Monthly Archives: December 2012

Democrats’ Medicare Chutzpah

One little-noticed element in the “fiscal cliff” debate hasn’t attracted much attention – the glaring hypocrisy of Democrats when it comes to the Medicare program.  Last Thursday, Democrats in the House offered a motion to recommit spending reduction legislation (full text available here) that would have required HHS to disclose:

1)      The number of Medicare beneficiaries in such district…who, at any time during the ten-year period beginning on the first day of the first fiscal year that begins after the date of the enactment of this Act, will A) lose coverage under the Medicare program… or B) experience an increase in premiums, cost-sharing, or other out-of-pocket costs under such respective program as a result of the implementation of this Act; and

2)      The name and location of each hospital and nursing facility that would experience a reduction in payments under the Medicare program…as a result of the implementation of this Act.

It’s more than a bit rich for the Democrat leadership to offer such a motion, given that Obamacare:

  • Takes “half a trillion dollars out of Medicare” to pay for Obamacare’s new programs, according to none other than Nancy Pelosi;
  • Raises Part D premiums, according to the Congressional Budget Office, so that Big Pharma can benefit from its “rock-solid deal” struck behind closed doors with President Obama and Congressional Democrats;
  • Cuts Medicare Advantage by more than $300 billion, which will reduce the program’s enrollment by half and plan choices by two-thirds, causing millions of seniors to lose their current health insurance; and
  • Makes up to 40 percent of providers unprofitable over the long-term, according to the non-partisan Medicare actuary, potentially forcing providers “to withdraw from providing services to Medicare beneficiaries.”

The Medicare program is in dire need of reform to make it fiscally sustainable.  But no one should take lessons on entitlement “reform” from the crowd that – by its own admission – raided the Medicare program to pay for yet more irresponsible entitlement spending.

Even Supporters Fear Obamacare’s Impact on States

An eye-opening article in yesterday’s Los Angeles Times shows the dilemma states are facing as they begin to make crucial policy and budgetary choices surrounding Obamacare.  The article notes that the law “takes states into uncharted territory” as they attempt to estimate the fiscal impact of Obamacare’s massive Medicaid expansion:

California, which plans to expand coverage to hundreds of thousands of people when the law takes effect in 2014, faces myriad unknowns.  The Brown administration will try to estimate the cost of vastly more health coverage in the budget plan it unveils next month, but experts warn that its numbers could be way off.  Officials don’t know exactly how many Californians will sign up for Medi-Cal, the public health insurance program for the poor.  Computing the cost of care for each of them is also guesswork.  And California is waiting for key rulings from federal regulators that could have a major effect on the final price tag, perhaps in the hundreds of millions of dollars….

Unanticipated costs associated with the healthcare changes could undermine California’s efforts to improve its standing on Wall Street and keep the economy moving.  They could force fresh cuts in services if they consume much more of the state budget than Brown is able to approximate….

Gov. Jerry Brown expressed a new concern in an interview last week.  He said recent signs from Washington suggest the federal government may not pay as much of the costs associated with the new law as originally promised, sticking states with a larger share of the bill.  “As the guardian of the public purse here, I have to watch very closely what may come out of Washington,” the governor said.  “So we’re going to move carefully.  We want to make sure the federal government is on board.”

These statements of caution and concern come from a major supporter of the law.  And little wonder: Over the past two fiscal years, states had to close a combined $146.3 billion in budget gaps – yet Obamacare is about to impose new unfunded mandates on states of at least $118 billion.  Both the numbers, and the diffident attitude from the governor of the largest state in the union, should serve as a cautionary tale for states contemplating the massive fiscal hit Obamacare will impose on their budgets.

Obamacare’s Christmas Present: Higher Premiums

Even as Americans gather to celebrate the Christmas holiday, they will soon face an unwelcome surprise come the new year: premium increases sparked by Obamacare.  Earlier this month, the Los Angeles Times reported on a 20% increase sought by California Blue Shield – and what was one of the reasons given for the jump?  You guessed it:

The company also expects higher costs from an influx of new customers under the federal healthcare law in 2014. “It’s a once-in-a-lifetime change in the healthcare market that will bring a lot of volatility, and we need higher reserves for that,” [a spokesman] said.

If Obamacare results in only a 20% premium increase, customers may be lucky.  Recently, Aetna CEO Mark Bertolini told an investor conference that premiums could double as a result of Obamacare:

While subsidies in the law will shield some people, other consumers who make too much for assistance are in for “premium rate shock,” Mark Bertolini, who runs the third-biggest U.S. health-insurance company, told analysts yesterday at a conference in New York….“We’ve shared it all with the people in Washington and I think it’s a big concern,” the CEO said.  “We’re going to see some markets go up as much as 100 percent.”

Candidate Obama promised repeatedly that his health plan would CUT premiums by an average of $2,500 per family within his first term.  But premiums have already risen by $3,065 since Barack Obama was elected President.  And the recent news suggests premiums will only skyrocket further in the coming months and years.  In other words, Obamacare is shaping up to be a perpetual lump of coal in Americans’ Christmas stockings.

They Said It…

The New York Times has an interesting story today on market research taken by groups attempting to build support for Obamacare, and encourage Americans to sign up for insurance plans in the law’s Exchanges.  Among the more interesting passages were the following two paragraphs:

Lake Research Partners recommended that Enroll America not cite specific dollar amounts at all when they talk to the uninsured about new coverage options. “Talking about ‘free or low cost’ plans may be more motivating,” the survey authors wrote in a report.

Another finding: respondents generally did not like hearing that the law would require most Americans to buy health insurance or pay a fine starting in 2014.  “The data show warning signs for messaging around the mandate,” the survey authors wrote.

One of the many problems with this messaging is its inaccuracy.  As a major Bloomberg article noted last month, most Americans will be required to pay thousands of dollars per year for health insurance under Obamacare – at least in part because the law’s mandated benefits will raise individual health insurance premiums by $2,100 per family.  And those who can’t afford insurance will pay a tax, not a fine, the President’s claims notwithstanding.

Just as important, the fact that liberal supporters of the law are trying to hype its “free” benefits tells you everything about Obamacare you need to know.

Another Problem Obamacare Made Worse

In the Wall Street Journal this morning, Laura Meckler has a must-read article outlining the nation’s skyrocketing spending on health care:

All together, nearly one in four federal dollars is devoured by health-care spending. That is more than double the 10% of the budget it consumed in 1960, before Medicare and Medicaid were created. The Congressional Budget Office projects that in just a decade, health care will consume nearly one in three federal dollars, pressuring government spending in other areas, such as infrastructure and the military. Any deal to avert the fiscal cliff likely would do little to alter this trajectory, meaning pressure from health-care costs likely will continue to weigh on Washington and spur yet more budget wrangling.

Demographic changes prompted by the impending retirement of the Baby Boom generation, coupled with continually rising health costs, will put a squeeze on the federal fisc for decades to come. Yet, as the Journal article notes, any supposed “grand bargain” reached in the coming days and weeks “likely would do little to alter” the unsustainable nature of federal health spending, which will “continue to weigh on Washington” — and subsume other important budgetary priorities — for the foreseeable future.

Recall that nearly four years ago, the Obama Administration and its liberal media allies boldly pledged that “health care reform is entitlement reform.” Those fanciful claims have long since been obliterated, by a law that took over half a trillion dollars from Medicare to fund yet more spending on health care entitlements. This morning’s article makes plain this Administration’s failed fiscal record — one of skyrocketing spending and mountains of debt, exactly the types of “reform” we don’t need.

On Raising Premiums — And Raising the Retirement Age

Earlier this week, the Center for American Progress released a report about the potential effects of raising the retirement age. Among the reasons cited in the report to oppose an increase in the retirement age was the following:

Since 65 and 66-year-olds would be older and on average less healthy than the nonelderly population in the exchanges, shifting these individuals to the exchange pools would increase premiums for all enrollees in the exchange by an average of about 3 percent. Premium increases in the exchanges would be highest for the youngest exchange beneficiaries, as those younger than age 30 would see an increase of 8 percent and those between the ages of 30 and 34 would see an increase of 5 percent. Such substantial increases in premium costs for young and relatively healthy individuals could result in these individuals choosing not to purchase health insurance — a process known as adverse selection — which would increase costs for the less healthy individuals remaining in exchanges. This scenario could threaten the viability of the exchanges.

These claims are particularly interesting for CAP to make, because there’s one law that guarantees skyrocketing premiums for young Americans — and it’s called Obamacare. An Associated Press study, and story, the week after the law passed noted the impact:

Under the health care overhaul, young adults who buy their own insurance will carry a heavier burden of the medical costs of older Americans — a shift expected to raise insurance premiums for young people when the plan takes full effect. Beginning in 2014, most Americans will be required to buy insurance or pay a tax penalty. That’s when premiums for young adults seeking coverage on the individual market would likely climb by 17 percent on average, or roughly $42 a month, according to an analysis of the plan conducted for The Associated Press; The higher costs will pinch many people in their 20s and early 30s who are struggling to start or advance their careers with the highest unemployment rate in 26 years.

So if the Center for American Progress really wants to lower premiums for younger Americans — as opposed to attempting to defend America’s unsustainable status quo on entitlements — it should whole-heartedly endorse a repeal of Obamacare, and its onerous new regulations that will jack up premiums for millions of 20-somethings nationwide.

A Big Premium Fail for Obamacare — And the Commonwealth Fund

The Commonwealth Fund is out this morning with its annual study regarding premium increases – which shows once again how badly both Obamacare, and Commonwealth itself, have failed in their premium projections.  The study admits that “health insurance is expensive and has become less affordable, no matter where one lives.  Insurance premiums rose sharply in all states during these eight years [i.e., 2003 to 2011] and, because wages failed to keep pace, increase as a share of median household income.” But the report claims Obamacare will change all that:

If premium growth were to slow to 1 percentage point below projected levels if recent rates of increase continue, the cost of family coverage would drop an average of $700 annually by 2015 and $2,029 by 2020. Even greater amounts could be saved if the annual premium growth rates were to slow by 1.5 percentage points.  An average of $1,042 could be saved annually on family coverage by 2015.  The savings would more than double to $2,986 annually by 2020.

There are two problems with this approach.  First, under Commonwealth’s “best-case” scenario, premiums would still total $21,754 by 2020 – that’s an increase of $6,732 from 2011 alone.  But candidate Obama promised repeatedly that his health plan would cut premiums – not merely “slow the growth rate,” but CUT premiums in absolute terms – by an average of $2,500 per family within his first termA projected increase of “only” $6,700 under Commonwealth’s best case scenario comes nowhere near close to meeting candidate Obama’s pledge to cut premiums by $2,500 – rather, it breaks that promise by nearly $10,000 per family.

The second issue is the way in which the Commonwealth Fund, just like candidate Obama himself, has consistently moved the goalposts in the wrong direction –admitting every year that the premium savings it promises are just around the corner have not materialized:

  • In 2010, Commonwealth claimed that we could save $3,403 in premiums by 2020, and that under its best case scenario, premiums would total $19,938 per family in that year.
  • Last year, Commonwealth claimed that we could save $3,173 in premiums by 2020, and that under its best case scenario, premiums would total $20,620 per family in that year.
  • This year, Commonwealth claims that we could save $2,986 in premiums by 2020, and that under its best case scenario, premiums would total $21,754 per family in that year.

Notice a pattern here?

Given that Commonwealth’s supposed premium savings are disappearing faster than a pile of magic beans, why should we believe them — or the President — that Obamacare will EVER do anything to control the skyrocketing premiums harming struggling families?  Instead of holding campaign-style rallies in an attempt to raise taxes on job creators, President Obama could get to work on fulfilling his campaign pledge, and avoid socking middle-class families with tens of thousands of dollars in higher premium costs due to his unpopular law’s failure to deliver.

Henry Waxman, Liberals, and Medicaid

The Hill reported last night that liberals are calling for the massive Medicaid entitlement to be left unchanged in talks related to the fiscal cliff.  For instance, House Energy and Commerce Committee Ranking Member Henry Waxman said that “If you want to boil it down to one message: Keep your hands off the Medicaid program.”

This is an interesting statement from Mr. Waxman, given comments he made nearly four years ago.  In early 2009, during the markup of the “stimulus” bill, then-Chairman Waxman opposed an amendment to prohibit millionaires from receiving Medicaid benefits, on the grounds that “I think it is highly unlikely that you are going to find millionaires who would like to go on Medicaid.”  Unfortunately, however, he never explained why he thought that millionaires – who of course can afford to buy most any type of health insurance – would turn down Medicaid coverage, given that the program provides “free” coverage of medical treatments without charging premiums or other cost-sharing.

In other words, Henry Waxman wants to leave untouched an insurance program for millions of poor Americans even though – by his own admission – those who can afford insurance categorically reject Medicaid.  By any reasonable standards, that’s not “reform.”

Nancy Pelosi and Entitlement ‘Reform’

This afternoon, USA Today published an op-ed from former Speaker Pelosi expressing her opposition to an increase in the Medicare retirement age. Pelosi claimed that “We can do better — and we have. Democrats are the only ones who have enacted a plan that extends the solvency of Medicare without cutting benefits through [Obamacare].”

Pelosi’s claims are particularly ironic, because last November, one leading Democrat admitted that the party “took a half a trillion dollars out of Medicare in [Obamacare], the health care bill” to pay for Obamacare’s new programs. That speaker? Nancy Pelosi.

Pelosi is right about one thing: We CAN do better — better than Obamacare. And we should take no lessons on entitlement “reform” from someone who by her own admission “took half a trillion dollars out of Medicare” to pay for more new unsustainable federal programs.

HHS Encourages States to Raise Insurance Premiums

The New York Times has an interesting article this morning about various provider groups – chiropractors, acupuncturists, and others – lobbying states to be included in their list of mandatory “essential” health benefits.  Unfortunately, the Obama Administration is encouraging these efforts, by allowing states to free-ride on federal taxpayers for the costs of imposing these mandates.  Section 1311 (d)(3)(B) of Obamacare explicitly requires states to pay for the incremental costs of any added benefits above the minimum thresholds – because these added benefits will raise federal spending on Exchange insurance subsidies.  But according to page 5 of the Administration’s proposed rule on essential benefits, HHS now proposes to waive that requirement in virtually all cases:

We propose that state-required benefits enacted on or before December 31, 2011 (even if not effective until a later date) may be considered EHB, which would obviate the requirement for the state to pay for these state-required benefits….

In this proposed rule, we interpret state-required benefits to be specific to the care, treatment, and services that a state requires issuers to offer to its enrollees.  Therefore, state rules related to provider types, cost-sharing, or reimbursement methods would not fall under our interpretation of state-required benefits.  Even though plans must comply with those state requirements, there would be no federal obligation for states to defray the costs associated with those requirements….

We expect there will be few, if any, payments made for state-required benefits since required benefits enacted prior to December 31, 2011 will be part of EHB, and therefore will not require the state to incur any costs.

This wording means that 1) all mandates enacted prior to January 2012 are exempt from the Obamacare requirement, and 2) going forward, all provider-specific (as opposed to disease specific) mandates will also be exempt from the statutory requirement.  In other words, states now have the ability to jack up premiums – by imposing costly new mandates in their insurance markets – and stick the federal government with the tab for billions of dollars in higher subsidy spending.

Candidate Obama promised repeatedly that his health plan would CUT premiums by an average of $2,500 per family.  Unfortunately, however, empowering rent-seekers to impose new mandates at the state level – by allowing states to free-ride on the federal government’s largesse – won’t lower premiums for patients, and it won’t lower skyrocketing federal spending either.