Monthly Archives: June 2016

Will Medicare Premium Increases Be an Issue in November?

Buried in the Medicare trustees report released Wednesday are a few lines that could cause political controversy. “In 2017 there may be a substantial increase in the Part B premium rate for some beneficiaries,” the actuaries write—which means seniors will find out about increases shortly before Election Day.

Higher-than-expected Medicare spending in 2014 and 2015 set the stage for a large premium adjustment in 2016. But, notably, the absence of inflation thanks to the drop in energy prices last year meant that seniors receiving Social Security benefits did not receive an annual cost-of-living adjustment.

The Medicare statute has a “hold harmless” provision that prevents Part B premiums from rising by more than the amount of a Social Security cost-of-living adjustment. For most beneficiaries, the provision meant that in 2016, they received no such adjustment—but also did not pay a higher Part B premium. However, nearly one-third of beneficiaries—new Medicare enrollees, “dual eligibles” enrolled in both Medicare and Medicaid (in places where state Medicaid programs pay the Medicare Part B premium), and wealthy seniors subject to Medicare means-testing—do not qualify for the provision.

The New York Times noted last fall that the hold-harmless provision, by protecting most beneficiaries, exposed some to higher increases: “If premiums are frozen for 70 percent of beneficiaries, premiums for the other 30 percent must be raised more to cover the expected increase in overall Medicare costs. In other words … the higher Medicare costs must be spread across a smaller group of people.”

Congress, seeing a dynamic in which some seniors could face a nearly 50% increase in premiums, crafted a provision to forestall such a high and sudden spike. The Bipartisan Budget Act capped Part B premium increases for 2016, paid for by a loan from the Treasury that would be repaid by seniors in future years.

The legislative language used, however, allows premium spikes to come back with a vengeance. The Bipartisan Budget Act provided that the Medicare Part B “smoothing” provision would be renewed in 2017—but only if Social Security beneficiaries received no cost-of-living adjustment at all. The trustees report out Wednesday says that beneficiaries are projected to receive a very modest adjustment: 0.2%. Although that change is relatively small, it means that the “smoothing” provisions in last year’s budget deal do not apply—and, as the Wednesday Medicare report notes, premiums for some beneficiaries “need to be raised substantially,” up to nearly $150 per month.

Before the trustees’ report was released, some experts had predicted that a series of payment reductions by the Independent Payment Advisory Board (IPAB) under Obamacare would spark talk of “death panels” in political campaigns this fall. Spending levels did not require the board to convene, making that issue moot for now. But that doesn’t mean that Medicare won’t be an issue on the campaign trail. Democrats raised the Part B premium issue last year; expect to hear much more about it before November.

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

An Important Test in the Fight Against Obamacare Bailouts

On Wednesday, a House Republican task force is scheduled to release its recommendations regarding a health-care alternative that Congress and a new president can enact next year. It’s an important step in the fight against Obamacare, but a much more immediate, though less publicized, battle will also occur this week — one over the use of the Judgment Fund to pay out certain claims or settlements. This fight will test whether House Republicans can take concrete actions to undermine Obamacare.

The battle will occur in an unlikely venue: Consideration of the Financial Services and General Government appropriations measure, expected on the House floor beginning Wednesday. With that piece of legislation, the House can pass a provision I’ve written about recently: a prohibition on the use of the Judgment Fund to pay out rewards related to “risk corridor” lawsuits.

Some background on the issue, and the lawsuits: Risk corridors are one of two transitional programs designed to cushion insurers’ losses in Obamacare’s first three years. Through risk corridors, plans achieving high profits on insurance exchanges in the years 2014–16 would forfeit some of those gains, which would subsidize insurers who suffered large losses. At least, that’s the way it was supposed to work.

The reality has proven far different. While the administration repeatedly claimed that risk corridors would be budget-neutral — that is, payments to insurers with losses would equal payments into the system by insurers with gains — that hasn’t happened and isn’t likely to happen. The balky insurance exchanges, the administration’s unilateral change allowing some individuals to keep their pre-Obamacare insurance temporarily, and enrollment by sicker-than-average individuals all mean that insurers have lost billions selling Obamacare plans. As a result, insurers put in claims totaling $2.87 billion for 2014, asking the government to reimburse them. But because few insurers made profits, plans had paid only $362 million into the risk-corridor program, meaning that the administration could pay only 12.6 percent of the risk-corridor payment requests in 2014.

In a November 2015 memo, the Obama administration stated that the $2.5 billion in unpaid 2014 risk-corridor claims represented an outstanding obligation of the federal government. But an appropriations restriction enacted by Congress in 2015 prevents the Centers for Medicare and Medicaid Services (CMS), which manages Obamacare and the exchanges, from using additional taxpayer funds on unpaid risk-corridor claims.

Here’s where the Judgment Fund comes in. Multiple insurers have filed lawsuits seeking their unpaid risk-corridor claims from the federal government. The Obama administration, while sympathetic to their case, remains hamstrung by the language that prohibits CMS from bailing out insurers. But the Judgment Fund — administered by the Treasury, not CMS — currently contains no such restriction.

And that’s why the Financial Services appropriations bill this week matters in the fight against Obamacare. Enacting a restriction on the use of the Judgment Fund to pay any claims or settlements related to the risk-corridor lawsuits would prevent the Obama administration from using the fund as a back-door insurer bailout. Democrats have essentially encouraged the administration to do just that — settle the cases, pay the claims from the Treasury to circumvent the prohibition on a CMS-funded bailout, and give insurers a big, wet, multi-billion-dollar, taxpayer-funded kiss.

While Congress has multiple policy justifications — an aversion to both bailouts and Obamacare — to prohibit the use of the Judgment Fund to pay risk-corridor claims, it also has constitutional prerogatives to protect. The text of Obamacare nowhere contained an explicit appropriation for risk corridors, which is one reason CMS had to create a system by which incoming funds from some insurers had to finance funds outgoing to others. Then Congress went even further and explicitly included a prohibition on taxpayer-funded bailouts. Congress did this not once, but twice: first in December 2014 and then again last winter.

The Obama administration would like nothing better than to chuck those explicit congressional restrictions out the window and use the Judgment Fund to bail out its Obamacare partners-in-crime, Big Insurance. While the Congressional Research Service and the Comptroller General of the Government Accountability Office have both ruled that the Judgment Fund cannot be used to spend money where Congress has explicitly declined to appropriate funds, the House should not rest on its laurels and assume that this imperial president will follow the guidance of these nonpartisan experts. It can, and should, go further to protect taxpayer funds and rein in the administration.

Even as it unveils its alternative to the law, House Republicans have the chance to take a critically important step to undermine Obamacare this week. Both to save the country from Obamacare and to preserve its constitutional power of the purse, the House should match deeds with words and prevent the Judgment Fund from being used for a multi-billion-dollar Obamacare bailout.

This post was originally published at National Review.

The Daunting Math Behind the House Republican Health Plan

A House Republican alternative to Obamacare is coming this week, and some reports suggest it will include a refundable tax credit to subsidize health insurance. This would present some tough political and policy choices about whether and how to pay for a new program of tax credits.

Changing the tax treatment of employer-provided health insurance could provide one of the largest potential sources of financing for a new refundable credit. It also would bring hefty trade-offs. On the political side, capping the deductibility of employer-based health plans to finance refundable credits that are considered government spending would not please some Republicans. Put another way: Repealing Obamacare’s tax increases to replace them with other revenue increases is unlikely to go over well with conservative voters, as I wrote late in 2014.

On a more technical level, such tax changes pose a “Goldilocks” problem. Some believe that an Obamacare alternative could cap the deductibility of employer-based insurance in a way that would raise enough revenue to fund subsidies for most, if not all, of those newly covered by the law, while leaving employer-based coverage unchanged for the vast majority of plans and workers. Achieving one of these goals would be difficult; achieving both simultaneously could be impossible.

Financing a refundable tax credit through reforms to Medicaid would raise other concerns. Some noteworthy examples suggest that giving states additional flexibility over benefit parameters would flatten the growth of Medicaid spending. But the Congressional Budget Office might conclude that such changes would cause states to reduce the number of individuals covered by Medicaid. Liberal advocates of Obamacare’s coverage expansions are almost certain to argue this. And if achieving coverage gains is an objective of an Obamacare alternative, budget scorekeepers are likely to note that reforming Medicaid to finance a refundable tax credit could work at cross-purposes.

House Republicans could decide to use Medicare savings to finance a new refundable tax credit. That, however, could lead to charges of hypocrisy because of the political attacks Republicans have leveled against President Barack Obama for funding the 2010 health-care law this way and because of the optics of using one entitlement program to fund another. Likewise, Republicans could, in theory, propose a new refundable credit without any method of paying for it—but such a proposal may not receive enough support to ensure passage.

It’s also possible that House Republicans’ proposal may attempt to obscure the conflicts and trade-offs that come with crafting a health plan. Mr. Obama arguably did that as a presidential candidate in 2008, and it’s a major reason his health-care efforts enjoyed widespread popularity through early 2009. Once the messy trade-offs necessary to construct the law—the individual mandate, tax increases, and Medicare reductions—were clear, the effort’s approval ratings plummeted. They remain low today. Given what happened with Obamacare’s crafting and rollout, Republicans’ failure to acknowledge the policy trade-offs necessary to enact an alternative to that law could win a short-term political battle—but cost them a long-term policy war.

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

How to Stop the Obamacare Bailouts

In the coming decade, actions set in motion by the Obama administration could cost the American taxpayer over $170 billion in publicly funded health-insurance-company bailouts — a scandal I described in detail in these pages last week. Fortunately for taxpayers, however, a future administration could shut off the gushing taps of bailout dollars that President Obama has turned on. Because the bailouts in large part revolve around unilateral administration actions — decisions solely made by the executive, without even the notice-and-comment process used in normal rulemaking — the next administration could reverse those actions almost as quickly as they were introduced.

By taking the steps below, a Republican administration could preserve taxpayer funds — and restore the separation of powers this administration has so badly damaged.

RISK CORRIDORS 

One of two transitional programs for Obamacare insurers, risk corridors were designed to provide stability in the law’s early years — insurers with large profits would pay in some of their gains to reduce shortfalls by carriers with large losses. However, because insurers have lost money hand-over-fist on Obamacare exchanges, claims by loss-making insurers seeking payments have greatly exceeded receipts taken in by profit-making insurers. Congress has thus far prevented the Centers for Medicare and Medicaid Services (CMS) from using taxpayer funds to bail out the risk corridors, but insurers are taking legal action seeking unpaid risk-corridor funds as a result.

Action: Revoke the Administration Memo Declaring a Unilateral Bailout: In November, CMS issued a short memo noting that, in 2014, insurers requested $2.87 billion in risk-corridor payments, but because other insurers only paid in $362 million to risk corridors, the administration could only pay 12.6 percent of 2014 payment requests. The memo stated that the $2.5 billion in unpaid payments represent an “obligation of the United States Government for which full payment is required.”

The memo conceded that Congress had provided no appropriation for the $2.5 billion in risk-corridor shortfalls — indeed, Congress had specifically enacted language prohibiting CMS from spending additional taxpayer funds on risk-corridor payments. CMS had no authority to issue such a memo — and the next administration should revoke it.

Action: Refuse to Settle Risk-Corridor Lawsuits — and Refuse to Pay Claims: Insurers have filed several lawsuits seeking to collect their unpaid risk-corridor funds — lawsuits that the Obama administration will be inclined to settle. Congress prohibited CMS from using taxpayer funds to pay risk-corridor claims — but a legal settlement would be paid from the Judgment Fund of the Treasury, allowing the administration to circumvent the appropriations restrictions.

The Obama administration may, in its final days after November’s elections, attempt to settle the insurer lawsuits by paying risk-corridor claims from the Judgment Fund. Such an action would contradict opinions of the Congressional Research Service (CRS) and the Government Accountability Office (GAO). Both organizations have stated their belief that the Judgment Fund cannot be used to spend money on accounts and programs where Congress itself has declined to appropriate funds. Particularly given the views of these non-partisan legal experts, federal judges can, and should, look skeptically upon, and even overturn entirely, any conspiracy by the Obama administration and insurers to create a backdoor bailout without Congress’s explicit consent in the form of an appropriation.

The next administration should fight these insurer lawsuits tooth-and-nail, refusing to either settle the lawsuits or to use the Judgment Fund to pay any claims — unless and until Congress explicitly appropriates funds for that purpose. Under our Constitution, the power of the purse lies solely with Congress, not with unelected bureaucrats who believe they can dispense billions of dollars in taxpayer money to their crony-capitalist colleagues at will.

Potential Savings to Taxpayers: Insurers submitted $2.5 billion in unpaid risk-corridor claims for 2014. Given continued insurer losses in 2015 and 2016, a conservative estimate would suggest a total of $7.5 billion in unpaid claims for each of 2014, 2015, and 2016. Actions by a new administration could save taxpayers from this bailout totaling billions — possibly tens of billions — of dollars.

REINSURANCE 

Reinsurance, the second program intended to ease the transition to Obamacare, would, according to the text of the law, impose “fees” on all employer-provided plans from 2014 to 2016. The funds were designed to 1) repay the Treasury for the cost of another reinsurance program in place from 2010 to 2013, and 2) subsidize insurers selling Obamacare-compliant individual plans with high-cost patients.

Action: Reclaim Funds for the Treasury: While the text of Obamacare explicitly states the Obama administration should prioritize repaying the Treasury over repaying insurers, the administration has done precisely the opposite — putting payments to insurers ahead of repayments to taxpayers. The non-partisan experts at CRS have called the Obama administration’s actions a clear violation of the text of the law.

The next administration can and should limit this insurer bailout by reorienting its priorities in line with both the law and basic common sense — taxpayers deserve priority before insurers. It could also sue insurers to recoup bailout funds dispensed in error because of the Obama administration’s reckless disregard for the law.

Potential Savings to Taxpayers: While insurers appear likely to receive the full $20 billion in reinsurance payments provided for under the law from 2014 to 2016, the Treasury is set to receive far less than the $5 billion it was promised under the statute. Reorienting the reinsurance priorities to put taxpayers before insurers will likely save the public billions.

COST-SHARING SUBSIDIES

Obamacare requires insurers to provide reduced cost sharing — that is, lower deductibles and co-payments — to households with incomes under 250 percent of the federal poverty level. But the text of the law nowhere includes an explicit appropriation to subsidize the insurer-provided discounts. The Obama administration, refusing to be bothered by such trifling inconveniences as the plain text of a statute, will have already paid out $13.9 billion by the end of this fiscal year (September 30). A future administration could turn the bailout taps off within days of taking office.

Action: Turn Off the Bailout Taps Immediately: As noted in the deposition of an IRS employee recently released by the House Ways and Means Committee, the Obama administration decided to turn on these bailout taps despite the plain text of the law — and without undertaking any public notice-and-comment process. A future administration could turn the bailout taps off in a similar fashion within days of taking office.

Action: Settle the House Lawsuit: On May 12, in United States District Court, Judge Rosemary Collyer agreed with the House of Representatives in U.S. House of Representatives v. Burwell, an important constitutional case related to the cost-sharing subsidies. The House argued, and Judge Collyer agreed, that the Obama administration’s payments to insurers violated the Constitution — which, by prohibiting any payment without an explicit appropriation, gives Congress, and only Congress, the “power of the purse.”

By settling the House lawsuit, the next administration would provide another level of insurance that the bailout taps to insurers could not be re-started. The House’s suit requests a permanent injunction prohibiting the Treasury Department and the Department of Health and Human Services from spending any taxpayer funds on cost-sharing subsidies to insurers unless and until Congress provides an explicit appropriation. If the next administration agreed to such a measure by settling the House’s lawsuit in federal court, it would bind all future administrations to the same standard — restraining executive power and restoring the separation of powers.

Potential Savings to Taxpayers: The Congressional Budget Office estimates that cost-sharing subsidies will total $45 billion over the next four fiscal years — roughly the time span of the next administration — and $130 billion over a decade, meaning that a new administration could save taxpayers tens of billions, if not hundreds of billions, of dollars.

This series of actions from the next administration would save taxpayers more than $50 billion in total — $7.5 billion from risk corridors, up to $5 billion from reinsurance, and $45 billion in cost-sharing subsidies — and potentially triple that amount if the restrictions on cost-sharing subsidies become permanent.

Just as important, the next administration should also thoroughly investigate the actions taken by the Obama administration regarding these insurer bailouts for any hint of illegality. In the deposition released by the House Ways and Means Committee, the IRS’s chief risk officer noted “there was some risk to making these [cost-sharing subsidy] payments with respect to the . . . Anti-Deficiency Act,” which he recalled “has criminal penalties associated with it” for federal employees who spend money not appropriated by Congress. The chief risk officer noted that “we take [the Anti-Deficiency Act] very seriously.”

At minimum, the next administration should investigate just how seriously all Obama administration employees took the Anti-Deficiency Act, and whether they violated the law — not to mention the Constitution’s separation of powers — to shovel bailout funds to insurers. The IRS’s chief risk officer noted that then-attorney general Eric Holder and Treasury Secretary Jack Lew were personally involved in the decision to turn on the bailout taps for the cost-sharing subsidies. In addition to turning off those taps, a new administration should determine whether the Obama administration’s sweetheart deals for health insurers crossed the line from mere crony capitalism into criminal activity.

This post was originally published at National Review.

Paul Ryan, Donald Trump, and a Return to Congressional Government?

Last week’s announcement by House Speaker Paul Ryan that he will vote for presumptive Republican presidential nominee Donald Trump in November received widespread attention from political commentators. However, few noted the reason behind Mr. Ryan’s public endorsement of Trump: The speaker believes Mr. Trump will effectively cede policy-making authority to Republicans in Congress.

Writing in his hometown Janesville Gazette, the House speaker spent time outlining the agenda he has worked to frame since taking office in September—creating policy teams tasked with formulating an alternative to Obamacare, principles for tax reform, an anti-poverty agenda, and more. Noting that Hillary Clinton likely wouldn’t embrace the principles behind the Republican agenda, “we need a Republican president willing to sign [this agenda] into law,” he said.

Mr. Ryan clearly believes that “the House can be a driver of policy ideas”—in fact, he said as much in his article endorsing Trump. Mr. Ryan justified his endorsement of the businessman as a practical means to enact the agenda he and his fellow House Republicans are developing: “House Republicans are helping shape that Republican vision by offering a bold policy agenda, by offering a better way ahead. Donald Trump can help us make it a reality.”

What Mr. Ryan proposes—and what the speaker believes Mr. Trump has endorsed—would amount to the greatest ceding of a policy agenda from the executive to the legislature in over two decades. The arrangement echoes then-Speaker Newt Gingrich’s Contract with America, which dominated headlines following the 1994 Republican sweep of Congress. For a time, House Republicans so controlled the policy agenda that in April 1995, President Bill Clinton plaintively pleaded in a prime-time television news conference: “I am relevant. The Constitution gives me relevance.”

For all Mr. Trump’s ability to generate headlines or set Twitter alight, Mr. Ryan envisions a scenario where a President Trump, if not entirely irrelevant, would give Republicans in Congress the lead role in formulating a governing agenda. While Mr. Trump has thus far shown little interest in policy nuances, Mr. Ryan’s gambit appears based on the premise that, when and if he takes office, Mr. Trump will continue to outsource most of his agenda to Congressional Republicans. We’ll see if this arrangement will wear well for Speaker Ryan, Republicans in Congress, or Mr. Trump himself.

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

Totaling Up $170.8 BILLION in Obamacare Bailouts

Obamacare has been in the news — and the courts — quite a lot recently. While much of the press attention has focused on the controversial contraception mandate, a potentially bigger issue remains largely unreported — namely, that the Obama administration has set in train an unholy trinity of bailouts that could pay health-insurance companies $170.8 billion in the coming decade.

Much of the litigation surrounds the legality — or more specifically, the lack of legality — of these bailouts. On May 12, the administration lost a case in United States District Court, U.S. House of Representatives v. Burwell, in which Judge Rosemary Collyer ruled that payments to insurers for cost-sharing subsidies without an express appropriation from Congress violated the Constitution. And recently, multiple insurers have filed suit against the government in the Court of Federal Claims, seeking payment for unpaid “risk corridor” funds, designed to cushion insurers from incurring major losses, or major gains, during the exchanges’ first three years.

What exactly do all these Obamacare lawsuits entail? And how much taxpayer money is the Obama administration shoveling to insurers in an attempt to keep them participating in its moribund exchanges? Herewith, a 101 tutorial on the more than $170 billion in Obamacare bailouts.

RISK CORRIDORS

What’s the issue? Risk corridors were one of two temporary programs (I discuss the other below) designed to provide stability to the law’s exchanges in their first years. From 2014 through 2016, the risk-corridor program is designed to minimize large insurer losses, as well as large insurer profits. Initially, the administration claimed risk corridors would be implemented in a budget-neutral manner — that is, outgoing payments to insurers with losses would equal incoming payments from insurers with gains. But the healthcare.gov catastrophe, coupled with policy changes unilaterally made in the fall of 2013, caused the Centers for Medicare and Medicaid Services (CMS) to float the idea of using taxpayer funds in risk corridors to offset insurer losses — in other words, bail them out.

How much has the government paid? Nothing, thankfully — at least not yet. Fearful that the administration could utilize risk corridors to implement a taxpayer-funded bailout of insurers, Congress passed in December 2014 (and subsequently renewed this past winter) appropriations language that prevents CMS from using additional taxpayer funds to pay insurers’ risk-corridor claims.

How much could the government pay? In 2014, insurers submitted $2.87 billion in risk-corridor claims, but because insurers with gains paid in only $362 million, insurers with losses received only that much in payments — approximately 12.6 percent of the requested funds. Last week insurers in North Carolina and Oregon sued to recover their unpaid risk-corridor funds, following a $5 billion class-action suit filed in February by an Obamacare co-op insurer in Oregon. While CMS has not yet settled those lawsuits seeking unpaid risk-corridor funds, in November it issued a policy memo stating that those unpaid funds represent an obligation of the federal government. Insurer losses more than doubled last year when compared with the 2014 losses.

Although CMS has not yet released data on risk-corridor claims for 2015 or 2016, it seems likely that risk corridors will incur losses similar to those for 2014. A McKinsey study released last month, “Exchanges Three Years In,” found that insurer losses more than doubled last year when compared with the 2014 losses — making $2.5 billion in claims the likely low estimate for risk corridors. A conservative assumption would estimate a total of $7.5 billion in unpaid risk-corridor claims — $2.5 billion each for 2014, 2015, and 2016.

Although the appropriations language in place currently prevents CMS from using taxpayer funds for risk-corridor claims, it is possible — even likely — that the administration could attempt to settle the insurer lawsuits as one way of getting bailout funds to insurers. Any settled lawsuits would be paid from the Judgment Fund of the Treasury, not out of a CMS budget account, thus circumventing the appropriations restrictions.

REINSURANCE

What’s the issue? The second Obamacare temporary stabilization program, called reinsurance, requires “assessments” — some would call them taxes — on all employer-provided health-insurance plans. These assessments are designed to 1) reimburse the Treasury for the $5 billion cost of a separate reinsurance program that operated from 2010 through 2013 and 2) reimburse insurers with high-cost patients from 2014 through 2016.

How much has the government paid? In 2014, insurers received nearly $8 billion in payments from the reinsurance “slush fund.” The administration still holds nearly $1.7 billion in funds from the 2014 benefit year — money that will no doubt get shoveled insurers’ way as well. While the law explicitly stated that the Treasury should get reimbursed for its $5 billion before insurers receive payments from the reinsurance fund, the Obama administration has implemented the law in the exact opposite manner — prioritizing insurer bailouts over repaying the Treasury. The Congressional Research Service (CRS) has stated that this action represents a clear violation of the text of the Obamacare statute. The Obama administration chose to violate the plain text of the law and prioritize claims to insurers over the statutory requirement to repay taxpayers.

How much could the government pay? Between 2014 and 2016, insurers appear likely to receive the full $20 billion in reinsurance payments provided for under the law. On the other hand, the Treasury will receive far less than the $5 billion it was promised, because the Obama administration chose to violate the plain text of the law and prioritize claims to insurers over the statutory requirement to repay taxpayers.

COST-SHARING SUBSIDIES 

What’s the issue? The law requires insurers to reduce cost-sharing (such as deductibles and co-payments) for certain low-income individuals with incomes under 250 percent of the federal poverty level. While Section 1402 of the law authorized the Departments of the Treasury and Health and Human Services to remit payments to insurers for the cost of these discounts, it did not include an explicit appropriation for them. Judge Collyer’s May 12 ruling, though stayed pending appeal by the administration, prohibits future spending on cost-sharing subsidies by the federal government unless and until Congress enacts an explicit appropriation.

How much has the government paid? In fiscal year 2014, insurers received $2.1 billion in cost-sharing subsidies. In fiscal 2015, the cost-sharing subsidies totaled $5.1 billion, and this fiscal year, spending on the subsidies will total an estimated $6.1 billion — for a total paid out (through this September 30) of $13.9 billion. How much could the government pay? If Judge Collyer’s ruling is not upheld on appeal, this bailout program — unlike the other two — will continue without end. According to the Congressional Budget Office, spending on cost-sharing subsidies will total $130 billion over the coming decade, unless halted by a judicial ruling — or unless a new administration decides it will not spend funds that have not been appropriated by Congress.

There you have it. Combine a total of $33.3 billion paid to date ($20 billion in reinsurance plus $13.3 billion in cost-sharing subsidies) with potential future bailouts of $137.5 billion ($7.5 billion in risk-corridor funds plus an additional $130 billion in cost-sharing subsidies) and you come up with a not-so-grand total of $170.8 billion in taxpayer-funded Obamacare bailouts to insurers.

The scope of both the bailouts and Obamacare’s failures looks truly staggering. Despite literally billions of dollars coming from three separate bailout programs, insurers still cannot make money selling Obamacare products. Most insurers continue to lose funds hand over fist, while some, such as UnitedHealthGroup, the nation’s largest health insurer, have all but exited the exchanges entirely.

The scope of the bailouts put the lie to Joe Biden’s claims just prior to Obamacare’s passage, when he claimed to ABC News, “We’re going to control the insurance companies.” Au contraire, Mr. Vice President. By requiring more than $170 billion in bailouts just to keep the sputtering exchanges afloat, the insurance companies are controlling you — and us, the taxpayers, as well.

This post was originally published at National Review.

What If GOP Alternatives to Obamacare Cover Fewer People–And That’s Not a Flaw?

Republican lawmakers crafting alternatives to Obamacare face a fundamental decision: whether to focus on expanding coverage or containing costs. Their choice may be driven, at least in part, by budget scorekeepers.

The Congressional Budget Office released a report in December 2008 on key issues in thumbnail_Figure 2-2.jpganalyzing major health-care proposals. Included was a chart projecting individuals’ willingness to enroll in health insurance at various levels of subsidy (in technical terms, an elasticity curve). That curve suggested that insurance enrollment would remain below 40% until subsidies reached 70% of cost and that even if costs were 100% subsidized, about a fifth of individuals would decline to enroll. (And that level of subsidy is probably much greater than many Republicans would be willing to offer.)

This scenario is what prompted President Barack Obama to accept an individual mandate after he had campaigned against it; Nancy-Ann DeParle, one of his advisers overseeing health-care efforts, wrote in April 2009 that “the Congressional Budget Office (CBO) will likely take the position that without an individual responsibility requirement, half of the uninsured will be left uncovered.”

Having fought a mandate to purchase health insurance on both policy and constitutional grounds, Republicans are unlikely to include one in their alternative. This means that CBO is likely to analyze, or score, such a proposal as covering fewer individuals than Obamacare. While the GOP plan taking shape may not contain the legislative detail necessary to receive a CBO analysis, any Republican alternative is likely to be criticized by Obamacare supporters for not covering as many Americans.

Republicans could, however, embrace such an outcome as a feature rather than a flaw to their proposal. CBO concluded last September that eliminating the mandate would dramatically reduce coverage levels; this could be cited as grounds to argue that most of Obamacare’s coverage gains have come due to government coercion.

Some conservatives may argue that lowering costs, not increasing health coverage, is the proper metric by which to gauge health-care reforms. The plan I worked on for America Next, a conservative think tank, took this approach, focusing on reducing costs rather than on implementing a major coverage expansion.

Other details may spark controversy, but lowering costs vs. increasing coverage is a fundamental distinction likely to define any alternative to Obamacare. The option Republicans choose and the way they frame the issue will go a long way toward shaping the policy and political battles to come.

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