From Repeal and Replace to Delay and Defund

From Repeal and Replace to Delay and Defund
July 22, 2013

Benjamin Domenech

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

Consumer Power Report #382

The House voted last week to delay the employer and individual mandates, teeing up a battle in the fall over the continuing resolution, which could be explosive.

House lawmakers on Wednesday voted to approve two separate bills amending portions of the Affordable Care Act, the latest moves by the GOP to try to throw up hurdles to the Obama health law. The first bill would codify the year-long delay to the obligation on companies to provide health care coverage to their workers from next year. The second would delay a similar obligation on individuals to purchase health-care insurance. The vote on the first bill delaying the employer mandate passed 264–161, with 35 Democrats joining Republicans in supporting it. The vote on the second legislation was approved by a vote of 251–174. On that measure, 22 Democrats sided with the majority. Neither bill is expected to be taken up by the Democratic-controlled Senate. The White House said the president would veto either bill if it was advanced to his desk by Congress.

Keep in mind that on the employer mandate vote, Obama’s promising to veto something that simply codifies what he’s doing already. Which is pretty remarkable, isn’t it?

What we’re seeing here is a shift from the Repeal and Replace battle to the Delay and Defund battle. This is ground where it’s more difficult for Democrats in swing districts to oppose the attempt. On the employer mandate, one in six House Democrats bucked their president. On the individual mandate, one in nine House Democrats did. Privately, many Democratic staffers have expressed a willingness to delay the law and “implement it right” as opposed to running in a year when the implementation is providing daily reminders of the administration’s failure to measure up to its promises.

But that’s not the only shift that’s happening – the other one is within the public relations battle, where Obamacare supporters are shifting to high gear. Here’s an interesting piece from Ezra Klein and Sarah Kliff on the implementation PR push, which contains multiple warning signs for the difficulty of making the law a reality.

In states that refuse the Medicaid expansion, residents whose incomes are above the poverty line ($11,490 for an individual) will still have access to tax credits for purchasing private insurance on the exchanges. Those below the poverty line, however, will not receive help obtaining coverage. That lessens the law’s reach, and creates an unexpected messaging problem: How does the White House tell certain citizens that they earn too little to qualify for any help? “How do you explain this in a way that seems fair and reasonable, that the higher income people get help but you don’t?” said Mike Perry, a founding partner at Democratic polling firm Perry Undem Research. “Advocates on the ground are really struggling with that group. They want to have a positive message but don’t know what to say.”

Perry and his co-founder, Tresa Undem, have arguably conducted the most extensive research on encouraging insurance enrollment under the law; in April, Undem conducted a briefing for administration officials on how best to reach young Americans. They have found, overwhelmingly, that Americans are uninformed about the health law – and are deeply skeptical when they learn about it. When they asked a recent focus group whether a $210 premium was affordable, only 29 percent of likely marketplace enrollees said yes. Then, Undem and Perry phrased the question a bit differently. They told the focus group participants that, with their tax credits, they would save “$1,908 a year compared to what you would pay on your own.” All of a sudden, 48 percent of the participants thought that insurance was affordable. But 48 percent is still less than half.

On The Blaze, I explained the reasons for this push: how it’s designed to cover up the gap between what Obama promised and what he’s delivering. We’ll see if the Obama administration is able to cover up this cost increase with more hipster commercials. I remain unconvinced.

-- Benjamin Domenech


INSIDE THIS ISSUE


CALIFORNIA’S LARGEST SMALL BUSINESS INSURER DROPS OUT OF SMALL BUSINESS EXCHANGE

Another insurer dropping out:

Health insurance giant Anthem Blue Cross said it won’t participate in California’s new insurance market for small businesses.

Anthem, a unit of WellPoint Inc., is California’s largest insurer for small employers. This surprising move could hamper the state’s ability to enroll businesses in its new exchange called Covered California that opens Jan. 1 as part of the federal healthcare law.

Instead, Anthem said it will keep selling coverage to small firms outside the exchange in direct competition with the state-run market. Anthem also remains one of 13 health insurers that will offer policies to individuals in Covered California.

Nonetheless, Anthem’s decision stunned many observers.

“That’s really surprising and not a good thing for the exchange,” said Micah Weinberg, a senior policy advisor at the Bay Area Council, an employer-backed San Francisco group.

“Anthem is a very major player in the small-group market and you want a broad range of insurers, particularly the most compelling brand names,” Weinberg said.

The state had required health insurers wanting to sell in the individual exchange to also submit a bid for the small-business market, which is limited to employers with 50 or fewer workers.

Darrel Ng, a spokesman for Anthem, said Covered California lifted the requirement last month so the company opted to leave what’s known as the SHOP, or small-business health options program.

“Because Anthem is no longer required to participate in SHOP as a condition of being on the individual exchange,” Ng said, “Anthem has withdrawn its SHOP application. Anthem will continue to participate in the individual exchange.”

More here.

SOURCE: Los Angeles Times


REGULATORY CAPTURE DEFINED: HOW THE AMA GETS DOCS HIGHER PAY

This is how it works:

Unknown to most, a single committee of the AMA, the chief lobbying group for physicians, meets confidentially every year to come up with values for most of the services a doctor performs.

Those values are required under federal law to be based on the time and intensity of the procedures. The values, in turn, determine what Medicare and most private insurers pay doctors.

But the AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent, according to an analysis of doctors’ time, as well as interviews and reviews of medical journals.

If the time estimates are to be believed, some doctors would have to be averaging more than 24 hours a day to perform all of the procedures that they are reporting. This volume of work does not mean these doctors are doing anything wrong. They are just getting paid at the rates set by the government, under the guidance of the AMA.

In fact, in comparison with some doctors, Sheela’s pace is moderate.

Take, for example, those colonoscopies.

In justifying the value it assigns to a colonoscopy, the AMA estimates that the basic procedure takes 75 minutes of a physician’s time, including work performed before, during and after the scoping.

But in reality, the total time the physician spends with each patient is about half the AMA’s estimate – roughly 30 minutes, according to medical journals, interviews and doctors’ records.

Indeed, the standard appointment slot is half an hour.

To more broadly examine the validity of the AMA valuations, The Post conducted interviews, reviewed academic research and conducted two numerical analyses: one that tracked how the AMA valuations changed over 10 years and another that counted how many procedures physicians were conducting on a typical day.

It turns out that the nation’s system for estimating the value of a doctor’s services, a critical piece of U.S. health-care economics, is fraught with inaccuracies that appear to be inflating the value of many procedures.

Here’s more on Medicare’s plans to link payments to quality. Chris Jacobs makes the case for how to fix the problem.

SOURCE: Washington Post


HOW OBAMACARE IS IMPACTING RESTAURANTS

CEO of CKE Restaurants on how Obamacare is affecting him:

Our company currently plans to offer all employees who work more than 30 hours per week coverage that meets the ACA’s requirements. We are choosing to do that rather than send our employees to the ACA’s health-insurance exchanges and, if the workers qualify, the federal subsidies to help them pay for it.

On average, our general managers earn $50,000 per year. Should they decline insurance coverage, they will be subject to an initial annual penalty of $500 and a maximum penalty of $1,250. We estimate that their share of paying the health-insurance premium through our company plan will range between $2,000 and $3,000 per year, well in excess of any potential penalty.

The lowest-paid employees who qualify for ACA coverage (as opposed to Medicaid) earn about $11,500 per year. They would be subject to an initial penalty of $115 and a maximum penalty of $695. We currently estimate that their share of health insurance premiums will be $1,091.55 per year – again, well in excess of any potential penalty. So, in the first year, our employees’ insurance costs likely will be four to 10 times more than the ACA’s penalty on the uninsured.

This is why I am concerned that the ACA could actually cause the number of our covered employees to decrease, particularly in the first year. The penalty for declining coverage will be low compared with the cost of coverage; and employees will know that if they happen to get sick, they can get insurance after that. So the economically rational decision for young people, like our crew employees, is to pay the penalty and forego the insurance. Despite what the government may believe, our employees are smart enough to figure this out.

For insurers, it’s simple math: Premiums collected must exceed claims paid. If too few young healthy people enroll, insurers will raise premiums on those who do. This could result in a spiral of rising premiums – causing more healthy people to drop coverage, driving premiums even higher.

The rising cost of insurance affects people whether they purchase insurance through their employers or an exchange, since both depend on private insurers. If insurance costs go up, taxpayers also may end up paying more to foot the bill for the higher cost of subsidized insurance. This is particularly concerning since the administration has announced that it will be unable to verify whether applicants for subsidies actually qualify for them. The subsidies are likely to be very popular.

More here on the shift to part-time workers.

SOURCE: Wall Street Journal


THE WHITE HOUSE MUDDLES THE MESSAGE AGAIN

Is the PR push still off-message?

This summer was supposed to be a time to reintroduce the public to the Affordable Care Act and teach people how to sign up for benefits this fall.

But that’s not what’s happening.

Instead, earlier this month, the Obama administration decided to delay some key pieces of the law, most notably the requirement for larger employers to provide coverage or risk fines, because they couldn’t have reporting regulations ready in time for next year’s rollout.

Then this week, the Republican-led House voted to delay the so-called individual mandate for a year to match. It was the 39th such vote against the law.

And now some are starting to worry that the White House is getting dangerously off-message.

The administration tried to regroup Thursday: It put President Obama front and center in the White House East Room, surrounded by smiling beneficiaries of the parts of the Affordable Care Act already in effect.

Among those singled out: those who have been on the receiving end of a somewhat obscure provision requiring insurance companies to pay if the companies spend too much on administrative costs rather than medical expenses.

“Dan Hart, who’s here from Chicago, had read these rebates were happening,” said Obama. “But he didn’t think anything of it until he got a check in the mail for 136 bucks.”

This year an estimated 8.5 million Americans will get rebates thanks to the law’s “medical loss ratio” rules. That’s actually down from the 13 million who got them last year. And Obama admitted that even those who are getting the checks don’t necessarily associate them with the health law.

“I bet if you took a poll, most folks wouldn’t know when that check comes in that this was because of Obamacare that they got this extra money in their pockets,” he said.

SOURCE: National Public Radio


OBAMACARE’S BUILDUP AND HOSPITALS’ SELF-INFLICTED WOUND

The trade-off that didn’t happen.

Liberty Hospital near Kansas City, Mo., has eliminated 120 jobs this year, closed its wound-care clinic, and stopped offering free rides to poor and elderly patients. The Cleveland Clinic is searching for ways to cut $250 million from its $6 billion budget in the next 16 months. It’s already closed expensive maternity wards in half the hospitals it operates. In northern New York, Adirondack Health may shutter its emergency room in Lake Placid and a dialysis center in Tupper Lake. All of these hospitals and scores of others nationwide are squeezing services to make up for unexpected budget shortfalls – the result of a deal they made with the federal government that they’re now having second thoughts about.

When the Obama administration was selling the benefits of the Affordable Care Act in 2010, the hospital industry agreed to accept a $155 billion decrease in Medicare payments over a decade. The administration assured hospital executives that patients newly covered under the health-care law would make up for much of the loss. Because of the ongoing squabbles between President Obama and Republicans in Congress over the U.S. budget, that hasn’t happened.

The automatic federal spending cuts known as sequestration have sliced an additional 2 percent from Medicare reimbursement payments to hospitals this year. Beginning next year, many hospitals will also collect less money from Medicaid, the federal program that provides coverage for the poor, than they’d been promised when they signed on to the Affordable Care Act. The law required all states to expand their Medicaid programs to cover uninsured citizens who make too little to buy plans under Obamacare. But the Supreme Court ruled last year that states could opt out. Nearly half have chosen to do so, as Republican governors or GOP-led state legislatures have opposed the increased Medicaid spending. That means 6 million poor Americans who would’ve been eligible for health coverage won’t get it; many of them will continue to walk into emergency rooms unable to pay for services that hospitals by law have to provide. “We are hugely affected by what’s happening in Washington,” Adirondack Chief Executive Officer Chandler Ralph says. “It’s a hiccup there, and it’s a tsunami here.”

For-profit health systems whose patients are largely covered by private insurance may be equipped to absorb the losses. Rural and inner-city hospitals that run on thin margins and treat large populations of patients on Medicare, Medicaid, or without any insurance are suffering. “The trade-off that the hospital industry made was, we’ll take lower payments going forward in exchange for more people being insured,” says Patrick McGuire, chief financial officer of St. John Providence Health System in the Detroit area, which eliminated 160 positions in May. “It’s not quite working out the way we thought it was going to.”

SOURCE: Bloomberg Business Week


JUDGE GRANTS TEMPORARY EXEMPTION IN HOBBY LOBBY CASE

An important win:

U.S. District Judge Joe Heaton issued the preliminary injunction for the Oklahoma City-based arts and crafts chain and stayed the case until Oct. 1 to give the federal government time to consider filing an appeal with the U.S. Supreme Court.

The ruling was welcomed by the Christian owners of Hobby Lobby and its sister company, the Mardel Christian bookstore chain. Attorneys for the Green family have argued that their religious beliefs are so deeply rooted that having to provide every form of birth control would violate their conscience.

“We’re just very excited. This is a great step for us,” Hobby Lobby president Steve Green said.

Members of the Green family say they believe life begins at conception, and oppose birth control methods that can prevent implantation of a fertilized egg in the uterus, such as an intrauterine device or forms of emergency contraception.

The company offers 16 other forms of birth control mentioned in the federal health care law in its health insurance plans.

“To offer prescriptions that take life is not an option for us,” said Green, who attended Friday’s hearing with other family members and supporters.

Heaton, who rejected the companies’ request to block the mandate in November, issued the injunction less than a month after the 10th U.S. Circuit Court of Appeals ruled that the companies were likely to prevail in the case. Heaton ruled last month that the company would not be subject to fines of up to $1.3 million a day for not offering the birth control methods.

There are currently 63 separate lawsuits challenging the health care law’s mandate, 34 of them involving for-profit businesses like Hobby Lobby.

SOURCE: Kansas City Star


EMPLOYER MANDATE DELAY HAPPENED WITHOUT CONSULTING CMS

From the White House, without any due diligence:

The Obama administration delayed the employer mandate in its signature healthcare law without consulting one of the top officials in the implementation effort.

Marilyn Tavenner, the administrator of the Centers for Medicare and Medicaid Services (CMS), said Wednesday that she was not consulted on the decision to delay the employer mandate.

Tavenner said she was informed on June 24 or 25 that the mandate would be delayed for a year but was not consulted until the decision had already been made.

The delay was publicly announced July 2.

Tavenner, testifying Wednesday before a subcommittee of the House Oversight and Government Reform Committee, said she has been in the loop throughout the overall implementation effort, but the decision to delay the employer mandate was made after consultation with the Internal Revenue Service, not CMS.

SOURCE: The Hill

Benjamin Domenech

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