Articles on the implementation of ObamaCare.
By Orrin Hatch, Lamar Alexander and John Barrasso
Wednesday, the Supreme Court will hear oral arguments about whether the Obama administration used the IRS to deliver health insurance subsidies to Americans in violation of the law. Millions of Americans may lose these subsidies if the court finds that the administration acted illegally. If that occurs, Republicans have a plan to protect Americans harmed by the administration’s actions.
When the court rules in King v. Burwell, we anticipate that it will hold the administration to the laws Congress passed, rather than the laws the administration wishes Congress had passed, and prohibit subsidies in states that opted not to set up their own exchanges, as the language in the law clearly states. Such a ruling could cause 6 million Americans to lose a subsidy they counted on, and for many the resulting insurance premiums would be unaffordable.
Republicans have a plan to create a bridge away from Obamacare.
First and most important: We would provide financial assistance to help Americans keep the coverage they picked for a transitional period. It would be unfair to allow families to lose their coverage, particularly in the middle of the year.
The majority (52 percent) of Obamacare enrollees receiving an advance premium tax credit to purchase Obamacare insurance is facing the prospect of paying back $530 of that tax credit to the IRS, according to a new study from H&R Block. This clawback is reducing the refunds for these taxpayers by 17 percent this filing season.
Under Obamacare, taxpayers earning between 133 and 400 percent of the federal poverty level are eligible to receive a tax credit to help purchase insurance on Obamacare exchanges. This tax credit is calculated using old tax data of the recipients. The credit is advanced ahead of time to the taxpayer’s insurance company. The taxpayer must reconcile at tax time the advance credit received with the actual credit she is eligible for.
As the SCOTUS oral arguments in King v. Burwell draw near, the cacophony from liberal outlets is nearly deafening. The plaintiffs’ position is “absurd ,” they cry. Congress “never contemplated withholding premium subsidies” in noncooperative states. Even the Obama administration argued that “it would have been perverse for Senators concerned about federalism to insist on pressuring States to participate in the implementation of a federal statute.”
Perverse? Jonathan Gruber (whose position on the issue is “complicated”) is equally disdainful, calling the challengers’ stance “nutty,” “stupid,” and a “screwy interpretation” of the law.
Really? Were Obamacare architects incapable of using “sticks” masquerading as “carrots” to coerce states into setting up Exchanges?
The debate over ObamaCare has obscured another important example of government meddling in medicine. Starting this year, physicians like myself who treat Medicare patients must adopt electronic health records, known as EHRs, which are digital versions of a patient’s paper charts. If doctors do not comply, our reimbursement rates will be cut by 1%, rising to a maximum of 5% by the end of the decade.
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Dec. 26, 2014, was strike three for Pamela Weldin.
The day after Christmas, Weldin, of Minatare, Neb., had logged on to Facebook to find a message from a friend of hers. Included in the note was a link to an article from the Omaha World-Herald announcing that CoOportunity Health, a nonprofit health insurance company offering plans in Nebraska and Iowa, had been taken over by state regulators.
The insurer, one of 23 Consumer Operated and Oriented Plans, or co-ops, started with the backing of the federal government and received $145 million in loans from the Centers for Medicare and Medicaid Services. But, CoOportunity’s expenses and medical claims would far exceed its revenue for 2014.
The Obamacare window technically just closed this weekend, but 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.
Behind the scenes, HealthCare.gov is still a mess.
The “back end” of the Obamacare website still isn’t properly wired to the health insurance companies. It’s slow going for health plans to make sure the 11.4 million people who have signed up end up in the right plan. Subsidy payments aren’t automated, so the insurers get payments based on estimates. And adding information like a marriage or the birth of a child is a convoluted, multi-step process.
Approaching ObamaCare With Humility
Washington can’t get out of Its own way on health care. Give states a chance.
President Obama spoke frequently of humility during last week’s prayer breakfast. Congressional Republicans could use a healthy measure of that virtue should the Supreme Court rule that ObamaCare subsidies are not available in the 37 states with federally-facilitated exchanges.
ObamaCare is the product of a yawning humility deficit. Its core conceit is that a group of very smart and ideologically like-minded people could reorganize the financing of a $3 trillion industry that touches the lives of 320 million Americans.
Its architects boast that more people have “selected a plan” this time around than during the program’s disastrous initial open season. They are quick to overlook the law’s wreckage – canceled policies, loss of employer-sponsored coverage, erroneous subsidies that will require people of modest means to repay the government with interest, and assorted other disruptions and deformations.
A law that is minutely prescriptive too often got its prescriptions horribly wrong. Its flaws will reach the point of absurdity should the Supreme Court rule that its attempt to subsidize health insurance made most health insurance subsidies illegal.
The case of King v. Burwell would be a simple one, but for its social and political implications. The Court is examining a defect in the law, one of many in what is perhaps the most poorly drafted statute in U.S. history. The provision in question provides that subsidized health insurance coverage is available only through an exchange “established by the state.”
The IRS effectively rewrote the law to allow subsidies to be paid as well through the 37 exchanges that were not “established by the state,” but by the federal government. In defending the agency, the Justice Department in essence argues that the IRS can change laws so that they conform to what Congress must surely have meant to write, rather than what they actually wrote.
The Court should instead base its ruling on the bedrock principle that only Congress has constitutional warrant to correct its own legislative blunders. If it does, health insurance subsidies will no longer be available to millions of people who live in states with federal exchanges, presenting 37 Governors with a stark choice between two unpalatable options: submit to ObamaCare’s flawed framework by establishing state exchanges or let their constituents forfeit subsidized coverage.
Democrats will pressure Governors to establish such exchanges while also pushing Congressional legislation to authorize the provision of subsidies through federal exchanges. Republicans are floating alternative proposals that would subsidize coverage for low-income people and those with pre-existing conditions, while stripping ObamaCare of mandates and relaxing some of its other requirements.
These proposals will meet with criticism, some of it justified. Getting the right subsidy in the right amount to the right person (or the right insurance company) on a monthly basis is tricky business. The Administration had 3-1/2 years from the law’s enactment to the launch of the exchanges to get it right. They didn’t. Erecting an alternative federally administered system in a matter of months would risk a similar fate.
Perhaps what is needed is not an alternative national system at all. ObamaCare’s serial pratfalls have led millions to question the federal government’s capacity to administer the law. A judicial smackdown five years after the law’s enactment will reinforce the view that Washington can’t get out of its own way on health care.
Republicans should embrace this sentiment and argue that health care is too important to be entrusted to the people who brought us ObamaCare. They should advocate that Governors be empowered to advance alternative ways of expanding coverage, springing them from ObamaCare’s take-it-or-leave-it trap.
Congressional Republicans could accomplish this by advancing a bill to provide capitated allotments to states that would be based on the amount of refundable tax credits that its residents received during 2014. To qualify for an allotment, a state would be required to develop a plan for providing affordable coverage to low-income residents and those with pre-existing conditions. Each state would decide how best to achieve these objectives, with the results subject to rigorous evaluation.
States that already have set up exchanges could keep them and those that have not could still establish them. But they also could instead choose to be freed from ObamaCare’s one-size-fits-all rigidities by opting to receive allotments. These allotments would provide the resources to launch innovative and effective alternatives to ObamaCare tailored to their state’s unique characteristics. If some states institute defective regimes, the damage would at least be quarantined and not induce national contagion.
Resisting the temptation to develop comprehensive national legislation will prove no easier for Republicans than it has been for Democrats. But if ObamaCare has taught us anything, it is that the good intentions behind sweeping legislation are often overcome by unintended consequences. The humility that might engender perhaps will make them think twice about devising a national regime of health insurance subsidies and instead give each state the opportunity to fashion programs best suited to their circumstances.
It takes a journalist to clear the fog about Republican health policy alternatives. (Yes, they do have alternative plans.) In his new book, Overcoming ObamaCare, Philip Klein, who is the commentary editor of the Washington Examiner, presents a timely and accessible review of the three primary approaches that Republican officials and policy analysts are offering.
Klein acknowledges that Republicans failed to implement serious health reforms when they had control of the White House and of Congress during the George W. Bush administration, and the nation paid dearly when Democrats jammed their still-unpopular health law through when they had control of both branches of government in 2010.
He implicitly warns that if Republicans don’t come up with an alternative to ObamaCare, we could be saddled with ObamaCare’s “government takeover of health care” for good.
“During their time in the wilderness [after HillaryCare], smart liberals took lessons from their Clinton era defeat and refined their health care strategy in preparation for their next opening,” he writes. The book makes it clear that now is the time for conservatives to get to work coalescing around a plan.
Overcoming ObamaCare is a solid primer on conservative policy alternatives – a very useful tool especially for the army of conservatives elected to office in November who are intent on repealing, and in some cases replacing, ObamaCare.
Klein is a good student of conservative health policy, acknowledging “there’s one prominent area in which the U.S. does not have anything approaching a functioning consumer market, and where instead, the consumer is completely left in the dark, given few choices, elbowed out of the decision-making process by large bureaucracies, and given very little incentive to seek out the best deal. Unfortunately, this area accounts for $2.9 trillion in spending, representing more than one-sixth of the U.S. economy. I am, of course, referring to health care.”
As a former journalist, I am biased toward his clear, straightforward approach and his birds-eye reporting of the policy debate as it has unfolded in the political and policy realms.
Klein compares and contrasts the various reform plans and explains the three schools of thought and the philosophies driving them:
Reform. The margins aren’t always as clear as the categories would imply, but he places me in the reform school, saying I favor “a step-by-step approach to undoing ObamaCare.”
I am as opposed as anyone to this law (co-authoring Why ObamaCare Is Wrong for America in 2011), but five years out, reality has taken over. So far, Congress has passed and the president has signed 17 major changes to the law, including repeal of the 1099 reporting provision for small business, the CLASS Act long-term care Ponzi scheme, and blocking funding for the financially-troubled non-profit co-op health plans. Many more are teed up.
Thousands of legislators, millions of companies and tens of millions of Americans have had to make changes in their health care arrangements to comply with federal law. That means our health sector has been changed irreversibly by ObamaCare. We can no longer go back to the system we had before the law passed any more than we can go back to the 1990s. Most of the policies that people had before don’t exist. Many of the doctors that were in the networks their health plans before have retired or have sold their practices to hospitals. Hospitals have merged, and all providers have built new business models to comply with the law. State approval of previous health insurance plans has expired, and the plans can no longer legally be sold because they don’t comply with ObamaCare.
Americans “don’t want a big gigantic replacement plan. That scares them,” he quotes me as saying.
Avik Roy of the Manhattan Institute agrees. “His overarching idea is for Republicans to perform what he’s referred to as a ‘jiu-jitsu’ maneuver. In short, he has proposed that Republicans reform Obamacare to make it more market friendly and then use that modified structure to achieve broader reforms to the nation’s older health care entitlements.” He provides a detailed explanation of the reform plan Avik has offered, “Transcending Obamacare.”
Replace. Jim Capretta of the Ethics and Public Policy Center and Yuval Levin, also of EPPC and editor of National Affairs, are quoted extensively here. “You’re going to have to do replace with repeal,” Capretta says. “You can’t displace this incumbent program without a replace program, in my judgment.”
Jeff Anderson, executive director of the 2017 Project, says the law isn’t “remotely fixable.” Ditto, Budget Chairman Tom Price with his “Empowering Patients First Act.”
He also provides a Cliff’s Notes overview of one of the replace proposals that has received significant attention: The Coburn-Burr-Hatch proposal by the three leading U.S. Senators.
But even some in this “replace” school implicitly agree that reform must evolve from the changed landscape of ObamaCare.
Restart. Finally, he talks about the Restart school, starting with Louisiana Governor Bobby Jindal’s reform proposal and his criticisms of those who would propose “ObamaCare Lite.” Cato’s Michael Cannon also is in this school, with his “Large HSA” proposal.
Klein takes a deep dive in each of these chapters into the tax treatment of health insurance – which is at the heart of conservative health reform. Conservatives have long supported providing financial assistance to the uninsured, especially those who are not offered or cannot afford employer-based health insurance but who make too much to qualify for public programs, especially Medicaid.
But the debate continues on the right about how to structure those subsidies – through tax credits, refundable tax credit, or tax deductions — with many variations in different plans. Klein portrays the vigorous debate that takes place in the policy community including, for example, an intense discussion with Louisiana Gov. Bobby Jindal (a tax deduction supporter) and policy experts Klein attended in April of 2014.
Klein doesn’t take sides. But he acknowledges, in his conclusion, “Republican control of the Senate and a spirited GOP presidential nomination contest should provide a great opportunity to debate many of the ideas explored in this book.”
And then we warns: “Those who aren’t happy about the direction of American health care need to start the process of coalescing around an alternative approach. If they can do that, there’s a chance to overcome ObamaCare and move toward a health care system that puts the consumer first.”
One final plug: I am biased in thinking that we must move to a new system that puts consumers in charge of their health care decisions and that we must seize opportunities to begin that process. The pending Supreme Court decision in King v. Burwell provides opportunities to make such changes: If the High Court were to decide that the IRS acted illegally in providing subsidies through federal health care exchanges, Congress and 36 governors are highly unlikely to sit back and watch as five million people lose their health insurance coverage. Congress already is working on plans to use the possible opportunity of a win in the courts to give citizens new options that could lead to the transformative change that underpins each of the conservative philosophies.
The Galen Institute today released an updated version of its list of significant changes made to the Affordable Care Act by the Obama administration, the Congress, and the U.S. Supreme Court since the law was passed in March of 2010. Today’s list includes four additional changes made by the Obama administration, most of them contrary to statutory language. By our count, more than 46 significant changes have been made to the law: at least 28 that the administration has made unilaterally, 16 that Congress has passed and the president has signed, and 2 by the Supreme Court. Here are the latest additions:
•Bay State Bailout: More than 300,000 people in Massachusetts gained temporary Medicaid coverage in 2014 without any verification of their eligibility, with the Obama and Patrick administrations using a taxpayer-funded bailout to mask the failure of the commonwealth’s disastrously malfunctioning website. (January 2014)
•Failure to enforce abortion restrictions: A GAO report found that many exchange insurance plans don’t separate charges for abortion services as required by the ACA, showing that the administration is not enforcing the law. In 2014, abortions were being financed with taxpayer funds in more than 1,000 exchange plans. (Sept. 16, 2014)
•Risk Corridor coverage: The Obama administration plans to illegally distribute risk corridor payments to insurers, despite studies by both the Congressional Research Service and the GAO saying a congressional appropriation is required before federal agencies can make the payments. (Sept. 30, 2014)
•Transparency of coverage: CMS delays statutory requirements on insurance companies to disclose data on the number of people enrolled, disenrollment, number of claims denied, costs to consumers of certain services, etc. (Oct. 20, 2014)