We Have No Idea How Much Obamacare Costs

We Have No Idea How Much Obamacare Costs
June 13, 2014

Benjamin Domenech

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

Consumer Power Report #423

Remember back when Obamacare was supposed to be reducing the deficit? Those were the days:

For Democratic lawmakers who were hesitant to sign onto the sweeping 2010 health care law, one of the most powerful selling points was that the Affordable Care Act would actually reduce the federal budget deficit, despite the additional costs of extending health insurance coverage to the uninsured.

Four years after enactment of what is widely viewed as President Barack Obama’s key legislative achievement, however, it’s unclear whether the health care law is still on track to reduce the deficit or whether it may actually end up adding to the federal debt. In fact, the answer to that question has become something of a mystery.

In its latest report on the law, the Congressional Budget Office said it is no longer possible to assess the overall fiscal impact of the law. That conclusion came as a surprise to some fiscal experts in Washington and is drawing concern. And without a clear picture of the law’s overall financing, it could make it politically easier to continue delaying pieces of it, including revenue raisers, because any resulting cost increases might be hidden.

Charles Blahous, a senior research fellow at George Mason University’s free market-oriented Mercatus Center, calls the CBO’s inability to estimate the net effect of the law “a real problem.” “The ACA’s financing provisions were assumed to be effective so as to get a favorable score out of CBO upon enactment, but no one is keeping track of whether they’re being enforced,” says Blahous, a public trustee for Social Security and Medicare. “We receive occasional updates on the gross costs of the law, but none on whether the previously projected savings provisions are producing what was originally projected.” As a result, Blahous says, “there’s no barrier to continually rolling back the financing mechanisms without the effect on the ACA’s finances ever being fully disclosed.”

The Hill has more:

Congressional budget scorekeepers said they can no longer measure the fiscal impact of many provisions of ObamaCare because the task is impossible.

In a little-noticed footnote from April, the Congressional Budget Office (CBO) said it will continue to assess the effects of the law’s exchange subsidies and the Medicaid expansion, while not tracking others.

“The provisions that expand insurance coverage established entirely new programs or components of programs that can be isolated and reassessed,” the office wrote.

“In contrast, other provisions of the Affordable Care Act significantly modified existing federal programs and made changes to the Internal Revenue Code.

“Isolating the incremental effects of those provisions on previously existing programs and revenues four years after enactment of the Affordable Care Act is not possible.”

Part of this lack of ability to predict the costs of Obamacare is due to the Supreme Court’s decision on the Medicaid expansion issue. With one in five Americans now on Medicaid, but with the surge in enrollment very uneven and the exchange experiences so inconsistent, it’s obvious now how incomplete the CBO predictions really were. And even without the uneven and ill-tracked nature of the expansion and relative eligibility, CBO is really going to be flying blind for the next few years on how much Obamacare is actually costing the taxpayers, or will cost them for the foreseeable future.

-- Benjamin Domenech


IN THIS ISSUE:


VIRGINIA REPUBLICANS SNAG SENATE, BLOCKING MEDICAID EXPANSION

Virginia Republicans snatched control of the state Senate on Monday, immediately ending a budget stalemate by pushing Democrats to agree to pass a spending plan without Medicaid expansion, Gov. Terry McAuliffe’s top priority.

The power shift forced Senate Democrats to yield after a protracted standoff that had threatened to shut down state government in less than a month, according to several lawmakers with direct knowledge of the deal. Democratic negotiators agreed in a closed-door meeting Monday to pass a budget without expanding health coverage to 400,000 low-income Virginians.

The news followed the unexpected resignation of a fellow Democrat, a senator from southwest Virginia, who pulled himself out of the running for a state job Monday amid claims that he had traded his seat for the position. Phillip P. Puckett’s surprise exit from the Senate could doom McAuliffe’s legislative agenda for his remaining 3 1/2 years, political observers said.

With no allies in power in the Capitol, McAuliffe will have to sidestep a recalcitrant legislature, perhaps by turning to executive orders, to achieve his priorities, which, aside from expanding Medicaid, include job creation and expanding abortion rights and gay rights. McAuliffe has already attempted to single-handedly roll back restrictions on abortion clinics and has explored ways to expand Medicaid without legislative approval. Now, he risks further inflaming partisan tensions in a place that has long prided itself on conducting the people’s business in the more collegial “Virginia way.”

SOURCE: Washington Post


MANDATE PENALTY TO HIT ONE MILLION AMERICANS

Roughly one million low-income Americans will pay a fine under Obamacare, according to the Congressional Budget Office (CBO).

The CBO estimated that four million people would pay the individual mandate penalty for not having health insurance by 2016 as a result of the president’s health care law, according to a report released last week.

“All told, CBO and [the Joint Committee on Taxation] estimate that about four million people will pay a penalty because they are uninsured in 2016 (a figure that includes uninsured dependents who have the penalty paid on their behalf),” the report said. “An estimated $4 billion will be collected from those who are uninsured in 2016, and, on average, an estimated $5 billion will be collected per year over the 2017–2024 period.”

A chart accompanying the report revealed that 200,000 of those paying the penalty earn less than 100 percent of the poverty line. An additional 800,000 are considered low-income, earning between 100 and 199 percent of the poverty level.

President Barack Obama was once critical of an individual mandate precisely because of its effect on low-income Americans. During a primary debate against Hillary Clinton, then-candidate Obama criticized the idea of a mandate for imposing fines on people who could not afford health insurance.

“You can have a situation, which we are seeing right now in the state of Massachusetts, where people are being fined for not having purchased health care, but choose to accept the fine because they still can’t afford it even with the subsidies,” he said. “They are then worse off, they then have no health care and are paying a fine above and beyond that.”

This year Americans opting to not purchase health insurance will pay a $95 fine or 1 percent of their household’s adjusted gross income--whichever amount is greater. By 2016, the minimum fine will be $695 or 2.5 percent of the household income.

In addition, the report estimated that under Obamacare 30 million Americans will still be uninsured by 2016.

SOURCE: Washington Free Beacon


MORE PATIENTS FLOCK TO EMERGENCY ROOMS

It wasn’t supposed to work this way, but since the Affordable Care Act took effect in January, Norton Hospital has seen its packed emergency room become even more crowded, with about 100 more patients a month.

That 12 percent spike in the number of patients – many of whom aren’t actually facing true emergencies – is spurring the Louisville hospital to convert a waiting room into more exam rooms.

“We’re seeing patients who probably should be seen at our (immediate-care centers),” said Lewis Perkins, the hospital’s vice president of patient care and chief nursing officer. “And we’re seeing this across the system.”

That’s just the opposite of what many people expected under Obamacare, particularly because one of the goals of health reform was to reduce pressure on emergency rooms by expanding Medicaid and giving poor people better access to primary care.

Instead, many hospitals in Kentucky and across the nation are seeing a surge of those newly insured Medicaid patients walking into emergency rooms.

Nationally, nearly half of ER doctors responding to a recent poll by the American College of Emergency Physicians said they’ve seen more visits since Jan. 1, and nearly nine in 10 expect those visits to rise in the next three years. Mike Rust, president of the Kentucky Hospital Association, said members statewide describe the same trend.

Experts cite many reasons: A long-standing shortage of primary-care doctors leaves too few to handle all the newly insured patients. Some doctors won’t accept Medicaid. And poor people often can’t take time from work when most primary care offices are open, while ERs operate round-the-clock and by law must at least stabilize patients.

Plus, some patients who have been uninsured for years don’t have regular doctors and are accustomed to using ERs, even though it is much more expensive.

“It’s a perfect storm here,” said Dr. Ryan Stanton of Lexington, president of the Kentucky chapter of the ER physician group.”We’ve given people an ATM card in a town with no ATMs.”

SOURCE: USA Today


VA HEALTH CARE SYSTEM SEES DELAYS

Nearly 60,000 veterans are waiting to get appointments at the Department of Veterans Affairs and 70% of facilities have used an alternative to official appointment schedules to make wait times appear shorter, according to an internal VA audit released Monday.

During a nearly monthlong audit of 731 VA facilities and nearly 4,000 employees, the VA found widespread problems with appointment scheduling and pressure on employees to change data. More than 10% of scheduling staff were given instruction on how to alter patient appointment scheduling, according to the audit.

“Today, we’re providing the details to offer transparency into the scale of our challenges, and of our system itself,” said Sloan Gibson, acting VA secretary, in a release. “I’ll repeat--this data shows the extent of the systemic problems we face, problems that demand immediate actions.”

Monday’s report is the culmination of an extensive audit ordered by Eric Shinseki, the former VA secretary, in the wake of widespread reports of the use of unauthorized patient wait lists throughout the VA system that made official wait times appear to be much shorter than the actual wait times faced by veterans.

As of May 15, roughly 57,436 veterans were waiting to be scheduled for care and another 63,869 had enrolled in the VA health-care system over the past decade yet have never been seen for an appointment.

SOURCE: Wall Street Journal


POLL: VOTERS REGRET OBAMACARE

The scandal surrounding the Department of Veterans Affairs health care system isn’t making Americans feel more confident about ObamaCare, a just released Fox News Poll finds.

Less than a third of voters believes that the government will do a better job with ObamaCare than the VA did managing care for vets (31 percent). Over half believe it won’t (55 percent). Meanwhile, a majority regrets ObamaCare ever passed, and more voters than not say the country is worse off under the law.

By a 55–38 percent margin, people wish the Affordable Care Act had never passed and the 2009 system were still in place. That includes a quarter of Democrats (25 percent), a majority of independents (58 percent) and most Republicans (85 percent). Over half of voters under age 35 (53 percent) along with a majority of those ages 65 and over (58 percent) regret ObamaCare passed.

In addition, by a double-digit margin, more voters say the country is worse off under the new health care law: 44 percent worse off vs. 29 percent better off. Another one voter in four says ObamaCare hasn’t made much of a difference either way (24 percent). Independents are twice as likely to say we’re worse off under ObamaCare (49 percent worse off vs. 24 percent better off). Almost all Republicans say worse off (72 percent) or no difference (21 percent).

Among Democrats, a 54-percent majority says the country is better off as a result of the law, while 15 percent say worse off and 27 percent say it hasn’t made much of a difference. Overall, 39 percent of voters approve of the way President Obama is handling health care, down from 43 percent last month. A 58-percent majority disapproves of Obama’s job performance on health care. That’s near the record-high 61 percent who gave him the thumbs-down in November 2013.

SOURCE: Fox News


JUDGE VOIDS EXPANSION OF DISCOUNT DRUG PROGRAM

A federal judge has struck down a new rule requiring drug companies to offer certain drugs at discounted prices, saying the Obama administration had no authority to issue the rule.

Federal officials said the decision could provide a windfall to drug makers. However, the pharmaceutical industry said that the administration was stretching the Affordable Care Act to provide discounts on more drugs for more people, and that the rule was “inconsistent with the plain language of the statute.”

The administration said it was still reviewing the decision, issued in late May by Judge Rudolph Contreras of the Federal District Court here, and had not decided whether to appeal.

In his ruling, Judge Contreras, who was appointed in 2012 by President Obama, said the administration had “acted beyond the bounds of its statutory authority.” He issued an injunction blocking the rule.

Ted Slafsky, the president of Safety Net Hospitals for Pharmaceutical Access, which represents hospitals participating in the drug discount program, said, “The court decision will have a devastating impact on rural hospitals and free-standing cancer hospitals, which will pay a lot more for expensive drugs.”

But James M. Spears, executive vice president and general counsel of the Pharmaceutical Research and Manufacturers of America, an industry group that filed the lawsuit, said, “We are extremely pleased with the court’s decision.”

The effects of the ruling already are being felt. Citing the court decision, Genentech, a leading biotechnology company owned by Roche, said last week that it had stopped providing discounts on some medicines sold to some hospitals newly eligible for the program.

At issue is a federal program created in 1992 to limit the prices that drug companies can charge for medications sold to certain hospitals and clinics serving low-income patients. The discounts typically range from 20 percent to 50 percent.

In passing the Affordable Care Act in 2010, Congress expanded the program to make the discounts available to many rural hospitals and cancer hospitals.

At the same time, Congress wanted to preserve financial incentives for the development of drugs to treat rare diseases and disorders, so it said that the discounts would not be required for such “orphan drugs.”

But drugs often have multiple uses. Orphan drugs are not used exclusively to treat rare diseases, and Congress did not make clear whether the discounts would be available when those same drugs were used to treat other, more common illnesses.

SOURCE: New York Times

Benjamin Domenech

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