Tag Archives: single-payer

Elizabeth Warren’s Single-Payer Falsehood: If You Like Your Obamacare, You CAN’T Keep It

Note to PolitiFact: We’ve found your “Lie of the Year” for 2021. Or 2025. Or the next year Democrats take the levers of power in Washington. We submit a claim made Wednesday by one Elizabeth Warren (D-Mass.): “We will not back down in our protection of the Affordable Care Act. We will defend it at every turn.”

She made that statement at a press conference announcing her support for Sen. Bernie Sanders’ single-payer health care bill—which, if one searches for “Affordable Care Act,” will uncover the following section:

SEC. 902. SUNSET OF PROVISIONS RELATED TO THE STATE EXCHANGES.

Effective on the date described in section 106, the Federal and State Exchanges established pursuant to title I of the Patient Protection and Affordable Care Act (Public Law 111–148) shall terminate, and any other provision of law that relies upon participation in or enrollment through such an Exchange, including such provisions of the Internal Revenue Code of 1986, shall cease to have force or effect.

Oops.

If You Like Your Obamacare, Too Bad

Perhaps Warren should learn a lesson from Barack Obama, who in 2013 was forced to apologize for what PolitiFact then called the “Lie of the Year”: “if you like your plan, you can keep it.” Millions of people received cancellation notices that year, because their plans did not comply with Obamacare’s myriad new mandates and regulations on insurance.

Four years later, many people now on Obamacare can’t keep their plans—because, like me last year, they have seen their plans cancelled. But some—maybe not many, but some—Obamacare enrollees might actually like their current coverage.

Sanders’ bill tells each and every one of them, “If you like your Obamacare, too bad,” even as Warren claims she will “defend [the law] at every turn.” Somewhere, George “Those Who Cannot Remember the Past Are Condemned to Repeat It” Santayana is smiling.

Liberals Can’t Help Deceiving People

But perhaps it isn’t surprising to see Warren throw out such a whopper, claiming to defend Obamacare even as she signed on to a bill to destroy it. Suffice it to say the accuracy of her biography has undergone scrutiny over the years.

But more to the point, look at the way liberals sold Obamacare. Obama said if you like your plan, you can keep it. He also said that if you like your doctor you can keep your doctor. And that his plan would cut premiums by $2,500 per year for the average family. And that he wouldn’t raise taxes on the middle class—“not any of your taxes”—to pay for it. How did all of those promises work out?

In short, liberals can’t help themselves. To use liberals’ own vernacular about “repeal-and replace” efforts, they can’t just stop at taking away health care from 178.4 million people with employer-sponsored coverage. No, they want to take away health care from millions of people in the Obamacare exchanges too.

Some of them think Americans will want the “better” health care liberals will provide in their utopian socialist paradise—that the American people won’t mind giving up their current health plan, and don’t care about (or won’t even notice) people like Warren promising one thing and doing another.

Hey, Reporters…?

Given all the stories from reporters accusing Health and Human Services Secretary Tom Price of lying about Republicans’ “repeal-and-replace” measure, I naturally assume that journalists have already beaten down Warren’s door asking her about her comments Wednesday. Did she not read the bill she just co-sponsored? How can she claim to “defend” a law when she just endorsed a bill that—by its own wording—will “terminate” one of its main sources of coverage? Isn’t that lying to the American people?

I also assume that, just as they did stories about the “faces of Obamacare” during the repeal debate, those same reporters will go back to individuals with coverage under the exchanges and ask how those people might feel about the prospect of having their plans taken away by Sanders’ bill.

At least one group can truly celebrate the Sanders plan: PolitiFact. Judging from Warren’s start, and given the number of whoppers used to sell the last health-care takeover, they and their fellow fact checkers will have their hands full for some time to come.

This post was originally published at The Federalist.

Bernie Sanders’ Single-Payer Plan Provides Benefits for Billionaires

On Wednesday, socialist Sen. Bernie Sanders plans to introduce the latest version of his single-payer health-care program. If past practice holds, Sanders will call his plan “Medicare for All.” But if he wants to follow Medicare as his model, then the Sanders plan could easily earn another moniker: Benefits for Billionaires.

An analysis released by the Congressional Budget Office (CBO) in August demonstrates how Medicare currently provides significant financial benefits to seniors at all income levels, including the wealthy. Specifically, the CBO paper analyzed lifetime Medicare taxes paid, and lifetime benefits received, by individuals born in the 1950s who live to age 65.

The non-partisan budget office found that at every income level, seniors received more in Medicare benefits than they paid in Medicare taxes. Men in the highest income quintile—the top 20 percent of income—received a net lifetime benefit from Medicare of nearly $50,000, even after taking into account the Medicare taxes and premiums they paid. Women received an even greater net benefit between taxes paid and benefits received at all income levels, reflecting both longer life expectancy (i.e., more benefits paid out) and shorter working histories (fewer taxes paid in).

The CBO analysis confirms prior work by the Urban Institute—no right-wing think tank—that Medicare pays out more in benefits than it receives in taxes at virtually all income levels. For instance, according to Urban’s most recent study, a high-earning male turning 65 in 2020 will pay in an average of $123,000 in Medicare taxes, but receive an average of $222,000 in benefits.

Melinda Gates Doesn’t Need Government Health Care

Some may quibble with the work by CBO and Urban Institute for containing an important oversight. In analyzing only Medicare benefits and Medicare taxes paid, the two papers omit the portion of Medicare’s financing that comes from general revenues—including the income taxes paid primarily by the wealthy. While it’s difficult to draw a precise link between Medicare’s general revenue funding and any one person’s income tax payments, it’s possible that—particularly for one-percenters—income taxes paid will offset the net cost of their Medicare benefits.

But regardless of those important details, the larger point still holds. Even if her taxes do outweigh the Medicare benefits received, why does Melinda Gates need the estimated $300,000 in health care benefits paid to the average high-income woman born in the 1950s? Does that government spending serve a useful purpose?

Moreover, if Medicare provides a net benefit to the average senior at virtually every income bracket, how does the program as currently constructed represent either 1) social insurance or 2) a sustainable fiscal model? Under an insurance model, some individuals “win” by receiving greater net benefits, while some individuals “lose” by not fully receiving back the money they paid in. But given that multiple analyses have demonstrated that virtually every cohort of seniors currently benefits from Medicare, then the program’s only true “losers” are the future generations of Americans who will fund today’s profligate spending.

We Don’t Have Money to Subsidize the Rich

Yes, Medicare currently does include some means testing for wealthy beneficiaries, in both the Part B (physician) and Part D (prescription drug) portions of the program. But common sense should dictate first that wealthy individuals not only should be able to opt-out of Medicare if they so choose—because, strange as it sounds, the federal government currently forbids individuals from renouncing their Medicare benefits—wealthy seniors should not receive a taxpayer subsidy at all. Whether in Medicare or Sanders’ socialist utopia, the idea that Warren Buffett or Bill Gates warrant taxpayer subsidies defies credulity.

Despite this common-sense logic, liberals continue to support providing taxpayer-funded benefits for billionaires. In 2011, then-Rep. Henry Waxman (D-CA) said “if [then-Speaker John] Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code.” Perhaps Waxman views keeping wealthy seniors in Medicare as a form of punishment for the rich. After all, nearly nine in ten seniors have some form of supplemental insurance, and a form of “insurance” one must insure against may not be considered an unalloyed pleasure.

Regardless, Medicare faces its own financial reckoning, and sooner rather than later. In 2009—the last trustees’ report before Obamacare introduced fiscal gimmicks and double-counting into Medicare—the program’s actuaries concluded Medicare’s Hospital Insurance Trust Fund would become functionally insolvent this year. Given that bleak outlook, neither Medicare nor the American people can afford Sanders’ ill-conceived scheme to provide taxpayer-funded health benefits to wealthy 1-percenters.

This post was originally published at The Federalist.

A “Grand Bargain” on Obamacare Repeal?

To know where you’re going, it helps to recognize where you’ve been. Examining the causes of Republicans’ legislative setbacks on health care—including last month’s dramatic failure of a “skinny” repeal bill on the Senate floor—provides the glimmer of a path forward for a legislative “repeal-and-replace” package, if they are bold enough to take it.

In both the House and the Senate, debate focused on a push-pull between two competing issues: The status of Medicaid expansion in the 31 states that accepted it, and what to do about Obamacare’s regulatory regime. During the spring and summer, congressional leaders attempted messy compromises on each issue, phasing out the higher federal match for Medicaid expansion populations over time, while crafting complex processes allowing states, insurers, or both to waive some—but not all—of Obamacare’s regulatory requirements.

But rather than constructing substantively cumbersome waiver arrangements—the legislative equivalent of a camel being a horse written by committee—Occam’s Razor suggests a simpler, cleaner solution: Preserving the status quo (i.e., the enhanced federal match) on Medicaid expansion in exchange for full repeal of Obamacare’s insurance regulations at the federal level.

A “grand bargain” in this vein would give Senate moderates a clear win on Medicaid expansion, while providing conservatives their desired outcome on Obamacare’s regulations. For this conservative at least, the regulations represent the heart of the law, prompting both its spending on exchange subsidies—to offset the higher premium costs from the regulatory mandates—and the taxes needed to fund that spending. Expelling the regulations from the federal statute books would represent a clear step towards the promise of repealing Obamacare “root and branch,” and return control of health insurance to the states, where it lay from 1947’s McCarran-Ferguson Act until Obamacare.

Federal Regulations Are Driving Up Health Costs

When coupled with structural reforms to Medicaid—a block grant or per capita caps—included in the House and Senate bills, repealing the federal regulations would enable the “laboratories of democracy” to reassert control over their health insurance markets and Medicaid programs. It would also contrast favorably with a recent proposal introduced by senators Lindsey Graham (R-SC) and Bill Cassidy (R-LA). While Graham claims his plan would “empower each individual state to choose the path that works best for them,” in reality it would retain federal dictates regarding pre-existing conditions—the most costly of all the Obamacare mandates.

In a sad irony, some of the same senators who want Congress to respect their states’ decisions to expand Medicaid also want to dictate to other states—as the Graham-Cassidy plan does—how their insurance markets should function. But the true test of federalism applies not in the principle’s convenience, but in its inconvenience.

I do not support single-payer health care, but as a federalist, I support the right of states like California and Vermont to explore a state single-payer system. There are other, arguably better, ways to cover individuals with pre-existing conditions than a Washington-imposed requirement, and true adherents of federalism would empower states to explore them.

Yes, This Idea Is Imperfect

To be sure, even this attempted “grand bargain” includes noteworthy flaws. Retaining the enhanced Medicaid match encourages states to prioritize expansion populations over individuals with disabilities in traditional Medicaid, and may lure even more states to accept the expansion. Keeping the higher Medicaid spending levels would preclude repealing all of Obamacare’s tax increases. And the Senate parliamentarian may advise that repealing Obamacare’s regulations does not comport with the budget reconciliation process. But despite the obvious obstacles, lawmakers should seriously explore this option. After Republicans promised repeal for four straight election cycles, the American people deserve no less.

Throughout the repeal process, conservatives have bent over backwards to accommodate moderates’ shifting legislative goalposts. When moderates objected to passing the repeal legislation all but one of them voted for two years ago, conservatives helped construct a “repeal-and-replace” bill. When moderates wanted to retain the Medicaid expansion in their states—even though the 2015 repeal bill moderates voted for eliminated it entirely—conservatives agreed, albeit at the traditional match rates. And when Senate moderates complained, conservatives agreed to a longer phase-out of the higher match rate, despite justifiable fears that the phase-out would never occur.

Winston Churchill purportedly claimed that Americans will always do the right thing—once they have exhausted every other possibility. This “grand bargain” may not represent the “right” outcome, or the best outcome. But conservatives have exhausted many other possibilities in attempting to come to an agreement. Perhaps moderates will finally come to accept federalism—giving states a true choice over their insurance markets, rather than trying to dictate terms—as the solution to keeping their promise to the American people and repealing (at least part of) Obamacare.

This post was originally published at The Federalist.

“Problem Solvers’” Obamacare Solution: Single Payer

On Monday, a bipartisan Problem Solvers Caucus in the House released their list of “solutions” regarding Obamacare. Developed over the past several months, the list can easily be summed up in a single phrase: Single payer.

The lawmakers didn’t come out and say as much, of course, but that would be the net result. In funding more bailout spending for insurers, the proposal clearly states that Obamacare is “too big to fail”—that no amount of taxpayer funding is too great to keep insurers offering coverage on the health exchanges. Enacting that government backstop would create a de facto single-payer health-care system—only with many more well-priced insurer lobbyists around to demand more crony capitalist payments from government to their industry.

Cost-Sharing Reductions

Suppose for a minute that a burglar comes into your house late at night and tries to steal your belongings. Upon apprehending the suspect, the burglar tells you that he only stole your property because he’s hungry and struggling to provide for his family.

In this scenario, how likely would you be just to give the burglar your property, so he could have the resources he needs? Probably not very. On the one hand, that would solve the burglar’s immediate problem, but the burglar broke the law—and ignoring that offense will only encourage future law-breaking.

That’s essentially the scenario facing Obamacare’s cost-sharing reduction payments, meant to subsidize discounted co-payments and deductibles for certain low-income individuals. Obamacare didn’t include an actual appropriation for the payments, so Barack Obama just made one up that didn’t exist. In essence, he stole both the constitutional spending power of Congress and taxpayer funds—recall that spending money without an appropriation is not just a civil, but a criminal, offense—to get Obamacare started.

Yet Congress seems far more worried about propping up Obamacare than holding President Obama to account—focusing solely on the outcomes to individuals, while caring not a whit for the effects on the rule of law. The Problem Solvers Caucus plan includes cost-sharing reduction payments with no accountability for the Obama sdministration’s flagrant violation of the Constitution.

Ironically, Tom Reed (R-NY) and other Republican members of the Problem Solvers Caucus voted in 2014 to authorize the lawsuit that declared the cost-sharing payments unconstitutional last year. But do Reed and his other colleagues actually want to do anything to enforce that lawsuit, and preserve the Constitution that they swore to uphold? Not a chance.

Reinsurance

The Problem Solvers Caucus plan also includes “stability fund” dollars designed to subsidize insurers for covering high-cost Obamacare enrollees. But here again, the proposal throws good money after bad at insurers, creating a new government program after non-partisan auditors concluded that insurers illegally received billions of dollars from the last federal bailout.

Last September, the Government Accountability Office (GAO) concluded that the Obama administration illegally funneled billions of dollars in reinsurance funds to health insurers rather than the U.S. Treasury. After taking in “assessments” (read: taxes) from employers, the text of Obamacare itself requires the government to repay $5 billion to the Treasury (to offset the cost of another Obamacare program) before paying health insurers reinsurance funds.

But when employer “assessments” generated less money than originally contemplated, the Obama administration put insurers’ needs for bailout funds over the law—and taxpayers’ interests. GAO found the Obama administration’s actions violated the law, costing taxpayers billions in the process.

As with the cost-sharing reduction payments, the Problem Solvers Caucus would give insurers even more money, while ignoring the prior illegal—and unconstitutional—acts that benefited health insurers under the Obama regime. In so doing, the Problem Solvers proposal would create another big problem, by incentivizing future presidents to keep breaking the law to advance their political agenda.

Throwing Money at Problems

In general, the Problem Solvers Caucus attempts to solve problems by throwing money at them, by paying tens of billions of dollars (at minimum) to insurers. But as Margaret Thatcher pointed out four decades ago, socialism always runs out of other people’s money—a problem that the proposal wouldn’t solve, but worsen.

The Problem Solvers Caucus proposal amounts to little more than an Obamacare TARP—that’s Turning Against Repeal Promises (or Taking Away Repeal Promises, if you prefer). In abandoning the repeal cause, and setting up a federal backstop for the entire health-care system, the plan would create a de facto single-payer health-care system. Bernie Sanders would be proud.

This post was originally published at The Federalist.

John Cornyn Illustrates Republicans’ Obamacare Problem in One Tweet

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

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

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

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

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

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

It’s the Costs, Stupid!

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

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

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

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

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

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

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

Buying into a Liberal Shibboleth

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

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

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

This post was originally published at The Federalist.

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.

The Republican Party Split That Donald Trump’s Nomination Won’t Resolve

The general election campaign has not begun, but preliminary polling suggests that Donald Trump is a decided underdog against Hillary Clinton. For the Republican Party, there is an issue beyond the Election Day outcome–and one that, at least right now, looks unlikely to be resolved no matter who wins in November.

More so than reports of John Kasich suspending his campaign, it was Sen. Ted Cruz‘s withdrawal from the Republican primary race Tuesday night that sparked reactions from Republicans ranging from begrudging acceptance to continued hostility. Mr. Trump’s ascendance illustrates a split within the Republican Party, between the “establishment” and the “tea party” lanes, that has been widening for years. It is likely to persist, as both factions disagree on the elements that led to Mr. Trump’s meteoric rise.

A core point in the internal GOP dispute is whether political confrontation or ideological conservatism most motivates voters, including the party’s base. Steve Schmidt, a consultant to John McCain‘s presidential campaign in 2008, said on MSNBC Tuesday night that Mr. Trump’s rise was fueled by voter frustration stoked by the tea-party wing. He and other establishment figures view anger as a poor substitute for substantive policy solutions and a dead-end political strategy in general.

On the other hand, those aligned with tea-partyers view the Trump phenomenon as rising from discontent with an insufficiently conservative leadership. They see voters’ frustration and anger rooted in an establishment that overpromised and underdelivered, for example by promising to fight President Barack Obama’s executive orders on immigration “tooth and nail” in November 2014 but, just a few months later, ruling out a partial government shutdown over the issue as “not an option.”

A Cruz nomination would have left little doubt about the party’s ideological direction. Mr. Cruz often echoed Ronald Reagan’s desire to speak “in bold colors, not pale pastels,” and relying on motivated conservatives to help drive general election turnout. A Cruz-Clinton match-up would have made clear the potential, and potential limits, of a “base strategy.”

Conversely, Trump’s ideological heterodoxies—on health careabortion and even about Hillary Clinton herself—reshuffle the political landscape. Mr. Trump falls outside the “establishment” and “tea party” labels, as neither side fully embraced his ascent. Mr. Trump said Wednesday that “As far as the Republican Party coming together, it will, maybe not 100%, but it’ll come together 99% and the 1% I don’t want and it won’t have any impact.” What shape the GOP takes as some elements rally behind him and others consider different directions will definitely have an impact on the Republican Party as we have known it.

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

Obamacare Increasing Government Bureaucracy

Even as federal regulators take steps to constrain administrative spending by private health insurers, government overhead on health coverage has soared.

In a Health Affairs blogpost published Wednesday, David Himmelstein and Steffie Woolhandler use actuarial estimates from the Centers for Medicare and Medicaid Services to project that between 2014 and 2022, national spending on private insurance overhead and government administration will rise by $273.6 billion related to the health-care overhaul.

The authors both favor single-payer health insurance; Mr. Himmelstein co-founded Physicians for a National Health Program, an advocacy organization directed to that end. They close their piece by saying that “In health care, public insurance gives much more bang for each buck.”

Yet overhead in the public sector is growing much faster than in the private sector.

Mr. Himmelstein and Ms. Woolhandler combine two categories of spending—government administration and the net cost of private insurance (i.e., overhead)—to reach their estimates of administrative costs. Combining the two categories masks significant differences. While private insurance overhead is projected to rise at an average annual rate of 8.2% between 2014 and 2022, government administration is projected to rise at a 22.7% annual rate—nearly three times as fast. That’s consistent with my 2012 analysis, which noted that federal actuaries projected double-digit increases in spending on government administration for three of the first four years of Obamacare implementation (2011, 2012, and 2014).

This week federal regulators proposed extending medical-loss ratio requirements—a price control on overhead spending—to Medicaid managed-care plans. Meanwhile, several state-run insurance exchanges face financial difficulties, with structural challenges to their ability to attain self-sufficiency while limiting their charges on consumers to only a small share of premiums. The growing spending on bureaucracy reported in Health Affairs suggests that regulators should perhaps focus first on increasing efficiency and reducing government’s own costs before issuing more requirements on the private sector—such as the 653-page regulations issued Wednesday—that attempt to pass them on to consumers.

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

Single-Payer Dystopia

Late last week, Los Angeles Times columnist David Lazarus wrote an article about an impending piece of legislation to be introduced by Rep. Jim McDermott. According to the column, the bill would allow states to receive federal Medicare and Medicaid funds to establish state-based single-payer health insurance systems.  The article provides background on California’s numerous prior attempts to establish single-payer health care in the state, and quotes liberal advocates as saying the McDermott legislation could finally result in the single-payer dreams becoming reality.

Unfortunately, there are a few flaws in this logic. Such as California’s $16 billion budget deficit, which has prompted Gov. Jerry Brown to ask voters to approve massive tax increases. And there’s also this unwelcome element: “A draft of McDermott’s bill says that to receive federal funds, states would have to offer a health care plan with the same benefits as the most popular plan available to federal government employees.” That plan would be the Blue Cross Blue Shield standard option plan, which in 2010 cost a whopping $6,458.88 for a single person annually –34% more than the average single premium for employer-provided health insurance in California that year.

To sum up: At a time when California still faces double-digit unemployment and massive budget shortfalls, liberals think the state can use existing federal dollars to cover 7 million uninsured, provide 34% richer benefits to those with insurance, and save the state money in the process. Some might argue that position is taking “California Dreamin‘” to an extreme. Because given economic malaise, budget constraints, and a platinum-plated package of mandated benefits, the single-payer health utopia liberals seek would, for millions of California residents, quickly turn into a dystopia. Or even a Fruitopia.

Liberals’ Silly Contortions over Premium Support

Earlier this week the Center for American Progress released a paper, and former Obama Administration official Zeke Emanuel wrote a blog post, attacking the Ryan-Wyden premium support model.  The gist of both documents is their assertion that government-run Medicare would attract sicker beneficiaries than private plans, and in so doing fatally undermine the government-run program.  From the CAP report:

“No version of premium support fully prevents private health insurance plans from attracting healthier beneficiaries, driving up premiums for those who remain in traditional Medicare.  In addition, no version of premium support creates a level playing field between private plans and traditional Medicare.  As a result of these two factors, more and more beneficiaries would gradually shift to private plans over time.”

Compare the above position to the (in)famous quote from a Congressional Democrat two years ago, in which she said that a government-run plan for those under age 65 would eradicate private insurance:

“Next to me was a guy from the insurance company, who then argued against the public health insurance option, saying it wouldn’t let private insurance compete – that a public option will put the private insurance industry out of business and lead to single payer [loud cheering]. My single payer friends: He was right. The man was right.”

So the liberal groups who once claimed that a government-run plan “will put the private insurance industry out of business and lead to single payer” NOW believe that government-run Medicare CANNOT compete on a “level playing field” against the private sector.  Why didn’t they tell us this two years ago…?

There are three possible explanations for this abrupt U-turn by the left:

  • Liberals believe that risk adjustment to adjust for beneficiaries’ health status will not work effectively, and that allowing plans to offer benefits actuarially equivalent to, but not exact replicas of, government-run Medicare will attract healthier beneficiaries.  In this case, the left is admitting Obamacare will fail – because Obamacare includes provisions allowing for actuarially equivalent plans (Section 1302(d)) and a risk adjustment program (Section 1343).
  • Liberals believe that unlike the above-65 population in Medicare, everyone below age 65 has identical health status, rendering concerns about certain plans attracting sicker-than-average beneficiaries moot.
  • Liberals will say one thing when it comes to expanding government control, and another when it comes to giving individuals more private choices.

Feel free to decide amongst yourselves which option you find most accurate…