The Congressional Budget Office (CBO) issued a new budget forecast last week. It should be a wake-up call to policymakers, and to the candidates running for president. It is also a clear indictment of fiscal policy during the Obama presidency.
The forecast shows annual federal budget deficits rising throughout the coming decade, pushing total federal debt to levels well above the historical norm. CBO projects the federal budget deficit will be $544 billion in 2016, or 2.9 percent of GDP. By 2026, the annual deficit will be nearly $1.4 trillion, or 4.9 percent of GDP. Over the period 2016 to 2025, CBO expects the federal government will need to borrow an additional $9.4 trillion, pushing total federal debt up to $23.8 trillion, or 86 percent of GDP.
The deficits projected in CBO’s forecast, and the level of debt they would cause, are almost unprecedented in the nation’s history.
Now, two years into the law, it’s clear that progress is going to be slower. The Obama administration acknowledged as much in late 2014, and again in October, when it presented its own modest predictions. Monday, the budget office also agreed, slashing its 2016 estimate by close to 40%.
The House GOP emerged from its retreat earlier this month united in its goal to come up with an alternative to Obamacare. But the deeper into health policy the members dig, the more difficult finding consensus will become.
Republicans have determined that they will select pieces of different GOP proposals rather than simply put forth one of the party’s old plans as its main health proposal. The older conservative health plans are unworkable in a post-ACA world.
Does the American public know that, buried deep in the Healthcare.gov website, the health insurance coverage available to a family gets worse as their income rises? Do people know that a family expecting to earn $51,000 in 2016 is not even allowed to buy the same coverage as a family that expects to earn $49,000?
Repealing the Affordable Care Act is not enough. The country has been drifting toward full federal control of health care for decades. What’s needed is a credible plan to reorient federal policy across the board toward markets and the preferences of consumers and patients, and away from one-size-fits-all bureaucratic micromanagement.
Lanhee Chen and James Capretta, along with 8 other colleagues, have developed such a plan. This plan would:
– Retain employer coverage for 155 million Americans
– Provide age-adjusted tax credits to individuals without employer-sponsored coverage
– Allow for continuous coverage protection
– Reform the Medicaid and Medicare programs
– Expand the use of Health Savings Accounts
UnitedHealth Group Inc. said its projected losses on the Affordable Care Act exchanges for 2016 deepened as enrollment grew despite the company’s efforts to reduce sign-ups.
The biggest U.S. health insurer said it is expecting losses of more than $500 million on its 2016 ACA plans, compared with previous projections that amounted to $400 million to $425 million in losses.
UnitedHealth had taken steps to pull back on its exchange business in anticipation of losses, including reducing marketing and slashing commissions to health-insurance agents.
The Obama administration’s top health insurance official told Congress Thursday he wants to “loosen up capital rules” to allow private investors to become part owners of the dozen surviving ObamaCare co-ops.
Andy Slavitt, the acting administrator for the Centers for Medicare and Medicaid Services which oversees the ObamaCare co-ops, told the Senate Finance Committee that his agency would also look approvingly on co-op mergers with existing insurance companies.
The new private investment policy represents a major reversal for the Obama administration, which has previously hailed the non-profit co-op health insurance model as a tool for providing competition to private, for-profit insurers.
However, 83 percent of ObamaCare enrollees pay far less than $408 because they get tax credits under the healthcare law. The average tax credit for 2016 is $294, meaning that the average share of the premiums that enrollees have to pay is $113. That is up $8 from the $105 people paid on average last year.
Enrollment through the ObamaCare exchanges has been more sluggish than initially expected, with just about 12 million sign-ups likely this year. That’s better than the 10 million or so officials projected back in October, but far less than the 21 million the Congressional Budget Office estimated as the law was taking shape.
Part of the problem seems to be that people are finding ways to game the system by signing up outside of the limited annual enrollment period and then dropping insurance shortly after. The law has a number of exemptions that allow people to buy coverage at any time throughout the year, such as changing or losing a job, having a child, moving, and getting married.
The people who come in via those special enrollment exemptions, it turns out, are far more expensive to cover. In an earnings call last November, an executive with UnitedHealth, the nation’s largest insurer, said that people buying in outside of the standard enrollment period cost about 20% more.
In the wake of Louisiana governor John Bel Edwards’ announcement last week that his state would expand Medicaid under ObamaCare, the White House rolled out a new scheme to persuade the 19 states that are still holding out to fall into line and expand their programs: throw more money at them.
But these state officials should resist the temptation, for at least three reasons:
- First and most obvious is that expansion states have all experienced the same thing: More people signed up than expected, and it blew a hole in the states’ budgets.
- The second reason is that there’s no such thing as “free” federal dollars. The money comes with conditions, which effectively shifts policymaking from the receiving state’s legislature and governor to a distant federal bureaucracy (in this case, the Centers for Medicare & Medicaid Services), which dictates how states must spend federal Medicaid funds.
- The third reason is less abstract: Medicaid will harm those it’s meant to help. Often lost in the expansion debate is that Medicaid is the worst form of health coverage in the country.