Yes, Premiums Will Go Up

Obamacare apologists have been touting last month’s news from California about the effect that the law will have on insurance premiums, but, as I explain in a column on National Review Online, the law’s critics have been right to point out how Obamacare will increase rates in the individual insurance market.

Obamacare is imposing a minimum benefit for insurance that is in excess of what many consumers purchase on their own today. And the law is imposing many new rules on what insurance companies may and may not take into account when setting premiums. There is no experience anywhere indicating that these kinds of changes will lower premiums. And there’s an abundance of evidence from state experiments indicating that these changes will increase premiums, and probably quite substantially.

So Roy and the others were rightly suspicious of the spin coming out of California and decided to take a look themselves. What they found is that California officials were comparing the Obamacare exchange premiums with small-employer plans, not the existing individual market in the state. This was a completely inappropriate comparison. It is the enrollees in the individual-insurance market who will have little choice but to get their coverage from the exchange next year. Employees of small businesses can still get their insurance outside of the exchange, and do so on a self-insured basis to avoid getting pooled with insurance enrollees outside their firms. But for people in the individual market, there’s no getting around Obamacare.

You can read the rest of the piece here.

posted by James C. Capretta | 2:15 pm
Tags: Obamacare, insurance premiums
File As: Health Care

Obamacare and the New Medicare Trusteesí Report

The Medicare Trustees released their annual report on the state of the Medicare trust fund last Friday, and, not surprisingly, Obamacare supporters are already pointing to the report’s findings as evidence that the law is working. Such claims are nonsense, as I argue in a short post on National Review Online.

For starters, Medicare’s unfunded liability remains staggering — a full $43 trillion over the infinite horizon. That’s nearly $7 trillion more than the 2010 report.

Moreover, as was the case in every report from 2010 onward, Medicare’s actuaries have again told us that the real state of Medicare’s financial outlook is far worse than the official projections indicate. That’s because the cuts to Medicare contained in Obamacare are so irrational and blunt that they will almost certainly be reversed. Most especially, the actuaries expect the so-called “productivity improvement factor” will be reversed because of the damage it will do to access to care for seniors. That would be the provision in Obamacare that reduces the inflation update for most non-physician providers of services, especially hospitals. The cuts begin this year and continue every year, in perpetuity. If they are allowed to stand, they will push reimbursement rates for hospitals to levels that are so low they’ll fall below what Medicaid pays by the end of this decade. Medicaid’s rates, meanwhile, are so far below what private insurance pays that the network of hospitals willing to take large numbers of Medicaid patients is quite constrained. The actuaries expect that, by 2030, the cuts would push revenue for 25 percent of the nation’s hospitals below their total costs, leading many of them to withdraw from the Medicare program entirely.

You can read the rest of the post here.

posted by James C. Capretta | 12:06 pm
Tags: Medicare Trustees, Obamacare
File As: Health Care

Itís Not ďUniversal CoverageĒ

Securing universal health insurance enrollment has been a major goal of American liberals for decades, and Obamacare aims to use the individual mandate to ensure that all Americans obtain health insurance. But as I explain in a column at National Review Online, even with the individual mandate Obamacare will fail to provide “universal coverage” for Americans, and will end up becoming just another expensive entitlement program.

In its latest assessment of the law, released in conjunction with new budget projections, the CBO indicates that the number of uninsured residents in the United States will never fall below 31 million — three million more uninsured people than was estimated for the non-mandate plan President Obama rejected — and that the insured will never be as much as 90 percent of the population.

And even that estimate is highly optimistic. It assumes that 70 percent of the population eligible for the Medicaid expansion will eventually enroll in the program. As of today, however, only 24 states have governors and legislatures that would likely agree to move ahead with expansion, and that number could easily fall as more state policymakers come to the realization that Medicaid is far too often failing its current enrollees. It makes little sense in that context to dramatically expand a program that credible independent observers believe needs significant reform.

You can read the rest of the column here.

posted by James C. Capretta | 3:09 pm
Tags: Obamacare, universal coverage
File As: Health Care

Winning the Obamacare Fight

In a column published today at National Review Online I point out some steps that Congressional Republicans can take to not only push back against the worst aspects of Obamacare, but also to win the public argument over the future of American health care.

For the moment, the future of Obamacare isn’t a question of legislative tactics. It’s a question of political strategy — how to build a wave of public support behind a credible program to repeal Obamacare and replace it with something far better, and how to get that sentiment to prevail at the polls in 2014 and 2016. The excesses and deficiencies of Obamacare will go a long way toward convincing the public that there must be a better way. But the congressional GOP can and should also take steps to build its case and gain the upper hand in the argument. The bill to close down the prevention fund and apply some of the savings to a high-risk pool is one small step in that direction.

You can read the rest of the piece here.

posted by James C. Capretta | 12:13 pm
Tags: Obamacare, high-risk pools
File As: Health Care

Cost Estimates for an Obamacare Replacement Plan

This week, the American Action Forum (AAF) released a white paper I co-authored with AAF’s President Doug Holtz-Eakin. The paper provides new insurance coverage and cost estimates for the Obamacare replacement plan I developed in collaboration with many other health policy analysts over the past two years. (The replacement plan was described in two published articles: the first, co-authored by Robert Moffit of the Heritage Foundation, appeared in the spring 2012 edition of National Affairs; the second, published as a white paper by the American Enterprise Institute, provided some additional details about the reform plan.)

The AAF cost estimates are encouraging. They show that a replacement plan built on a decentralized, market-based reform program can broaden insurance coverage dramatically without the massive federal power grab and mandates of Obamacare. This is an important development. It demonstrates that, contrary to the talking points of the 2010 law’s apologists, there are viable, practical alternatives to Obamacare that have the potential for broad appeal with the American people.

The emergence of AAF’s modeling capacity — the Health Economic Policy Simulation System (HEPSS) — is also an important advance. It means that a new source of credible analytical information is now available to the policy community, and more information about the cost and coverage consequences of various reform plans can only help to improve the caliber of the public debate. Moreover, the estimates produced by HEPSS will almost certainly differ from those produced by the Congressional Budget Office, the Urban Institute, and others because the HEPSS model uses different sources of data in some respects (including more extensive data on the use of high deductible health plans by employers) and because every model requires the use of some assumptions, and there’s no reason to expect the HEPSS assumptions to exactly match those used by CBO and others.

Obamacare is now being implemented, but that does not mean the debate over the future of American health care policy is over. Quite the contrary. Obamacare has far too many fundamental flaws for this debate to be over. At some point, the public will be receptive to hearing about alternatives to the current law, and opponents need to be ready with a fully developed answer. The paper released today is far from the final word, but it is another step in the right direction.

posted by James C. Capretta | 4:30 pm
Tags: Obamacare
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

The Top Ten Health-Care Bills for 2013

Over at National Review Online I outline ten health care bills that could receive bipartisan support in Congress and would limit the worst aspects of Obamacare.

The Obama administration chose to delay many of the most controversial implementing rules of Obamacare during 2012 to avoid stirring up opposition to the president during the election year. That decision has now put everything behind schedule. Moreover, a majority of states have decided (as was their right) not to build the state exchanges envisioned in the law, leaving the task to the federal government. And there’s no direct appropriation available to the federal government for this task. So it’s quite clear that implementing the law by January 2014 will create significant and unnecessary chaos in the insurance marketplace. Republicans should seize the opportunity this state of affairs provides and push for a delay of the law’s implementation. The administration will of course vigorously oppose any suggestion of delay, but many employers, states, and health-sector participants would welcome it.

You can read the other nine proposals here.

posted by James C. Capretta | 11:33 am
Tags: Obamacare
File As: Health Care

Delay, Repeal, Replace

Jeffrey H. Anderson and I have an piece in The Weekly Standard on what conservatives can do to stop Obamacare and fix the problems with the American health care system.

Delaying the implementation of Obamacare would be important for three reasons: It would save hundreds of billions of dollars in federal spending. It would spare Americans from having their health care premiums spike until a somewhat later date. And it would move the onset of Obamacare much closer to the 2016 presidential election, which would put Obama’s centerpiece legislation at center stage in that race—as the future health of the nation demands that it be.

Of course, this is the last thing that Obama wants, but he may not have much choice in the matter. Once a possible delay gets floated by Republicans in Congress, it could gather momentum. Many governors, including some Democrats, are likely to support such a move because they see a train wreck coming in 2014 and are eager to avoid it. Moreover, many businesses, including insurers, would support a delay because they know the government is not remotely ready to implement Obamacare on schedule. Even a one-year delay would pay dividends in all of the ways listed above.

For those interested, the rest of the article can be found here.

posted by James C. Capretta | 12:53 pm
Tags: Obamacare
File As: Health Care

The Project to Replace Obamacare Begins Now

As 2013 begins, encouraging a discussion about how to replace Obamacare might strike some observers as a case of particularly bad timing. After all, in the year just ended, the Supreme Court upheld most of the provisions of the law and the president won re-election. As a consequence, the best opportunities to remove the law from the books all disappeared. The tough reality now is that Obamacare is not going to be undone during the next four years. So why bring up an alternative plan at this point?

The answer is that replacing Obamacare is by necessity a long-term project; you have to start somewhere. Moreover, it remains essential. Like it not, health care policy is central to the struggle over the size and scope of governmental power. Without a better approach than Obamacare, there will be no success in limiting government or in lessening the dependence of citizens on the state.

It is also going to take a lot of work and political effort to build the political coalition necessary to move health care policy in a different direction. Indeed, one of the reasons Obamacare passed in the first place is because opponents of government-dominated health care never coalesced around a serious and workable alternative in the years prior to 2009. Moreover, those efforts that did take place to promote a real alternative, such as Sen. John McCain’s proposal from the 2008 campaign, fell far short because they were not preceded by the necessary policy and political groundwork.

But all is not lost. Obamacare is flawed legislation that is already forcing employers to cut back their hiring and limit hours of work. It will soon send premiums sky high for many Americans who already have insurance. Promises about the law’s coverage and cost-control effects were greatly exaggerated. There will come a time — sooner rather than later — when Americans will be ready to hear again about an alternative to Obamacare’s government-heavy approach. At that moment, which might coincide with the 2016 presidential election contest, Obamacare’s opponents must be ready with a viable, center-right, market-based alternative that can win public support. And the only way to be ready for a debate on health care in 2016 is to get to work now on the alternative plan. It takes that long to develop a workable framework, get it analyzed with credible numbers, and refine it to ensure it has broad appeal.

In that spirit, I am circulating again two essays on this subject from 2012. The first, co-authored by myself and Robert Moffit of the Heritage Foundation and published in the journal National Affairs, describes what we see as the fundamental principles of an effective, market-based reform plan. The second — a sequel of sorts to the first — is my effort to provide more detail on some of the key features of a workable alternative plan. It was published last month by the American Enterprise Institute in its Health Policy Outlook series.

Advocates of expansive governmental power are always more comfortable than their limited-government opponents talking about health care policy. It is far easier to sell “the government will take care of it” than to explain why a decentralized, market-driven approach will be better for voters anxious for certainty about their health care needs. Nonetheless, this fight cannot be avoided. Health care is too important to fiscal policy, to the American economy, and to the concerns of voters to be set aside as an unwinnable issue.

It is of course true that full replacement of Obamacare with a workable, market-based alternative will be an extremely difficult undertaking. But it is also true that a new direction in health care policy is crucial for the future prosperity of the country. And so, that being the case, it’s far better to get started on the effort now than to delay and thereby handicap the possibility of future success.

posted by James C. Capretta | 2:28 pm
Tags: 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

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