Monthly Archives: October 2014

A Jab from Washington at State and Local Educators

Politico reported last week about how education leaders in red and blue states alike have pushed back against federal control in education policy. Given this environment, Washington would do well not to patronize state and local leaders’ ability to manage schools and their desire to do right by their students. Yet it appears that the Department of Education has done just that.

Consider a series of proposed requirements released last month for the federal School Improvement Grants program. In examining alternatives to the requirements, the Education Department noted that it could allocate funds “without establishing any new requirements governing their use.” However, the proposal stated, in such a circumstance state and local education authorities would have to implement the congressional requirements “without key regulatory support from the Department.” The relevant passage concluded: “We do not believe that states generally possess the capacity or expertise needed to meet this responsibility with the amount of rigor expected by Congress.”

The language sends a clear message that the Department of Education does not trust state and local education leaders’ competence to implement “evidence-based, whole-school reform strateg[ies]” without “key regulatory support” from Washington–or does not trust their intentions to act in the best interests of their schoolchildren. Either way, the message does a disservice to the many men and women who put in countless hours to reform America’s schools and educate our children. It also raises the question of whether “key regulatory support” from the Department of Education means advice and technical guidance, or more federal requirements and paperwork.

The Education Department’s attitude calls to mind Ronald Reagan’s comment about the nine most terrifying words in the English language: “I’m from the government, and I’m here to help.” Small wonder that parents and local politicians of both parties are giving that supposed assistance a second look.

This post was originally published at the Wall Street Journal’s Think Tank blog.

A Retiree Health “Fix” That Isn’t

Since the Affordable Care Act became law in 2010, supporters and opponents have argued about whether the measure would lead employers to drop health coverage for workers. This issue has returned to the news; Wal-Mart recently decided to drop coverage for some of its part-time workers, and The Wall Street Journal reported this week that some firms, seeking to avoid employer penalties under the law, have encouraged employees to enroll in Medicaid.

While their private-sector counterparts have received more attention, public-sector employees–particularly retirees–could face similar problems with dropped coverage. The Atlantic reported last week on the trend of cities in financial distress, from Detroit to Chicago to Sheboygan, Wis., reducing or eliminating coverage and seeking to use the insurance exchanges to get out of their health-care obligations to retirees. As one pension expert quoted in the Atlantic noted, “every public-sector employer is looking at the exchanges as a potential way to get out of the unfunded liabilities that the public sector is bearing.”

But transferring state and municipal retirees to insurance plans on the exchanges doesn’t reduce the amount of unfunded liabilities; it shifts the cost from state and local governments to Washington. Many of the retirees in question could qualify for federal premium and cost-sharing subsidies for their exchange insurance policies. Even by Washington standards, the magnitude of the problem is daunting: A 2012 Pew study found that state governments held $627 billion in unfunded retiree health obligations; adding local government health plans could push those obligations toward $1 trillion.

State governments are grappling with a difficult revenue environment, while the federal government faces long-term fiscal challenges caused by demographic shifts. Given these dynamics, what looks to some mayors like a quick fix to their budget woes–shifting retirees to the federal exchanges–could, in the broader fiscal sense, amount to shifting deck chairs on the Titanic. If efforts by cities and states ultimately encourage private-sector firms to drop health coverage for their workers and retirees, they will add to our nation’s collective entitlement obligations—and could end up sinking our federal fiscal ship.

This post was originally published at the Wall Street Journal’s Think Tank blog.

The Obamacare Benefit Mandate Mess

President Barack Obama promised that his Affordable Care Act would work to reduce health costs. But a recent Kaiser Health News article outlined one way in which the law–and the way the administration and states have implemented it–is helping to increase costs.

The issue surrounds benefit mandates at the state level, which require insurers offering policies in that state to cover a particular type of treatment, provider, or service. While many of these mandates may sound appealing, they incrementally raise the cost of insurance–for procedures that some people might not wish to purchase, feel they need, or find morally objectionable. A 2009 Congressional Budget Office analysis found that the ACA’s package of mandated benefits would raise premiums on the individual health insurance market 27% to 30% because individuals would be required to purchase richer coverage and because that richer coverage would induce additional consumption and demand for care.

The Affordable Care Act contains a provision designed to dissuade states from enacting additional benefit mandates. Section 1311(d)(3)(B) of the law directs states to reimburse the federal government for its costs, in the form of additional exchange insurance subsidies, associated with any new benefit mandates enacted. However, as Kaiser Health News reported last month, “some states are simply excluding from the mandates plans that the states would have to pay for.” The end result: conflicting requirements and benefit packages for different categories of coverage, creating confusion for consumers and insurance companies.

In addition, the federal Web site offering information on state-mandated benefit packages reveals that the administration has exempted many types of mandates from the Section 1311 repayment requirement. For example, states can enact provider requirements mandating coverage by a particular type of health professional, as well as dependent coverage requirements (e.g., for newborn coverage, domestic partners, etc.), without having to pay the federal government for the additional subsidy costs associated with the new requirements.

Obamacare raised individual market insurance premiums by mandating additional benefits, but some states now view these stronger insurance requirements not as a ceiling but as a new floor. Yet by imposing new mandates that will raise premiums further, their actions may make the Affordable Care Act increasingly unaffordable for consumers—and for the taxpayers funding insurance subsidies.

This post was originally published at the Wall Street Journal’s Think Tank blog.

Obamacare Enrollment and the “Soft Bigotry of Low Expectations”

The infamous bungled launch of HealthCare.gov came exactly a year ago. While this year’s open enrollment doesn’t start until Nov. 15, administration officials, mindful of last year’s “debacle,” are already working to lower expectations.

Health and Human Services Secretary Sylvia Mathews Burwell declined, when speaking with reporters last week, to endorse the Congressional Budget Office’s enrollment target of 13 million participants in insurance exchanges next year. She also declined to say when a new target might be announced.

It’s perhaps not surprising that the administration is seeking to tamp down expectations. This year’s open-enrollment period starts later than last year’s did; it runs for only three months, compared with six in 2013; and it falls in the middle of the Thanksgiving and Christmas holidays. When it comes to enrollment and outreach, most of the “low-hanging fruit“–individuals with a strong desire to purchase health insurance–have already signed up.

The fact that this year’s open-enrollment period is also the first Obamacare re-enrollment period will also drive traffic to the online exchanges–and could create confusion. Even advocates of the law have talked about the “massive technological challenges” associated with such an effort. And individuals who do not actively re-enroll through HealthCare.gov and choose instead to remain in their 2014 plans through 2015 could face significant premium increases.

President Barack Obama came into office hoping to restore Americans’ faith in government. Yet last fall the federal government’s ability to provide basic functionality to a Web site was viewed as nothing short of miraculous, and this fall the administration has declined to say whether 2015 insurance enrollment will meet expectations. The administration appears to be hoping that Obamacare will benefit from low expectations–and that in itself says a lot about the status of President Obama’s legacy.

This post was originally published at the Wall Street Journal’s Think Tank blog.