In an ongoing backdoor attempt to pay off insurers burned by President Barack Obama’s signature legislation, the Affordable Care Act, the Obama administration is creating the framework needed to implement a “public option,” the precursor to a single-payer health-care system. Distracted by the presidential election and the news that ACA insurance premiums will increase by an average of 25 percent in 2017, many have failed to notice the administration’s plan to use a special U.S. Department of Justice fund, called the Judgment Fund, to funnel billions of dollars to insurers without congressional approval. If it successfully executes this plan, the Centers for Medicare and Medicaid Services will have circumvented Congress to secure a taxpayer bailout for insurers — directly contradicting Congress’s intentions as expressed by multiple spending bills, and possibly violating federal law.
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In a move virtually ignored outside Washington and largely unnoticed even within it, last December the House and Senate passed legislation repealing much of Obamacare. President Obama promptly vetoed the measure — an obstacle that will disappear come January 20. As reporters and policymakers attempt to catch up and learn the details of a process they had not closely followed, three important lessons stand out from last year’s “dry run” at repealing Obamacare.
Republicans’ path on Obamacare could prove more complicated than the new conventional wisdom in Washington suggests. If past is prologue, last year’s reconciliation bill provides one possible roadmap for how the congressional debate may play out.
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For the past six years, Republicans — across Washington, and across the country — have virtually to a person run against Obamacare. Their campaign has helped them win numerous House and Senate seats, a majority of governorships, and now has given them unified control of Washington for the first time in 15 years. Like the dog that finally caught the proverbial car, Republicans will wake up Wednesday morning asking themselves — on Obamacare, as on many other issues — “What now?”
The answer might be less obvious than it first appears. Democrats used the decade and a half between the defeat of Hillary Clinton’s health plan in 1993–94 and the 2008 election to develop a consensus architecture about what their ideal health-care plan would look like. In the Democratic primaries that year, Senators Clinton and Obama disagreed strongly on the necessity of an individual mandate to purchase coverage — a difference they litigated very publicly, and at great length, during the primary campaign — but agreed on virtually everything else.
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Those on both the left and the right overestimated the effect Obamacare would have on the larger health care system. The footprint of Obamacare has been smaller than expected. It hasn’t shaken up the employer system all that much, and it hasn’t changed the underlying health system as champions and critics thought it would. It hasn’t reduced the uninsured as much as expected and (therefore) hasn’t cost as much as expected overall even though per capita costs are higher than projected. The exchanges have drawn far too few healthy people to be stable and the rules that govern them have had too little of an effect on the dynamics of our larger health economy to be fundamentally disruptive.
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Hillary said on Tuesday: “We got to fix what’s broken and keep what works, . . . We’re going to tackle it and we’re going to fix it.” Secretary Clinton is exactly correct — if by “fix” she means enacting a proposal that could line the pockets of businesses to the tune of nearly a trillion dollars while simultaneously jacking up premiums and deductibles for millions of Americans. Hillary Clinton’s plan for a new federal tax credit to subsidize out-of-pocket costs for all Americans will encourage businesses to make their health benefits skimpier — raising premiums, co-payments, and deductibles — because they know that the new tax credit will pick up the difference for the hardest-hit families.
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Medicaid expansion will not cure hospitals’ financial woes, according to a report released by the Congressional Budget Office. To put it bluntly, hospitals made a horrible deal by endorsing Obamacare in 2009. They agreed to annual reductions in their Medicare payments forever in exchange for a one-time increase in the number of insured patients. But Medicaid’s payment rates are below hospitals’ average costs, [and] the use of hospitals’ services among the newly insured will increase by about 40 percent as a result of having insurance.” If Medicaid pays hospitals less than their average costs, then inducing additional patient demand by expanding coverage could actually exacerbate hospitals’ shortfalls, not improve them.
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Obamacare’s fourth open enrollment period will begin November 1. For the Internal Revenue Service, it will be open season on uninsured taxpayers. In an effort to maximize enrollment, the IRS is mining the personal tax information of people who have chosen not to buy Obamacare policies or claimed an exemption. CMS proclaims Obamacare policies are “a product consumers want and need” and plans an outreach campaign. The agency can’t understand why millions of people—many of them young and healthy—still don’t realize what they want and need it.
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Former Obama administration official Donald Berwick once called the Center for Medicare and Medicaid Innovation (CMMI) “the jewel in the crown of health-care reform.” The metaphor is apt: CMMI, more than any other aspect of Obamacare, is an imperial enterprise.
Congress established CMMI in the Obamacare statute with the goal of finding ways to reduce federal spending on medical care without diminishing its quality. That, of course, is the responsibility of Congress, which created the Medicare program and which alone bears responsibility for making legislative changes to it.
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Late Monday evening, health insurer Aetna confirmed a major pullback from Obamacare’s exchanges for 2017. The carrier, which this spring said it was looking to increase its Obamacare involvement, instead decided to participate in only four state marketplaces next year, down from 15 in 2016. Aetna will offer plans in a total of 242 counties next year — less than one-third its current 778. Coupled with earlier decisions by major insurers Humana and UnitedHealthGroup to reduce their exchange involvement, Aetna’s move has major political and policy implications
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Could it be that the highly compensated insurance-company actuaries are lousy at math? For months, we’ve been reading stories about how big medical bills incurred by Obamacare enrollees are driving publicly traded insurance companies from the exchanges. Some affiliates of the venerable Blue Cross Blue Shield Association (BCBS), reeling from the costs of paying medical claims for a population that is unhealthier than expected, have joined the stampede to the Obamacare exits, while others seek premium increases of as much as 60 percent or sue the government for corporate handouts to offset their losses.
The apparent desperation of insurance-company CEOs might lead you to believe that Obamacare was failing. Not a chance, according to the Centers for Medicare and Medicaid Services.
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