Monthly Archives: December 2016

Note to Harry Reid: Thanks to Obamacare, People Are Dying on Wait Lists

He’s at it again—Harry Reid, that is. Thursday morning, the outgoing Senate minority leader claimed that if “you get rid of Obamacare, people are going to die.”

Apparently Reid forgot to heed Hillary Clinton’s warning about fake news, because the idea that thousands of people die from lack of health insurance has been rebutted by, of all people, a member of the Obama administration.

Richard Kronick, President Obama’s former director of the Agency for Healthcare Research and Quality, in 2009 published a paper that “found that uninsured participants had no different risk of dying than those [who] were covered by employer-sponsored group insurance.”

Harry Reid, Science Denier

As multiple articles by fact-checking organizations have explained, it’s very difficult to control for all the variables associated with health, mortality, and lack of insurance. It’s a tough question to analyze: Do the uninsured die because they lack health insurance, or do they die because they are more likely to be poor? As Kronick himself stated:

It seems likely that if we were able to control for additional factors, such as health-related behaviors (smoking, alcohol consumption, obesity, and risk-taking behaviors more generally), wealth, or value placed on health or health care, the estimated [mortality] effect of being uninsured would be reduced further. What is uncertain is whether the reduction would being the estimated hazard ratio all the way down to 1.0 or whether an independent effect of being uninsured would remain.

Even liberals like the Brookings Institution’s Henry Aaron have conceded that much of the evidence—including a study from the Oregon Health Insurance Experiment, which showed that access to health insurance had no measurable effect on physical health outcomes for patients—shows an unclear effect between insurance and mortality: “I am a strong advocate of measures to achieve universal insurance coverage and would rather that Kronick’s study and the Oregon project provided evidence in support of my policy preference. But, as far as mortality is concerned, they just don’t.”

Apparently things like evidence in support of one’s policy preferences present a novel concept to the outgoing leader. So much for the liberal allegation that conservatives are science deniers.

Obamacare Made Vulnerable People Die on Wait Lists

That said, if Reid wants to have a debate about Obamacare and dying, perhaps he should examine the thousands of individuals with disabilities who have been dying because Obamacare encourages discrimination against the most vulnerable. Because states get a higher federal match for expanding Medicaid to able-bodied adults than covering home-care needs for individuals with disabilities, more than half a million disabled Americans wait—and wait, and wait some more—to get access to needed care.

Except for those who die before they can access care. Last month, reports from Illinois noted that no fewer than 752 individuals with disabilities have died—yes, died—while on waiting lists to receive Medicaid services since that state expanded coverage under Obamacare. Ironically enough, on the very same day that Illinois’ legislature expanded Medicaid to the able-bodied under Obamacare, it cut medication funding to special-needs children.

This is “compassion” in the Obama administration’s eyes: Expanding services to the able-bodied while cutting services for special-needs kids.

As I have previously noted, this dynamic hasn’t just happened in Illinois. It has occurred all over the country. In Arkansas, Gov. Asa Hutchison pledged to cut waiting lists for individuals with disabilities in half. Instead, they have grown by 25 percent, even as the state expanded coverage to the able-bodied. In Ohio, Gov. John Kasich cut Medicaid eligibility for individuals with disabilities by 34,000, even as he unilaterally expanded the program to other Ohioans.

Making irresponsible claims about the effect of repealing Obamacare is bad enough. Making those claims in a vain attempt to justify a law that encourages discrimination against the most vulnerable really takes the cake. The American people deserve better than Reid’s false comments—and they deserve better than Obamacare.

This post was originally published at The Federalist.

Reforming Medicaid, Beginning on Day One

A recent article listing five ways in which Health and Human Services Secretary-designee Tom Price could reform health care surprisingly excluded solutions for our nation’s largest taxpayer-funded health care program—Medicaid. That’s right: While Medicare spends more federal dollars, state and federal taxpayers spend more on Medicaid overall. With federal program spending scheduled to top $400 billion next fiscal year, and Medicaid consuming a large and growing share of state budgets, Dr. Price should waste no time making critically important reforms.

Ultimately, conservatives should work to convert Medicaid into either a block grant or per capita cap, where states would receive fixed payments from the federal government in exchange for additional flexibility to manage their programs as they see fit. While Congress must approve the legislative changes necessary to create a block grant or per capita cap, Dr. Price and Centers for Medicare and Medicaid Services Administrator-designee Seema Verma—who has a great deal of experience managing state Medicaid programs—can take steps, beginning on Day One, to give states more flexibility and freedom to experiment.

The prime place for Price and Verma to start lies in Medicaid’s “1115 waivers,” so named for the section of the Social Security Act (Section 1115) that created them. Under the 1115 process, HHS can waive certain requirements under Medicaid and the State Children’s Health Insurance Program (SCHIP) for “any experimental, pilot, or demonstration project which, in the judgment of the Secretary, is likely to assist in promoting the objectives” of the programs.

Unfortunately, such waiver authority is only as effective as the Administration that chooses to exercise it—or not, as has been the case for much of the last eight years. One section of Obamacare actually increased the bureaucracy associated with 1115 waivers, requiring states to undertake a lengthy process, including a series of hearings, before applying for a waiver (because Obamacare itself was written in such a transparent manner). Subsequent legislative changes have sought to streamline the process for states requesting extensions of waivers already granted.

However, Dr. Price and Ms. Verma can go further in allowing states to reform Medicaid. They can, and should, upon taking office immediately propose a template waiver application for states to utilize. They can also publicly indicate their intent to approve blanket waivers—that is, waiver applications meeting a series of policy parameters will be automatically approved. While Congress should ultimately codify state flexibility into law—so no future Administration can deny states the ability to implement needed reforms—the new Administration can put it into practice while waiting for Congress to act.

As to the types of waivers the Trump Administration should look favorably upon, House Republicans’ “Better Way” proposal and a report issued by Republican governors in 2011 provide two good sources of ideas:

Work Requirements: Despite repeated requests, the Obama Administration has steadfastly refused to allow states to impose a requirement that able-bodied Medicaid beneficiaries either work, look for work, or prepare for work through enrollment in job-training programs. Because voluntary job-referral programs have led to impressive success stories, states should have the ability to impose work requirements for Medicaid recipients.

Cost-Sharing and Benefit Design: Whether through enforceable yet reasonable premiums, modest co-payments, Health Savings Account-like mechanisms, or a combination of all three, states should have greater freedom to utilize consumer-directed health care options for beneficiaries. These innovations would not only turn Medicaid into a product more closely resembling other forms of health insurance, they can also help reduce costs—thus saving taxpayers money.

Premium Assistance and Wellness Incentives: Current regulatory requirements for premium assistance—in which Medicaid pays part of the cost associated with an eligible individual’s employer-based insurance—have proven ineffective and unduly burdensome. States should have more flexibility to use Medicaid dollars to subsidize employer coverage, without providing additional wrap-around benefits. Likewise, states should have the ability to offer incentives for wellness and healthy behaviors in their Medicaid programs, just as successful employers like Safeway have done.

Payment Reforms and Managed Care: With health care moving away from a fee-for-service model, in which doctors and hospitals get paid for each service performed, states should have the ability to innovate. Some may wish to implement bundled payments, which would see Medicaid providing a lump-sum payment for all the costs of a procedure (e.g., a hip replacement and associated post-operative therapy). Others may benefit from a waiver of the current requirement that Medicaid beneficiaries have the choice of at least two managed care plans—a requirement that may not be feasible in heavily rural areas and states.

Program Integrity: With fraud endemic in federal health care programs, states should receive flexibility to track down on scofflaws—for instance, the ability to hire contingency fee-based contractors, and more scrupulously verify beneficiary eligibility and identity. By monitoring suspicious behavior patterns through the use of “big data,” these efforts could save both Washington and the states billions.

Reforming a program that will cost state and federal taxpayers an estimated $607.2 billion this fiscal year will not be easy, and will not happen overnight. But the sprawling program’s vast size and scope also demonstrate why the new Administration should start its work immediately. While Congress can and should fundamentally reform Medicaid, HHS can use blanket 1115 waivers to allow states to experiment as soon as they can. In this way, the “laboratories of democracy” can drive the innovation needed to bring Medicaid into the 21st century, lowering health costs and saving taxpayers money.

John Cornyn Illustrates Republicans’ Obamacare Problem in One Tweet

As the Senate’s second-ranking Republican, John Cornyn holds significant sway in policy-making circles. In his third term, and serving on both the judiciary and finance committees—the latter of which has jurisdiction over Medicare and Medicaid—Cornyn should have a good working knowledge of health policy.

All of that makes this tweet, sent Friday from his account, so surprising:

How can advocates tout Obamacare a success when, among many other flaws, it leaves 30 million people uninsured?

The tweet essentially complains that Obamacare wreaked massive havoc on the health care system, while leaving 30 million uninsured. It’s similar to the Catskills joke cited by Woody Allen in “Annie Hall”: “The food at this place is really terrible—and such small portions!”

Observers on Twitter noted the irony. Some asked Cornyn to support more government spending on subsidies; some asked him to have his home state of Texas expand Medicaid; some asked for a single-payer system that would “end” the problem of uninsurance entirely.

For that matter, increasing the mandate tax to thousands of dollars, or putting people in jail if they do not purchase coverage, would also reduce the number of uninsured. Does that mean Cornyn would support those efforts?

It’s the Costs, Stupid!

There are many reasons conservatives should not remain fixated on the number of people with health insurance when designing an Obamacare alternative.

Insurance Does Not Equal Access: The narrow networks and high deductibles plaguing Obamacare exchange plans—imposed because federally mandated benefits force insurers to find other ways to cut costs—impede access to care, making finding an in-network physician both more difficult and more costly.

Similarly for Medicaid—the prime source of Obamacare’s coverage expansions—beneficiaries themselves don’t even consider a Medicaid card “real insurance,” because they cannot find a physician who will treat them: “You feel so helpless thinking, something’s wrong with this child and I can’t even get her into a doctor….When we had real insurance, we would call and come in at the drop of a hat.”

Insurance Does Not Equal Better Health: The Oregon Health Insurance Experiment compared a group of individuals selected from a random lottery to enroll in Medicaid with similarly situated individuals who did not win the lottery and did not enroll in coverage. It found that Medicaid coverage brought no measurable improvement in physical health outcomes. Likewise, prior studies have suggested that, for health outcomes Medicaid coverage may be worse than having no health insurance at all.

Beneficiaries Do Not Value Health Insurance: Another study from the Oregon Health Insurance Experiment released last year found that most Medicaid beneficiaries valued their health insurance at between 20 and 40 cents on the dollar. In other words, if given a hypothetical choice between a Medicaid insurance policy valued at $3,000, and cash in the amount of $1,500, most beneficiaries would choose the cash.

Obama Promised to Lower Costs—And Failed to Deliver: During his 2008 campaign, Barack Obama didn’t promise to reduce the number of uninsured by a certain amount. He did, however, promise to cut the average family’s health insurance costs and premiums by an average of $2,500 per year. On that count, his health law failed miserably. Since the law passed, employer-sponsored coverage has risen by more than $4,300 per family. Exchange policies spiked dramatically in 2014, when the law’s mandated benefits took effect, and are set to rise again this coming year.

Voters Care Most About Costs: Prior polling data indicates that, by a more than two-to-one margin, voters prioritize the cost of health care (45 percent) over the lack of universal coverage (19 percent). Likewise, voters prefer a health plan that would lower costs without guaranteeing universal coverage to a plan that would create universal coverage while increasing costs by a 13-point margin.

Buying into a Liberal Shibboleth

The responses from liberals to Cornyn’s tweet indicate the extent to which health coverage has become a shibboleth on the Left. There are few things liberals will not do—from spending more money on subsidies, to creating a single-payer system, to expanding coverage to illegal immigrants—to ensure everyone has a health insurance card. (Some liberals might object to putting people in jail for not buying health coverage. Might.)

The liberal fixation—some would call it an obsession—over the number of people with health insurance comes despite evidence suggesting insurance coverage does not necessarily equate with access or improved health outcomes. Over the past 40 years, 90 percent of the growth in safety net spending has come in the form of higher spending on health programs. That spending could have been more effective in alleviating poverty by improving the education system, changing transportation patterns, or enhancing nutritional options in poor communities, all of which also could foster better health outcomes. But because liberals remain singularly focused on the number of Americans with insurance cards, that’s where they want to focus all the federal government’s time and energy.

So, apparently, does John Cornyn. Rather than pledging to lower health costs—Americans’ top health care goal—or questioning the effectiveness of Democrats’ focus on health insurance above all else, his tweet looks like pure kvetching about a problem he has no interest in solving. If one wants to understand Republicans’ problems on health care—both their poor messaging, and their single-minded policy focus on replicating liberal solutions in a slightly-less-costly manner—they need look no further than this one tweet.

This post was originally published at The Federalist.

No, Medicare Enrollees Haven’t “Earned” All Their Benefits

In his interview with 60 Minutes that aired Sunday night, Speaker of the House Paul Ryan made a compelling case for reforming Medicare. But in trying to make a political point about the need to maintain the status quo for beneficiaries in retirement, Speaker Ryan actually understated the problems the program faces:

We have to make sure that we shore this program up. And the reforms that we’ve been talking about don’t change the benefit for anybody who is in or near retirement. My mom’s now enjoying Medicare. She’s already retired. She earned it. But for those of us, you know, the X-Generation on down, it won’t be there for us on its current path. So we have to bring reform to this program for the younger generation, so that it’s there for us when we retire, and so that we can keep cash flowing to current generations’ commitments. And the more we kick the can down the road, the more we delay, the worse it gets.

There’s just one problem with this explanation: the benefits Ryan claimed his mother’s generation “earned” don’t begin to match the money paid into the system.

Money In Doesn’t Equal Money Out

Strictly speaking, the benefits Ryan’s mother receive are “earned,” in the sense that beneficiaries must pay into the Social Security system for 40 quarters to qualify for Medicare eligibility. But in the actuarial sense of “earned” benefits—“I’m only getting back all the money I paid in during my working life”—most beneficiaries receive benefits that vastly exceed their payroll tax contributions to Medicare.

In its 2015 document highlighting the long-term budget outlook, the Congressional Budget Office (CBO) conducted an analysis of average payroll taxes paid and benefits received. It found the latter exceeded the former by a wide margin—a margin that will grow over time:

Under the assumption that all scheduled benefits are paid, real average lifetime benefits (net of premiums paid) for each birth cohort as a percentage of lifetime savings will generally be greater than those for the preceding cohort. For example, benefits received over a lifetime are projected to equal about 7 percent of lifetime earnings for people born in the 1940s, on average, but 11 percent for people born in the 1960s. By contrast, real average lifetime payroll taxes relative to lifetime earnings will rise from 2 percent in the 1940s cohort to almost 3 percent for the 1960s cohort.

Both the text and accompanying chart come with a significant caveat: Medicare payroll taxes fund only a share of overall Medicare spending, and that share has declined significantly in recent years—from 67 percent in 2000 to about 40 percent last year. General revenue covers a growing (currently about 47 percent) percentage of Medicare’s finances; individuals do pay a portion of the federal government’s general revenue through income taxes, but it’s harder to differentiate what portion of an individual’s income taxes fund Medicare in any given year.

Regardless, the CBO analysis confirms that benefits paid out continue to rise thanks to skyrocketing health costs—and that taxes paid into the system cannot keep up. A similar CBO analysis conducted earlier this year for the 2016 long-term budget outlook likewise determined that Social Security benefits paid out will exceed taxes taken in for most seniors. (Unlike Medicare, Social Security is funded entirely by payroll taxes, so the gap between benefits and taxes is smaller, but still significant.) Both CBO reports echo research undertaken by the Urban Institute, whose most recent analysis found that a couple earning average wages who retired last year will receive $1,038,000 in Medicare and Social Security benefits after paying in only $683,000 in payroll taxes.

We Have To Fix Our Medicare System

Phasing in changes like premium support for Medicare makes both political and policy sense—to give Americans time to adjust and plan for major changes to entitlement programs, and to try and head off campaigns designed to scare current seniors. On the other hand, CBO believes the premium support proposal included in House Republicans’ budget this year would save seniors 6 percent on out-of-pocket health costs annually—raising the obvious question of why seniors should be shut out of the opportunity to save money.

No matter the details, the fact that most seniors receive more in benefits than they paid in payroll taxes speaks to the urgent need to right-size our entitlements. Regardless of how we do it, our nation will be much better off if we confront these problems sooner rather than later. Because continuing our Lake Wobegon system—in which everyone receives more than they paid in—will guarantee a fiscal crisis of epic proportions.

This post was originally published at The Federalist.

Putting Obamacare in a Deep Freeze

As they debate various ways to repeal and replace Obamacare, Republicans in Congress have proposed a transition between the current regime and the more market-oriented solution they wish to create. As part of that transition, Congress should explore putting an immediate freeze on new Obamacare enrollment. Such a freeze would allow currently enrolled Americans to maintain their coverage while halting the growth in spending on the law’s costly taxpayer subsidies.

Medicaid Freeze

There are good policy reasons to include a freeze on enrollment as part of repeal legislation. The “Better Way” alternative to Obamacare released by Speaker Ryan in June proposed that “states that have not expanded Medicaid under Obamacare as of January 1, 2016…would not be able to do so.” If the House intends to freeze enrollment by preventing new states from implementing Medicaid expansion, reason dictates that it should also prevent new individuals in states that have already expanded Medicaid from joining the entitlement.

Previous research suggests that the existence of a Medicaid entitlement for the able-bodied significantly decreases job-search activity, employment, and enrollment in employer-sponsored health coverage. The Foundation for Government Accountability (FGA) has demonstrated that freezing enrollment would allow individuals currently on Medicaid to transition out of poverty and into work in a relatively short period of time, and that there is broad public support for such a move.

Freezing enrollment would also begin to unwind the inequities in the current system, which rewards states that have expanded Medicaid for discriminating against the most vulnerable. Some governors have indicated their desire to preserve the expansion in their states. But keeping Medicaid expansion in some states would set up a direct conflict with other states that are explicitly prohibited from expanding under the House Republican plan. As a compromise, Congress should instead freeze enrollment in those states that have already expanded Medicaid, as a way to begin dismantling the new entitlement for the able-bodied.

King v. Burwell

When it comes to insurance Exchanges, Republicans had previously proposed freezing enrollment in Obamacare’s subsidy regime. Last year, the Supreme Court considered the case of King v. Burwell, which had the potential to strike down taxpayer-funded subsidies in states with a federally run insurance exchange (i.e.  most of them). Ahead of that case, Senators Ron Johnson and Ben Sasse both proposed different transitional arrangements that would allow individuals receiving subsidies at the time of the ruling to continue their coverage for some period of time, without allowing new individuals to qualify for taxpayer-funded coverage.

Though the Supreme Court ultimately upheld the subsidies in King v. Burwell, the transition plans by Sasse and Johnson provide just as sensible a template now as they did then. Admittedly, insurers may not want to offer coverage where only unsubsidized individuals can join exchanges, as those unsubsidized individuals would likely be the costliest to insure. But the plans laid out by Sasse and Johnson provide two possible blueprints for unwinding Obamacare, including its taxpayer-funded exchange subsidies.

Obama Precedent

In considering the practical effects of an enrollment freeze, Republicans should examine how President Obama tried to minimize the impact of his “Lie of the Year” — “If you like your plan, you can keep it.” When millions of Americans received cancellation notices in the fall of 2013, the Obama Administration allowed individuals to keep their prior coverage temporarily. This reprieve was ultimately extended until December 2017.

By allowing some individuals to keep their pre-Obamacare coverage, Obama’s plan-cancellation “fix” solved a political problem, minimizing the number of individuals thrown off their current coverage at one time. Extending the “fix” for several years also limited disruption, as natural “churning” in insurance markets will reduce the number of individuals with affected policies between now and December 2017.

Of course, President Obama’s administrative actions in 2013 violated the law. Even liberals have acknowledged that Obama abrogated his constitutional duties by publicly advertising that his Administration would not enforce the ACA’s statutory requirements. But Congress can and should seek to minimize disruption in a legal way, by explicitly including an enrollment freeze in its repeal legislation. With Obamacare’s coverage gains coming almost entirely from Medicaid expansion, freezing enrollment will allow for a smoother transition into the new system Republicans intend to create.

This post was originally published at National Review.