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

Another Broken Promise

Obamacare Is Driving Costs Up, Not Down

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.

posted by James C. Capretta | 1:44 pm
Tags: cost curve, Medicare, Obamacare
File As: Health Care

The Upton Bill Is No Small Matter

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.


posted by James C. Capretta | 4:51 pm
Tags: Obamacare, Fred Upton
File As: Health Care

Beware the Pivot to a ‘Grand Bargain’

In the ongoing debate over the government shutdown and the upcoming negotiations over the debt ceiling, Republicans should continue to focus on extracting concessions on Obamacare, rather than “pivoting” to a more general debate over the budget. As I argue in a column at National Review Online, the implementation of Obamacare is going to continue to face serious problems that will make opposition to Obamacare the right choice both politically and as a matter of policy.

No doubt the speaker and his allies are looking for an end-game strategy on the CR and debt-limit fights that has a chance of producing a modest victory for the GOP. That’s understandable. But, at this point, they are better off sticking with the fight they already started over Obamacare than with pursuing broader budget talks that could easily backfire.

Ironically, the odds have improved in recent days for extracting concessions on Obamacare from the White House and Senate Democrats. This has nothing at all to do with the shutdown and its political effects and everything to do with the slow-motion fiasco that is the Obamacare rollout. The continued dysfunction at the healthcare.gov website is confirmation that the law was not ready to be implemented. And the problems are not limited to the inability of curious citizens to see the insurance options. It is also apparent that the systems are not properly transmitting the required data to the insurance companies to successfully enroll people in coverage. If these problems persist, there could be thousands of people come January 1 who think they have signed up for insurance but have not yet successfully done so.

You can read the rest of the column here. And for those interested in hearing more about the problems with the implementation of the Affordable Care Act, my former colleague from the Office of Management and Budget, Keith Fontenot and I discussed the law's implementation on C-SPAN's Washington Journal on Saturday, October 5th.

posted by James C. Capretta | 11:10 am
Tags: Obamacare, shutdown
File As: Health Care

Win the Argument

How the GOP Can Get the Upper Hand

In a column at The Weekly Standard, I argue that Republicans should use the budget debates over the government shutdown as a chance to argue for a delay of the Affordable Care Act's individual mandate.

The political and substantive case for a delay in the individual mandate is compelling.  On a political level, what politician wants to defend giving a one-year break to corporate America but not to the little guy?  That’s exactly the position Democrats are now in, and the GOP can swing public opinion their way by making this the central theme of their public case.  In the coming days and weeks, there will be no shortage of opportunities for GOP members and Senators to go on TV, and they should use every chance they get to pound the message home with voters that the Democrats are the ones protecting businesses but not workers.

Substantively, the case is just as strong.  The administration has delayed enforcement of the employer mandate for a year, which means some workers will not get an offer of coverage at their place of work.  Because the individual mandate is still in place, they will have to go into the exchanges to get insurance or pay the uninsured tax.  In two states, New Hampshire and West Virginia, there’s only one plan being offered in the exchanges.  In other states, there are very few choices.  Is it really fair to force American to buy insurance from one insurance carrier, or limit their choices to even two or three plans?  The administration says it will start enforcing the employer mandate in 2015, which means many workers who were forced into the exchanges in 2014 will be forced out of them in 2015 when they get offered employer plans.  Does disrupting insurance like this make any sense?  The GOP should make these points to show that a delay of the employer mandate necessitates a commensurate delay of the individual requirement.

You can read the rest of the article here.

posted by James C. Capretta | 10:53 am
Tags: Obamacare, individual mandate, delay
File As: Health Care

The Play Should be Delay

While there is widespread recognition among conservatives that the Affordable Care Act should be their chief target in the fiscal debates between now and the end of the year, there is some disagreement about whether Republicans in the House should seek to delay or defund the health care law. In a piece in The Weekly Standard, Jeffrey Anderson and I argue that, for both political and substantive reasons, delaying rather than defunding Obamacare is a wiser strategy.

A push for a full-year delay of other major provisions is thus seen not as an unusual and politicized concept but rather as a reasonable response to the reality on the ground. A recent Kaiser poll asked whether Obamacare’s opponents “should continue trying to change or stop it, so it has less impact on taxpayers, employers, and health care providers,” or “should accept that it is now the law of the land and stop trying to block the law’s implementation.” By a 20-point margin—53 to 33 percent—respondents said that Obamacare’s opponents should keep trying to impede its implementation. In other words, Americans don’t think Republicans should just sit by and watch Obamacare go into effect.

The notion of defunding Obamacare gets a very different public reaction. While essentially every poll taken over the past three-and-a-half years has shown that Americans want to see Obamacare repealed, they don’t want to see it defunded. Rather, polls show that Americans oppose defunding Obamacare by large margins—ranging from about 20 to 30 percentage points. Over the past two-and-a-half years, Kaiser has taken eight polls on defunding. On average, those 8 polls have shown 29-point opposition to defunding—61 to 32 percent.  A CBS News poll that showed 18-point opposition to Obamacare (51 to 33 percent) showed 20-point opposition to defunding it (55 to 35 percent).

You can read the rest of the article at the Weekly Standard’s website here.

posted by James C. Capretta | 2:37 pm
Tags: Obamacare
File As: Health Care

The Soft Underbelly of Obama­care

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

The Significance of the Missing Employer Mandate

Apologists for Obamacare have been scrambling to defend the administration's decision to delay the implementation of the employer mandate by claiming that the mandate is not actually an important part of the law. But as I explain in a post at The Weekly Standard, delaying the mandate has serious implications for how much Obamacare will add to the federal deficit over the next ten years.

CBO’s estimates make clear how important the employer mandate is to Obamacare. Today, the agency provided updated projections of what the administration’s one-year delay (as well as related changes in the administrative process for adjudicating claims for federal subsidies) would mean for costs and coverage in coming years. CBO concluded that the administration’s decisions will increase the federal budget deficit over the coming decade by $12 billion. (Incidentally, the blog post from the Treasury Department announcing the mandate delay contained 478 words, so that’s about $25 million per word.) CBO also says the delay and related actions will mean one million people won’t get employer-sponsored health insurance in 2014, and about half of them will be left uninsured as a result. Even by Obamacare standards, these are not minor consequences unless one cares nothing about federal deficits or how many people don’t have health insurance.

You can read the rest of the post here.

posted by James C. Capretta | 11:55 am
Tags: Obamacare, employer mandate
File As: Health Care

Ways and Means Health Subcommittee Hearing: “The Obama Administration’s Delay of the Employer Mandate”

Today, the House Ways and Means Health Subcommittee held a hearing on the Obama administration’s decision to delay enforcement of the employer mandate, where I gave testimony on the implications of both the delay in the employer mandate as well as the administration’s recent decision to abandon income verification for applicants to state insurance exchanges.

The decisions to abandon the employer mandate for 2014 and to allow applicant attestations in some instances were announced only last week; it will take some additional time before the full implications are known and understood.  Nonetheless, in my testimony, I will provide some initial observations about what they mean for employers and the federal budget, and for broader implementation of the 2010 health care law.  I also offer my recommendations to the committee and to Congress regarding what I believe would be an appropriate legislative response to the administration’s recent announcements.

You can read the rest of my written remarks here, or watch video of the entire hearing here.

posted by James C. Capretta | 6:47 pm
Tags: Obamacare, employer mandate, exchanges
File As: Health Care

The Fiasco That Is Obamacare

Following close on last week’s announcement that the employer mandate provisions of Obamacare will be delayed by a year, the administration just announced another problem in the law’s implementation.

In a 606-page regulation, issued the Friday after July 4, the administration announced that income and employment verification in the state-run exchanges in 2014 will be based on the “honor system.”  That is, the state exchanges will not be required to secure independent verification of the household incomes of the applicants, nor will they have to track down whether or not applicants were offered qualified coverage by their employers. On both counts, the state exchanges can simply accept whatever is claimed by the applicants as accurate, and then pay out subsidies accordingly.

This announcement is another indicator—as if we needed one—of the complete fiasco that is Obamacare implementation.

You can read the rest of my post on the fiasco that is Obamacare on the Weekly Standard blog, and listen to this episode of the Weekly Standard podcast, where I spoke with Michael Graham about Obamacare’s sloppy and irresponsible implementation.

posted by James C. Capretta | 10:46 am
Tags: Obamacare, exchanges
File As: Health Care