Monthly Archives: November 2011

Obama’s Medicare Dis-Advantage

Democrats will likely attempt to trumpet a GAO report released today regarding Medicare Advantage enrollment for 2011 as claiming that the Medicare Advantage program will be unaffected by Obamacare.  (The report is not yet online, but should be posted here in the coming hours.)  While Democrats’ newfound interest in the Medicare Advantage program is certainly welcome, if perhaps a tad cynical, the claims are both incomplete and misleading.  First, less than one percent of Obamacare’s cuts to MA actually went into effect in 2011, according to the Congressional Budget Office.  Second, as the Associated Press previously reported, Medicare Advantage figures for 2012 are likely to be skewed due to bonuses paid out by a temporary, multi-billion dollar demonstration/waiver program – one that even Democrats admitted was implemented because Medicare “could not tolerate dislocation, given the political climate.” (See our full write-up of this issue from back in September here.)  In other words, the Medicare Advantage program is NOT immune from Obamacare cuts – it merely won a temporary reprieve while the President campaigns for re-election.

As we previously reported, both CBO and the Medicare trustees found that Medicare Advantage enrollment is still projected to decline, just that enrollment won’t start falling until 2013, after the President runs for re-election. (Think that timing is a coincidence?)  Another report released last month also demonstrated how Medicare Advantage plan enrollment will decrease across the country thanks to Obamacare.  The study found that Medicare Advantage enrollment will be cut in half by 2017 thanks to Obamacare, and that plan choices will be reduced by two-thirds, with an average of almost 18 fewer MA plans being offered in each county.

As Speaker Pelosi recently admitted, Democrats “took a half a trillion dollars out of Medicare in [Obamacare], the health care bill” to pay for more unsustainable new entitlements.  The idea that this level of payment reductions will not have an effect on beneficiaries defies logic.  And given that this month’s Kaiser Family Foundation health tracking poll found that only 22 percent of Americans believe Obamacare will make Medicare better off – an all-time low – the American people don’t seem to be buying this fiscal sleight-of-hand either.

The Return of Mediscare

The Washington Post reports this morning that Democrats are playing political games again, “begin[ning] a campaign…to attack Republican lawmakers for pushing cuts to Medicare benefits during the latest round of failed federal deficit talks.”  The story once again reveals the vast chasm between political rhetoric and policy reality for Democrats regarding our unsustainable entitlements.  Obama’s own Chief of Staff, Bill Daley, said in July that Medicare “will run out of money in five years if we don’t do something.”   And the President himself acknowledged that “if you look at the numbers, then Medicare in particular will run out of money and we will not be able to sustain that program no matter how much taxes go up.  I mean, it’s not an option for us to just sit by and do nothing.”  Yet that’s exactly what most Democrats want to do – to do nothing on Medicare, in the hopes that they will benefit politically:

  • The President’s deficit proposal scrupulously avoided ANY changes to the Medicare benefit until AFTER the President leaves office in 2017, even though the President’s own Chief of Staff said would run out of money by 2016.  Some of the proposals, including additional means testing for wealthy beneficiaries, were actually positive steps forward.  But what’s the point of delaying changes to the Medicare benefit until after the program could be broke – other than political gamesmanship?  Given his eagerness to impose a trillion-dollar tax hike within mere months, why is the President so afraid of raising Medicare premiums on millionaires and billionaires until after he leaves office?
  • As one House Member put it, if the President had proposed a true restructuring of our unsustainable entitlements, that would “cancel out any bludgeoning that Democrats might give the Republicans over Medicare and Medicaid.”
  • Likewise, Senate Democrats have little interest in entitlement reform either; the Post’s the liberal Plum Line reported in July that Senate Democrats don’t want to pass Medicare reform because it would be “giving away the biggest [political] advantage” Democrats have had “in some time.”
  • The most telling line of the Post’s story this morning?  Rep. Steve Israel, Chair of the Democratic Congressional Campaign Committee, “declined to say whether a [deficit] agreement to cut entitlements might have hindered his political strategy.”  In other words, Democrats WANTED the supercommittee to fail – so that they could resume their “Mediscare” political attack ads against Republicans.

Remember, this is the same party that, as Speaker Pelosi recently admitted, “took a half a trillion dollars out of Medicare in [Obamacare], the health care bill” to pay for more unsustainable new entitlements – but when it comes to reforming Medicare to save the program, Democrats have been AWOL, focusing instead on scoring political points.

Liberals’ willingness once again to exploit Medicare for electoral gain raises obvious points:  With sovereign debt crises roiling Europe, some may question how long the program can wait for Democrats to stop their political posturing and work to fix our unsustainable entitlements – and whether, by increasing the risk of another debt downgrade or other fiscal turmoil, seniors may suffer in the long run for the Democrat deficit dithering.

Another Way Employers Could Dump Coverage

Yesterday NPR ran a story about two Minnesota law professors who recently wrote a law review article about yet another unintended consequence of Obamacare – one which could result in employers “selectively dumping” their high-risk, and therefore high cost, employees into Exchanges.  The article argues that employers could engage in benefit management strategies – wellness discounts, tight networks of specialists – that encourage healthy, low-risk individuals to participate in the group plan, while encouraging unhealthy workers to rely on Obamacare’s Exchanges.  Employers could also give their workers cash incentives – in the form of Health Reimbursement Arrangements or other compensation – to minimize financial losses.  Even if high-risk workers migrating to Exchanges could not receive federal insurance subsidies (because their employer was still offering coverage), workers could still come out ahead – after all, a firm who knows a worker will incur $50,000 in health expenses annually would be MUCH better off financially to send that employee to the Exchange, even if the firm paid the full $15,000-$20,000 cost of that worker’s insurance policy on the Exchange.

Of course, federal taxpayers would be worse off under this scenario; the article notes that any attempt by employers to offload their costliest employees could result in significant costs to the federal government:

Employer dumping of high-risk employees could undermine the exchanges on which individual markets are expected to operate by rendering the pool of policyholders seeking coverage in exchanges disproportionately risky relative to the general population.  Such adverse selection, in turn, would simultaneously increase premiums, lower coverage rates, and increase the cost to the federal government of subsidizing coverage for low- and moderate income individuals.  Ultimately, these forces could render insurance exchanges unsustainable

Given all this, it’s a bit surprising that senior HHS officials have said it would be a good thing for employers to “dump [their] people into the Exchange,” and that Speaker Pelosi talked favorably about Obamacare as a way “for businesses to be emancipated from health care costs because they have a way out or whatever works for them.”  Regardless, the law review article is yet another way in which Obamacare is turning out to misfire on the promises Democrats made – and backfiring on the American people.

Obamacare’s Tax Increases Already Killing Jobs

Before the holiday came word that workers for a Michigan-based medical device company had less to be thankful for – Obamacare cost some of them their jobs.  Device manufacturer Stryker announced that it would be shedding “five percent of its workforce over concerns about the impending 2.3 percent medical device tax prescribed by” Obamacare.  A press release from the Kalamazoo company noted that “the targeted reductions [i.e., layoffs]…are being initiated…in advance of the new medical device excise tax scheduled to begin in 2013” under Obamacare.

The company’s CEO had already announced in September that “we’re already starting to think about actions that offset that additional tax,” and the recent job-cutting announcement followed through on that earlier comment.  Of course, the big question is what other medical device companies and related organizations are also thinking about job cuts between now and 2013 due to Obamacare’s $800 billion in destructive tax increases.

Recall that last year Speaker Pelosi claimed that Obamacare would create “4 million jobs – 400,000 jobs almost immediately.”  Tell that to the workers at Stryker facing layoffs over the holiday season, all thanks to Obamacare.

New Report Shows How Obamacare Damaging State Budgets

The National Governors Association released their annual fall update on the Fiscal Survey of States this morning, and the results once again demonstrate the impact of both the economic slowdown and Obamacare’s unfunded mandates.  The report illustrates how dire state budget deficits have been, and will remain over the foreseeable future.  States faced $230 billion in budget gaps between fiscal years 2009-2011, had to close an additional $95 billion in deficits this fiscal year (i.e., fiscal 2012), and 17 states have reported at least $40 billion in projected deficits for fiscal year 2013. (Many states have yet to complete official forecasts for future years, so these numbers are likely to increase.)  That’s a total of at least $365 billion in state budget deficits over a five-year period.

The NGA report notes that Medicaid enrollment has increased by 17.7 percent over the current three year period, and that Medicaid already comprises the largest portion of total state spending.  Yet Obamacare would expand Medicaid still further, to an additional 16 million (or more) Americans, while placing new unfunded mandates on states of at least $118 billion.  The NGA’s press release accompanying the report makes clear the implications of the fiscal squeeze Obamacare is exacerbating for many states:  “Spending on Medicaid is expected to consume an increasing share of state budgets and grow much more rapidly than state revenue growth, resulting in slow or no growth in education, transportation or public safety” expenditures.  It’s yet another example of the fiscal havoc Obamacare is wreaking on state and federal budgets alike.

Obamacare Not a “Rock-Solid Deal” for Seniors

The Associated Press ran a story yesterday on the Medicare “doughnut hole” changes included in Obamacare, which provides some anecdotal examples of potential savings.  But the most important numbers quoted in the article are these:  Only about two million Americans out of 47 million Medicare beneficiaries have benefited from the new discount program.  That means a very small percentage of program participants actually are receiving benefits from Obamacare.

Second, the true savings for beneficiaries in the doughnut hole may in reality be less than they appear; if the richer benefits in the coverage gap just prompt seniors to continue buying more expensive brand-name drugs rather than using less costly generics, they won’t really have “saved” much.  (It also would increase health costs, not lower them.)

Last but not least, all seniors will be paying higher Part D premiums in order for a select group of beneficiaries to receive richer coverage.  The Congressional Budget Office estimated that “the law would lead to an average increase in premiums for Part D beneficiaries of about 4 percent in 2011, rising to about 9 percent in 2019.”  That means that 17 million seniors are paying higher premiums, but only about 400,000 beneficiaries passing through the doughnut hole will actually receive the full benefit of the discount regime established in the law. (Many of the beneficiaries in the “doughnut hole” are low-income seniors, and the Medicare program already covered their additional costs in the coverage gap prior to Obamacare.)  Some would categorize this redistributive scenario as “spreading the wealth around.”

Of course, Big Pharma is virtually guaranteed to benefit from its “rock-solid deal” struck behind closed doors with President Obama and Congressional Democrats.  But will seniors actually benefit from this portion of Obamacare?  The evidence is clear that most beneficiaries won’t.

Obama’s “Bait and Switch” on the Berwick Nomination

Late on Friday, John McDonough published a blog post in the Boston Globe entitled “Why Berwick Matters.”  He intended to use the posting as a means to attack Republicans – but in reality his revealing comments unwittingly serve as an indictment of Democrats, Obamacare, and Berwick for political gamesmanship over the nomination.

As many of you know, McDonough served as Sen. Kennedy’s point person on health “reform” through his senior post on the HELP Committee during 2009-10.  It is therefore with a strong insider perspective that McDonough’s post included the following bombshell:

It was a thrilling moment when it became clear that Berwick had been selected by President-elect Barack Obama and the new Secretary of Health & Human Services, Tom Daschle, to run the federal Centers for Medicare and Medicaid Services.  Finally, the key U.S. health agency would be headed by a physician thoroughly committed to fundamental quality and system improvement, as well as patient empowerment.  It was a heady — and short-lived — moment.

If you think the reference to HHS Secretary Daschle was a typo, it wasn’t; the piece continues:

In late January 2009, Daschle’s nomination blew up over his unpaid taxes.  Berwick’s nomination — which would have sailed through an easy confirmation in early 2009 — was held aside while a successor was recruited, and then the Administration began looking at other names.  The health reform legislative campaign provided another reason to delay, and so it was not until April, 2010 that the President nominated Berwick.

In other words, the White House intended to have Berwick head CMS all along – but delayed the nomination until AFTER Obamacare passed, because it knew how controversial he was.  What McDonough’s piece elides over is the fact that Daschle’s withdrawn nomination prompted the new Administration to engage in closer scrutiny of its nominees.  It’s likely that Berwick’s history of support for British socialized medicine – including his comments about the NHS being a “seductress” – emerged at that time.  At which point, according to McDonough’s account, the Administration scrapped the idea of nominating Berwick – at least until AFTER Obamacare passed.  All of which raises the question:  If Berwick was so unpopular that the Administration couldn’t bring itself to nominate Berwick in the light of day – i.e., to make a clear statement before Obamacare passed that Berwick would be the one to implement the law – why was ever he nominated at all?

McDonough concludes his blog post by saying that Senate Republicans engaged in “meaningful disrespect” of the nominee, a similar tone to the White House reaction that said “a small group of senators…[were] putting political interests above the best interests of the American people.”  In reality however, McDonough’s account makes clear that the real disrespect was being driven by the Obama Administration, which refused for political reasons to inform the American people before Obamacare’s enactment that the unpopular health care bill would be implemented by an even more unpopular and controversial appointed bureaucrat.

Democrats Man the Obamacare Lifeboats

The past several weeks have seen several indications of just how willing and eager Democrats – including the President himself – have become to distance themselves from the unpopular, 2700-page health care law:

  • Bloomberg ran a story last week about how President Obama is afraid to talk about Obamacare to average voters; he mentions the law at political fundraisers, but “he’s just not making the sales pitch in public.”  Even liberals have been flummoxed by the President’s silence on Obamacare; one asked rhetorically, “Why not just own it?”
  • Former Senator Blanche Lincoln blasted the Administration for having “4,200 pages of pending, new regulations to be put on the books that just create huge uncertainty.”  She also sounded skeptical of Obamacare: “We have to be willing to look as we make this journey in health care, not only what we’ve done that’s good, but that things that are not going to work.”  Of course, as many would note, Lincoln voted for Obamacare, and thus bears responsibility for the more than 10,000 pages (NOT a mere 4,200 pages) of new federal regulations and notices that have been issued since March 2010 implementing the law’s mandates and requirements.
  • Two weeks ago, five Democrat Senators wrote to the Administration asking for another Obamacare waiver, finally conceding that the law “may cause disruption for farmers and others in the agricultural sector” by causing members of farmer co-operatives to lose their current coverage.  Among the signatories was New York’s Chuck Schumer, who just last March was claiming that “As people learn about the bill…it’s going to become more and more popular….Those who voted for health care will find it an asset, those who voted against it will find it a liability.”  By asking for a waiver, Schumer has now admitted Obamacare is a political liability for him, because as his constituents learned more about the bill, they found out they could lose their current health insurance coverage thanks to a law he voted for.
  • The most recent Kaiser health tracking poll found that only a bare majority of Democrats (52%) approve of the law, and that approval among Democrats dropped by 13 points in just one month.

Last year Speaker Pelosi famously said we had to pass the bill to find out what’s in it.  More than one year later, many Democrats are finally finding out what’s in the law, and have discovered that they don’t like it any more than Republicans do.

Obamacare Has NOT Contained Skyrocketing Premiums

Health insurance premiums and Obamacare were again in the news over the holiday week.  The Administration made its first decision to publicize one 12 percent premium increase as “unjustified” under Obamacare’s new rate review procedures.  However, the Washington Post noted that HHS had previously approved an 11 percent increase and an 18 percent increase for other plans.  Separately, the National Association of Insurance Commissioners’ endorsement of actions to protect health insurance brokers drew criticism from the liberal organization Health Care for America Now, which stated the action was “tone-deaf to the skyrocketing health premium costs of average Americans.”

Both these events have one thing in common: They prove how Obamacare is not living up to its own promises.  Remember that candidate Obama repeatedly promised his health care plan would lower premiums by $2,500 per family, and do so within his first termSo the 18 percent premium increases the Obama Administration itself approved – and the “skyrocketing health premium costs” criticized by a pro-Obamacare group – all should be a thing of the past.  That they are not only reinforces the conventional wisdom that Obamacare is not helping struggling American families.

Sebelius Again Admits: Obamacare Will INCREASE the Deficit

In her comments on Medicare Administrator Berwick’s resignation yesterday, Secretary Sebelius claimed that Berwick’s actions implementing Obamacare “extended the life of the [Medicare] Trust Fund by 8 years.”  There’s only one problem with that allegation: Medicare actuary Foster has written that the Medicare provisions in the law “cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions under the PPACA) and to extend the [Medicare] trust fund, despite the appearance of this result from the respective accounting conventions.”

If Secretary Sebelius and the Administration want to use Obamacare’s Medicare savings provisions to extend the life of the Medicare trust fund – and not to fund the new entitlements created by the law – the Congressional Budget Office previously estimated what the fiscal impact would be:  “A net increase in federal deficits of $260 billion” through 2019.