Tag Archives: Center for American Progress

Liberals’ Hypocrisy on Per Capita Caps

It was, to borrow from Arthur Conan Doyle, the dog that didn’t bark. In releasing the annual report on its finances, Medicare’s actuary last month found that the program would not trigger requirements related to the Independent Payment Advisory Board (IPAB) this year—or for several years to come. Although the Senate and House health-care bills avoided altering Medicare, the IPAB development—or non-development, as it were—should inject some important perspective into the legislative debate.

Many liberal critics of the Republican bills have attacked proposals to impose per capita caps on state Medicaid programs, while conveniently forgetting that Obamacare imposed similar spending caps on Medicare. In fact, Section 3403 of the law empowers IPAB—a board of unelected bureaucrats—to make binding recommendations to Congress reducing program spending if Medicare will exceed statutory limits for spending per beneficiary.

The IPAB non-event should therefore put the harsh rhetoric surrounding Medicaid caps in perspective. After all, how damaging can per capita caps be if spending remains sufficiently low not to trigger them? And why do liberals who claim that health-care delivery reforms implemented by Obamacare can slow Medicare spending not believe that, given sufficient flexibility, states could similarly reform their Medicaid programs to lower costs—as states like Rhode Island already have done?

We Care More About Politics than Policy

Some Obamacare supporters claim that statutory restrictions on IPAB—in enforcing Medicare spending caps, the board may not change Medicare benefits or “ration health care”—will protect Medicare beneficiaries in a way that the current bills do not protect Medicaid recipients. But IPAB’s supposed “protections” have their own flaws. The statute does not define “rationing,” and then-Secretary of Health and Human Services (HHS) Kathleen Sebelius testified in 2011 that HHS would need to draft regulations to do so. But the Obama administration never even proposed rules “protecting” Medicare beneficiaries from rationing under the IPAB per capita caps—so how meaningful can those protections actually be?

When push comes to shove, few liberals can justify their support for per capita caps on Medicare, but opposition to similar caps in Medicaid. One day on Twitter, I posed a simple question to Topher Spiro, of the Center for American Progress (CAP): If the Republican proposals for per capita caps in Medicaid included the same beneficiary “protections” as IPAB creates for Medicare recipients, would he support them? I never received a substantive answer.

Therein lies the problem: Many critics of the Republican Medicaid proposals seem to prioritize political partisanship over policy consistency. Five years ago, CAP made very clear it supports IPAB’s per capita caps on Medicare spending, denouncing a 2012 legislative effort to repeal the board. But earlier this year, the organization denounced as “devastating” Republican proposals for per capita caps on Medicaid. So why exactly does this purportedly non-partisan organization support per capita caps when a Democratic Congress enacts them, but oppose similar caps proposed by a Republican Congress?

It’s Okay, It’s Just Hypocrisy

Likewise, the disability community has raised concerns about the proposed changes to Medicaid, attacking per capita caps as causing “massive cuts in Medicaid services.” But when issuing comments on the bill that became Obamacare in January 2010, the major coalition representing disability groups proposed 73 different recommendations in a document exceeding 5,500 words yet included not a sentence on the Medicare per capita caps ultimately included in the law.

Democratic senators appearing with disability advocates at events to denounce spending caps for Medicaid fail to recognize that they voted for similar caps in Medicare, which provides health coverage to 9 million Americans with disabilities. Moreover, despite being in place for several years, the Medicare caps have yet to be breached. So how damaging is a policy that hasn’t affected Medicare beneficiaries in the slightest, and which Democratic lawmakers themselves have voted for?

In his Sherlock Holmes story “Silver Blaze,” Doyle wrote of the guard dog that didn’t bark because it was friendly with an intruder. Likewise, many liberal advocates and Democratic lawmakers are quite friendly with per capita entitlement caps, already having imposed such caps for Medicare. Particularly given the non-factor of such caps in the Medicare program in recent years, they should perhaps “bark” less in opposing similar caps in Medicaid. Both beneficiaries and taxpayers deserve better than opportunistic—and politically inconsistent—scaremongering.

This post was originally published at The Federalist.

Don’t Blame Trump When Obamacare Rates Jump

Insurers must submit applications by next Wednesday to sell plans through HealthCare.gov, and these will give us some of the first indicators of how high Obama Care costs will skyrocket in 2018. ObamaCare supporters can’t wait to blame the coming premium increases on the “uncertainty” caused by President Trump. But insurers faced the same uncertainty last year under President Obama.

Consider a recent press release from California Insurance Commissioner Dave Jones. He announced that “in light of the market instability created by President Trump’s continued undermining of the Affordable Care Act,” he would authorize insurers to file two sets of proposed rates for 2018—“Trump rates” and “ACA rates.” Among other sources of uncertainty, Mr. Jones’s office cited the possibility that the Trump administration will end cost-sharing reduction payments.

Those subsidies reimburse insurers for discounted deductibles and copayments given to certain low-income individuals. Congress has never enacted an appropriation for the payments, but the Obama administration began disbursing the funds in 2014 anyway.

Thus the uncertainty: The House filed a lawsuit in November 2014, alleging that the unauthorized payments were unconstitutional. Judge Rosemary Collyer ruled in the House’s favor and ordered a stop to the payments. As the Obama administration appealed the ruling, the cost-sharing reduction payments continued.

The House lawsuit and the potential for a new administration that could cut off the payments unilaterally should have been red flags for regulators when insurers were preparing their rate filings for 2017. I noted this in a blog post for the Journal last May.

To maintain a stable marketplace regardless of the uncertainty, regulators should have demanded that insurers price in a contingency margin for their 2017 rates. It appears that Mr. Jones’s office did not even consider doing so. I recently submitted a Freedom of Information Act request to his office requesting documents related to the 2017 rate-filing process, and “whether uncertainty surrounding the cost-sharing reduction payments was considered by the Commissioner’s office in determining rates for the current plan year.” Mr. Jones’s office replied that no such documents exist.

What does that mean? At best, not one of the California Insurance Commission’s nearly 1,400 employees thought to ask whether a federal court ruling stopping an estimated $7 billion to $10 billion in annual payments to insurers throughout the country would affect the state’s health-insurance market. At worst, Mr. Jones—a Democrat running for attorney general next year—deliberately ignored the issue to avoid exacerbating already-high premium increases that could have damaged Hillary Clinton’s fall campaign and consumers further down the road.

The California Insurance Commission is not alone in its “recent discovery” of uncertainty as a driver of premium increases. In April the left-liberal Center for American Progress published a paper claiming to quantify the “Trump uncertainty rate hike.” The center noted that the “mere possibility” of an end to cost-sharing payments would require insurers to raise premiums by hundreds of dollars a year.

Following insurers’ June 21 deadline, expect a raging blame game over next year’s premium increases. Conservatives shouldn’t hesitate to ask regulators and liberal advocates now pointing the finger at uncertainty where they were this time last year when the future of those payments was equally uncertain.

This post was originally published in The Wall Street Journal.

Obamacare, Health Costs, and Jobs

Yesterday, the Brookings Institution released updated statistics on the role of health care jobs in the broader economy. The study’s findings provide interesting grist for the ongoing debate about Obamacare’s impact on jobs. Three theories follow from the data.

1. Obamacare Has Not Affected Health Care Jobs

The chart showing a steady-state rise in health care employment over the past decade illustrates this point perfectly. As costs continue to rise, and our society continues to age with the impending retirement of the baby boomers, health care employment has steadily grown.

But the fact that health care hiring has increased at virtually the same pace since 2003 demonstrates the law’s minimal to nonexistent effect on employment trends that preceded its enactment.

Healthcare-Job-Changes13070

Brookings Institution

2. Obamacare: Little Effect on Health Care Jobs, Little Effect on Health Care Costs

Labor costs comprise one of the major components of health care spending. A report from the American Hospital Association last year found that labor costs were the largest single driver of health cost growth, accounting for more than one-third of the overall rise in hospital prices—a percentage that has remained fairly constant over time.

It’s therefore difficult to assert that Obamacare has permanently “bent the curve” on health costs if the largest driver of health costs—the labor force—has grown unabated. Rather, it seems more likely that the recent slowdown in costs stems largely from the recession and struggling families forgoing health expenses, as a recent Kaiser Family Foundation study concluded.

3. Not Reducing Health Costs = Reducing Non-Health Jobs

Nancy Pelosi’s infamous claim at the White House health summit that Obamacare would “create 4 million jobs–400,000 jobs almost immediately” wasn’t based on the health sector creating more jobs—in many respects, it was based on the sector creating fewer new positions.

A 2010 Center for American Progress report, the basis for Pelosi’s claim, asserted that Obamacare would create more jobs outside the health sector by slowing the growth of costs within the sector—essentially, a rebalancing of costs and jobs away from health care and toward other industries.

Of course, as other analysts have noted, the converse is also true: If health care jobs continue to grow—as they have since Obamacare’s enactment—those growing health costs will hinder the competitiveness of non-health industries, to say nothing of our massive entitlement deficits.

It’s why anyone who wants to preserve American economic preeminence should want health care growth to slow, even if it means that some new health care jobs aren’t created. It’s also why analysts should be worried that Obamacare hasn’t fixed that problem in the slightest.

This post was originally published at the Daily Signal.

Obamacare Shocker: Premiums Could Double

This morning’s Wall Street Journal published its own analysis of premiums under Obamacare, and its conclusions will prompt shock—rate shock—among those who need to buy health insurance under the law’s new exchanges next year:

Healthy consumers could see insurance rates double or even triple when they look for individual coverage under the federal health law later this year, while the premiums paid by sicker people are set to become more affordable, according to a Wall Street Journal analysis of coverage to be sold on the law’s new exchanges. The exchanges, the centerpiece of President Barack Obama’s health-care law, look likely to offer few if any of the cut-rate policies that healthy people can now buy, according to the Journal’s analysis.

The article goes on to provide specific examples of the kind of premium hikes many Americans may face under Obamacare:

Virginia is one of the eight states examined by the Journal and offers a fairly typical picture. In Richmond, a 40-year-old male nonsmoker logging on to the eHealthInsurance comparison-shopping website today would see a plan that costs $63 a month from Anthem, a unit of WellPoint Inc. That plan has a $5,000 deductible and covers half of medical costs.

By comparison, the least-expensive plan on the exchange for a 40-year-old nonsmoker in Richmond, also from Anthem, will likely cost $193 a month, according to filings submitted by carriers.

Liberals may argue that even though premiums may triple for some Americans, these individuals will be getting “better” insurance. But that’s not what then-Senator Obama promised—he said premiums would go down under his plan by $2,500 per family per year. Moreover, the Congressional Budget Office noted in 2009, well before the law passed, that premiums would go up in part because Obamacare forces individuals to buy more costly health insurance policies:

Average premiums would be 27 percent to 30 percent higher because a greater amount of coverage would be obtained. In particular, the average insurance policy in this market [i.e., on exchanges] would cover a substantially larger share of enrollees’ costs for health care (on average) and a slightly wider range of benefits. Those expansions would reflect both the minimum level of coverage (and related requirements) specified in the proposal and people’s decisions to purchase more extensive coverage in response to the structure of subsidies.

Liberals’ response to the latest analysis of higher premiums is particularly telling. From the WSJ:

Tom Perriello, who voted for the law as a Democratic House member from Virginia and who now works for the left-leaning Center for American Progress, called the costs of premiums “a work in progress” and added, “Over the next few years, we should see that cost curve bend.”

In other words, premiums won’t go down any time soon. That admission from a lawmaker who helped ram Obamacare into law will likely prove cold comfort to millions of Americans facing higher premiums due to the measure next year.

This post was originally published at the Daily Signal.

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.

The Siren Song of the Left’s ‘Competition’

As previously noted, yesterday the Center for American Progress released its platform for altering entitlements. In fairness, the paper does include some conservative ideas, most notably additional means-testing for Medicare beneficiaries. But mainly the report demonstrates the fundamental difference between conservatives and liberals: Not only do liberals not believe in markets, they don’t understand (and/or don’t want to understand) how markets actually work.

Take for instance the CAP proposals that will supposedly “enhance competition based on price and quality,” such as the idea to “require health insurance exchanges to offer tiered insurance plans.” On the face of it, the idea sounds reasonable enough –encourage plans to lower premiums by offering a variety of choices. But the catch here — as in the rest of the CAP proposals — is that “competition” is government-defined, government-mandated, and government-prescribed. For instance, if insurers want to offer, and patients want to purchase, less expensive insurance coverage that doesn’t cover all of Obamacare’s mandated benefits — and/or insurance purchased across state lines — both CAP and Obamacare would tax those who gain coverage through such means, because this “competition” is prohibited in liberals’ new health care utopia.

Then there’s the fact that the CAP report also includes numerous other proposals that involve expanding prescription drug price controls in various forms. One may find it ironic — and ever-so-slightly contradictory — that a report supposedly focused on “enhanc[ing] competition” simultaneously expands government-dictated price controls.

Finally, CAP’s proposals for “competitive bidding” seem little short of comical for their ideologically-based hypocrisy. The paper states that Congress should “use competitive bidding for Medicare Advantage” — but then just as quickly states that government-run Medicare itself should not compete. And why doesn’t CAP want government-run Medicare to compete against private plans? Because a paper co-authored by one of CAP’s own scholars released in September found that in many parts of the country, traditional Medicare can’t compete– it’s far too costly. The study, outlined in an article in the Journal of the American Medical Association, found that private plans would be 9% cheaper than traditional Medicare under a competitive bidding proposal.

Mind you, the Left has no problems forcing seniors to pay more for private Medicare Advantage coverage, or forcing them out of their plans entirely– Obamacare’s cuts to the program will ensure both outcomes. But when it comes to competitive bidding for government-run Medicare itself, CAP and others on the Left want nothing to do with such an idea, clinging instead to the shibboleth of government-run Medicare as a first step towards socialized medicine for all. And that hypocrisy — competition for thee, but not for me — explains in a nutshell why liberal ideas such as those in the CAP paper are both unrealistic and ideologically dangerous.

No Magic Bullet to Control Entitlements

Speaking at an event this morning regarding the Center for American Progress’ new health and entitlement manifesto (about which more later), former Obama Administration official Zeke Emanuel claimed that controlling health costs by itself would cure America’s fiscal woes: “I think this is the legacy for the president because if he can get healthcare costs under control, everything changes…This really is the big kahuna for his legacy going forward.”

It’s a nice assertion — but it’s also flat wrong. CBO DemographicsThe Congressional Budget Office’s long-term budget outlook includes a chart demonstrating that, over the next 25 years, demographics count for at least half — and as much as three-quarters — of projected increases in spending on Medicare, Medicaid, Social Security, and Obamacare insurance subsidies: What this analysis means is that, even if the growth of health costs does manage to slow (both CBO and the Medicare actuary think Obamacare’s cost reductions will not be sustainable in the long-term), slowing health costs alone won’t solve Medicare’s financial problems. Put another way, Medicare needs structural reform NOW –because nothing else can save the program. Emanuel’s incorrect comments notwithstanding, it’s a lesson policy-makers in both parties would be wise to heed.

In Defense of J.D. Kleinke

On Sunday the New York Times published an op-ed by American Enterprise Institute fellow J.D. Kleinke, entitled “The Conservative Case for Obamacare.” In recent days, the piece has drawn a great deal of pushback from right-leaning commentators.

Some of the criticism is justified, for the article itself is internally inconsistent. Even as it claims the law is market-based, the article talks about Obamacare’s “forcibl[e] repatriat[ion]” of individuals who choose not to purchase health coverage — and any “market” that relies upon coercion isn’t really a market at all. It attempts to equate Obamacare with association health plans, when the former is the antithesis of the latter — association health plans were designed to allow small business to opt-out of onerous state benefit mandates, whereas Obamacare imposes a whole new cohort of benefit mandates at the federal level.

Kleinke’s article is also misleading and factually inaccurate on critical points. He claims that “Republicans conveniently forgot that [an individual mandate] was something many of them had supported for years.” The only problem with that claim is that Kleinke conveniently forgot that an individual mandate was something many Republicans had opposed for decades:

  • Conservatives made the claim in 1993 that an individual mandate was unconstitutional, claims which quickly gained resonance.
  • In “The System” — the seminal account of the Clintoncare debate –Haynes Johnson and David Broder note that by the time Senate Republicans gathered in Annapolis in mid-1994, the individual mandate was an area of much controversy within the Conference (page 363).
  • Senator Don Nickles — who introduced a bill that included an individual mandate in the fall of 1993 — introduced an entirely new version of the same bill seven months later – one which excluded the mandate. In comments in the Congressional Record back in June 1994, Nickles noted that “as we received input from the states, it is my belief that this individual mandate should be dropped from the legislation.” (Record, June 16, 1994, page S7085).
  • Two dozen Senate co-sponsors — more than half the Republican Conference at the time — agreed with Nickles’ view, and dropped the mandate from the bill.

So there is ample evidence that an individual mandate was not conservative orthodoxy back in 1993-94, let alone 2008. Senator Nickles pointed all this out in a letter to the editor published in the Times earlier this year — meaning the facts were, and are, readily available for all those who wish to search for them. Sadly, however, Kleinke, like Ezra Klein and others, failed to do so, perhaps because the “Republicans switched positions on the mandate to defeat Obama” meme is too politically valuable to abandon. One would have hoped that an AEI scholar would have been slightly more thorough in his research than a liberal “JournoList.” Unfortunately, that does not appear to have been the case.

On the other hand, it’s worth examining the behavior of liberal analysts over the past several months:

Given this behavior from the left’s purported “scholars,” Kleinke benefits himself from the soft bigotry of low expectations. Yes, his piece is factually incorrect, and logically and philosophically inconsistent. But hey — at least he’s not being two-faced about his position.

The Obama Campaign’s Magical Medicare Mystery Tour

Over the weekend, the Obama campaign renewed their refrain of “Mediscare” attacks during a series of speeches in Florida.  The new hook for the President was a Center for American Progress study, which we have already debunked elsewhere.  One of the study’s authors was Harvard economist David Cutler – and a new National Journal piece shows that the “hot shot of the health economics world” has, shall we say, evolved slightly when it comes to reforming Medicare:

  • In an e-mail to staff of the Simpson-Bowles fiscal commission back in 2010, Cutler proposed “removing the special status of traditional Medicare.”  In the CAP report he co-authored just last month, Cutler said that “the Romney-Ryan plan increases system-wide costs by promoting private insurance that will be more costly than the existing [traditional] Medicare system.”
  • The introduction to the CAP paper last month said that Governor Romney and Chairman Ryan “want to convert our nation’s Medicare program into a voucher system for people who are under 55 years of age.”  Which is exactly what Cutler himself proposed back in 2010, when he wrote the Simpson-Bowles commission and suggested “moving the Medicare population into the exchanges…that would be the same as the voucher.”  As the National Journal article notes, “Cutler wasn’t just recommending that the Democrats incorporate vouchers into Medicare, something the Obama campaign is squarely against now.  He was also proposing that the federal government move seniors into insurance exchanges through a much-criticized executive-branch Medicare board [i.e., the Independent Payment Advisory Board created by Obamacare].  That is a proposition you won’t hear in talking points from either Cutler or the Obama campaign.”
  • In the CAP paper last month, Cutler wrote that “private insurance that will be more costly than the existing Medicare system.”  Which is the exact opposite of the conclusion reached in another August article, this one in the Journal of the American Medical Association: “beneficiaries must pay more for traditional Medicare or join a private plan.”  And one of the authors of that JAMA piece?  You guessed it – David Cutler.

So the highlight of the Obama campaign’s “Mediscare” mud-slinging argument is an analysis from someone who has flip-flopped on 1) keeping traditional Medicare’s preferred status; 2) converting Medicare into a “voucher” program; and 3) whether traditional Medicare will be more or less costly than private insurance plans (with that last flip-flop taking place in the lengthy time span of three weeks).  When trying to explain away his contortions on Medicare reform, Cutler told National Journal he was “trying to explain health care economics to people who are not economists or health care specialists….I agree, people should read my articles and books.  But if they don’t, I need to communicate in pieces.”  In other words, believe Cutler — or at least some of the “pieces” of his analysis – instead of your own lying eyes.

One thing’s for certain: There’s a whole lot of change in these disingenuous assaults by Team Obama.  But there isn’t a lot of hope in them, that’s for sure.  Nor is there a lot of principle either.

Does David Cutler Believe in ANYTHING?

Last Friday the liberal Center for American Progress released a paper co-authored by Harvard professor David Cutler that amounted to a partisan — and thoroughly un-principled — attack on conservative entitlement reform proposals.  When it comes to premium support proposals in Medicare, the CAP paper alleged that traditional, government-run Medicare would be cheaper for senior citizens than a choice of private plans:

Seniors will face higher costs not only because of this cost shift from the government but also because the Romney-Ryan plan increases system-wide costs by promoting private insurance that will be more costly than the existing Medicare system.  The Romney-Ryan plan would cost more than the current Medicare system because, as the Congressional Budget Office has documented, private insurance companies have higher profits and administrative costs than Medicare does, and because the plan would reduce the market share, and therefore the purchasing power, of traditional Medicare….Ample evidence exists that premium support would not foster the type of competition that reduces prices.

There then followed a whole series of calculations showing how much more seniors would be forced to pay because the paper alleges the Romney-Ryan plan will drive them into private, less-efficient health plans.  This position would be slightly less disingenuous had not both CAP and Cutler himself, in a paper Cutler co-authored earlier this month, taken the exact opposite position and put out similarly detailed projections about how much more seniors would pay – not because private plans would be lessefficient than government-run Medicare, but because they would bemore efficient:

An estimate of what such a bidding system may mean for Medicare beneficiaries, using 2006-2009 data on MA plan bids and traditional Medicare costs, is shown in the TABLE.  Nationally, in 2009, the benchmark plan under the Ryan-Wyden framework (i.e., the second-lowest plan) bid an average of 9% below traditional Medicare costs (traditional Medicare was equivalent to approximately the tenth-lowest bid).  Since traditional Medicare is simply another plan option under the Ryan-Wyden plan, a beneficiary in 2009 would have paid an average of $64 per month (9% of $717) in additional premiums to stay in traditional Medicare….beneficiaries must pay more for traditional Medicare or join a private plan.

The rest of the CAP paper really needs no rebuttal — its author’s lack of principles discredits it enough on its own.  And as we have pointed out before, the Center for American Progress has done a thorough job disgracing itself by taking wholly illogical and inconsistent positions for no apparent reason other than political gain.

But one fundamental question is why Harvard University allows faculty members like David Cutler to use their institutional affiliation to put out such mutually contradictory and disingenuous work.  Universities claim to be bastions of academic freedom.  But changing one’s position in a matter of weeks, and putting out detailed estimates on both sides of an economic argument, may strike many as a perversion of academic freedom — engaging in either rank political opportunism, selling one’s “academic” conclusions to the highest bidder, or some combination thereof.  In short, academic freedom does not mean the freedom not to have principles — a lesson that Cutler and Harvard apparently need to re-learn.