Tag Archives: uncertainty

How Donald Trump Created the Worst of All Possible Health Care Worlds

Following last week’s developments in the ongoing saga over Obamacare’s cost-sharing reduction (CSR) payments, two things seem clear. First, President Trump won’t stop making these payments to insurers, designed to reimburse them for providing reduced deductibles and copayments to low-income individuals. If Trump’s administration continued to pay CSRs to insurers mere weeks after the Obamacare “repeal-and-replace” effort collapsed on the Senate floor, it should be fairly obvious that this president won’t cut off the payments.

Second, notwithstanding the above, Trump won’t stop threatening to halt these payments any time soon. Seeing himself as a negotiator, Trump won’t cede any leverage by committing to make future payments, trying to keep insurance companies and Democrats in suspense and extract concessions from each. He has received no concessions from Democrats, and he likely has no intentions of ever stopping the payments, but will continue the yo-yo approach for as long as he thinks it effective—in other words, until the policy community fully sees it as the empty threat that it is.

The combination of these occurrences has created the worst of all possible worlds for the president, his administration, and Republicans. Conservatives can, and should, criticize Trump for continuing to violate the Constitution in making the payments. But liberals will also criticize Trump for violating the Constitution only on a piecemeal, month-by-month basis, claiming that the threat to cut off the unconstitutional payments “sabotages” Obamacare.

President Trump Is Savaging the Constitution

From a constitutional perspective, Trump’s approach to CSRs undermines the rule of law. The president referred to the payments in a May interview with The Economist, stating that “If I ever stop wanting to pay the subsidies, which I will [sic].”

But as any conservative will explain (and this space previously outlined), the president cannot stop making any payments unilaterally. The Supreme Court ruled unanimously in Train v. City of New York that if a law makes a constitutional appropriation, the president cannot refuse to spend the money. He must make the appropriation. Conversely, if the law lacks an appropriation, the president cannot spend money—that prerogative lies with Congress, as per Article I, Section 9, Clause 7 of the Constitution.

Judge Rosemary Collyer ruled last May that Obamacare lacks an appropriation for the cost-sharing reduction payments. If the president agrees, he should stop the payments immediately. If the president disagrees, he should continue the Obama administration’s appeal of that ruling, and commit to making payments unless and until the Supreme Court orders him to stop. Instead, the president has treated the payments—and thus the Constitution—as his personal plaything, which he can obey or disregard on his whim.

This Policy ‘Uncertainty’ Has Consequences

From a policy perspective, the president’s dithering—and the continued threats that he has yet to carry through on (and likely never will)—are having an impact. For years, insurers—wrongly—ignored the threat that CSR payments could disappear, even as some individuals publicly warned them of the risk.

Having under-estimated their risk before this year, many insurers have over-estimated their risk now. Carriers have threatened higher premium increases, or reduction in service areas, because they finally recognize the inherent uncertainty around CSR payments lacking an explicit appropriation in statute.

Insurers’ cries of “uncertainty” have joined chorus with liberals’ claims of “sabotage” against the Trump administration. The same liberal groups and advocates who failed to recognize the uncertainty last year—because higher premiums for 2017 would have hurt Hillary Clinton and Democrats during last fall’s elections—now almost gleefully embrace the concept, believing it can benefit them politically.

Therein lies the full scope of the political danger for Trump and Republicans. It seems obvious that Trump will continue to make the payments to insurers. But it seems equally obvious that Trump enjoys keeping insurers on the proverbial short leash, and won’t give them the “certainty” over the payments that they desire. The end result: An administration that receives political blame from the Right for making unconstitutional payments, and from the Left for “uncertainty”-related premium increases, because Trump has not confirmed those unconstitutional payments will continue.

Rule of Law, Not of Men

In many respects, Trump has provided a perfect illustration of the problems inherent in creating a government based on men and not laws. When President Obama decided to violate the Constitution by making CSR payments without an appropriation, he created a scenario whereby any future president could do exactly what Trump appears to relish: Hold the flow of funds as a political cudgel in an attempt to bend people to his desires.

But in an ironic twist, the political benefit from creating this unilateral policy could accrue to Democrats, if Republicans receive fallout from higher premiums in 2018. Perhaps that outcome could persuade both parties to abandon the executive unilateralism that has become far too common in recent administrations. Restoring the rule of law seems like such a simple, yet novel, concept that some enterprising politicians in Washington might want to try it.

This post was originally published at The Federalist.

Obamacare Hurting Jobs — And Patients

Yesterday the US Chamber of Commerce released its updated survey of small businesses.  The polling data revealed what many Americans already know – that Obamacare is increasing uncertainty and reducing hiring.  A whopping 74% of businesses said that Obamacare makes it harder for their firms to hire new workers, and 30% said they are not hiring thanks to Obamacare.  The survey is consistent with other reports; analysts at UBS have stated that Obamacare is “arguably the biggest impediment to hiring, particularly hiring of less skilled workers,” and the President of the Federal Reserve Bank of Atlanta has “frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”

Physicians are similarly unenthused about the impact of Obamacare on their practices.  As an op-ed in this morning’s USA Today notes, “many doctors are becoming wary of the law at a time when only one in three Americans support it.”  The piece cites a recent Deloitte survey of physicians, which found that 83% of physicians believe Obamacare will increase wait times, while only 27% believe the law will reduce costs through efficiency savings.

Speaker Pelosi famously said we had to pass the bill to find out what’s in it.  The latest news shows once again how American job creators and American physicians have not liked what they discovered in the massive 2700-page law.

“Whatever It Takes” to Create Jobs? How About Repealing Obamacare

In his radio address this weekend, the President claimed that in 2012 he would do “whatever it takes to move this economy forward.”  If that’s the case, there are numerous reasons why he would want to repeal Obamacare:

  • John Stossel recently talked with several business executives, all of whom discussed the uncertainties associated with Obamacare.  For instance, the CEO of Best Buy said “if I went to the deepest specialist in the industry, he can’t tell me what it’s actually going to cost, let alone what I’m going to be responsible for.”  And a former CEO noted that “you don’t really know what the cost [of Obamacare will be] because it’s designed to fail,” by giving companies incentives to dump their employee benefit plans.  As a result, these and other executives are holding off on hiring due to the unknown costs of Obamacare.
  • Analysts at UBS have stated that Obamacare is “arguably the biggest impediment to hiring, particularly hiring of less skilled workers.”
  • The President of the Federal Reserve Bank of Atlanta has “frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”
  • The non-partisan Congressional Budget Office concluded that Obamacare will reduce the labor supply by about 800,000 thanks to the law’s perverse incentives, which according to CBO “will effectively increase marginal tax rates,” thereby discouraging work.

The growing consensus regarding the harmful effects of Obamacare on the American economy – where unemployment is STILL above the 8 percent mark the Administration promised it would never hit – leads one to ask:  Is the President most interested in creating jobs, or is he interested in defending his unpopular 2700-page health care law, even as it prevents the economy from moving forward?

Obamacare Increasing Uncertainty, Decreasing Job Growth

Businesses small and large are once again showing signs just how Obamacare is affecting their willingness to hire.  In his Sunday column, George Will writes about how Obamacare’s new health insurance mandates mean the Carl’s Jr. chain will open fewer stores, and therefore hire fewer workers:

“When CKE’s health-care advisers, citing Obamacare’s complexities, opacities and uncertainties, said that it would add between $7.3 million and $35.1 million to the company’s $12 million health-care costs in 2010, [CEO Andy] Puzder said: I need a number I can plan with.  They guessed $18 million — twice what CKE spent last year building new restaurants.  Obamacare must mean fewer restaurants.

And therefore fewer jobs.  Each restaurant creates, on average, 25 jobs — and as much as 3.5 times that number of jobs in the community.  (CKE spends about $1 billion a year on food and paper products, $175 million on advertising, $33 million on maintenance, etc.)….

CKE restaurants have 95 percent employee turnover in a year — not bad in this industry — and the health-care benefits under CKE’s current “mini-med” plans are capped in a way that makes them illegal under Obamacare.  So CKE will have to convert many full-time employees to part-timers to limit the growth of its burdens under Obamacare.

In an economic climate of increasing uncertainties, Puzder says, one certainty is that many businesses now marginally profitable will disappear when Obamacare causes that margin to disappear.  A second certainty is that “employers everywhere will be looking to reduce labor content in their business models as Obamacare makes employees unambiguously more expensive.””

It’s not just franchisees groaning under the weight of Obamacare’s mandates.  On Friday, the PBS News Hour interviewed Bobby Joslin, the owner of a small business sign company in Nashville, who agreed that Obamacare is reducing hiring:

“We’re fighting mandates that just keep coming at us at nowhere….For instance, the Obamacare, when we bring on a new employee, we don’t know what that employee truly is going to cost us in 2014.  And we’re not in the practice of hiring people and then laying them off.”

These real-world testimonials sync with the views of many economic experts.  Analysts at UBS have stated that Obamacare is “arguably the biggest impediment to hiring, particularly hiring of less skilled workers.”  And the President of the Federal Reserve Bank of Atlanta has said that he has “frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”

At a time when unemployment remains stubbornly high, and 300,000 workers LEFT the job market last month, it’s clear one of the main culprits – the many mandates in the massive 2,700 page health care law.

Obamacare Hits the States

Several reports in the past week or so have illustrated the impact that the recession – along with Obamacare – are having on state Medicaid budgets nationwide.  To wit:

  • A front-page article in Monday’s USA Today outlined how “a growing number of states are sharply limiting hospital stays under Medicaid to as few as 10 days a year to control” rising state spending on the program.  A related article noted a major reason for these developments: Obamacare “requires states to maintain Medicaid eligibility and enrollment standards until 2014,” when the coverage expansions under the law take effect.  So the only option states have is to reduce benefit levels or reimbursement amounts.
  • The Los Angeles Times reported this morning about California’s newly approved 10% reimbursement reduction to many physicians and other Medicaid providers, which the state and federal government both admitted could have a significant impact on beneficiary access.  As noted above, California and other states have been forced to use the crude method of reimbursement adjustments to balance their budgets, because Washington will not grant states flexibility to make other changes in their Medicaid programs.
  • The liberal Kaiser Family Foundation released its annual survey of state Medicaid programs yesterday.  The report again confirms that states are struggling through tough budget times, made more difficult by Obamacare’s strictures on Medicaid programs.  The report also notes that states are struggling with significant uncertainty surrounding the law itself:

States were asked to identify the biggest challenges for Medicaid in implementing health reform.  Most states identified multiple health care reform implementation challenges.  The most commonly listed challenges included: the fiscal impact of health care reform implementation, the tight implementation timelines, lack of clear federal guidance, limited staff and administrative resources to accomplish all of the required health care reform planning and implementation tasks such as streamlining eligibility processes, building an exchange and integrating Medicaid eligibility and enrollment processes with the exchange, as well as various systems and IT issues, and provider access issues.

In other words, Washington is harming states – both because it’s imposing new mandates on their Medicaid programs, and because it’s not providing clear and timely guidance on those mandates.

  • An article in Health Affairs published this week provided new estimates of the cost of Obamacare’s Medicaid expansion under a variety of different scenarios.  The Harvard researchers found that the law’s Medicaid expansion could cost as much as $98 billion per year by 2019 – a significant portion of which will be borne by the states.

It’s worth recalling that at a time when states face budget deficits totaling a collective $175 billion, Obamacare is imposing new unfunded mandates of at least $118 billion.  All the developments above reinforce the belief that states cannot afford the Medicaid programs they have now – so why is Obamacare foisting yet more unfunded mandates on the back of broken state Medicaid systems?

CBO, CLASS, and Obamacare’s Fiscal Sustainability

Since the demise of CLASS, analysts on both sides of the political spectrum have weighed in on whether and how the fiscal disaster that is the CLASS Act has broader implications for Obamacare’s sustainability.  For instance, last week liberal blogger (and Obamacare apologist) Ezra Klein said the motto is “trust CBO,” and that because CBO says the law will reduce the deficit, it will.  (Of course, CBO also said last year that CLASS would reduce the deficit in its first ten years, so that may not mean much.)

Before looking at the granular details, it’s first worth comparing CLASS to Obamacare at a macro level.  The HHS report on CLASS contains the word “uncertain” no fewer than 16 times in a 50-page document – it discusses “inherently uncertain” CLASS modeling, the “great uncertainty around the existing estimates,” and a “very high level of uncertainty around assumptions in the actuarial models.”  Likewise, CBO in its score of Obamacare said that “the range of uncertainty” surrounding estimates of the budgetary impact of the legislation “is quite wide.”  CBO’s most extensive analysis of Obamacare’s long-term projections – in last year’s long-term budget outlook – included a whole section regarding uncertainty and sustainability, which I’ve pasted below my signature.  The sum total of the passage would lead one to believe that the uncertainty surrounding implementation of the rest of the law is nearly as great as that surrounding CLASS.

To examine it more closely:  The Administration now claims that since CLASS’ demise, Obamacare will reduce the deficit by an estimated $124 billion over the next ten years.  What does that mean?  If…

  1. Medicare provider payment reductions that will take Medicare rates below Medicaid payment levels – and cause up to 40 percent of providers to become unprofitable – are implemented as scheduled; AND
  2. Medicare Advantage cuts that the Administration already felt the need to mitigate in the short-term for political reasons can be implemented, causing millions of seniors to lose their current coverage; AND
  3. Someone finds a spare $370 billion to avert a 30 percent reduction in Medicare physician payment fees scheduled to take effect this coming January; AND
  4. A future Administration is willing to implement a 40 percent tax on insurance policies so unpopular unions forced its delay until 2018, well after President Obama will have left office; AND
  5. Democrats are willing to allow a new “high-income” tax not indexed to inflation to become the “new AMT,” hitting more and more middle-class families until nearly 80 percent are being hit with this surcharge; AND
  6. A scheduled reduction in insurance subsidies in 2019 goes through, despite liberal advocates already calling for the subsidies to be increased; AND
  7. Employers do not drop coverage en masse, despite the numerous studies, papers, briefs, reports, employer questionnaires, consultant presentations, surveys, op-eds, interviews, and quotes suggesting that employers will drop coverage in much higher numbers than CBO first anticipated…

Then the Administration will have reduced the deficit by about $12 billion a year for the next decade – or less than 1% of the whopping $1.3 trillion deficit the federal government ran over the past 12 months.  In other words, at best the law will “reduce” the deficit by an amount so small some may consider it microscopic.  And, as illustrated above, the number of assumptions needed to arrive at that conclusion may be so great as to beggar belief – just as the Medicare actuary knew from Day One that CLASS wouldn’t work, despite all the Administration’s rhetoric.  Their claims notwithstanding, I haven’t seen Ezra Klein or other Obamacare advocates willing to make actual wagers that the law will actually end up reducing the deficit – and given what’s needed to make that prediction come true, with good reason.

Obamacare and Jobs — Or Why America is NOT “Doing Just Fine”

Speaking on the Senate floor during his open, Senator Reid claimed that “It’s very clear that private sector jobs have been doing just fine; it’s the public sector jobs where we’ve lost huge numbers.”

Unfortunately, private sector jobs have NOT been doing just fine – employment numbers haven’t even kept up with population growth – and Obamacare is one of the major reasons.  Analysts at UBS have stated that Obamacare is “arguably the biggest impediment to hiring, particularly hiring of less skilled workers,” and that the law “has the added drawback of straining state and federal budgets,” leading to the public sector job losses Sen. Reid talked about.  And the President of the Federal Reserve Bank of Atlanta has said that he has “frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”

Government intervention in the form of Obamacare is one of the reasons private sector firms haven’t been hiring.  So why does Senator Reid think that yet more government intervention – this in the form of new “stimulus” spending, coupled with a tax on job creators – will do anything different?

Deadline Day for DOJ: Will Administration End the Obamacare Uncertainty?

The Los Angeles Times and other news outlets have noted that today marks an important deadline in the ongoing legal battle over Obamacare.  If the Justice Department wants the full Eleventh Circuit Court of Appeals to review its decision striking down the law’s individual mandate, it must apply for such an en banc review by today; otherwise, the Justice Department’s only option would be an appeal to the Supreme Court.  The Times article notes that seeking an en banc review “could take weeks, or even months, and probably push back a Supreme Court ruling until 2013” – which some would view as a political ploy to avoid placing an election-year spotlight on Obamacare’s unpopular individual mandate.

There’s every reason for the Justice Department to avoid the dilatory nature of an en banc petition, and request the Supreme Court take up the individual mandate in the term it will start next week.  The issues surrounding the mandate have been well-argued: three circuit courts have now ruled on the mandate, and a fourth heard oral arguments on the mandate last Friday.  Meanwhile, the uncertainty surrounding the law continues to affect the broader economy – investment firms have called the law “arguably the biggest impediment to hiring,” and states have complained that they do not have sufficient information to implement the law in a timely fashion.

In recent weeks President Obama has asked Republicans to put country before party.  The question now is, Will President Obama’s Justice Department put the good of the country first, and stop the delays and uncertainty by asking the Supreme Court to rule on Obamacare immediately?

Two Thoughts on Yesterday’s Court Ruling

As has been reported elsewhere, the Fourth Circuit struck down two lawsuits against Obamacare yesterday, on procedural and standing grounds.  Most of the rulings’ discussion involved procedural and standing issues, as might be expected, and therefore did not examine the merits of the mandate.  But there are two points worth noting from the opinions.

First, one judge in the Liberty University case filed a concurring opinion, arguing that the court should dismiss the case on procedural and standing grounds, but adding that, on the merits, he would uphold the mandate as a constitutional tax.  The justification of the mandate as a tax relied in part on this footnote on page 59 of the ruling:

“The fact that Congress considered it necessary to exempt the individual mandate exaction from some traditional tax collection procedures like criminal liability and liens evidences that the exaction is a tax.  26 U.S.C. § 5000A(g)(2).  Otherwise, there would be no need to except the exaction from some of the standard tax collection procedures, which otherwise apply.”

In other words, because Congress made the mandate look LESS like a tax – by calling it a “penalty,” and by prohibiting criminal enforcement and the filing of tax liens – the mandate is therefore a tax.  Given this tortured logic, it perhaps isn’t surprising that this concurrence is an anomaly, thus far the only opinion among more than one dozen judges – at both the district and circuit court levels, and among judges appointed by Republican and Democrat Presidents – to conclude the mandate is in fact a tax and not a penalty.

Second, another judge in the Liberty case filed a dissent, arguing that the court should hear the case on the merits and affirm the mandate on commerce clause grounds.  The interesting element here is one argument he made to hear the case NOW, rather than waiting until after 2014 – as the majority argued – to determine whether the mandate lawsuits are justified:  “Leaving the constitutionality of the Act unsettled would seem likely to create uncertainty in the health insurance and health care industries, which might depress these major sectors of the economy.”  That sentiment equally applies to the uncertainty facing all businesses about what their expenses might be as Obamacare’s new regulations raise costs for business.  Regardless of where one stands on the merits of the mandate, stopping the uncertainty for business over Obamacare is an appropriate sentiment at this time of economic turmoil – one the Justice Department will bear in mind as it decides, hopefully sooner rather than later, whether and how to appeal last month’s ruling overturning the mandate.

Key Democrat Calls for Slowing Down Obamacare’s Regulatory Train Wreck

On Meet the Press yesterday, former Democrat Congressman Harold Ford Jr. called for a moratorium on new regulations – including new regulations under Obamacare.  An excerpted transcript is below; the full transcript can be found here.

At a time when unemployment remains near record high levels, and tens of millions of Americans are out of work, the Administration has already released more than 9,000 pages of Obamacare-related regulations, notices, and other mandates in the Federal Register – with many thousands of pages still being developed.  All these mandates will raise premiums for individuals and families, increase costs for businesses, and ultimately impede job creation.  Both Rep. Ford, and CNBC’s Maria Bartiromo, indicated that pending health care regulations are creating uncertainty among businesses that is harming the economy.  Why can’t President Obama see that himself, and call off the harmful Obamacare regulations before the economy incurs any more damage…?
 

REP. FORD:  I would have to think if you are–we’re fortunate around this table to be dutifully employed, some people with more than one job.  The reality is, if you have a jobs plan, put it out.  The same as I would say for Michele Bachmann.  If she has a plan to get gas prices down to $2, she ought to give it to President Obama and let him implement it now so Americans can be spared the agony.  Two, I hope the president does what E.J. said.  I hope he’s bold.  E.J. and I may define bold differently, but he’s got to come out, I think, with a plan to create certainty around regulations.  I would all–I’d ask and encourage a moratorium on new regulations even with some parts of the healthcare bill because, if you listen to big business people in the country, they’re concerned about their costs going forward.  You look at industries that are growing, the oil and gas industry, how do you get people back to work in industries where they’re ready to hire?  There are things that you can do right away.  And there’s no doubt, I think a repatriation tax, lowering this tax so many can come back in the country, can go to the federal government, the tax dollars, and a lot of that money people worry it will be spent on dividends or it’ll be spent on stock buyback.  Who cares?  If the money comes back to the U.S., and–U.S. investments benefit, the economy benefits because the stock market goes up.

MS. GUTHRIE:  Real quick, Maria.

MS. BARTIROMO:  That’s the issue.  I mean, the president needs a short-term and a long-term plan.  On the short-term, a plan that the markets can believe. The markets are built on confidence.  People need to have confidence that we actually see a plan that will encourage businesses to create jobs.  Right now all we’re ever hearing about is, “Oh, taxes will go higher, the millionaires, the billionaires.  Corporations should carry the brunt.” That’s why they’re sitting on–the corporate sector is the strongest that we’ve seen in a long time.  They’ve got $2 1/2 trillion in cash.  But they’re not putting the money to work because they’re anticipating costs going higher later.  And on the point on regulation, Dodd-Frank is the law of the land.  So why are the rules being written now?  Businesses do not know what they’re business is going to look like in six months, so they’re not going to add heads to the payroll.

REP. FORD:  They need to be stopping so critical of Wall Street as well.  I mean, Wall Street and Main Street are the same.

MS. BARTIROMO:  Exactly.

REP. FORD:  When Wall Street does well…

MR. DIONNE:  Can I speak for Main Street, please?

MS. GUTHRIE:  Yes.

REP. FORD:  Sure.  But, E.J., I’m not, I’m not…

MS. GUTHRIE:  E.J., go.

MR. DIONNE:  You know, I mean, the problem in this economy is there isn’t demand and I do–Harold’s right–I do want the president to be bold.  And I think–I’ve been watching CNBC more than I ever have before, and enjoying it. And I’ve seen one CEO after another come on there and say, “Austerity is not the thing you do when we may be heading into a second recession.” We need government to step in.  The governments around the world in March of 2009 got together and organized an international stimulus plan which kept us from falling into a depression.  The president’s got to go out there with support from the business folks I see all the time on CNBC.  It’s not just–it’s not about regulation, it’s about demand.

MS. BARTIROMO:  It’s about both.  There’s a demand story, but there’s also a regulatory environment which people still do not know and understand how it is going to look in six months.

REP. FORD:  Health care’s a part of that too, Maria.

MS. BARTIROMO:  Absolutely, health care’s a part of it.