Congress on Obamacare: Stop This Train Wreck Already

Congress on Obamacare: Stop This Train Wreck Already
April 29, 2013

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

Consumer Power Report #371

This Obamacare thing is not going as well as some had hoped.

Democratic senators, at a caucus meeting with White House officials, expressed concerns on Thursday about how the Obama administration was carrying out the health care law they adopted three years ago. Democrats in both houses of Congress said some members of their party were getting nervous that they could pay a political price if the rollout of the law was messy or if premiums went up significantly. President Obama’s new chief of staff, Denis R. McDonough, fielded questions on the issue for more than an hour at a lunch with Democratic senators. Senator Jeanne Shaheen, Democrat of New Hampshire, who is up for re-election next year, said, “We are hearing from a lot of small businesses in New Hampshire that do not know how to comply with the law.” In addition, Mrs. Shaheen said, “restaurants that employ people for about 30 hours a week are trying to figure out whether it would be in their interest to reduce the hours” of those workers, so the restaurants could avoid the law’s requirement to offer health coverage to full-time employees. The White House officials “acknowledged that these are real concerns, and that we’ve got to do more to address them,” Mrs. Shaheen said.

No wonder members of Congress want to make sure they don’t have to participate in the exchanges.

Congressional leaders in both parties are engaged in high-level, confidential talks about exempting lawmakers and Capitol Hill aides from the insurance exchanges they are mandated to join as part of President Barack Obama’s health care overhaul, sources in both parties said. The talks – which involve Senate Majority Leader Harry Reid (D-Nev.), House Speaker John Boehner (R-Ohio), the Obama administration and other top lawmakers – are extraordinarily sensitive, with both sides acutely aware of the potential for political fallout from giving carve-outs from the hugely controversial law to 535 lawmakers and thousands of their aides. Discussions have stretched out for months, sources said. A source close to the talks says: “Everyone has to hold hands on this and jump, or nothing is going to get done.”

Yet if Capitol Hill leaders move forward with the plan, they risk being dubbed hypocrites by their political rivals and the American public. By removing themselves from a key Obamacare component, lawmakers and aides would be held to a different standard than the people who put them in office. Democrats, in particular, would take a public hammering as the traditional boosters of Obamacare. Republicans would undoubtedly attempt to shred them over any attempt to escape coverage by it, unless Boehner and Senate Minority Leader Mitch McConnell (R-Ky.) give Democrats cover by backing it. There is concern in some quarters that the provision requiring lawmakers and staffers to join the exchanges, if it isn’t revised, could lead to a “brain drain” on Capitol Hill, as several sources close to the talks put it.

This is being framed in the press as Congress wanting to exempt itself from Obamacare. That is a bit unfair: Members and personal staff were already subject to the overall requirements, but Grassley and others wanted to require staff and members to enroll in the exchanges, specifically. Keep in mind that committee staff, who wrote the bill, are already exempt from having to participate in the exchanges. Now they’re trying to figure out how to carve out everyone else or to make it possible for the existing FEHB subsidy to go into the exchanges. But that’s going to get lost in the populist backlash. Loren Heal clarifies:

The talks are about what the law actually means, and whether the government, as an employer, can help fund medical coverage for members of Congress and their staffs who are on exchange-based insurance. … It should be obvious that exempting Congress and staff from PPACA would be political suicide. It would be seen for what it is: a violation of the rule of law, striking at the very heart of the republic. Rather, Congress should live with the laws it makes, and the best way to do that is to put government employees on exchange-based insurance and make them pay for it like everyone else.

Stories like this are a good example of why I’m skeptical about Ezra Klein’s comparisons of Obamacare’s uneasy rollout to Medicare Part D. Yes, Part D’s launch was uneven and had a host of problems. But ultimately those problems were more about delays in prescription drugs – they weren’t about forcing you into whole new insurance plans, they weren’t about surgery or operations, they weren’t about the kind of upheaval that would have Capitol Hill worried about brain drain. They certainly weren’t about skyrocketing premiums hitting your wallet all at once: See the recent news that younger and healthier Marylanders could see those premiums go up by 150%. That’s hardly an equivalent impact to what Part D represented. By mid-spring, things had been smoothed out and the program was running fine – and no one was trying to be exempted from it.

The risk at the heart of Obamacare, of taking such a significant step to alter the existing policy within a sweeping area of one-sixth of the economy (let alone one that impacts personal finances and lifestyles to such an enormous degree), is that it has to actually work. The confidence Obama and his allies displayed during the passage of his signature law was tied to their forthright belief that their bureaucratic approach would not result in significant upheaval or blowback – but if that turns out not to be the case, Democrats will be dealing with the consequences for a very long time.

-- Benjamin Domenech


IN THIS ISSUE:


MEDICAID EXPANSIONS STALL

Medicaid expansions, viewed as a slam dunk initially, have stalled.

“As state legislative sessions are wrapping up,” Avalere Health’s Caroline Pearson tweets, “The outlook for Medicaid expansion looks bleak.” She posts this map of where states are at in their thinking about the health law provision. Twenty states and the District of Columbia have agreed to expand their Medicaid programs, to cover everyone under 133 percent of the federal poverty line.

That leaves 30 states that haven’t, although Avalere categorizes four states as leaning in that direction (Tennessee, Kentucky, Florida and New York). Some of these states have especially large uninsured populations. Texas, for example, has an estimated 1.8 million people who would be expected to enroll in Medicaid under the expansion. Florida has the same number – and, while Gov. Rick Scott (R) has endorsed the expansion, the Florida House and Senate are now feuding over whether they will move forward.

There’s not a whole lot that the White House can do to cajole these states into participating. The administration has shied away from Medicaid cuts, which might make governors weary of expanding the Medicaid program. It also has shown an openness to different proposals, like Arkansas’ plan to expand Medicaid by using the federal dollars to buy private coverage.

Aside from these gestures, there’s not much else for the federal government to do. With the health insurance exchanges, the Obama administration always had the ability to jump in and build a marketplace for any state that decided not to. With Medicaid, there’s no back-up plan. A state opts out, and that’s pretty much it.

This all mostly means that the health law’s insurance expansion may start off significantly smaller than initially envisioned.

SOURCE: Washington Post


DISAGREEMENT OVER MEDICAID IN INDIANA

Negotiations continue.

State lawmakers continued to wrangle over how to expand Medicaid to 400,000 more Hoosiers late into the last day of the 2013 session.

Sen. Luke Kenley, R-Noblesville, the senate’s lead budget writer, told reporters Thursday he had included a provision in the budget authorizing the governor to expand Medicaid through the Healthy Indiana Plan and to report his progress back to lawmakers.

Only, a review by The Indianapolis Star revealed that language was not in the budget. Turns out the House’s lead budget writer, Tim Brown, R-Crawfordsville, had removed it. When told by a reporter, Kenley looked at the budget to confirm – and then called Brown on his cellphone.

This isn’t the first shenanigan with the Medicaid plan. Brown killed a bill that came out of the Senate with the same language. But a Star review of the state budget as it passed the Senate found much of the Senate’s version of the Medicaid expansion included in the budget bill.

The back and forth may continue today. Kenley and other senators wants that language back in.

But Michael Cannon advises against expansion.

Medicaid already spends $460 billion annually, ostensibly on health care for the poor. A lot of that money never reaches the poor. Shady providers, drug dealers, organized criminals, states and even middle-class families all take a big slice. Medicaid fraud and abuse cost taxpayers maybe $100 billion annually.

Meanwhile, many enrollees can’t even find a doctor. One-third of primary care physicians won’t take new Medicaid patients. Only 20 percent of dentists accept Medicaid. In 2007, 12-year-old Deamonte Driver died – yes, died – because his mother couldn’t find one of those dentists.

Only one reliable study has tried to measure whether this 47-year-old program even improves health. It has so far found only questionable gains in self-reported health and no evidence that Medicaid saves lives.

Rather than reform this unhealthy program, the health-care law pulls millions of more patients into it. According to one estimate, more than 80 percent of adults who would enroll in the expansion currently have private coverage, where access to care is better.

SOURCE: Indystar.com


PROMOTING OBAMACARE IS PROVING DIFFICULT

Relying on outside groups that are just starting to talk.

Obama is leaning heavily on outside allies, and on Friday he asked Planned Parenthood to help sell the law with a pitch heavy on benefits to women, like contraceptive coverage and preventive care – the same targeted themes he stressed during his reelection campaign.

But Enroll America, the coalition of health care advocates, industry groups, and labor and civil rights organizations that’s planning a massive outreach effort, says it’s still planning to kick into full gear its “Get Covered America” campaign this summer – it’s not speeding up the timetable. Headed by Anne Filipic, the former deputy director of the White House Office of Public Engagement, the coalition is planning a campaign of online organizing, grass-roots outreach and paid advertising.

Organizing for Action has been planning its own outreach campaign for the summer, too, which is shaping up as a big test of the strength of its armies of volunteers. OFA officials didn’t respond to questions about whether they’ll speed up their plans.

Why wait? The answer, the law’s supporters say, is that if they do the outreach too early – and people are told they can sign up for Obamacare coverage with generous subsidies but there’s nowhere to go right now – they’ll just tune out.

But Democrats are worried now – about the messaging and the mechanics of the rollout.

“I’m concerned – because we did take substantial criticism for putting this plan in place – that it achieve its true purpose,” said Rep. Lloyd Doggett of Texas. “There’s so much work to do in such a short period of time.”

SOURCE: Politico


THE EXCHANGES WON’T HAVE MUCH COMPETITION

At least not at first.

The White House sums up the central idea behind the health care exchanges in the new federal health law with a simple motto: “more choices, greater competition.” But even some stalwart supporters of the Affordable Care Act worry that in many states, people won’t have a lot of health insurance choices when the exchanges launch in October.

Health economists predict that in states that already have robust competition among insurance companies – states such as Colorado, Minnesota and Oregon – the exchanges are likely to stimulate more. But according to Linda Blumberg of the Urban Institute, “There are still going to be states with virtual monopolies.” Currently Alabama, Hawaii, Michigan, Delaware, Alaska, North Dakota, South Carolina, Rhode Island, Wyoming and Nebraska all are dominated by a single insurance company. The advent of the exchanges is unlikely to change that, according to Blumberg.

Competition aside, the exchanges face a number of technical and logistical problems. No less a figure than Montana Sen. Max Baucus, one of the chief Democratic authors of the ACA, said in a hearing earlier this month that he sees “a huge train wreck coming” when the exchanges open for business. Meanwhile, a March survey by the Kaiser Family Foundation indicates a majority of Americans still don’t know what a health insurance exchange is, and skeptics wonder how many eligible individuals will show up.

The exchanges were conceived as private marketplaces operating within federal guidelines. They are designed to give Americans who do not get health insurance from their employers the opportunity to choose from an array of private insurance plans, and to generate competition between insurers that will lead to lower premiums.

Individuals and businesses with up to 100 employees will be able to shop on the exchanges, and people who can’t afford coverage on their own will get government subsidies to help them. About 26 million Americans are expected to purchase health insurance through the exchanges.

But it is unclear how many insurance carriers will decide to seek approval for selling their products through these online marketplaces. Insurance companies have been mostly silent about their plans, with some citing uncertainty about federal and state rules as a reason for holding back.

Some fear that any uptick in competition will bypass those states where doctors are in short supply and the number of hospital systems is limited. A recent analysis by the American Medical Association found that a single insurance company held 50 percent or more of the market in nearly 38 percent of local markets nationwide.

SOURCE: Pew Charitable Trusts


WHY NOT PUT ALL FEDERAL EMPLOYEES ON THE EXCHANGES?

Rep. Dave Camp has an idea.

“If the ObamaCare exchanges are good enough for the hardworking Americans and small businesses the law claims to help, then they should be good enough for the president, vice president, Congress, and federal employees,” said Camp’s spokeswoman in a statement.

The political principle is straightforward, but it would come at a price. Putting all federal employees on the exchanges would obliterate the most market-oriented insurance program run by the government, the Federal Employee Health Benefits Program, or FEHBP. Indeed, the FEHBP has long been considered a model for market-based reform of the Medicare and Medicaid programs.

In the FEHBP, employees get to choose amongst a wide variety of plans offered by private insurers. The employer – the government – then subsidizes about three-fourths of the cost to the employee. The employee can choose a more generous or expensive plan if he wants, but he has to pay for a portion of the difference in price, and vice versa. As a result of this approach, FEHBP plans have organically evolved to contain the benefits and financial features that consumers want. By contrast, any minor change to Medicare requires an act of Congress.

Obamacare’s exchanges are closer in concept to FEHBP than traditional Medicare, but the exchanges heavily constrain the ability of plans to alter their design as consumers’ preferences evolve.

SOURCE: Forbes

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)