Obamacare Future Is All About the Politics

Obamacare Future Is All About the Politics
April 23, 2014

Benjamin Domenech

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

Consumer Power Report #416

The New York Times considers Obamacare’s political ramifications, which is essentially a consideration of the future of the law:

When Franklin D. Roosevelt established Social Security, he created generations of loyal Democrats. When Lyndon B. Johnson signed Medicare into law, he built on that legacy, particularly with older Americans. And when George W. Bush instituted a new prescription drug benefit for Medicare, it helped reclaim elderly voters for Republicans. But President Obama’s Affordable Care Act, the $1.4 trillion effort to extend health insurance to all Americans, is challenging the traditional calculus about government benefits and political impact. Even as Mr. Obama announced that eight million Americans had enrolled in the program and urged Democrats to embrace the law, those in his party are running from it rather than on it, while Republicans are prospering by demanding its repeal. The reasons are complex and layered in the early assessments, but say much about the nation’s political polarization, its shifting fault lines of class and race, and a diminished faith in government.

Democrats could ultimately see some political benefit from the law. But in this midterm election, they are confronting a vexing reality: Many of those helped by the health care law – notably young people and minorities – are the least likely to cast votes that could preserve it, even though millions have gained health insurance and millions more will benefit from some of its popular provisions. “The angry opponents are more mobilized than the beneficiaries,” said David Axelrod, the longtime adviser to Mr. Obama.

Ross Douthat has more on the moveable goal posts and unclear politics of the law:

Before we entered into the agony of the botched roll-out, the law’s supporters were eagerly citing the persistently low rate of health care inflation as a sign that Obamacare was already working as designed, already having a beneficial effect. But as Vox’s Sarah Kliff reported yesterday, the latest inflation numbers cast some doubt on that hopeful hypothesis, with federal data indicating “that health care spending is now growing just as quickly as it was prior to the recession.”

Now this may be temporary: Some kind of cost inflation was always likely to be associated with this year’s roll-out of subsidies and Medicaid spending, and the law’s supporters can reasonably argue that we should wait a few years, until the coverage expansion (however large) has become a normal feature of the system, to judge Obamacare’s impact on inflation overall.

But at a certain point that judgment will need to be made. So, again, what should be the standard? What should be the baseline? Does Obamacare need to hold inflation to the low 2011–2012 pace (a pace, again, that many liberals wanted to credit to its early impact) in order to be counted as a cost-containing success? Does it just need to hold inflation below, say, a 10 or 20-year average? (Note that both on its own terms and relative to overall inflation, health cost inflation had been declining for seven years before Obamacare was passed – so just holding either rate below the average of 2000–2010 would not actually be that impressive.) In other words – what does the Affordable Care Act have to achieve in order to live up to its name?

This brings me back to the two-edged sword of the reality that Ezra Klein talked about here. Klein’s point was that Obamacare is working, albeit unevenly, because it’s more state-based than people in Washington would like to admit, and because the Medicaid SCOTUS decision made the implementation even more uneven than expected. As a general matter, he’s right: The experience with Obamacare will be very different depending on the state you’re in (as many folks have noted in the past, in a heavily regulated state like New York or Massachusetts, the law can make for positive experiences in a host of ways). But this cuts both ways, politically. The fact that outside of DC, Obamacare doesn’t exist means that the positive experiences from “beneficiaries” aren’t viewed as the result of Obama’s policies, which are for the layperson tied up in the healthcare.gov debacle and the national level scrum. It’s no coincidence that even flawed state exchanges are viewed more positively than the federal experience while the overall polling shows the public still opposed to the law.

The real question for David Axelrod et al. isn’t whether the opponents are more mobilized than the beneficiaries (they clearly are, at least for this cycle) – or whether the opponents outnumber the beneficiaries (they clearly do, at least for this cycle). It’s whether the beneficiaries even view themselves as beneficiaries of Obamacare – or whether the political insulation from having TennCare or Kynect, designed to smooth implementation, leaves those who do gain subsidized coverage unaware that Obamacare had anything to do with it.

-- Benjamin Domenech


IN THIS ISSUE:


DOES FAILURE TO EXPAND MEDICAID KILL PEOPLE?

The older studies concluding that being uninsured increases mortality tend to be of lower quality than those that find it has no discernable effect. Dickman et al. continue this tradition in selecting the research results underlying their methodology for calculating the upper and lower bounds for their death estimates. The upper bound estimates depend upon the results in a 2012 paper by Sommers et al. which neglects the effects of HIV infection when comparing all-cause mortality in New York with that of other states. The lower bound estimates depend upon the results in a 2009 paper by Wilper et al. It assumed that people who were uninsured at the time they were interviewed remained uninsured a decade later and found that health insurance was so important that having it reduced an individual’s chance of dying by 40 percent.

The Sommers paper concludes that Medicaid expansion reduced unadjusted nonelderly all-cause mortality by 19.6 deaths per 100,000 from a baseline of 320 deaths per 100,000. It compared mortality in three states that expanded Medicaid coverage in the early 2000s (New York, Maine and Arizona) with mortality in four neighboring states (Pennsylvania, New Hampshire and Nevada plus New Mexico) that did not. New York accounted for about 45 percent of the sample population in the paper. The authors write that their results were “largely driven by” New York.

The time periods used for the comparison were the five years immediately before the first full year in which a state’s Medicaid expansion took effect, and the first five years after the expansion.

Aside from the usual problems inherent in the sort of ecologic modeling the Sommers paper is attempting, its results were likely influenced by the higher than normal 2001 mortality rate caused by the World Trade Center attack, and by New York’s extremely high rate of HIV infection.

SOURCE: NCPA


OBAMACARE’S NUMBERS

If a lot of young workers suddenly got access to employer health benefits, then the Massachusetts exchange might have ended up extra-heavy with early retirees, displaced workers and the like. Or it might not – it’s hard to say, because I can also spin stories in which young people are still in school, or finding themselves, and they’re less likely to have employer-based insurance than a stable 45-year-old roofer is.

The point is, I don’t think we can confidently assume that most insurers expected their insurance pool to look like Massachusetts’, because most insurance pools don’t look like Massachusetts’: They’re younger, poorer and more likely to have been going without insurance. According to the study I cited above, the percentage of uninsured people ages 19 to 33 dropped to 8 percent from double digits. Young people may not have bought as many exchange policies as their elders did. But they were getting insurance somewhere.

The good news is that pretty soon, we’ll find out what the insurers are thinking; they’ll start filing some of their preliminary rate increases in a couple of weeks. My guess would be that those increases will be modest in places such as New York, which had a lot of signups – and had also nearly destroyed its private insurance market, so that almost any reform would have been an improvement. My guess would be that in other places, where the signups are too old or too few, premiums will jump sharply. I’d also guess that the backdoor bailouts the administration has been arranging through the risk corridors will be enough to keep existing insurers in the market, though maybe not enough to lure many new ones.

But those are just guesses, based on too little data – right now, all we know about their thinking comes from investor conferences and earnings calls, which tend to be a rather artificially cheery format. All I know right now is that whatever the insurers were expecting, I sure wasn’t expecting the demographics to settle down at 28 percent. And I don’t remember hearing numbers that low from any of the law’s boosters, either.

SOURCE: Bloomberg View


WHITE HOUSE SOLICITED MILLIONS FOR OBAMACARE OUTREACH

The White House and the Department of Health and Human Services (HHS) solicited millions in donations from private health care companies for a nonprofit organization to promote Obamacare, according to the Government Accountability Office (GAO).

The GAO released a report on Monday following a request from Republican senators to investigate HHS’s coordination with Enroll America, a “nonprofit, nonpartisan” organization founded by former White House staffers.

The report noted that former HHS Secretary Kathleen Sebelius contacted the CEOs of five organizations last year to “solicit support” for Enroll America, which it would use to promote Obamacare.

Additionally, the report links the White House to Sebelius’ outside fundraising for the first time. A White House official contacted the Robert Wood Johnson Foundation (RWJF) asking for a “significant” financial contribution for Obamacare’s private national outreach effort. The White House had said they did not sign off on calls made by Sebelius.

According to the report, Deputy Assistant to the President for Health Policy Jeanne Lambrew contacted the group in 2012, telling a RWJF staff member that Enroll America would need roughly $30 million for Obamacare outreach.

“RWJF told us that the official also indicated a hope that RWJF would provide a significant financial contribution to support such efforts, but did not make a specific funding request on behalf of Enroll America or any other outside entity,” the GAO said.

“While White House officials agreed that the deputy assistant to the president for health policy did not make a specific funding request on behalf of Enroll America or any other outside entity, they stated that this official did not offer RWJF a specific estimate of the level of financial support needed for national outreach efforts,” the GAO added.

Sebelius called the CEO of RWJF In January 2013 to encourage the company to “continue providing financial support to Enroll America.” The company donated $13 million after the call.

SOURCE: Free Beacon


“MEDICAL HOMELESSNESS” ON THE RISE

While open enrollment for coverage under the Affordable Care Act is closed, many of the newly insured are finding they can’t find doctors, landing them into a state described as “medical homelessness.”

Rotacare, a free clinic for the uninsured in Mountain View, is dealing with the problem firsthand.

Mirella Nguyen works at the clinic [and] said staffers dutifully helped uninsured clients sign up for Obamacare so they would no longer need the free clinic.

But months later, the clinic’s former patients are coming back to the clinic begging for help. “They’re coming back to us now and saying I can’t find a doctor, “said Nguyen.

Thinn Ong was thrilled to qualify for a subsidy on the health care exchange. She is paying $200 a month in premiums. But the single mother of two is asking, what for?

“Yeah, I sign it. I got it. But where’s my doctor? Who’s my doctor? I don’t know,” said a frustrated Ong.

Nguyen said the newly insured patients checked the physicians’ lists they were provided and were told they weren’t accepting new patients or they did not participate in the plan.

And Nguyen says – while the free clinic isn’t technically supposed to be treating former patients they signed up for insurance, they can’t in good faith turn them away.

Dr. Kevin Grumbach of UCSF called the phenomenon “medical homelessness,” where patients are caught adrift in a system woefully short of primary care doctors.

“Insurance coverage is a necessary but not a sufficient condition to assure that people get access to care when they need it,” Grumbach said.

Those who can’t find a doctor are supposed to lodge a complaint with state regulators, who have been denying the existence of a doctor shortage for months.

Meanwhile, the sick and insured can’t get appointments.

“What good is coverage if you can’t use it?” Nguyen said.

SOURCE: KCBS


BROWNBACK SIGNS BILL REQUIRING LEGISLATIVE APPROVAL ON MEDICAID

Medicaid won’t expand in Kansas anytime soon.

HB 2552, which requires an act of the Legislature to expand Medicaid through the Affordable Care Act, has been signed by Gov. Sam Brownback, his office announced Friday.

The bill was originally created to require prompt payment from KanCare providers. It was amended on the Senate floor to include legislative approval of a Medicaid expansion.

“It doesn’t take a position on whether or not Medicaid expansion under the Affordable Care Act should take place in Kansas. But what it does say is it should be up to the people’s elected representatives to make that decision,” said Rep. John Rubin, R-Shawnee, who carried the amended bill on the House floor.

Rubin agreed that since the Legislature is already finished with its regular session, the issue will not come up again until 2015. “You certainly could say it’s a pause between now and next January,” he said.

SOURCE: Wichita Eagle


ILLINOIS MEDICAID PAYING FOR DEAD CLIENTS

The Illinois Medicaid program paid an estimated $12 million for medical services for people listed as deceased in other state records, according to an internal state government memo.

The memo dated Friday, which The Associated Press obtained through a Freedom of Information Act request, says the state auditor compared clients enrolled in the Medicaid database last June with state death records dating back to 1970. Auditors identified overpayments for services to roughly 2,900 people after the date of their deaths.

The heads of the departments of Healthcare and Family Services and Human Services, the two state agencies involved with Medicaid payments, outline steps to fix the problem in the memo to their senior staffs.

The memo states that more than $7 million has been recovered and the rest is expected to be recouped by year’s end.

Sen. Dale Righter, a Republican from Mattoon and the Senate GOP’s point person on Medicaid reform, said the finding was further evidence that Democrats’ arguments that they have done all they can to clean up the Medicaid rolls is “empty rhetoric.”

“It’s disappointing and somewhat enraging for taxpayers, but it’s not surprising,” Righter said. “I wish this administration would spend more time trying to solve the problems rather than trying to convince taxpayers that they’ve already solved them.”

Gov. Pat Quinn’s office didn’t immediately respond to phone and email messages seeking comment.

SOURCE: State Journal Register


CBO IMPLIES OBAMA REGULATION SHOVELED BILLIONS TO INSURERS:

As I said in my February 2014 post calling the CBO February report “baffling,” consider the implications of asserting that the insurers would make so much money on the Exchanges that they would, on net, owe the federal government $8 billion. If you do the math, it means that the CBO assumed that, over the course of three years, insurers would be earning about 8 cents on every dollar they earned via policies sold on the Exchanges. I just ran the numbers again and came up with a very similar conclusion: the earlier estimate could only be true if insurers were supposed to make a hefty 8% or greater return on premiums. That estimate of 8 cents on the dollar was really peculiar at the time because enrollment – let alone actually paying customers – was running seriously behind projections and the number of “young invincibles” was particularly low. Low overall insurance purchases and particularly low rates of purchases by the people who were most needed in the Exchanges caused many people to believe back in February that insurers would hardly make hefty profits and pay money to the government under Risk Corridors. Instead, they thought insurers would fare poorly and probably have to be subsidized (or “bailed out”) by the government.

The effect of the February CBO pronouncement was to dampen enthusiasm for a bill proposed by Senator Marco Rubio that would have repealed the Risk Corridors provision as a bailout to the insurance industry. If, after all, the federal government was, on balance, making money on Risk Corridors, it was hard to see it as a “bailout” to the insurance industry. Whether intended or not, the political effect of the February CBO announcement was to pull the rug out from one justification for repeal of Risk Corridors.

But is it even plausible to believe that the regulatory change made by the Obama administration in March without the approval of Congress could cause such a large change in the Risk Corridors program? I have done the math again and the answer is no. I do not see how it is possible to get $8 billion out of the regulatory tweak that was made. Again, the calculations are baffling.

SOURCE: ACA Death Spiral

Benjamin Domenech

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