Tag Archives: Heritage Foundation

Thank You, Jim DeMint

As someone born in mid-August, I’m used to low-key birthdays. In my childhood, big birthday celebrations always seemed out of place when half of my friends and classmates were on vacation. Perhaps because of that, I’ve never advertised my birthday, or made much of a fuss about it.

Which is why it was so noteworthy that, four years ago, I received a grand total of two cards for my birthday. The first came from my mother.

The second came from James Warren DeMint.

The card came with a handwritten note, thanking me for joining the Heritage Foundation and congratulating me for my work there. It’s the kind of thoughtful gesture totally unseen by the public that a person—particularly a person with a prominent position and no small amount of fame—doesn’t have to make, but rather one they want to make.

I still have that note—and I’ve read it several times the past few days. For while the press and people outside the Beltway naturally focus on Jim DeMint’s policy views and political actions, that’s not what I most remember about him.

Yes, Jim DeMint is a committed conservative, but more important, Jim DeMint is at his core a fundamentally humble and decent human being. If character is what you do when no one is looking—like sending handwritten notes to your staff to recognize and thank them—then Jim DeMint’s rich character has its roots in both his southern gentility and his deep and abiding faith.

I’ve worked in several congressional offices, and in each case it truly has been a privilege to do so. I’ve been very lucky during my career—I haven’t worked for any Members who screamed at their staff, asked their staff to do favors for them, or succumbed to scandal.

But of all the offices in which I worked, the DeMint team in the Senate was by far the best working environment I had—and probably ever will have—on or off Capitol Hill. Sen. DeMint empowered his staff, creating a warm, nurturing culture that permeated all levels of the organization.

When I wrote in March of the need for humble servant leadership among congressional leaders, I specifically referred to my first interview with Sen. DeMint’s team in 2012, for creating a team atmosphere where I knew from the outset I would feel at home. In their attitude, the staff took cues from the senator himself.

Modest to a fault, Jim DeMint never sought to impose himself on his staff. He would often give us wide berth, not wanting to intrude unduly and create situations where staff had to be “on” in front of their boss. But by the same token, he was always there for us. I know of specific instances where Sen. DeMint mentored and counseled staff going through tough times, in a manner and to an extent few would expect of a man with so many other obligations.

Lone among the Members I worked for, Sen. DeMint once reached out to me to offer me an apology. He didn’t even need to apologize—he himself had done me no wrong. But he felt that I had been wronged by others, and wanted to do what little he could to help make it right. Several years later, I can’t help but experience a similar feeling.

Monday evening, I received a letter in the mail—an incongruously timed fundraising solicitation from the Heritage Foundation, with Jim DeMint’s name prominently displayed in the top-right corner. The message written on the envelope: “I cannot begin to tell you how much we are indebted to you for your support.”

No, Senator—it is we who are indebted to you, for all that you have done to support, sustain, and enrich our lives. All we can give back to you is our gratitude.

This post was originally published at The Federalist.

Bill Clinton’s Right: Obamacare’s Tax on Success Is “Crazy”

Taxes are back in the news on the presidential campaign trail — and this time, the controversy has nothing to do with Donald Trump. While the commentariat have seized on Bill Clinton’s description of Obamacare as “crazy,” it’s important to recognize exactly what he considered so nonsensical: the fact that Obamacare increases already sizeable government-imposed penalties on work, entrepreneurship, and success. Its perverse incentives will leave more Americans stuck in a poverty trap, making Obamacare even more warped than Bill Clinton’s description of the law.

In their full context, Clinton’s comments look more damning of the law, rather than less. Before uttering the “crazy” epithet, his remarks focused on those whose income puts them right above the cutoff line to receive federal subsidies. These people are, in the former president’s words, getting “whacked” because they have succeeded in life and in business:

The current system works fine if you’re eligible for Medicaid if you’re a lower-income working person, if you’re already on Medicare, or if you get enough subsidies on a modest income that you can afford your health care. But the people who are getting killed in this deal are the small businesspeople and individuals who make just a little too much to get in on these subsidies. Why? Because they’re not organized, they don’t have any bargaining power with insurance companies, and they’re getting whacked. So you’ve got this crazy system where all of a sudden 25 million more people have health care, and they’re out there busting it, sometimes 60 hours per week, wind up with their premiums doubled and their coverage cut in half. It is the craziest thing in the world. [Emphasis is mine.]

During the 2012 campaign, Mitt Romney was roundly criticized when he said in an interview,  “I’m not concerned about the very poor. We have a safety net there.” Bill Clinton’s comments emphasized that Obamacare is not concerned about the middle class. It’s not aimed to support those who want to rise in station in life; it actually discourages them from doing so.

And whereas Romney’s 2012 impromptu “gaffe” came in a live television interview, Obamacare represents considered policy — the result of a legislative process of nearly a year and policymaking developed long before that. As I noted in a 2013 Heritage Foundation paper, the law contains numerous subsidy cliffs that create enormous inequities. In some cases, as little as an additional dollar of income could cause the loss of thousands of dollars in premium or cost-sharing subsidies paid by the federal government, or both. “Families facing these kinds of poverty traps may ask the obvious question: If I will lose so much in government benefits by earning additional income, why work?”

The nonpartisan Congressional Budget Office (CBO) has answered that question simply: In many cases, individuals will not work. A 2010 CBO report concluded that “the phaseout of the [insurance] subsidies as income rises will effectively increase marginal tax rates, which will also discourage work.” All told, the nonpartisan budget scorekeepers have concluded that the law will reduce the labor supply by the equivalent of 2 million jobs next year alone.

Obamacare only exacerbated an existing poverty trap identified by scholars on both sides of the political spectrum, including those at the left-of-center Urban Institute. As income rises above the poverty level, government-funded benefits such as Medicaid, food stamps, and the earned-income tax credit phase out or disappear altogether, eroding or eliminating much of the income effect from higher wages. If a single parent with two children can receive nearly $30,000 in government benefits with no earnings, but only about $10,000 in benefits with $35,000 in earnings, many parents may make the calculated decision that the comparatively modest net increase in family income does not justify work. Moreover, both the prior welfare system and Obamacare impose financial penalties on marriage, discouraging one of the best ways for families to rise out of poverty.

It’s ironic that Bill Clinton, the president who signed the largest tax increase in American history, would express such outrage at the way Obamacare raises effective marginal tax rates for the middle class. But for a party that purports to stand for the interests of the poor and working class, Obamacare will only work to perpetuate the cycle of poverty down to future generations. And that is perhaps the craziest idea of all.

This post was originally published at National Review.

An Issue That Could Define Alternatives to Obamacare

A line buried in a Heritage Foundation policy paper issued just before the November elections hinted at a major fissure point in discussions surrounding a conservative alternative to Obamacare. The distinctions it raised could shape the form of any health-care alternatives the Republican-led Congress considers next year.

The policy brief, outlining the principles for any conservative health-care alternative, included the following lines:

Replacing the current tax treatment of health benefits with a new design for health care tax relief that is both revenue and budget neutral (based on pre-PPACA levels) is the first step in transforming the American health system into one that is more patient-centered, market-based, and value-focused.

The words in parentheses pack the most punch, for they lay down a clear marker regarding budgetary baselines—which define the parameters of many policy debates in Washington.

Consider a hypothetical alternative to Obamacare that repeals the law entirely, including its more than $1 trillion in tax increases, but then imposes new limits on the tax break for employer-provided health coverage—raising, say, $400 billion in revenue—to finance coverage expansions. Does that alternative cut taxes by $600 billion (the $1 trillion in repealed taxes, offset by the $400 billion in new revenue), or raise taxes by $400 billion, because repeal of the law should be seen as a given?

Polling data conducted for America Next earlier this year suggests that Americans believe the latter. A majority of voters (55%)—and sizable majorities of conservative voters—believe that “any replacement of Obamacare must repeal all of the Obamacare taxes and not just replace them with other taxes.”

Slide10

Economists and policy experts on both the left and the right agree on the need to reform the tax treatment of health insurance. But there is less agreement on the means. For instance, in one of his now-infamous videos, MIT economist and Obamacare consultant Jonathan Gruber explained how provisions in Obamacare—sold as a tax on insurance companies—ultimately would raise tax burdens on the middle class. Some on the right have proposed that Congress accelerate this tax increase by amending the law next year. Other alternatives to the Affordable Care Act would repeal and replace the law’s tax increases, while still other alternatives (including the plan put forward by America Next) would repeal all of the law’s tax increases, and reform the tax code, without raising additional revenue in its stead.

To the casual observer, these baseline distinctions may seem arcane—but in Washington, they can pack a wallop. Expect the issues referenced in the Heritage brief to resurface whenever the new House and Senate consider health-care alternatives.

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

The Opportunity Cost of Fixing Obamacare

The Wall Street Journal reported Wednesday on five states considering whether to spend additional dollars to fix their health insurance exchanges or move to the federal exchange. Some lawmakers believe that “upgrading or sustaining the exchanges could deplete funding for roads, education or other vital programs.”

NA-CB436_EXCHAN_G_20140603182704

States trying to fix balky exchanges face technical and logistical problems—and two looming deadlines. The first is Nov. 15, the start of the open-enrollment period for 2015. The second, and perhaps more important, is Jan. 1—the date the U.S. Department of Health and Human Services loses authority to issue grants to states for their exchanges.

With the prospect of additional grants from Washington unavailable next year, some states are rethinking their fiscal priorities. Rep. John Delaney (D., Md.), who opposes efforts in Maryland to spend as much as $50 million more on its exchange, was quoted as saying: “You can’t just print money in the states. It could come from education or other important programs.”

Of course, the same arguments could be made regarding Obamacare’s Medicaid expansion. Despite a high federal match, expansion brings with it administrative costs—in the tens of billions, by a 2010 Heritage Foundation estimate—and state shares of spending would increase in future years.

The Fiscal Survey of States underscores the squeeze Medicaid has placed on states’ other spending priorities. In fiscal 2013, states collectively reduced higher education spending by more than $1 billion, even as Medicaid outlays grew by nearly $500 million.

It’s good that legislators, including supporters of the Affordable Care Act, are publicly recognizing the opportunity costs associated with greater state spending on health care. But it’s a debate that should have transpired years ago.

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

The Most Effective Obamacare Delay Is Full Defunding

There is nothing controversial about stopping Obamacare. A majority of Americans dislike the law and want it repealed. Obamacare is disastrous for individuals, businesses, and doctors alike. It is unaffordable and unworkable, and the Obama Administration has also made it unfair by giving its pet interest groups waivers and opt-outs.

Conservatives are also united behind full repeal of Obamacare, despite what you may hear from the media and liberal operatives. The debate right now is on how this goal is best achieved.

Debate is healthy for society, and also for a movement. Conservatives should not want to become the empty echo chamber that has become the liberal political/media/academic establishment.

With that in mind, let’s turn to the debate over how to save the country from Obamacare. Our view is that the most effective way to delay Obamacare is to cut off funding. Congress can halt Obamacare’s disastrous impact by defunding it entirely before the law’s health insurance exchanges take effect on October 1.

This approach would prevent further implementation of the law; it is the only tactic that fully achieves the objective that advocates of delay seek to accomplish.

Some conservatives believe they can achieve delay without defunding by postponing the individual mandate and employer mandate for one year while leaving firmly in place the massive federal spending on Obamacare’s new health care entitlements—$48 billion next year, and nearly $1.8 trillion over 10 years. Others, acknowledging that a delay of the mandate is insufficient, are now calling for Congress to delay the mandates and the new entitlements.

Both approaches are flawed, however. First, Obamacare is far more than the individual mandate, the employer mandate, and the new entitlement spending. It’s a massive, government-centered restructuring of American health care. A 53-page Obamacare timeline released by the House Energy and Commerce Committee shortly after the law passed found that in 2014 alone, 27 separate Obamacare programs and requirements take effect.

Delaying only the mandates and new entitlements, in other words, would leave dozens of other Obamacare programs ready to launch, from additional costly mandates on state Medicaid programs to a new Medicare payment model for community health centers.

Second, merely delaying—as opposed to defunding—the law would allow Obamacare’s regulators to continue their work, strangling the economy by imposing more government red tape. Regulators could continue to enforce the Health and Human Services (HHS) anti-conscience mandate and issue new Obamacare rules raising costs and premiums for struggling businesses and families alike. The way to stop the Red Tape Tower involves full defunding, because it’s the only way to ensure Obamacare’s regulators will cease their destructive work.

Because full defunding will stop all of Obamacare’s programs and all of its new regulations, it is the strongest play for those who want to stop Obamacare cold. Obamacare isn’t just about taxes and subsidies—it is about a series of massive new encroachments created by the federal government. Defunding of Obamacare will ensure that those encroachments cease.

We should not buy into the false assumption that efforts to defund Obamacare equate to a shutdown of the federal government. Heritage and others have pushed for Congress to fully fund regular government operations and separate Obamacare from annual appropriations. But conservatives of either party in Congress have no leverage on any of these critical issues unless the President believes that he will have to assume the responsibility of a government shutdown.

Conservatives want to keep the federal government open. We just want to shut down Obamacare.

This post was originally published at the Daily Signal.

The Case for Medicare Reform

The panel meets in secret, is controlled by special interests, and helps determine the allocation of nearly $100 billion in federal health care spending.

Is it some clandestine panel created by Obamacare? Hardly. It’s a panel controlled by the American Medical Association (AMA)—and, as The Washington Post reported in a front-page article yesterday, it has been micro-managing the way Medicare pays physicians for nearly a quarter-century.

The panel is just one part of the complex bureaucratic machinery that sets Medicare physician payment enacted by Congress in 1989. Instead of payment set by the free market forces of supply and demand, the panel assigns “value” to different medical procedures. So, in theory, a doctor performing an hour-long surgery should be paid four times as much as a physician undertaking a 15-minute procedure.

In practice, however, the process is far from straightforward. As the Post article demonstrates, the panel operates with virtually no public transparency, little government oversight, and a structural bias toward specialty physicians over primary care procedures. Curiously, in 1989 one of the arguments advanced for this payment system is that it would rectify the bias against primary care doctors.

Worse than the inaccuracies in the current payment system is the premise underlying it: That the Medicare bureaucracy and its group of “experts” can determine the “right” price of nearly every service performed by physicians nationwide.

Later this afternoon, the House Energy and Commerce Committee will begin its markup of Medicare physician payment legislation. While the legislation would revamp the process for setting Medicare reimbursements, as a Heritage Backgrounder released last week demonstrates, it does not represent fundamental reform of the Medicare program. Instead, many of the same medical specialty societies that have abused the current rate-setting process would receive new powers to control patient care—by setting guidelines that physicians must follow and cutting doctors’ pay if they do not.

True reform of the Medicare program would use a premium support system and market forces to unleash competition that will drive down health costs. Getting the federal government out of the price-control business would allow innovative reimbursement solutions to take root.

As usual, Ronald Reagan said it best:

This is the issue:… whether we believe in our capacity for self-government or whether we abandon the American Revolution and confess that a little intellectual elite in a far-distant capital can plan our lives for us better than we can plan them ourselves.

When revamping Medicare physician payment, Congress has the opportunity to take power away from that “little intellectual elite” and should not hesitate to do so. And, rather than attempting to empower other bureaucratic entities to micromanage the health system, it should return that power back to the place where it belongs—with the people themselves.

This post was originally published at the Daily Signal.

Federalism’s Quiet Victory

More than a week after the Supreme Court ruling on Obamacare, some have discovered the ruling was not the unqualified victory for the Obama Administration that reporters made it out to be on the day of the decision.  Multiple press reports have focused on statements by governors indicating they may not, or will not, participate in the law’s now-optional expansion of Medicaid. (A good summary of where states stand on the expansion based on public comments to date can be found here.)

On the substance, it’s easy to see why states would be greatly concerned.  As Matt Salo, head of the National Association of Medicaid Directors, stated, the idea that the Medicaid expansion is “free” to states is nothing but a massive prevarication:

State officials retort that the notion that expansion is free for states until 2017 is “a big lie,” in Salo’s words.  While the federal government will pay many of the administrative costs, states will share in the expense of some information technology and personnel.  And the requirement that most individuals carry insurance is expected to spur at least some of an estimated 13 million people who currently qualify for Medicaid, but are not enrolled to sign up, Salo said.  States will receive their traditional federal funding match for those people.

Those administrative costs will be significant — one Heritage Foundation study pegged them at nearly $12 billion in the first six years alone.  And there’s also the fact that the law’s spending reductions are widely predicted by experts to be unsustainable, meaning it’s entirely possible Congress could reduce the federal Medicaid match –sticking the states with even more added costs – down the line if lawmakers need to undo Medicare payment reductions to ensure seniors still have access to care.

More fundamentally, however, the ruling gives states something they have not had in their relations with the federal government in quite some time – leverage.  The federal government will no longer be able blithely to dismiss state concerns, or order them to expand Medicaid just as Washington says — or else.  It’s particularly noteworthy that just one day after the Supreme Court ruling, former Speaker Pelosi publicly floated the idea of “re-thinking” the federal Medicaid match — increasing the federal share to compensate states for their unfunded mandates.  It’s unclear whether that would actually happen — or if so how the increased federal payments would be paid for — but it shows that in light of the ruling, federal politicians cannot ignore states’ concerns, a step in the right direction in restoring the long-lost balance between Washington and the states.

And that is as the Framers intended it to be.  In Federalist 46, James Madison wrote that federal infringements on the states would spark popular outrage, just as Obamacare sparked a majority of states to sue the federal government for exercising unconstitutional coercive power on their sovereignty:

Should an unwarrantable measure of the federal government be unpopular in particular States, which would seldom fail to be the case, or even a warrantable measure be so, which may sometimes be the case, the means of opposition to it are powerful and at hand.  The disquietude of the people; their repugnance and, perhaps, refusal to co-operate with the officers of the Union; the frowns of the executive magistracy of the State; the embarrassments created by legislative devices, which would often be added on such occasions, would oppose, in any State, difficulties not to be despised; would form, in a large State, very serious impediments; and where the sentiments of several adjoining States happened to be in unison, would present obstructions which the federal government would hardly be willing to encounter.

But ambitious encroachments of the federal government, on the authority of the State governments, would not excite the opposition of a single State, or of a few States only.  They would be signals of general alarm.  Every government would espouse the common cause.  A correspondence would be opened. Plans of resistance would be concerted. One spirit would animate and conduct the whole.  The same combinations, in short, would result from an apprehension of the federal, as was produced by the dread of a foreign, yoke; and unless the projected innovations should be voluntarily renounced, the same appeal to a trial of force would be made in the one case as was made in the other.

The Court’s ruling echoed Madison’s comments about the “general alarm” that the law has inflicted upon the states; it struck down the coercive requirements of the Medicaid expansion as “economic dragooning” that puts “a gun to the head” of states.  What’s more, Chief Justice Roberts’ ruling laid down a marker implying that additional laws could also be struck down as unconstitutional impositions on states: “We have no need to fix a line [defining coercion] either.  It is enough for today that wherever that line may be, this statute is surely beyond it.”

Whatever one thinks of the merits of the Chief Justice’s opinion on the individual mandate, the Court’s ruling on the Medicaid expansion is already having an impact on politics and policy in dozens of states — and the constitutional implications of the decision could influence the state-federal relationship for years to come.  This at least is an outcome many conservatives can value.

Obama’s Medicare Dis-Advantage

Democrats will likely attempt to trumpet a GAO report released today regarding Medicare Advantage enrollment for 2011 as claiming that the Medicare Advantage program will be unaffected by Obamacare.  (The report is not yet online, but should be posted here in the coming hours.)  While Democrats’ newfound interest in the Medicare Advantage program is certainly welcome, if perhaps a tad cynical, the claims are both incomplete and misleading.  First, less than one percent of Obamacare’s cuts to MA actually went into effect in 2011, according to the Congressional Budget Office.  Second, as the Associated Press previously reported, Medicare Advantage figures for 2012 are likely to be skewed due to bonuses paid out by a temporary, multi-billion dollar demonstration/waiver program – one that even Democrats admitted was implemented because Medicare “could not tolerate dislocation, given the political climate.” (See our full write-up of this issue from back in September here.)  In other words, the Medicare Advantage program is NOT immune from Obamacare cuts – it merely won a temporary reprieve while the President campaigns for re-election.

As we previously reported, both CBO and the Medicare trustees found that Medicare Advantage enrollment is still projected to decline, just that enrollment won’t start falling until 2013, after the President runs for re-election. (Think that timing is a coincidence?)  Another report released last month also demonstrated how Medicare Advantage plan enrollment will decrease across the country thanks to Obamacare.  The study found that Medicare Advantage enrollment will be cut in half by 2017 thanks to Obamacare, and that plan choices will be reduced by two-thirds, with an average of almost 18 fewer MA plans being offered in each county.

As Speaker Pelosi recently admitted, Democrats “took a half a trillion dollars out of Medicare in [Obamacare], the health care bill” to pay for more unsustainable new entitlements.  The idea that this level of payment reductions will not have an effect on beneficiaries defies logic.  And given that this month’s Kaiser Family Foundation health tracking poll found that only 22 percent of Americans believe Obamacare will make Medicare better off – an all-time low – the American people don’t seem to be buying this fiscal sleight-of-hand either.

Obamacare: Cutting Benefits AND Choices for Seniors

Even as the Administration attempts to argue that Obamacare is “giving Americans more freedom in their health care choices,” a new report released this week shows how the law is taking away choices for seniors.  Following up on a Heritage Foundation study published last year, this paper examines how Medicare Advantage plan enrollment will decrease across the country.  The study finds that Medicare Advantage enrollment will be cut in half by 2017 thanks to Obamacare, and that plan choices will be reduced by two-thirds, with an average of almost 18 fewer MA plans being offered in each county.*

The number of seniors losing their Medicare Advantage plans thanks to Obamacare almost perfectly mirrors the percentage of individuals in employer-sponsored coverage who will lose their pre-Obamacare plan.  The Administration’s own estimates revealed that its onerous regulations will force most businesses – half of all employers, and as many as 80% of small businesses – to give up their current plans within the next two years, thus subjecting them to costly new mandates that will increase premiums.  Some surveys suggest this number is a low estimate, and that as many as 70% of firms could lose their pre-Obamacare coverage as early as next year.

At a time when liberals are attacking Republicans for wanting to cut Medicare benefits, it’s ironic that the Administration has been forced to use misleading rhetoric and “weasel words” to claim seniors in Medicare Advantage plans will not be harmed by a measure that “saves” $500 billion from the Medicare program – yet “will not enhance the ability of the government to pay for future Medicare benefits.”  And it’s also fittingly ironic – some would argue even Orwellian – that this Administration apparently wants to give seniors “more freedom in their health care choices” by taking most of them away.

 

* In case anyone was wondering, yes, this study does include the effects of the multi-billion dollar MA demonstration/waiver program announced by the Administration earlier this year, in what many experts have called a politically motivated effort to ensure that Obamacare’s ill effects won’t impact seniors until AFTER the President’s re-election campaign.

Yet More Evidence Obamacare Is Costing Jobs

The Heritage Foundation is out this week with a new study quantifying Obamacare’s adverse impact on job creation.  The study notes that in the months prior to April 2010, private sector firms created more than 67,000 jobs per month.  After April 2010 – the month after the President signed Obamacare into law – private sector job creation plummeted to only 6,400 jobs per month, or less than one-tenth the prior pace.  This growth of 6,400 private sector jobs per month is MUCH less than the 100,000-150,000 jobs the economy needs to generate per month just to keep up with population growth.  And this lethargic pace of private sector job creation is also a far cry from the “4 million jobs – 400,000 jobs almost immediately” that former Speaker Pelosi said Obamacare would generate back in February 2010.

Separately, Bernie Marcus, the co-founder of Home Depot, provided further anecdotal support for Heritage’s findings in an interview with Investors Business Daily yesterday.  Marcus believes the federal government is the biggest obstacle to job creation, because “the impediments that the government imposes are impossible to deal with.”  Chief on that list are new mandates imposed thanks to the President’s health care overhaul:  “As [President Obama] speaks about cutting out regulations, they are now producing thousands of pages of new ones.  With just ObamaCare by itself, you have a 2,000 page bill that’s probably going [to] end up being 150,000 pages of regulations.”

With unemployment remaining near record high levels and the economy plagued by moribund growth, these new developments reiterate what many Republicans predicted all along – Obamacare is costing the American economy jobs.