Yuval Levin


Unwinding Obamacare

Now that 2014 has arrived, the Affordable Care Act is no longer a theoretical proposition, but a policy that is in now being implemented. But, as my colleague Yuval Levin and I explain in a piece in The Weekly Standard, there are still parts of the law that conservatives can and should try to stop from being implemented, both to protect Americans from the worst effects of the wrong-headed law, and to help build the case for its eventual repeal.

Especially troubling is the “risk corridor” provision of the law, under which taxpayers are on the hook for covering large portions of the losses that insurers incur on the Obamacare exchanges. If an insurer pays out claims that exceed 108 percent of its premium collections, taxpayers would cover about 75 percent of its losses.

A mirror-image provision is also supposed to recoup 75 percent of any profits above 108 percent of premium collections. But because Obamacare’s design is so flawed and its rollout has been so bungled, enrollees in the exchange insurance plans are likely to be significantly older and sicker than the insurance company actuaries assumed (there was also a great deal of political pressure on insurers to lowball their premiums in this first year of the program). There will thus likely be few if any insurers rebating profits under this risk-corridor provision, only a large cost to the taxpayer. The insurers are counting on this massive bailout to avoid a bloodbath of losses from Obamacare.

You can read the rest of the article here.

posted by James C. Capretta | 2:00 pm
Tags: Yuval Levin, risk corridors, Obamacare
File As: Health Care

The Soft Underbelly of Obama≠care

One of the challenges facing opponents of Obamacare has been that there is so much wrong with the law, it can be difficult to choose a single target to focus on. But as Yuval Levin and I explain in an article in The Weekly Standard, the individual mandate, one of law’s most important provisions is also one of its most problematic and unpopular.

The law’s champions have always considered the individual mandate to be the indispensable provision. It is what allows them to make the only boast they really care to make, which is that the law—in their estimation—will deliver on the long-sought goal of “universal coverage” (which now appears to mean covering all but 30 million people in our country). And it is what allows them to attempt to transform the purchase of government-sanctioned health insurance from just another consumer choice into a social obligation, if not a legal decree.

Of course, the mandate has already ceased to be the obligation that Obamacare’s architects wanted it to be. In his landmark ruling in NFIB v. Sebelius last summer, Chief Justice John Roberts found that Congress did not have the authority under the commerce clause to make the purchase of health insurance obligatory. The only way the “personal responsibility” requirement was found constitutional was as a tax on the uninsured: Citizens can either purchase insurance or pay that tax. Both options are perfectly permissible under the law. Indeed, the Roberts decision suggests that Congress could never raise the tax very much because that would tip the balance away from providing a genuine choice to imposing a de facto obligation to buy coverage.

The rest of the piece can be read online here.

posted by James C. Capretta | 10:23 am
Tags: Obamacare, individual mandate, Yuval Levin
File As: Health Care

Itís Time to Delay Obamacare

Over at the AEI Ideas blog my colleague Yuval Levin and I make the case that both supporters and opponents of Obamacare should agree to delay the implementation of the major provisions of the law that are now scheduled for 2014.

Everyone should now understand that, if there is not a delay, next year will be the scene of an epic disaster for American health care. The trouble started, as it often does, at the top. The president insisted on passing a reform with only Democratic support. That guaranteed large-scale public opposition, which has persisted. It also left the nation’s Republican governors less than enthusiastic about becoming the law’s enablers.

The president compounded the problem by stalling on key implementation decisions in 2011 and 2012 to avoid controversy before the election. States could not get answers to basic questions about what the law’s “exchanges” would involve or what their options were for Medicaid. And insurers even now remain unclear about the regulatory environment they will confront. With so much uncertainty, states, employers, and insurers all delayed their decision-making as long as possible too. The result is that implementation of the largest social-welfare policy change in a generation is far behind schedule.

The rest of the post is online at the AEI Ideas blog here.

posted by James C. Capretta | 1:53 pm
Tags: Yuval Levin, Obamacare
File As: Health Care

Why Obamacare Is Still No Sure Thing

My Ethics and Public Policy Center colleague Yuval Levin and I co-authored an op-ed for the Wall Street Journal this weekend on what state governments can do to resist the implementation of Obamacare.

Talk of the law's inevitability is intended to pressure these governors into implementing it on the administration's behalf. But states still have two key choices to make that together will put them in the driver's seat: whether to create state health-insurance exchanges, and whether to expand Medicaid. They should say "no" to both.

At its core, ObamaCare is a massive entitlement expansion. Between vastly increased Medicaid eligibility and new premium subsidies, it is expected to bring 30 million more people onto the federal government's entitlement rolls. The law anticipates that the states will take on the burden of implementing the expansions, but states can opt out of both.

You can read the rest of the column online here.

posted by James C. Capretta | 11:17 am
Tags: Obamacare, Yuval Levin, exchanges
File As: Health Care

More Mediscare

My colleague Yuval Levin and I have a column in The Weekly Standard about how a recent study of Medicare reform in the Journal of American Medical Association distorts its own findings in an attempt to discredit premium support proposals like the Wyden-Ryan plan:

For starters, the Wyden-Ryan plan would apply only to entrants into the program after 2023. No current senior, and no one under 55 today, would be affected by it. So there is no way for the reform to increase the premiums of any current beneficiaries.

Moreover, even the Harvard scholars’ own analysis shows that no senior would necessarily pay any more for Medicare coverage under the proposed reform. The point of premium support is to bring more efficiency into the program. If competition introduced new ways of providing and structuring coverage and care that significantly reduced costs, presumably the fee-for-service Medicare plan (which would remain an option under Ryan’s proposal) would learn from some of these and reduce its own costs too. If it didn’t, it would lose customers, and it would deserve to.

You can read the rest of the article here.

posted by James C. Capretta | 10:57 am
Tags: Yuval Levin, premium support
File As: Health Care

The Mandate After the Court

My colleague Yuval Levin and I have co-authored a new article for National Review Online about how the Roberts decision will affect Obamacare:

In the wake of the Roberts decision, participation in Obamacare’s insurance scheme is optional. Rather than a requirement to buy coverage backed with a penalty for violators, the law now offers Americans two equally lawful and legitimate options: buy expensive insurance (which Obamacare will make all the more expensive), or pay a modest (and still largely unenforceable) tax and just buy insurance for the same price later if you need it. Presented as a choice, not a command, this provision will invite a straightforward comparison, and for many Americans the choice it would pose would be a very easy one. 

You can read the rest of the article here

posted by James C. Capretta | 12:03 pm
Tags: Supreme Court, Yuval Levin
File As: Health Care

The Anti-Jobs Bill

My colleague Yuval Levin and I have coauthored a piece in the latest Weekly Standard that examines the consequences of the Democrats' health care plan for the broader economy, and especially for the jobs outlook:

Beyond taxes and spending, Obamacare would also wreak havoc on the labor market. Because employers would get penalized if any of their low- and moderate-wage workers ended up in the new subsidized insurance pool, they would avoid hiring such workers. Democrats claim they want to jam through health care reform so they can turn their attention to jobs, but the bill provides a strong disincentive for businesses to hire those who need jobs the most.

The plan would, moreover, trigger an inefficient and costly re-sorting of American labor. Under the bill, despite the enormous cost of subsidizing coverage in the new government-run “exchanges,” only 18 million people would be getting such subsidized coverage in 2016—even though there are 127 million Americans today with incomes in the targeted range of between one and four times the poverty rate. The vast majority of workers would still be in job-based plans and get no additional help. Gene Steuerle of the Urban Institute estimates that a worker making about $60,000 per year in 2016 would get $4,500 more in federal aid if he were able to get his insurance through an exchange rather than through his employer. That’s a powerful incentive for workers and firms to rearrange their operations to take advantage of the federal money. In time, the American economy would be divided into companies with low-wage workers getting government-subsidized health care and others with higher-wage workers who continue to get employer-based plans. This would make the labor market far less efficient (harming productivity), and it would mean that the subsidies themselves would cost far more than the CBO now estimates.

And for those workers who do end up getting federal subsidies for their insurance, the program is a trap. If they get a pay raise, they will lose some of their insurance subsidy. Indeed, the schedule of subsidy withdrawal is so severe that it will push many low-wage families into effective tax brackets of 60 percent to 80 percent, according to a CATO Institute analysis. Obamacare would thus provide a strong disincentive to work and so undermine the most successful policy initiative in generations: welfare reform.

You can read the entire article online here.

posted by James C. Capretta | 11:52 am
Tags: Obamacare, Yuval Levin, Eugene Steuerle, CBO
File As: Health Care

Facing in Opposite Directions

My EPPC colleague Yuval Levin has written a post that nicely sums up why a bipartisan health-care solution will not be easy to come by. It's not that conservatives and liberals don't both see the shortcomings of today's arrangements. They do. It's that they simply have very different conceptions of what must be done to fix the problems. Liberals believe that more empowered and enlightened government management of the health sector can deliver better results. Conservatives quite rightly are highly suspicious of this contention. The government has been running Medicare and Medicaid for more than four decades, and the result has been bureaucratic regulation and price controls that make the entire health sector less efficient and productive. The conservative solution is to empower cost-conscious consumers in a reformed marketplace that rewards efficiency and value. Given the intensity of the debate over the last year, the odds are long indeed that the two sides will suddenly find an acceptable compromise anytime soon.

posted by James C. Capretta | 5:01 pm
Tags: Yuval Levin, conservatives, liberals
File As: Health Care

After Obamacare

With my colleague Yuval Levin, I have cowritten a piece in the latest Weekly Standard examining the political landscape for health care reform in the wake of the election of Scott Brown to the United States Senate. After discussing how the Democrats’ ambitious plans have screeched to a halt, we suggest some ideas for health reform that conservatives should take up:

First, they should seek to address the problem of insuring Americans with preexisting conditions through state-based high-risk pools, not cumbersome insurance regulations that try to outlaw basic economics. Risk pools, backed with federal money but nowhere near the scale of Obamacare’s costs, would give those with preexisting conditions more options in the individual market and make a significant dent in the number of uninsured, but without overturning our health care system.

Second, they should propose to help doctors and patients limit some of the burden of rising costs with medical malpractice reform. Sensible caps on punitive damages would not only save money but also help address shortages of medical providers in key specialties, and allow more Americans to afford and access care.

Third, they should argue that the states be given the lead role in developing more detailed reforms of how and where people get their insurance—to cover more people and slow the rise of costs. The overall goal should be to build well-functioning marketplaces in which insurers and providers compete to deliver the best value to cost-conscious consumers. The federal government should remove bureaucratic obstacles to state experimentation on this front, and offer support where possible, but not design one mammoth new program. The regulation of both the practice of medicine and of insurance is done in the states, and their improvement should be too....

Meanwhile, for the longer term, conservatives should make a case for changes in the tax law that level the playing field between employer-provided and individually purchased health insurance, with a gradual transformation of the tax exclusion for employer-based coverage into a credit available to all. A consumer-controlled tax credit would also enhance the benefits of risk-pools, tort reform, and state-based reform efforts.

And they should press the case for real Medicare reform, not to use the program as a pot of cash, as the Democrats tried to do over the past year, but to put it on a sound footing by empowering enrollees rather than bureaucrats to make decisions....

These ideas would not yield a sudden transformation of American health care, but a gradual improvement in the areas that matter most—cost-control, greater access for the uninsured, and greater fairness for those with preexisting conditions—while sustaining the quality and innovation that characterize American health care.

The piece is available in its entirety here.

posted by James C. Capretta | 9:28 pm
Tags: Obamacare, Yuval Levin, tort reform, risk pools, Medicare
File As: Health Care

Why the Senate Bill Makes No Sense

In the new Weekly Standard, my colleague Yuval Levin and I discuss the bill that has emerged from the Senate. An excerpt:

The [Democrats' original] goal was to get a large swath of the public insured by the government, and so gradually create a socialized insurance system. Conservatives opposed this scheme because they believe a public insurer would not be able to introduce efficiencies that would lower prices. Liberals supported it because they think a public insurer would be more fair and more effective.

But in order to gain 60 votes in the Senate, the Democrats have now had to give up, for all practical purposes, on any version of that public insurer, while leaving the other components of their scheme in place. The result makes no sense whatsoever — not to conservatives, not to liberals, not to anyone. Rather than reform a system that everyone agrees is a failure, it will subsidize that system and compel participation in it — requiring all Americans to pay ever-growing premiums to private insurance companies, most of which are for-profit, while doing essentially nothing about the underlying causes of those rising costs. The thought that, after all of this, a Democratic Congress is going to force Americans to send their premiums to the despised insurance industry and then subsidize that industry to boot has sent the left into such a state of frenzied recriminations it could sink the whole enterprise yet.

And that is by no means the only problem for the left in this bill. The mad rush to pass something obscures a crucial component of the bill's design that could prove very problematic for Democrats. For all of President Obama's insistence that we must have action now, and all the talk by congressional Democrats about the terrible costs of delay, the key components of the Senate bill would actually not go into effect for four years. Essentially all of the spending provisions and insurance reforms — including the individual mandate to purchase health insurance, the employer mandate to provide it, the state insurance exchanges, the federal subsidies for coverage, and the Medicaid expansion — would only go into operation in 2014....

This timeline of tax and spending implementation corresponds rather awkwardly to the political calendar confronting the Democrats.

The entire article is available here.

posted by James C. Capretta | 8:16 pm
Tags: Yuval Levin, Harry Reid, Senate bill
File As: Health Care

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