Monthly Archives: September 2011

Obamacare Rhetoric vs. Obamacare Reality: 41% Premium Increases

Reporting on this week’s Kaiser Family Foundation survey indicating premiums for employer-provided health insurance coverage rose by $1303 for the average family last year, ABC News spotlights the case of one flower shop to demonstrate that “many of the promises surrounding President Obama’s health care legislation remain unfulfilled.”  Specifically, workers at the Flora Venture flower shop in Newmarket, NH – who remember candidate Obama’s repeated promises that his bill would lower premiums by $2,500 per family – faced a whopping 41 percent premium increase last year.  One manager said “I basically work for the health care payments” – indicating how much Obamacare has fallen short of its promises to lower premium costs for struggling families.

Just as interesting was the spin the White House put on the Obama rhetoric then, versus the Obamacare reality now:

“So what about that $2,500 in savings the president pledged? White House deputy chief of staff Nancy-Ann DeParle insists families will see that savings — by 2019.

““Many of the changes in the Affordable Care Act are starting this year, and in succeeding years,” DeParle told ABC News, “and by 2019 we estimate that the average family will save around $2,000.””

This statement raises several obvious questions:

  • During the 2008 campaign, Obama campaign adviser – and current White House adviser – Jason Furman told the New York Times in July 2008 that “We think we could get to $2,500 in [premium] savings [per family] by the end of the first term, or be very close to it.”  That means the premium savings should be achieved in large part by 2012, not 2019.  Why the sudden seven year delay in attaining this promise?  If the President now believes Mr. Furman’s statements back in 2008 were inaccurate, and/or impossible to meet, then why is he still advising the President on economic policy at a time of record unemployment?
  • How and why is the “most accountable” Administration promising savings – not now, not even three years from now, but eight years from now, well after President Obama has left office?  If the Administration claims that the delay in achieving premium savings is because the provisions in Obamacare that will save money have yet to take effect, why didn’t the Administration press Congress to have these facets of the law take effect sooner?
  • Ms. DeParle (conveniently) didn’t cite a source on her savings claim, but the Administration has previously invoked a report published by the Business Roundtable in November 2009 (i.e., before the health care law was even enacted) to make this assertion.  However, the Roundtable’s study only presumes a reduction in the increase of premiums.  Don’t take my word for it: Look at Exhibit 1 of the study (depicted below), which study illustrates that under the maximum achievable “savings,” large employer premiums in 2019 will be $23,151 per family – or $12,408 higher than they were in 2009.  But remember, candidate Obama promised to CUT premiums, not just to slow their rate of growth.  So how and why is the Administration attempting to pass off a $12,400 premium INCREASE as a SAVINGS to American families?

Any way you slice it, the workers at the Flora Venture flower shop aren’t being helped by the Administration’s rhetoric and spin – and are being hurt by the failures of the legislation the Administration signed into law.

Business Roundtable

CLASS’ Solvency Concerns Could Lead to Another Ill-Advised Mandate

The Hill reported yesterday that disability advocates hope a forthcoming report from HHS on the CLASS Act will allow the program to go forward.  (HHS finally published a blog post late Wednesday that said its report on CLASS would be released next month – this nearly a full week after the CLASS Act’s actuary said he was leaving his job, and his office was being closed.)  One advocate “acknowledged that the CLASS Act might not work, but said the Administration should give it a try…‘If it doesn’t work, try something new.’”

Suggested in the above comments is the implication that HHS should start the program now, even if it doesn’t have a clear path to keep CLASS solvent.  Over and above the fact that the Administration has a statutory obligation to certify CLASS’ solvency BEFORE premiums get paid into the program, starting up a program without a clear path to sustainability is a recipe for further bad policy choices down the line.  For instance, if CLASS is established and quickly faces solvency issues, the Administration could attempt to “solve” the problem by imposing a mandate on individuals to participate in CLASS.  Former Obama Administration budget chief Peter Orszag, writing in Foreign Affairs in June, called for just such a mandate; in fact, he said one of the “only solutions” to make the CLASS program solvent may be “to make the purchase of such insurance mandatory.”

What’s more, in defending the individual mandate in a Pennsylvania court, the Justice Department recently admitted that Congress could force individuals to purchase long-term care insurance – meaning if the individual mandate is upheld by the Supreme Court, a CLASS Act mandate could be next:

To test the limits of Congress’s Commerce Clause authority, the court asked government counsel to assume that the “graying of America” and aging Baby Boomer population results in a dire shortage of affordable nursing home care.  The court posed the following question: “[A]s a result, could Congress mandate the purchase of long-term care insurance?”

In response, the government conceded that Congress could: (1) determine that a market is faltering due to the failure of individuals to pay for the goods or services they receive in that market, and then (2) invoke its Commerce Clause power to require the individuals to pay for the goods or services in advance of seeking or obtaining them.  Thus, supported with appropriate findings, counsel for the government posited that Congress could require the purchase of long term care insurance as a condition of lawful residency:

[I]t is possible that Congress at some point would determine that this is a crisis and that people have to pay for it, and there are various ways that they could do that.

Congress’ failure to vet the CLASS program – passing the bill to find out what’s in it – has already created one mess, a program even Secretary Sebelius has admitted is “totally unsustainable” as written.  Many would argue that starting up such a fiscally dubious program and hoping it will become solvent eventually is a recipe for further bad policy choices – for instance, an unprecedented mandate to buy long-term care insurance – in the future.

Democrat Plans Rationing With Open Eyes

From Montana this week comes word that its Governor, Brian Schweitzer, wants to establish a government-run health care plan in his state.  The governor said he “has completely different plans for the Medicare and Medicaid money the federal government gives the state,” and that he wants to “create a state-run system that borrows from the program used in Saskatchewan.”  He then went on to explain how his government-run system might keep taxpayer spending on health care low:

[Schweitzer] said the Canadian province [i.e., Saskatchewan] controls cost by negotiating drug prices and limiting non-emergency procedures such as MRIs.

A simple web search about waiting times in Saskatchewan yields information about the types of “non-emergency procedures” subject to rationing in the province; for instance, the list of “Wait List FAQs” from the Saskatchewan Cancer Agency includes this helpful guidance for cancer patients:

What are you doing to ensure that I get an appointment in a timely way?

Currently we have a shortage of medical oncologists that is impacting our wait times.  We are also actively recruiting to fill our vacant positions throughout our facilities and are working to bring in locums to help address wait times….

Can I get care sooner if I go somewhere else?

You will find that wait times exist in the healthcare system throughout Canada and in other countries as well….

And when it comes to the MRI example Governor Schweitzer referenced, rationing occurs there as well – unless you’re politically connected.  Saskatchewan Rough Riders – i.e., players in the Canadian Football League – have been able to jump the long queues for MRIs in the province by paying for their own treatment; other people can wait for as long as three months.

Details on how Governor Schweitzer intends to turn Montana into a Canadian-style health care system are not yet known.  However, given that Schweitzer’s application will be reviewed by the Centers for Medicare and Medicaid Services – whose head, Donald Berwick, has spoken of rationing with our eyes open – it’s quite possible the application will be approved.  In that scenario, those who can afford to get to the head of the queue – millionaires and billionaires who can fund the entire cost of their treatment, and pro athletes like Michael Vick – will receive in a prompt fashion the MRIs and cancer care they need to maintain or regain their health.  Everyone else, perhaps not.

Obamacare and the Supreme Court

Today’s biggest health care story is obviously the Justice Department’s request that the Supreme Court review the 11th Circuit Court ruling overturning Obamacare’s individual mandate.  Stories on that can be found in the New York Times here, the Washington Post here, the Wall Street Journal here, The Hill here, Politico here, and the Associated Press here.  The filing itself largely trod upon previous ground; only two key points of note stand out.  First, the Justice Department indicated it would NOT attempt to argue that a ruling on the mandate’s constitutionality should be deferred until after its implementation in 2014, due to the provisions of the Anti-Injunction Act.  This law was the basis for the Fourth Circuit’s refusal to speak to the merits of the mandate in its ruling.  DOJ’s position makes it likely (but not certain) that any Supreme Court ruling would speak to the merits of the mandate itself, as opposed to issues of standing.

Second, while other stories have previously commented upon this, it’s worth reiterating the contradictions between the brief’s arguments about the mandate’s status as a tax and prior comments from the President.  Here’s what the Obama Justice Department said about the mandate yesterday:

“The ‘practical operation’ of the minimum coverage provision is as a tax.”

Here’s what President Obama said about that very subject in 2009:

“For us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase.”

Again, the Obama Justice Department in yesterday’s filing:

“There is no such magic words test [for determining whether the mandate is a tax].”

And Obama in 2009 on the same subject:

“You can’t just make up that language and decide that that’s called a tax increase….The fact that you looked up Merriam’s Dictionary, the definition of tax increase, indicates to me that you’re stretching a little bit right now.  Otherwise, you wouldn’t have gone to the dictionary to check on the definition.”

Now that we’ve cleared all that up…

Did Liberals Admit Obamacare Will Increase the Deficit?

The Center for Budget and Policy Priorities released a report earlier this week that shed some interesting light on Obamacare’s claims of deficit reduction.  The report spends nearly 20 pages attacking Medicare premium support proposals for creating a “two-tier health care system,” because in CBPP’s view the inflation adjustments in such proposals would not keep up with rising health costs.  Conversely, the report claims that under Obamacare, “the premium credits that low- and moderate-income families will receive to help buy coverage through the new health insurance exchanges are designed to keep pace with health insurance costs, at least for the first five years.”  That sentence is followed by this doozy of a footnote:

“Starting in 2019, the growth in premium credits is limited if premiums grow faster than the CPI.  Congress enacted this provision as part of the Health Care and Education Affordability Reconciliation Act of 2010 in order to hold down the cost of health reform in later decades, but many analysts believe that it will eventually have to be modified.”

In other words, the liberal CBPP cites as conventional wisdom the belief that Obamacare’s premium subsidies will have to be increased even further – thus reducing, or likely eliminating entirely, all of the law’s supposed “savings.”  CBPP was forced to make this striking admission because the inflation adjustments for premium subsidies in Obamacare are similar, and possibly equal, to the inflation adjustments for Medicare recipients under the House Republican budget’s premium support model.    That fact leaves CBPP on the horns of a dilemma, as either:

  • Premium subsidies under Obamacare will be inadequate – meaning individuals will be FORCED to buy a policy they cannot afford*; or
  • Obamacare will require massive new subsidies ON TOP OF the trillions already approved, destroying the mirage of deficit-neutrality Democrats purport to claim; or
  • The inflation adjustments in the House Republican proposal for Medicare are just as sustainable as Obamacare’s premium subsidies, and the left’s attempt to claim otherwise represents scare tactics and political posturing.

As the saying goes, that’s not class warfare.  That’s math.

 
* It’s worth reiterating that Republican proposals for Medicare premium support do NOT involve coercing seniors to buy a product, unlike Obamacare’s constitutionally dubious individual mandate.

Higher Premiums Today — And Higher Premiums Tomorrow

As we’ve previously reported, the main take-away from the Kaiser survey of employer-sponsored coverage is that premiums rose this year by an average $1,303 per family – with researchers directly attributing several hundred dollars of that increase to Obamacare.  The White House claims that this is an aberration, and premium increases will moderate in the future.  However, a look at other elements of the survey demonstrates exactly how many Americans will be affected by higher premiums when all of Obamacare’s mandates take effect:

  • Six percent of covered workers face a waiting period of four or more months (Exhibit 3.8, p. 51), but the law specifies that employers must shorten waiting periods to no more than 90 days.  These workers will face premium increases thanks to Obamacare.
  • Nearly one in eight (12%) covered workers – and more than one in four (28%) covered workers in small firms – have single deductibles of $2,000 or more (Exhibit 7.6, p. 102).  But the law caps deductibles for a single policy at $2,000.  These workers will face premium increases thanks to Obamacare.
  • Nearly two in five (38%) workers in high deductible health plans have family plan deductibles of over $4,000 (Exhibit 8.10, p. 148).  But the law caps family plan deductibles at $4,000 per year.  These workers will face premium increases thanks to Obamacare.
  • More than one in six covered workers (17%) are in plans with no annual out-of-pocket maximum (Exhibit 7.29, p. 125).  But the law prohibits annual limitation on cost-sharing above a government-defined threshold.  These workers will face premium increases thanks to Obamacare.
  • One in ten (10%) covered workers in large firms, and more than one in six covered workers in small firms (17%), are subject to an annual limit on benefits (Exhibit 14.5, p. 222).  But the law prohibits these annual limits.  These workers will face premium increases thanks to Obamacare.

All these workers will face premium increases as a direct result of provisions in Obamacare.  And that assumes that workers will get to keep their coverage at all.  For the more than one in six (17%) of workers in high-deductible plans, Secretary Sebelius and HHS will publish regulations that hold the potential for many, if not most, high-deductible plans to be considered NOT “government-approved.”  And as one senior HHS official commented, employers may “dump” their firms in government-sponsored Exchanges – meaning workers would lose their existing employer coverage entirely.

The Administration is claiming that today’s higher premiums are an anomaly.  But looking at the survey data, and analyzing the provisions of the law, it becomes obvious that when it comes to skyrocketing premiums thanks to Obamacare, you ain’t seen nothing yet.

Responding to the White House on Premium Increases

The White House released a blog post this morning attempting to rebut criticism about today’s announcement that premiums for families went up by a whopping $1,300 this year alone.  Several points to note:

  • The blog post argues that “the Kaiser report is informative, but it’s a look backwards” – backwards in this case being defined as this year.  But during the 2008 campaign, Obama campaign adviser (and current White House adviser) Jason Furman told the New York Times in July 2008 that “We think we could get to $2,500 in [premium] savings [per family] by the end of the first term, or be very close to it.”  In other words, by the Obama campaign’s own metrics, premiums should be ALREADY going down – and instead they’re going UP.
  • The blog post cites some surveys for 2012 to indicate that premiums may rise at a slightly slower rate, and attempts to claim credit for this development.  However, consultants at Mercer admit that to the extent health care spending trends have slowed, they have likely been due to the bad economy and individuals foregoing treatments – which is reflective of the “stimulus’” failure to create the jobs it promised.  So by taking credit for slowing premiums, the Administration is also taking credit for the failed economy, which has discouraged people from seeking medical treatments.
  • In addition, candidate Obama repeatedly promised during his campaign that he would “cut” premiums by an average of $2,500 per family – meaning premiums would go DOWN, not merely just “go up by less than projected.”  In other words, ANY increase in premiums – no matter how minor – represents a failed promise by the President and his Administration.  (Of course, this year premiums actually went up at an even faster rate than last year, but this point remains valid regardless.)
  • Even as it deflects blame for rising premiums, the Administration also attempts to take credit for the new services as a result of Obamacare – notably coverage of young adults, and preventive services without cost-sharing.  How exactly does the Administration attempt to take credit for Obamacare’s supposed benefits, while not accepting responsibility for the costs associated with them?  Does the White House really believe that all these new services can be provided for “free,” WITHOUT raising premiums?

Today’s Big Story: How Obamacare Sparked Higher Premiums

The most important story in health care today does NOT revolve around the Justice Department’s decision to forego a review by the full Eleventh Circuit of Obamacare’s individual mandate, thus leading to a likely Supreme Court decision on the mandate next term. (For more on this story, see articles here, here, and here.)  Rather, it involves the release of the Kaiser Family Foundation’s annual survey of employer-sponsored health insurance premiums.  The survey notes that “compared to 2010, premiums for single coverage are 8% higher and premiums for family coverage are 9% higher.  The 9% growth rate in family premiums for 2011 is significantly higher than the 3% growth rate in 2010.”  In other words, Obamacare isn’t lowering premiums – in fact, premium increases have accelerated since Obamacare passed last year.

As a reminder, candidate Obama said repeatedly his bill would CUT premiums by an average of $2,500 per family – meaning premiums would go DOWN, not merely just “go up by less than projected.”  The campaign also promised that that those reductions would occur within Obama’s first term.  However, the annual Kaiser Foundation survey of employer-provided insurance found that average family premiums totaled $12,860 in 2008, $13,375 in 2009, and $13,770 in 2010 and $15,073 this year.  In other words, while candidate Obama promised premiums would fall by $2,500 on average, premiums have already risen by $2,213 during the Obama Administration.

Other conclusions that can be drawn from the Kaiser study:

  • You CAN’T Keep Your Current Coverage:  The survey found that only about half (56%) of workers were in plans that pre-date Obamacare’s enactment.  The loss of employees’ pre-Obamacare coverage is occurring even faster than the Administration’s own estimates, which concluded half of all employers – and as many as 80% of small businesses – will be forced to give up their current coverage by 2013.  Just as important, by giving up their pre-Obamacare plans, both employers and employees will be subjected to costly new mandates that will increase premiums.
  • Small Business Tax Credit Ineffective:  The percentage of small businesses offering coverage went DOWN by eleven percentage points, suggesting Obamacare’s temporary small business tax credit has not succeeded in persuading firms to offer coverage (if anything, the contrary may have occurred).  The survey also found that only 29% of firms with under 50 employees even attempted to determine if they would be eligible for the credit, and of those, only 30% – or fewer than 9% of all small firms (i.e., 30% of 29%) – said they definitely planned to claim the credit for 2010 and 2011.
  • New Requirements are Raising Premiums:  Significant percentages of workers were in plans that had to change their services covered (31%) or cost-sharing requirements (23%) to meet Obamacare’s new preventive service mandates.  These mandates by definition will raise premiums for plans, as this year’s 9% increase demonstrates.

Last year, former Speaker Pelosi famously said we had to pass the bill to find out what’s in it.  Today we have once again found out just how much Obamacare is failing to live up to the President’s promises.

Kaiser 2011

Deadline Day for DOJ: Will Administration End the Obamacare Uncertainty?

The Los Angeles Times and other news outlets have noted that today marks an important deadline in the ongoing legal battle over Obamacare.  If the Justice Department wants the full Eleventh Circuit Court of Appeals to review its decision striking down the law’s individual mandate, it must apply for such an en banc review by today; otherwise, the Justice Department’s only option would be an appeal to the Supreme Court.  The Times article notes that seeking an en banc review “could take weeks, or even months, and probably push back a Supreme Court ruling until 2013” – which some would view as a political ploy to avoid placing an election-year spotlight on Obamacare’s unpopular individual mandate.

There’s every reason for the Justice Department to avoid the dilatory nature of an en banc petition, and request the Supreme Court take up the individual mandate in the term it will start next week.  The issues surrounding the mandate have been well-argued: three circuit courts have now ruled on the mandate, and a fourth heard oral arguments on the mandate last Friday.  Meanwhile, the uncertainty surrounding the law continues to affect the broader economy – investment firms have called the law “arguably the biggest impediment to hiring,” and states have complained that they do not have sufficient information to implement the law in a timely fashion.

In recent weeks President Obama has asked Republicans to put country before party.  The question now is, Will President Obama’s Justice Department put the good of the country first, and stop the delays and uncertainty by asking the Supreme Court to rule on Obamacare immediately?

Paging Alex Trebek: CLASS Program is in Jeopardy

That can be the only conclusion based from the articles in this morning’s papers – the Associated Press, the Wall Street Journal, and The Hill.  Among the highlights, outgoing CLASS actuary Bob Yee said:

  • “Technically, Kathy Greenlee, the administrator for CLASS, is still in charge.  But the staff, eight people in the office as of last week, will not be working on CLASS. They have been, or are in the process of being, reassigned.”
  • “It’s difficult trying to find a solution [to CLASS’ solvency concerns] without an in-house actuary.”
  • “My feeling is that they are not going to make some wonderful discovery [to make CLASS solvent].  You draw your own conclusion about what’s going to happen.”
  • “Once you take a pause [in implementation], it’s hard to start back up.”

The Journal article also notes that the Administration specifically asked Democrats not to fund the CLASS program for Fiscal Year 2012 – suggesting a distinct lack of enthusiasm within HHS for a program that Secretary Sebelius admitted was “totally unsustainable” as written in the law.  The two most likely scenarios:

  • Either HHS thinks the program is unsustainable, and is putting the program in “cold storage” (rather than stopping implementation outright) to avoid answering embarrassing political questions – i.e., How did this unsustainable program end up in Obamacare? – ahead of the presidential election; or
  • HHS thinks the program is unsustainable, and wants to wait until a potential Obama second term to implement it, solvency concerns notwithstanding.

Political questions aside, the only operative question at this point should be whether or not the program is sustainable.  HHS has had 18 months to make such a determination – but so far the silence from the Administration on this front has been deafening.  If it cannot be salvaged, it should be scrapped; to do otherwise would represent a waste of taxpayer dollars at a time when the federal government is running trillion-dollar deficits.