Tag Archives: Hillary Clinton

Insurance Commissioners’ CSR Malpractice

Today, a Senate committee hearing will feature testimony from insurance commissioners about the status of Obamacare in their home states. It will undoubtedly feature pleas from those commissioners for billions of new dollars in federal funds to subsidize insurance markets. But before Congress spends a single dime, it should take a hard look at insurance commissioners’ compliance with their regulatory duties regarding Obamacare. On several counts, preliminary results do not look promising.

Of particular issue at today’s hearing, and in health insurance markets generally: Federal payments to insurers for cost-sharing reductions, discounts on co-payments, and deductibles provided to certain low-income individuals. Obamacare authorized those payments to insurers, but did not include an appropriation for them. Despite lacking an explicit appropriation, the Obama administration started making the payments anyway when the exchanges began operation in 2014.

Rightfully objecting to an intrusion on its constitutional “power of the purse,” the House of Representatives filed suit to block the payments in November 2014. In May 2016, a federal district court judge ruled the insurer payments unconstitutional, halting them unless and until Congress granted an explicit appropriation.

By the middle of 2016, it seemed clear that the cost-sharing reduction payments lay in significant jeopardy. While the federal district court allowed the payments to continue during the Obama administration’s appeal, a final court ruling could strike them down permanently. Moreover, a new administration would commence in January 2017, and could stop the payments immediately. And neither Hillary Clinton nor Donald Trump had publicly committed to maintaining the insurer payments upon taking office.

Let’s Let the Problem Fester to Put Trump in a Bind

How did insurance commissioners respond to this growing threat to the cost-sharing reduction payments? In at least some cases, they did nothing. For instance, in response to my public records request, the office of Dave Jones, California’s insurance commissioner, admitted that it had no documents examining the impact of last May’s court ruling on the 2017 plan bid year.

To call this lack of analysis regarding cost-sharing reductions malfeasance would put it mildly. A new president could easily have cut off those payments—payments totaling $7 billion this fiscal year—unilaterally on January 20. Yet the regulator of the state’s largest insurance market had not so much as a single e-mail considering this scenario, nor examining what his state would do in such an occurrence.

For Democrats such as Jones, last year’s silence on cost-sharing reductions represents a happy coincidence. Had insurance commissioners required insurers to price in a contingency margin for 2017—to reflect uncertainty over whether the federal payments would continue—those higher premiums would undoubtedly have hurt Clinton during last fall’s campaign. Instead, liberals like Jones who remained quiet last year have suddenly started shouting from the rooftops about “uncertainty” leading to higher premiums—because they believe Trump, not Clinton, will bear the political blame.

Break the Law to Fund Our Political War Against You

Indeed, insurance commissioners who remained silent last year about cost-sharing reduction payments have responded this year in alarming fashion. The commissioners’ trade association wrote to the Trump administration in May asking them “to continue full funding for the cost-sharing reduction payments for 2017 and make a commitment that such payments will continue.”

The insurance commissioners essentially demanded the Trump administration violate the Constitution. Article I, Section 9, Clause 7 of the Constitution grants Congress the sole power to appropriate funds, and the Supreme Court in a prior case (Train v. City of New York) ruled that the executive cannot thwart that will by declining to spend funds already appropriated. Under the Constitution, a president cannot spend money, or refuse to spend money, unilaterally—but that’s exactly what the insurance commissioners requested.

By implicitly conceding the unconstitutional actions by the Obama administration, and asking the Trump administration to continue those acts, the commissioners’ own letter exposes their dilemma. Why did commissioners ever assume the stability of a marketplace premised upon unconstitutional actions? And why did commissioners purportedly committed to the rule of law ask for those unconstitutional actions to continue?

Regardless of whether members of Congress wish to make the payments to insurers, they should first demand answers from insurance commissioners for their regulatory failure. Insurance commissioners’ collective ignorance that the unconstitutional cost-sharing reduction payments could disappear closely mimics banks’ flawed assumptions in the years leading up to the subprime mortgage collapse. Unless Congress relishes the thought of passing another TARP program, they would be wise to exercise their oversight authority before they even think about getting out the taxpayers’ checkbook.

This post was originally published at The Federalist.

Why Theresa May Flopped in Last Night’s UK Election

Last November 8, Hillary Clinton lost the U.S. presidential election in an amazing upset by Donald Trump. She endured her shock defeat on a date prescribed by federal law. What if Hillary Clinton didn’t have to run a campaign last autumn, but called one anyway—then came up short?

That’s essentially what happened last night across the Atlantic, where British Prime Minister Theresa May gambled big—and lost. She called a surprise “snap election” earlier this spring hoping to expand her parliamentary majority, and gain additional leverage in her “Brexit” negotiations with the European Union. Instead, when the votes came in, her Conservative Party lost both votes and seats in Parliament. While the Conservatives remain the largest party in Parliament—albeit short of an outright majority—the election result cannot be viewed as anything other than a defeat.

The result looks that much more stunning when considering May’s foremost opponent: a Labour Party led by Jeremy Corbyn, a leftist who makes Sen. Bernie Sanders look moderate. Corbyn has opposed both military force and the use of nuclear weapons; more than 80 percent of his party’s own members of Parliament supported ousting him as leader, but the grassroots party returned him anyway. A university professor called Corbyn’s election as Labour leader “an act of stupidity unparalleled since Caligula appointed his horse to the Roman Senate.”

Losing This Big Took Some Effort

How could May, thought a shoo-in to win a landslide only a month ago, flop so resoundingly against an opponent so weak?

As with Hillary Clinton’s loss to Trump, it took some effort. May, like Clinton, played a safe campaign, in which she didn’t seem comfortable, while Corbyn relished interactions with voters and constituents. Her campaign manifesto prompted a U-turn from the prime minister mere days after its launch, angering traditional Conservative supporters and giving the party a bumbling appearance, at a time when May had promised to provide strong and stable leadership.

There were other factors, too. In the wake of last year’s referendum to exit the European Union, the UK Independence Party vote collapsed. It appears some working-class voters who voted UKIP at the last election shifted back to Labour instead of voting Conservative.

Turnout rose in newly won Labour areas, suggesting Corbyn’s brand of hardcore socialism and “pork-barrel politics”—including pledges to abolish tuition fees—motivated young people to turn out. And as Harold Macmillan famously warned, “Events, dear boy, events” may have conspired against the prime minister. The terror attacks in Manchester and London Bridge, coupled with Trump’s tweets against London Mayor Sadiq Khan, may have played a role in the campaign’s final days.

What Happens Next?

Although voters may have punished her for going to the country early, another plebiscite could be in the cards. In her speech early Friday morning, the prime minister promised a “period of stability,” suggesting a possible transition, followed by a third general election. With the Conservatives operating a minority government, it seems unlikely that government could last for the full five-year lifetime of a Parliament.

That said, May may not remain long enough to make those decisions herself. Early reports suggest a high likelihood that the prime minister could step down as Conservative leader, triggering the second leadership election for the party in as many years. (It is a demonstration of the election’s shock result that Corbyn could well outlast May as party leader—an outcome few previously would have thought possible.)

However, one election seems unlikely to occur any time soon: A second referendum on Scottish independence. Scotland provided one of the election’s many ironies when a weakening of Scottish National Party support led to a gain of 11 Conservative MPs, propping up the party after losses elsewhere. With Labour also benefitting from the SNP weakness, and Scottish voters seemingly taken a dim view of a “never-endum” debate on independence, the union of England and Scotland apparently remains secure—for the time being.

As to Britain’s “other” union—its impending divorce from the European Union—the nature of that relationship seems less clear. With the Conservatives having less room for maneuver in the coming Parliament, the next prime minister—whether May or someone else—could end up playing a weakened hand in negotiations with Brussels. That’s the exact opposite scenario of the one May envisioned six weeks ago—another surprising outcome from Thursday’s surprising election.

This post was originally published at The Federalist.

One Easy Way to Start Reforming Entitlements

During his election campaign and the subsequent presidential transition, Donald Trump expressed a high degree of discomfort with reducing Medicare benefits. His position ignores the significant financial peril Medicare faces—a whopping $132.2 billion in deficits for the Part A (Hospital Insurance) trust fund over the past eight years.

That said, there is one easy way in which the new administration could advance the cause of entitlement reform: allow individuals—including wealthy individuals, like, say, Donald Trump—to opt out of Medicare.

Under current Social Security Administration (SSA) practice dating back to at least 1993, individuals who apply for Social Security benefits are automatically enrolled in Medicare Part A (hospital coverage). While Medicare Part B (physician coverage) requires a separate application process and monthly premium payment, Part A is effectively mandatory for all Social Security recipients. Individuals who do not wish to enroll can do so only by not applying for Social Security benefits. Put another way, the federal government holds individuals’ Social Security benefits hostage as leverage to forcibly enroll them in Medicare Part A.

If you think the government holding benefits hostage to forcibly enroll seniors—even wealthy ones—in taxpayer-funded Medicare sounds more than a little absurd, you wouldn’t be the first one. Several years ago, several conservatives—including former House Majority Leader Dick Armey—filed a lawsuit in federal court, Hall v. Sebelius, seeking to overturn the SSA guidance. The plaintiffs wanted to keep their previous private coverage, and did not wish to lose the benefits of that coverage by being forcibly enrolled in Medicare Part A.

We Have A Roadmap To Remedy This Problem

Unfortunately, both a federal district court and the Court of Appeals for the District of Columbia agreed with the federal government. The majority opinions held that the underlying statute distinguished being “entitled” to Medicare Part A benefits from “enrolling” in Part B, meaning the government was within its rights to deny the plaintiffs an opportunity to opt out of Part A.

However, a dissent at the Court of Appeals by Judge Karen LeCraft Henderson can provide a roadmap for the Trump Administration to remedy the absurd scenario of individuals being forcibly enrolled in a taxpayer-funded program. Judge Henderson held that the Social Security Administration had no statutory authority to prohibit (via its Program Operations Manual System, or POMS) individuals from disclaiming their Medicare Part A benefits. While the law “entitles” individuals to benefits, it does not give SSA authority to force them to claim said benefits. SSA published guidance in its program manual exceeding its statutory grant—without even giving the public the opportunity for notice-and-comment before establishing its policy.

It’s Time To End The SSA’s Kafka-esque Policies

During the Cold War, East German authorities referred to the barriers surrounding West Berlin as the “Anti-Fascist Protective Wall”—implying that the Berlin Wall stood not to keep East Berliners in East Germany, but West Berliners out. One can’t help but notice a similar irony in the Medicare opt-out policies developed by the Social Security Administration. After all, if Medicare is so good, why must SSA hold individuals’ Social Security benefits hostage to keep them enrolled in the program?

The Trump Administration can easily put an end to the Social Security Administration’s Kafka-esque policies—and take one small step towards reforming entitlements—by instructing the new Commissioner of Social Security to work with the Centers for Medicare and Medicaid Services to develop a means for individuals to opt out of the Medicare Part A benefit. The savings from such a policy would likely be modest, but why should the federal government force the expenditure of taxpayer dollars on benefits that the beneficiaries themselves do not wish to receive?

The simple answer: it shouldn’t. Perhaps Bernie Sanders or Elizabeth Warren view forcible enrollment in Medicare as “punishment” for wealthy seniors. But at a time when our nation faces nearly $20 trillion in debt, individuals of significant means—whether Bill Gates, Donald Trump, or even Hillary Clinton—shouldn’t be forced to accept taxpayer-funded benefits. The Trump Administration eliminating this government absurdity would represent a victory for fiscal responsibility—and sheer common sense.

This post was originally published at The Federalist.

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.

Barack Obama’s Anti-Democratic Speech

In Miami on Thursday afternoon, President Obama gave a speech ostensibly updating the American people on the status of his health care law. But beneath the wonky explanations lay several dark—one might even call them intolerant—undercurrents.

As much as Donald Trump’s recent comments suggesting he won’t accept the results of November’s election violate democratic norms—and they do—President Obama’s demeanor provides a more subtle, but perhaps no less insidious, threat to democratic pluralism.

When it comes to his eponymous law, President Obama thinks only policy outcomes to his liking warrant an end to debate, will only acknowledge ideas and philosophies consonant with his own, and refuses to acknowledge the extent of the deception needed to pass the measure in the first place.

Granted, the President didn’t follow Donald Trump’s (bad) example in saying he would only accept the election results “if I win.” But when it comes to the policy consequences arising from said elections, the President’s attitude essentially echoes Trump’s: The outcomes only matter if he wins.

“Going Back” to Hillarycare

As his is wont, the President on Thursday cited multiple votes on repeal bills in Congress, and questioned why Republicans wouldn’t want to “go back” to the days before Obamacare. But to this historian, it’s worth taking at least minute to do just that.

A certain former Secretary of State often likes to point out that “it was called Hillarycare before it was called Obamacare.” She’s right, of course. It was called Hillarycare—and the voters overwhelmingly rejected it, handing control of both chambers of Congress to Republicans for the first time in 40 years. And before that, voters and legislators rejected universal coverage schemes under Presidents Nixon, Truman, and both Presidents Roosevelt, to name but a few.

Viewed from this prism, why did Democrats in 2009 “go back” to try and enact Hillarycare after voters soundly rejected it—not just during the Clinton Administration, but time after time after time over a span of nearly a century? Because, for good or for ill, they believed in the objective of universal coverage—and they would not take repeated “nos” from the voters for an answer.

Why then should those concerned about the impact of Obamacare—or for that matter, any program promoted by this President—not demonstrate the same level of passion, and the same level of sustained enthusiasm, to obtain their objectives? The answer is simple: They absolutely should—at least, if you believe in democracy. But to judge from his speech, President Obama apparently places a higher priority on denigrating those who would undermine his agenda.

Granted, if you believe government only exists to provide an ever-larger amount of largesse to individuals—a boundless array of programs, generating an ever-growing level of federal munificence—you might think the only outcomes that matter are ones that increase government’s scope and reach. But if you believe that lawmakers, in their rush to obtain short-term political advantage, might be spending their way into unsustainable levels of debt for future generations, you probably take issue with the President’s one-sided perspective.

Differing Goals

Likewise, the President refuses to acknowledge that conservatives have any “serious alternatives” to the law. As someone who helped draft not one, but two, such alternatives, I can categorically call that claim false. President Obama likely knows such alternatives exist—but because they disagree with his objectives, he refuses to acknowledge them.

There’s an ironic contradiction between the President’s refusal to acknowledge conservative alternatives to Obamacare and his self-proclaimed willingness to accept ideas from any quarter. In his speech Thursday, the President joked that he would even change the name of Obamacare to “Reagancare” or “Paul Ryancare,” if Republicans would agree to improve the measure.

But there’s a not-insignificant catch: President Obama will discuss ideas from anyone—but only if they accomplish his objectives. If the ideas don’t synch up with his objectives—if he doesn’t win on the policy, to echo Trump—then to the President, those ideas simply don’t exist.

The President once again talked about Obamacare’s program of state waivers, which he claimed would provide flexibility to states. But as I have previously noted, the law permits states to waive some of the law’s requirements only if they agree to accomplish the law’s objectives. States can impose more mandates and regulations, and cover more people, but not fewer. Conservatives who wish to emphasize solutions that focus on lowering health care costs over expanding coverage will find little comfort from the law’s waivers—and little acknowledgement from this President.

Win at All Costs?

One might not recognize it at first glance, but the President’s speech implicitly admitted many of the deceptions needed to pass Obamacare in the first place. In calling the law a “starter home,” and calling for increased subsidies, he conceded that his remarks to Congress stating “the plan I’m proposing will cost around $900 billion” amounted to a bait-and-switch. Ditto his claims that premiums are rising at their slowest rate—far from the $2,500 per family premium reduction he promised in 2008.

But to President Obama, when it comes to policy, winning is all that matters. And just as with Trump’s comments on the election in November, the only outcomes that matter to President Obama—and the only ideas he will acknowledge—are those in agreement with him. Regardless of whether you believe Obamacare should be preserved, improved, or repealed, that’s bad for democracy.

This post was originally published at The Federalist.

The Dirty Little Secret of Hillary Clinton’s Health Plan

On Monday, President Bill Clinton committed a Kinsley gaffe, criticizing Obamacare as “the craziest thing in the world,” whereby small business owners “wind up with their premiums doubled and their coverage cut in half.” In response to her husband’s accurate depiction of Obamacare’s problems, Hillary said on Tuesday: “We got to fix what’s broken and keep what works, . . . We’re going to tackle it and we’re going to fix it.” Secretary Clinton is exactly correct — if by “fix” she means enacting a proposal that could line the pockets of businesses to the tune of nearly a trillion dollars while simultaneously jacking up premiums and deductibles for millions of Americans.

Hillary Clinton’s plan for a new federal tax credit to subsidize out-of-pocket costs for all Americans will encourage businesses to make their health benefits skimpier — raising premiums, co-payments, and deductibles — because they know that the new tax credit will pick up the difference for the hardest-hit families. While Secretary Clinton’s other major health-care proposals (to increase federal subsidies on insurance exchanges and to create a government-run “public option” on them) would apply only to those without employer-based coverage, the out-of-pocket tax credit would apply to both insurance that is employer-based and insurance that is individually purchased.

In analyzing her proposals, the liberal Commonwealth Fund noted that Secretary Clinton’s out-of-pocket tax credit would affect a pool of 177.5 million potentially eligible Americans, which is more than four times as many as those who would be eligible to avail themselves of the government-run “public option.” The broader reach for the tax credit, plus its generous amount (up to $2,500 per individual or $5,000 per family for out-of-pocket spending that exceeds 5 percent of income) creates a sizable cost for the federal government: net spending of $90.3 billion in 2018 alone, according to the Commonwealth analysis. In 2009, President Obama made this pledge to Congress: “The plan I’m proposing will cost around $900 billion over ten years.” But one element alone of Secretary Clinton’s plan will cost at least that much — and probably more than $1 trillion.

The Commonwealth analysis of Clinton’s plan attempts to estimate how much the out-of-pocket tax credit will reduce health-care expenses for middle-class and working-class families. What the Commonwealth researchers did not mention in the report, and instead buried in a technical appendix, is this doozy of an asterisk: “Potentially, this [tax credit] approach gives firms an incentive to increase workers’ premium contributions, so that more workers are eligible to claim the credit.”

The Commonwealth researchers did not even attempt to model the impact of the tax credit on the actual behavior of businesses, claiming that employers might not know their workers’ income or out-of-pocket expenses, and saying they could not make decisions based on incomplete information. Nonsense. Even if businesses decide not to increase employees’ premium contributions, they could jack up deductibles instead. A firm could raise its deductible by $2,500, offer all workers a $1,000 bonus — to help employees whose out-of-pocket costs don’t meet the 5 percent of income threshold to obtain the tax credit, or assist workers’ cash flow until they receive it — and still come out ahead.

Whether by accident or design, the Commonwealth researchers assumed that employers will not respond to incentives — an assumption that belies three years of experience with Obamacare’s exchanges. Thousands of Americans have gamed the law’s special enrollment periods to sign up for coverage outside the annual enrollment window, incurred above-average costs – and then dropped their coverage at above-average rates, un-enrolling after returning to health. And because Section 1412 of the law allows enrollees a three-month grace period before insurers can drop their coverage for non-payment, one insurer found that 21 percent of its customers didn’t bother to pay their premiums last December, because the law effectively said they didn’t have to.

Given the ways in which Americans have gamed Obamacare’s morass of new regulations to create a system of barely functioning insurance exchanges, it beggars belief to think that businesses would not similarly work to maximize profit. According to the Kaiser Family Foundation’s survey of employer-sponsored health plans, only 23 percent of workers face a deductible above $2,000. With the average deductible rising 12 percent last year, firms would now have an even greater incentive to privatize their gains – because the new tax credit would allow them to socialize their workers’ losses by moving them to the federal fisc.

Why would Secretary Clinton propose a costly plan that encourages large businesses to pocket profits while jacking up costs on struggling families? Simple: The plan will make employer coverage less desirable, and it might even make the Obamacare exchanges look attractive by comparison. If liberals’ end goal is to erode employer-provided health coverage and migrate all Americans to government-run exchanges, offering a tax credit that will effectively erode that coverage faster isn’t a bad way to start.

This post was originally published at National Review

How Bailing Out Health Insurers Will Lead to Single Payer Health Care

The bad news for Obamacare keeps on coming. Major health carriers are leaving insurance exchanges, and other insurance co-operatives the law created continue to fail, leaving tens of thousands without health coverage. Those on exchanges who somehow manage to hold on to their insurance will face a set of massive premium increases—which will hit millions of Americans weeks before the election.

Many on the Right believe Obamacare was deliberately designed to fail, and fear that we’re on a slippery slope toward single-payer. On the other side of the spectrum, the Left hopes conservatives’ fears—and liberals’ dreams—will be answered. But is either side right?

The reality is more nuanced than the rhetoric would suggest. Whether government runs all of health care is less material than whether government pays for all of health care. The latter will, sooner or later, lead to the former. That’s why the debate over bailing out Obamacare is so important. Ostensibly “private” health insurers want tens of billions of dollars in taxpayer-funded subsidies—because they claim these subsidies are the only thing standing between a government-run “public option” or a single-payer system.

But the action insurers argue will prevent a government-run system will in reality create one. If insurers get their way, and establish the principle that both they and Obamacare are too big to fail, we will have created a de facto government-run insurance system. Whether such system is run through a handful of heavily regulated, crony capitalist “private” insurers or government bureaucrats represents a comparatively trifling detail.

The Biggest Wolf Is Not the Closest

In considering the likelihood of single-payer health care, one analogy lies in the axiom that one should shoot the wolf outside one’s front door. Single-payer health care obviously represents the biggest wolf—but not the closest. While liberals no doubt want to create a single-payer health care system—Barack Obama has repeatedly said as much—they face a navigational problem: Can you get there from here?

The answer is no—at least not in one fell swoop. Creating a single-payer system would throw 177.5 million Americans off their employer-provided health insurance. That level of disruption would be orders of magnitude greater than the cancellation notices associated with the 2013 “like your plan” fiasco, which itself prompted President Obama to beat a hasty, albeit temporary, retreat from Obamacare’s mandates. Recall too that the high taxes needed to fund a statewide single-payer effort prompted Vermont—Vermont—to abandon its efforts two years ago.

Understanding the political obstacles associated with throwing half of Americans off their current health insurance, liberals’ next strategy has focused on creating a government-run health plan to “compete” with private insurers. Hillary Clinton endorsed this approach, and Democratic senators made a new push on the issue this month. When stories of premium spikes and plan cancellations hit the fan next month, liberals will inevitably claim that a government-run plan will solve all of Obamacare’s woes (although even some liberal analysts admit the law’s real problem is a product healthy people don’t want to buy).

Can the Left succeed at creating a government-run health plan? Probably not at the federal level. Liberals have noted that only one Democratic Senate candidate running this year references the so-called “public option” on his website. Thirteen Senate Democrats have yet to co-sponsor a resolution by Sen. Jeff Merkley (D-Oregon) calling for a government-run plan. Such legislation faces a certain dead-end as long as Republicans control at least one chamber of Congress. Given the failure to enact a government-run plan with a 60-vote majority in 2009, an uncertain future even under complete Democratic control.

What About Single-Payer Inside States?

What then of state efforts to create a government-run health plan? The Wall Street Journal featured a recent op-ed by Scott Gottlieb on this subject. Gottlieb notes that Section 1332 of Obamacare allows for states to create and submit innovation waivers—waivers that a Hillary Clinton administration would no doubt eagerly approve from states wanting to create government-run plans. He also rightly observes that the Obama administration has abused its authority to approve costly Medicaid waivers despite supposed requirements that these waivers not increase the deficit; a Clinton administration can be counted on to do the same.

But another element of the state innovation waiver program limits the Left’s ability to generate 50 government-run health plans. Section 1332(b)(2) requires states to enact a law “that provides for state actions under a waiver.” The requirement that legislation must accompany a state waiver application will likely limit a so-called “public option” to those states with unified Democratic control. Because Obamacare, and the 2010 and 2014 wave elections it helped spark, decimated the Democratic Party, Democrats currently hold unified control in only seven states.

Even at the state level, liberals will be hard-pressed to find many states in which to create their socialist experiment of a government-run health plan. In those few targets, health insurers and medical providers—remember that government-run health plans can only “lower” costs by arbitrarily restricting payments to doctors and hospitals—will make a powerful coalition for the Left to try and overcome. Also, in the largest state, California, the initiative process means that voters—and the television ads health-care interests will use to influence them—could ultimately decide the issue, one way or the other.

So if single-payer represents the biggest wolf, but not the one closest to the door, and government-run plans represent a closer wolf, but only a limited threat at present, what does represent the wolf at the door? Simple: the wolf in sheep’s clothing.

Too Big To Fail, Redux

The wolf in sheep’s clothing comes in the form of insurance industry lobbyists, who have been arguing to Republican staff that only making the insurance exchanges work will fend off calls for a government-run plan—or, worse, single-payer. They claim that extending and expanding the law’s current bailouts—specifically, risk corridors and reinsurance—can stabilize the market, and prevent further government intrusion.

Well, they would say that, wouldn’t they. But examining the logic reveals its hollowness: If Republicans pass bad policy now, they can fend off even worse policy later. There is of course another heretofore unknown concept of conservative Republicans choosing not to pass bad policy at all.

That’s why comments suggesting that at least some Republicans believe Obamacare must be fixed no matter who is elected president on November 8 are so damaging. That premise that Congress must do something because Obamacare and its exchanges are “too big to fail” means health insurers are likewise “too big to fail.” If this construct prevails, Congress will do whatever it takes for the insurers to stay in the marketplace; if that means turning on the bailout taps again, so be it.

But once health insurers have a clear backstop from the federal government, they will take additional risk. Insurers have said so themselves. In documents provided to Congress, carriers admitted they under-priced premiums in the law’s first three years precisely because they believed they had an unlimited tap on the federal fisc to cushion their losses. Republican efforts in Congress to rein in that bailout spigot have met furious lobbying by health insurers—and attempts by the Obama administration to strike a corrupt bargain circumventing Congress’ restrictions.

Efforts to end the bailouts and claw back as much money as possible to taxpayers would shoot the wolf at the door. Giving insurers more by way of bailout funds—socializing their risk—will only encourage them to take additional risk, exacerbating a boom-and-bust cycle that will inevitably result in a federal takeover of all that risk. When the federal government provides the risk backstop, you have a government-run system, regardless of who administers it.

While the insurance industry may view more bailouts as their salvation, Obamacare’s version of TARP looks more like a TRAP. By socializing losses, purportedly to prevent single-payer health care, creating a permanent insurer bailout fund will effectively create one. While remaining mindful of the other wolves lurking, Congress should focus foremost on eliminating the one at its threshold: Undo the Obamacare bailouts, and prove this law is not too big to fail.

This post was originally published at The Federalist.

Another Insurer Bites the Obamacare Dust

Late Monday evening, health insurer Aetna confirmed a major pullback from Obamacare’s exchanges for 2017. The carrier, which this spring said it was looking to increase its Obamacare involvement, instead decided to participate in only four state marketplaces next year, down from 15 in 2016. Aetna will offer plans in a total of 242 counties next year — less than one-third its current 778.

Coupled with earlier decisions by major insurers Humana and UnitedHealthGroup to reduce their exchange involvement, Aetna’s move has major political and policy implications:

Exchanges are in intensive care
Insurers have lost literally billions selling Obamacare policies since 2014. One estimate found that insurers suffered $4 billion in losses in 2014; other studies that suggest carriers lost the same amount last year as well. And these multi-billion-dollar losses come after taking into account two transitional programs that have used federal dollars to protect insurers — programs that will end this December 31.

Over the weekend, in a report on premium increases for 2017, the New York Times noted that for one Pennsylvania health plan, nearly 250 individuals incurred health-care costs of over $100,000 each — “and then cancelled coverage before the end of the year.” While the administration has proposed some minor tweaks to minimize gaming the system, they will not solve the underlying problem: It takes tens of thousands of healthy enrollees to even out the health costs of 250 individuals with six-figure medical expenses, and Obamacare plans have failed to attract enough healthy individuals.

An opening for Trump?
The Wall Street Journal noted that the Aetna’s pullback means that some areas in Arizona now have no health insurers offering exchange coverage. Individuals there who qualify for insurance subsidies will have nowhere to spend them.

President Obama faced a self-imposed crisis in the fall of 2013 when millions of Americans faced a double whammy: Cancellation of their pre-Obamacare policies was coupled with much higher premiums for exchange coverage to replace it. Hillary Clinton could face an eerily similar dynamic in the weeks just before November 8. It remains to be seen whether Donald Trump’s campaign can capitalize on this potential October surprise hiding in plain sight.

Hillary has a problem
Over and above the obvious political problem that the exchanges present between now and November, their dire situation poses a policy quandary that a potential President Clinton would have to address — and fast — on taking office. Her campaign has proposed increasing federal subsidies for those affected by high out-of-pocket costs. But subsidies to individuals will matter little if insurers will not participate in exchanges to begin with.

So how would Hillary Clinton solve the exchange problem? Would she endorse a bailout of the insurers that liberals love to hate? Conversely, if Republicans retain control of at least one house of Congress, how on earth could she enact a government-run health plan that Barack Obama could not pass with huge, filibuster-proof majorities in both chambers? How would a President Clinton get out of the box that her predecessor has gift-wrapped for her?

Will conservatives stand fast?
As I previously noted, Aetna’s “solution” to the exchange problem is simple: Place taxpayers on the hook for their losses — in short, a permanent taxpayer bailout. But given the billions of dollars that insurers have already lost even after receiving tens of billions in corporate welfare from the federal government, Congress will, we should hope, exercise the good judgement not to throw good money after bad.

No Republican voted for Obamacare in either the House or the Senate — and for good reason. The poor design of its health-insurance offerings has ensured that only very sick individuals, or those qualifying for the richest subsidies, have signed up in any significant numbers. No small legislative changes or regulatory tweaks will change that fundamental dynamic. The question is whether, having seen their predictions proven correct, Republicans will seize defeat from the jaws of victory and view a Hillary Clinton victory as meaning they need to “come to terms” with a law that has destabilized insurance markets across the country. Here’s hoping that sale proves as elusive for Mrs. Clinton as Obamacare itself has been to insurers.

This post was originally published at National Review.

How Hillary Clinton’s Credit for Out-of-Pocket Health Costs Could Backfire

Hillary Clinton said recently that she supports efforts to allow some under 65 to buy into Medicare and suggested that this would help lower health-care costs. A key element of her broader health-care platform could, however, increase them–at a sizable cost to the federal government.

A plan the Clinton campaign unveiled in September would create a refundable tax credit worth as much as $2,500 per individual and $5,000 per family to cover out-of-pocket health-care expenses. The campaign has said that the credit would be “available to insured Americans with qualifying out-of-pocket health expenses in excess of five percent of their income, and who are not eligible for Medicare or claiming existing deductions for medical costs.” This means people eligible for the credit would include not only those who have plans through the Obamacare exchanges but also those insured through their employer. Making the credit refundable could allow individuals with little or no income tax liability to receive a refund from the federal government toward their out-of-pocket health costs.

The potential breadth of this proposal could prove its undoing. For one thing, the most recent Census Bureau survey, published in September, estimates that 175 million Americans are covered by employer plans. That’s nearly 14 times the 12.7 million individuals covered by plans through the Affordable Care Act exchanges. While there have been proposals to increase federal subsidies provides to those enrolled through the ACA exchanges, this is the only plan suggesting new federal subsidies for those with employer coverage.

Extending federal subsidies for out-of-pocket costs incurred by those with employer-provided plans could dramatically remake that market. Companies could opt to increase employee cost-sharing, knowing that workers would recoup some or possibly all of their new costs through the federal program. A Kaiser Family Foundation survey of employer plans last year found that only 19% of workers with single coverage faced a deductible of more than $2,000. The Clinton plan sets the maximum credit for individuals at $2,500. If the federal government provides individuals with high health costs a refundable credit to help subsidize their expenses, employers would have reason to try to offload their costs onto employees—which ultimately could end up costing the U.S. Treasury more.

Details of the Clinton plan are still limited. Should it be implemented, policy makers could attempt to shape or amend the tax credit’s effects. Still, it’s possible that a policy designed to absorb higher health costs would shift them from employers and workers to federal taxpayers. That cost-shifting wouldn’t lower spending–and could increase it. Knowing there is a federal credit might give employees incentive to incur additional expenses to exceed the subsidy threshold. That would mean a credit aimed at mitigating the effects of rising health costs for some families could end up exacerbating the problem on a broader scale.

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

For Presidential Candidates, Some Inconvenient Truths on Entitlements

News coverage regarding Hillary Clinton’s proposal to allow individuals under age 65 to buy into Medicare has focused largely on describing how her plan might work, or how it fits into her Democratic primary battle with socialist Bernie Sanders — the left hand trying to imitate what the far left hand is doing. But these political stories mask a more important policy paradigm: While Sanders and Clinton both want to expand Medicare, the program is broke — and neither Sanders, nor Clinton, nor Donald Trump have admitted that inconvenient truth, or have proposed any specific solutions to fix the problem.

Astute readers may note the verb tense in the preceding sentence. It’s not that Medicare will become insolvent in ten or twenty years’ time — it’s practically insolvent now. The program’s Part A (hospital insurance) trust fund lost a whopping $128.7 billion between 2008 and 2014, according to the program’s trustees. The Congressional Budget Office projected earlier this year that the trust fund would become insolvent within the decade.

But in reality, the only thing keeping Medicare afloat at present is the double-counting budget gimmicks created by Obamacare. In the year prior to the law’s enactment, the program’s trustees estimated that the Part A trust fund would become insolvent by 2017 — just a few short months from now. But within months after Obamacare became law, the trustees pushed back their insolvency estimate twelve years, from 2017 to 2029.

The trustees’ estimates notwithstanding, Medicare hasn’t become more solvent under President Obama — far from it. Instead, the Medicare payment reductions and tax increases used to fund Obamacare are simultaneously giving the illusion of improving Medicare’s insolvency. When former Health and Human Services secretary Kathleen Sebelius was asked at a congressional hearing whether those funds were being used “to save Medicare, or#…#to fund health care reform [Obamacare],” Sebelius replied, “Both.”

The Madoff-esque accounting schemes included in Obamacare do not improve Medicare’s solvency one whit. In fact, they undermine the program, because the illusion of solvency has encouraged politicians to ignore Medicare’s financial shortfalls until it’s too late.

And ignore it they have. Sanders has proposed a “Medicare for all” plan that a liberal think tank this week estimated would cost the federal government $32 trillion over ten years. Hillary Clinton has proposed creating another new entitlement — this one a refundable tax credit of up to $5,000 per family to cover out-of-pocket medical expenses, for which many of the 175 million Americans with employer-sponsored coverage could qualify. And Donald Trump has run ads, in states including Pennsylvania, claiming he will “save Social Security and Medicare without cuts.”

But none of them have provided specifics about how they would reform our existing entitlements to prevent a fiscal collapse and preserve them for current seniors and future generations. The collective silence might stem from the fact that Medicare alone faces unfunded obligations of $27.9 trillion over the next 75 years — and that’s after the Obamacare accounting gimmicks that make Medicare’s deficits look smaller on paper. Shortfalls that large will require making tough choices; greater economic growth will make the deficits more manageable, but we can’t grow our way out of a $28 trillion shortfall.

Reaction to Speaker Paul Ryan’s comments about Trump last week has largely focused on the latter’s tone and temperament in his presidential campaign. But if Ryan has stood for anything in Washington, it is fiscal responsibility and entitlement reform. Conversely, by claiming he can “save Social Security and Medicare without cuts,” Trump is effectively signing Republicans up for a $28 trillion tax increase to “save Medicare” — and more besides for Social Security. Little wonder, then, that the Speaker expressed his reluctance to endorse Trump; at their meeting today, they could well address this topic in detail.

Four decades ago, as Britain plunged into its Winter of Discontent, Prime Minister James Callaghan returned from a South American summit and denied any sense of “mounting chaos.” The next day, the Sun’s famous headline shouted “Crisis? What Crisis?” Clinton, Trump, and Sanders should take note. For while the remaining candidates for president seem more interested in creating new entitlements than in making existing ones sustainable, ultimately voters will not look kindly on those who fiddled while our fiscal future burned.

This post was originally published at National Review.