Tag Archives: Senate Finance Committee

What’s Congress Doing with SCHIP?

Amidst the wrangling over Obamacare, reauthorization of the State Children’s Health Insurance Program (SCHIP) expired on September 30, the end of the federal government’s fiscal year. The two committees of jurisdiction—energy and commerce in the House, and finance in the Senate—each marked up their reauthorization bills last week. But House Energy and Commerce Committee Chairman Greg Walden (R-OR) said Monday the bill would not come to the House floor this week.

What’s the holdup? Why the delays in bringing to the floor for votes a bill whose authorization has already expired?

Even though Republicans proposed a generous—some conservatives might argue too generous—reauthorization of SCHIP, House Democrats object because they don’t want millionaires and billionaires to pay for the new spending on children’s health insurance, and Senate Democrats object because they want to attach tens of billions of dollars in taxpayer subsidies to insurance companies.

I swear to you: I’m not making this up.

A Mixed House Package

The SCHIP reauthorization text varies little between the House and the Senate versions. On that front, conservatives may have qualms with supporting little more than a straight extension of the status quo. The bill extends—albeit for only one year, as part of a more gradual phase-out—enhanced funding to state SCHIP programs. The full 23 percent match increase would end in 2019, as under current law, while states would receive an additional 11.5 percent increase in 2020. Some states have received a 100 percent federal match for their child enrollees due to this Obamacare provision, which is a clear disincentive for states to fight fraud and improper spending.

Moreover, the bill extends Obamacare’s maintenance of effort requirement—limiting states from making changes to their programs—by an additional three years in most cases, from 2019 to 2022. The bill also does not include reforms the House proposed two years ago, which would require states to focus on covering poor children first—the program’s prime emphasis before the 2009 reauthorization signed by President Obama envisioned states expanding their programs to more affluent families.

On the positive side, however, the House did include good reforms to help pay for the new SCHIP spending. It includes several provisions designed to promote program integrity in Medicaid, including one that would effectively ensure that lottery winners, or others who receive large lump-sum payments, do not maintain coverage for this low-income program. The House bill would also increase Medicare means-testing for affluent families, reducing taxpayer subsidies for Part B (outpatient care) and Part D (prescription drug) coverage for individuals making over $160,000, and eliminating the subsidies entirely for individuals making more than $500,000.

Those pay-fors drew Democrats’ ire, and prompted the postponement of consideration on the House floor this week. To put it more bluntly: Democrats are holding children’s health hostage because they object to charging millionaires and billionaires more for Medicare. Should anyone remind them that Obamacare itself also increased Medicare means-testing for wealthy beneficiaries to pay for Obamacare?

In the Senate, a Stalemate

Meanwhile, over in the Senate—which has yet to decide how to pay for the new SCHIP spending—Minority Leader Chuck Schumer (D-NY) demanded last week that the Republican majority “immediately bring this bill to the Senate floor for a vote and include much-needed bipartisan provisions to stabilize the markets, lower premiums for 2018,” and extend other programs.

Schumer made those demands despite two inconvenient truths: Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) haven’t yet reached agreement on a bipartisan “stabilization” bill—and most states finalized their 2018 insurance premiums on September 27, weeks ago. In other words, Schumer wants to enact an agreement that doesn’t exist to achieve premium reductions that can’t happen.

A cynic might surmise that, with his talk of “stabilization” measures, Schumer wants to use SCHIP to sneak through tens of billions of dollars in cost-sharing reduction payments to insurers—a provision that might prove unpopular, and controversial, as a stand-alone measure, but could pass through relatively unnoticed as part of a larger, “Christmas tree”-sized bill.

For conservatives, the current mixed policy outcomes on SCHIP could deteriorate significantly. Weakening the House’s “pay-fors”—which seems bound to happen, given Walden’s further attempts to negotiate with Democrats—could eliminate some, if not most, of the reasons conservatives could see to vote for the measure.

While the policy outcomes seem uncertain, and could range from fair to poor, the political ramifications seem clear. In 2007 and 2008, when President George W. Bush vetoed SCHIP bills due to provisions that would have diverted the program from the low-income children for which it was designed, Democrats organized protests, and ran ads against him. This year, when Democrats are holding up an arguably too-generous SCHIP bill literally because they want to defend the wealthy and insurance companies, Republicans have responded by…negotiating with them.

If one wants reasons behind conservative discontent with Washington, look no further than this bill.

This post was originally published at The Federalist.

Five Factors That Could Interfere with Graham-Cassidy’s State Health Care Waivers

Some conservative writers—including others who write for this publication—have opined that the legislation written by Sens. Lindsay Graham (R-SC) and Bill Cassidy (R-LA) offers states the ability to innovate and reform their health care systems. Most conservatives, including this one, consider state flexibility an admirable goal.

Certainly reforming Medicaid—through a block grant or per capita cap, coupled with additional flexibility to allow states to manage their programs more freely—would go a long way towards improving care, and reducing health care costs.

But does Graham-Cassidy as written deliver on its promise regarding Obamacare insurance regulations? On the two critical questions surrounding the legislation—will it lower insurance premiums, and will it generate a system that works for states?—a textual analysis of the bill yields significant doubts. At least five issues could hinder the results its sponsors have promised, and which all conservatives hope for.

1. Subsidizing Moral Hazard

The language on the top of page 15 explicitly links waivers to funding from the new system of block grants the bill creates. Any waiver will only apply to 1) coverage provided by an insurer receiving block grant funding and 2) coverage “provided to an individual who is receiving a direct benefit (including reduced premium costs or reduced out-of-pocket costs)” under the block grant.

This requirement that each and every person subjected to a non-Obamacare-compliant plan must receive a “direct benefit” subsidized by federal taxpayers has several potential perverse consequences. By definition, it encourages moral hazard. Because individuals will know that if they are subjected to health underwriting, or an otherwise noncompliant plan, they must receive federal subsidies, it will encourage them not to buy health insurance until they need it.

It means that either states will have to extend taxpayer-subsidized benefits to highly affluent individuals (allowing them to buy noncompliant plans), or have to permit only low- and middle-income families to buy noncompliant plans (to restrict the subsidies to low-income families). Both scenarios seem politically problematic to the point of being untenable.

If states try to provide a de minimis direct benefit—say, a $1 monthly premium subsidy—to some enrollees to minimize the two problems described above, they would face high overhead costs, and a complex system to administer.

When considering the two considerations above—will the bill lower premiums, and will it work?—this provision alone seems destined to preclude either from occurring. The moral hazard could increase premiums, not lower them, driving more healthy people out of the marketplace by telling them they will receive subsidies if and when they become sick and need coverage. The requirement that every person subjected to a waiver must receive subsidized benefits appears potentially destabilizing to insurance markets, while also creating political problems and administrative complexity.

2. Encouraging Lawsuits

The provision on page 12 requiring states applying for waivers to describe “how the state intends to maintain access to adequate and affordable health insurance coverage for individuals with pre-existing conditions” presents two concerns. First, a future Democratic administration could use rulemaking to define “adequate and affordable health insurance coverage” so narrowly—prohibiting co-payments or cost-sharing of more than $5, for instance—that no state could maintain access to “adequate and affordable” coverage, thereby eliminating their ability to apply for and receive a waiver.

Second, courts have ruled that Medicaid waiver applications are subject to judicial review, a standard that would presumably apply to the Graham-Cassidy waivers as well. While a Congressional Research Service report notes that courts have traditionally given deference to the Centers for Medicare and Medicaid Services (CMS) on waiver applications, the Ninth Circuit Court of Appeals in 1994 did in fact strike down a California waiver application that CMS had previously approved.

If a state receives a waiver, it seems highly likely that individuals affected, with the strong encouragement of liberal activists, will seek relief in court, and point to the page 12 language to argue that the court should strike down the waiver for not providing “adequate and affordable coverage” to people with pre-existing conditions. At minimum, the ensuing legal uncertainty could place states’ waiver programs in limbo for months or even years. And only one judge, or one circuit court, that views the pre-existing condition language as applying to more than states’ waiver application could undermine the program.

Congress could theoretically include language in Graham-Cassidy precluding judicial review of administrative decisions regarding waivers, as Democrats did 13 separate times in Obamacare. But on this particular bill, such a provision likely would not pass muster with the “Byrd rule” that applies to budget reconciliation measures.

Specifically, language prohibiting judicial review would have no (or a minimal) budgetary impact, and would represent matter outside the committees with jurisdiction over the reconciliation bill (Senate Judiciary versus Senate Finance and HELP Committees), both points of order that would see the provision stricken absent 60 Senate votes (which the bill does not have) to retain it.

Given the ongoing political controversy surrounding pre-existing conditions, some moderates may view the inclusion of this phrase as critical to their support for the bill. But its inclusion could ultimately undermine the entire waiver process and one of conservatives’ prime goals from the “repeal-and-replace” process, namely relief from Washington-imposed regulatory burdens.

3. Encourages Activist Judges and Bureaucrats

Language on page 13 of the bill includes language limiting any regulatory waiver: “A health insurance issuer may not vary premium rates based on an individual’s sex or membership in a protected class under the Constitution of the United States.” Here again, a future Democratic administration, or activist judges, could easily take an expansive view of “protected class” to include age, family status, gender identity, etc., in ways that undermine the waivers’ supposed regulatory relief.

4. Allows States to Waive Only Some Regulations

While states may waive some Obamacare regulations, they can’t waive others, an internal inconsistency that belies the promise of “flexibility.” For instance, states cannot waive the under-26 mandate if they so choose. Moreover, language on page 15 prohibiting a waiver of “any requirement under a federal statute enacted before January 1, 2009” precludes states from waiving regulations that preceded Obamacare, such as those related to mental health parity.

If the sponsors believe in state flexibility, they should allow states to waive all federal insurance regulations, even ones, such as the under-26 mandate or mental health parity, they may personally support. Or better yet, they should move to repeal the regulations entirely, and let states decide which ones they want to re-enact on the state level.

5. No Funding Equals No Waivers

Because the bill explicitly ties waivers to federal funding, as noted above, the “cliff” whereby block grant funding ends in 2027 effectively ends waiver programs then as well. Such a scenario would put conservative policy-makers in the perverse position of asking Washington to increase federal spending, because any regulatory relief under Obamacare would otherwise cease.

Meaning of Federalism

The potential concerns above demonstrate how Graham-Cassidy may not provide full flexibility to states. Whether through cumbersome administrative requirements, a future Democratic administration, court rulings, or key omissions, states could find that as written, the bill’s promise of flexibility might turn into a mirage.

Given that, it’s worth remembering the true definition of federalism in the first place. Federalism should not represent states getting permission from Washington to take certain actions (and only certain actions). It should represent the people delegating some authority to the federal government, and some to the states. A bill that looked to do that—to remove the Obamacare regulatory apparatus entirely, and allow states to decide whether and what portions of the law they wish to reimpose—would help to restore the principles of federalism, and a true balance between Washington and the states.

This post was originally published at The Federalist.

Will the “Byrd Bath” Turn Into a Tax Credit Bloodbath?

While most of official Washington waits for word—expected early this week—from the Congressional Budget Office (CBO) about the fiscal effects of House Republicans’ “repeal-and-replace” legislation, another, equally critical debate is taking place within the corridors of the Capitol. Arcane arguments behind closed doors about the nuances of parliamentary procedure will do much to determine the bill’s fate in the Senate—and could lead to a final product vastly altered compared to its current form.

In recent days, House leaders have made numerous comments highlighting the procedural limitations of the budget reconciliation process in the Senate. However, those statements do not necessarily mean that the legislation released last week comports with all of those Senate strictures. Indeed, my conversations with more than half a dozen current and former senior Senate staff, all of whom have long expertise in the minutiae of Senate rules and procedure, have revealed at least four significant procedural issues—one regarding abortion, two regarding immigration, and one regarding a structural “firewall”—surrounding the bill’s tax credit regime.

Those and other procedural questions explain why, according to my sources, Senate staff will spend the coming week determining whether they will need to write an entirely new bill to substitute for the House’s proposed language. The stakes involved are high: Guidance from the parliamentarian suggesting that the House bill contains fatal procedural flaws, meaning it does not qualify as a reconciliation bill, could force the House to repeat the process, starting again with a new, “clean” reconciliation measure.

It is far too premature to claim that any of these potential flaws will necessarily be fatal. The Senate parliamentarian’s guidance to senators depends on textual analysis—of the bill’s specific wording, the underlying statutes to which it refers, and the CBO scores (not yet available)—and arguments about precedent made by both parties. Senate staff could re-draft portions of the House bill to make it pass procedural muster, or make arguments to preserve the existing language that the parliamentarian accepts as consistent with Senate precedents. Nevertheless, if the parliamentarian validates even one of the four potential procedural problems, Republicans could end up with a tax credit regime that is politically unsustainable, or whose costs escalate appreciably.

In 2009, Democratic Senator Kent Conrad famously opined that passing health care legislation through budget reconciliation would make the bill look like “Swiss cheese.” (While Democrats did not pass Obamacare through reconciliation, they did use the reconciliation process to “fix” the bill that cleared the Senate on Christmas Eve 2009.) In reality, it’s much easier to repeal provisions of a budgetary nature—like Obamacare’s taxes, entitlements, and even its major regulations—through reconciliation than to create a new replacement regime. The coming week may provide firsthand proof of Conrad’s 2009 axiom.

“Byrd Rule” and Abortion

The Senate’s so-called “Byrd rule” governing debate on budget reconciliation rules—named after former Senate Majority Leader and procedural guru Robert Byrd (D-WV)— in fact consists of not one rule, but six. The six points of order (codified here) seek to keep extraneous material out of the expedited reconciliation process, preserving the Senate tradition of unlimited debate, subject to the usual 60-vote margin to break a filibuster.

The Byrd rule’s most famous test states that “a provision shall be considered extraneous if it produces changes in outlays or revenues which are merely incidental to the non-budgetary components of the legislation.” If the section in question primarily makes a policy change, and has a minimal budgetary impact, it remains in the bill only if 60 senators (the usual margin necessary to break a filibuster) agree to waive the Byrd point of order.

One example of this test may apply to the House bill’s tax credits: “Hyde amendment” language preventing the credits from funding plans that cover abortion. Such language protecting taxpayer funding of abortion coverage occurs several places throughout the bill, including at the top of page 25 of the Ways and Means title.

Over multiple decades, and numerous parliamentarians, Republican efforts to enact Hyde amendment protections through budget reconciliation have all failed. It is possible that Republicans could in the next few weeks find new arguments that allow these critical protections to remain in the House bill—but that scenario cannot be viewed as likely.

The question will then occur as to what becomes of both the credit and the Hyde protections. Some within the Administration have argued that the Department of Health and Human Services (HHS) can institute pro-life protections through regulations—but Administration insiders doubt HHS’ authority to do so. Moreover, most pro-life groups publicly denounced President Obama’s March 2010 executive order—which he claimed would prevent taxpayer funding of abortion coverage in Obamacare—as 1) insufficient and 2) subject to change under a future Administration. How would those pro-life groups view a regulatory change by the current Administration any differently?

Immigration

A similarly controversial issue—immigration—brings an even larger set of procedural challenges. Apart from the separate question of whether the current verification provisions in the House bill are sufficiently robust, ANY eligibility verification regime for tax credits faces not one, but two major procedural obstacles in the Senate.

Of the six tests under the Byrd rule, some are more fatal than others. For instance, if the Hyde amendment restrictions outlined above are ruled incidental in nature, then those provisions merely get stricken from the bill unless 60 Senators vote to retain them—a highly improbable scenario in this case.

But two other tests under the Byrd rule—provisions outside a committee’s jurisdiction, and provisions making changes to Title II of the Social Security Act—are fatal not just to that particular provision, but to the entire bill, potentially forcing the process to begin all over again in the House. The eligibility verification regime touches them both.

Page 37 of the Ways and Means title of the bill requires creation of a verification regime for tax credits similar to that created under Sections 1411 and 1412 of Obamacare. As Joint Committee on Taxation Chief of Staff Tom Barthold testified last week during the Ways and Means Committee markup, verifying citizenship requires use of a database held by the Department of Homeland Security’s Bureau of Citizenship and Immigration Services (CIS).

That admission creates a big problem: The tax credit lies within the jurisdiction of the Senate Finance Committee—but CIS lies within the jurisdiction of the Senate Homeland Security and Governmental Affairs Committee. And because the Finance Committee’s portion of the reconciliation bill can affect only programs within the Finance Committee’s jurisdiction, imposing programmatic requirements on CIS to verify citizenship status could exceed the Finance Committee’s scope—potentially jeopardizing the entire bill.

The verification provisions in Sections 1411 and 1412 of Obamacare also require the use of Social Security numbers—triggering another potentially fatal blow to the entire bill. Senate sources report that, during when drafting the original reconciliation bill repealing Obamacare in the fall of 2015, Republicans attempted to repeal the language in Obamacare (Section 1414(a)(2), to be precise) giving the Secretary of HHS authority to collect and use Social Security numbers to establish eligibility. However, because Section 1414(a)(2) of Obamacare amended Title II of the Social Security Act, Republicans ultimately did not repeal this section of Obamacare in the reconciliation bill—because it could have triggered a point of order fatal to the legislation.

If both the points of order against the verification regime are sustained, Congress will have to re-write the bill to create an eligibility verification system that 1) does not rely on the Department of Homeland Security AND 2) does not use Social Security numbers. Doing so would create both political and policy problems. On the political side, the revised verification regime would exacerbate existing concerns that undocumented immigrants may have access to federal tax credits.

But the policy implications of a weaker verification regime might actually be more profound. Weaker verification would likely result in a higher score from CBO and JCT—budget scorekeepers would assume a higher incidence of fraud, raising the credits’ costs. House leaders might then have to reduce the amount of their tax credit to reflect the higher take-up of the credit by fraudsters taking advantage of lax verification. And any reduction in the credit amounts would bring with it additional political and policy implications, including lower coverage rates.

Firewall Concerns

Finally, the tax credit “firewall”—designed to ensure that only individuals without access to other health insurance options receive federal subsidies—could also present procedural concerns. Specifically, pages 27 and 28 of the bill make ineligible for the credit individuals participating in other forms of health insurance, several of which—Tricare, Veterans Administration coverage, coverage for Peace Corps volunteers, etc.—lie outside the Finance Committee’s jurisdiction.

If the Senate parliamentarian advises for the removal of references to these programs because they lie outside the Finance Committee’s jurisdiction, then participants in those programs will essentially be able to “double-dip”—to receive both the federal tax credit AND maintain their current coverage. As with the immigration provision outlined above, such a scenario could significantly increase the tax credits’ cost—requiring offsetting cuts elsewhere, which would have their own budgetary implications.

Senate sources indicate that this “firewall” concern could prove less problematic than the immigration concern outlined above. While the immigration provision extends new programmatic authority to the Administration to develop a revised eligibility verification system, the “firewall” provisions have the opposite effect—essentially excluding Tricare and other program recipients from the credit. However, if the parliamentarian gives guidance suggesting that some or all of the “firewall” provisions must go, that will have a significant impact on the bill’s fiscal impact.

Broader Implications

Both individually and collectively, these four potential procedural concerns hint at an intellectual inconsistency in the House bill’s approach—one Yuval Levin highlighted in National Review last week. House leaders claim that their bill was drafted to comply with the Senate reconciliation procedures. But the bill itself contains numerous actual or potential violations of those procedures—and amends some of Obamacare’s insurance regulations, rather than repealing them outright—making their argument incoherent.

Particularly when it comes to Obamacare’s costly insurance regulations, there seems little reason not to make the “ol’ college try,” and attempt to repeal the major mandates that have raised premium levels. According to prior CBO scores, other outside estimates, and the Obama Administration’s own estimates when releasing the regulations, the major regulations have significant budgetary effects. Republicans can and should argue to the parliamentarian that the regulations’ repeal would be neither incidental nor extraneous—their repeal would remove the terms and conditions under which Obamacare created its insurance subsidies in the first place, thus meeting the Byrd test. If successful, such efforts would provide relief on the issue Americans care most about: Reducing health costs and staggering premium increases.

When it comes to the tax credit itself, Republicans may face some difficult choices. Abortion and immigration present thorny—and controversial—issues, either one of which could sink the legislation. When it comes to the bill’s tax credits, the “Byrd bath,” in which the parliamentarian gives guidance on what provisions can remain in the reconciliation bill, could become a bloodbath. If pro-life protections and eligibility verification come out of the bill, a difficult choice for conservatives on whether or not to support tax credits will become that much harder.

This post was published at The Federalist.

Fact Checking Politico’s Hit Piece on Tom Price

Earlier this evening, Politico released an “article” discussing “Tom Price’s Radically Conservative Vision for American Health Care.” The piece’s first sentence claimed that “gutting Obamacare might be the least controversial part of Tom Price’s health care agenda”—a loaded introduction if ever there were one. The article goes on to quote seven separate liberal analysts—including the President of Planned Parenthood—while not including a single substantive Republican quote until the very last paragraph of a 27-paragraph piece.

Given this opinion piece masquerading as “journalism,” it’s worth pointing out several important facts, falsehoods, and omissions in the Politico story:

CLAIM:           Republicans “may look beyond repealing and replacing Obamacare to try to scale back Medicare and Medicaid, popular entitlements that cover roughly 130 million people, many of whom are sick, poor, and vulnerable.”

FACT:                         It’s ironic that the Politico reporters suddenly care about the “sick, poor, and vulnerable.” I’ve been writing about how Obamacare encourages discrimination against the vulnerable literally for years—including a few short weeks ago. If any Politico reporters have written on how Obamacare encourages states to expand Medicaid to able-bodied adults rather than to cover individuals with disabilities, I have yet to read those articles.

This week came a report 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 to able-bodied adults. If the Politico reporters—much less the liberal advocates the reporters interviewed for the article—care so much about the “sick, poor, and vulnerable,” when will they cover this Obamacare-induced tragedy?

CLAIM:           “Price…has proposed policies that are more conservative than those of many House Republican colleagues.”

FACT:                         Dr. Price’s Fiscal Year 2016 budget—which included provisions related to Obamacare repeal, premium support for Medicare, and block grants for Medicaid—passed the House with 228 votes. How can Politico claim that Dr. Price’s policies “are more conservative than those of many House Republican colleagues,” when over 93% of them publicly endorsed his vision?

CLAIM:           “The vast majority of the 20 million people now covered under Obamacare would have far less robust coverage—if they got anything at all.”

FACT:                         This claim presupposes 1) that all individuals covered under Obamacare want to buy health coverage, and 2) that they want to buy the type of health coverage Obamacare forces them to purchase. It ignores the fact that premiums increased by thousands of dollars in 2014 because individuals were forced to buy richer coverage.

It also ignores the fact that nearly 8 million individuals have paid the tax penalty associated with not buying Obamacare-compliant health coverage—because they cannot afford it, do not want it, or both—and another 12.4 million have requested exemptions from the Obamacare mandate. Depending on the degree of overlap between individuals who paid the mandate tax penalty and individuals who claimed exemptions, the number of Obamacare refuseniks could actually exceed the number of individuals newly covered under the law.

Instead, this claim comes at the question of insurance coverage from President Obama’s liberal, paternalistic perspective. When millions of people started receiving Obamacare-related cancellation notices in the mail, the President gave a speech stating how all those plans were “substandard:” “A lot of people thought they were buying coverage, and it turned out not to be so good.” In other words, “If you liked your plan, you’re an idiot.”

CLAIM:           “Price also supports privatizing Medicare…”

FACT:                         The premium support plan included in the House Republican budget includes 1) a federal contribution that increases every year to fund 2) a federally-regulated plan with 3) federally-mandated benefits and 4) the option to continue in government-run Medicare if beneficiaries so choose. Which of these four points would the Politico reporters deem “privatizing?”

CLAIM:           “…an approach that Democrats lambaste as a voucher system…”

FACT:                         That claim is both ironic and hypocritical coming from Democrats, as a version of premium support endorsed by House Speaker Ryan and Senate Finance Committee Ranking Member Ron Wyden in 2011 would have utilized the exact same bidding mechanism as Obamacare itself. Do Democrats “lambaste” Obamacare’s Exchanges as a “voucher system?” Interestingly enough, the Politico reporters neither note this irony, nor apparently bothered to ask the question.

CLAIM:           “…that would gut a 50-year-old social contract and shift a growing share of health care costs onto seniors.”

FACT:                         The form of premium support endorsed by Rep. Price in this year’s House Republican budget would, according to a September 2013 analysis from the Congressional Budget Office (CBO), save both the federal government and seniors money. And don’t take my word for it—here’s a quote from the CBO paper:

CBO’s analysis implies that beneficiaries’ total payments would be about 6 percent lower, on average, under the average-bid option than under current law. That reduction results from the combination of the lower average premiums paid above and a reduction in average out-of-pocket costs, which would result primarily from higher enrollment in lower-bidding private plans.

Where exactly among the highlighted phrases did the Politico reporters get the idea that premium support will “shift a growing share of health care costs onto seniors?”

CLAIM:           “Price also wants to limit federal Medicaid spending to give states a lump sum, or block grant, and more control over how they could use it—a dream of conservative Republicans for years, and a nightmare for advocates for the poor who fear that many would lose coverage.”

FACT:                         A block grant would increase federal spending on Medicaid annually—just by slightly less than prior estimates. Only in Washington could granting a program a three percent increase rather than a five percent increase classify as a “cut.”

Having provided actual facts to rebut the piece’s nonsensical claims, I’ll offer some free advice: If the folks on Politico’s payroll want to publish liberal talking points unchallenged, they should quit their jobs, go out on their own, and do what I do for a living. I’m all for a free press, and freedom of speech, but passing opinion—and one-sided opinion at that—as “journalism” does a disservice to the name.

This piece was published at The Federalist.

Past as Prologue? A Review of “The System”

A young president promising hope and change takes over the White House. Immediately embarking upon a major health-care initiative, he becomes trapped amidst warring factions in his party in Congress, bickering interest groups, and an angry public, all laying the groundwork for a resounding electoral defeat.

Barack Obama, circa 2009-10? Most definitely. But the same story also applies to Bill Clinton’s first two years in office, a period marked by a health-care debate in 1993-94 that paved the way for the Republican takeover of both houses of Congress.

In their seminal work “The System,” Haynes Johnson and David Broder recount the events of 1993-94 in detail—explaining not just how the Clinton health initiative failed, but also why. Anyone following the debate on Obamacare repeal should take time over the holidays to read “The System” to better understand what may await Congress and Washington next year. After all, why spend time arguing with your in-laws at the holiday table when you can read about people arguing in Congress two decades ago?

Echoes of History

For those following events of the past few years, the Clinton health debate as profiled in “The System” provides interesting echoes between past and present. Here is Karen Ignani of the AFL-CIO, viewed as a single-payer supporter and complaining that insurance companies could still “game the system” under some proposed reforms. Ironic sentiments indeed, as Ignani went on to chair the health insurance industry’s trade association during the Obamacare debate.

There are references to health care becoming a president’s Waterloo—Johnson and Broder attribute that quote to Grover Norquist, years before Sen. Jim DeMint uttered it in 2009. Max Baucus makes an appearance—he opposed in 1994 the employer mandate he included in Obamacare in 2009—as do raucous rallies in the summer of 1994, presaging the Obamacare town halls 15 years later.

Then there are the bigger lessons and themes that helped define the larger debate:

“Events, Dear Boy, Events:” The axiom attributed to Harold Macmillan about leaders being cast adrift by crises out of their control applied to the Clintons’ health-care debate. Foreign crises in Somalia (see “Black Hawk Down”) and Haiti sapped time on the presidential calendar and press attention, and distracted messaging. During the second half of 2009, Obama spent most of his time and energy focused on health care, leading some to conclude he had turned away from solving the economic crisis.

Old Bulls and Power Centers: “The System “spends much more time profiling the chairs of the respective congressional committees—including Dan Rostenkowski at House Ways and Means, John Dingell at House Energy and Commerce, and Patrick Moynihan at Senate Finance—than would have been warranted in 2009-10. While committee chairs held great power in the early 1990s, 15 years later House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid called most of the legislative shots from their leadership offices.

Whereas the House marked up three very different versions of health-care legislation in 1993-94, all three committees started from the same chairman’s mark in 2009. With Speaker Paul Ryan, like John Boehner before him, running a much more diffuse leadership operation than Pelosi’s tightly controlled ship, it remains to be seen whether congressional leaders can drive consensus on both policy strategy and legislative tactics.

The Filibuster: At the beginning of the legislative debate in 1993, Robert Byrd—a guardian of Senate rules and procedures—pleaded for Democrats not to try and enact their health agenda using budget reconciliation procedures to avoid a filibuster. Democrats (begrudgingly) followed his advice in 1993, only to ignore his pleadings 16 years later, using reconciliation to ram through changes to Obamacare. Likewise, what and how Republicans use reconciliation, and Democrats use the filibuster, on health care will doubtless define next year’s Senate debate.

Many Obama White House operatives such as Rahm Emanuel, having lived through the Clinton debate, followed the exact opposite playbook to pass Obamacare.

They used the time between 1993 and 2009 to narrow their policy differences as a party. Rather than debating between a single-payer system and managed competition, most of the political wrangling focused on the narrower issue of a government-run “public option.” Rather than writing a massive, 1,300-page bill and dropping it on Capitol Hill’s lap, they deferred to congressional leaders early on. Rather than bashing special interest groups publicly, they cut “rock-solid deals” behind closed doors to win industry support. While their strategy ultimately led to legislative success, the electoral consequences proved eerily similar.

Lack of Institutional Knowledge

The example of Team Obama aside, Washington and Washingtonians sometimes have short memories. Recently a reporter e-mailed asking me if I knew of someone who used to work on health care issues for Vice President-elect Mike Pence. (Um, have you read my bio…?) Likewise, reporters consider “longtime advisers” those who have worked the issue since the last presidential election. While there is no substitute for experience itself, a robust knowledge of history would come in a close second.

Those who underestimate the task facing congressional Republicans would do well to read “The System.” Having read it for the first time the week of President Obama’s 2009 inauguration, I was less surprised by how that year played out on Capitol Hill than I was surprised by the eerie similarities.

George Santayana’s saying that “Those who cannot remember the past are condemned to repeat it” bears more than a grain of truth. History may not repeat itself exactly, but it does run in cycles. Those who read “The System” now will better understand the cycle about to unfold before us in the year ahead.

This post was originally published at The Federalist.

Will the “Doc Fix” Include a Compromise on Children’s Health Insurance?

Democrats on the Senate Finance Committee issued a news release Saturday expressing concern about provisions for children’s health insurance in the Medicare “doc fix” bill taking shape in the House. Media coverage of the children’s health program has largely focused on the length of the extension: Senate Democrats want a four-year extension, while a summary of the House agreement released Friday has a two-year reauthorization. But there are other, fundamental policy disagreements.

The disagreements are rooted in a letter issued by the Centers for Medicare and Medicaid Services (CMS) in August 2007. Congress was due to reauthorize the children’s health insurance program that fall, and the letter applied two principles to state programs: It targeted resources first toward families making less than 200% of the federal poverty level (now $48,500 for a family of four). If states wished to expand children’s health insurance to families with incomes greater than 250% of the federal poverty level, they had to first cover at least 95% of children in the lowest income group. The letter also instructed states to take steps to ensure that children and families were not dropping private, employer-provided coverage to enroll in taxpayer-funded programs.

Democrats reacted to the letter by refusing to vote on President George W. Bush’s nominee for CMS administrator in the Senate. The Democratic-controlled Congress passed legislation expanding children’s health insurance October 2007 and January 2008, but President Bush, viewing the bills as inconsistent with the policy goals his administration had outlined, vetoed the measures. House Republicans sustained his veto on both occasions.

Upon taking office, President Barack Obama ordered his secretary of health and human services, Kathleen Sebelius, to rescind the August 2007 memo. In February 2009 congressional Democrats enacted the children’s health insurance program expansion that had previously eluded them. Many Republicans believe the program should be targeted toward the lowest-income families, as it was initially designed. Draft reauthorization language issued by the House Energy and Commerce Committee last month would focus “funding on low-income families” to “address concerns about crowding out private coverage and subsidizing upper-middle-class families,” according to a summary.

The bipartisan deal to amend Medicare’s “doc fix” includes a two-year reauthorization of the children’s health insurance program, but policy details of that extension haven’t been released. Unless Republicans and Democrats can agree on a compromise—which eluded Congress and the Bush administration in 2007-08—one party may have to renege on policies it has adhered to for years. There are questions about the fiscal sustainability of the “doc fix,” but the philosophical questions may be no less difficult.

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

Democrats Afraid of Obamacare’s Shadow

Politico reported late last week that Finance Committee Chairman Baucus will not schedule a confirmation hearing for Acting CMS Administrator Marilyn Tavenner.  The article provided some hint as to the reasoning behind the Chairman’s position: “If she [Tavenner] did have a hearing, it would likely be dominated by controversial health reform politics.”  In other words, Chairman Baucus and Democrats are shelving confirmation proceedings for a major Administration post — again — because they don’t want to talk about Obamacare.

As noted above, this isn’t the first time that Democrats have attempted to avoid debating the controversial health care law.  With respect to Tavenner’s predecessor, Donald Berwick, Chairman Baucus could also have called a confirmation hearing any time he liked, but chose not to do so.  Even as liberals alleged that “Republicans refuse[d] to even have [sic] a hearing” about Dr. Berwick, the fact remains that Republicans have no power to block the Senate Finance Committee from moving forward on Berwick’s nomination, Tavenner’s nomination, or any other nomination.

Much as the White House may want to blame Republican obstruction for the delays in confirming a CMS Administrator, the Administration should take a closer look in the mirror at its own party’s actions.  While the White House alleged that Dr. Berwick’s nomination was blocked because senators “put political interests above the best interests of the American people,” it was Democrats who did not want to call a hearing, and were afraid to discuss either Berwick or Obamacare at any point during the second half of 2010, their huge Senate majorities notwithstanding.  Moreover, according to key Democrat staffers, the Administration wanted to appoint a CMS Administrator in 2009, but decided not to, perhaps because it did not want to tell the American people who would actually implement Obamacare prior to its enactment.

Some may find the irony that even as the Administration attempts to sell the unpopular law to the American people, Democrats in Congress appear to have settled on a “Don’t Mention the War” strategy towards the 2700-page legislative behemoth.  Regardless, the net effect will be that unconfirmed bureaucrats have been given control over every American’s health insurance, and a budget larger than the Pentagon’s, for four years without so much as a cursory hearing.

Correcting the Record on the Berwick Nomination

The end of Donald Berwick’s tenure as Centers for Medicare and Medicaid Services Administrator last week has resulted in several news stories, as well as points that need rebutting:

  • First, it is NOT correct to state that “Republicans refuse[d] to even have [sic] a hearing” on Berwick’s confirmation – for Republicans have no power to block the Senate Finance Committee from moving forward on Berwick’s nomination (or any other nomination).  Chairman Baucus could have called a confirmation hearing any time he liked, but chose not to do so.
  • Second, if the White House wants to claim that Berwick’s nomination was blocked because senators “put political interests above the best interests of the American people,” their criticisms should be focused on Democrats who did not want to call a hearing, and were afraid to discuss either Berwick or Obamacare at any point during the second half of 2010, their huge Senate majorities notwithstanding.  The White House should also look in the mirror – because according to key Democrat staffers, the Administration wanted to appoint Berwick in 2009, but decided not to, perhaps because it learned of his controversial views and did not want them publicized in the run-up to Obamacare’s passage.  Berwick had previously committed to delivering a public “point-by-point rebuttal” to his critics, but the New York Times noted this weekend that “for political reasons, the Administration did not want him [Berwick] to defend past statements” regarding rationing and British socialized medicine.  In other words, the White House censored Berwick, thereby playing politics with his nomination.
  • Third, the idea that Republican criticisms of Berwick were based on a “caricature” significantly understates the breadth and scope of Berwick’s comments regarding controversial issues.  In an interview with MSNBC’s Chris Hayes over the weekend, Hayes alleged that opposition to Berwick were based on one article about rationing and one speech about the NHS.  Berwick himself claimed his critics had “a lack of authenticity in inquiry.”  But in reality, the more one inquires into Berwick’s history, the more one finds controversial statements focused on a health system driven by government bureaucracy and centralized planning.  One publicly available document shows not just one article or one speech, but 158 separate quotes over 22 pages, and dozens of articles, highlighting Berwick’s troubling views – none of which have been publicly refuted.  Dr. Berwick wrote articles with such titles as “Cost-Effectiveness Analysis in Pediatric Practice,” which makes one wonder:  If these cost-effectiveness analyses were NOT designed with rationing health care in mind, then what exactly was the point of conducting the analysis in the first place?
  • Fourth, the notion that Republican concerns about Berwick were based upon gamesmanship, and that his nomination was merely “derailed by politics” understates the problematic nature of his nomination.  Berwick himself said this weekend that “I did not even know if I was fit for” the CMS post.  This concern about his managerial skills was shared by others in the health policy sphere, who “voiced concerns that Berwick lacked the administrative background for the position.”  Berwick in a 2006 interview admitted: “Inattention to detail is my biggest defect….I can create a mess.”  Couple his lack of managerial expertise with his controversial – and oft-repeated – views, and there were many substantive reasons, both practical and philosophical, for Republicans to question his nomination, not just a desire to score points.

Finally, it’s worth pointing out that in his New York Times interview, Berwick conceded the health care law remains unpopular: “It’s a complex, complicated law.  To explain it takes a while.  To understand it takes an investment that I’m not sure the man or woman in the street wants to make or ought to make….Somehow we have not put together that story in a way that’s compelling.”  That one of Obamacare’s key implementers, and biggest supporters, acknowledges the public continues to reject the law speaks volumes about the 2700-page measure.

Donald Berwick’s Greatest Hits

Given Medicare Administrator Berwick’s resignation today, it’s worth remembering some of the highlights (or lowlights) of Berwick’s tenure.  Berwick spent most of his time in a virtual bunker since his controversial recess appointment last July – hiding from reporters’ questions, and going to great lengths to do so:

  • “Exited behind a stage” at a July press event on health IT regulations before the media were allowed to ask questions, according to Inside Health Policy;
  • Declined to participate in an August conference call with reporters to discuss a report on Medicare’s solvency;
  • Declined to participate in the release of the annual Medicare trustees report;
  • Declined to respond to interview requests from both the New York Times and Congressional Quarterly;
  • Declined to remain on an August conference call “to take questions from reporters,” according to The Hill;
  • “Left without taking questions from reporters” after delivering a speech to health insurance executives and lobbyists;
  • Declined to answer a series of questions from a reporter about his prior writings on rationing; an Administration official accompanying Dr. Berwick responded solely that “He’s not taking any questions;” and
  • Failed to deliver the “point-by-point rebuttal” to his critics previously promised at his (VERY brief) Finance Committee hearing in November;
  • Required a “security escort” to avoid questions from reporters during an appearance in early December;
  • Held a closed-door meeting with lobbyists and other industry executives.

Recall also that Berwick never responded to substantive document requests related to his nomination either.  Berwick promised Sen. Grassley to release financial statements related to his tenure as the head of the Institute for Healthcare Improvement, only to renege on this promise once he accepted his recess appointment last year.  It remains unclear whether, or what, Berwick was attempting to hide by not disclosing these documents.

Berwick had some “achievements” while at CMS – for instance, a preliminary rule for accountable care organizations so onerous and bureaucratic virtually every health care provider group imaginable promised not to participate.  But it’s worth asking:  If a Medicare Administrator has to go to such seemingly absurd lengths to avoid scrutiny of his own record, did he EVER belong in that role in the first place?  And how does the “most transparent and accountable Administration” justify such conduct?

Berwick’s Tenure Rationed With Our Eyes Open

In a holiday edition of “Take Out the Trash Day,” the Administration announced this afternoon that Medicare Administrator Donald Berwick was resigning effective December 2 (next Friday).  Deputy Administrator Marilyn Tavenner has been nominated to succeed Berwick, whose statements in support of the British single-payer system and “rationing with our eyes open” sparked widespread controversy.

It is of course ironic that given the Administration’s mantra of “We Can’t Wait,” the White House took three years to nominate a Medicare chief who might actually be confirmable.  Recall reports from earlier this year suggesting that even Senate Democrats did not want Berwick’s confirmation to go ahead, as Finance Committee Chairman Baucus refused to schedule a hearing on Berwick’s appointment.

On this day before Thanksgiving, all Americans should give thanks that the Obama Administration finally gave in to political and constitutional realities, and submitted the nomination of a new Medicare Administrator to the Senate.  However, many may still be concerned at the circumstances by which an unconfirmed bureaucrat was given control over every American’s health insurance, and a budget larger than the Pentagon’s, for nearly a year and a half without so much as a cursory confirmation hearing.