December 11, 2013 •
Supporters of the Affordable Care Act have always had a difficult time talking about the “individual mandate,” since it is at the same time the most strikingly coercive and heavy-handed element of the law while also being essential for making the law work. As I argue in a column at National Review Online, however, the Supreme Court's decision last June to uphold Obamacare also undermined the legal and moral force of the “mandate” by ruling that it was only legitimate if understood as an optional tax on the uninsured, not a legal mandate obligating citizens to purchase health insurance.
Though the law’s supporters believe the threat of the mandate is critical to forcing people into the Obamacare exchanges, they don’t want to admit this directly to voters. So the mandate is mentioned often in policy circles, but seldom by supporters when communicating in the media or directly to voters. Every once in a while, though, when pressed in more public settings on why they think the young will sign up for coverage, they are forced to admit that it’s due in part to their faith in the mandate — as Zeke Emanuel did on Fox News Sunday over the weekend.
The ambivalent embrace of the mandate by Obamacare’s authors is reflected in the law’s construction. Initially, the mandate’s year-by-year penalties were set at much higher levels, but they were lowered by Democrats on the Senate Finance Committee to protect themselves from political attacks by Republicans. As enacted, the mandate’s penalties are very low, especially relative to the premiums charged by insurers in the exchanges, and especially in the first two years. In 2014, the penalty, or tax, is the greater of (a) a per-person tax of $95 per adult and $47.50 per child, up to a maximum of $285, or (b) 1 percent of total household income. The tax rises to 2 percent of household income in 2015. A typical household of four people with an income of $40,000 will face a mandate tax of $400 in 2014. That compares with premium payments of $1,500 to $3,000 for the typical low-cost insurance offerings, even after the federal subsidies are netted out of the premium costs.
You can read the rest of the column here.
December 9, 2013 •
Though the Obama administration appears to have fixed the most obvious problems with the healthcare.gov website, the troubles with the implementation of the Affordable Care Act are far from over. As I argue in a column at e21, it is far from clear that healthcare.gov is working as well as it needs to, and in any case, some glitches on a website are far from the most serious problems facing Obamacare's implementation.
Further, multiple media reports indicate that insurers are still not receiving accurate enrollment information in many cases. Fully one-third of the sign-ups in October were corrupted, meaning that there are already several thousand Americans who think they have signed up successfully for health insurance but really have not. And the administration now admits that, even after the supposed fixes to the system over the past month, there is still a ten percent error rate in the transmission of enrollment applications to insurers. If that holds in the coming weeks, and the administration keeps beating the bushes to get more people to sign up through the website, there will be hundreds of thousands of Americans who think they have health insurance come January 1 but do not. The backlash from these botched enrollments will only add to the legend of the Obamacare implementation fiasco.
And then there is the still unresolved issue of insurance cancellations. The administration is pleased that there were supposedly 29,000 people enrolling in coverage in the first two days of December through healthcare.gov. But that per day rate implies 345,000 sign-ups by December 23rd through the federal website—well short of the five million who have received notices indicating their insurance will terminate effective January 1. The president’s half-hearted and lawless attempt to allow these people to keep their old policies in 2014 may reduce those facing a break in coverage somewhat, and others are likely to purchase new plans outside of the exchanges. Even so, if only 2 million people are facing a break in coverage on January 1, that is still 85,000 people per day through online enrollment—well above anything experienced to date at the federal and state-run websites.
You can read the rest of the column here.
November 27, 2013 •
One of the few major promises made by the president about the Affordable Care Act that has not been exposed as empty and false in the wake of the law's disastrous rollout has been that Obamacare will drive overall health care costs down. In a post on The Weekly Standard's blog yesterday, I show why the recent claim by the president's Council of Economic Advisors that Obamacare will drive down health care costs is mistaken.
The CEA paper attempts to make the case for Obamacare by looking at trends from the most recent release of National Health Expenditure (NHE) projections. The NHE data, compiled by the independent Office of the Actuary in the Department of Health and Human Services (HHS), does show a slowdown in health spending in recent years. NHE spending growth per capita has averaged 3.1 percent since 2010, down from 5.9 percent in the previous decade.
But the slowdown did not start abruptly in 2010. In 2002, NHE spending per capita rose 8.5 percent and then began to slow over the ensuring years. In 2008, NHE spending per capita rose just 3.7 percent – two years before Obamacare was enacted.
You can read the rest of the piece here.
November 20, 2013 •
The disastrous implementation of the Obamacare health insurance exchanges on October 1 has left the left health care law more vulnerable than ever. As I argue in a column at National Review Online, Republicans need to continue to push back against the most problematic and unpopular elements of the legislation to both protect Americans losing their insurance because of Obamacare, and to hasten the eventual repeal and replacement of the law with a better alternative.
The first order of business remains thinking through what to do about canceled individual-market policies. Prior to last week, it would have been unthinkable that the White House would unilaterally adopt a policy allowing millions of people to stay in their individual-insurance plans in 2014. After all, notwithstanding that famous presidential pledge, a major focus of Obamacare is the termination of the individual insurance market and the shifting of that market’s participants into the Obamacare exchanges in 2014. An escape route that allows large numbers of current individual-insurance enrollees to avoid the exchanges in 2014 (even one with its own set of traps) raises the very real possibility that the exchanges will falter before they ever get started.
This does not mean that the GOP should be applauding the White House’s supposed “fix.” For starters, the administration’s plan is completely lawless, as many others have noted. The president has not altered any regulations or asked Congress to provide a carve-out for the 2013 insurance plans. He instead announced he would not enforce the law for a year, which the administration claims should be enough for state regulators and the insurance industry to reopen the canceled plans.
Of course, this is not the way to run the government. In the near term, it’s not at all clear that states and insurers aren’t still exposed legally. What if an insurance enrollee sues an insurer for not providing an Obamacare-required benefit? Would that have standing in court? Who knows?
You can read the rest of the column here.
November 14, 2013 •
With millions of Americans facing the prospect of losing their health insurance in the new year because of the Affordable Care Act, something needs to be done to provide some relief for the people whose health care is threatened by this poorly thought out and poorly implemented law. A bill introduced by House Republicans, led by Energy and Commerce Committee chairman Fred Upton, would offer some help to the people facing the difficult prospect of losing their health insurance, and as I argue in a piece at The Weekly Standard, even though this bill would not be a panacea for the fatally flawed Affordable Care Act, it is a good start.
The concept of the Upton bill is straightforward: it removes the impediments in Obamacare that have forced insurers to issue the cancellations in the first place. Specifically, it would allow insurers to continue offering individual insurance market policies under the state insurance rules that are in effect in 2013. As a practical matter, that means these insurance plans will be able to offer coverage at far lower premiums than the Obamacare-compliant plans will charge because the plans made viable by the Upton bill will not be forced to subsidize the less healthy risk pool that is likely to show up in the Obamacare exchanges. Further, the Upton bill would allow individuals to stay in these reopened insurance plans without fear of being penalized for not enrolling in Obamacare-compliant products.
There has been a lot of commentary recently that the Upton proposal won’t really do much because insurers do not have the capacity to reopen plans in time to get people coverage by January 1. And it is certainly true that reversing the cancellations will entail significant expense and trouble for the insurance industry.
But that does not mean it is impossible. It’s worth noting the California insurance commissioner is forcing two insurers to reverse cancellations for hundreds of thousands of individual market plan enrollees, and the insurers are reluctantly complying to keep people in their plans beyond January 1. In that case, operational issues were not impossible to overcome.
You can read the rest of the post here.
November 12, 2013 •
Though the administration has secured a month’s reprieve from the woes of implementing the Affordable Care Act by promising that the dysfunctional online enrollment system will be up and running by the end of November, as I argue in a column at e21, the delayed launch of the program has already caused serious problems that will not be solved by fixing the healthcare.gov website.
The immediate problem for the administration is that even with a perfectly functional enrollment and data transmission system, it would be challenging to process new insurance enrollments of 4 million or so people in a two week period. Given the track record of healthcare.gov to date, it is highly unlikely that the system will be able to handle that much volume in that short of a time frame.
Moreover, it is also completely unrealistic, not to mention unreasonable, to expect so many Americans to suddenly become comfortable again with healthcare.gov, enter their personal financial information into it, and then select an insurance plan—in just a two-week period. For starters, contrary to the president’s assertions, many of the current enrollees in individual market plans will not be impressed by the premiums, cost-sharing requirements, and provider networks of the exchange plans. If and when the web site becomes more operational, the administration will face another political firestorm from the rate shock that is built into Obamacare’s cost structure.
You can read the rest of the column here. On Monday, I appeared on the Kudlow Report to talk about what should be done to mitigate the Obamacare train wreck, and you can watch a portion of that segment here.
November 6, 2013 • On Sunday I was invited to appear on Chris Wallace's program to discuss the Obamacare rollout and its impact on the insurance market with one of the law's architects, Ezekiel Emanuel. You can watch a video of the debate, or read a transcript at FoxNews.com.
October 29, 2013 •
In the midst of the troubled launch of Obamacare's health insurance exchanges, it is looking less and less likely that the law will lead to the net increase of insured Americans that the administration has promised, as I explain in a column at National Review Online.
At the time of enactment, CBO estimated that the net effect of the various Obamacare provisions would be 10 million new enrollees in Medicaid in 2014, 8 million enrollees in plans offered on the exchanges, 4 million new enrollees in plans sponsored by employers, and a reduction of 2 million people in the non-exchange individual insurance market. The net effect was an estimated reduction in the ranks of the uninsured of 19 million in 2014.
The Obama administration relied heavily on this CBO cost estimate to argue that the law would dramatically expand insurance coverage even as it also reduced projected federal budget deficits, in the short and long term. The CBO estimate was also instrumental in rounding up the final votes in favor of passage of the legislation in Congress. A strong case can be made that the numbers in the CBO cost estimate were what was promised to the American people, and therefore represent the benchmark against which Obamacare should be assessed.
The likelihood that such a sizeable reduction in the uninsured can be achieved in 2014 is slim. To date, far more people have learned that they are losing their plans next year than have signed up for new coverage in the exchanges. Moreover, even though Medicaid enrollments are running above those in the exchange plans, they are still not nearly on pace to reach the levels promised at enactment.
You can read the rest of the column here.
October 25, 2013 •
With the serious setbacks facing the implementation of the Affordable Care Act, it is starting to look like it would be best for opponents of the law to wait for the disaster to unfold to reap the political benefits of its collapse in 2014.
But, as I argue in a column at The Weekly Standard, pushing for delaying the individual mandate should remain a key part of the GOP's opposition to the law in the months ahead.
There are many conservatives who fully expect the law to collapse under its own immense weight, and who anticipate that they will reap the political benefits of that collapse in 2014 no matter what they do now. So why engage in another politically risky showdown with the president?
Certainly the GOP shouldn’t repeat the mistaken tactics of the last month. But there’s every reason to continue making a delay of the individual mandate the GOP’s top priority in the negotiations with the Obama administration and Senate Democrats over the coming months.
For one thing, there will never be a better time to press the case for a mandate delay. The rollout of Obamacare is a complete mess. The voters can see for themselves that enrollment in Obamacare is a completely unreasonable proposition at this stage, even with the administration’s recent announcement that it will treat any enrollment commitments made before April 1 as satisfying the coverage requirement (previously, the cut-off to avoid the uninsured tax was thought to be mid-February, because the law allows for three months without coverage in a calendar year and it can take several weeks to go from an enrollment submission to initiation of insurance coverage). It should be obvious that the system for determining subsidy amounts for households has not been tested nearly enough to ensure it is reliable and will not waste billions in taxpayer dollars. It will be impossible for the administration to continue its defense of the individual mandate if these conditions remain substantially unchanged through the end of 2013.
You can read the rest of the column here.
October 15, 2013 •
If the White House and Congress want to make a serious effort at entitlement reform, they should begin by bringing more consumer choice to Medicare, which could be done by replacing Obamacare's Medicare accountable care organizations (ACOs) with a model that provides more consumer choice, as I explain in a new column at e21.
There are far better ways to encourage the spread of high-quality integrated care networks in Medicare. The fastest, surest way would be to create a level competitive playing field with Medicare’s dominant FFS insurance system. This is the premise of the “premium support” model of Medicare reform. Under premium support, private insurance options—the MA plans of today, plus whatever new models may emerge—would compete directly with the government-administered FFS option on a regional basis, and the beneficiaries would select their coverage from the competing plans. Importantly, the government’s contribution to coverage would not increase with higher priced insurance. That means the beneficiaries would have to pay more for expensive plans. The result would be strong incentives for enrollment in options that offer high value at reasonable cost -- exactly what well-run integrated systems of care could offer.
You can read the rest of the column here, and for more on Medicare ACOs, you can watch this AEI video where I explain what they are and why they won't work as defenders of the Affordable Care Act expect them to.Next