase of the Washington Post, who is it who should be learning?  Is it the harassed public who are running like rats from tax preparer to Obamacare navigator?  Or is the administration bureaucrats who created such a masterpiece that it is urgently petitioning itself for relief?

It’s a teaching moment for someone, but unfortunately, there is little openness to learning.

The Tax Train Wreck

POSTED one week ago BY HEALTH CARE COMPACT

What a mess.

There’s no other term for the current Obamacare tax woes. Yesterday California admitted that it had sent the wrong tax forms to 100,000 people.  You might ask, why do taxes have anything to do with health care?  The answer is that the administration designed it to work that way.  Now it emerges that not 100,000 but 800,000 people have been sent the wrong tax documents nationwide. That is one person out of every five who may have received a subsidy.

This adds up not only to tax trouble, but trouble for Obamacare. Incredibly, federal health officials are attributing this huge number of erroneous forms to “a coding error” and an “intermittent” problem, as if a mistake of this magnitude could be caused by a few typos.

The statements sent to taxpayers from HealthCare.gov are used to determine whether tax credits were the correct amount. The credits are pegged to the cost of premiums in a consumer’s area as well as to income for the past year. Consumers who received too large a credit must reimburse the government, and those who received too little can claim additional money when they file their taxes.

The forms contained an incorrect value for the local premium, which affects other calculations, the officials said. The government is notifying those who received an incorrect statement.

It is very difficult for consumers to know on their own whether the local premium listed on the statement, known as a 1095-A, is incorrect. Some 50,000 people appear to have already filed their taxes using incorrect statements, federal officials estimated, and a Treasury Department official said the IRS was reviewing what to do about them. The 750,000 who haven’t yet filed are being told to wait until they get corrected statements.

Federal health officials have attributed the problem to a coding error that caused some forms generated in January to include local premium data for 2015, not 2014. They said it was intermittent, and not concentrated in one part of the country."

The Wall Street Journal points out that the code used for constructing the forms used the wrong year. “Here’s where things went awry this filing season. Some forms 1095-A included the monthly premium amount of the second lowest cost Silver plan for 2015 instead of 2014. Yes, you and I know that while it’s 2015, we’re filing our 2014 tax forms – but somehow that got lost at Healthcare.gov. Those folks reported amounts for the wrong year which is why the form needs to be corrected. You’ll see the potentially incorrect amount on Part III, Column B of form 1095-A.”

No subtle error this. What is worse, the feds cannot in many cases send out the correct form until March.  And because one can’t file taxes without the right form, those who were counting on a tax refund now find their finances blocked by the snafu. The WSJ article adds, “here’s the bad news (as if that’s not bad enough already): those corrected forms should be available by early March, not in the next day or so. March. And since the information could potentially affect tax credits and therefore, tax refunds, taxpayers who received the bad tax statements are being asked to wait to file 2014 federal income tax returns.”

The New York Times argues that with so many problems being encountered and with penalties looming over the heads of millions of people who don’t even know they are headed their way, the enrollment period should be extended - by months! “Sign-ups were supposed to close this month, but the Health and Human Services Department announced Friday that it would reopen the marketplaces in 37 states for six weeks in March and April. The goal is to make sure that people who are learning about the deadlines and tax penalties for the first time won’t be shut out of coverage — and forced to pay a penalty — for a second year.”

The Times sadly cites the law’s shortcomings as the reason for this expedient and notes that Obamacare advocates have been clamoring for changes, as if the advocates hadn’t written the law themselves.  In fact Obamacare passed without a single Republican vote.  All of these shortcomings were written in by Obamacare’s architects.

The department’s decision reflects two realities: 1) Confusion about how Obamacare works remains very high. Several surveys have shown that many of the uninsured don’t understand that there are deadlines for coverage, penalties for failing to get insurance, or financial assistance that might make insurance affordable. 2) There’s a basic mismatch between enrollment season and tax season that interferes with the incentive structure of the law. The punishment for not being insured last year comes too late to sign up for this year. That means that without the special period, many people would have been doomed to pay two years’ worth of penalties.

Ironically, in spite the declaration of Valerie Jarrett that Obamacare’s sacred provisions are non-negotiable, the administration is itself the party which is changing it all the time.  And now NYT says the changes aren’t enough.  The desperation is palpable. The fallout for sending two year’s worth of penalties in the mail to voters who didn’t know the penalties existed must have set the administration’s teeth to chattering.

The Wall Street Journal delivers a restrained condemnation of the absolute disaster now unfolding.

We keep reading that ObamaCare is working beautifully—a liberal reverie interrupted only by those moments when the law is not. The latest arrived Friday, featuring another political exemption from the individual mandate.

This tax-filing season is exposing Americans for the first time to the ObamaCare command to buy health coverage or else pay a penalty—or pay maybe, kind of, to some extent. The White House carved out vast exceptions to the mandate last year to assuage its unpopularity, but a few saps are still discovering they must pay 1% of their gross income or $95, whichever is higher, for going uninsured. This remains unpopular, and thus we get calls for more regulatory improvisation. …

It is either a measure of ObamaCare’s complexity or public disrepute, or both, that the White House felt panicked enough to let off even more people from the mandate leash. The list of broad categories of mandate exemptions has reached 29 and counting, to wit: People can opt out because their state did not expand Medicaid; or if they could not use Healthcare.gov during its catastrophic 2013 launch; or if ObamaCare cancelled their old plan; or simply if they believe the new plans are too expensive. The “hardship” exemption application even includes a write-in option.

Exemptions by the score and extensions by the brace of months are the tangible signs of panic.  There is an urgent need to fix problems as they are being discovered.  But the wholesale dispatch of 800,000 wrong tax forms provokes real doubt over the basic competence of the system.

Readers will recall that the Obamacare computer system has been dogged by scandal from the first.  It was found to be sharing client data with third party providers.  A major Obama insurance participant recently lost 80 million records to Chinese hackers.  The rollout of the website last year became a epic joke.  For health officials to now claim that  800,000 erroneous records were mailed due to a coding error  strains credulity.

Where was the quality control?  Who did the data testing?  How could such a gigantic number of goofs remain undetected until the envelopes were mailed?  All that is certain is that it will muddle on until some series of events puts the whole trainwreck out of its misery.

The Devil In the Details

POSTED one week ago BY HEALTH CARE COMPACT

The devil in every scheme, it is said, is in the details.  Nowhere is this truer than in the Affordable Care Act.  The sheer complexity of this mammoth system is forcing march and counter-march among the multitudes who have been forced to buy it, and among the army of bureaucrats tasked with enforcing it.  Deadlines are announced, only to be extended - and extended again.  

The Washington Post has announced that yet another Obamacare rule affecting small business has been delayed in order to avoid the hardship it would cause.

In the latest in a long string of delays in enforcing the rules under the health care overhaul, the Internal Revenue Service and Treasury Department announced on Wednesday that they will wait until summer to start enforcing financial penalties on small businesses that provide so-called Health Reimbursement Arrangements to their employees.

Under HRAs, employers provide spending accounts that their workers can use to cover a portion of the cost of buying individual health plans. The arrangements, which give employers a tax-free means to help pay for their workers’ health costs, do not comply with insurance standards in the Affordable Care Act, commonly known as Obamacare, according to Treasury guidance issued in the fall of 2013. Consequently, employers who elect to continue offering HRAs could be fined as much as $100 per day per employee.

According to American Action Forum “the justification for the IRS’ decision to limit the availability of these plans is that while HRAs are considered ‘group plans’” for purposes of the ACA, the health benefits offered (effectively none, because the employer offers only reimbursement) do not satisfy other requirements of the ACA; specifically, the IRS states that these plans violate the Essential Health Benefits provision of the ACA, as well as the prohibition on spending caps on these mandatory benefits.”

In other words Obamacare thinks HRAs aren’t good enough and so restricts their use by levying a fine forcing you to buy one of the ACA’s own products.  Except in this case the product is unavailable so check back next year.

Officials also hinted at the fact that the new online health insurance exchanges set up under the law, which were meant to give small businesses more choices and more affordable health insurance options, haven’t quite delivered.

“The market is still transitioning and the transition by eligible employers to SHOP Marketplace coverage or other alternatives will take time,” they wrote.

And when you finally get one of these new “affordable care” products you may find it isn’t affordable and not very good either.  According to Julie Appleby of Kaiser Health News and CNN Money, one shouldn’t count on Obamacare to save one from medical bankruptcy. The basic problem, according to CNN is that the policies have to leave the consumer short in order to be cheap. If the policy actually paid for your medical care the premium would be higher than acceptable.  So the insurance companies advertise a low sticker price then riddle their policies with loopholes to welsh on the patient.  The policyholder thinks he or she is covered until they get the bill.

After Pam Durocher was diagnosed with breast cancer, she searched her health insurer's website for a participating surgeon to do the reconstructive surgery.

Having done her homework, she was stunned to get a $10,000 bill from the surgeon. …

"I panicked when I got that bill," said the 60-year-old retired civil servant who lives near Roseville, Calif.

Like Durocher, many consumers who take pains to research which doctors and hospitals participate in their health insurance plans can still end up with huge bills. …

Consumer advocates say the sheer scope of such problems undermine promises made by proponents of the Affordable Care Act that the law would protect against medical bankruptcy. …

Insurers defend the move to smaller networks of doctors and hospitals as a way to provide the low-cost plans that consumers say they want.

If regulators required them to fully cover charges by out-of-network doctors, that could reduce "incentives for providers to participate in networks" and make it harder to have adequate networks, America's Health Insurance Plans,  and the insurers' trade group.

Blue Cross Blue Shield Association wrote in a joint letter to the National Association of Insurance Commissioners (NAIC).

It would also raise premiums.

Raising the premiums would make it obvious that Obamacare is not affordable.  To keep the illusion from collapsing, the ACA tries to keep the premium price down - though it has been unsuccessful at that too - and conceals the fact that the meal ticket doesn’t buy much of a meal.

Some states have taken other steps to protect consumers:

• Colorado insurers must pay non-network medical providers their full charges, not discounted network rates, for care at in-network hospitals.

• In Maryland, insurers must pay for "covered services," which includes emergency care, but the state sets standardized payment rates.

• Starting in April, New Yorkers won't face extra bills for out-of-network emergency care, when an in-network provider is unavailable or when they aren't told ahead of time that they may be treated by a non-participating provider. Instead, the bills must be settled in arbitration between the providers and the insurance companies.

But it is all a closing of barn doors after the horse has bolted.  The States have to put in place protections against the abuses that Obamacare has enabled.  All they can do is hand out life preservers on the Titanic.  Meanwhile many small businesses are struggling with the mind-boggling delays and changes of the law.  The Washington Post article above describes their plight:

In regards to the rules in the health care law, the delay is nothing new for employers. Most notably, the Obama administration has several times pushed back the start of penalties for business that do not provide adequate health insurance to their employees, first pushing the entire deadline back one year and then last year announcing an even more gradual, tiered (by company size) rollout.

A year earlier, the administration instituted a one-year delay in enforcing rules requiring companies to report their health insurances costs on employees’ tax forms. Officials also delayed additional rules requiring owners to provide equal coverage to all of their employees, and they later postponed fines on health plans that don’t meet certain coverage criteria in the law.

At this point, the small business community has had about enough of the temporary reprieves and is calling for permanent solutions.

But it is not just small businesses that are in disarray. Even individuals who have bought Obamacare plans are finding themselves sinking in bureaucratic quicksand.  Only today Covered California sent 100,000 taxpayers the wrong Obamacare tax form, setting off a scramble to send new forms out.  This is potentially problematic because unless the correct forms are filed the IRS will start levying fines.

SACRAMENTO, Calif. (AP) -- California's health exchange apologized Thursday for sending about 100,000 incorrect tax forms last month to people who purchased private coverage, a mistake that could delay tax filings or force households to amend their taxes.

Covered California acknowledged that it sent out inaccurate coverage information on 1095-A forms and is in the process of sending out revised forms, said spokesman James Scullary. …

The mistake brings another headache for people struggling to understand the new tax penalties. The federal health care reform law requires most people to have insurance or face a tax penalty that increases each year.

The penalty for a person who makes $40,000 a year will increase from $299 in 2014 to nearly $600 in 2015. And a family of four with that same income would see fines increase from $500 to nearly $1,000.

The exchange said many of the mistakes on the tax forms were related to number of months a household had coverage. For example, the 1095-A form may have stated that a family had coverage from April through September, but the family was covered from April through October.

The state sent email and postcard notices to people who received the incorrect forms to let them know they would be receiving new forms. All updated forms should be sent out in the next few weeks, Scullary said.

Anyone who received a wrong tax form but has already filed their tax return is being advised to consult a tax professional.

These unfortunates may have to pay the tax professional to undo the mistake caused by filling out the wrong form sent to them by the government.  They may even be so unlucky as to have to pay the tax professional only to file it late and pay the penalty all the same.  If they are truly unlucky they may find that the insurance policy they purchased at such effort includes nobody in their network who can treat them.

It is complications like this that are referred to as the “devil in the detail.”  While the proponents claim Obamacare works like a dream, most of the people that are forced to live under it, know that it feels more like hell.

The Obamacare Bomb and Backlash

POSTED about 2 weeks ago BY HEALTH CARE COMPACT

Jason Millman at the Washington Post warns of a possible political backlash if millions of Obamacare insurance policy holders suddenly find they have to pay back the subsidies they received in the last enrollment period.  The word subsidy connotes a gratuity. Consumers are about to find out Obamacare subsidies are like a loan which you have to pay back.

… a new round of political headaches could just be beginning for the administration.

That's because it's tax season, and many Americans could soon be getting an unwelcome surprise that they owe the government a penalty for skipping health insurance coverage.

Up to 6 million Americans are expected to pay a penalty for not having coverage in 2014, according to recent Obama administration projections. The 2014 penalty for this tax season is $95, or 1 percent of family income — purposefully on the weaker side to let people adjust to this new coverage scheme. Most of the uninsured won't actually face the penalty because they'll qualify for an exemption, either related to their inability to afford coverage or some other hardship.

But it's likely that a lot of people who will have to pay don't know it yet. Despite the unpopularity of the individual mandate and the high-stakes Supreme Court case over it three years ago, there's still limited awareness of the penalty among those who could risk triggering it. Nearly half of uninsured Americans weren't aware of the penalty, and almost as many don't realize the law offers financial help to purchase coverage, according to a Harris Poll survey in the fall.

That means millions of people won't learn they'll have to pay the penalty until they file taxes this year, and at that point, it will have been too late to buy 2015 coverage since the enrollment deadline was Feb. 15. The minimum individual mandate penalty more than triples this year, rising to $325, or to 2 percent of income.

"It's the fact that if you didn't apply by Feb. 15, you have no way of escaping the penalty in 2015," said Stan Dorn, a senior fellow at the Urban Institute. "It's not something that a lot of people have necessarily thought through."

This has led directly to appeals from Democratic officials to extend the Feb 15 deadline in the hopes of minimizing the numbers of people who will be slugged by the penalty. California for example, is mulling extending the deadline to April 15 - two months - in order to avoid this potential backlash.  

Extending the enrollment deadline creates a perverse incentive to ignore the deadline.  John Tozzi of Bloomberg Business notes that because the effectivity of policies is reckoned from the deadline, shifting the “last day” means that insurers may be on the hook for more individuals than they reckoned with.

Giving people another two months to enroll for coverage would raise the risk for insurance companies that some people will wait to buy insurance until they need it. That's called adverse selection, and it's why health plans have limited open enrollment windows to begin with. If you could buy coverage all year round, some people would wait until they get sick to sign up, and there might not be enough healthy people paying into the risk pool to cover the costs.

"It takes somewhere from three to seven healthy people to make up for one unhealthy person when it comes to cost," says Jim O'Connor, principal and consulting actuary at Milliman. There's no telling what mix of sick and healthy people would sign up if the deadline were extended. While extra time raises the risk of adverse selection, O'Connor says, the tax penalty "might shake up some of the healthy people" who would have otherwise not enrolled. "It does have some potential for increasing costs," he says, though it would likely be a "manageable change."

But there is another, less publicized reason why enrollments are being extended.  In spite of all the happy talk about soaring Obamacare “sign-ups,” many of these fail to actually pay a premium.  The actual number of enrollees is a much lower number than signups. And there are disturbing indications - from an actuarial point of view - that many of those coming on board are elderly and infirm.

Jed Graham of Investor’s Business Daily notes that “with ObamaCare's second-year sign-up period now in overtime, it looks like paid enrollment will — barring a miracle — finish even further short of forecasts than it did in 2014.”  Significantly, young people are joining at even an lower rate than the already dismal percentages for last year.  Forty percent of the population is rated as young.  But only 24% are joining up.  This means that the people coming on board are older and sicker than the general population.

Even assuming that the 11.4 million sign-up figure announced with fanfare by the Obama administration grows by several hundred thousand during a weeklong extension, the final tally is on pace to dip below 11 million once nonpayers (15% of last year's total) are winnowed out. The Congressional Budget Office had projected 12 million at the start of 2015. ...

Officials haven't specifically said they're using the special extension because of a shortfall in young-adult sign-ups, but that might be a motivation. Data through mid-January showed that just 26% of the nearly 7.2 million people who signed up via HealthCare.gov were in the 18-to-34 age group vs. 28% during last year's open enrollment.

Minnesota, the only state disclosing its demographic mix for 2015, said 18-to 34-year-olds account for 24% of the total, below last year's 24.3%. That result may have been affected by low-cost insurer PreferredOne's decision not to offer subsidized plans on the exchange this year.

Young adults represent about 40% of the potential exchange pool. Analysts expect second-year enrollment to be somewhat younger and healthier relative to first-year enrollees, both because of the ramping up of the individual mandate and because those most in need of health care had reason to be among ObamaCare's early adopters.

Time is winding down for the exchanges to get the young and healthy on board.

Obamacare advocates are still pushing the narrative that it’s working. New York Magazine’s Jonathan Chait mounted a quixotic  defense of its cost, questioning allegations that the costs have risen. He takes particular aim at Stephen Moore, an economist at the Heritage Foundation.  Here is a sample of his rebuttal.

Moore’s argument is so incoherent that it is hard to follow, but let me try to explain. Higher health costs is not the same thing as higher federal spending on health care. Health-care costs is how much we pay for our treatments (which happens to be much more than what people in other countries pay).

The idea of “bending the curve” is that, in addition to simply paying for the cost of covering the uninsured, Obamacare would try to tame the long-term trend toward health-care inflation. That is not only happening, it is happening in a far more dramatic way than even the most optimistic advocates predicted. Medical costs are rising at the slowest rate in half a century:

Then Chait inserts this chart as proof of his argument that costs have fallen.  But the reader will note that Obamacare is now only into its second enrollment period and therefore the declines which Chait trumpets actually occurred before the ACA and most of it during the Bush administration!  How could it be due to Obamacare?  The proofs of success are thin indeed.

 

17-obamacare-graph2.nocrop.w529.h408.png

 

In actuality, arguments such as Chait’s are trumped by the simple market test.  Is the product selling?  The short answer is obviously not.  And that is why Obamacare exchanges, like department stores which have not met their sales targets,  are progressively extending the trading hours.  When a store announces it will close at 6 pm, then extends to 10 pm and is now open till midnight, and still cannot meet customer targets - like the young people quota - no amount of “explaining” by Jonathan Chait can be persuasive of success.

Obamacare is a bomb and people are running for the bunkers to avoid the backlash.

Obamacare Enrollment Much Lower Than Touted

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Cost continues to hammer at the Affordable Care Act and it is affecting acceptance.  Avik Roy has dug down into the 2015 enrollment touted to be at a record high and and found that signups have actually slowed down by 54% over last year’s disastrous Obamacare opening.  The reason: cost.  People can’t afford it and are resisting joining.

Last night, the White House tweeted that “about 11.4 million Americans are signed up for private health coverage” through Obamacare’s insurance exchanges. President Obama claims that this figure proves that his health law is working. But once you unravel the spin, what the latest numbers show is that the pace of enrollment in Obamacare’s exchanges has slowed down by more than half. If previous trends hold,  Obamacare exchanges have enrolled slightly more than 5 million previously uninsured individuals: a far cry from 11.4 million.

Roy examines these numbers points out that not everybody who “signs up” enrolls; to enroll is to pay the premium. Since only 84% of those who “sign up” actually pay, the number of people actually enrolled is much lower.  Further, Roy nets out those who had previous insurance from those who enrolled.  His conclusion: “Obamacare Exchanges Will Gain Only 3 Million Enrollees In 2015”.  That is the number of newly insured.

Why did enrollment slow down so much in Year Two? A few reasons.

First, Obamacare’s exchange-based plans are really expensive, even if you partially benefit from the law’s subsidies. In a 3,137-county study we published last year, I and two Manhattan Institute colleagues found that underlying premiums had increased by 49 percent in the average county for people shopping on Obamacare’s exchanges. (You can visit our interactive map and find out how your county stacks up.)

Second, a lot of people who signed up in Year One didn’t stick around during Year Two. For some, this could be a result of changing economic circumstances: for example, a new job with employer-sponsored health insurance. For many others, however, it’s a result of dissatisfaction with the value and quality of Obamacare-based coverage.

In plain language, Obamacare is meeting resistance because it terribly expensive even with subsidies.  Since half of those who received subsidies last year now having to pay some or all of it back, those taxpayer-funded subsidies are not all they are cracked up to be; less a gift than a loan.

Why so expensive?

Dr. Jeffrey Singer gives an example rising from his own experience.  Writing in the Wall Street Journal, Singer says he and other doctors are spending much more time filling out records than before.  Doctors see fewer patients and consequently are tempted to charge them more for less time.  They have become HHS bureaucrats, and as with all bureaucracies, the cost of doing business rises.  Doctors are no different. Add bureaucracy to the mix, and to stay afloat, they must increase prices for the patients they still have time to see.

A 2014 survey by the industry group Medical Economics discovered that 67% of doctors are “dissatisfied with [EHR] functionality.” Three of four physicians said electronic health records “do not save them time,” according to Deloitte. Doctors reported spending—or more accurately, wasting—an average of 48 minutes each day dealing with this system.

That plays into the issue of higher costs. The Deloitte survey also found that three of four physicians think electronic health records “increase costs.” There are three reasons. First, physicians can no longer see as many patients as they once did. Doctors must then charge higher prices for the fewer patients they see. This is also true for EHRs’ high implementation costs—the second culprit. A November report from the Agency for Healthcare Research and Quality found that the average five-physician primary-care practice would spend $162,000 to implement the system, followed by $85,000 in first-year maintenance costs. Like any business, physicians pass these costs along to their customers—patients.

Then there’s the third cause: Small private practices often find it difficult to pay such sums, so they increasingly turn to hospitals for relief. In recent years, hospitals have purchased swaths of independent and physician-owned practices, which accounted for two-thirds of medical practices a decade ago but only half today. Two studies in the Journal of the American Medical Association and one in Health Affairs published in 2014 found that, in the words of the latter, this “vertical integration” leads to “higher hospital prices and spending.”

The bureaucratic bloat goes beyond the doctor’s office. It runs straight into tax time. “Those who purchased coverage through ObamaCare's exchanges will get a lot more ornery come tax time this spring. They'll have to fill out a new and extraordinarily complicated form — the instruction booklet runs 21 pages — that directs them to do things like ‘add allocated amounts across all allocated policies with amounts for non-allocated policies from Forms 1095-A, if any, to compute a combined total for each month.’"

Here’s the catch.  Form 1095-A is only now being mailed out.  You can’t really do your taxes until you get it. And many don’t have it.

"It's not optional," said Lautigar … a CPA and franchisee of H&R Block in Chattanooga. "I've been doing taxes for 20 years, and this is easily by far the biggest change and the most complicated process to add to tax return since the late 1980s. It's a whole new world."

The problem is that many people are rushing to file their taxes, unaware that they need to include forms that may not arrive in the mail until early February.

"The majority of these people do not even know it's coming," Ridge said. "Our biggest, loudest message is, 'Wait for 1095-A. Don't do your taxes without it.'"

The Obamacare maze has been a windfall for tax preparers, like H&R Block. Securities analyst Gil Luria believes Obamacare “would yield as much as $104.25 million in additional revenue for the company this year.”  Medical debt is not something one associates with a person “covered” under Obamacare.  But as Marisa Torrieri at Forbes writes higher costs, coupled with high deductibles and premiums mean that you will often walk away from a hospital owing money - even if you’re insured.

Exacerbating the issue is that even if you upgraded your insurance coverage this year—or plan to do so before open enrollment season ends in a few days—there are many factors at play when it comes to health care costs that it’s nearly impossible to predict what your expenses (or debt) could add up to. ....

In only the second year of the Affordable Care Act, the average premium for individual health plans bought on the open market rose by 5.4% to $389 per month, according to data from Pricewaterhouse Coopers.

And those who had job-based coverage didn’t escape the bite, either. The Kaiser Family Foundation reports that premiums for employer-sponsored health plans have increased by 26% over the past five years, while the average employee deductible has risen 47% since 2009. …

“And a lot of consumers are having to go with a much higher deductible than they used to, or they’re getting underinsured [to save money],” says Pat Palmer, founder of Medical Recovery Services, a firm that helps consumers analyze their health care bills for inaccuracies. “A family may have to get a $10,000 deductible just to afford their premiums, but they’re stuck with the bill [if something bad happens].”

Not only has the Affordable Care Act failed to rein in costs, it has added to them.  The result is Obamacare is simply recycling taxpayer money into the hospital system.  It’s not helping consumers as much as inflating the bills and giving patients a little extra to pay the bloat.  

The American Interest notes the case of Iowa Obamacare seller CoOpportunity Health.  The more policies it sold the deeper in the hole it got.  “The New York Times reports on what happened next:”

Its success apparently helped doom it. CoOportunity’s many customers needed more medical care than expected, according to Nick Gerhart, Iowa’s insurance commissioner, and it had priced its plans too low. After taking control of the co-op in late December, Mr. Gerhart decided last month that it could not be saved and asked a court to liquidate it. The co-op, he said at the time, faced more than $150 million in liabilities. That left its customers scrambling for new coverage, and providers wondering if millions of dollars in outstanding claims would ever get paid.

As John Tozzi writes in Bloomberg Business, you have to insure people who don’t need it to make the policy work.  “‘It takes somewhere from three to seven healthy people to make up for one unhealthy person when it comes to cost,’ says Jim O'Connor, principal and consulting actuary at Milliman. There's no telling what mix of sick and healthy people would sign up if the deadline were extended. While extra time raises the risk of adverse selection, O'Connor says, the tax penalty ‘might shake up some of the healthy people’ who would have otherwise not enrolled. ‘It does have some potential for increasing costs,’ he says, though it would likely be a ‘manageable change.’”

Obamacare policies can be money losers even for insurance companies. The only way to escape the bankruptcy which overtook CoOpportunity is to raise premiums, narrow the networks and increase the deductibles.  In other words sell mediocre insurance to carry those with pre-existing conditions. This is exactly what many insurers are doing.  Is it any wonder that, after the spin is peeled away, Obamacare enrollments are actually slowing down?

The fundamental problem with the Affordable Care Act is that it has not significantly increased competition, nor made health care delivery markedly more efficient.  It has not “bent the cost curve,” but instead has just thrown a slug of money at the problem and imposed massive bureaucratic costs besides.  The arithmetic is beginning to drag it down.  The biggest enemy of Obamacare isn’t the Republicans.  It is economics and common sense.

Why Medicaid Expansion is Not More Popular

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Margot Sanger Katz of the New York Times wonders why the Red States can’t be bought off by “free federal money” when by her reckoning they should be.  There’s no explaining it, except through an irrational aversion to progress amounting to a bigotry against change.

In places where the uninsured rate plummeted this year, Republicans still scored big electoral victories.

Arkansas, Kentucky and West Virginia — states that saw substantial drops in the proportion of their residents without insurance — all elected Republican Senate candidates who oppose the Affordable Care Act. Control of the West Virginia state House of Delegates flipped from Democrats to Republicans. And Arkansas elected Republican supermajorities to both houses of its legislature along with a Republican governor, a situation that could imperil the Medicaid expansion that helped more than 200,000 of its poorest residents get health insurance.

Katz was not alone.  President Obama himself was also wondering why more birds didn’t emerge to eat out of his hand.

Obamacare would be working well if more Republicans were like Ohio Gov. John Kasich, President Obama told Vox.com in an interview released Monday.

“The good news is that in dribs and drabs, much as was true with the original Medicaid program, you’re starting to see Republican governors and Republican state legislatures realizing that, ya know, ‘We’re cuttin’ off our nose to spite our face — we got an ideological objection to us helping our own constituencies and our own healthcare systems,'” Obama said.

“To their credit, you got folks like John Kasich in Ohio and (Gov. Rick) Snyder in Michigan and now, most recently, the governor up in Alaska and others who are saying, ‘Ya know what, this is the right thing to do, let’s go ahead and expand it.'”

It’s a well-known fact, according to Nicole Kaeding of Cato Institute, that “governors love federal funding.” “Democratic and Republican governors alike are showing their penchant for ‘free’ federal dollars by supporting expanded Medicaid roles in their state. Republicans governors—who often say they dislike Obamacare—are in many cases pushing their legislatures to expand Medicaid to take advantage of this windfall.”

The birds see the nuts and seeds spread on the ground and are drawn to them. Republican governors commonly disguise “collaboration” with Obama by contriving a local brand version of Medicaid expansion to conceal the fact.  Sometimes they get to peck at the seed.  At other times political forces drive them away.

GOP Governor Bill Haslam in Tennessee announced that he would support Medicaid expansion. His administration promoted the plan by saying, “Insure Tennessee will leverage the enhanced federal funding which will pay for between 90 and 100 percent of the cost and in doing so will bring federal tax dollars Tennesseans are already paying back to the state.”

To help minimize the state’s contribution and maximize federal funding, Haslam decided to expand the state’s health provider tax. Under a provider tax, a state agrees to increase Medicaid reimbursements to the providers paying the tax, such as hospitals. The higher reimbursement level draws a higher federal contribution. So state politicians and hospitals win, but federal taxpayers lose.  

In this case, luckily, Tennessee’s legislature denied Haslam’s  expansion attempts.

Governor Mike Pence in Indiana is pushing for Medicaid expansion, dubbing the program “Healthy IN Plan 2.0.” Governor Pence received an “A” in our Fiscal Policy Report Card on America’s Governors last year for his tax-and-spending restraint. But his decision to expand Medicaid to include working-aged, able-bodied, childless adults sends a very different signal.

Governors Pence and Haslam aren’t the only two Republicans wanting to expand Medicaid. Wyoming Governor Matt Mead said that by rejecting Medicaid expansion the legislature is “rejecting $120 million dollars meant for Wyoming.” Governor Gary Herbert of Utah has said that Medicaid expansion allows “Utah [to bring] taxpayer dollars back to our state.” More than 10 Republican governors support Medicaid expansion, many using this same sort of rhetoric.

When you come right down to it, almost nobody says “no” to money.  But of course everybody knows “free money” isn’t really free.  It is actually your own money and the bill will come back to bite you. So some politicians stay away notwithstanding the temptation. Kaeding writes about this phenomenon and why it is important:

These governors justify their actions by claiming that it will return tax dollars to their states. But Medicaid spending is not a fixed pie. The more that each state expands its program, the more that the nation’s taxpayers will be hit.  Federal expenditures are funded based on the matching percentage. It’s not true to say that if Tennessee doesn’t expand, that the money goes to California. Instead, if Tennessee doesn’t expand, then the money isn’t spent and taxpayers keep more of their earnings.

As I’ve discussed before, expanding Medicaid is also a risky proposition for state budgets, which some Republican governors do not seem to understand. They boast their fiscal conservatism, but their recent actions on Medicaid expansion come at the expense of a larger burden on the nation’s taxpayers.

The bribe has not worked as well as intended in part because there is enough grassroots opposition to Obamacare to remind the Republican governors that these dodges are transparent.  The answer to Margot Sanger Katz’s question about why Red States and voters still won’t take the money is that they are much smarter than Ms. Katz thinks they are. Most of the electorate understands that they will pay for the “free money” out of their own pockets anyway, and that the “free money” always comes with federal strings attached.

The Republican governors, for their part, have refused after making the cynical calculation that because Obamacare is doomed they will inevitably share its fate if they board. And even rats won’t go down with the Titanic, not if they can help it.  Medicaid expansion dollars are only one part of the equation.  Obamacare also has certain inherent liabilities that politicians are eager to avoid.  The Cadillac Tax is one, as Fox News reports:

A national business group representing the nation’s large employers reported Wednesday that companies desperate to avoid a 40 percent ObamaCare “Cadillac tax” are finding ways to shift the costs to workers.

The so-called “Cadillac tax,” now four years away, will affect health plans that spend more than $10,200 per worker.

“The excise tax, when it hits in 2018, will affect both employers and employees,"said Brian Marcotte, president of the National Business Group on Health.

Employees will get incentives to reduce costs through such arrangements as wellness programs, including losing weight or stopping smoking.

Meanwhile, employers are shifting workers into plans with higher deductibles, just as ObamaCare does in the health care exchanges, and using health savings accounts to help defray the costs.

Another cost saver, Marcotte added, is to increase premiums for spouses who have access to other plans.

Take it and you will be damned. Bribes are always tempting, but they will be refused if they’re not worth running a foreseeable risk.  Getting on the Obamacare wagon is a definite risk.  Most of those who voted for it were evicted from office.  The Republican governors know this.  They may be attracted by the money, but the intelligent and principled ones will stay their hand, knowing that to grasp the bills is to accept the dire consequences.

The Immutable and Ever-Changing Obamacare

POSTED 2 weeks ago BY HEALTH CARE COMPACT

The Affordable Care Act has reached a critical crossroads.  On the one hand the White House has signaled that it will not allow any modifications to the law.  But on the other hand the same White House is furiously changing the law and is under even more pressure from Democratic lawmakers to alter it further.

Standing like a stone wall against Obamacare change is Valerie Jarrett, who declared that the president will not see his handiwork amended.

In an interview on NPR's "Morning Edition," Jarrett was asked if there is "anything that you can name" in the law that the administration would be willing to compromise on. "That's kind of a theoretical question," Jarrett responded. "When you say 'compromise,' no, we're not willing to compromise on providing access to affordable healthcare for all Americans." …

"You can't cherry pick," she said. "You can't just say, 'Yes I want everybody covered if they have a pre-existing condition, but no I'm not going to require everybody to have coverage.' The numbers don't work that way."

But cherry-picking was exactly what Congressional Democrats were urging the president to do. They wanted exceptions and extensions to the individual mandate penalties at the heart of the law. Without more exceptions and extensions millions of Americans woiuld have to pay large penalties in accordance with Obamacare provisions and that spells political poison.

WASHINGTON (AP) -- The official sign-up season for President Barack Obama's health care law may be over, but leading congressional Democrats say millions of Americans facing new tax penalties deserve a second chance.

Three senior House members told The Associated Press that they plan to strongly urge the administration to grant a special sign-up opportunity for uninsured taxpayers who will be facing fines under the law for the first time this year." …

The three are Michigan's Sander Levin, the ranking Democrat on the Ways and Means Committee, and Democratic Reps. Jim McDermott of Washington, and Lloyd Doggett of Texas. All worked to help steer Obama's law through rancorous congressional debates from 2009-2010.

The lawmakers say they are concerned that many of their constituents will find out about the penalties after it's already too late for them to sign up for coverage, since open enrollment ended Sunday.

That means they could wind up uninsured for another year, only to owe substantially higher fines in 2016. The fines are collected through the income tax system.

This year is the first time ordinary Americans will experience the complicated interactions between the health care law and taxes. Based on congressional analysis, tax preparation giant H&R Block says roughly 4 million uninsured people will pay penalties.

Up to half of those who received subsidies may have to pay them back in whole or part.  This means trouble and the only way out is to change the rules on the fly.  The regime of exceptions is in such flux that last minute reprieves could not be communicated to tax preparers and software in time to mitigate the anger of those being slugged by fines.  

The administration is thus caught in a dilemma.  On the one hand it wants to hold a hard line against any Republican attempt to change so much as a line in the law, yet on the other hand the administration itself is compelled to alter it all the time --  sometimes so quickly that no one can keep up -- in order to avoid political disasters of its own making.

As tax season begins conflicting rules over the tax penalties for Obamacare are plunging millions into confusion, especially the working poor who are not eligible for subsidies but do not make enough to afford a new healthcare insurance policy. The confusion has left millions scrambling for ways to avoid fines they cannot afford. …

Adding to the confusion, the federal government is creating new exemptions to help those who fall in the gap, but many tax preparers may be unaware of the new rules.

The quickly evolving rules may also be absent from some online tax programs that many use to file.

The trouble with all these ad hoc changes, as health insurance professional Patrick Paule notes, is that it multiplies rather than reduces the problems of the law. Paule lists five legal ways people are now scamming Obamacare caused by imperfections in the current statute.  Most of these exploit the enrollment period -- the very period which the Democratic lawmakers want extended.  By extending the period or adding exceptions, the operation of the law becomes even more complicated than it already is.  

To see this clearly, let us examine one representative legal dodge which Paule describes, the so-called “Buy Nine, Get Three Free” loophole.

Under Obamacare’s individual mandate, you can go 90 days without insurance before you have to pay any amount of the individual shared-responsibility tax. When combined with open enrollment that runs from mid-November to mid-February, this 90-day window allows individuals to hold off on paying premiums in December, January, and February. They can then submit a new application at healthcare.gov by February 15 and begin coverage on March 1.

Of course, this assumes you stay healthy. However, because Obamacare also allows a 90-day grace period, if you become ill or injured during that time, you have the ability to pay the back premiums and there’s no lapse in coverage.

What happens when you extend the open enrollment period, as Democrats Levin, McDermott and Doggett have asked?  It could create unintended consequences that no one quite understands. Does“Buy Nine, Get Three Free” become “Buy Eight, Get Four Free” under extended enrollment?

And remember there are four more loopholes that Paule enumerates.  Obamacare is on the one hand represented by Jarrett as an immutable, majestic legal structure.  But in reality, the law is being made up as it goes along, so that it resembles a house of cards delicately piled one on the other.  Moving one card could cause the entire structure to become unstable.

As if to make matters more interesting a number Republican governors have, like Jarrett, sworn not to alter Obamacare -- in order to kill it!  An upcoming case in the Supreme Court may prove that the law is unworkable as written because of what the Democrats call a “typo”.

(Reuters) - Five Republican state governors say they will not rescue a crucial part of Obamacare if it is struck down by the Supreme Court, underlining the prospect for a chaotic aftermath to a ruling that could force millions of Americans to pay much more for coverage or lose their health insurance.

The Supreme Court is due to hear opening arguments in the case known as King v. Burwell on March 4, marking the second major challenge to President Barack Obama’s Affordable Care Act (ACA) after the justices ruled in 2012 against a claim that it was unconstitutional. The latest case tests the tax-credit subsidies at the core of Obamacare.

In its ruling expected by June, the high court could bar the federally run insurance marketplace from providing the subsidies in at least 34 states. That could throw the insurance system into turmoil as states respond in starkly different ways.

In response to Reuters' queries, spokespeople for the Republican governors of Louisiana, Mississippi, Nebraska, South Carolina and Wisconsin said the states were not willing to create a local exchange to keep subsidies flowing. Republicans argue that Obamacare is unacceptable government intervention that raises costs for consumers and businesses.

Should the US Supreme Court rule against the government in King vs Burwell, the ACA could still be saved by what Brian Beutler of the New Republic called a “one sentence” to undo the so-called error. “If Congress were to pass a one sentence bill affirming what everyone knows, it would moot the case, and thus end the uncertainty.”  Alternatively, the Republican governors could work around a possible Supreme Court decision by patching things up on their own. In either case the Republicans would have to change the unchangeable law in order to save it. In a supremely ironic strategy, the Republicans could bring down Obamacare simply by not changing it and letting it collapse under the weight of its unremediated defects.

But this is silly. No law can be simultaneously immutable and constantly changing at the same time.  Obamacare is just a law, and laws get amended or repealed all the time.  Efforts by the administration to raise this statue to the level of a constitutional provision or bedrock legal doctrine can only create the absurdities we see now.

The reality is that Obamacare has become the subject of a power struggle between two conflicting political principles in American life.  It has become a kind of litmus test that has divided and will continue to divide the political landscape. It has all the potential of being frozen into a standoff.  In that  gridlock, every health policy holder will be frozen into dysfunction.

The only feasible way out of the dilemma is to take the problem out of Washington.  If health care decisions were left to the states then some actual progress would be possible.  This is what the Health Care Compact proposes. The HCC alternative will look increasingly better the longer gridlock continues.  Health policy is trapped by Washington’s madness.  Only by leaving the asylum is there any hope for progress.  That means the Health Care Compact is the last best hope of truly affordable health care.

Obamacare the Healthcare Edsel

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Obamacare has launched an unprecedented promotional campaign in the last weeks of its open registration.  The best known effort is a video that features President Obama making faces at himself in the mirror, pretending like he can’t correctly pronounce the word “February,” and taking a bunch of selfies with a selfie stick.  The ad was yet another attempt to attract younger people into his program.  CBC characterized it as a video that is “found exclusively on Buzzfeed's Facebook page,” and “essentially Obama's humour-infused way of promoting healthcare.gov while reminding young Americans of the upcoming Feb. 15 Obamacare enrollment deadline.”

But that’s not all.  Obama’s team also invoked God, and took out space in church bulletins to push its health care exchanges.

In an effort to sign up as many consumers as possible for insurance under the Affordable Care Act (or Obamacare), the Obama administration has gone to extraordinary lengths to partner with churches and other faith-based groups, even publishing sample church bulletin inserts, flyers, and scripts for announcements, as well as "talking points." These materials are part of the "Second Sunday & Faith Weekend of Action Toolkit," which is available on the website of the Department of Health and Human Services (HHS).

No stone has been left unturned. The government has already spent $700 million promoting Obamacare, and this last surge of spending is still aimed at attracting “the young invincibles” who continue to hold out from the Affordable Care Act.  As the Wall Street Journal points out, young Americans just aren’t that into the President’s signature legislation.

The White House also teamed up with Electronic Sports League, the online gaming group, for a public service announcement. Meanwhile, the health law’s backers are holding events at colleges, bars that feature rock bands and cafes in Ohio, Illinois, Pennsylvania and other states.

Ahead of the main sign-up deadline on Sunday, the Obama administration appears on track to reach its overall goal of enrolling between 9 and 10 million people in health plans through the federal and state exchanges by the end of this year. But the administration will likely have a way to go to get the number of 18 to 34-year-olds and Hispanics that supporters of the law ultimately hope to reach.

In fact, despite the gimmicks, the promotions do not seem to have budged the needle insofar as young people are concerned. “The mix of enrollees is remarkably similar to last year,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. The fundamental problem the administration faces is that Obamacare is a rip-off for the young, who are seen in actuarial terms as cash cows to pay for the expenses of the elderly and uninsurable.

In other words, they don’t get value for their money. As CNBC pointed out in early 2014, the Obamacare system blatantly overcharges this age group. President Obama’s Rube Goldberg Machine is simply not the kind of insurance most of them would want in a rational world.

Obamacare could require far too much expense and provide too few benefits for the percentage of healthy young-adult enrollees to rise, according to a new analysis.

Consumer price comparison site NerdWallet said its analysis suggests that healthy younger adults who go without insurance could on average spend up to five times less on health care than those who sign up in Affordable Care Act plans.

The site predicts that, despite a legal mandate to obtain coverage, many young adults will remain uninsured in 2014 because it is cheaper for them to pay their medical bills than to buy insurance.

However, they are the kind of clients Obamacare needs, because young people rarely get sick, meaning they use fewer health care resources. Therefore, their premiums are pure gravy.  The more young people, the more gravy. This fact is what really accounts for the reluctance of this demographic to sign up, gimmicks or not.  

Recently Cornell University was in the news when its students protested the imposition of a $350 penalty on all who refused to join the university’s $2,352 health plan -- even if they already had insurance. It was Obamacare in microcosm and this time it was too glaring to hide. The young are beginning to see themselves as “wallet fodder” whose only value to the administration is whatever money can be squeezed out of them.

Advertising can promote products but it has limits. Students of Madison Avenue will may recall the ill-fated debut of the Edsel automobile.  Although heavily promoted, it bombed because word went around that the car was a turkey.  From that point onward, no amount of glaze, basting, cranberry sauce, or stuffing could sell the Edsel.

In November 1956, Ford settled on a name for its new line of mid-priced automobiles: It would be called the Edsel, after the son of the firm’s founder. Launched the following September, the Edsel was an utter flop, and has since become an exemplar of a product gone wrong, of how seemingly omnipotent firms and advertisers can be laid low by grass-roots consumer antipathy.

Documents held by the Hagley Library help make sense of the Edsel debacle. Two months after the Edsel’s launch, Ford hired Ernest Dichter, then the nation’s leading market-research analyst, to help the company determine how to increase sales. Dichter's frank assessment, laying out the extent of the Edsel’s troubles, offered only a few glimmers of hope for the company.

The Edsel, he bluntly told Ford, suffered from "a bandwagon in reverse" with a "quite negative” word-of-mouth campaign. Edsel owners seemed not only unenthusiastic but even embarrassed by their choice. "I guess I just don’t talk about my cars much," one told Dichter, but "it seems I talk even less since I got an Edsel." Another complained that if he told others about buying an Edsel, "they make a wisecrack and that’s it."

Obamacare is an Edsel. Despite all efforts to promote it, consumers have come to realize it’s everything its critics predicted. To top it all off, the Obamacare mandates are enforced by the IRS, i.e. America’s favorite, most trusted government agency.  Even the Washington Post, which is a notorious cheerleader for Obamacare, could hardly find anything better to say about it other than “win some, lose some.”  Describing the plight of the “29ers” - people forced into part-time employment by Obamacare’s rules - all the Post could muster was the deeply philosophical observation of, “meh.”

All policy changes create winners and losers. If some part-timers lost hours, other members of the labor force probably benefited: Specifically, workers formerly locked in to full-time jobs by their need for employer-provided health insurance have been freed to find other employment situations that better suit their families’ needs, since they can get coverage on new exchanges. In other words, their overall welfare improved, even as their work and wages may have declined.

Never mind that the Post completely misses the point that every iteration of intrusion by the federal government into health care policy creates a new cycle of winners and losers, upending real people’s lives every time it the feds step in.  That is what happens in the real world when federal bureaucrats and politicians take control of an individual’s private health care choices.  Remember, the Obama administration and all of the law’s supporters breathlessly told us that the promise land lay just around the corner.  No more expensive insurance.  No more uninsured people.  No more being at the mercy of insurance companies.  No more losers.  We would all belong in the winners circle this time.  This time would be different. Except when it wasn’t.  No matter what sort of weird, indifferent response super-supporters like the Washington Post give for the anemic response to Obamacare, the truth is that when a program is as fundamentally flawed as Obamacare, no amount of hip advertising, Presidential selfies, or Pajama Boys are going to fix it.

The Economics of Loss

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Merrill Matthews at Forbes notes the parlous condition of the cooperatives that attempted to write Obamacare policies. The idea was to cut the greedy insurance companies out of the equation.  The cooperatives then proceeded to lose money.  It is doubtful whether many will survive.

As the Washington Post explains, “The co-ops differ from traditional insurers in their nonprofit status, consumer focus and organizational structure; they will be governed by boards controlled by policyholders.” …

S&P writes: “All but one of the [23] co-ops included in our study reported negative net income through the first three quarters of 2014. … Most co-ops’ weak operating performance is a result of high medical claims trend and not enough scale to offset administrative costs. … In fact, nine of the co-ops (including CoOportunity Health) reported a MLR [i.e., medical loss ratio; the claims compared to premiums] of 100% or more through September 2014.”

In short, the co-ops are leaking money faster than an Obama green energy project, or Obama’s student loan program. Some are even spending more on claims than they’re receiving in premiums—the MLR—and that’s before any administrative costs.

The Daily Signal reports that these coops cost the taxpayer an average of more than $17,000 per enrollee. “More than 500,000 people enrolled in health plans offered by nonprofit insurance companies created under the Affordable Care Act. And with the co-ops receiving an average of $108.7 million from the federal government, taxpayer-backed funding per enrollee topped $17,000.”

The Health Republic Insurance of Oregon coop spent $44,297 taxpayer dollars per enrollee.  And they’re still going broke. Modern Healthcare reports that the Oregon cooperative is performing worse than a recently closed Iowa cooperative.

Last month the Iowa Insurance Division ordered the closure of CoOportunity, one of 23 not-for-profit co-op insurance companies funded by the Affordable Care Act. The healthcare law created the co-ops as an alternative to the politically charged public option and to foster competition in the individual marketplaces. …

Eleven co-ops—Arches Health Plan in Utah, Colorado HealthOP, Community Health Alliance in Tennessee, Consumers Mutual Insurance of Michigan, Evergreen Health Cooperative in Maryland, Health Republic Insurance of Oregon, HealthyCT in Connecticut, Land of Lincoln Health in Illinois, Meritus Health Partners in Arizona, Minuteman Health in Massachusetts and Nevada Health CO-OP—had net loss-to-surplus ratios that were worse than CoOportunity's. That means their net losses represented a larger portion of their remaining funds compared with CoOportunity's, as of Sept. 30.

What this suggests is that Obamacare operates at a loss.  Without ancilliary forms of business to make money “downstream” or in related services, they are selling below the cost of goods. The more enrollees the cooperatives bring in, the deeper in the hole they go.  Scott Gottlieb notes that some of the big insurance companies are also going to lose money unless they get bailed out through the “risk corridor” program.

Some of the biggest health insurers are baking faulty math into their earnings forecasts by factoring in payments from Uncle Sam that may never materialize.

At issue are risk-sharing arrangements contained in Obamacare that are meant to help offset losses insures might take as the program gets started. Collectively, these programs have become known as “the three Rs” because of their three elements.

The first component is risk adjustment — a mechanism for transferring funds from plans that enroll low-risk members to plans that attract high cost enrollees. The second piece is a reinsurance scheme. The government will cover a percentage of the losses for high cost enrollees whose medical bills fall above a certain threshold.

It’s third element – the risk corridors — that’s likely to cause the earnings woes.

The idea here is to share the financial risk with Uncle Sam. If the actual medical claims for any individual Obamacare plan fall above or below 3% of some target amount, then the health plan will keep all the gains or losses itself. Here’s the rub. For anything outside that threshold, Uncle Sam will split the money with the health plan, essentially capping their upside and protecting their downside. Specifically, for the first 5% of gains or losses, the government will split it 50/50 with the plans. For anything above that, the government will take 80% of the extra gains or losses.

But these bailouts are going to be challenged in court and by the new Republican majority. Anything that upsets the gravy train will cause catastrophe, because without taxpayer dollars the insurance companies will lose money just like the cooperatives.  Obamacare is a net financial loser. Gottlieb writes that the simple problem is that everyone involved in it needs a bailout because it is not internally turning a profit.  

The controversial wrinkle is this: By the estimation of many, the program was intended to be budget neutral – basically paying for itself by transferring money from insurers that made profits to those that did not. The problem was that there weren’t enough Obamacare plans making money to fund the kitty. So like many other parts of Obamacare, the President re-interpreted the rules, and said that the risk corridors could be funded off taxpayer money that was skimmed from other programs. In other words, the monetary obligations would become open ended.

Thus the only way to keep the cooperatives or insurance companies from losing money is to make sure the taxpayers lose money -- through higher taxes, so the bailouts have to go on forever.  It is either that or raise the premiums or narrow the networks.  It’s that simple.  The kind of store Obamacare is sold through doesn’t matter.  The product itself is sold at a loss. The more you sell, the more you lose.

Recently Cornell University evoked the problem of Obamacare in miniature when it decided it had to charge students who opted out of the university health care system a penalty, even if they already had insurance.  The reason the university gave was cost.  The costs were too high to support unless they raised prices.  This is exactly the dilemma of the Affordable Care Act. It can’t continue without either a perpetual bailout or constantly rising prices.

The Revolt Against Healthcare Costs at Cornell

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Cornell students followed in the footsteps of the Harvard faculty, who recently felt the financial lash of Obamacare personally.  Readers will recall the uproar in Harvard after previously generous health benefits were reduced by the so-called Cadillac Tax.

The problem students at Cornell faced was ‘noncompliance’ with a new standard.  The students protested when told they either had to join the University’s $2,532 Student Health Insurance Plan or pay a $350 penalty -- even if they already had previous insurance.  Some pundits argued the new impositions were brought about by Obamacare.

Skorton said in the Feb. 5 statement Cornell’s health services funding has been “strained” in light of rising health insurance costs. Additionally, students will have a $10 co-pay for visits to the campus’ health center, Gannett.

The rise of health insurance costs is a perpetual trend in the marketplace, and the rising costs specifically at Cornell are a secondary result of the Affordable Care Act, Ed Haislmaier, a health policy researcher at the Heritage Foundation, told The College Fix in an interview.

“From a health policy analysis, [Cornell] has a health center that offers more than a nurse,” Haislmaier said. “They are in the healthcare delivery business now, and that is a fixed cost.”

Cornell’s argument is that many of the student’s health insurance policies are not up to standard -- an argument also put forward by the Affordable Care Act to cancel older insurance policies.  “Dr. Janet Corson-Rikert, associate vice president for campus health and director of Gannett Health Services, pointed to many students with high-deductible plans or with health networks that work well in their hometowns, but do not provide the same coverage while in Ithaca,” said the Ithaca Journal.

The University did not connect its new expenses to Obamacare but argued its health facility had gradually been falling into debt.  “The university said it racked up debts over the years by increasing services at Gannett Heath Services. To pay for the expanded services, Cornell said it relied first on gifts and reserves, and then funds borrowed internally to cover costs.”

Without those investments — and the fee to be instituted in the fall — certain services would have been cut, or students charged more at the time of care, according to Murphy. Those alternatives were unacceptable, she said.

The new funding model relies on continued use of central university funds while extracting more contributions from students. Those with SHIP coverage will contribute more through their premiums, along with the upfront fee paid by the approximately 70 percent of undergraduate, 30 percent of professional and 10 percent of graduate students not enrolled in the plan.

The most interesting aspect of Cornell’s new policy is that it charges people to opt of out its system. It’s an like charging people who don’t want to eat an in a restaurant a fee for not eating there. It resembles the Individual Mandate of Obamacare where people are forced into the system to make its cost model work.

But the Individual Mandate is licit because the Supreme Court ruled it a tax. Since government has the power to tax, it can impose the mandate.  The question is where Cornell gets a power to tax, considering that it is not a government.  The argument of both Obamacare and Cornell seem to be “we have to increase the fees or we can’t afford to give you free health care”.  This is an absurdity. Nothing in “health care reform” seems to have reduced the cost of service delivery.  On the contrary, it has apparently increased them.

Under these circumstances, how can “Affordable Health Care” be affordable?  And how can students, who are famously impecunious, ever survive the requirement to meet the expectations of the health bureaucrats?

Blaming Staples for the 29ers

POSTED about 3 weeks ago BY HEALTH CARE COMPACT

President Obama has discovered the 29er phenomenon and has decided to blame the victims for it.  The term is explained by economist Casey Mulligan, who blogs at the New York Times.  In early 2014 Mulligan wrote:

A “29er” refers to someone working 29 hours per week, the maximum that an hourly employee can work and still be considered part time by the federal government, as defined under the Affordable Care Act.

Before 2014, when the new federal definition took effect, Census Bureau data suggest that hardly anyone worked exactly 29 hours a week: about one in 1,000. Only six in 1,000 worked 26 to 29 hours a week. …

Part-time employees do not create a health-insurance requirement or a penalty for their employer, which gives large and small employers an incentive to reduce at least some employees’ hours to 29 hours. A number of employers plan to do exactly this.

But the incentives are not limited to penalty avoidance by employers, and began this month. Employees in families with income of less than 400 percent of the poverty line will lose access to generous federal subsidies if they make themselves eligible for employer health coverage by working full time at an employer that offers coverage to such employees.

Andy Pudzer, who runs the Carl’s Jr restaurant chain wrote in January of 2015, “among the Affordable Care Act’s many economic and political disruptions, the law has unintentionally encouraged employers to convert full-time jobs into part-time jobs.”

Obamacare has caused millions of full-time jobs to become part-time, imposed a tax on lower-income workers who cannot afford it, forced millions of people out of insurance they liked, restricted access to doctors for millions of others, and created an enormous bureaucracy that discourages our doctors and nurses while suppressing health-care system innovation.

Even Politifact agrees the 29er phenomenon is real, although Louis Jacobson tries to say it only affects hundreds of thousands, not millions.  So what does president Obama do? He blames people for being affected by his policies.  Kevin Williamson at the National Review argues that you can’t blame people for obeying the Law of Supply and Demand:

Staples, which is in the process of acquiring former rival Office Depot, became a topic of national conversation this week when Barack Obama, speaking to Buzzfeed, denounced the company for allegedly chopping part-timers’ hours in response to the Affordable Care Act, a.k.a. Obamacare, which requires that firms pay for health insurance for employees putting in more than 30 hours a week. At the end of 2013, Staples put out a policy informing managers that no part-timer should be scheduled for more than 25 hours a week; Buzzfeed, which is big on the Dickensian-state-of-Staples-employees beat, claims that “Staples Threatens to Fire Staff for Working More than 25 Hours a Week,” but that isn’t exactly right, either: One store manager did post a notice making that threat, but that’s not the same thing as a corporate policy. Staples claims — unpersuasively — that this is a decade-old, pre-ACA rule, even though Staples “talking points” distributed to managers in 2014 identify it as a new policy. Staples is pretty clearly drawing a line in the managerial sand here, and part-timers are going to be on the less-than-25-hours side of it. …

Demand curves slope downward. Which is to say, if you raise the price of something, people will be inclined to consume less of it. Those with a choice in the matter – say, a large office-supply chain with a mess of low-skilled part-time employees who are basically as interchangeable as toner cartridges in the greater scheme of office-supply things – will in fact consume less. If the thing that is getting more expensive is manpower, it will cut employees’ hours, circulate a lot of those dopey “do more with less” memos, and look for labor substitutes, like the banks did with those ATMs that haunt President Obama’s imagination.

Obama can damage the Staples brand by calling them misers.  But Walmart has done the same thing.  The difference is, Walmart is too big to make a public example of.  If the president damages Walmart, he could step on too many toes.

Wal-Mart is among the last of its peers to cut health insurance for some part-time workers. In 2013, 62 percent of large retail chains didn't offer health care benefits to any of its part-time workers, according to Mercer, a global consulting company. That's up from 56 percent in 2009.

Wal-Mart has been scaling back eligibility for part-time workers over the past few years, though. In 2011, Wal-Mart said it was cutting backing eligibility of its coverage of part-time workers working less than 24 hours a week. And then in 2013, it announced a threshold of 30 hours or under.

Wal-Mart, like most big companies, also is increasing premiums, or out-of-pocket costs that employees pay, to counter rising health care costs.

The chain of events that caused the 29er phenomenon began in Obama’s office.  It began with him.  Now “you can’t make an omelet without breaking eggs” and if so Obama should simply own up to the 29er phenomenon as a necessary cost on the road to progress.  But he can’t turn around and blame other people for his own policies.

Oh wait, he did just that.

Lousy Insurance

POSTED about 3 weeks ago BY HEALTH CARE COMPACT

The Achilles’ Heel of Obamacare was, is and will be cost.  The trouble is that Affordable Care isn’t affordable .  CNN’s Money distills a Kaiser Family Foundation study comparing Obamacare with employer health care. The conclusion is clear but dismaying. “Deductibles, co-payments, and drug payments are higher under the average Obamacare silver-level plans -- the most popular -- than employer policies, according to a CNNMoney comparison of reports by Kaiser Family Foundation and Health Research & Education Trust.”

 

The only thing that Obamacare is better than is nothing.  “To be sure, having Obamacare coverage is often better than being uninsured, especially if you rack up big bills through a major illness or accident.”  Compared to employer health insurance the ACA’s metal plans are decidedly lackluster.

Deductibles

Employer

Obamacare silver plan

$1,217

$3,453

 

Co-pays per visit

Employer

Obamacare silver plan

Primary care

Specialist

Primary care

Specialist

$24

$36

$28

$56

 

Drugs representative cost

Employer

Obamacare silver plan

Generic

Preferred

Generic

Preferred

$11

$31

$13

$47

 

Annual maximum ceiling on out of pocket

Employer

Obamacare silver plan

$3,011

$5,826

 

Bloomberg notes that all Obamacare plans, except its super-premium platinum product are markedly inferior to employer based insurance.  The most affordable ACA plans offer the least actual cover. “For a bronze plan, the insurer is meant to cover 60 percent of the cost of essential health care, on average, leaving beneficiaries to cover the rest. For silver plans, it's 70 percent; for gold, 80 percent; and for platinum plans, 90 percent. As a result, premiums are generally lowest for bronze plans and highest for platinum.”

Bronze plan holders are even more inferior than the silver plans used for the comparison above.  

The result is that for many Obamacare policyholders coverage is scant.  You can be “covered” yet unable to see a doctor -- sometimes literally because to save money networks can be impractically sparse.  John Goodman cites these examples cited by Elizabeth Rosenthal of the New York Times:

When Karen Pineman of Manhattan sought treatment for a broken ankle, her insurer told her that the nearest in-network doctor was in Stamford, Connecticut – in another state.

Alison Chavez, a California breast cancer patient, was almost on the operating table when her surgery had to be cancelled because several of her doctors were leaving the insurer’s network.

When the son of Alexis Gersten, a dentist in East Quogue New York, needed an ear, nose and throat specialist, the insurer told her the nearest one was in Albany – five hours away.

When Andrea Greenberg, a New York lawyer, called an insurance company hotline with questions she found herself speaking to someone reading off a script in the Philippines.

Aviva Starkman Williams, a California computer engineer, tried to determine whether the pediatrician doing her son’s 2-year-old checkup was in-network, the practice’s office manager “said he didn’t know because doctors came in and out of network all the time, likening the situation to players’ switching teams in the National Basketball Association.”

Of course the people who have the bronze and silver plans are often the same people who will really need good coverage should they get seriously sick.  Yet they are precisely the same group who have this shabby coverage.  The young are greatly overcharged and there is something disturbing about the president hawking his product to the young by hamming it up for promotional material in the oval office.  Obama is targeting the poor to sell them shoddy goods, like a carnival huckster enticing rubes into an faked exhibition to fleece them.

What is astonishing is how poor the product is, even after the huge amounts of money spent stuffing it with subsidies and startup funds.  The Daily Mail wrote that it cost $50,000 for every American covered. The Daily Signal described the enormous amounts of taxpayer funds spent on trying to provide Obamacare through cooperatives:

More than 500,000 people enrolled in health plans offered by nonprofit insurance companies created under the Affordable Care Act.

And with the co-ops receiving an average of $108.7 million from the federal government, taxpayer-backed funding per enrollee topped $17,000.

This ranged from a low of $1,588 in Iowa to a whopping $44,297 per person in Oregon.  For that kind of money one would expect caviar and champagne, not macaroni and cheese with a high deductible.  This is not surprising given the level of money wasted. The Office of the Inspector General of the Department of Health and Human Services released a report entitled: Federal Marketplace: Inadequacies in Contract Planning and Procurement. It found:

  1. CMS did not adequately plan for the Federal Marketplace contracts (page 10)

  2. Only two of the six key contracts underwent CMS Contract Review Board oversight prior to award (page 12)

  3. CMS’s procurement decisions may have limited its choices for selecting Federal Marketplace contractors (page 13)

  4. When awarding two key Federal Marketplace contracts, CMS did not perform thorough reviews of contractor past performance (page 16)

  5. For five of the six key contracts, CMS chose a contract type that placed the risk of cost increases solely on the Government (page 17)

  6. CMS estimated a total contract value of $464 million for the key contracts at the time of award (page 18).  The true value has doubled and is still rising.

 

CMS originally estimated the contract value for the 6 key contracts to be $464 million. As of early 2014, CMS had updated the estimated value of these contracts to $824 million. The updated contract value more than tripled for the FFM1 contract awarded to CGI, from $58 million to $207 million.28 In addition, the value for the DSH contract more than doubled, from $69 million to $180 million. The remaining 4 contract values increased between 1 and 54 percent.


There is no mystery to why the Obamacare product is so poor despite the billions lavished on it.  It’s a candy store for contractors insurance companies, bureaucrats and lobbyists. It is the very epitome of a feeding trough for politically connected hogs.  Corrupt government programs tend to become even more corrupt over time.  But Obamacare has started off with enough wastage to raise the question of just how much worse it can get.

Kansas Democrats Try to Repeal HCC

POSTED about 3 weeks ago BY HEALTH CARE COMPACT

If being attacked that opponents is the sincerest form of acknowledgement, the Health Care Compact idea is being acknowledged in Kansas. It was one of 9 states which started to form a compact in late 2014.

Kansas, Missouri and seven other states have signed on to a movement that would wrest regulation of most of the nation’s health care insurance systems from the federal government.

Those state legislatures want to be part of a proposed interstate health care compact. The compact would let participating states use federal funds – in the form of block grants – to design and operate their own Medicare, Medicaid and other health care programs, except for the military’s.

Critics say the idea is unworkable and faces long political odds. Indeed, states need Congress to approve any interstate compact.

But now James J. Ward (D) of Kansas has filed a bill to repeal Kansas health care compact initiative. It has now been joined by a successor initiative, this time joined by a number of Democratic legislators.

Louis E. Ruiz (D)*, Tom L. Burroughs (D), John Carmichael (D), Pam Curtis (D), Dennis Highberger (D), Harold Jay Lane (D), Jarrod Ousley (D), Melissa A. Rooker (R), Anna M. Tietze (D), Ponka-We Victors (D), Kathy A. Wolfe-Moore (D)

It has been referred to Committee on Health and Human Services on 2/4/2015.  But this development shows it is now being taken seriously and not being dismissed.  In a way this is good news for the initiative because the HCC is now being noticed -- and is consequently becoming a target.

Too Late To Lose King vs Burwell

POSTED about 3 weeks ago BY HEALTH CARE COMPACT

James Taranto catches the feeling of despair felt by Obamacare advocates as the Supreme Court date for hearing King vs Burwell approaches. As this site has often argued, first its supporters argued that no court would hear it.  Then the goal posts moved to no court would decide in favor of King.  It subsequently became the argument that the Republicans would not dare win for fear of angering millions. It was even argued that the Supreme Court’s legitimacy would evaporate if it held against Burwell.  Most recently plaintiff King himself has been accused as a right wing maniac.  Taranto writes:

If the law is on your side, the juridical adage goes, argue the law. If the facts are on your side, argue the facts. If neither the law nor the facts are on your side, pound the table.

Supporters of ObamaCare have reached the stage of pounding their heads on the table. …

Over at the New York Times , Linda Greenhouse weighed in last week with a piece that was dyspeptic in the original sense of the word. Unable or unwilling to digest the plaintiffs’ argument, she simply gagged on it.

“Greenhouse fails even to mention the government’s stronger, though ultimately unpersuasive, argument that the statute is ambiguous,” lawyer Howard Slugh, whose firm has filed a brief in King v. Burwell, notes in an entertaining rejoinder at National Review Online. “Instead, she insists that the plaintiffs’ reading of the statute is utterly frivolous.” She claims that the justices “all agree on how to interpret statutory text”—and that they all agree with her.

She ends by instructing the justices (her emphasis): “Read the briefs. If you do, and you proceed to destroy [sic] the Affordable Care Act nonetheless, you will have a great deal of explaining to do—not to me, but to history.” As Slugh understates: “It takes a lot of chutzpah to admonish the Supreme Court in such fashion.”

NRO’s legal blogger, Ed Whelan, makes one obvious point: “It’s difficult not to conclude that Greenhouse thinks, rightly or wrongly, that the Left’s efforts to intimidate Chief Justice Roberts in the first Obamacare case worked and are worth repeating.”

Taranto goes on to enumerate veiled threats to act extralegally or creatively.  The object is always the same: to prevent the unreasonable unthinkable outcome of a loss to King from occurring. Perhaps the most telling sign was the adamant refusal of Sylvia Burwell to explain if there was a Plan B in case the court held against the government.

The situation reminds one of the start of World War 1 where railway timetables made mobilization, once begun, unstoppable.  They were like intercontinental bombers which once launched, could not be recalled.

In 1969 AJP Taylor published his book War by Timetable.   In it, he argued that railway timetables played a key part in starting the First World War.

Mobilising millions of men was a hugely complicated job.   Every country used the railways, and spent years working out how to get all those soldiers and all their supplies to where they needed to be - eg the Schlieffen Plan took nine years to devise (1897-1906).

So every country had only one Plan   - the Russians had 'Plan A', the French 'Plan 17'; and it was too much to devise another one!

So, when the crisis came - although it didn't fit the situation that these Plans envisaged - every country had to go ahead and implement their Plans because they had no other plans of what to do, and it was too late to make a new one.   The Tsar HAD to order a general mobilisation, even though he only wanted to mobilise against Austria.   And when, on 1 August, Kaiser Wilhelm tried to pause the German mobilisation, his generals told that he couldn't; 11,000 trains were on the move, and war could not now be stopped.

The same appears to be true of Obamacare. With the massive plan entrained, the administration believes it’s too late to stop now.

Liberating the Insurance Markets

POSTED about 3 weeks ago BY HEALTH CARE COMPACT

John Goodman in Forbes argues that Obamacare has turned insurance into something like the NBA, with rotating teams of players in provider networks.  He relates the New York Times story of people who find their networks absurdly inconvenient.  In one case an operation is scheduled and has to be reshuffled when some members of the team drop out of the network. He asks why insurance companies should treat their customers so.

The answer he gives is that Obamacare insurance are doing everything they can to fob off sick patients and attract healthy ones. There’s an economic reason for this.  In casualty insurance the sales pitch is always “we pay”.  In health insurance the sales pitch is “we want healthy clients”.

If the health insurers followed the lead of the casualty insurers, their ads would focus on what could go wrong and how good they are at treating the problems. After all, why do you need health insurance? Because you might get cancer, heart disease, or some other expensive-to-treat condition. And when that happens, you would like to be in a plan that give you access to the best doctors and the best facilities for your condition.

But in fact, this is what you never see in a health insurance commercial in Washington, DC. There is never a mention of cancer, heart disease, diabetes, AIDS or any other serious health condition.  Instead, what you see are pictures of young healthy families. The implicit message is: if you look like the people in these photos, we want you.

What explains the difference between the health insurance and casualty insurance markets? In the latter people pay real prices that reflect real risks. In the former, no one is paying a premium that reflects the expected cost of his care. The healthy are being overcharged so that the sick can be undercharged. So insurers try to attract the healthy and avoid the sick.

Goodman’s point is that the ridiculously narrow networks are a direct result of the structure of Obamacare. “The healthy are being overcharged so that the sick can be undercharged. So insurers try to attract the healthy and avoid the sick.”  The trick he argues, is to align the incentives.  To do this, insurance has to be freed from the Obamacare exchanges in some way, and the method he describes looks strikingly similar to the health care compact. “In a previous Forbes post I argued that we can denationalize and deregulate the exchanges. And by instituting “health status insurance” we can have a market with real prices that gives real protection to people with pre-existing conditions.”

Denationalizing and deregulating the Obamacare exchanges would involve removing the mandates, charging risk-related prices to most and providing separately for the uninsurable and indigent.  One way to reduce the pure welfare burden of the uninsurables is to institute what John Cochrane called “health status insurance”, which essentially insures against becoming uninsurable. “Health-status insurance covers the risk of premium reclassification, just as medical insurance covers the risk of medical expenses.”

In any event, a deregulated market would be much easier to implement under a Health Care Compact regime than under the monolithic structure of Obamacare.  If health care reform is to have any chance, Obamacare has to go.

The Health Care Compact Moves Forward in Montana and Ohio

POSTED about 3 weeks ago BY HEALTH CARE COMPACT

The Health Care Compact took another step forward in Montana as Nancy Balliance R-MT  filed MT HB348, “An Act authorizing an interstate health care compact; directing the governor to join the compact and providing a contingent effective date.”  The text of the bill calls for the establishment of an “interstate advisory health care commission” under the HCC boilerplate concept.

A very similar bill has been filed in Ohio, OH HB34.   It too stipulates an “interstate advisory health care commission” and seeks approval from the United States Congress. The Ohio bill has many more sponsors. Terry R. Boose (R)*, Wes Retherford (R)*, John Becker (R), Louis W. Blessing Jr. (R), Louis W. Blessing III (R), Andrew O. Brenner (R), Jim Buchy (R), James Butler (R), Harry James Butler (R), Margaret Conditt (R), Ronald Edward Hood (R), Steven Wayne Kraus (R), Ronald Maag (R), Kristina Daley Roegner (R), Mark J. Romanchuk (R), Andrew M. Thompson (R)

There have been no significant reactions from the press as yet, probably because the bills are in the early stages.  But these developments show that the Health Care Compact is moving from a notional idea to an actual part of the movement to replace Obamacare with something better.

The Health Care Compact Strikes Back

POSTED 3 weeks ago BY HEALTH CARE COMPACT

As controversy continues to swirl around Obamacare, with attention focused on the forthcoming King vs Burwell suit in the Supreme Court, legislators in different states are quietly laying the groundwork for solutions using the underlying principle of the Health Care Compact as a guide. Specifically, they are using the idea that people are better off when decisions are made closer to home. State Senator Brian Kelsey of Tennessee has authored a pair of bills aimed at opening up the insurance market for residents of the state by removing artificial restrictions on the purchase of insurance.  

Sen. Brian Kelsey, R-Germantown, is proposing two bills to reform the state's health care infrastructure in the wake of Insure Tennessee's defeat.

Under one bill, Kelsey is proposing to allow Tennesseans to buy insurance plans that are for sale on insurance exchanges in other states. The open border approach - which would require agreements between states, according to the bill - would widen the breadth of plans from which Tennesseans could choose, Kelsey said.

Kelsey, who also is sponsoring a bill that would prevent Tennessee from establishing its own exchange, wants to see Tennesseans have access to the most affordable health care regardless of where the insurance plan is offered - and regardless of whether Tennesseans send money out of state to buy the plans.

"I'm concerned about getting Tennesseans the most affordable plan for their budget. That's more important to me than protecting insurance companies' bottom line," Kelsey said.

Federal regulators don’t care about, or understand, what Tennesseans need. Conversely, a State Senator like Brian Kelsey, is closer to his constituents and knows that they will benefit from having access to more insurance choices than are currently offered within the state. There was a recent attempt to expand Medicaid in Tennessee, which would have further empowered federal bureaucrats to make even more health care choices for Tennessee residents. The bills that Kelsey has proposed are a response to that failed attempt. While Medicaid is based on the faulty notion that health care is made more affordable by application of federal subsidies (and subsequently, federal mandates), the Health Care Compact is designed to actually reduce cost and increase choice. Kelsey wants to bring the decision-making back home to Tennessee, where it belongs. In his view, customers should be able to shop wherever they can get a good deal, not artificially restricted to a particular, government-mandated marketplace.

Though there are differences in standards and networks due to the current structure of state insurance, and some in the health care industry have questions about these proposal might work, Sen. Kelsey and others are trying to move health care in Tennessee in the right direction.

A cross-border approach raises a bevy of questions and concerns, health care industry professionals say. "We are evaluating the proposed legislation," said a spokesman for the Tennessee Department of Commerce and Insurance, which licenses health insurance companies in the state. Insurance companies are governed state by state — there is no federal agency that regulates insurance — so an insurance company could offer a plan from out of state and that may not necessarily meet Tennessee standards.

Insurance companies with plans for sale in other states that opened to Tennessee residents would have to make sure Tennessee-based doctors were in their network, Kelsey said. He wants to see Tennesseans have broader access to choices but remains opposed to creating a state-run exchange if the King vs. Burwell case at the U.S. Supreme Court finds that tax credits are not available on the federal health insurance exchange. ...

The increased number of plans will make plans more affordable even if credits on the federal exchange are no longer available, he said. "My goal is to address the health care problem in Tennessee and America by going the opposite way of Obamacare," Kelsey said. "That's why I'm advocating both strategies at the same time: to attack Obamacare in the U.S. Supreme Court and to offer conservative reform to health care.

Further details illustrate how the Health Care Compact’s fundamental approach can be used to boost competition. The key, in this case, is a personal health savings account “which is designed to give enrollees more choices and encourage them to make better healthcare decisions.”  Kelsey also drafted a resolution that directs Congress to authorize states to design their own models of Medicaid reform by receiving funding as block grants.

The senate bill would allow TennCare recipients to use a PHA to purchase a benefit coverage plan from an array of options approved by the Bureau of TennCare, ranging from the conventional safety net of limited benefits to full-service benefit plans.  The range of options must provide a broad continuum of consumer flexibility including, but not limited to, managed care organizations, self-directed plans, and medical home networks.  Plans offered as options would directly compete for the enrollee’s business.

A recipient could choose to use the full amount of the PHA to purchase comprehensive or partial coverage plans.  If the enrollee selects a plan with rates that are lower than the total amount of the PHA, then they could retain any balance of the PHA to spend on healthcare related items.  Unused balances would roll forward to the next quarter.  If the enrollee ceases to be eligible for medical assistance, a portion of the unused balance of the PHA could be used for health care expenses or to purchase health insurance.  Unused funds would revert to the state after 12 months or immediately upon the death of the enrollee.

“Personal Health Accounts encourage good health choices by consumers and gives them skin in the game,” added Kelsey.  “This approach would truly provide reform of our healthcare system in Tennessee.”

The idea of using a health care compact has been attacked by Obamacare advocates as something akin to nullification.  But in truth, interstate compacts have long been used as a tool to facilitate and reduce the costs of commerce between the states.  As Obamacare continues to flounder, with its Byzantine system of subsidies, taxes, and giant bureaucracies, and costs are too high, it becomes increasingly clear that the future of health care reform lies in simplification.  The health care compact idea provides good platform for eliminating artificial impediments to efficient markets.

Possible replacements are now under consideration in the new Republican Congress, and they ought to include simplifying measures such as the Health Care Compact itself.  The best alternative for the grotesquely bloated Obamacare is a system based on the simple and obvious notion that the closer we all are to the decision-making, the more likely it is that the decisions will actually reflect the health care we each want and need.

Panic over King vs Burwell

POSTED 3 weeks ago BY HEALTH CARE COMPACT

Joshua Green of the New Republic thinks the Republicans “secretly hope” that the Supreme Court will save Obamacare.  He argues that if the courts cut off federal subsidies there will be an immediate outcry for their restoration and the Republicans are too stupid -- for want of a better word -- to figure out a way to hand out replacement subsidies.

The outcry for a fix will be broad, sustained, and lockstep, but it will meet wildly different audiences. Everyone in the GOP primary field will face extensive pressure to treat an adverse decision as an opportunity to get rid of the law altogether, but some of them will be governors or former governors who won’t be as amenable to using constituent suffering to leverage an unrealistic political goal. Republican Senate candidates from the above-mentioned Wisconsin, Ohio, and Florida, but also from Pennsylvania, New Hampshire, Illinois and elsewhere, will quickly see their political fortunes become entwined with the cause of fixing Obamacare.

As chaos grows, it will be tempting for these Republicans to claim that they and the broader right bear no culpability. Obama and Obamacare did this to them. But that message won’t wash outside of precincts where antipathy to the president already runs extremely deep. Elsewhere it’ll be drowned out by a simple but forceful argument, promulgated by people with much larger megaphones—and by the fact that everything was basically OK until five Republican-appointed Supreme Court justices intervened. Unlike Republicans, the team of organizers, lawyers, and political operatives who have banded together to save the ACA have adopted a strategy that precludes them from discussing their political contingency planning. But it stands to reason that Obama and Clinton would both lay the damage at the feet of those justices, and the party on whose behalf they had acted. The ruling would create a hydra of loyal but politically disengaged Obama supporters, consumer groups, health care providers, and other actors, none of whom will be satisfied with Republican excuse-making and inaction.

This is pure wishful thinking.  Obamacare overturned the status quo ante and disrupted millions of insurance plans without batting an eye.  But they were Democrats who are entitled to do such things.  Republicans of course, have no such right.  But the argument is false in its premise.  Obamacare will be replaced by any number of plans now being considered, including some which will devolve the health care issue to the states.

However Green’s article is also battlespace preparation.  King versus Burwell, which was once dismissed as a case which would never reach the Supreme Court, before it was a case that could never win in the Court, has gradually become a case the Republicans don’t dare win.  That’s quite a promotion in status.

Obamacare’s advocates fear a loss and therefore they are readying public opinion for an apocalyptic narrative.  When the subsidies are ruled upon, your healthcare will be “taken away from you”.  That will inevitably be true of some, but it will hardly be the apocalypse the ACA advocates warn against.

Obamacare is in trouble and its advocates are panicked.

Leaving Money on the Table

POSTED 3 weeks ago BY HEALTH CARE COMPACT

Dan Mangan of CNBC tries to solve a mystery.  Why are people “leaving Obamacare money on the table”.

The federal government is willing to shoulder a share of the medical costs with millions of people, but many of them are still saying, "Thanks, but no thanks."

A new analysis reveals that nearly 14 million people next year could get financial help to pay out-of-pocket costs if they enroll in Obamacare health plans, a new analysis finds.

That federal aid, known as cost-sharing reductions, can reduce the amount people pay in deductibles, co-payments, co-insurance and maximum out-of-pocket costs that they incur when they go to the doctor or hospital. Those costs are the share of services not covered by a person's health plan.

But large numbers of the relatively low-income people—nearly half of whom live in the South—who are eligible for that aid are not taking advantage of it, even though it could save them an average of $479 in health costs annually.

The same question has been asked of Red State governors with regard to Medicaid expansion.  Why don’t they take the “free” government money offered to them by the federal government? No answers are really offered, but a related mystery may shed some insight on the problem.

Why don’t Latinos like Obamacare?  Why don’t they take the “free” money?

Hispanics represent about a third of the nation’s uninsured, and for a number of reasons, signing them up has been harder. According to the latest government statistics, as of Jan. 16, two months into the current open enrollment period, just 10 percent of those who had enrolled in the 37 states served by healthcare.gov are Latino, only slightly up from 7 percent during the first few months of last year’s enrollment, despite a concerted effort to reach them.

Are they stupid like Republicans?  Or is it the case that they are smarter than Obamacare architects give them credit for.  Mexicans are familiar with the corrupt, deceitful nature of their own government.  Anything pushed by the federales even the American Federales must have a hook in it.

As for Republican politicians, some have yet to be convinced there is such a thing as “free” government money.  Unlike well educated Democrats, they suspect that “free” money actually comes from taxpayers, as Soylent Green came from people and therefore they are reluctant to take it, knowing anything too good to be true has got to have a catch.

And then there’s the fact that Obamacare imposes lots of procedures and costs that just aren’t worth $479. Government bureaucrats think they can get people to eat out of their hands, even though all birdseed originally comes from the people themselves.

The Unlamented Obamacare

POSTED 3 weeks ago BY HEALTH CARE COMPACT

Professor Julian Zelizer, who wrote a book titled The Fierce Urgency of Now: Lyndon Johnson, Congress and the Battle for the Great Society, a glowing account of Lyndon Johnson’s achievements, writes that decades from today Republicans will look on Obamacare with the same fondness that people regard Medicaid.  In Amazon’s introduction to his book, Johnson was responsible for:

The passage of the Civil Rights and Voting Rights Acts; the War on Poverty program; Medicare and Medicaid; the National Endowments for the Arts and the Humanities; Public Broadcasting; immigration liberalization; a raft of consumer and environmental protection acts; and major federal investments in public transportation. Collectively, this group of achievements was labeled by Johnson and his team the “Great Society.”

There was also Vietnam, but the Great Society, especially the War on Poverty left such a wonderful legacy that Zelizer claims:

It is possible to imagine that several decades from now, when a Democratic president sends a proposal to Congress that would require cuts in the Affordable Care Act, a right-wing activist will say: "Get your government hands off my Obamacare!"

It is possible to imagine anything, but since Obamacare was in the first instance designed to cure the unsustainably excessive spending of Medicare and Medicaid, not to mention abolish Employer-based health insurance which was the legacy of Franklin Roosevelt is not likely.  Barack Obama set out to ‘cure’ the achievements of Lyndon Johnson and FDR.  It is somewhat ironical for Zelizer to imagine people objecting to someone curing the cure of the cure.

But he might be right.  The first instinct of Washington is to pile Pelion on Ossa; to fix any unsustainable expensive program by throwing more money at it.  The only problem to continuing this indefinitely is that government eventually runs out of other people’s money.

So while Zelizer may imagine someone waxing sentimental over Obamacare, it is less than likely.  The congressmen who voted for it have for the most part lost their seats to an outraged electorate. True masterpieces improve with age.  Programs like Obamacare, which never had any quality to begin with, only corrode into junk.

Several decades from now a left-wing activist will say: “get this jalopy off the road.”

The Emergence of the “Hell No” Coalition

POSTED 3 weeks ago BY HEALTH CARE COMPACT

The intimidation game continues as Obamacare advocates continue to insist that resistance to the program is futile while its opponents vow to repeal every single word of it. If Medicaid expansion is a vote of confidence in the immortality of Obamacare, two recent state rejections must therefore indicate some believe it is not long for this world.

(Reuters) - The Wyoming Senate on Friday rejected a bill that would have supported the state's expansion of the Medicaid program for the poor under President Barack Obama's healthcare reform law, effectively shutting the door for the remainder of year.

Opponents of the measure in the Republican-dominated state senate voiced concerns about possible complications with its implementation, and argued that increased health spending would add to the federal debt.

A companion bill in the state's House of Representatives was pulled from committee as well on Friday.

This follows a similar rejection in Tennessee. “A plan to expand Medicaid to cover an additional 280,000 low-income Tennessee residents failed in a key committee vote Wednesday, bringing a quick end to a long debate spearheaded by Gov. Bill Haslam (R).”

But after all that work, it took just over two days for the state Senate Health and Welfare Committee to vote, by a 7 to 4 margin, against Insure Tennessee. … Legislative leaders don’t expect the Medicaid expansion proposal to return during the regular session, which begins Monday.

Medicaid expansion was seen as a way to bribe Red States into participating in Obamacare. But events in Wyoming and Tennessee suggest that some politicians have stopped sitting on the fence.  In their considered view it is no longer worthwhile hitching their wagon to a falling star.

Obamacare advocates are dismayed at the emergence of what they term the “hell no” caucus against the president’s signature health plan.  They are calling it “irrational” to refuse money.  The Washington Post writes:

Just when you thought there was some hope for the nearly 4 million people Republican leaders are denying access to health coverage across the country, the “hell no” caucus struck back. Conservative Indiana Gov. Mike Pence (R) concluded negotiations with the Obama administration last week to expand Medicaid in his state. “Indiana Medicaid Expansion May Tempt Other GOP-Led States,” declared one headline. “Will Mike Pence tip the GOP scales on Medicaid expansion?” asked another.

Not in Tennessee, where the state legislature on Wednesday repudiated an expansion plan that its GOP governor, Bill Haslam, has been pressing forward for months. This isn’t just bad for the people who will continue going without Medicaid in Tennessee. It also exposes how deeply irrational the anti-Obamacare frenzy is in certain sectors of the GOP, with staunch opposition remaining even when popular conservative leaders try to push in a more reasonable direction. And it’s a bad sign for what might happen if the Supreme Court rules against the Obama administration in its latest Affordable Care Act case.

The Obamacare advocates had estimated that by this time the voters would be “hooked” on Obamacare subsidies and that the Red States would fall, one by one, to the siren song of lucre.  Never did they believe that they would lose the mid-term elections so badly over this precise issue; that the Supreme Court would actually be hearing a challenge to the legality of the subsidies nor that a “hell no coalition” would gather force as time went on.

Obamacare is becoming the administration’s RMS Titanic.  It has struck the iceberg of unaffordability and down by the bow.  Despite the service of free drinks and the playing of the band, the passengers are taking to the lifeboats.  They will not be back.

Damn the Data Torpedoes!

POSTED 3 weeks ago BY HEALTH CARE COMPACT

The true scope of the consumer data breach at the health insurer Anthem became glaringly evident as more details came in. “The lawsuits against Anthem Inc. have already started rolling in” in connection with the loss of the records of up to 80 million records.

The health insurer revealed this week it had been hit by a data breach that may have exposed up to 80 million customers’ personal information.

While no credit card or medical data was stolen, the hackers made off with names, birth dates, addresses, salary data and most importantly, Social Security numbers. …

Anthem customers in California and Alabama have filed suits alleging the company didn’t properly secure their data or notify them promptly enough following the discovery of the attack, legal news outlet Law360 reported.

In fact other health insurers may be as vulnerable, if not more vulnerable than Anthem. The standards for the health industry do not include the requirement to encrypt data.

WASHINGTON (AP) — Insurers aren't required to encrypt consumers' data under a 1990s federal law that remains the foundation for health care privacy in the Internet age — an omission that seems striking in light of the major cyberattack against Anthem.

Encryption uses mathematical formulas to scramble data, converting sensitive details coveted by intruders into gibberish. Anthem, the second-largest U.S. health insurer, has said the data stolen from a company database that stored information on 80 million people was not encrypted.

The main federal health privacy law — the Health Insurance Portability and Accountability Act, or HIPAA — encourages encryption, but doesn't require it.

Ordinary encryption may have been a dubious defense anyway against the sophistication of the attacker, now believed to be China. “New York (AFP) - Data on as many as 80 million customers at US health insurance giant Anthem was stolen by hackers, officials confirmed Thursday, in a cyberattack investigators have reportedly linked to China.”

The cyberattack is just the latest exposing personal information on millions of people in the United States, triggering calls for companies to beef up their data defenses.

"Cyberattackers executed a very sophisticated attack to gain unauthorized access to one of Anthem's IT systems and have obtained personal information relating to consumers and Anthem employees who are currently covered, or who have received coverage in the past," a statement from the second-largest US health insurer said.

Anthem’s defenses are probably stronger than Obamacare’s, of which it is a participant.  Concern over the vulnerability of health data was raised on Capitol Hill.

The mammoth data breach at health insurer Anthem Inc. has given new life to concerns about whether information shared with federal healthcare websites is safe.

“That was one of the first things I thought about,” Senate Homeland Security and Governmental Affairs Committee Chairman Ron Johnson (R-Wis.) told The Hill.

Experts suggested the Anthem attack could be a preview of larger scale attacks on the vulnerable data highways of Obamacare.  Data is no longer segregated into islands but is connected over networks, creating a potential bonanza for an attacker.

The unprecedented scale of the Anthem hack, which exposed the personal data of up to 80 million customers, has shown that these links present a potential vulnerability in the healthcare system.

“We’re not talking with healthcare organizations as standalone entities anymore,” said Christopher Budd, a security expert with TrendMicro. “They’re interconnected.”

Health insurers like Anthem market and sell their plans on the federal- and state-run healthcare exchange websites, creating data flows between the two sources.

“Those are basically roadways that attackers could be using,” Budd said.

Obamacare itself has opened the data stream to third parties, ringing alarm bells everywhere. The Electronic Frontier Foundation writes:

The Associated Press reports that healthcare.gov–the flagship site of the Affordable Care Act, where millions of Americans have signed up to receive health care–is quietly sending personal health information to a number of third party websites. The information being sent includes one's zip code, income level, smoking status, pregnancy status and more.

EFF researchers have independently confirmed that healthcare.gov is sending personal health information to at least 14 third party domains, even if the user has enabled Do Not Track. The information is sent via the referrer header, which contains the URL of the page requesting a third party resource. The referrer header is an essential part of the HTTP protocol, and is sent for every request that is made on the web. The referrer header lets the requested resource know what URL the request came from. This would for example let a website know who else was linking to their pages. In this case however the referrer URL contains personal health information.

In some cases the information is also sent embedded in the request string itself, like so:

https://4037109.fls.doubleclick.net/activityi;src=4037109;

type=20142003;cat=201420;ord=7917385912018;~oref=https://www.

healthcare.gov/see-plans/85601/results/?county=04019&age=40& smoker=1&parent=&pregnant=1&mec=&zip=85601&state=AZ&income=35000& &step=4?

This is probably a much weaker level of security than Anthem’s.  The vulnerability of Electronic Health Records in the face of a manifest threat is undeniable.  However at present the political imperative to ‘make Obamacare a success’ trumps every danger.  The administration is proceeding in the style of Admiral Farragut: “damn the torpedoes, full speed ahead!”  But president Obama is not Farragut.  The result may be different.

Why King vs Burwell Matters

POSTED 3 weeks ago BY HEALTH CARE COMPACT

A measure of the intensity -- some would say desperation -- with which the political environment to the court challenge King vs Burwell is being prepared has been the spate of attacks, both personal and legal, which have been mounted against the individuals who brought suit.  It is as if the defenders of Obamacare were not content to argue their case strictly according to law, although they assured readers that the legal arguments would be laughed out of court, but to employ every trick in the book, and then some.

Greg Sargent opens with his portrayal of Gregory King, the “King” in King vs Burwell.  Sargent leads with quote from Politico depicting him as a figure seething with hatred and irrational resentments.

The man who could cripple Obamacare isn’t shy about telling the world that he thinks the president is an “idiot,” posting altered images of the First Lady in Middle Eastern clothing and expressing his hatred for the “Democraps” who enacted the health care law.

David M. King, 64, is the lead plaintiff on the Supreme Court case that challenges the government’s right to grant tax subsidies to millions of Americans in certain states to make health insurance more affordable. When the case is argued on March 4, King — friendly, with graying hair and a mustache — will become the public face of King v. Burwell, the most significant threat to the Affordable Care Act since the 2012 Supreme Court case that put the law’s individual mandate on the line.

A pity, Sargent says, because King himself may soon qualify for a check from the government and therefore hardly claim injury!  Therefore King’s claim to standing is thin at best and darkly motivated at worst.

A couple points about this. First, it’s fascinating that King is less than a year away from qualifying for Medicare. As it happens, Politico reports that two of the other four challengers are 64 and 63, also putting them very close to qualifying. Remember, this lawsuit is all about the plaintiff’s objection to being subjected to the individual mandate’s requirement that they get insurance. The plaintiffs are claiming injury because Virginia is on the federal exchange, which, they say, means they should not be getting the subsidies which are necessary under the law to require them to get insurance under the mandate. Yet three of the challengers are very close to having the mandate canceled for them by Medicare. (One, it should be noted, is 56 years old.)

Three reporters from the Wall Street Journal take the same tack, saying that since King served in Vietnam, he could avoid the objectionable provisions of Obamacare by sheltering with the VA system.

The plaintiffs have persuaded courts to hear their case on the grounds that the subsidies allegedly harm them by subjecting them to the law’s requirement to carry insurance or pay a penalty. Without the subsidies, insurance would be too expensive for them, they contend, thus making them exempt from having to pay the fine for lacking insurance.

But Mr. King could avoid paying that fine or any insurance premiums because, according to him and his attorneys, he served in the Army in Vietnam. That qualifies him for medical coverage with no premiums through the Department of Veterans Affairs, benefits and legal experts say. In an interview at his home here, Mr. King said he had been to a VA medical center and had a VA identification card, which typically serves as proof of VA-care enrollment.

Legal experts say the fact that Mr. King could avoid paying the penalty for lacking insurance by enrolling in VA coverage undermines his legal right to bring the case, known as “standing.” The wife of a second plaintiff has described her husband on social media as being a Vietnam veteran. The government previously questioned the standing of a third plaintiff on the grounds that her income may exempt her from paying the penalty for lacking insurance, but a lower court didn’t address the issue.

None of this directly touches upon the legal merits of the case, but it prepares the battlespace.  Even the Supreme Court is not immune from the pressure of public opinion and if King can be portrayed odiously enough, it can only weaken the entire case.  The WSJ itself observes:

Standing issues with these three plaintiffs don’t jeopardize the case, legal experts say, because only one plaintiff needs standing for the suit to proceed before the court. Instead, they could create skepticism about the strength of the challengers’ case and highlight the difficulty of finding plaintiffs to show the health law’s subsidies harm Americans, these experts say.

The point Sargent seems to be making is that nefarious forces are behind this case.  There is no real injury involved to anyone, it is a simple case of political vendetta.  And being a possible political put-up job, he indirectly exhorts reporters to go out and dig deeper into what must be a steaming pile of conspiracy.

All of this adds to the general circus-like atmosphere that is increasingly enveloping this lawsuit, and once again raises the question: Why, given how high the stakes are for this lawsuit, isn’t it getting more attention from the top-shelf reporters at the major news organizations?

There seems little doubt that these are but the opening salvos on the plaintiffs. Stay tuned for more exposes as opponents try to build ‘skepticism’.

Anyone who has followed King vs Burwell over the past months will be aware of its remarkable transformation from the case that would never be heard by the USSC, to the case that didn’t have a chance of winning, to a case caused by a mere typo in the law and lastly -- but perhaps not finally -- to a case hatched by Republicans in a back room.

The tremendous asymmetry in resources between four individuals, albeit aided by conservative pressure groups, and the massive federal government is hardly ever mentioned.  The David-and-Goliath aspect of this clash has been avoided at all costs.  Yet apart from this unnoticed fact the elephant in the room is hardly ever mentioned.  A significant number of voters hate Obamacare.

The promise to repeal Obamacare catapulted the Republicans into control of both Houses and into a large number of state houses.  For Sargent to suggest that these four plaintiffs have no standing to challenge Obamacare may not play well with a public who may seen these plaintiffs as proxies for themselves.  King vs Burwell is the challenge on behalf of all those voters who said “enough” to Obamacare.

Sargent may try to whistle past the graveyard and pretend that everybody likes Obamacare despite the clear results of the midterm elections, but the truth is that many, perhaps the majority of Americans, have a real problem with the law.  That is the reason why King vs Burwell, not because of some perverse confluence of errors, but because people angry, up in arms even, with Obamacare. The ACA’s proponents have ignored this discontent from the first.

King versus Burwell is not even the end.  It is only the beginning.

The Anatomy of a Double Cross

POSTED 3 weeks ago BY HEALTH CARE COMPACT

The Wall Street Journal’s Review and Outlook suggests there’s been a falling out among thieves.  It argues that president Obama has double-crossed Big Pharma by promising them certain concessions in exchange for supporting Obamacare, which he later reneged upon.

In 2009 Big Pharma agreed to contribute $80 billion towards ObamaCare, largely by expanding the Medicaid discount to 23.1% from 15.1%. They also agreed to mark down prescriptions for seniors by 50% above a certain level. Mr. Obama wants to raise that to 75%.

In return the White House agreed to spare the drug companies from central planning such as allowing the Health and Human Services Department to “negotiate” lower drug prices. But that was then. The budget now claims to be “deeply concerned with the rapidly growing prices of specialty and brand name drugs” and, sure enough, it rescinds the price-fixing reprieve.

The problem of course was that Obamacare turned out to be much more high cost than anticipated.  Instead of bending the cost curve it has actually added to the price of delivered care.  This left the administration in a political bind.  They had to reduce the price to to consumers somehow.  And the only way to do it was to go back on their deal.

Price controls are now being prepared.

Remember the business line, circa 2009, that if you weren’t at the ObamaCare table you were on the menu? Well, Big Pharma sat at the table, gave Mr. Obama what he wanted, and is now back on the menu as the cheese course. …

The news is that Mr. Obama’s new budget proposal for 2016 reneges on the quid pro quo that some of the dumber drug makers cut in return for supporting ObamaCare in 2009. That transaction was supposed to buy political protection against the left-wing wish list of price controls, weakened patents and other extortion that Mr. Obama now endorses in his budget.

No one should feel sorry for big pharma.  They saw Obamacare for what it was, a division of spoils among those who designed it.  But the first rule of division among conspirators is to watch your back.  Big Pharma turned its back on the president and now that the program is under severe cost pressure, they will be the first to go.

The Return of the Second Stringers

POSTED 3 weeks ago BY HEALTH CARE COMPACT

Nothing says how much the administration values Obamacare clients as in the care they take to send the very worst. The IRS is beefing up its staff to handle the load presented by the health care program.  But their intake consists of the less than ideal.

Rehiring is for someone you want back, not someone who was a problem. But the IRS may be different from your average employer. So suggests a new report by the Treasury Inspector General for Tax Administration. The watchdog report says the IRS rehired hundreds of former employees with prior substantiated conduct or performance issues.

The Inspector General identified hundreds of rehires despite prior substantiated conduct or performance issues. Some were serious. They ranged from unpaid taxes, unauthorized access to taxpayer information, leave abuse, falsification of official forms, unacceptable performance, misuse of IRS property, and off-duty misconduct. The Treasury Inspector General for Tax Administration concluded that the rehires pose increased risks to the IRS and taxpayers.

But having created a maze of tax regulations concerning health care it’s clear the administration needs more hands to process the paperwork. Compelled by the circumstances it is understandable that they should turn to old hands, who despite their shortcomings, nevertheless know the ropes -- perhaps too well. “The IRS has a difficult and important job to do,” writes Robert Wood. “But it isn’t clear that most of the problems with the agency are budgetary.”

Indeed they are not.  The problem is mostly to do with putting the bureaucracy in greater charge of health care.

Yes, Obamacare Can Be Replaced

POSTED 3 weeks ago BY HEALTH CARE COMPACT

The mirror-imaging of Obamacare advocates was on full display in Jonathan Cohn’s Huffington Post article “An Obamacare 'Replacement?' Don't Believe The Hype”.  It basic argument is that stupid Republicans could never craft an intellectual castle as lofty as the one the Obamacare architects built.  He writes:

Congressional Republicans want Americans -- especially the nine on the Supreme Court -- to think the GOP can do in less than five months what it took Democrats decades to achieve: enact comprehensive health care reform legislation. But given that Republicans have been unable to reach consensus on much beyond repealing Obamacare in the last five years, that’s an ambitious timeline.

It’s the Voice of Central Planning.  Cohn cannot conceive of policy reform built on simplification; on letting people do what they want rather than doing what they are told. If a person thinks about most anything in his life that actually works, he will find that almost none of it is managed, administered or controlled by the government.

Only Obamacare advocates could think that health care cannot be delivered without them. But in reality they have merely added a layer of bureacracy onto the health care system without actually adding resources to the equation.  Obamacare doesn’t supply doctors.  It is simply a giant machine for moving money around -- at a huge frictional cost.

The Obamacare Replacement Plans Enable HCC-like Approaches

POSTED 3 weeks ago BY HEALTH CARE COMPACT

Senate Finance Committee Chairman Orrin Hatch (R-Utah), House Energy and Commerce Chairman Fred Upton (R-Mich.) and Sen. Richard Burr (R-N.C.) have proposed an immediate alternative to Obamacare should the Supreme Court decide against the government in King vs Burwell.

Under the senators’ plan, individuals would no longer be required to buy healthcare coverage and employers would no longer be required to offer it. People who already have government insurance through Medicaid would be given tax credits to buy private plans, and upper-income families would no longer qualify for financial help.

The most important aspect of the trio’s plan is that it would allow consumers to buy a much wider range of plans than is currently available on the Obamacare exchanges. “Under our plan, every American will be able to access a health plan, but no American is forced to have health insurance they do not want,” their proposal read.

Dr. Scott Gottlieb and Tevi Troy think that de-linking assistance from insurance products could open the floodgates to a de facto replacement of Obamacare.

One of the most meaningful reforms would be to lift the heavy federal regulation of which insurance products can be sold in the exchanges, allowing insurance regulation to revert to the states. Congress can stipulate that any state operating its own exchange can allow any health plan that previously met its insurance requirements (pre-ACA) to be offered, either on or off its own exchange. Republicans could allow this provision to sunset so they could pursue broader reforms later.

This would reintroduce competition in the design of health plans, instead of forcing consumers into the Washington-designed plan imposed in the exchanges. Right now, the only thing that varies among ObamaCare’s different metal plans (bronze, silver, gold) is the cost sharing. The actual benefits—the narrow doctor networks and closed drug formularies—are basically the same.

Best of all the dergulation would make it possible to meet the objections of King vs Burwell to exchanges, because vouchers would liberate the delivery of subsidies from the exchanges.  The administration’s job will simply be to mail people a check.  The states -- and the Feds if they want -- can run their own exchanges.

States can take some unilateral latitude of their own, by explicitly coupling such a workaround to a looser interpretation of when the ACA’s tight regulation of state-based insurance products will kick in. They can dare the Obama team to cut off subsidies if states choose to take a relaxed view on the regulatory strictures, such as which mandated benefits must be included in a health plan, or how much cost-sharing can be allowed.

The best outcome would be for Congress to explicitly link any Obama administration “fix” to a regulatory setup that lets governors regain control of their state insurance markets. Congress could then couple it to indefinite extensions of other arbitrary waivers, such as the mandate on employers with more than 50 “full time” workers that they must provide coverage at work. It was set to begin in 2014. The White House delayed its full implementation until the end of the president’s term, thus skirting the economic cost.

Developments are creating the groundwork for a Health Care Compact type solution.  The sheer unwieldiness of Obamacare is creating a demand for simpler, subsidiary solutions.  The need to quickly segue into alternative arrangements in the wake a collapse in the ACA subsidy system is driving things towards governance reform.

Now is the time for a more concerted effort to build alliances with the various movements to replace Obamacare.  So far Democrats have been lulled into the false belief that only a Republican-designed monster bureaucracy can replace a Democrat-designed monster bureaucy.  It has never occurred to them that the ultimate endgame may be no monster bureaucracy at all. Just checks paid to people to help them afford the care they choose.

Death and Taxes

POSTED about 4 weeks ago BY HEALTH CARE COMPACT

The intimate connection between the IRS and Obamacare was confirmed by a pair of news stories.  The first, from the Daily Signal, reports that the IRS is asking for a $67 M budget increase and 483 more employees to implement the administration’s flagship health program.

President Obama released his $4 trillion budget proposal for fiscal year 2016 this week, which includes $13.9 billion for the Internal Revenue Service. The agency asked Congress for close to $2 billion more for operations than last year—a 16 percent increase.

The billions of dollars will help the agency bolster its staff by adding more than 9,280 full-time employees. The proposed jump in employment at the IRS is an 11 percent increase from 2015.

To enforce the 46 new tax provisions of the Affordable Care Act specifically, the IRS asked for $67 million. That will cover 483 new employees related to Obamacare’s implementation."

The second story, from Forbes, concerns proposed new regulations which will permit the denial of passports to those who owe money to the IRS.  At present the trigger amount for denial is a $50,000 debt.  As Forbes writes, “a $50,000 tax debt is easy to amass today. … In that sense, the you-can’t-travel idea seems extreme. Some commentators noted that a far smaller sum of unpaid child support can trigger similar passport action.”

A failure to meet the individual mandate or refund the government might conceivably put one over the top.  The accretion of tax rules highlights the growing linkage between the tax agency and the implementation of social policy.  There are said to be two inescapable things in life: death and taxes.  Obamacare may not be able to prevent death, but it can make sure you know about taxes.

Cruz, Jindal Warn Against Fraternizing with the Foe

POSTED about 4 weeks ago BY HEALTH CARE COMPACT

Hopes that Obamacare repeal efforts can be easily saved defeated by backroom dealing were dashed  by two warning shots fired across the bows of the Washington GOP establishment by the party’s conservative wing.  Both Ted Cruz and Bobby Jindal, contenders of the votes of the conservative bloc, warned that the GOP wasn’t returned in the midterms simply to roll over and play dead.

Cruz said:

The Senate should use reconciliation and “every procedural means possible” to repeal Obamacare.

CNSNews.com asked Cruz, “Given that the Senate enacted Obamacare in a reconciliation measure that required only 51 votes, would you support repealing Obamacare with only 51 votes?”

“Absolutely,” Cruz responded. “If it can be passed with reconciliation, it can be repealed with reconciliation. And we need to use every procedural means possible to fight to stop the train wreck that is Obamacare.”

“I believe in 2017 a Republican president will sign legislation repealing every word of Obamacare.”

Bobby Jindal was even more cutting and direct in his warnings. “If the whole point of this [2014] election was simply to give John Boehner and Mitch McConnell nicer offices, let’s give ‘em back,” Mr. Jindal said during an anti-Common Core event at Washington’s Mayflower Hotel.

“Right now you’ve got an attempt by many in this city to say, ‘Well, we can’t really repeal Obamacare,” Mr. Jindal said. “Never mind all the rhetoric, never mind all those promises we made on the campaign trail, it would just be too difficult… My message to Republican leaders, the Republican Party, Republican elected officials, do what you promised you were going to do when you asked us to vote for you. Second, don’t become just cheaper Democrats. We don’t need Democrat Lite.”

The shots at the Capitol’s GOP leaders are aimed at an audience of conservative activists hungry for action – to repeal the loathed health care law, snuff out the Common Core education standards, and fight the culture war many conservatives fear they are losing.

For this audience, Mr. Jindal condemns “elites,” whom he identifies as virtually any official aimng to implement President Barack Obama’s health care law or the Common Core standards, or those trying to reduce the size of soda cups in New York City.

“In my mind, the elites are those that think they know how to live our lives better than us,” Mr. Jindal, who graduated from Brown University and was a Rhodes Scholar, told reporters after his remarks. “President Obama has been a leader of that way of thinking, but there are many on the left, Secretary Clinton is included, that also share that mindset. I think that’s antithetical to the American experiment in self-governance and trusting the American people to make their own decisions.”

This threat from the flank promises to turn any attempt at easy accommodation by the GOP leadership into struggle for party leadership.  Any Republican who aspires to become president in 2017 will have his work cut out for him without the support of the factions which Cruz and Jindal lead.

This means that the fight over Obamacare will be the serious one that Democratic strategists have long denied was even possible.

Tennessee Kills Medicaid Expansion

POSTED about 4 weeks ago BY HEALTH CARE COMPACT

The defeat of Republican Tennessee Gov. Bill Haslam’s alternative plan to expand Medicaid under Obamacare can be interpreted as an act of political calculation.  Members of his own party shot down an attempt “with Haslam negotiating with federal officials for months on an approach that included conservative policy elements. But Insure Tennessee always faced significant obstacles in getting legislative approval, and it was killed even though hospitals had agreed to cover the state’s share of the costs.”

Even though Haslam said that his plan, “Insure Tennessee is not Obamacare”, “some Republicans were also skeptical of Haslam’s contention that the state wouldn’t be saddled with costs from expansion.”

Republican Rep. Jeremy Durham pointed out that the White House previously proposed lowering the provider taxes states can levy and that Tennessee’s Sen. Bob Corker has called for eliminating them.

“The idea that there would be no state dollars [involved], I just don’t find that realistic,” Durham said Tuesday.

It may also be that the Republicans have estimated that Obamacare is sinking like the Titanic and want no part of the voyage. If the Republicans believed Obamacare had a future they would have hedged their bets through Insure.  Whether they are right in distancing themselves from it or not remains to be seen.

Stolen Data

POSTED about 4 weeks ago BY HEALTH CARE COMPACT

News that health insurer Anthem Inc had been hacked, leading to the loss of 40 million client records including “names, birthdays, social security numbers, street addresses, email addresses and employment information, including income data” is sure to raise concerns about how secure the Obamacare electronic health record system will be.

The FBI had warned last August that healthcare industry companies were being targeted by hackers, publicizing the issue following an attack on U.S. hospital group Community Health Systems Inc that resulted in the theft of millions of patient records.

Medical identity theft is often not immediately identified by patients or their provider, giving criminals years to milk such credentials. That makes medical data more valuable than credit cards, which tend to be quickly canceled by banks once fraud is detected.

Security experts say cyber criminals are increasingly targeting the $3 trillion U.S. healthcare industry, which has many companies still reliant on aging computer systems that do not use the latest security features.

The Los Angeles Times says “the data breach comes at a crucial time for Anthem. The company is trying to sign up thousands of people in Obamacare.”  Obamacare itself is sharing policyholder data with third party providers, a practice that was cut back only after an outcry arose.

Health officials are scaling back the amount of consumer data shared with private companies amid privacy concerns for consumers on the federal ObamaCare exchange.

The Obama administration made changes to the HealthCare.gov website that limit the amount of data available to third parties for marketing or analysis, The Associated Press reported Friday afternoon.

A Republican congresswoman has charged this is proof that Obamacare is selling patient data.

Rep. Marsha Blackburn (R-TN) laid out in an exclusive interview with Breitbart News at the Iowa Freedom Summit the biggest coming scandal of 2015: That the Obama administration is allowing corporations to data mine from healthcare.gov.

“We finally have confirmation—I had anecdotal evidence on that when healthcare.gov started up,” Blackburn said. “They denied, denied, denied. Now we have confirmation that yes, indeed, that what healthcare.gov has done is allowed data mining. What we’re trying to find out now—and we’re investigating—did they make money? Did they sell your data? Who got the money? What pool did that money go to? Did that come back into taxpayer funds? Or, have companies been given free access?”

Blackburn, the vice chairman of the House Energy and Commerce Committee, said congressional hearings are in the works right now, too. “Absolutely, you’re going to see hearings on this,” she said, “because the federal government first and foremost has to protect your data.”

This may prove to be untrue, but it doesn’t mean that the government can’t lose data accidentally or become a victim itself. Obamacare has put out a tender to vendors to build a National Data Warehouse, gathering all the eggs as it were, in one basket.  Although the federal government will doubtless assure consumers that the data will be protected, they cannot possibly guaranty it.  After all, Edward Snowdown stole many of the secrets of the NSA.  It is hard to believe that Obamacare data will be secured more tightly than classified info at NSA. Putting all the data in a single warehouse means that if a hacker gets in, he gets everything.

Striking Down Obamacare Won’t Cause a Constitutional Crisis

POSTED about 4 weeks ago BY HEALTH CARE COMPACT

Linda Greenhouse argues in an op-ed piece in the New York Times that a Supreme Court decision finding against the government in King vs Burwell “would change the nature of the Supreme Court” from a fair arbiter to a wrecker.  She believes this even though until recently she thought the government would lose.

But the new Affordable Care Act case, King v. Burwell, to be argued four weeks from now, is different, a case of statutory, not constitutional, interpretation. The court has permitted itself to be recruited into the front lines of a partisan war. Not only the Affordable Care Act but the court itself is in peril as a result….

To reject the government’s defense of the law, the justices would have to suspend their own settled approach to statutory interpretation as well as their often-stated view of how Congress should act toward the states. …

Readers of this column may recall my expression of shock back in November when the court agreed to hear King v. Burwell. A three-judge panel of the federal appeals court in Richmond, Va., had unanimously rejected the challenge to the law, and the plaintiffs’ appeal didn’t meet the normal criteria for Supreme Court review. A defeat for the government — for the public at large, in my opinion — seemed all but inevitable.

While I’m still plenty disturbed by the court’s action, I’m disturbed as well by the defeatism that pervades the progressive community. To people who care about this case and who want the Affordable Care Act to survive, I have a bit of advice: Before you give up, read the briefs. (Most, although not all, are available on the website of the American Bar Association. ) Having read them this week, I’m beginning to think for the first time that the government may actually prevail.

But the real danger to Obamacare isn’t an ideological court.  All political parties and justices have ideologies -- for many it’s their reason for existence.  The major problem with Obama is money.  Behind all the talk about statutory interpretation is one salient fact.  Without subsidies Obamacare is unsustainable.  Greenhouse would readily agree based on her column.

If the Supreme Court agrees with the challengers, more than seven million people who bought their insurance in the 34 states where the federal government set up the marketplaces, known as exchanges, will lose their tax subsidies. The market for affordable individual health insurance will collapse in the face of shrinking numbers of insured people and skyrocketing premiums, the very “death spiral” that the Affordable Care Act was designed to prevent.

What is less obvious is that even with subsidies Obamacare is unsustainable.  Medicaid expansion in the states and subsidies are ultimately appropriations questions.  Thus even if the Supreme Court holds for the government, the operation of reality and arithmetic may doom it anyway.

Greenhouse’s argument about taking the statute in context goes far, but not far enough.  Money is important.  Striking down Obamacare subsidies won’t cause a Constitutional Crisis unless declaring an unaffordable bill constitutional does.

The Supreme Court Attempts to Break the Tie

POSTED 4 weeks ago BY HEALTH CARE COMPACT

Michael Cannon of Forbes creates a compendium of legal arguments, both pro and contra, for King vs Burwell in the Supreme Court.  The case is to decide whether the Federal Government can pay subsidies to Obamacare policy holders in states which have refused to establish an exchange.

The existence of case illustrates how narrow the margin for the ACA actually -- and how inflammatory it has become into the bargain. Laws which are passed without bipartisan support are only as stable as the width of their voting base.  Without bipartisan support, bills like Obamacare will be perceived as a diktat.

To a large extent the mere fact that the Supreme Court may have the decisive role to play in Obamacare’s creation is an admission of how few Obamacare’s political margin really is.  The political system is stalemated, with the Republicans holding the legislature the Democrats the White House.  They are therefore looking to the Supremes to block the tie.

But it will it work? No matter which way the USSC goes the divisions over government’s role are revealed to be deeper than ever.  In retrospect president Obama managed, whether intentionally or otherwise, to exacerbate the debate over the scope of the state in American life.  The source of Obamacare’s great controversy lies in that it is a proxy for a fundamental philosophical division of opinion in American life.

Josh Earnest Refuses to Talk About the Individual Mandate

POSTED 4 weeks ago BY HEALTH CARE COMPACT

White House Press Secretary Josh Earnest appeared not to support a Treasury Department estimate that up to 6 million American might find themselves paying more tax money to Uncle Sam as a result of the Obamacare they bought.  Earnest said:

"I don't think it is accurate to suggest that millions of people are going to get a tax bill as a result of this," Earnest said in response to a question Tuesday about the millions of Americans who will pay a tax penalty for not having health insurance in 2014. "The vast majority of Americans, more than three-quarters of Americans, are just going to have a box to check on their tax form to confirm that they've had health insurance. And so the impact that we are talking about here is very small and for the vast majority of people has been very positive."

Tax questions about Obamacare make the administration uncomfortable.  A New York Times article suggests that the unintended consequence of Obamacare’s tax provisions are so severe the administration is considering ‘exempting’ more people from them to avoid the political fallout.  The article begins:

Obama administration officials and other supporters of the Affordable Care Act say they worry that the tax-filing season will generate new anger as uninsured consumers learn that they must pay tax penalties and as many people struggle with complex forms needed to justify tax credits they received in 2014 to pay for health insurance.

The White House has already granted some exemptions and is considering more to avoid a political firestorm.

Little wonder then that Josh Earnest attempted to downplay the penalties, even though millions will be hit by them.  No one likes to admit the authorship of a debacle.  Taxes and medical costs are the Achilles Heel of the Affordable Care Act.  Not even the president has figured out a way to pay for a free lunch -- without paying for it.

Obamacare Advocates Scoff at Repeal

POSTED 4 weeks ago BY HEALTH CARE COMPACT

The “months long” campaign against Obamacare has begun according to Reuters, with a vote by Congress directing committees to craft a replacement.  The scope of the intended demolition is the entire edifice.

Defying a White House veto threat, lawmakers voted 239-186 on a measure to eliminate the complex web of federal subsidies, insurance reforms, taxes and regulations that have extended health coverage to millions of Americans since the Affordable Care Act became law in 2010.

President Obama has publicly vowed to veto legislation and the Republicans do not have the numbers to override a presidential veto.  The Washington Post’s Dana Milbank, in an op-ed piece, calls it an exercise in futility, emphasizing the lack of heat and passion in the vote to repeal. But that is because the real action is expected later.

Greg Sargent, blogging in the Washington Post thinks the Republicans “would make it easier for the Supreme Court to side with the challengers and gut subsidies” and endanger the whole edifice of Obamacare.

Meanwhile, as Brian Beutler reports, a new brief filed by public health scholars predicts thousands of deaths could result from a decision gutting subsidies for millions. Now, perhaps the Justices won’t factor in such potential consequences — or the likely failure of Republicans to offer any alternative for all or some of those people — as they make their decision. But as noted above, even conservative and Republican critics of the law appear to think they just might.

Given that only a few months ago, Obamacare’s advocates scoffed at the idea that the challenge to the law would ever reach the Supreme Court, the idea that it is now under existential threat now sounds like whistling past the graveyard.  It suggests ACA advocates had made a fundamental miscalculation in the odds in the law, just as they made a blunder in politics, believing Obamacare would win them the gratitude of the electorate -- which it did not as the 2014 midterm elections showed.

The Obamacare advocates are bluffing with their contrived confidence.  Obamacare is under real threat and its poor economics suggests that it ultimately cannot survive.

Truly Unaffordable Care

POSTED one month ago BY HEALTH CARE COMPACT

High costs continued to be the weak point of the Affordable Care Act. Rachel Garfield and Katherine Young of the Kaiser Family Foundation completed a study of those who remained uninsured, despite the offer of the metal plans in Obamacare.  They found the plans offered unaffordable even with the subsidies.

Nearly three in ten (29%) uninsured adults who applied for ACA coverage said they did not obtain that coverage because they believed it was too expensive. Many who cited cost barriers were ineligible for financial assistance under the ACA and would have faced the full cost of Marketplace coverage. However, more than four in ten who cited cost as a reason for not enrolling in coverage were eligible for financial assistance. Many appear to be eligible for tax subsidies, but they may have still found Marketplace coverage to be unaffordable even with subsidies.

Not only are the costs of Obamacare blowing out, but even with 15 tax increases and the bailouts of insurance companies people simply can’t afford the product.  In fact the underlying health care product got even more expensive under Obamacare, though this increase was disguised as higher deductibles and narrower networks.  But now it seems that even with deductibles Obamacare is simply unaffordable.

This can only mean Obamacare is doomed.  A program can survive opposition from the rival political party, but it can never survive financial infeasibility.  Obamacare got its sums wrong and will perish, not from politics, but from economics.

More Alternatives to Obamacare Emerge

POSTED one month ago BY HEALTH CARE COMPACT

Louisiana Governor and Republican stalwart Bobby Jindal fired a shot across the bow of GOP congressionals when he denounced plans to replace Obamacare with a watered-down version of itself.  He averred to proposals aimed at raising taxes by only half the amount that the Affordable Care Act has raised them.  In the matter of taxes, Jindal writes:

The law is chock full of them — no fewer than 18 revenue raisers totaling over $1 trillion through 2022.Yet several alternative proposals being discussed by Republicans don’t actually repeal the law’s tax increases. Instead, they repeal the law’s tax increases, only to replace them with new revenue hikes. So, rather than raise taxes by more than $1 trillion, as Obamacare did, these plans raise taxes by perhaps, say, “only” $500 billion.

This puts Republicans in the positions of being “cheap” Democrats, or Democrat-lite. We’ll raise taxes — but just … less than Obamacare. We’ll spend hundreds of billions on new entitlement programs — but just … less than Obamacare.

The talking points put forward by the administration project this exact seductive scenario.  Republicans ‘must’ save or change Obamacare -- by tweaking it.  They have no ‘responsible’ alternative but to fund it, etc. Jindal says that at least some congressional Republicans are planning exactly that.

Jindal has put forward a plan of his own called America Next.  It contains some of the ideas espoused by Paul Ryan, but has a slightly different way of implementing a voucher.  Both plans aim at putting health-money in the hands of consumers.  Jindal’s plan appears more oriented toward block grants.  

The scope of both plans is beyond this article to compare. However the emergence of competing Republican plans signals the start of serious competition for an Obamacare replacement within the greater conservative world.  The Jindal plan, with its emphasis on money given the states given “with minimal restrictions” aligns somewhat with the Health Care Compact.

Obamacare is foundering.  Jindal argues that it must be buried, not just bureaucratically, but intellectually repudiated into the bargain.  In order to achieve that its successor cannot afford to be some kind of weakened form of the Affordable Care Act. The time is right for simplification; the opportunity is here for the HCC to assert itself.

Tax Time Debacle

POSTED one month ago BY HEALTH CARE COMPACT

A New York Times article suggests that the unintended consequence of Obamacare’s tax provisions are so severe the administration is considering ‘exempting’ more people from them to avoid the political fallout.  The article begins:

Obama administration officials and other supporters of the Affordable Care Act say they worry that the tax-filing season will generate new anger as uninsured consumers learn that they must pay tax penalties and as many people struggle with complex forms needed to justify tax credits they received in 2014 to pay for health insurance.

The White House has already granted some exemptions and is considering more to avoid a political firestorm.

An administration official observed: “Mark J. Mazur, the assistant Treasury secretary for tax policy, said up to six million taxpayers would have to ‘pay a fee this year because they made a choice not to obtain health care coverage that they could have afforded.’”  But how would Mark Mazur know what a person might have afforded?  Certainly he would be assisted in that determination by models, estimates, statistics and the like.  But Mazur can never actually know the preferences of every consumer or what pressing expenses might at that very moment take a higher priority than enrolling in Obamacare.  The Individual Mandate is a coercive instrument employed by a paternalistic government that seriously believes it knows how better to spend an individual’s money than the individual does.

Many people awarded insurance subsidies for 2014 did not realize that the amount would be reviewed and recalculated at tax time in 2015.

Consumers are sure to have questions, but cannot expect much help from the tax agency, where officials said customer service had been curtailed because of budget cuts.

The 2015 filing season could be the most difficult in decades, officials said. Ms. Olson said new paperwork resulting from the Affordable Care Act would probably exacerbate problems with customer service, which “has reached unacceptably low levels and is getting worse.”

“The I.R.S. is unlikely to answer even half the telephone calls it receives,” she added. “Taxpayers who manage to get through are expected to wait on hold for 30 minutes on average and considerably longer at peak times.”

Timothy S. Jost, an expert on health law at the Washington and Lee University School of Law who supports the Affordable Care Act, said: “It will be very easy to find people who are unhappy with the new tax obligations — people who have to pay a penalty, who have to wait forever to get through to somebody at the I.R.S. or have to pay back a lot of money because of overpayments of premium tax credits.”

And they would be unhappy for a good reason.  Supporters of the Act might argue that consumers are being unreasonable in their outrage, but a glimpse at the byzantine forms they must complete must generate some sympathy for the poor taxpayer.

The calculations will be relatively simple if all members of a household had coverage for every month of 2014. They can simply check a box on their tax return. But lower-income people often have changes in employment, income and insurance. If any members of a household were uninsured in 2014, they must fill out a work sheet showing coverage month by month, and they may owe penalties.

To claim tax credits, consumers need to fill out I.R.S. Form 8962, which includes a matrix with 12 rows and six columns — a total of 72 boxes, to compute subsidies for each month. Most taxpayers use software to prepare returns, and that will simplify the process, officials said.

The system as designed is bureaucratically regressive.  It is hardest upon the poor and the casually employed.  But that should be expected from a program that penalizes people who “made a choice not to obtain health care coverage that they could have afforded.” The government stands ever-ready to spend your money, not the way you see fit, but the way Obamacare’s architects believe is rational.

Obamacare’s Unknown Tax Burden

POSTED one month ago BY HEALTH CARE COMPACT

Even though the total cost of each additional Obamacare enrollee has been estimated to be $50,000, nobody really knows for sure what the program will cost.  It isn’t that agencies like the CBO have refused to predict it, it is that they can’t. Americans for Tax Reform looks at a recent Congressional Budget Office report and find this gem about the the 15 tax increases which are part of the law. (Emphasis mine)

Those estimates address only the insurance coverage provisions of the ACA and do not reflect all of the act’s budgetary effects. Because the provisions of the ACA that relate to health insurance coverage established entirely new programs or components of programs and because those provisions have mostly just begun to be implemented,CBO and JCT have produced separate estimates of the effects of the provisions as part of the baseline process. By contrast, because the provisions of the ACA that do not relate directly to health insurance coverage generally modified existing federal programs (such as Medicare) or made various changes to the tax code, determining what would have happened since the enactment of the ACA had the law not been in effect is becoming increasingly difficult. The incremental budgetary effects of those noncoverage provisions are embedded in CBO’s baseline projections for those programs and tax revenues, respectively, but they cannot all be separately identified using the agency’s normal procedures. As a result, CBO does not produce estimates of the budgetary effects of the ACA as a whole as part of the baseline process.

This reflects the essential unknowability of what will be spent.  As the paragraph above notes, the CBO is in terra incognita.  Hence, nobody really knows how much of a tax increase Obamacare has plunked down on the taxpayers.  The benefits of Obamacare are so far, hypothetical.  What it is going to cost is also nebulous.

This should be borne in mind the next time it is described in glowing terms.

King vs Burwell May Not Matter

POSTED one month ago BY HEALTH CARE COMPACT

The New Republic hinted that administration might have a few aces up its sleeve if the Supreme Court rules that subsidies to Obamacare policy holders cannot be paid to states which have not established an exchange. “It is thus not in their interest to betray any suggestion that they’re working on contingency plans—legal, political, legislative, administrative—and thereby alert the Court that it would not be inviting Armageddon by ruling for the plaintiffs. Even as the absence of contingency planning would amount to a stunning dereliction of duty.”

Nevertheless the implication is that the administration can find some way to work around the subsidy problem -- probably by delivering the same funds via another method.

But while Obamacare’s advocates are unable to talk about their own contingency plans, they are full ideas about how the Republicans can let them off the hook. The Huffington Post writes: “Some wording in one section of the law is the source of the dispute -- an ambiguity that Congress could fix with a simple, one-line correction.”

In their estimation the Republicans could never craft a magnum opus equivalent to Obamacare’s in just a few months.  The Huffington Post engages in mirror-imaging when it says:

But drawing up a health care bill can't really be done "quietly" -- or quickly. The debate over the Affordable Care Act dragged on for more than a year in Congress. And that was just the final stage of a process that had unfolded over roughly a decade, during which time liberal intellectuals and interest groups hashed out different ideas for how to write legislation and then how to build a political coalition that could pass it. It took such a long time because devising even narrowly tailored health care legislation requires coming to grips with difficult trade-offs -- and then dealing with politically powerful constituencies that might not like them.

It has never occurred to them that simplification, rather than feature-for-feature replacement might be the Republican goal.  The Orange County Register rightly identifies the real threat to Obamacare as stemming, not from some provision of the law, but from the lack of money. As the cost of the ACA and its associated taxes and penalties come to the fore, it becomes increasingly difficult to see it as sustainable.

We think there are ample grounds, including the report this past week by the nonpartisan Congressional Budget Office, which estimates that the health law will cost the federal government a net $1.35 trillion from 2016-25.

That vast sum will reduce the ranks of the uninsured by 24 million to 27 million, according to CBO. That works out to a cost of $50,000 per person, which puts the fritters to the canard advanced by supporters of the Affordable Care Act that the law has significantly reduced the per capita cost of health care.

Then there was the estimate this past week by the Treasury Department that as many as 6 million Americans will have to pay an Obamacare tax penalty this year because they were uninsured in 2014. The penalty is 1 percent of income above a certain threshold – for instance, $20,000 for a couple.

Even if the Republican congress let the administration off the hook with a “one line correction”, it is hard to see how the government can keep paying these subsidies at a sufficient level to make a cost-effective difference in health care. In that case the administration has no contingencies in the event of a loss in King vs Burwell, or even a victory for that matter.

Ryan, Upton and Kline

POSTED one month ago BY HEALTH CARE COMPACT

Rep Paul Ryan has been put in charge of crafting a Republican alternative to Obamacare.  It is an indication that the GOP sees the vote to repeal Obamacare as doomed to fail from a presidential veto.  The Republican alternative to be drafted by Ryan’s committee, represents the follow-on attack in what appears to be a repeal and replace strategy.

A trio of Republican committee chairmen will immediately get to work on drafting the party’s ObamaCare backup plan, House Majority Leader Kevin McCarthy (R-Calif.) announced Friday.

The working group is forming one day after McCarthy announced the House would vote next week to fully repeal ObamaCare, marking the first repeal vote of the GOP-controlled Congress.

McCarthy said Friday that the party “recognizes that full repeal requires a thoughtful replacement strategy.” …

In addition to Ryan, the two other chairmen shaping the ObamaCare alternative will be Energy and Commerce Committee Chairman Fred Upton (R-Mich.), and Education and the Workforce Committee Chairman John Kline (R-Minn.).

Ryan’s appointment commits the GOP to a fairly radical overhaul strategy, since he has gone on record as saying that Obamacare is “beyond repair”.  “You can't fix a fundamentally broken law; you've got to replace it. That's why Congress can't save Obamacare with a few tweaks, despite what its defenders say. No quick fix can correct the main flaw: The law takes power away from patients and hands it to bureaucrats.”

Some indication of the approach that Ryan will prefer is given in his extensive writing on the subject, notably his Path to Prosperity template, which basically reduces the government’s role in medical care provision to supplying a voucher which customers can then use to purchase the insurance of their choice.  There are a few other provisions to take care of the inuninsurables, but fundamentally it attempts to dismantle the entire historical edifice of Medicare and special tax benefits in favor of a largely uniform voucher system.  Here is a summary of Ryan’s thinking as described in Wikipedia.

Medicare: Starting in 2022, the proposal would end the current Medicare program for all Americans born after 1957 and replace it with a new program (still called Medicare) which uses a voucher and would increase the age of eligibility for Medicare:

Starting in 2022, the age of eligibility for Medicare would increase by two months per year until it reached 67 in 2033.

After 2022, the current Medicare program ends for all people who have not already enrolled. People already enrolled in the current Medicare program prior to 2022 would continue to receive the program. New enrollees after 2022 would be entitled to a voucher to help them purchase private health insurance.

Beneficiaries of the voucher payments would choose among competing private insurance plans operating in a newly established Medicare exchange. Plans would have to insure all eligible people who apply and would have to charge the same premiums for enrollees of the same age. The voucher payments would go directly from the government to the private insurance companies that people selected.

The voucher payments would vary with the health status of the beneficiary. For the average 65-year-old, payment in 2022 is specified to be $8,000, which is approximately the same dollar amount as projected net federal spending per capita for 65-year-olds in traditional Medicare in that year.

Each year, the voucher payments would increase to reflect increases in the consumer price index (average inflation) and the fact that enrollees in Medicare tend to be less healthy and require more costly health care as they age. They would not increase by the higher, healthcare inflation rate.

The voucher payments to enrollees would also vary with the income of the beneficiary. The wealthiest 2% of enrollees would receive 30 percent of the premium support amount described above; the next 6% would receive 50 percent of the amount described above; and people in the remaining 92% the income distribution would receive the full premium support amount described above.

Eligibility for the traditional Medicare program would not change for people who are age 55 or older by the end of 2011 or for people who receive Medicare benefits through the Disability Insurance program prior to 2022. People covered under traditional Medicare would, beginning in 2022, have the option of switching to the voucher system.

The proposal would modify Medicaid as follows:

Starting in 2013, the federal share of all Medicaid payments would be converted into block grants to be allocated to the states. The total dollar amount of the block grants would increase annually with population growth and with growth in the consumer price index (average inflation).

Starting in 2022, Medicaid block grant payments would be reduced to exclude projected spending for acute care services for elderly Medicaid beneficiaries.

States would have additional flexibility in designing their programs.

Ryan’s plan has been criticized as cutting government spending on health, which it does. Those who favor the plan believe that by putting power back in the hands of consumers the excessive medical costs of the last decades may at last be trimmed.  However that may be, the plan that the trio of chairmen will propose may differ significantly from Ryan’s earlier thinking, but Path to Prosperity may give some notion of the starting point.

Obama’s Legacy, the Bill is in the Mail

POSTED one month ago BY HEALTH CARE COMPACT

A number of financial time bombs are ticking deep within the bowels of Obamacare.  The first, as John Graham points out, are the possibly unrealistic estimates of the CBO of the total program costs, arising from a higher than predicted subsidy rate and the reliance on historically low rates of health spending.

Medicaid savings in the January 2015 projection are due to 10 percent to 15 percent reductions in costs per beneficiary. The same holds for the $51 billion of savings due to lower subsidies to health insurers in Obamacare exchanges. CBO notes that cost increases in private and government health plans have been significantly slower than anticipated in previous years, and assumes this will continue. Nobody can fully explain the slower rate of health spending in recent years, but consumer-driven health plans and the Great Recession explain much of it.

This challenges CBO’s long-term projections: CBO now projects real (inflation-adjusted) growth in Gross Domestic Product (GDP) of over two percent per annum though 2025, so it appears imprudent to expect health spending to continue to increase at a recessionary pace. Another challenge is that CBO projects that only 75 percent of enrollees will receive subsidies in 2015 and 71 percent in 2025 (p. 122). However, 87 percent received subsidies in 2014.

The second are the possibly illegal risk sharing arrangements that the ACA has with insurance companies. These are described by Scott Gottlieb. All of them have the effect of putting the taxpayer on the hook for company losses.  The fourth is the one that Gottlieb doesn’t mention: what if the government runs out of money?

At issue are risk-sharing arrangements contained in Obamacare that are meant to help offset losses insures might take as the program gets started. Collectively, these programs have become known as “the three Rs” because of their three elements.

The first component is risk adjustment — a mechanism for transferring funds from plans that enroll low-risk members to plans that attract high cost enrollees. The second piece is a reinsurance scheme. The government will cover a percentage of the losses for high cost enrollees whose medical bills fall above a certain threshold.

It’s third element – the risk corridors — that’s likely to cause the earnings woes.

The idea here is to share the financial risk with Uncle Sam. If the actual medical claims for any individual Obamacare plan fall above or below 3% of some target amount, then the health plan will keep all the gains or losses itself. Here’s the rub. For anything outside that threshold, Uncle Sam will split the money with the health plan, essentially capping their upside and protecting their downside. Specifically, for the first 5% of gains or losses, the government will split it 50/50 with the plans. For anything above that, the government will take 80% of the extra gains or losses. …

The controversial wrinkle is this: By the estimation of many, the program was intended to be budget neutral – basically paying for itself by transferring money from insurers that made profits to those that did not. The problem was that there weren’t enough Obamacare plans making money to fund the kitty. So like many other parts of Obamacare, the President re-interpreted the rules, and said that the risk corridors could be funded off taxpayer money that was skimmed from other programs. In other words, the monetary obligations would become open ended.

Obamacare’s costs have probably been underestimated.  When the bill comes due Obama may be long out of office and thus escape personal blame.  But he will leave posterity his “legacy” together with a pile of IOUs to pay for it.  There will be no escape from his bills.

Sink or Swim

POSTED one month ago BY HEALTH CARE COMPACT

Yevgeniy Feyman argues in Forbes that in a kind of operation of the law of unintended consequences, Obamacare’s infliction of high costs on the American public will lead to market reform.  Americans accustomed to ‘letting insurance pay for it’ will find that insurers aren’t going to pay of much and therefore drive a hard bargain. Feynman believes this will be good for everyone in the end.

Post-Obamacare, the new normal for millions of Americans will be high deductible health plans (HDHPs), narrow provider networks, and more complex cost-sharing schemes. The Obama Administration may not call it consumer-driven health care, but that’s what it is.

So it’s time to begin thinking about how patients will navigate a health care system in transition from historically generous low-deductible plans with broad networks and volume-based payment systems, to HDHPs with very skinny provider coverage.  Patients will be expected to shop around, but the information necessary to make informed decisions in the post-Obamacare world is still largely inaccessible.

No one will be spared.  Even traditionally generous employer-provided insurance will be beaten down by Cadillac taxes and employer mandates, so everyone will be watching the dimes. But the good news is that this will force consumers to shop around for deals.  After all, they couldn’t afford treatment if they didn’t.

Some inpatient coinsurance rates were as high as 50 percent, even after the deductible has been met. Moreover, you’d be hard-pressed to find a plan without a four-tiered formulary, with different levels of cost sharing for generic, preferred brand, non-preferred brand, and specialty drugs – with coinsurance rates as high as 75 percent for some specialty tiers.

This isn’t necessarily a bad thing. To limit unnecessary utilization, or to divert patients to more cost-effective treatments, insurers are experimenting with a broad range of tools that include coinsurance, network, and tiered benefit designs. But without appropriate information, patients will be left alone in the dark, stumbling blindly through the maze of American health care. And it appears that good information is still lacking….

Of course, the employer-sponsored market still offers much more generous protection than the individual market – with or without Obamacare. To understand how entrenched ultra-high-value insurance has been, just look at the reaction of Harvard faculty to the addition of cost-sharing in their health insurance plans. …

But thanks in part to overall trends (rising health care costs) as well as Obamacare’s Cadillac Tax, even historically generous benefit packages will either be reduced or will demand more contributions from employees.

So now we have patients facing deductibles, coinsurance, tiered benefit designs, narrow networks, and all sorts of other utilization management tools. But for these tools to be effective (and serve their purpose, rather than simply dissuading patients from using healtcomes critical. 20 percent coinsurance for a CT scan might be 20 percent of $500 or $2,000 depending on where it’s done. And unfortunately, though the information might be out there, it’s far from clear that patients are aware of it, or would take advantage of it.

But seeing as they have to -- for lack of money to do anything else -- then surely they will.  Feynman’s analysis coincides with an observation already made on this site:  that one purpose of Obamacare was to increase the cost of medical care so less of it would be used. This is already happening.  Everyone is “covered”, but by a blanket so small and threadbare that an “informed consumer” to use Feyman’s phrase, must choose which part of his anatomy to warm.

There is no doubt that people will spend their healthcare dollars more carefully when things are so expensive.  But is it really fair to call such a policy a success?  It is a success, but in the sense of a policy that casts everyone into the sea so that everyone is in a position where he must either sink or swim.

Will you swim? Or will you sink?

The December Premium Skippers

POSTED one month ago BY HEALTH CARE COMPACT

Some time ago insurance companies warned that the grace period provision of Obamacare would allow scheming customers to avoid paying their last insurance bill, because companies were prohibited from denying benefits to those who were only 30 days in arrears.  The fear was that some customers would skip their December bill and simply enrol in a new plan come January.

That fear has now materialized.

Early returns for ObamaCare's fourth quarter are in, and it appears clear that paid enrollment levels took a dive.

That's not a surprise. As IBD noted back in December, "there is good reason to suspect that people will take advantage of ObamaCare rules to skip their final payment of the year without consequence." …

ObamaCare exchange customers who have a choice of carriers can stiff one and make a switch in the new year. Many had an incentive to do so this year because many of the most popular plans raised prices and were undercut by competitors.

Score one for the little guy? Not so fast.  Insurance companies are likely to compensate by charging other people a little more to make up for the people who skip the bill.  Ultimately the consumer will pay for the generous “grace” period mandated by the government.

There’s no free lunch and never was.

Boehner Readies For Assault

POSTED one month ago BY HEALTH CARE COMPACT

John Boehner says he’s going to pull the trigger on Obamacare.  Didn’t say he’d hit it though. The Hill reports the speaker will unveil a new plan to comprehensively replace the ACA, in addition to holding a vote to repeal it now.

Speaker John Boehner (R-Ohio) is pushing back against new criticism that the Republican Party lacks a plan to replace ObamaCare, even as it renews its effort to repeal the law.

“There will be an alternative, and you will get to see it,” Boehner told Fox News's Bret Baier in an interview that aired Wednesday night.

Leaders of the three House committees that oversee healthcare policy are currently “working together to craft, what we believe, what would be a better approach with regard to healthcare for the American people,” Boehner said on “Special Report with Bret Baier.”

The three-term Speaker also defended his party’s decision to hold another ObamaCare repeal vote next week.

By placing D-Day in the future Boehner is suggesting that they are still working on the real assault.  That will involve dangers of its own, the biggest being that a new comprehensive plan may simply be a Republican one-size-fits-all version of the Democrat one.  It may be just as unwieldy a behemoth as the monster it seeks to replace.

It would be far better if the Republicans merely passed a governance framework, as envisioned by the Health Care Compact, in order to break up the problem into manageable chunks.  The biggest source of health policy failure has been Federal government intervention.  It will not be free of it until governance of the problem is devolved to the states.

Squeezing Into the Obamacare Corset

POSTED one month ago BY HEALTH CARE COMPACT

Like a plump woman trying to fit into a corset, the managers of Obamacare find themselves trying to keep bloat they themselves created from escaping its restrictions.  Jason Millman at the Washington Post writes that insurers are trying to claw back mandated benefits by expanding the fine print.

One of the greatest promises of the Affordable Care Act is that if you are sick or get sick, health insurers can no longer charge you more or avoid covering you altogether. They have to provide coverage to anyone who wants it, and they're not allowed to cherry pick healthier customers over sick customers.

But patient groups say they've spotted an alarming trend of some health insurance plans designing drug benefits to purposefully keep out sicker, costlier patients. It's currently the subject of a federal complaint, and a new study offers evidence this is happening across the country.

Here's how advocates say this works. Rather than reject coverage for sick patients altogether, some insurers are placing high-cost medications for chronic conditions into the highest-priced tiers of the drugs they cover, which would force patients to pay potentially thousands of more dollars out of pocket for essential medications.

This is especially true of persons suffering from chronic diseases requiring expensive treatments, like HIV patients. This is how it works.

Douglas Jacobs, who is pursuing degrees in public health at the Harvard T. H. Chan School of Public Health and medicine at the University of California, San Francisco, and also the lead author of the study, suggests that some insurers are dissuading HIV patients from enrolling due to high-cost HIV drugs.

Usually, insurers get a person to complete a set of forms, provide a list of covered drugs and out of pocket costs for steering patients to medicines or generic drugs for which an insurer has already negotiated a favorable cost. Ben Sommers, the co-author of the study, suggests that forms can be designed in a way that discourages people with pre-existing medical conditions.

The study analyzed 48 Obamacare, or ACA, policies across 12 states in the country with the help of the federal Healthcare.gov marketplace. The study found that in 2014, 12 policies placed all HIV drugs covered under the policy, which required consumers to pay at least 30 percent of the cost. Some insurers did not cover the HIV drugs.

People in these plans had to pay three times the average cost per HIV drug in comparison to customers in other plans.

The Washington Post suggests the government will try to fix the problem by prohibiting the practice.   But this seems unlikely to work.  It stems directly from the failure of the program to cut costs.  Absent real economies, insurance companies are simply forced to transfer money from one set of policy holders to other.  By mandating the treatment of people with pre-existing conditions, Obamacare created a financial commitment that could only be met by raising premiums on healthy people, raising taxes or skimping on benefits.

The Obama administration recently said it would consider it a form of discrimination if a health plan put "most or all" drugs treating a specific condition at the highest levels of cost, a development that Schmid of the AIDS Institute said he was encouraged by. In a letter to health insurers last month, CMS said it might review exchange plans to determine whether insurers designed plans with high out-of-pocket costs for certain conditions, including bipolar disorder, diabetes, HIV, rheumatoid arthritis and schizophrenia.

The fat policylady won’t fit in the Obamacare corset.  Her failure to lose weight means that the fat bulges which are compressed in one place, pop out in another.  The only short-term answer, given her failure to diet, is to buy a bigger corset. This will take the form of expanding the budgetary limits on how much the taxpayer can spend to support the new costs.

Treating a person with HIV is as expensive as ever.  Given that such patients cannot be charged the full value of their insurance because pre-existing conditions are discriminatory, some form of subsidy must be found to make up the difference.  The bigger bill means the hat has to be passed around yet again.

Voters may choose to pay more, but politicians who have promised the public something for nothing dread the prospect of having to tell the truth.  The truth is that bringing patients with pre-existing conditions into the system may be a laudable goal, but it’s not free.  Nothing is free. Pay up, taxpayer. Pay up.

Sick Leave Is Paid For By—You!

POSTED one month ago BY HEALTH CARE COMPACT

Why not? If government is going to pay for it. A poll finds that 2 in 3 Oregon voters support sick paid leave of the sort being pushed by President Obama nationally.

When asked by telephone whether they would “favor or oppose a proposal to require all employers in Oregon to provide 7 paid sick days to their employees,” 67 percent of likely voters said they would favor or strongly favor the proposal, while 23 percent said they would oppose or strongly oppose it. The share that strongly supported the idea was more than three times as large as the share strongly opposed.

That is only a half measure.  The plan President Obama is proposing for federal workers includes paid parental leave too. “President Obama two weeks ago called on Congress to enact that benefit–which would be paid “administrative” leave that would not be charged against either sick leave or annual leave time–while separately ordering agencies to advance up to six weeks of paid sick leave for those purposes under existing authority.”

Who doesn’t want paid leave?  Who doesn’t want parental leave? If pollsters had asked respondents in Oregon if they were in favor of 70 days paid sick leave, close to a hundred percent would have said, “yes”.  The only ones who might have said “no” are those who wonder whether the employers might try to recover the costs by trimming wages or benefits in other areas.

Long instinct will have warned them how in this wicked world there is rarely something given for nothing.  Sooner or later the bill will arrive. And that instinct would be correct, says Tim Worstall at Forbes.  He points out that a lot of companies already pay for sick leave because hey have calculated it as part of the package of attractions they want to offer.  By forcing companies that don’t offer sick leave to mandatorily offer it, the result will probably be pay cuts.

He writes that compensation packages are capped by what the employer can afford to offer.  Increase one “benefit” and you will shrink other benefits, including wages, as the company struggles to make it add up.

To an employer hiring someone has a cost. The closest approximation to that we have in the economic statistics is “total labour compensation.” That’s the wages they get paid, of course, but also all of the benefits that go with the job. Paid maternity leave, paid sick leave, pension contributions, health care insurance, taxes paid on employing someone (for example, the employer contribution to FICA taxation) and so on. We have to add all of these together to get what is the total cost to an employer of having an employee. And it’s this number that interests the employer as well. They will have some pretty good idea of how much they can make by employing someone and if that total compensation is higher than those earnings then that person isn’t going to get hired (or remain so).

In particular, mandated sick leaves will eat into any future wage increases.  If you get a raise via a sick leave, you probably won’t get the wage rise you might have otherwise.  Now some people would prefer to have the paid sick leave.  But then you might have figured that into your choice when you applied for a job.

But one way or the other there’s no free lunch.  There never was.

The Return of the Native

POSTED one month ago BY HEALTH CARE COMPACT

The Wall Street Journal notices that the firm most responsible for the Obamacare website’s failed roll out is back. They have been rewarded, apparently, for doing a lousy job.  The WSJ is outraged, but are they surprised?

So what does it take to ruin your reputation around Washington these days? The question comes to mind after learning that one of the capitol’s most corrupt bureaucracies has decided to hire one of its most incompetent contractors—and the answer explains a lot about accountability in government.

Only days after the Internal Revenue Service announced that it would throttle back tax-season customer service in retaliation for modest budget cuts, the House Ways and Means oversight subcommittee discovered that the agency had an active $4.46 million contract with CGI Federal. You may recall that company as the same outside website-builder-for-hire that was the lead designer for the ObamaCare website rollout fiasco of 2013.

CGI’s ineptitude was too much even for the Health and Human Services Department, which defenestrated CGI in January 2014. Several states followed. In a letter to the IRS on Friday, Illinois Republican Pete Roskam deadpans, “I am concerned that just months after the HHS and Massachusetts firings, the IRS selected the same contractor to provide critical technology services related to the administration of the Patient Protection and Affordable Care Act.”

In other words, the IRS isn’t merely buying CGI’s services but, yes, rewarding the company with a new health-care consignment. Mr. Roskam is requesting more information about this consolation prize, and well he should. The law’s convoluted income-reporting provisions will make filing for people who receive insurance subsidies a special ordeal.

Surely the WSJ staff must have been sagacious enough to realize that firms like CGI are very competent, except that their skills are not the sort which are described in the job specification.  CGI can work within the system, which itself incompetent.  It can be said to be “competently incompetent”.  It fits right into Obamacare.

They were only banished for show.  Now, as anyone would have expected, it’s time for the return of the native.

Rich Government, Poor Government

POSTED one month ago BY HEALTH CARE COMPACT

One of the most interesting things about the administration is that it can be both rich and poor at the same time.  For example, the government is desperate to save money on military health care. “(AP) — U.S. officials say an independent commission is recommending broad changes to the military's retirement and health care systems that could save more than $20 billion over the next four years.”

That’s because they can’t afford it’s rising costs. But at the same time the administration touts the lavish subsidies it has poured into Obamacare premiums.  “Here. Here. Take these subsidies,” it seems to say. In fact the Washington Times says the president wants to completely liberate himself from any spending ceilings and let ‘er rip.

WASHINGTON (AP) - President Barack Obama will seek to bust through spending limits for both domestic and defense programs, the White House said Thursday, negating the effects of across-the-board cuts agreed to by both Democrats and Republicans and signed by Obama into law. ...

The brazen proposal from the president, two months after voters booted his party from control of Congress, reflected the White House’s newfound confidence on the economy. Obama’s aides believe that improving conditions give Obama credibility to push his spending priorities unabashedly - despite the fact that Republicans still believe government spends far too much.

Federal deficits, gas prices and unemployment are all falling, while Obama’s poll numbers have crept upward. The president has been newly combative as he argues it’s time to ease the harsh measures that were taken to help pull the economy out of recession.

How can the government be both rich and poor at the same time?  The answer to the puzzle is that government is “rich” whenit wants to buy support from voters. Then it is “poor” when it needs to find the tax revenues to pay for its wealth.  If it cannot find tax revenue it simply pays a captive group, like the military, less.  It then the uses the “savings” to provide benefits for new voters, like amnestied immigrants.  Once the immigrants are firmly in the bag, then they too will be taxed or subject to economies as the Big Tent moves its show elsewhere.

That is how government can be both rich and poor at the same time.  It is “rich” to those it wants to pull into the tent.  Once they’re in the door suddenly they’re poor.

Obamacare’s Program of Redistribution

POSTED one month ago BY HEALTH CARE COMPACT

The connection between taxes and money is shown by two articles, each dealing with the one of two sides of the Obamacare coin. CNN says that up to six million taxpayers will finish up paying a tax penalty to government for not buying an ACA policy.

Some 3 million to 6 million Americans will have to pay an Obamacare tax penalty for not having health insurance last year, Treasury officials said Wednesday. It's the first time they have given estimates for how many people will be subject to a fine.

The penalty is $95, or 1% of income above a certain threshold (roughly $20,000 for a couple). So you could end up owing the IRS a lot of money.

Take a married couple with $100,000 in income - their bill comes to $797, according to the Tax Policy Center ACA penalty calculator.

The penalty for remaining uninsured rises to the larger of $325 or 2% of income in 2015.

Thirty million more would have paid tax penalties except that they have been granted exemptions -- for the time being -- by the government.  But it’s not an extension, it’s a reprieve.  When the reprieve runs out, they too will have to walk the walk to the payment window.

As many as 6 million people are estimated to be subject to tax fines for failing to have health insurance last year, a top federal tax official said Wednesday.

But an estimated 30 million other people who also lacked health coverage will avoid those penalties because they have an exemption, the official said as the Obama administration highlighted efforts to help people deal with the first tax season to feature the effects of Obamacare.

Another federal official also warned that people who fail to sign up for health insurance coverage for this year shouldn't count on getting an extension past the Feb. 15 deadline for doing so.

It’s easy to see why tax is one side of the Obamacare coin.  Ever increasing taxes are needed to pay for the other face of the coin: ever increasing subsidies. Californians alone received $3.2 billion in subsidies from the government.

Californians received $3.2 billion in Obamacare premium subsidies during the rollout of the federal health law last year.

That federal aid went to about 800,000 California households, state officials said Monday. Those individuals and families paid $1.1 billion in premiums themselves, meaning for every dollar they spent the federal government paid an additional $3 to their health insurer.

Nearly 90% of enrollees in the Covered California exchange qualified for financial help based on their income. The average monthly subsidy was $436 per household, according to the state …

The taxpayer subsidies are a linchpin of the Obama administration's effort to make health insurance more affordable for millions of Americans. Individuals earning up to $46,000 annually and families of four making up to $94,000 qualified for assistance.

Health policy experts said the fact that subsidies covered such a large share of Californians' premiums suggests that most people who signed up in the first year of the Affordable Care Act were lower income.

That “free” money has to come from somewhere. To raise it, Obamacare has to tax even state and local governments.  Reuters  says “the state of Ohio filed a lawsuit on Monday that claims Obamacare tax assessments against state and local governments for public employee health plans are unconstitutional.”

The suit by Attorney General Mike DeWine involves the federal government’s power under the Affordable Care Act’s Transitional Reinsurance Program to levy taxes against health insurance companies and certain employers who offer self-insured group health plans.

The U.S. Department of Health and Human Services (HHS) has said it is assessing this tax on state and local governments for their public employee health plans, DeWine’s office said. DeWine said this would destroy the balance of authority between the federal government and the states.

There’s no way the federal government can match 3 dollars for every one dollar of subsidy unless it recovers the cost from somewhere.  Since all money eventually originates from taxpayers, the “free” money really represents dollars recycled from one wallet to another, an illusion whereby the public is served at their own expense by politicians who pretend the money comes from somewhere else.

Aaron Blake of the Washington Post says this chimerical largesse makes it almost impossible to repeal Obamacare. A  “poll, from the Kaiser Family Foundation, shows that 64 percent of people say they would want Congress to re-expand the subsidies to all beneficiaries of the Affordable Care Act, if the Supreme Court voids some of them.”

And as the debates over reforming Social Security and Medicare show, once you start giving people government benefits, it becomes very difficult to take them away.

Democrats would relentlessly drive home the idea that Republicans would be trying to take away people’s health-care subsidies. From there, it would be up to Republicans to make the case that letting Obamacare implode is a holier goal than restoring those subsidies.

The law is still not popular, but as this poll shows, the repeal movement isn't exactly a majority. And the opponents who say it should be scaled back could certainly still be on board with restoring the subsidies.

This sets up a situation in which people face increasing taxes so that they may receive “free money” to buy an overpriced, narrow networked, high deductible insurance plan. Some might argue that the illusory benefits are real because they force people to buy things they would, in their irresponsibility, never purchase. The Columbus Dispatch tells this anecdote about a person who benefited from Medicaid expansion.

Life took an unfortunate turn for Ben Ertel last year.

He was working at the University of Cincinnati Medical Center when his antidepressants stopped working and he fell into a major depression. He quit his job.

Searching for health insurance a few months later, Ertel, 29, learned he qualified for Medicaid under Ohio’s expansion of the tax-funded health-care program.

“I went from paying more than $1,000 for medical bills and medications each month to $250,” Ertel said at a Statehouse news conference yesterday. “The best part was, with the stress of keeping up with the bills gone, I was able to take a course and take my state test for a nurse’s aide license.”

A month later, he had a new job, and starting on Dec. 1, health coverage through his employer.

And now that Ertel has a job he’ll be taxed, to pay for the subsidized care of someone who has still or perhaps never will make it out of the dumps.  Some like that arrangement, but there should be no mistake. The heart of Obamacare is redistribution.  It is a money pump from people who earn to those who don’t.

Obamacare Missing Its Targets

POSTED one month ago BY HEALTH CARE COMPACT

Politico says Obamacare has successfully failed to reach the 38% of Young Invincibles it set out to enrol in Obamacare, having triumphantly reached 26% of the number instead.  Considering the fact that young people are paying inordinately into the ACA insurance pool, it argues, this is victory indeed.

That optimism contrasts with the earliest concerns, which included fears that many millennials would pay little attention or decide to forgo coverage because of other expenses such as cellphones or Netflix subscriptions. Plenty of Obamacare critics predicted the latter. They warned that having too few young, presumably healthy people in insurers’ risk pools — to balance out the health care costs of an older, typically sicker population — would throw plans into a “death spiral.”

Moving Obamacare’s goalposts is now the primary source of its success. Investor’s Business Daily notes that the number of people who will lose their employer health insurance will far exceed initial estimates.

The CBO now expects that 10 million workers will lose their employer-based coverage by 2021.

This finding stands in sharp contrast to earlier CBO projections, which at one point suggested ObamaCare would increase the number of people getting coverage through work, at least in its early years.

The budget office has, in fact, increased the number it says will lose workplace coverage every year since 2011.

The ACA shows every sign of being a program in trouble.  It is over-budget and not meeting its targets.  Perhaps it is not as bad as the worst case scenarios, but it is far from reaching its own rosy ambitions.

Congress Schedules First Total Assault on Obamacare

POSTED one month ago BY HEALTH CARE COMPACT

The first congressional vote to repeal Obamacare is scheduled to take place in the first week of February, according to Fox News.

The vote comes as Republicans have debated how to address the controversial health care bill. GOP lawmakers are facing rising pressure from conservative groups and activists to go big in their efforts to dismantle the law, but the party is stuck in an internal debate over how far they can go, and whether undoing it piecemeal is a preferable course of action....

Party strategists have questioned whether aiming for full repeal is worth the effort, when President Obama would surely veto.

Thus the vote is as much of a test of strength among groups within the Republican party as it is between the GOP and president Obama.  It will define just what kind of coalition can be built among Obamacare opponents.  But it is also a probing attack against the ACA’s defenses.

Outwardly the administration is talking a confident game.  But inwardly they know that Obamacare is in trouble, and they too have declared the intention to hold the tenuous line of veto.  Repeal is attack to the maximum.  Veto is defense to the maximum.  The battlefield will look very different after the first onset next week.

Full Spend Ahead

POSTED one month ago BY HEALTH CARE COMPACT

It was said that the hallmark of the British upper classes was that they never talked about money and never thought about anything else.  American liberals, by contrast, always talk about money but never give a thought to where it will come from.  That is truer than ever. Even though Obamacare is on track to cost twice as much as president Obama predicted it would, its advocates are already laying plans to expand it, practically without limit.

Chris Jacobs of the Wall Street Journal’s Washington Wire says “last week, the advocacy group Families USA attempted to change that, releasing its ‘Health Reform 2.0’ agenda of how to expand on Obamacare.”

The Families USA paper includes a full—and costly—wish list of new spending programs related to the law, including:

* Fixing the “family glitch,” in which families are ineligible for federal insurance subsidies if one member of the family has an offer of “affordable” employer-sponsored health coverage;

* Extending funding for children’s health insurance, a program that Obamacare funded only through September;

* Increasing federal cost-sharing subsidies—raising the amount of subsidies, currently provided to families with incomes under 250% of the federal poverty level, so as further to reduce deductibles and co-payments, and potentially raising the income cutoff for subsidies;

* Making permanent an increase in Medicaid reimbursement rates included in Obamacare that expired on Dec. 31, 2014;

* Extending coverage to immigrant populations (the report does not specify whether such coverage should also apply to the undocumented); and

* Increasing federal premium subsidies. Amending the current subsidy set-up in this way would necessitate two changes to current law, both of which would require an increase in federal spending. Congress would need to repeal the provision, set to kick in after 2019, scheduled to reduce the subsidies’ annual rate of growth; then lawmakers would have to pass the subsidy increase that Families USA advocates.

*The proposal also contains numerous mandates on insurance plans—for instance, to cover adult dental care, all forms of pediatric care, and expand access to provider networks.

Who’s going to pay for it?  That’s a little detail the advocates have skipped. But fixing the “family glitch” alone would cost $50 billion more per year. There is some talk about price controls, but nothing firm.  Which is par for the course.  In reality that attitude Obamacare’s architects seem to have taken is: talk about saving money but spend it like hell.

To the question: is it sustainable?  The answer is, “nobody’s stopped us yet?”

It’s a Bargain

POSTED one month ago BY HEALTH CARE COMPACT

The Los Angeles Times’ David Lauter writes that Obamacare will be cheaper than expected, citing reductions in premiums. “President Obama's healthcare law will cost about 20% less over the next decade than originally projected, the Congressional Budget Office reported Monday, in part because lower-than-expected healthcare inflation has led to smaller premiums.”

One of the biggest sources of saving is non-participation in Medicaid expansion. That brings the estimate down to $1.35 trillion.

The budget office, noting that its estimates of the law's costs have dropped repeatedly, said the smaller price tag was "attributable to many factors." Two of the largest were "the slowdown in the growth of healthcare costs" and the Supreme Court's decision in 2012 to allow states to opt out of expanding the Medicaid program for the poor.

About half the states have so far declined to expand Medicaid to all impoverished adults, as the law allows. Because the federal government pays the cost of that expansion, the states that have declined have held down federal spending.

At first glance this seems at variance with published reports that Obamacare will actually cost $1.9 trillion, as the Daily Mail reports.  It is certainly different from the president’s own estimate, as seen on the White House website, putting the cost at $0.9 trillion. The discrepancy arises because the counts do not tally the same thing.

The CBO report explains the difference in the tallies. Appendix B shows that the actual cost of Obamacare is $1.9 trillion as reported by the Mail.  However, after the CBO report says that after the government collects the individual penaltes, the employer penalties, the Cadillac Tax and other taxes, then the net cost after new taxes is $1.35 trillion -- Lauter’s figure.

Amount billions $

Item

$47

Penalty payments by uninsured people

164

Penalty payments by employers

149

Excise tax on high premium insurance plans

281

Other revenues

$639

Total

 


The Los Angeles Times piece makes it sound like the nation is getting a bargain. But in reality the nation is paying $1.9 trillion. It is “only” $1.35 trillion because of an accounting trick which represents the $639 billion as already collected. It’s a bargain in the same sense that you are “only” being charged the outstanding balance for stuff you’ve paid a deposit on.

Obamacare’s Giant Price Tag

POSTED one month ago BY HEALTH CARE COMPACT

Cost continues to be the weakest point of Obamacare.  The full details of that cost are only now emerging. Philip Klein of the Washington Examiner cites a CBO report concluding that the actual cost of the ACA was not the “around 900 billion” cited by the president, but more than double. Nearly 2 trillion dollars.

When Obama pitched the healthcare law to Congress, he said it would cost "around $900 billion" over 10 years. But his statement was misleading because the way the law was designed, the major spending provisions didn't kick in until 2014. This meant that 10-year estimates at the time the law was passed in 2010 were artificially low, because they included four years (2010 through 2013) in which spending was negligible.

The new CBO analysis finds that between fiscal years 2016 and 2025, spending on the law's expansion of Medicaid will cost $920 billion and insurance exchange subsidies will cost nearly $1.1 trillion. The major spending provisions, taken together, will total $1.993 trillion.

This does not include the non-subsidized premiums that are being paid by the policy holders themselves.  It represents the amount of money the taxpayer is putting into Affordable Care.  In exchange for this expenditure, how many people are helped?  A little arithmetic shows it to be 23 million people.

The CBO also said it expected the law's exchanges to cover 21 million by the end of the 2016 fiscal year and for Medicaid to cover an additional 13 million — gains that it projects will be partially offset by a reduction of 11 million people in employer or other existing coverage.

That can be calculated easily as 21+13-11=23 million persons.  The cost per person is therefore 2 trillion divided by 23 million or about $87,000 per person.  The benefits purchased for this gigantic sum are questionable.  The core problem with Obamacare is that it does not seem to be value for money.  Rather it appears to be an overpriced boondoggle.

Fee For Service vs Capitation

POSTED one month ago BY HEALTH CARE COMPACT

Bruce Japsen at Forbes describes the next phase in the ACA’s medical reform program -- this time specially designed not to increase coverage but to reduce cost. “The Obama administration will push Medicare payment rapidly away from fee-for-service medicine within four years, outlining a plan to have half of all Medicare dollars paid by to doctors and hospitals via “alternative” reimbursement models by the end of 2018.”

Vox calls it the “White House's radical new plan to change how doctors get paid”.  There is nothing new or radical about it.  Anyone who was encountered a “set menu” at a restaurant or ordered a “value meal” at a fast food outlet knows the concept.  Currently doctors and hospitals bill according to fee-for-service.  This is the restaurant equivalent of a la carte ordering.  At a fast food restaurant you can think of it as ordering items separately.

What Obamacare wants to do is bundle the services into packages, something that is already happening but which they want expanded. Japsen writes: “Currently, just 20 percent of payments from the Medicare health insurance program for the elderly are paid via alternative payment models like bundled payments, patient-centered medical homes and accountable care organizations, a rapidly emerging care delivery system that rewards doctors and hospitals for working together to improve quality and rein in costs.”

It sounds reasonable enough.  Most of us know that ordering a “value meal” is generally cheaper than constituting the same thing by individual item. The resemblance is so great that even the terminology used is similar to fast food. “The whole system is moving towards value-based payments,” says Vox.  You know, like a “value meal”.

The “value meal” idea is also not new. It is called capitation.  When you cater a wedding or other event, you charge by the number of guests and provide “fullness” in the same way that hospitals are supposed to provide “wellness”.  But the catch is this. Capitation or bundling does not by itself provide value. It only provides value if there is competition among providers.

You can be clipped by a caterer just as well as in a dishonest a la carte restaurant. To see this, remember that food in prisons is also provided on a bundled basis, but food in prison is not necessarily any good.  In fact it is terrible because the prisoner cannot simply go elsewhere to eat.  The reason value meals at fast food restaurants are cheap is because if you don’t like the value meal at McDonald’s you can go down the block to Burger King, or perhaps get the set meal at a Chinese restaurant.  It is competition, not the mode which creates the economies.

Recently the Australian medical association examined the question of whether capitation improved preventive care in New Zealand.  The conclusion: “there has been no discernable increase in preventive care services by GPs paid an annual fee to look after the health of their patients, according to the New Zealand Medical Association.”

Under arrangements introduced in New Zealand in 2002, GPs derive half their income from capitation payments, with the remainder fee-for-service payments which, under the Kiwi system, include hefty patient co-payments of around $45 to $50 per visit ($17 for disadvantaged groups).

Blended arrangements are in fact a common sight at restaurants.  At Burger King you can order a Whopper Value Meal or order the Whopper by itself.  It’s a blended menu.  Compare this to what the ACA has in store. Vox writes:

The Affordable Care Act also created Accountable Care Organizations: larger groups of doctors that band together and take a lump sum of money to care for a specific group of patients, much like what the White House wants lots of providers to do under this new plan.

This could benefit the patients.  It could reduce costs.  But it will not by itself do so.  The medical catering service Vox enthuses over is only as good as its implementation.  In fact it contains a hidden danger. Obamacare has been building up monopolies by encouraging the consolidation of providers -- the larger groups of doctors that band together and take a lump sum of money to care for a specific group of patients.  This reduces competition.

The reason why value meals in the food industry are cheaper is primarily not because of the bundling, but because they are in competition with other establishments.  Without competition bundled food is prison food.  Who’s for prison food?

Anecdotes

POSTED one month ago BY HEALTH CARE COMPACT

Justin Haskins tells what is disparagingly referred to as an anecdote: his unpleasant experience at the hands of Obamacare.  The story begins with him trying to buy insurance and finding himself paying a higher rate than he used to.

“I’m sorry sir,” the polite Healthcare.gov customer-service agent said. “There’s nothing I can do. You’re either going to have to enroll in Medicaid or you’re going to have to pay the full health-insurance rate.”

“The rate you quoted earlier?” I asked. “That’s nearly 30 percent higher than my current insurance bill, I just can’t afford it.”

“You’ll have to pay the full rate, yes,” the agent replied.

“I don’t understand,” I explained. “I have plenty of money to pay you a reasonable rate, but I can’t afford to pay the same rate a millionaire would be asked to pay. Why can’t I just receive a partial subsidy? I’m willing to pay more than what Medicaid offers.”

“Sir, that’s just not how the system works.”

Right. That’s not how ObamaCare works; it doesn’t work at all.

Haskins’ problem was that he was a young graduate student and metal plan premiums are tough on the young, who have to be soaked to pay for the old and the uninsurable.  As described elsewhere, the “young invincibles” have had to pay extraordinarily more so that favored other groups can receive a subsidy.

Haskins didn’t want to be on Medicaid, which he saw as welfare. So he bought a short term plan while he sought another option. Then it occurred to him that anecdotes -- of which he was one -- when multiplied enough became statistics.  Obamacare was driving away the young, if he was any indication of the trend.

The reason is obvious. If young, healthy people — the group that the American Enterprise Institute’s Scott Gottlieb and Kelly Funderburk say is being “ripped off” by ObamaCare rates — opt out of the ObamaCare exchanges, the exchanges will collapse in a “death spiral” because not enough healthy folks will be paying in to make up for the less-healthy ones, who need more care.

My experience perfectly highlights the insanity of the Affordable Care Act. It forced me — a paying, insured, well-educated, healthy American — out of the coverage I’d had, then tried to push me into Medicaid.

The program wouldn’t let me pay more when I offered to pay a higher rate to stay out of Medicaid, and it provided only one other option: paying the highest rate available for insurance I didn’t use once in 2014.

Rather than take the easy route and enroll in Medicaid, I paid my own way with a private plan of my choosing. Now, instead of being rewarded for saving taxpayer money, I’m being punished with a fine of at least $95. What a country!

There is a tendency among Obamacare’s advocates to dismiss these as isolated occurrences; to assure themselves that on the whole their program is well loved and even helpful.  They will be blind until the last.  People are not stupid, and they know when they are being ripped off.

The Deep Seated Resentment Against Obamacare

POSTED one month ago BY HEALTH CARE COMPACT

Even though Obamacare advocates have assured anyone who will listen that the Republican’s “have learned Obamacare is unrepealable”, Dr. Ben Carson appears not to have heard the news.

Ben Carson on Saturday delivered a forceful defense of conservatism, arguing for dramatically scaling back the federal government and saying that he wouldn’t support Obamacare even if it worked. …

Carson said that the U.S. should cut its government by “attrition” — not replacing any federal employees that retire in the next 4-5 years. The resulting smaller government would mean that “they don’t have time to stick their noses in people’s business,” he said, to applause.

On the Affordable Care Act — which Carson has on several occasions compared to slavery — the famous former surgeon said he opposed any government intrusion in health care. “Even if it worked, I would oppose it,” Carson said of Obamacare. “It doesn’t.”

Neither Carson nor Cruz -- who swore to repeal ‘every word’ of Obamacare -- are stupid men. Doctors and Senators are rarely idiots.  Both men probably understood the deep wellsprings of resentment and dissatisfaction which the ACA advocates affect not to understand, or if they understood them, believe will pass.

This has led Obamacare’s advocates to adopt a the strategy of stonewalling until the storm passes.  Every criticism of their pet medical program is met with unyielding resistance and threats of veto.  They cannot bring themselves to see the resentment is real, and they will underestimate it to their peril.

Is the Obamacare Part-Time Effect Real?

POSTED one month ago BY HEALTH CARE COMPACT

Louis Jacobson of Politifact tries to assign a degree of believability to the assertion by the CEO of the Carl’s Jr restaurant chain that 'Obamacare has caused millions of full-time jobs to become part-time'.  In the end Jacobson finds that it probably true that many people have been pushed down into part-time jobs, but it might not be millions.  Just a few hundred thousand, and therefore only half-true.

The statistics, in this case, are inadequate to either prove or disprove that "millions" of Americans have seen their job go from full-time to part-time due to the law. That number is possible, but unsupported. That said, there’s evidence suggesting that hundreds of thousands of workers may have seen their hours cut as the law’s impact began to be felt. That’s not "millions," but it’s not insignificant either. On balance, we rate the claim Half True.

One study that tried to answer the question empirically was Leslie Muller’s ACA Small Employer Survey from the Grand Valley State University.  The scope of the study was confined to small firms in West and Southwest Michigan.  The summary of its findings are:

OVERALL

1. Only a quarter of small firms that offered health insurance in 2013 and 2014 plan on continuing to  

offer plans in 2015 and 2016. .  

2. Of those offering plans in 2014, 75% plan on offering insurance in 2015. Half of these firms plan  

on offering plans in 2016.  

3. Sixteen percent of firms are uncertain as to whether they will offer insurance in 2015; 28% are  

unsure about 2016.  

4. Of those companies not offering plans in 2015, 68% plan on sending employees out to the public  

exchange to buy individual health insurance.  

CHANGES TO HEALTH PLANS

1. 87% of firms have already or are considering increasing the cost share of insurance costs borne by  

the worker.  

2. 73% have or are considering shifting costs by using a high deductible health plan (HDHP).

3. 67% have or are considering shifting costs by changing prescription drug coverage.

CHANGES TO HIRING

1. 46% have or are considering limiting or reducing new hiring

2. 28% have or are considering reducing their overall workforce.

This suggests a far higher level of damage than Jacobson is willing to admit and may be much closer to  Carl CEO Andy Puzder’s estimate, which Jacobson cites.

Puzder provided some anecdotal evidence from his own sector -- restaurant chains -- that suggests a plausible case for "millions."

Many restaurant chains, he noted, are operated as franchises. In his own company’s case, 230 franchisees own 73 percent of the company’s 2,920 restaurants in the United States; the company itself owns the rest. While the parent company employs about 20,000 people, its domestic franchisees employ many more -- about 55,000. And industry leaders like McDonalds and Burger King have more franchises and franchise employees.

The disparate nature of franchise ownership makes it difficult to calculate the number of workers who may have had their hours cut. Based on his own experience at his company and the conversations he’s had with other industry CEOs, Puzder thinks it’s reasonable (but, he acknowledges, unscientific) to assume that 20 percent to 25 percent of their operational employees have had their hours cut to under 30 per week due to the employer mandate.

But more importantly, the Grand Valley State University study captures a whole host of cost cutting measures which are not even part of Jacobson’s fact checking.

Elizabeth Warren unwittingly gives credence to Puzder’s claims when she denounces the attempts to shift the definition of full time work back to 40 hours as “corporate welfare”.

Warren said that the bill effectively shifts the burden away from companies and onto taxpayers.

"This bill is corporate welfare," Warren said at a hearing held by the Senate Committee on Health, Education, Labor & Pensions. "Big corporations would get to cut health benefits for millions of workers, and push people out of their employer insurance plans. Some of those people will lose their health insurance all together. Others would be pushed onto federal programs, expanding the reach of Obamacare, and taxpayers would get stuck with the tab."

The costs have increased dramatically and companies, especially small firms, are attempting to escape them. This is well borne out by the Grand Valley State study.

OVERALL

1. Only a quarter of small firms that offered health insurance in 2013 and 2014 plan on continuing to  

offer plans in 2015 and 2016. .  

2. Of those offering plans in 2014, 75% plan on offering insurance in 2015. Half of these firms plan  

on offering plans in 2016.  

3. Sixteen percent of firms are uncertain as to whether they will offer insurance in 2015; 28% are  

unsure about 2016.  

4. Of those companies not offering plans in 2015, 68% plan on sending employees out to the public  

exchange to buy individual health insurance.  

CHANGES TO HEALTH PLANS

1. 87% of firms have already or are considering increasing the cost share of insurance costs borne by  

the worker.  

2. 73% have or are considering shifting costs by using a high deductible health plan (HDHP).

3. 67% have or are considering shifting costs by changing prescription drug coverage.

So yes, they are trying to “shift” the costs.  But where did these costs come from to begin with? What Warren misses is that some or most of these costs are a consequence of Obamacare itself. They were created by the very program she is supporting. Employers are scraping the same amount of butter over more toast.  

What Warren wants is for companies to come up with more butter so that more toast can be buttered to the previous degree of richness. This actually constitutes a tax increase, though Warren won’t say that.  Naturally companies will try to escape the increase by embarking on economies -- exactly what Puzder says they’re doing.

Nobody now seriously argues that Obamacare has reduced the costs of health care. In fact, Ezra Klein of Vox proudly claims that only the Democrats had the political courage to admit you needed more money to ‘solve’ the health care problem -- an irony since Obamacare was supposed to cut the amount of money needed to begin with.

But now that more money is required -- true apparently and not half true -- it is hardly fair to point the finger of accusation at those who have to bear the increases.  Obamacare is a job killer, or at least, a job disincentivizer.

“Every Word”

POSTED one month ago BY HEALTH CARE COMPACT

Them’s fighting words.  Although the public has been assured for months -- by Democrats -- that the Republicans have given up on repealing Obamacare, some Republicans at least have given the contrary impression.

DES MOINES, Iowa –  Conservative heavyweights joined with up-and-comers in hammering President Obama Saturday over everything from the health care law to his immigration policies as they played to a sold-out Iowa crowd in what amounted to the opening bell of the Republican presidential campaign. …

“The most important tax reform we can do is abolish the IRS,” Texas Sen. Ted Cruz told the fired-up audience.

The firebrand senator compared the EPA to a locust and got a huge reaction when he demanded to “repeal every word of ObamaCare.”

I guess that means Cruz wants to repeal Obamacare.  At least it would seem.

That Third Party Data Sharing

POSTED one month ago BY HEALTH CARE COMPACT

The saga of the reported sharing of client data by Obamacare with third-parties continues apace.  After the Associated Press broke the data sharing arrangement it was reported that the offending code had been removed. CNN, which earlier reported on the sharing said the code had been expunged.  But apparently CNN spoke to soon.

Earlier this week, the government came under fire after the Associated Press showed that Healthcare.gov was relaying users' personal information, such as zip code, income level, pregnancy status and whether or not you are a smoker.

That information was being shared with Google (GOOG), Twitter (TWTR, Tech30), Yahoo (YHOO, Tech30) and other companies that track people online, like the advertisement display service DoubleClick.

The evidence was on the website code itself.

But on Friday, CNNMoney read the code and found that Healthcare.gov was no longer relaying personal information to DoubleClick and others. …

But health officials would not explain why DoubleClick, a company in the advertising industry that already tracks people's browsing habits, should be allowed to know whether users smoke or are pregnant.

For its part, Google told CNNMoney it doesn't desire your personal health information anyway.

"We don't want and don't use that kind of data," said Andrea Faville, a Google spokeswoman. "And we don't allow DoubleClick systems to be used to target ads based on health or medical history information."

The data sharing’s only been scaled back. The Hill reports:

Health officials are scaling back the amount of consumer data shared with private companies amid privacy concerns for consumers on the federal ObamaCare exchange.

The Obama administration made changes to the HealthCare.gov website that limit the amount of data available to third parties for marketing or analysis, The Associated Press reported Friday afternoon. …

"We believe that the use of these tools are common and represent best practices for a typical e-commerce site," Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, said in a statement shared with The Hill.

Apparently the policy remains to share the client’s data, the only question being how much. This is about as disturbing as giving a vendor direct debit rights over your account on the assurance that he will withdraw your money only according to “best practice”. It’s an assurance without substance. But then the whole program might be.

Caring Enough to Take Your Money

POSTED one month ago BY HEALTH CARE COMPACT

Remember how Obamacare was going to save the American health system by keeping it from going bankrupt?  No? Well neither does Ezra Klein who now argues in Vox that the reason Republicans can’t come up with an Obamacare replacement is that unlike Democrats, they don’t care enough about health care to pay its cost.

Now don’t get the idea Klein means that Mitt Romney and Ted Cruz or Marco Rubio are unwilling to pay for American healthcare out of their personal fortunes.  Because Barack Obama, Hillary Clinton and Elizabeth Warren aren’t either. Klein is talking about tax dollars when he says “to pay for its cost”. He writes:

But the conservatives who actually want to pass a health-care reform plan realize there's basically no way to do it without accepting the post-Obamacare baseline: they need to spend a lot of that money, and they need to keep a lot of those taxes, in order to achieve their goals.

The irony, then, is that Obamacare might be the best thing to ever happen to conservative health reformers. If they have any chance of getting their party to prioritize health reform, it's only because Obamacare is so loathed by their co-partisans, and if they have any chance of actually designing a workable policy, it's only because Obamacare has given them money they can use toward their plans. …

Democrats wanted to pass health reform badly enough that they were willing to go through this buzzsaw to get it done. They were willing to have the internal party fight over what kind of plan to support, and then to go through the brutal legislative process required to make that plan into a bill, and then go through the political hell of canceling people's plans and implementing their replacement. They were, in other words, willing to lose a lot to win health reform. Ultimately, Obamacare passed, and it's working, but Democrats paid an enormous political price for it.

“See,” he argues, “we did this for you.  The tax money is there -- now spend it!”

First of all this talk about political sacrifice is sheer revisionism. As it was being passed many pundits believed it would a generation of Democratic voters. And about those costs. Obamacare’s architects were never up front about the costs.  The president said it would cost less than a cell phone plan -- he didn’t mention someone else would get slugged with the real price.  Nancy Pelosi famously said you would have the pass the bill to see what was in it.  

They hid behind a cloud of ink all the way. If this is courage, then what is cowardice?

Cowardice is portraying a bait and switch scam as an act of high minded statesmanship once its been found out.  And that is perilously close to the proposition being presented here.  What remains is an astonishing argument based on the premise he and people like him care enough about you to take your money and spend it the way they see fit, because you’re not smart enough to do it for yourself.  Apart from being a candid admission of dishonesty -- a way of saying that all talk about savings were as much as crud as the promise you could keep your doctor if you liked your doctor -- it perches on a self-constructed pile of vanity that is a marvel to behold.

Obamacare becomes like Dostoevsky’s Grand Inquisitor, unashamed to lie to people, indeed to tax them, for their own good.  He will bear upon himself the burden of doing what needs to be done.  Now please fill out the form.

Like the Inquisitor, the Messiahs of Obamacare would take upon the themselves the moral burden of finding the money even if only to offer it  to their Republican successors should such a misfortune befall.  But Klein’s basic problem is that he thinks right thinking people want his coveted taxes. He cannot imagine that they don’t. If the last election meant anything, it is that many voters don’t think much of the Inquisitor’s so-called moral sacrifice.  He can keep his morality and let the taxpayers keep their money.  If only those who are bent on saving the world at other people’s expense want to do people a favor, might they, if they would, just please go home.

Found Out

POSTED one month ago BY HEALTH CARE COMPACT

Stung by reports that it was sharing data with third parties gathered by its Obamacare webiste, the HHS quietly removed the offending code.  CNN, which earlier reported on the sharing said:

Earlier this week, the government came under fire after the Associated Press showed that Healthcare.gov was relaying users' personal information, such as zip code, income level, pregnancy status and whether or not you are a smoker.

That information was being shared with Google (GOOG), Twitter (TWTR, Tech30), Yahoo (YHOO, Tech30) and other companies that track people online, like the advertisement display service DoubleClick.

The evidence was on the website code itself.

But on Friday, CNNMoney read the code and found that Healthcare.gov was no longer relaying personal information to DoubleClick and others. …

But health officials would not explain why DoubleClick, a company in the advertising industry that already tracks people's browsing habits, should be allowed to know whether users smoke or are pregnant.

For its part, Google told CNNMoney it doesn't desire your personal health information anyway.

"We don't want and don't use that kind of data," said Andrea Faville, a Google spokeswoman. "And we don't allow DoubleClick systems to be used to target ads based on health or medical history information."

There are two standards of honesty in this world.  The first is the honesty which prevents someone from putting his hand in the cookie jar even if no one is looking. The second is the honesty that makes a person withdraw his hand from the cookie jar once caught.  What goes for honesty goes for competence.  Obamacare’s designers are not of the former, but of the latter.

The Fate of Whistleblowers

POSTED one month ago BY HEALTH CARE COMPACT

Two stories from opposite sides of the Atlantic Ocean illustrate the sad fact that all bureaucracies are ultimately alike in their instinct for self preservation.  Whistleblowers may spring up from time to time, even in the most monolithic of organizations.  But they will never be loved.

A whistleblower with the National Health Service in Britain told the press that her career was ruined after she took on the system.

A whistleblower says her career was destroyed by NHS managers after warning about how vulnerable patients were coming to severe harm.

Dr Hayley Dare, 42, a psychologist,even claims to have received a poison-pen letter from one of her bosses saying her children would suffer if she lost her job which also threatened: ‘You cannot win, you cannot beat us’.

She said conditions were so appalling at the mental health unit where she worked that one 72-year-old woman died after staff forgot about her.

You can’t fight city hall.  You can’t fight the VA either. One January 22, Stripes reported that doctor who blew the whistle found himself behind the 8-Ball.  Dr. Richard Hill said:

“I was told quite bluntly that if I see something wrong and say something about it, I would definitely be fired,” he said.

Janice Perry, president of the local chapter of the National Federation of Federal Employees that represents staff at the Fort Detrick VA clinic, declined to comment.

Hill provided documentation of the charge to The Frederick News-Post. In a May 8, 2014, letter to Hill, the chief of primary care services at Martinsburg’s hospital stated the charge.

The great thing about a competitive market system is that if you don’t get good service at once place you can take your business elsewhere.  Monopolies and trusts are undesirable, and even criminal by consequence.  Yet the ultimate monopoly is government provided health care.  Where do you go once all the health care is provided by a single entity?  How do you blow the whistle against such overwhelming power?

The answer is usually, you don’t.

The Seductive Allure of Central Planning

POSTED one month ago BY HEALTH CARE COMPACT

Michael Dougherty, writing in the Week, pens an article which very elegantly captures the publicized Republican alternatives to Obama but ultimately focuses on the wrong issue.  He casts the problem facing the Republicans as one of advocacy divided among three or more alternatives.

The Reform camp takes as a given that the GOP cannot pass a law that leads to lost coverage for millions who receive it through the various Rube Goldberg mechanisms of the ACA. Instead, the Reform camp, represented best by health-care wonk Avik Roy, works to keep the same amount of people covered but expands the market pressures within health-care exchanges by putting so many more people into them. Roy would simultaneously begin to push people out of Medicare and Medicaid and into the exchanges. It’s a plan for lighter regulation, but not a completely free market.

The Replace camp is represented best by: 1) the 2017 Project and 2) the Patient Choice, Affordability, Responsibility, and Empowerment Act (or CARE), which had been cosponsored by Sens. Tom Coburn, Richard Burr, and Orrin Hatch (Coburn has since left Congress). Unlike other conservative alternatives, these plans do not go after the great white whale of tax-free employer-provided health insurance plans, partly because it would be too immediately disruptive and partly because doing so may weaken resistance to a single-payer system. Essentially the “Replace” camp leaves most of the pre-ACA health-care system in place, along with some popular features of ObamaCare, but changes the mechanisms for driving costs down, concerning itself mostly with reforming the private market for health insurance. These are plans for overhauling only what was irrevocably broken before the ACA.

Lastly … considers the Restart school, embodied by Louisiana Gov. Bobby Jindal, whose premises are a bit different. Jindal doesn’t worry about the exact number of people who will have insurance, saying that doing so plays into Democratic hands. Jindal’s plan puts almost all its emphasis on reducing health-care costs. Jindal would extend the tax-preferred treatment given to employer plans to all plans.

All the Republican-supported plans are attempts to increase competition rather than cartelize a more regulated market. Almost all of them would allow insurers to charge older customers more, and younger customers less, than is currently allowed under the ACA.

So far Dougherty’s presentation is admirable. He then concludes on a non-sequitur: “If Republicans want to avoid the fate of other center-right parties in Europe that become mere budget-fixers on national health systems, they have to be much more united on their strategy than they are now.”

Dougherty seems to believe, as do many other policy analysts that one big plan must drive out the other.  In that universe there are right and wrong solutions. If Obamacare is a “wrong” solution then Republicans are duty bound to find the “right” solution so that the defective plan can be replaced.

But as the Health Care Compact advocates have long pointed out, this approach is fundamentally wrong.  The basic problem besetting the health care system is a governance question: who decides.  It is not a policy question.  This is not to say that all policies are alike and none are better than others.  However it is to assert that central government cannot necessarily find the best one and prescribe it for time to come.

Why should just one of the three models described by Dougherty be better than all the rest?  Suppose it is none of the three but Single Payer?  What if it depends on which of the three models suits a particular state.  Further suppose that some combination of models is actually the best.  What if model A is better for now but model B is better suited for next decade?

If people were locked into insurance models the way they were locked into health care insurance models it would be crazy. The only model that allows all these possibilities to happen is the Health Care Compact because it does not prescribe a single unitary Republican model to replace the unitary Obamacare model.  Instead it provides a governance framework for Vermont to try Single Payer if it wants or 2017 if it prefers.

Of course this argument has simplistically reduced the point of contention to a single item.  But it is nevertheless the case that the Republicans can never free Americans from Obamacare if they accept the proposition that the Republicans must formulate an equally massive plan to replace Obamacare. To do so would concede the implicit assertion of the administration that consumers are too dumb to choose things for themselves.

Less, not more regulation is the proper direction to take.  Lower-level, not Washington-made governance is the correct thing to do.  No more big plans.  They are what created the problems in the first place.

Discredited Obamacare Firm is Back

POSTED one month ago BY HEALTH CARE COMPACT

General Douglas MacArthur popularized the saying that “old soldiers never die.  They just fade away.” But had that crusty warrior lived in the twenty first century he might have said: old discredited federal contractors never die.  They just keep coming back.

The Daily Caller reports that CGI, the company which abjectly failed to roll out the Obamacare website is back.  “Seven months after federal officials fired CGI Federal for its botched work on Obamacare website Healthcare.gov, the IRS awarded the same company a $4.5 million IT contract for its new Obamacare tax program.”

As early as February, 2014 the company was on the comeback trail.

CGI Group Inc. (GIB/A), the Canadian company that lost the Obamacare website contract after a botched rollout, is pursuing new federal and state government work in the U.S. to bolster sales in its biggest market.

“Our view is that the brand isn’t damaged,” said Chief Executive Officer Michael Roach, 61. “We may see one-offs here and there, but I don’t see anything that will last. We’re prepared to talk to our clients about what we’re learning here. We’ve not been banned from anything. We’re not barred.”

And indeed they’re baaack.

“There have been many instances in our industry where other companies have run into something similar, and it’s passed with time,” Roach said. “There’s no doubt about it, this one got a lot more publicity.”

Nothing ever changes in Washington.  Maybe the date on the calendar, but little else.

The Financially Vulnerable Young Invincibles

POSTED one month ago BY HEALTH CARE COMPACT

Obamacare was always going to require ripping off for the young. Expanding the high risk pool of elderly and those with pre-existing conditions required an expansion of the low risk pool of healthy young people to balance it out. The iron laws of arithmetic meant that some people would have to pay in so that the system could pay out.

The New Yorker wrote in early 2014:

The obsession with the young invincibles is easy to understand. The economics of insurance depends on the pooling of risk, so for Obamacare to work on a national level you need healthy people (who will pay premiums but not rack up a lot in health-care costs) to enroll along with sicker people (whose health-care costs will more likely dwarf the premiums they pay). Since young people are typically healthier, getting them in the risk pool will help hold over-all costs down. But young people also know that they are healthier—and consider themselves invincible, even though they’re not—so they may prefer to take their chances and not pay for insurance.

So the solution was simple. Obamacare charged the young invincibles who they could enrol into the system a much higher rate than the old.  Dr. Deborah Ann Travis Honeycutt, M.D. describes in the Hill how her young patients are groaning under the financial weight:

College students are the hardest-hit demographic when it comes to ObamaCare’s cost increases. Typical 20-somethings in Georgia now face premiums averaging $2,750 per year—a 179 and 108 percent increase for men and women, respectively, over what similar pre-ObamaCare plans cost. That’s a demoralizing reality for college students working their way through school while still having adequate time to devote to their studies.

Georgia’s young are not alone. Millennials—young people between 18 and 29 years old—nationwide are drowning in rising health care costs. Average premiums for 27-year-olds increased in 45 states after ObamaCare went live last fall. Young women saw their health insurance costs skyrocket by an average 62 percent nationwide, while young men paid up to 99 percent higher than they did just one year ago. …

The supposedly benevolent principle underlying this provision is that seniors shouldn’t have to pay more for health care, even when they disproportionately account for health care spending. The typical 65-year-old spends more than five times what a typical 22-year-old spends in annual medical costs—$9,744 compared to only $1,834 per year, respectively. This 3-to-1 cap thereby forces college students to pay for their grandparents’ medical care, whether they like it or not.

This is inherently unfair. Forcing Millennials to pay more for health insurance because of their age rather than their medical needs amounts to little more than government-sanctioned discrimination.

These cost increases couldn’t come at a worse time for Millennials, either. The unemployment rate for people between ages 16 and 29 today is a staggering 14.7 percent—more than double the national rate of 5.8 percent. And for those college graduates who are fortunate enough to find a job, their starting salaries are lower in today’s dollars than those of both their parents’ and their grandparents’ generations.

The iron law of redistribution brooks no escape: soak those who can pay to support those who can’t.  That means make the young pay for the old.  This might work well enough if the youngsters could be sure that when they themselves grew old the same intergenerational subsidy would be given them.  But that requires an act of faith that the young don’t have any more.

That crisis of faith may in turn produce what insurers call a death spiral.  If the young, disgusted by their high premium rates, leave the system, then Obamacare will have no choice but to increase the burden on those few “invincibles” who remain even more, which will squeeze them out even faster.  It will produce a kind of  “flight” similar to the process which destroyed Detroit, in which anyone who could left the city until only those who depended on public welfare were left -- without the tax base to sustain it.  If the problem Dr. Honeycutt describes is not solved, a death spiral will set in.

Cost is the biggest danger facing Obamacare. It is pricing itself out of business.  Those who believed that “subsidies” or “free government money” could negate arithmetic will find that if couldn’t save Detroit it won’t save Obamacare.

The Domino Enigma

POSTED one month ago BY HEALTH CARE COMPACT

Cost problems in many forms continue to hound Obamacare.  Some of these are directly self-inflicted.  For example, the Obamacare had a little known calorie label clause “buried deep within the ACA’s 10,000 pages”.  

Each restaurant chain with over 20 locations is required to display the calorie content of each food and drink item it serves on signs and printed menus–with vending machine distributors subjected to the same rules.

Sounds harmless enough doesn’t it? It’s creating a major analytic problem for Domino’s Pizza and will do worse to Pizza Hut. The problem is that customers can change toppings to suit their taste creating an almost unimaginable potential variety in menu items.

A problem specific to pizza chains is the challenge of displaying a vast number of possible calorie totals across all of the materials that the rule potentially counts as a “menu.” Considering that Domino’s customers can customize their own pizzas, there is an endless number of possible combinations of toppings, each of which has a different calorie count. Liddle said a low-ball estimate of combinations Domino’s offers is 34 million. Pizza Hut has 2 billion possible combinations.

Of course the problem generating the right calorie count for each combination can be solved, given enough computer programming hours, staff training, logistics and effort.  But one could have said the of Enigma, the German coding machine whose ability to translate plaintext into billions of possible combinations supposedly rendered it unbreakable.  All the same it’s 2015 and computer science has advanced since the Second World War.

President Obama’s own Office of Management and Budget listed the menu display imposition as the third most burdensome statutory requirement enacted that year, forcing retail outlets to expend 14,536,183 work hours every year just to keep Uncle Sam happy.

But what makes it more ridiculous is that the effort is completely pointless. Studies show calorie labels make almost no difference. “A study of mostly low-income adults in Philadelphia, which recently enacted its own calorie labeling mandate, found that the regulation had no effect whatsoever on fast-food consumption, and that two-thirds of McDonald’s customers didn’t even notice the labels. The same research team, led by an NYU Medical School professor, found similar results in New York City. Now, the federal government expects different results nationwide.”

Yet that is the way bureaucracy is.  A simple, harmless looking requirement eventually imposes huge costs on the consumer while adding almost nothing of value to health care.

Vetoed By the Facts

POSTED one month ago BY HEALTH CARE COMPACT

The order is out. Stand fast. Do not retreat a single step. No pasaran! President Obama drew a line in the sand in his state of the union speech.

President Obama took a defiant tone Tuesday as he promised to ward off Republican attacks on his signature policies, from healthcare to immigration.

“We can’t put the security of families at risk by taking away their health insurance, or unraveling the new rules on Wall Street, or refighting past battles on immigration when we’ve got a system to fix,” Obama said.

“If a bill comes to my desk that tries to do any of these things, I will veto it. It will have earned my veto,” he said to applause.

The trouble is, the Republican majority sitting in congress was elected precisely to overturn Obamacare.  Why does Obama think he can hold the line?  Is he expecting reinforcements in the shape of a spate of good news?  Will people realize at tax time that “hey it’s nice to pay back the money I received as subsidies last year?”  Will they like it when they are auto-reenrolled in plans with much more expensive premiums? Are they going to be thrilled when they realize that their premiums and deductibles are up in any case?  Is it going to come as good news that their data is being shared with third-parties?  And what will Medicaid patients say when it becomes obvious the money has run out?

What will happen when taxpayers understand they are facing hefty penalties under the individual mandate?  How are they going to react when the employer mandate kicks in?

The cavalry is riding to the scene all right, but it is reinforcing the opposition to Obamacare, not to help it.  As the ACA’s proponents said, they thought it would be a done deal by now.  Dug in too deep to shift. A fait accompli.  But nothing of the sort happened.  It is teetering worse than ever, no thanks to the Republicans, but due to its own perverse, costly and defective nature.

President Obama has been outflanked by the flood of costs he swore to contain.  They are through his defenses.  He can threaten all he wants, but the truth is Obamacare has been vetoed by the facts.

No Behemoth

POSTED one month ago BY HEALTH CARE COMPACT

NPR notes that there’s a lot of anger -- almost religious anger -- against Obamacare. It cites the example of “Oklahoma state Rep. Mike Ritze … the Republican lawmaker, a family doctor [who] has stood behind three anti-Obamacare bills supported by conservative groups in Oklahoma and other states. None has made it into law, but Ritze plans to pick up the fight in the 2015 legislative session that convenes in the Sooner State next month.”

And then there’s “more than 700 Obamacare-related bills were filed in the states during 2014 or carried over from 2013 in states where legislatures allow that … some bills seek to ‘nullify’ the law or find creative ways to hinder its enforcement, while others are perennial filings inspired by Tea Party activists and other early foes of Obamacare”.

Yet for all that heat there’s been fairly little obvious light.  Conservative columnist Mark Levin predicted that the new Republican legislature would fold before Obama on every point, content to win a little victory here and a little triumph there.

The reason for this inability to translate political anger into action, according to John Goodman, is that the Republicans are divided among themselves.  In the muddle Obama is escaping.

The Affordable Care Act is one big mess. Even most Democrats know it’s a mess. It’s disliked on the left almost as much as it’s hated on the right. So you would think that Republicans would have a golden opportunity to offer an alternative. But they don’t have one.  They’re not even close.

Why is that?

In a post the other day, Ezra Klein pointed out a problematic trilogy: (1) virtually all Republicans say they want to repeal Obamacare, and most say they want to replace it with something better; but (2) replacing Obamacare means tackling the tough problem of health care reform; and (3) Republicans don’t agree among themselves on whether they even believe in health reform.

Why don’t Republicans believe in health reform? Because (this is me, not Ezra) they think about health reform in the wrong way. …

Republicans and Democrats tend to think alike. They believe that health reform means reforming the private sector. The reason: They believe that our most serious health care problems (cost, quality and access) originate in the private sector. In fact, our most serious problems originate in the public — not the private – sector. True health reform means reforming government.

This is exactly what the Healthcare Compact has been saying all along.  The health care problem is a governance problem.  It is not a policy problem.  The real difficulty lies in determining who decides how health dollars are spent, not prescribing in excruciating detail how the dollars are spent.

The real danger for the Republican Party is that they will replace one bureaucratic behemoth with another.  The answer is no behemoth.  That is the one clear message that the Health Care Compact must hammer upon.

Data Sellout

POSTED one month ago BY HEALTH CARE COMPACT

The story of Obamacare’s sharing of individual data with third-parties has now become mainstream news. CNN reports: “Healthcare.gov, the federal website where you sign up for Obamacare, is quietly sharing your personal information with private companies.”

The evidence is in the computer code on the website itself. It shows that Healthcare.gov is relaying certain information, such as your zip code, income level, pregnancy status and whether or not you smoke.

That information is being shared with several third parties. DoubleClick is a Google (GOOG) subsidiary that serves up advertisements and tracks your movements online. Healthcare.gov also shares your data with Google, Twitter (TWTR, Tech30), Yahoo (YHOO, Tech30), YouTube and others.

All the administration can say is that they’ve told the third parties not to misuse the data. “"When consumers fill out their online Marketplace applications, they can trust that the information they're providing is protected by stringent security standards and that the technology underlying the application process has been tested and is secure," HHS said. But as CNN rightly says, “but this doesn't explain why these companies see your data in the first place.”

Feedback, the administration says. The need for feedback to measure consumer satisfaction, explains why the third parties are seeing individual data in the first place. “A Medicare spokesman said the government uses these data firms to measure the performance of HealthCare.gov. However, it wasn't disclosed how the government ensures that these security policies are being followed.”

This explanation is ridiculous.  With all the billions that the administration has expended on Obamacare, they could have built their own custom monitoring system instead of leaking out the data to third parties in order to receive a copy of the reports.  Perhaps the most forceful argument is that it’s too late now, after having entered a house of questionable activity, to be quibbling over virtue.  The Lowell Sun writes:

By now, no one in this country should have any expectation of privacy, especially when accessing the Internet.

However, in light of the Sony hacking scandal and the president's call for stronger cybersecurity measures to protect consumers, it's disturbing to note that dozens of data companies are allowed to troll the government's own health-insurance website, unbeknown to the millions of Americans who have signed up for Obamacare.

These firms have embedded connections that allow them to track users, and in the process build profiles that are vital tools for advertisers. That information could include your age, income, ZIP code, and whether you smoke or if you are pregnant.

It's been documented by technology experts who analyzed HealthCare.gov, and confirmed by The Associated Press.

Like most things about Obamacare it’s fundamental justification is fait accompli.  It’s too late to cancel the subsidies, too late to repeal Obamacare, too late to stop Medicaid expansion, too late to stop data sharing.  Too late for everything.

Reason Magazine says it is yet one more worthless promise broken.  One more “never gonna happen” that just happened.

Since before Obamacare's health insurance exchanges went online, there have been worries about the safety and security of personal data collected by the system. But despite hearings and government watchdog reports saying that necessary security precautions weren't taken, the Obama administration has always assured the public that their data is perfectly secure.

“There’s no higher priority than protecting consumer information and maintaining trust for the consumers,” Andy Slavitt, who is slated to take over the top post at the Centers for Medicare & Medicaid Services later this year, told Politico last November.

Turns out we didn't need to worry about hackers breaking into the government's data troves. The government has been secretly sending out sensitive personal data, including age, zip code, and income information, to private advertising and marketing companies, according to a worrying report this evening from the Associated Press:

If you believed that “if you like your doctor you can keep your doctor” or “if you like your health plan you can keep your healh plan” you will surely believe that “there’s no higher priority than protecting consumer information and maintaining trust for the consumers.”

Is 2015 the Year of High Noon?

POSTED one month ago BY HEALTH CARE COMPACT

Despite all the talk suggesting that the repeal of Obamacare is no longer on the agenda, the response by Republican spokesmen following the State of the Union Address was reiteration of the goal to remove it from the books.

Republicans vowed to repeal and replace ObamaCare following President Obama's State of the Union address, a speech that repeatedly touted the successes of the healthcare law.

Newly elected Sen. Joni Ernst (R-Iowa) criticized the reform law for canceling healthcare plans and claimed it has raised premiums and "hurt … hardworking families."

"Americans have been hurting, but when we demanded solutions, too often Washington responded with the same stale mindset that led to failed policies like ObamaCare," Ernst said in the GOP's rebuttal to Obama's speech.

"We’ll … keep fighting to repeal and replace a healthcare law that’s hurt so many hardworking families," she said.

Indeed the rhetoric on both sides of the aisle has been uncompromising.  President Obama has vowed to veto any attempts to repeal Obamacare while the GOP to all appearances is prepared to see in a legal grave.  While some pundits have dismissed these fighting words as posturing, there’s always the possibility that both sides mean exactly what they say.

Perhaps 2015 will be the scene of intense political conflict -- and no kidding.

Forget About It

POSTED one month ago BY HEALTH CARE COMPACT

A curious thing happened during the president’s State of the Union Address. Sarah Kliff noted, “here's one bizarre thing: Obama barely mentions Obamacare, despite the fact that open enrollment is still open! People have until February 15 to sign-up — you'd think the president would use this address to promote that fact, right?”

She also Tweeted: “The phrase Affordable Care Act does not come up once in the President's prepared address (yes, it's the first thing I searched for)”, although he did mention health care insurance in one paragraph.

Why should Obama not mention Obamacare?

The obvious answer is that he doesn’t want to associate himself with it.  Anyone who is proud of an achievement usually misses no opportunity to associate himself with it.  In Shakespeare’s Henry V, the king reminds all gathered that everlasting fame would be the reward of all who fought with him on St. Crispian’s day.

   This day is call'd the feast of Crispian.

   He that outlives this day, and comes safe home,

   Will stand a tip-toe when this day is nam'd,

   And rouse him at the name of Crispian.

   He that shall live this day, and see old age,

   Will yearly on the vigil feast his neighbours,

   And say 'To-morrow is Saint Crispian.'

   Then will he strip his sleeve and show his scars,

   And say 'These wounds I had on Crispian's day.'

   Old men forget; yet all shall be forgot,

   But he'll remember, with advantages,

   What feats he did that day. Then shall our names,

   Familiar in his mouth as household words-

   Harry the King, Bedford and Exeter,

   Warwick and Talbot, Salisbury and Gloucester-

   Be in their flowing cups freshly rememb'red.

   This story shall the good man teach his son;

   And Crispin Crispian shall ne'er go by,

   From this day to the ending of the world,

   But we in it shall be remembered


In the case of Obamacare it seems a situation of “best not mentioned”.  This is the most damning thing of all.  It recalls the phrase that victory has a thousand fathers but defeat is an orphan.  What do you call Obamacare if even Obama would rather forget it?

Collapsing Under Its Own Weight

POSTED one month ago BY HEALTH CARE COMPACT

Richard Epstein at the Hoover Institution describes what he calls “the slow death of Obamacare”.  It is being suffocated by its own weight, an asphyxiation brought about by the mistaken belief that it could force the employer provided sector to do more, and the health care exchanges to sell perfected insurance by creating a bewildering maze of regulations.

These regulations have at great cost expanded coverage without reducing the cost of healthcare provision by one iota.  It’s regulatory approach relied on the creation of discontinuities -- ceilings on income, hours worked, or some proxy measure -- which segregated people into pools, divided by boundaries, such as the 30-hour “full time work” limit.

But the real world is not divided into discrete pools, nor are people so easily segregated into neat groupings. Well functioning markets fix this problem by offering a nearly continuous line of product offerings.  The US health care system has for a long time lacked a well functioning market.  Under the system whereby insurance companies “negotiate” with hospitals, the price list of services is not even known to the public.

This led to what Epstein called “inferior care at premium prices”.  Obamacare’s solution, was rather than to free the markets by removing the constraints, to add more of them.  Under this new layer of regulation prices have increased further.  That is the asphyxiation under which Obamacare is slowly perishing.

Now the Republicans are about to enter the same trap.  Objecting to the 30 hour full time rule, they are going to move it to 40 hours, replacing one discontinuity with another.  Many of the GOP proposals amount to exchanging one set of bureaucratic ideas for another.  The market will simply stifle under a changed set of rules when the solution is to remove as many of the rules as possible altogether.

The direction of reform should be to remove rather than to add regulation.  The Republicans must resist the temptation to create their own Gordian knot.  But that temptation has proved irresistible to politicians.  It may seduce the GOP as it has seduced the Democrats.

The Paperwork Python

POSTED one month ago BY HEALTH CARE COMPACT

Why are half of all companies still struggling to implement Obamacare nearly four years after the bill was passed? Fortune Magazine’s one word answer: paperwork.

About half of both mid-sized and large employers say they are not fully prepared to accurately apply all of the Affordable Care Act compliance standards, according to a new study by ADP  ADP 1.04% . Only 46% of mid-sized companies and 51% of large ones say they are equipped to meet the annual health care reporting requirements.

“The reporting that has to be done has to be accurate,” said David Marini, a vice president and managing director for ADP’s strategic advisory services. “Someone has to sign off that these documents are correct. There’s a whole new level of rigor.”

Along with the extension of insurance coverage, there are a host of regulatory and record-keeping standards that businesses are required to meet. The list includes accurately tracking employee hours, reporting health insurance enrollment and eligibility to federal authorities, and ensuring health plan offerings meet minimum standards of care and affordability

The stakes are high.  Penalties, legal liability.  Regulatory trouble. In order to fill out this paperwork and check it, companies have to spend more on it.  Lawyers, accountants, HR experts -- who’s going to hire them? Who’s going to pay the cost? Ultimately the consumer and taxpayer must, because in this world there is no free lunch.

This exacerbates the biggest problem facing Obamacare: cost.  The ACA was supposed to make health care cheaper.  Instead, from failed websites to complex tax forms, from constantly shifting networks to masses of paperwork engulfing companies it has added cost after cost.

Cost is the biggest danger to Obamacare.

Information Security Under Obamacare

POSTED one month ago BY HEALTH CARE COMPACT

One of the lesser known effects of Obamacare will be the creation of a giant database of health records.  It will be called the National Data Warehouse.

The Department of Health and Human Services (HHS) is looking for vendors to run its "National Data Warehouse," a database for "capturing, aggregating, and analyzing information" related to beneficiary and customer experiences with Medicare and the federal Obamacare marketplaces. Although the database primarily consists of quality control metrics related to individuals' interactions with customer service, potential contractors are to "[d]emonstrate ... experience with scalability and security in protecting data and information with customer, person-sensitive information including Personal Health Information and Personally Identifiable information (personal health records, etc.)." Vendors are also instructed that one of the requirements of a possible future contract would be "[e]nsuring that all products developed and delivered adhere to Health Insurance Portability and Accountability Act (HIPAA) compliance standards."

There are concerns that third-party components used in the Obamacare system will make it and the information pipes which flow into it as leaky as a sieve.

WASHINGTON –  A little-known side to the government's health insurance website is prompting renewed concerns about privacy, just as the White House is calling for stronger cybersecurity protections for consumers.

It works like this: When you apply for coverage on HealthCare.gov, dozens of data companies may be able to tell that you are on the site. Some can even glean details such as your age, income, ZIP code, whether you smoke or if you are pregnant.

The data firms have embedded connections on the government site. Ever-evolving technology allows for individual Internet users to be tracked, building profiles that are a vital tool for advertisers.

Connections to multiple third-party tech firms were documented by technology experts who analyzed HealthCare.gov, and confirmed by The Associated Press. There is no evidence that personal information from HealthCare.gov has been misused, but the number of outside connections is raising questions.

In case anyone thinks these fears are paranoid, it will be well to note that the president himself is warning of cybersecurity threats in his State of the Union address.

WASHINGTON— In his State of the Union address Tuesday night, President Barack Obama is expected to focus on several new cybersecurity and privacy proposals recently announced by the White House. The measures call for greater information sharing between the federal government and private companies, and new security initiatives to prevent high-profile hacks.

Health records are among the most sensitive pieces of information related to an individual.  Obamacare is collecting vast amounts of data into its infirm system and is actually building a giant warehouse at a time when the president is warning of cyberattacks.  What could go wrong?

What if the Dems Got Obamacare’s Costs Wrong?

POSTED one month ago BY HEALTH CARE COMPACT

The problems besetting Obamacare may be ascribed, according to its proponents, to the fact that it is “unfinished”.  Like anything good whose finishing touches have yet to be applied, it only seems problematic.  Just you wait until the magnum opus is completed and then it will be a wonder.  Healthcare advocacy group Families USA says:

Obamacare is great, but it leaves healthcare reform unfinished … The law does a lot to expand coverage, according to the paper, but many Americans will still find it difficult to get the insurance and care they need. For instance, many low-income Americans are living in states that have rejected the law’s Medicaid expansion. And even with insurance tax credits, many people will still find premiums unaffordable.

Seven years from now, there will still be 31 million uninsured Americans—a situation the group calls “unacceptable.”

The main problem: there aren’t enough subsidies.

Dubbing their recommendations Health Reform 2.0, the group is recommending that many of the health law’s provisions be taken further and wants an error in the law known a the “family glitch” to be fixed.

The way the law is currently written, if an individual’s employer-sponsored health coverage is deemed affordable only for them — but not for their family members — the family members are still banned from collecting insurance subsidies in the insurance marketplaces.

Who can argue with more subsidies?  The only problem is where will they get the money to give away?  As matters stand, nobody has a good handle on the Obamacare’s costs, a situation that has led to widely fluctuating premiums, according to the New York Times:

An analysis by The New York Times shows, for example, that the cost of one midlevel silver plan in Colorado rose 36 percent west of the Rocky Mountains this year, while another dropped nearly 40 percent in the northeastern plains. …

The variations in premium prices are also a direct result of what the insurer-friendly health care law permits. Insurers can target territories, choosing areas within a given market where they can attract enough members and put together provider networks that will negotiate on price. In addition, insurers were given some protection by the federal government to reduce possible losses in the early years, so some are experimenting with very low prices that may not be sustainable over the long term.

Insurers say they still do not have a firm grasp of what premium levels will allow them to cover the people who are signing up and not lose money on their medical care.

It is a mistake to think that the King vs Hablig case before the Supreme Court poses the greatest danger to Obamacare.  The real danger to the program is a cost blow-out. There no evidence to suggest it has cut the cost of health care.  Obamacare may even have increased the costs.  Subsidies can temporarily mask the cost increase from the consumer.  But ultimately the higher costs have to be met by higher premiums, bigger deductibles, and narrower networks.  It is exactly what we are seeing now.

Already the fall out from tax penalties, increased premiums caused by automatic re-enrolment and demands to return tax credits are being felt. Some Democratic Senators fear Obamacare may become an albatross around their necks.

Charles Schumer of New York, in the remnant of Democrats whose Senate careers have survived Obamacare, voiced similar sentiments in a National Press Club speech three weeks after the 2014 elections. “Democrats blew the opportunity the American people gave them” in 2008, Schumer said. “We took their mandate and put all of our focus on the wrong problem—health care reform.”

Not the wrong problem but the wrong solution.  By adding layers of ‘government solution’ onto the already high costs, they made things unsurprisingly more costly.  And now it threatens to drag the liberal project down.  It is cost that is the danger to Obamacare.

Helping Obama Out of a Fix

POSTED one month ago BY HEALTH CARE COMPACT

Catherine Rampell, an opinion writer at the Washington Post, characterizes how the administration wants to approach bipartisanship. She wants the Republicans to help the president get rid of all the Obamacare elements he’s having second thoughts about. Like the employer mandate.

Rather than debating whose version of the mandate is less harmful, Congress and the White House should join forces and eliminate it. After all, unlike the other Obamacare mandate — that all people have health insurance — the employer mandate is not all that crucial to the smooth, death-spiral-free functioning of the nation’s health system, now that we have a thick individual market….

Which is perhaps the real reason the White House and congressional Republicans both seem unhappy with the employer mandate but reluctant to fully dismantle it: Doing so would increase federal deficits by eliminating revenue raised from penalties and increasing the pool of Americans eligible for subsidies. But there are better, less distortionary ways to address these budget concerns while still promoting access to affordable health insurance — if only Congress and the White House could just admit they’re both on the same page.

A cynical Republican might ask: why help the president out of a jam?  But a more basic question would be, ‘why is the president in a fix in the first place?’  Because of the unintended consequences of Obamacare intervention in the first place.  In fact, the employer-based insurance is a legacy of FDR’s intervention in wage controls.  Obama tried to undo FDR and now he wants to undo what he did in the first place.

Perhaps the most fruitful approach is to find a bipartisan way to peel away all the layers of regulation, incentives, subsidies and distoritons that both parties have piled on over the years. The forward and reverse movement on the employer mandate is an example of all that is wrong with a government that has made up its mind to turn everything into a political football.

It’s is somewhat dismaying to read in the National Review that some Republicans are looking forward to the Supreme Court finding against the administration in King vs Burwell in order to obtain a pretext to strike a deal with Obama on favorable terms. John Fund writes:

If the Supreme Court ultimately finds that the Obama administration violated the law in issuing subsidies to some 6 million Americans in the 37 states where the federal government (rather than the individual state) runs the health-care exchanges, it could force a wholesale revision of Obamacare. Jonathan Turley, a liberal constitutional-law expert at George Washington Law School, told me recently that a Supreme Court victory for the plaintiffs in Halbig would put the continued existence of Obamacare up for grabs and force President Obama to the negotiating table with Congress and state legislatures.

It would be tragic to discover that the entire hue and cry about Obamacare was simply a pretext to get a chance to make a deal with the administration.  The likely outcome of any deal would be another horse designed by a committee; another complex monstrosity that no one can understand.

Far better to take the Health Care Compact approach, which holds out the promise of less government and more simplicity, not more of the same.

The Last of Marilyn Tavenner

POSTED one month ago BY HEALTH CARE COMPACT

Marilyn Tavenner’s departure from CMS has been largely free of criticism.  But that changed today as Republican Senators linked her departure with the failures of Obamacare.  Fortune reports:

Republican senators including Orrin Hatch, chairman of the Senate Finance Committee, praised Tavenner for performing admirably under difficult conditions. Senate Majority Leader Mitch McConnell said he hoped her replacement would not be distracted by Obamacare, calling it “a gigantic, unworkable law.”

In the House, Republican Darrell Issa blamed her agency for “padding” Obamacare enrollment numbers, saying: “Tavenner had to go.”

Well she’s gone, but Obamacare remains.  One wonders whether, after having held the line for the president for so long, Tavenner finally decided it was time to fall back on retirement or another job in the private sector.

Alex Wayne at Bloomberg takes up the tale of negative vibes which are now beginning to emerge. “Marilyn Tavenner, the U.S. official who directed the stumbling roll-out of Obamacare as well as its recovery in recent months, will resign as head of the Centers for Medicare and Medicaid Services.”

Washington can be a cruel town.  But it is also one with a rapid news cycle.  By this time next week Tavenner will have moved on.

Taxes, Taxes

POSTED one month ago BY HEALTH CARE COMPACT

The public is beginning to realize that tax time is Obamacare time.  Or maybe it’s the other way around.  Either way it comes to the same thing. The Washington Times writes: “Those Americans who didn’t get health insurance last year could be in for a rude awakening when the IRS asks them to fork over their Obamacare penalty — and it could be a lot more than the $95 many of them may be expecting.”

Most Americans don’t pay attention to politics because they’re too busy earning a living.  But the IRS is going to get their attention.

“People would hear the $95, quit listening, and make an assumption that that was what their penalty was going to be,” said Chuck Lovelace, vice president of affordable care for Liberty Tax Service. “I think that a lot of people will be surprised when they get in there and find out that their penalty is [based] on their household income.”

The penalty is designed to prod Americans to buy insurance and the penalty for not having it is scheduled to rise considerably: to a $325 minimum or 2 percent of income in 2015, and to a $695 minimum or 2.5 percent of income in 2016.

Even the relatively media-saturated state of California will find itself taken by surprise as the Mercury News  reports: “More than a million Californians benefitted from federally subsidized health insurance in 2014 through the nation's health care law. But now the law is about to give many of them a migraine.”

It's tax season, and for the first time Obamacare is showing up on tax forms. And it's leading to confusion and angst over new rules and their impact on taxpayers' pocketbooks.

That's because taxpayers must now reconcile the subsidy they received with the income they estimated they would earn last year. In addition, people who ignored the Affordable Care Act's requirement to obtain health insurance in 2014 now face a financial penalty levied by the Internal Revenue Service -- unless they qualify for an exemption.

Readers of this site will be familiar with this -- it has been the subject of many previous articles.  But ordinary people will be taken at unawares.  Yet it was inevitable.  Obamacare’s “free” money and subsidies had to come from somewhere.  The money people got had to be recovered -- all too often from the very same people who received it.  You can call it bait and switch.  You can call it a shel game. Or you can call it Obamacare.

Obamacare Proponents, Foes Spar Over CBO Modeling Scenarios

POSTED one month ago BY HEALTH CARE COMPACT

Sarah Kliff at Vox cites a study by Harvard’s Theda Skocpol concluding that the CBO never “explored the possibility of limiting insurance subsidies to the state marketplaces after the law's full implementation.”  In costing or scoring the implementation of Obamacare, the CBO always assumed the existence of federal subsidies. That fact, it is argued, “proves” that the architects of the ACA never saw the state exchanges as a necessary part of the subsidy granting process at all.

However, Michael Cannon at Forbes says it proves nothing more than what the CBO has itself said:  they assumed all states would deliver subsidies as a simplifying assumption.  All the scenarios cited by Skocpol as proof were nothing more than constructs flowing from this assumption.

Cannon cites another bill scored by the CBO which categorically examines scenarios in which state exchanges do not pay subsidies.

An alert Vox reader already informed Kliff that the claim that CBO never condsidered the possibility of Exchange subsidies in some states but not others isn’t exactly true. The comprehensive health care bill approved by Democrats on the Senate’s Health, Education, Labor, and Pensions (HELP) Committee in 2009 (S. 1679) would have given states four years to establish Exchanges themselves, after which point the federal government would establish an Exchange.  ...

In fact, the HELP bill would have withheld Exchange subsidies in both federal Exchanges and state-established Exchanges if the state did not cooperate by implementing the bill’s employer mandate. Even the government’s amici concede the HELP bill, which was merged with the Finance committee’s health care bill to form the PPACA, conditioned Exchange subsidies on states implementing the law. So much for Skocpol’s claim that “no one in Congress considered premium subsidies restricted to certain states to be either possible or desirable.” (Senate Democrats discarded this part of the HELP bill when crafting the PPACA, but retained and strengthened the Finance bill’s language conditioning Exchange subsidies on states establishing Exchanges.)

Thus the policy assumptions clearly conceived the possibility of state exchanges not delivering subsidies.  Citing computed scenarios based on simplification does not extinguish that policy posture. Cannon writes that the CBO also calculated scenarios assuming all states would expand Medicaid, and yet the Supreme Court already held that the states could refuse expansion.

In other words, the fact that the CBO assumed there would be subsidies in all 50 states under the HELP bill or the PPACA does not indicate that Congress did not intend to condition those subsidies on state cooperation. The CBO also assumed that the PPACA’s Medicaid-expansion subsidies would be available in all states. Does that mean those subsidies were not conditional on state cooperation?

The bottom line is that the King vs Burwell case is still an open question that the Supreme Court must resolve.  It’s not been “decided” by the discovery of the CBO documents by a long shot.

Out of One Pocket and Into Another

POSTED one month ago BY HEALTH CARE COMPACT

CBS News reports that more Americans are able to pay their bills, despite the fact that the bills have not gotten any smaller, because they are covered with Obamacare.  The cost of treatment may be higher than ever, but don’t worry “someone else” -- the insurance company or the government -- is paying for it.

A new study from The Commonwealth Fund found that the share of American adults who reported trouble in paying their medical bills slipped to 23 percent last year, or 43 million people. That marks the first decline since 2005. By comparison, the percentage of Americans with trouble paying medical bills in 2012 stood at 30 percent, or roughly 55 million people….

While the decline in uninsured Americans has been noted by other research organizations, the law's impact on health care costs has been debated, with some critics claiming that businesses and workers would be hurt by expenses related to mandated enrollment.

Yet The Commonwealth Fund's findings may provide some reassurance that the law is helping American families, many of whom have been walloped by rising health care costs at a time when wages have remained stagnant.

Medical debt has hobbled millions of Americans, hurting their credit scores and creating other financial headaches. About 43 million Americans have an overdue medical debt on their credit reports, the Consumer Financial Protection Bureau said in a December report.

Avik Roy, writing in Forbes says, hope you like the noose.  “The U.S. hospital industry is crony capitalism at its finest.”  They are overcharging the patient by a wide margin, and all Obamacare is doing is shoveling more money at them.

On Sunday evening, CBS’ 60 Minutes did a feature story on Steven Brill’s new book, America’s Bitter Pill, in which Brill complains that Obamacare didn’t do enough to tackle the exorbitantly high price of U.S. hospital care. “Obamacare does zero to change any of that,” says Brill. That’s not exactly right. What Brill—and CBS—don’t tell you—is that Obamacare is driving hospitals to charge you more than they already do.

Steven Brill, founder of The American Lawyer and Court TV took a starring role in the health care debate when he published the Time article “Bitter Pill,” describing how hospitals charge extreme prices for ordinary care to the uninsured. For example, Sean Recchi, an uninsured lymphoma patient, went to MD Anderson Cancer Center, a world-renowned facility in Houston, to seek treatment. MD Anderson proceeded to charge him $283 for a $20 chest X-ray. They charged him more than $15,000 for blood tests costing a few hundred dollars. They charged him $13,702 for a dose of Rituxan, a lymphoma drug, for which the average U.S. hospital price is around $4,000. All told, Recchi’s course of treatment cost $83,900. Whatever he couldn’t pay was called “uncompensated care.”

Well not this uncompensated care is compensated -- by the taxpayer.  Avik Roy points out what CBS News misses.  Paying the bills without lowering the costs only means the money Obamacare boasts of spending has been gotten from somewhere.  And that somewhere is the taxpayer’s pocket.  Roy writes:

Thanks to federal intervention in the health care system—Medicare, Medicaid, and the employer tax exclusion—hospitals have been able to charge whatever they want for their services, knowing that the average consumer has no idea how much he’s paying, because he’s paying mostly through taxes and other indirect means.

In 2013, U.S. government entities—i.e., taxpayers—spent a half-trillion dollars subsidizing American hospitals. By 2021, thanks in part to Obamacare, that will grow to $800 billion a year. That’s more than twice what the military spends subsidizing the aerospace industry.

And here’s the thing. While Brill rightly criticizes Obamacare for not doing anything to bring down the cost of hospital care, he’s actually an ardent supporter of the law. And this is the fundamental problem with Brill’s thesis. Obamacare doesn’t merely not do anything to bring hospital costs down. It actively works to drive hospital costs upward, by doubling down on the incentives hospitals have to charge more to patients.

Not only is Obamacare pouring in the coal, it is ramping up the price.  Avik Roy points out that the ACA is driving hospital consolidation, leading to even higher prices. “Since 2010, when Obamacare was passed, there has been a spike in the number of hospital M&A [merger and acquisiton] transactions.”

The Daily Signal’s Aylene Senger has a detailed chart showing the process of diminished competition in insurance markets throughout the US.

In 2009, when President Obama was trying to sell his health care reform ideas to Congress, he promised a competitive marketplace, where costs would decrease and quality would increase. …

2015 state-level competition. A comparison of the number of insurers selling coverage in the 2015 exchanges with the number of insurers that sold individual policies in the states before Obamacare took effect shows that the Obamacare exchanges are nationally 21.5 percent less competitive at the state level.

Roy describes the process whereby monopolies are being encouraged.  With the rise of monopolies comes the corresponding rise in prices.

The spike in hospital mergers is being driven by two things. The first is that Obamacare expands government-sponsored insurance, like Medicaid. Government insurance pays less than private insurance pays, so hospitals seek to merge so they can gain more leverage on private insurers to charge whatever they want. In 1993, for example, Harvard’s two main hospitals—Massachusetts General and Brigham and Women’s—merged, and immediately began jacking up prices to the privately insured and uninsured populations.

The second is that Obamacare creates a government program, called Accountable Care Organizations, whose explicit goal is to encourage hospitals to consolidate the provider industry, thereby giving them more leverage to charge higher prices. In 2011, a Federal Trade Commissioner called attention to this problem, noting that “the net result” of ACOs “may therefore be higher costs and lower quality health care.”

But who cares as long as the insurance company pays for it.  The consumer might, since the insurer ultimately pays out of the premiums collected.  The taxpayer might, since subsidies ultimately originate from the taxpayer.  But the administration doesn’t.  They’ve bought the vote and gotten the voters to pay the cost.

Tavenner Quits

POSTED one month ago BY HEALTH CARE COMPACT

Marilyn Tavenner, administrator of the Center for Medicaid and Medicare Services (CMS) announced she would step down from her position next month.

Tavenner is leaving after five turbulent years overseeing the agency. Her tenure included the disastrous rollout of the government’s HealthCare.gov website as well as, most recently, an inflated tally of total ObamaCare enrollment.

Her departure comes at a time when the program is facing serious legal challenges in the Supreme Court and a legislative attack by the Republican majority in Congress.  Tavenner was known for her wide net of contacts.  Despite the fact that she worked for a Democratic administration she apparently had good personal relationships with Republicans, in fact with many of the major layers in the health care industry.

Her temporary replacement,  Andrew Slavitt, the agency’s second-ranking official, is a graduate of the Harvard Business School but does not have the extensive contact network of Tavenner. Darius Tahir of Modern Healthcare suggests that Slavitt’s temporary job may last longer than might be expected. The reason is that whoever comes next will have to take the “hot seat”.

Speculation will now turn to whom President Barack Obama might nominate to replace Tavenner and if any nominee can gain approval from the Republican-controlled Senate.

“I think it's going to be very hard to get someone confirmed into this role,” said Dr. Scott Gottlieb, a scholar with the American Enterprise Institute, a conservative think tank. “I wouldn't be surprised to see someone act in the role for a prolonged period and then be appointed for the final year during a recess.”

It would be difficult for Obama to find a replacement with Tavenner's political relationships. Gottlieb called her “responsive” to congressional Republicans, for example.

Tom Scully, a former CMS administrator and current general partner at investment firm Welsh, Carson, Anderson & Stowe, said that he was “surprised she didn't leave earlier.”

Obamacare is moving into the most critical period since its enactment.  Tavenner may simply be getting out of the line of fire.

Redistribution

POSTED one month ago BY HEALTH CARE COMPACT

The Achilles Heel of Obamacare continues to be costs. Recently a local news channel had the opportunity to interview HHS secretary Sylvia Burwell.

In an exclusive broadcast interview with News 8's Janet St. James, Burwell had trouble explaining why costs have risen so sharply for those who don't qualify for a subsidy.

"Well, people were paying for indigent care that was occurring before people were insured... before the Affordable Care Act took place," Burwell said. "When we see more and more people receiving insurance, what we know is there is more downward pressure on those premiums in terms of passing along that indigent care."

The message is: wait and maybe one day they’ll go down since policy is moving in the right direction. But Janet St. James was onto something.  So that health care can become “affordable” to subsidized groups, it has to become less affordable to unsubsidized groups.  Someone has to pay for the free lunch.

This is exactly the point made by Drew Altman in the Wall Street Journal explaining why Harvard University faculty are incensed about the price rises to their insurance.

Like a quiet revolution in health insurance, deductibles have been steadily increasing for many years. But a mountain was made out of a mole hill when Harvard University’s plan for employees to pay modest deductibles and other forms of cost sharing kicked off a firestorm at the university and a broader discussion about whether Harvard was somehow affirming conservative principles by giving its employees a little more skin in the game. ...

Harvard was doing what many, if not most, employers do: increasing cost sharing a little in a given year to avoid a larger premium increase. It’s the only tried-and-true way employers have to hold down premium increases, and it’s one reason that deductibles and other forms of cost sharing are rising.

We need a broad and substantive national discussion about the changes occurring in health insurance and the growth of high-deductible plans. Some cost sharing is an appropriate part of a health insurance plan. The question is: When does cost sharing get so high that it endangers economic security, access to care, and health, especially for people who are sick and need more care?

For too long, Harvard faculty have had it good.  Now to keep costs down it has to be less good, starting with “deductibles” liked to skin in the game.  Only by charging people with “Cadillac plans” more can money be freed up for subsidies to other people.  The truth is that the cost of medical care cannot go down uniformly.  It will go down for some but only because it will go up for others.  Obamacare has failed to budge the underlying costs of care.  This means that to be “affordable” to some it must be “unaffordable” to others.

Another Strategic Opportunity for the Health Care Compact

POSTED one month ago BY HEALTH CARE COMPACT

The Hill cited sources claiming that the GOP’s strategy toward Obamacare had shifted -- without them admitting it -- away from full repeal.

The party remains far from consensus on how to handle the law, but threats from the its far-right members have largely faded as members look to show a GOP Congress can govern ahead of 2016, when the party hopes to retake the White House.

“If we can show that we can lead, we might get an even bigger majority in 2016. We might get the White House,” the aide said. “Republicans can say, ‘See, we were right? Put us in charge, and we’ll repeal the whole damn thing.’ ”

The change in tone can be seen even among hard-line Republicans, including Sen. Ted Cruz (R-Texas), who recently said he wanted to fix the “most onerous” pieces of the Affordable Care Act.

“There used to be an argument pretty prevalent on the Hill: They’re not going to do anything to fix Obama’s problem and force people to live with consequences,” said Stuart Butler, who spent 35 years leading policy for the conservative think tank, the Heritage Foundation.

“Well now, that seems to be not quite the strategy,” said Butler, who is now a senior fellow for the Brookings Institution.

A number of pundits have rushed into the vacuum, none more boldly than Avik Roy, who’s written a plan describing precisely what he thinks should happen. He describes the cup of hemlock he thinks should be offered to the administration in the event they are defeated in King vs Burwell.

Republicans, who now control both the House and the Senate, have three basic options for responding to a victory in King v. Burwell. The first would be what we can call the “let it burn” option: doing nothing. Doing nothing would effectively blow up the federal exchange, while keeping most of Obamacare’s costly insurance mandates intact. About four million people could lose their Obamacare subsidies, with many returning to the ranks of the uninsured.

While such an outcome might please the most hardened anti-Obamacare activists, it contains risks for Republicans. Politically, the voters would likely blame Republicans for not offering an alternative path forward. Most states would likely set up their own, unreformed exchanges. And from a policy standpoint, the GOP would be foregoing what might be their best opportunity to reform the health care system.

The second option would be to surrender: to simply legalize what the Obama administration has attempted to do through extralegal means. That would meaning signing on to Obamacare’s blizzard of destructive mandates and regulations.

The third option is Avik Roy’s plan, which contains one significant item of interest to the Health Care Compact. (Emphasis mine)

In my health-reform plan, Transcending Obamacare, I propose an alternative to Obamacare’s exchanges, one that could not only replace Obamacare but also, over time, replace the Great Society’s government-run health insurance programs for the poor and the elderly.

Importantly, the plan doesn’t require Republicans to repeal every word of Obamacare. They could do that and replace it with the Transcending Obamacare approach; or, they could achieve the same result by a partial repeal and deregulation of the law.

How would that work? Under the reformed health insurance markets proposed in Transcending, Americans would be free to choose from a broad array of health insurance plans, instead of being forced by the government to choose from a narrow set of federally-certified options:

The Plan repeals the ACA’s individual mandate requiring most Americans to purchase government-certified health coverage. The Plan restores the primacy of state-based exchanges and state-based insurance regulation. It expands the flexibility of insurers to design exchange-based policies that are more attractive to consumers, because they are of higher quality at a lower cost. The Plan expands access to health savings accounts. Because these reforms lower the cost of insurance for younger and healthier individuals, they have the potential to expand coverage, despite the lack of an individual mandate.

States would gain the further option of abandoning exchanges entirely, and simply offering means-tested tax credits to their lower-income residents.

According to economic modeling we conducted in partnership with University of Minnesota economist Stephen Parente, we estimate that such reforms would decrease the cost of the average single insurance plan by 17 percent; the impact would be larger in the states that have seen the highest premium increases under Obamacare.

The key point of confluence is Roy’s idea of deregulating healthcare insurance choices and reducing the federal government footprint in the health care payment system. Since the major reason for high cost is the lack of competition, policy movement along these lines can produce significant dividends.  Roy predicts it will cut insurance costs by 17%.

Be that as it may this creates another strategic opportunity for the Health Care Compact to make alliances.  The time to either repeal or replace Obamacare -- perhaps both -- is drawing nigh and the HCC should be there at the finish.

The Medicaid Free Lunch

POSTED one month ago BY HEALTH CARE COMPACT

Patrick Ishmael, “an analyst for the Show-Me Institute, a free market think tank based in Missouri”, explains in Forbes that Medicaid expansion money does not come from zero-sum pool.  Each Medicaid expansion is a separate deal.

Medicaid expansion funding is dictated not by some division of a funding pie, but by the beneficiaries and states participating in the program. If, say, one state expanded Medicaid but no others, that wouldn’t mean one state would get the Medicaid money that would have been earmarked for every other state. Rather than some large pie being split, state Medicaid expansions are more like a series of pies baked in separate ramekins — distinct from and independent of one another. If a ramekin goes unused, nothing really changes about the other ramekins. …

That means that Illinois, for example, isn’t getting “Missouri’s expansion money” because 1.) Missouri already receives more Federal money than it contributes, and 2.) the nature of Illinois’s Federal Medicaid benefits aren’t really dependent on Missouri’s participation anyway.

That separateness comes not only into play for federal money but also for state money.  In any event there is no “free lunch” which states which refuse to expand Medicaid miss.  The Feds aren’t going to buy you a lunch or feed your share to some other state.

That’s in addition to the fact that by not implementing Obamacare, Missouri also avoids the direct costs of an expansion and some of the enormous costs of the less-talked about woodwork effect.

This is a direct refutation of Ezra Klein’s argument that failing to expand Medicaid means just that: a missed free meal.  He writes in bold, “DEMOCRATS CREATED A GIANT SUBSIDY FROM BLUE STATES TO RED STATES AND REPUBLICANS ARE TURNING IT INTO A GIANT SUBSIDY FROM RED STATES TO BLUE STATES”.  But Ishmael says there’s no such thing because refusing Medicaid doesn’t turn into a bonanza for some other state.

Obamacare Overburdens the IRS

POSTED one month ago BY HEALTH CARE COMPACT

Geoffrey Norman at the Weekly Standard can’t understand why the Obama administration is so determined to veto any changes to the Affordable Care Act, because they’ve already changed it 46 times themselves. “As Tyler Hartsfield and Grace-Marie Turner of the Galen Institute write:”

By our count at the Galen Institute, more than 46 significant changes already have been made to the Patient Protection and Affordable Care Act: at least 28 that President Obama has made unilaterally, 16 that Congress has passed and the president has signed, and 2 by the Supreme Court.

Norman calls Obamacare “the soup sandwich of big government programs”.  There is something definitely Frankenstein-like about it, consisting as it does of numerous seemingly unrelated pieces.  Much of Obamacare is actually implemented by the IRS. The Hill writes that the IRS is now in a position where if it devotes time to Obamacare it takes time away from regular tax collection.  But on the other hand, if it devotes time to regular tax duties it risks neglecting Obamacare.

Nina Olson, the national taxpayer advocate …has long criticized congressional efforts to roll back the IRS’s budget, which include a $346 million cut enacted in December. She also noted that the IRS resources going toward implementing the agency’s role in the Affordable Care Act would help cause a decline in taxpayer services.

But it’s hard to see the Obama administration as the victim. It wanted Obamacare.  It expanded government’s role in health care payments, serving as a sort of super-insurance and income transfer mechanism and now it is saddled with the task.  The cost of administering Obamacare will probably run to the tens of billions.  This vast machinery is overstressing even the IRS.  It has forced hundreds of thousands of doctors to file reams of paperwork.  It will compel millions of taxpayers to seek help from H&R Block simply to square their Obamacare policies with their income tax returns.

Just as Frankenstein’s monster turned on its creator, so also is Obamacare’s administrative beast turning on its designers.

Robert Lazewski Warns Against Replacing One Monster With Another

POSTED one month ago BY HEALTH CARE COMPACT

Well known health care analyst  Robert Laszewski warns that Republicans will be tying a noose round their necks if they attempt to replace Obamacare with another Washington based, one-size-fits-all bureaucratic monstrosity.  He writes, “Of course that begs a question, Just what should we do to make health insurance reform politically and financially viable?”

The first change he suggests is to simplify things. Government is part of the problem. “Obamacare is an overregulated monster of an insurance marketplace reform that violates a basic marketplace rule ­­­­–– it doesn't meet most customers' needs because of its individual mandate and penalties, its limited choices, high deductibles, still high premiums and narrow provider networks.”

Democrats have a point when they argue that ObamaCare was built on Republican ideas. The problem is that Democrats have layered too much complexity on top of those ideas.

There is a Republican chassis underlying ObamaCare.

Health insurance exchanges are a Republican idea. Both presidents Bush and candidates Bob Dole and John McCain have proposed advanceable tax credits as a way to help people buy health insurance. Getting rid of pre-existing conditions and medical underwriting has always been a Republican objective.

But just as Tolkien’s Orcs are descended from the Elves, so too is Obamacare derived after many mutations from market ideas.  The challenge, Lazewski says, is to find some way to recover the nuggets from the slurry.  In the end it will be necessary to give the Democrats some credit for what must replace Obamacare, because if the debacle of the last six years proves anything, it is that some form of bipartisanship is necessary.

And that is why the Health Care Compact idea has not lost its validity.  It provides an opportunity not only to simplify the problem by removing one layer of complexity by returning the problem to the state level, it also sidesteps the problem of partisanship by allowing multiple and competing solutions to the health care problem.

The worst thing the GOP can do is replace one monster with another.