6 Actions States, Federal Government Could Take on Obamacare, Health Care in 2018

Many states are eager to reverse the damage from Obamacare in 2018, but in some cases, they will need help from Congress, leading health care experts say.

“A lot of states would like to act in 2018, but there is a lot of uncertainty while they are waiting on Congress and the administration,” Grace Marie Turner, president of the Galen Institute, a free-market health care advocacy group, told The Daily Signal.

In 39 states where the federal government administers health exchanges, health insurances premiums increased an average of 105 percent between 2013 to 2017. Meanwhile, about 70 percent of U.S. counties have only one or two health insurers.

The following are six ways the states and/or the federal government could push for change or reforms in the year ahead.

  1. State innovation waivers

Under Section 1332 of the 2010 Affordable Care Act (aka Obamacare), the federal government can grant “state innovation waivers” from the law for up to 11 statutory requirements.

Among the requirements, the waivers must provide as complete coverage to as many people as under the Obamacare law and can’t add to the federal deficit.

However, in 2015, the Obama administration placed strict “guardrails” on the innovation waivers, which have made it difficult for states to apply.

The Trump administration pledged maximum flexibility for states, but hasn’t fully delivered on that, said Naomi Lopez Bauman, director of health care policy at the Goldwater Institute, an Arizona-based conservative think tank.

So far, the Department of Health and Human Services hasn’t changed the strict guidelines for state waivers as was anticipated, she said.

“What HHS has messaged is not what we’re seeing,” Bauman told The Daily Signal. “Obama’s guidance in 2015 was very strict, and there has not been a lot of innovation. Changing the guidance is not a big lift for any new administration, but we haven’t seen it.”

Arizona will be applying for an innovation waiver at the end of the year, Bauman said.

This year, the HHS approved waivers for Alaska, Minnesota, and Oregon. However, HHS rejected a waiver application from Massachusetts, while Iowa and Oklahoma dropped their requests.

“It’s better if Congress can amend Section 1332, but the administration can rewrite the regulations, which the Obama administration made so strict,” Turner said.

2. Revived Graham-Cassidy

More federal block grants to states for health care would also provide a boost, similar to the failed proposal by Republican Sens. Lindsey Graham of South Carolina and Bill Cassidy of Louisiana, Turner said.

“Congressional action will take threading the needle in the reconciliation process,” Turner said. “Block grants to states are needed as much as possible, similar to Graham-Cassidy, but with refinements. Graham-Cassidy was very hurriedly thrown together.”

The Graham-Cassidy bill was initially a last-ditch effort at repealing and replacing Obamacare. However, after the tax-reform bill passed Wednesday ending the individual mandate to buy health insurance, Graham said there will be more urgency for a fix.

“I think we’re all going to say that we ripped the heart out of Obamacare with the individual mandate,” Graham said. “It’s pretty hard to rip the heart out of it, and not replace it.”

3. Direct primary care

Direct primary care allows doctors to be paid directly, rather than through health insurance plans. The idea is to offer doctors and patients the choice to avoid a cumbersome claims process, which could be less costly for the health care provider, who would then charge lower fees.

“Direct primary care would provide more options,” Turner said. “It was originally something for the wealthy. Doctors are bringing it to the middle class. It’s access to primary care, without running it through insurance, for a relatively low monthly fee.”

That could promote competition and is increasingly important for states that could use it to reduce Medicaid costs, said Robert Moffit, a senior fellow in health policy at The Heritage Foundation.

It could be used under Medicaid waivers, also known as Section 1115 waivers, which existed before Obamacare was passed.

“Most people on Medicaid are in the acute care populations, relatively young and healthy, mostly low-income women and children,” Moffit told The Daily Signal. “What they really need is direct access to physicians. Direct primary care could actually improve their situation.”

4. Medicaid work requirements

Seema Verma, head of the Center for Medicare and Medicaid Services, recently announced that the agency will allow states to experiment with work and community involvement requirement for able-bodies recipients of Medicaid, a federal state health program for the poor.

Such experiments could be worthwhile, Nina Owcharenko Schaefer, senior research fellow for health policy at The Heritage Foundation, told The Daily Signal.

“By definition, a demonstration is about testing new ideas and new approaches, but this would be optional for states,” she said “It will be interesting to see how plans vary. The idea of a demonstration is to see what does and doesn’t work, and if it is successful, to consider changing policy.”

Schaefer added, “However, such demonstrations, do not replace the need for more fundamental reform of the Medicaid program.”

CMS granted a Section 1115 waiver to Kentucky for a work requirement, and is considering waivers from the states of Arizona, Arkansas, Indiana, Kansas, Maine, New Hammpshire, North Carolina, Utah and Wisconsin.

More states could follow, said Rea S. Hederman Jr., vice president of policy at the Ohio-based Buckeye Institute.

“The Trump administration should give states more flexibility with Medicaid,” Hederman told The Daily Signal. “One way to do that would be work requirements for Medicaid for able-bodied adults. Medicaid expansion encouraged people to leave the labor force.”

5. Telemedicine to cut costs

States are showing a strong interest in telemedicine, said Moffit, also the chairman of the Maryland Health Commission, a state government body that makes recommendations to the governor.

“States are very interested in promoting telemedicine to improve access for people in rural areas for specialized care,” Moffit said.

He said demonstrations to the Maryland commission showed both improved outcomes and lower costs.

Telemedicine uses online technology to help administer medical care and puts patients in contact with a doctor through telecommunications.

The Department of Veterans Affairs rolled out a major model to promote telemedicine this past summer for VA patients.

6. Regulations for new hospitals

During the administration of President Gerald Ford in the mid-1970s, a federal law went into effect to withhold federal dollars from states that didn’t adopt “certificate-of-need” laws that require builders of health care facilities to prove to regulators that the community needed the planned services.

By the mid-1980s, Congress repealed the requirement and 15 states dumped the laws.

However, most states still have what critics call an anti-competitive law in place that drives up the cost of health care.

“States should review and reform the certificate-of-needs laws for permission to expand medical facilities,” Moffit said. “About 35 states right now require certificates of need for construction of hospitals or the expansion of medical facilities. It’s really long past time for state officials to reform this.”

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Conservative Group Urges Trump, GOP to Fight Obamacare, Illegal Immigration

President Donald Trump and the Republican Congress should support and prioritize conservative policies this year, including killing off Obamacare and standing tough on illegal immigration, a conservative action group says.

The Steering Committee of the Conservative Action Project (CAP) released a memo calling on both the legislative and executive branches to prioritize specific policies as the White House readies its legislative agenda for 2018 ahead of Trump’s State of the Union address on Jan. 25.

The memo highlights four key initiatives.

  1. Finish repealing Obamacare: Congress and the Trump administration should repeal Obamacare and all of its remaining regulations. The conservative activists also say the government shouldn’t offer health insurance companies “billion-dollar bailouts.”
  2. Refuse to grant amnesty to illegal immigrants: There should be no amnesty for illegal immigrants, including through the Deferred Action for Childhood Arrivals (DACA) program. Any immigration-reform legislation should be debated openly and transparently, the conservative group adds.
  3. Confirm Trump’s nominees: In order to speed up the process of confirming the president’s judicial and executive branch nominees, the Senate should increase its workweek from just 2.5 days a week to a full workweek, the CAP Steering Committee says.
  4. Support fiscally responsible policies: Republicans have long talked about restoring responsible budgetary and spending policies, and they should take advantage of having a president whose budget outline are hospitable to that goal. 

Twenty individuals and organizations were behind either the creation of the memo or took part in sponsoring it. They include Jenny Beth Martin, chairman of Tea Party Patriots Citizens Fund; Adam Brandon, president of FreedomWorks; and Lisa B. Nelson, CEO of the American Legislative Exchange Council. Mike Needham of Heritage Action for America and Becky Norton Dunlop of The Heritage Foundation signed it as well. 

Click here to view the full memo and list of sponsors.

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Americans Need Health Reform to be a Priority Issue in 2018

An open letter to President Donald J. Trump, Senate Majority Leader Mitch McConnell, and House Speaker Paul Ryan.

As you meet this weekend at Camp David to plan your 2018 legislative agenda, we strongly recommend that you keep health care as a top priority.

We applaud your success in repealing one of the most despised parts of Obamacare—the individual mandate fines—but millions of Americans are still suffering under the many other provisions of the 2010 health overhaul that remain on the books.

Americans need relief, and we believe they will hold their representatives accountable at the polls this November.

The efforts you put into repealing and replacing Obamacare last year were heroic. But the challenges are great.

Millions of people now rely on Obamacare subsidies for their health coverage, and the law has introduced wave after wave of distortions into our health sector, making legislative change difficult, especially under the torturous reconciliation rules.

The legislation offered last fall by Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La., offered a new platform for reform that we believe can lead to success.

Instead of trying to adjust the subsidy mechanisms in Obamacare, they took a new approach of providing block grants to the states to give them new resources and greater regulatory flexibility to revive their individual and small group health insurance markets.

This new platform of returning power and authority to the states, and ultimately to individuals, charts a new path for health reform.

We have been meeting with congressional leaders, White House officials, and others in the policy community since last fall to refine these new policy recommendations. We are eager and willing to work with you in advancing these policies, which we believe would have greater traction with members of Congress and voters.

Chairman Lamar Alexander, R-Tenn., has been working with Sen. Patty Murray, D-Wash., on short-term subsidies and state flexibility. These efforts are commendable, but they do not alter the basic structure of the law and will not provide the relief that Americans desperately need.

Health premiums continue to soar, and millions of people have little or no choice of health insurers. Millions of people who once could afford coverage no longer can, and many find that their health insurance premiums cost more than their mortgage or rent payments.

These same people, as federal and state taxpayers, also are paying for Medicaid—which now covers one in four Americans—and for sharply higher federal costs to subsidize Obamacare individual policies.

In a new Associated Press-NORC poll, nearly half of Americans said health care is their primary concern for 2018, topping taxes, immigration, education, and the environment by more than 15 percent.

Obamacare has failed miserably in fulfilling the last administration’s promise to cut health costs. The typical American worker now must devote roughly twice as many work hours to cover health costs as to pay for food.

Health costs are rising faster than before, and there’s no real prospect of a reversal without legislative action.

The individual health insurance market is contracting: Preliminary numbers show that the total number of people with individual policies fell from 20 million in March 2016 to 16 million in September of last year. That’s a 20-percent drop in a period of 18 months.

The year-end estimates are likely to show that fewer people have individual health insurance coverage today than at any time since 2014.

Washington has exacerbated the problems in our health sector. We believe individuals need to be empowered with greater flexibility and choice and that states are better equipped than Washington to oversee their health insurance markets. This requires legislative action from Congress for these new and better choices.

We applaud the administration’s efforts in creating regulatory relief from Obamacare where possible, including releasing today a new regulation for broader adoption of association health plans. We look forward to aggressive agency action in implementing regulatory relief, but more action is needed.

We are ready to work with you in building on your successes, and are developing consensus solutions that would enable greater competition so Americans can choose the coverage that is right for them, with more options of more affordable insurance policies and health care, while protecting health coverage for those who have it now.

We believe this new approach can lead to a successful outcome, and we encourage you to create the path by making reform a priority in your decisions about your 2018 agenda.

Signed,

Rick Santorum
Doug Badger, Galen Institute
Lanhee Chen, Hoover Institution and Stanford University
Marie Fishpaw, The Heritage Foundation
Rea S. Hederman, Jr., The Buckeye Institute
Heather R. Higgins, Independent Women’s Voice
Yuval Levin, Ethics and Public Policy Center
Carrie Lukas, Independent Women’s Forum
Mike Needham, Heritage Action for America
Ramesh Ponnuru, American Enterprise Institute and National Review
Grace-Marie Turner, Galen Institute

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Trump Rule Aims to Extend Health Care Option to 11 Million Uninsured

Small businesses and sole proprietors will be able to band together under a new federal rule to create employee health plans that would expand coverage options for 11 million uninsured Americans, senior Trump administration officials said.

The Labor Department rule allowing “association health plans,” placed Thursday in the Federal Register, builds on an executive order by President Donald Trump from October.

One senior Trump administration official said during a background briefing Wednesday that the association health plans will “level the playing field” between small businesses and large corporations and provide “more health care for more people at a lower cost.”

Currently, 8 million Americans employed by small businesses and another 3 million sole proprietors, who do business without employees, don’t have access to a group health insurance plan.

Entry on the Federal Register opens a 60-day public comment period, and the rule could be implemented as early as summer, officials said.

“The main objective of this effort is to expand choices for people who do not yet have insurance and [create] more options for employers and employees to take advantage of,” Robert Moffit, a senior fellow in health policy studies at The Heritage Foundation and a former assistant secretary at the Department of Health and Human Services, told The Daily Signal.

In theory, individual small businesses without many employees could band together—in some cases across state lines—to create a health insurance plan covering a combined, large pool of employees, not unlike that of a health plan run by a big company with its own large pool of employees.

Such association members must have a “commonality,” which could be based on region or industry, senior administration officials said on background.

For example, companies in a specific state could band together for a plan. Already, industry groups such as the National Association of Restaurants and the National Homebuilders Association have expressed support for the concept.

However, Moffit contends this is not alone a reason to oppose the plans.

“That’s a matter of how they are governed,” Moffit said. “Medicaid is prone to fraud. Nobody is saying we should ban Medicaid. If that’s a reason for opposition, you could apply such a rationale across the board to welfare programs and food stamps.”

While association plans are targeted for small businesses, a larger corporation could join one. However, these companies already have existing plans, so there would be less incentive to do so, the senior administration officials said.

Conceptually, the association health plans would be comparable to certain union-sponsored plans, such as that of the United Brotherhood of Carpenters, in which an individual entrepreneur may buy into a larger health insurance plan, officials said.

Administration officials who briefed state leaders on the idea described them as “cautious but not antagonistic” and “intrigued.”

States will be free to regulate to ensure the solvency of the plans.

America’s Health Insurance Plans, the health insurance lobby, has warned that such plans could be prone to fraud without state oversight.

“For example, between 2000 and 2002, insurance scams through associations left more than 200,000 policyholders with unpaid medical bills totaling $252 million,” a research brief from the organization says.

Participating companies will be required to have a role in governing the health plans, senior administration officials said.

Another potential point for opponents is that fewer people who are uninsured will turn to the existing insurance exchanges created under the Affordable Care Act, better known as Obamacare.

This could drive up the cost of the exchange plans, because they would have fewer participants. But Trump administration officials contend their plan will increase consumer options.

The rule will go into place administratively under an existing law, the Employee Retirement Income Security Act of 1974, known as ERISA.

When signing the executive order Oct. 12, Trump predicted:

Insurance companies will be fighting to get every single person signed up, and you will be hopefully negotiating, negotiating, negotiating, and you’ll get such low prices for such great care.

Trump’s executive order primarily does three things:

—Allows more small businesses to form associations to buy insurance plans, with the goal of creating more competition and expanding options across state lines.

—Reviews establishment of “short-term limited duration insurance,” which would not be subject to Obamacare’s expensive and comprehensive coverage regulations.

—Makes it easier for businesses to offer health reimbursement accounts, allowing more employees of small businesses to get coverage through work.

Sen. Rand Paul, R-Ky., who had opposed other administration-backed health care plans, said at the signing ceremony that the Trump executive order was “the biggest free-market reform of health care in a generation.”

Paul added that the reform, “if it works and goes as planned, will allow millions of people to get insurance across state lines at an inexpensive price.”

This report has been updated to include Moffit’s comments.

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The GOP’s Work Has Just Begun. Here’s What Should Top the Agenda in 2018.

Conservatives, we have our work cut out for us this year.

Mind you, 2017 definitely had its ups. Neil Gorsuch is on the Supreme Court. The war on terrorism moved in the right direction, with the prime minister of Iraq declaring victory over ISIS.

The Trump administration pulled the U.S. out of the Paris climate-change agreement and is working to reduce regulations. We also have a much-needed tax cut in place.

On a more personal note, we welcomed a new president at The Heritage Foundation: the immensely talented Kay Coles James. Director of the Office of Personnel Management under President George W. Bush, and a senior member of President Donald Trump’s transition team, James was the Heritage board of trustees’ unanimous choice after an extensive search.

The nation’s leading think tank couldn’t be in better hands.

Good thing, too, because there’s plenty to do in 2018—and beyond.

Take health care. Despite Trump’s claim to the contrary, repealing the individual mandate does not “essentially” repeal Obamacare. Key provisions, such as the expansion of Medicaid, remain in place.

“Repeal of the individual mandate is certainly a significant victory for congressional Republicans,” writes David Sivak in the Daily Signal. “Yet the change is modest compared to prior Republican attempts at repeal.”

Indeed, he points out, “Some predict that repeal of the individual mandate may actually lead Republicans to shore up the Obamacare exchanges.”

Or take spending—please. It continues to grow by leaps and bounds. Budget expert Romina Boccia, in a review of federal spending in 2017, notes that the deficit reached $666 billion (how appropriate), the debt hit $20 trillion, and Social Security spending topped $1 trillion.

This is unsustainable. No wonder we’re always told we can’t “afford” tax cuts. The money we send to Washington flows out at such a prodigious rate that policymakers naturally howl at the thought of even a modest reduction.

The problem is that freedom requires constant work and vigilance. There are no permanent victories or defeats. It’s like weeding a garden. Policymaking is never a “one and done” situation. There will always be something to do tomorrow. And the next day.

With that in mind, here’s a six-question test that I introduced in my 2006 book “Getting America Right.” My co-author Doug Wilson and I wrote that, if followed, “it could well become the bypass operation that restores Washington’s failing political heart to normal functioning.”

The questions we should ask of any policy prescription:

  • Is it the government’s business? Relatively few things really need federal intervention. Many can and should be handled at the state and local level, where accountability, knowledge, and oversight is naturally better.
  • Does it promote self-reliance? Liberal policy proposals usually promote dependence on government, but nothing could be more un-American. We should, for example, measure a welfare program’s success not by how many people are signed up for it, but by how many who are on it have managed to find work.
  • Is it responsible? Should we spend more than take in? Should we tolerate waste, fraud, and abuse? Of course not.
  • Does it make America more prosperous? That’s a key question to pose when it comes to trade barriers and business regulations. Yet we seldom do.
  • Does it make us safer? The way we’ve been underfunding the military, to the point where current readiness levels are seriously compromised, suggests that we need to ask this more often.
  • Does it unify us? We used to welcome immigrants as new Americans. Yet our current policies encourage balkanization. This needs to change—and soon.

We should certainly be optimistic about 2018. We have the tools we need to make things better. The question is, will we have the courage to act?

Originally published by the Washington Times.

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Fact Check: Did Obamacare Have a Record Number of Sign-Ups for 2018 Open Enrollment?

Americans signed up at record rates during the 2018 open enrollment period for former President Barack Obama’s signature health care law, Adam Hodge, former Democratic National Committee communications director, said on Fox News Tuesday.

“Obamacare is more popular now than it’s ever been,” Hodge said. “We’ve seen record sign-ups during the open enrollment period, that the Trump administration actually cut funding for and shortened the enrollment period.”

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Twitter users also claimed Obamacare saw record sign-ups this year.

Verdict: False

The total number of sign-ups on HealthCare.gov during the 2018 open enrollment period is lower than previous years, although the pace of sign-ups was faster.

Fact Check:

About 8.8 million people signed up for 2018 health coverage on HealthCare.gov during this year’s open enrollment period ending Dec. 15, compared to 9.2 million sign-ups for 2017 coverage and 9.6 million for 2016 coverage.

HealthCare.gov provides Affordable Care Act individual health plans in 39 states. The remaining 11 states and the District of Columbia run state health exchanges, and may have later deadlines to sign up than the federal deadline. Total enrollment for Obamacare plans won’t be known until all exchanges are accounted for, but enrollment on state exchanges also lags behind previous years.

The New York Times claimed the 8.8 million number is surprising since President Donald Trump’s administration cut HealthCare.gov’s advertising budget by 90 percent and shortened the enrollment period to around 45 days, half the length as the 2017 enrollment period.

“It’s incredible how many people signed up for coverage this year,” Lori Lodes, a former Obama administration official and a founder of Get America Covered, told The New York Times.

Enrollment for 2018 did outpace the rate of sign-ups from prior years. More people signed up for plans on HealthCare.gov in the first week of the open enrollment period than in previous years, with more than 600,000 people selecting plans. In the final week, 4.1 million people signed up for coverage or were automatically renewed.

When asked to clarify his statement, Hodge said he was referencing the pace of sign-ups. “The pace of sign-ups were faster given the shorter enrollment period and the enrollments in the last week were likely the biggest on record,” Hodge told The Daily Caller News Foundation in an email. He did not say whether he would amend his on-air statement to clarify there was not a record number of total sign-ups.

Though HealthCare.gov enrollment for 2018 outpaced previous years, the week-to-week enrollment pattern was typical. In previous years with longer enrollment periods, sign-ups significantly slowed after December, mostly because early enrollees want coverage that starts Jan. 1.

The bulk of HealthCare.gov sign-ups were consumers renewing coverage, with 2.4 million new consumers for 2018 compared to 3 million new consumers for 2017 and 4 million new consumers for 2016.

Premiums for health plans offered on HealthCare.gov skyrocketed for 2018, due in part to the Trump administration eliminating cost-sharing payments to insurance companies. Premiums for the second-cheapest silver plan increased 37 percent from an average of $300 per month to $411 per month. Low-income Americans will get larger subsidies because of the price increase.

The new tax reform law repealed the individual mandate provision in the Affordable Care Act that required every American to have health insurance coverage or pay a fine. Republicans in Congress are deciding whether to continue with Obamacare repeal and replace efforts in 2018 or move on to other priorities.

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities for this original content, email licensing@dailycallernewsfoundation.org.

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Fact Check: Did Republicans ‘Essentially’ Repeal Obamacare?

President Donald Trump claimed the GOP tax bill that Congress passed Wednesday “essentially” repeals Obamacare.

“We—I hate to say this—but we essentially repealed Obamacare because we got rid of the individual mandate, which was terrible,” said Trump during remarks after passage of the bill.

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Verdict: False

Republicans voted to repeal the individual mandate—the requirement that Americans buy health insurance or face a penalty—but left all other provisions of Obamacare in place.

Fact Check:

Republicans have long vowed to repeal the Affordable Care Act—the 2010 law that significantly expanded the rolls of Medicaid, created an insurance exchange with subsidies for low- and moderate-income people, and imposed new requirements on insurers and employers.

Congress successfully passed a repeal bill in 2015 only for it to be vetoed by then-President Barack Obama.

The legislation would have undone the Medicaid expansion—a provision that extended insurance to an additional 12 million people—and subsidies for the health insurance exchanges. It also would have repealed the individual mandate, employer mandate, and many of the taxes imposed on businesses.

Once Trump assumed office, repeated attempts were made to undo the law. A bill passed in the House would have rolled back Medicaid, removed the individual mandate, repealed key tax provisions, and offered tax credits instead of subsidized health plans on the exchanges.

Several iterations were called repeal even though they left large aspects of Obamacare intact. Congress ultimately failed to pass even a “skinny repeal,” which would have simply undone the individual and employer mandates.

Republicans in Congress were able to successfully undo that mandate Wednesday, but it was the only Obamacare provision touched by the tax bill.

Repeal of the individual mandate is certainly a significant victory for congressional Republicans; it’s one of the most controversial provisions of Obamacare. Yet the change is modest compared to prior Republican attempts at repeal.

Trump claimed that Republicans repealed Obamacare because the mandate was a “primary source of funding.” But the Congressional Budget Office estimated that only $35 billion in revenues would be lost over 10 years without the individual mandate.

Repeal of the 3.8 percent surcharge on capital gains and the 0.9 percent Medicare payroll tax, by comparison, could result in revenue losses over 10 years of $250 billion and $150 billion, respectively.

These sorts of revenue offsets will remain intact, however, and Congress will continue to subsidize the Obamacare exchanges and Medicaid expansion.

Some predict that repeal of the individual mandate may actually lead Republicans to shore up the Obamacare exchanges.

Despite a doubling of premiums in the private insurance market since 2013, the mandate did help reduce premiums by forcing younger, healthy Americans to enroll. Without it, the CBO predicts even higher premiums in the marketplace.

Republicans may introduce a legislative fix like the Alexander-Murray bill proposed earlier this year in an attempt to stabilize the exchanges. The fate of Obamacare, however, is far from certain.

The Trump administration has taken steps that undermine the health care law in recent months. It discontinued making subsidy payments to health insurers and slashed the budget for Obamacare enrollment efforts, among other changes.

The White House did not respond to a request for comment in time for publication.

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities for this original content, email licensing@dailycallernewsfoundation.org.

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Who Wouldn’t Have Coverage If the Obamacare Mandate Is Repealed

The prospect that Congress might zero-out Obamacare’s individual mandate penalty in the pending tax bill has sent Obamacare defenders into flights of pessimistic rhetoric, up to and including the charge that “thousands will die” as a result.

The argument by which that attention-grabbing conclusion is reached runs something like this:

  • health insurance coverage reduces mortality;
  • the mandate expands insurance coverage;
  • therefore, the mandate reduces mortality, and consequently, removing the mandate will increase mortality.

Indeed, none other than Harvard economist, and former Treasury Secretary, Larry Summers recently deployed that argument, claiming that eliminating Obamacare’s mandate tax penalty in the tax bill would result in the death of 10,000 people per year.

In response, University of Chicago economists Casey Mulligan and Tomas Philipson argued that research on the connection between insurance coverage and mortality has found no more than a weak linkage between the two. They note that part of the explanation may be “that lack of coverage does not necessarily imply lack of lifesaving care as hospitals cannot turn away emergency-care patients without coverage.”

Summers, joined by Professor Jonathan Gruber of Massachusetts Institute of Technology, a prominent “architect” of Obamacare, then fired back, doubling-down on Summers’ original claim.

At one level, this is a classic argument among academics—complete with each side accusing the other of basing its case on a “selective” use of evidence in the professional literature. What, however, should the rest of us make of it?

To start with, a recent review of the academic literature on the subject finds a mixed bag, but with the strongest link between coverage and health outcomes in cases where health insurance coverage improves access to care, “particularly among people with lower incomes and chronic conditions.”

That makes sense. Having health insurance makes less of a difference to people with higher incomes who can afford to pay for more of their medical care directly. Similarly, the difference between being insured versus uninsured appears to be marginal to the healthy person with an infrequent need for care—though going without health insurance can turn out to be a bad bet if a major illness or accident strikes.

That leads us to the crucial, practical question that this academic debate largely misses: Who are the people that would no longer have health insurance if the mandate penalty were repealed?

For that we turn to the source of the projected coverage losses: the Congressional Budget Office (CBO). Setting aside for the moment the—entirely separate—debate over the accuracy of CBO’s specific numbers, the agency projects that eliminating the mandate penalty will result in roughly 13 million fewer Americans having coverage by 2027. Of that number, CBO estimates that 5 million fewer people will be enrolled in individual market coverage; 5 million fewer in Medicaid; and more than 2 million fewer in employer group coverage.

Notice what CBO is not saying. CBO is not saying that those Americans will “lose” coverage. Rather, CBO is saying is that—absent the mandate penalties—those Americans, will voluntarily forego enrolling in health coverage. CBO is explicit on this point: “Those effects would occur mainly because healthier people would be less likely to obtain insurance and because, especially in the non-group market, the resulting increases in premiums would cause more people to not purchase insurance.”  This is a crucial point. Healthier people are less likely to die a premature or preventable death than unhealthy people, regardless of income or health insurance status.

That explains CBO’s somewhat counterintuitive projection that, without a mandate penalty, millions of poor people will turn down the offer of free Medicaid coverage. The reason is that they don’t think they need it (because they are healthy) and if they become ill and seek care at a hospital, they know the hospital will enroll them in Medicaid to get paid. Indeed, it is also why, long before Obamacare came along, that there was a persistent and notable gap between the number of people eligible for Medicaid and the number of people enrolled in the program.

It also explains CBO’s other counterintuitive projection: that eliminating the mandate penalty will generate higher tax revenues.  While not collecting mandate penalties brings in less revenue, CBO projects that there will be new revenues coming from the healthy people who decide to turn down tax-free employer health insurance in exchange for higher (taxable) cash wages. Presumably, CBO thinks that being healthy and very much alive are basic prerequisites for expecting those folks to generate additional tax revenues.

Repeal of the Obamacare mandate will not result in social catastrophe. Supporters of the mandate would have a more compelling argument if millions of poor and sick persons would be thrown out of their existing coverage, struggling with potentially fatal chronic illnesses and unable to get insurance to maintain continuous access to regular care. But that is not what CBO is projecting. Their argument is hardly compelling, to say the least, when the cohort of the future uninsured are healthy people who simply choose not to buy Obamacare coverage because they believe they don’t need it or want it.

However, while keeping the individual mandate in place is not the answer, there are actions lawmakers can take to make health insurance more affordable, and more flexible in terms of providing a wider variety of plans that match people’s needs with their desired prices.  Achieving this will require the elimination of costly federal rules that artificially drive up health insurance premiums; for instance, current mandates on what insurance plans must cover drive up prices for all, even those who would want a more limited health insurance plan. Already, rising insurance costs today threaten continuation of health insurance coverage among millions of middle class Americans in the individual and small group markets who are ineligible for taxpayer subsidies.  It’s time for lawmakers to make changes that give cheaper insurance options for those who want it—and time to stop forcing all Americans to purchase expensive health insurance they may not need or want.

 

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GOP Lawmakers Target Another Obamacare Mandate in States

Republicans in Congress are working to chip away at programs mandated under Obamacare following their inability to repeal the health care law.

Rep. Mark Meadows, R-N.C., and Sen. Ron Johnson, R-Wis., introduced a bill Tuesday to end what they called Obamacare’s “failing” plans that competed with private health insurers in the states.

“Multistate plans were a poorly conceived provision of an even more poorly conceived bill, Obamacare, and repealing these plans would be a good step toward getting our health care system back on track,” Meadows said in a written statement.

The plans create two national health insurance plans facilitated by the Office of Personnel Management to compete with insurance plans in each state, and are required in all 50 states.

“This mandate is the definition of government waste,” Johnson said in a prepared statement. “The program has failed to meet statutory requirements and is diverting necessary resources from what should be the OPM’s priorities, such as retirement and security backlogs. Congress needs to let the OPM focus on its job, eliminate this failed program, and work to ensure health care is more affordable for all Americans.”

Arkansas will be the only state to offer multistate plans in 2018, and Meadows, chairman of the conservative House Freedom Caucus, says the health care market would be better served without government interference.

Robert Moffit, an assistant director at OPM under President Ronald Reagan who is now a senior fellow for health policy studies at The Heritage Foundation, said that the fact Arkansas is the only state to offer the plan is telling:

It failed not only in terms of the metrics, in terms of generating insurer participation or coverage numbers, it failed to achieve its fundamental goal, which was to enhance competition in the health insurance exchanges. And the fact that it’s supposed to be in all 50 states and now only exists in Arkansas is a testimony to … the gravity of the monumental nature of this failure in public policy.

Meadows said government should not be part of the health care business.

“The OPM should not be in the business of contracting health insurance plans,” the North Carolina Republican said. “I’m grateful to work with Senator Johnson on this bill as we seek to restore common sense, market-based principles to our health care industry that will bring premiums and overall costs down and help make quality care affordable for all Americans.”

Democrats in the House and Senate passed Obamacare, formally known as the Affordable Care Act, without a single Republican vote in 2010, the second year of Barack Obama’s eight-year presidency.

Republicans have sought to repeal Obamacare on 70 occasions, and the House has voted over 50 times to repeal the law.

In a July 28 Senate vote, three Republicans—Lisa Murkowski of Alaska, Susan Collins of Maine, and John McCain of Arizona—blocked what lawmakers dubbed the “skinny repeal” of Obamacare.

Government has failed in its attempts to be a health insurance provider, Moffit said.

“The federal government has no business sponsoring health insurance plans to compete against other private sector plans in any case,”  he said.

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Killing the Obamacare Tax Penalty Would Not Amount to a Tax Increase

Only in Washington can removing a tax penalty be considered a tax increase.

The proposed tax overhaul that is quickly making its way through Congress would eliminate Obamacare’s individual mandate. That mandate—ruled a “tax” by the Supreme Court—charges taxpayers anywhere from $695 to upward of $10,000 (based on their income) if they do not purchase the type of health insurance that the federal government requires them to.

According to the most recent IRS report, for the 2015 tax year, 6.2 million taxpayers paid the penalty and 82 percent of those taxpayers made less than $50,000 per year. Another 12.7 million taxpayers qualified for an exemption, and 4.3 million more failed to report their health insurance status on their tax forms.

Without eliminating the individual mandate penalty, any of those 4.3 million taxpayers that didn’t report their health insurance coverage status and are not enrolled in an approved health plan will also have to pay the penalty next year when greater enforcement measures are scheduled to kick in.

So how does removing hundreds or thousands of dollars in “tax” penalties result in a tax increase, as some claim?

Well, if an individual or family decides that it is not in their best interest to purchase highly regulated, expensive, and often excessive health insurance, they will forego any Obamacare tax subsidy that they would qualify for if they did purchase the coverage.

Depending on each taxpayer’s income and available health insurance options, the Obamacare subsidies can range from no more than a few dollars to over $12,000 a year per individual and upward of $20,000 per year for families.

It is because the Congressional Budget Office counts those lost credits as tax revenue increases that the bill has been said by some to increase taxes on individuals and families making less than about $40,000 per year.

However, when the Congressional Budget Office looked at the impact of the proposed tax reform excluding the effects of eliminating the Obamacare penalty, it determined that all income groups would receive significant tax cuts through 2025.

The Congressional Budget Office’s conventional methodology, which says eliminating the Obamacare penalty would produce an increase in tax revenue, is misleading. What they are really saying is that the government would lose less revenue because some people would voluntarily forego a tax credit that they would otherwise claim if they bought the coverage.

The argument that this is somehow a tax increase also misses two other important points:

  • Declining the tax credit is optional.

The alleged tax increases—as a result of not receiving an Obamacare subsidy—are entirely optional. Individuals and families who currently receive tax credits for their health insurance can continue to receive the exact same credit under the proposed bill.

The only change is that they have the option—without penalty—to not purchase the government’s proscribed health insurance and, as a consequence, to not receive a tax credit.

Under the proposed bill, any time they change their mind, they will still qualify for the exact same premium tax credit that they would currently get for buying the coverage.

  • Taxpayers can’t spend the credits on what they want.

Unlike other tax credits that individuals receive back as cash, which they can spend on anything, Obamacare tax credits aren’t like cash. They’re more like gift cards that can only be used to purchase certain types of qualified health insurance from insurance companies.

Obamacare credits do not boost individuals’ or families’ disposable incomes. Instead, they boost insurance companies’ revenues. Eliminating the individual mandate penalty, on the other hand, could increase taxpayers’ disposable incomes by hundreds or thousands of dollars.

To count the decisions of some people to not buy health insurance—and thus forego Obamacare tax credits that were never actually delivered to them—as tax increases, is misleading to say the least.

Eliminating the Obamacare individual mandate will not reduce any taxpayer’s incomes by a single cent. It will, however, reduce the tax bills of many individuals’ and families—based on their own choices—by hundreds, if not thousands, of dollars.

And most importantly, it will leave taxpayers freer to make personal decisions absent the heavy hand of Uncle Sam.

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