Tag: aca

Here’s Your Free Health Care. Would You Care to Vote?

The Washington Examiner’s Paul Bedard writes:

The 61-page online Obamacare draft application for health care includes asking if the applicant wants to register to vote, raising the specter that pro-Obama groups being tapped to help Americans sign up for the program will also steer them to register with the Democratic Party.

That may strike some as unseemly. After all, people go to jail for buying votes. But the real problem here is that ObamaCare is paying too much.

According to the Congressional Budget Office, the average subsidy ObamaCare offers for private health insurance will rise from $5,500 next year to more than $8,000 in 2023. But according to the Washington Post:

The price of one bona fide, registered American vote varies from place to place. But it is rarely more than a tank of gas.

Indeed, as a rising furor over voter fraud has prodded some states to mount extensive efforts against illegal voters, election-fraud cases more often involve citizens who sell their votes, usually remarkably cheaply. In West Virginia over the past decade, the cost was as low as $10. Last year in West Memphis, Ark., a statehouse candidate used $2 half-pints of vodka.

At the high end, corrupt candidates in Clay County, Ky., once paid $100. But that was probably too much: It attracted one woman who already had sold her vote. The man who bought it first was outraged, and he beat up the man who bought it second.

ObamaCare overpays for everything.

California’s ObamaCare Exchange Costs 56 Times More to Launch than Facebook

Robert Laszewski notes that launching California’s ObamaCare “Exchange” is so far costing taxpayers 56 times as much as it cost to launch Facebook, while its marketing budget is 8 times what Sen. Barbara Boxer (D-CA) spent on her reelection bid (adjusted for inflation):

So far California has received $910 million in federal grants to launch its new health insurance exchange under the Affordable Care Act (“Obamacare”).

The California exchange, “Covered California,” has so far awarded a $183 million contract to Accenture to build the website, enrollment, and eligibility system and another $174 million to operate the exchange for four years.

The state will also spend $250 million on a two-year marketing campaign. By comparison California Senator Barbara Boxer spent $28 million on her 2010 statewide reelection campaign while her challenger spent another $22 million…

Privately funded Esurance began its multi-product national web business in 1998 with an initial $5.5 million round of venture fund investment in 1999 and a second round of $34 million a few months later.

The start-up experience of other major web companies is also instructive. Facebook received $13.7 million to launch in 2005. eBay was founded in 1995 and received its first venture money in 1997––$6.7 million in 1997.

Even doubling these investments for inflation still leaves quite a gap.

The California Exchange officials also say they need 20,000 part time enrollers to get everybody signed up––paying them $58 for each application. Having that many people out in the market creates quality control issues particularly when these people will be handling personal information like address, birth date, and social security number. California Blue Shield, by comparison has 5,000 employees serving 3.5 million members.

New York is off to a similar start. New York has received two grants totaling $340 millionagain just to set up an enrollment and eligibility process.

I thought it was notable that the Obama Administration has issued grants totaling $174 million to a non-profit group––Freelancers––for the purpose of setting up a new full service health plan in New York under the Affordable Care Act’s health insurance co-op program.

So, the Obama administration thinks it costs $174 million to set up a full service health insurance company in New York (including the significant cost of premium reserves) compared to $340 million to set up just a statewide insurance exchange to do eligibility and enrollment?

As many as 17 states are going to be setting up their own health insurance exchanges under the new law and the feds have so far released $3.4 billion to the states to build them. Little Vermont has received $124 million so far, Kentucky $253 million, and Oregon $242 million, for example. I wonder what the per person cost of exchange enrollment in Vermont will be?

Read the whole thing.

The Only Ones Who Misunderstand ObamaCare More than Its Detractors Are Its Supporters

Ezra Klein has a post arguing that ObamaCare is unpopular because the public doesn’t understand it. It would be more accurate to say that ObamaCare is popular with people like Klein because they don’t understand it.

Klein notes an apparent negative correlation between the popularity of certain provisions of the law and public awareness of those provisions. If only more people knew about the good stuff in ObamaCare – you know, the subsidies to seniors and the provisions forcing insurers to cover the sick – more people would like it. But the polls showing public support for those provisions don’t ask respondents whether they think the benefits of those provisions are worth the costs. They only ask about the benefits. Since none of those provisions is a benefits-only proposition, those polls tell us essentially nothing.

For example, last year a Reason-Rupe survey asked respondents about laws forcing insurers to cover the sick. What made this poll interesting is that it was the first poll in 18 years to ask respondents to weigh the costs of such laws against the benefits. The below graph (from my latest Cato paper, “50 Vetoes”) displays the results.

Reducing the quality of care is actually the most likely negative effect of banning higher premiums for people with pre-existing conditions. (Don’t take my word for it. The authors of the law knew those provisions reduce the quality of care, and so included an awful lot of regulations that they hope will prevent that from happening.) When people learn about this negative effect, they oppose those provisions by a ratio of five to one. Greater public understanding of ObamaCare increases public opposition to the law.

Klein also writes:

Obamacare can have a hard implementation in 2014, but President Obama isn’t going to repeal it or even lose reelection over it (though congressional Democrats might).

If he means there is no way the law will make things so bad that Obama would have to repeal it, I again think he doesn’t understand the law itself or the challenges of imposing a law like this on a hostile public. I cannot predict that President Obama will repeal his own signature domestic-policy achievement. Indeed, the odds are against it. But we cannot rule it out, and I have already predicted the president will at least sign major revisions to this law before he leaves office.

Where I agree with Klein is when he predicts that ObamaCare will become much harder to repeal if people (in particular the health care industry) get hooked on the trillions of dollars of new taxpayer subsidies that begin to flow in 2014:

My guess is the law’s top-line polling will change a bit, but the bigger change will be that the intensity of its supporters will come to match that of its detractors. All of a sudden, a lot of people will have something to lose if Obamacare is ever repealed.

It’s worth noting that this isn’t an argument that ObamaCare will survive because it’s a good law, but because people will be dependent on it.

How Virginia Businesses Are Struggling under Obama’s Illegal Employer Tax

An article in today’s Washington Post highlights the costs ObamaCare imposes on small businesses, and the dampening effect of the law on jobs and economic growth.

What the article does not reveal is that because the three businesses it examines are located in in Virginia, which has opted not to establish a health insurance “exchange,” Congress exempted these firms ObamaCare’s employer mandate. Yet the IRS is trying to impose that tax on firms in Virginia and 33 other states, even though Congress expressly forbids the agency from doing so. (Jonathan Adler and I explain here.)

An excerpt from the Post article.

Jody Manor has run a small cafe and catering company for nearly three decades in Old Town Alexandria, only a few blocks from where he was born. Six years ago he purchased an adjoining building, and more recently he started searching for a second location.

Whether he moves forward with expansion depends on the price tag of the requirements mandated by the Affordable Care Act, President Obama’s signature health-care initiative.

Manor’s company employs 45 people. If he brings in just five more, his business would soon be subject to new minimum coverage standards under the 2010 law — and he does not know whether his current health plan would meet this threshold of coverage or how his premiums might be affected.

“These changes are less than a year away, and I still have no information about how much our premiums are going to cost,” said Manor, owner of Bittersweet Catering, Cafe and Bakery. “It definitely gives me pause when thinking about adding another location.”

Nearly three years after the health-care law was passed…the picture remains anything but clear for small-business owners, some of whom have been warned that their premiums may spike and that their current coverage may fall short.

“There is tremendous confusion and fear among many of my competitors and other business owners in my network, particularly about what you have to cover and how you have to report,” said Hugh Joyce, owner of James River Air Conditioning in Richmond. “In speaking to them, I am convinced that the primary reason we aren’t seeing a robust economic recovery is the uncertainty and costs associated with this health-care law.”…

The situation only gets thornier for Joyce, who also owns a small art gallery with one full-time employee. Rules proposed this year by the Internal Revenue Service suggest that workers from separate firms owned by the same person will be totaled to determine an employer’s ultimate size. If so, Joyce will probably shift his gallery employee to part-time hours to avoid having to add coverage at his second business…

Meanwhile, many employers have seen their premiums rise or plans disappear as insurers prepare for the coming changes.

One in eight small-business owners who responded to a survey by the National Federation of Independent Business said their health insurance providers had notified them that their plans would be terminated. A study released last week by Adecco, a human resources consulting firm, showed that nearly a third of employers said they stopped hiring or cut their workforce because of the law…

“If our cost trajectory continues, in five to seven years the premiums will eat up all my net profit,” Joyce said. “It’s already hard out there right now, particularly for small and medium-size businesses. This may be the straw that breaks the camel’s back.”

I could “excerpt” the whole thing. Better that you just go there and read it.

If ObamaCare Isn’t Vulnerable, Why Is the President Violating the Law to Save It?

From my oped in today’s Daily Caller, heralding the release of my new Cato white paper, “50 Vetoes: How States Can Stop the Obama Health Law”:

But the surest sign that Obamacare remains vulnerable is that the Obama administration is violating its own statute, congressional intent, and even a Supreme Court ruling in order to save the law.

In “50 Vetoes,” a study released today by the Cato Institute, I explain the administration is so afraid of a sticker-shock fueled backlash that it is preparing to spend more than $600 billion that Congress never authorized to numb consumers to the costs of this law. Along the way, the administration will impose roughly $100 billion in illegal taxes on employers and individuals (including some legal immigrants below the poverty level), and deny millions of individuals the right to purchase low-cost “catastrophic plans.”

To cement the law’s Medicaid expansion in place, the administration is also violating the Supreme Court’s ruling in NFIB v. Sebelius. The Court prohibited the federal government from coercing states into implementing the expansion. Yet HHS is still threatening every state with the loss of all federal Medicaid funds if they fail to implement parts of the expansion. These are not the actions of an administration that feels its health care law is secure.

Finally, supporters forget that President Obama and congressional Republicans have already repealed important parts of the law, including Obamacare’s third entitlement program — a long-term care program known as the CLASS Act, repealed as part of the “fiscal cliff” deal. President Obama is already repealing his law one provision at a time.

Obamacare supporters may scoff at repeal. But if vulnerable Democratic senators start hearing from their constituents about the chaos and sticker shock they experience later this year, the scoffing will cease.

Read the whole paper.

50 Vetoes: How States Can Stop the Obama Health Care Law

Today, the Cato Institute releases my latest working paper, “50 Vetoes: How States Can Stop the Obama Health Care Law.” From the executive summary:

Despite surviving a number of threats, President Obama’s health care law remains harmful, unstable, and unpopular. It also remains vulnerable to repeal, largely because Congress and the Supreme Court have granted each state the power to veto major provisions of the law before they take effect in 2014.

The Patient Protection and Affordable Care Act (PPACA) itself empowers states to block the employer mandate, to exempt many of their low- and middle-income taxpayers from the individual mandate, and to reduce federal deficit spending, simply by not establishing a health insurance “exchange.” Supporters of the law do not care for this feature, yet they adopted it because they had no choice. The bill would not have become law without it.

To date, 34 states, accounting for roughly two-thirds of the U.S. population, have refused to create Exchanges. Under the statute, this shields employers in those states from a $2,000 per worker tax that will apply in states that are creating Exchanges (e.g., California, Colorado, New York). Those 34 states have exempted at least 8 million residents from taxes as high as $2,085 on families of four earning as little as $24,000. They have also reduced federal deficits by hundreds of billions of dollars.

The Obama administration is nevertheless attempting to tax those employers and individuals, contrary to the plain language of the PPACA and congressional intent, and to deny millions of Americans the opportunity to purchase low-cost, high-deductible coverage. Employers, consumers, and even state officials in those 34 states can challenge those illegal taxes in court, as Oklahoma has done. States can also block those illegal taxes—and even stop the federal government from operating an Exchange—by approving a strengthened version of the Health Care Freedom Act.

The PPACA’s Medicaid expansion, which would cost individual states up to $53 billion over its first 10 years, is now optional for states, thanks to the Supreme Court’s ruling in NFIB v. Sebelius. Some 16 states have announced they will not expand their programs, while half of the states remain undecided. Yet the Obama administration is trying to coerce states into implementing parts of the expansion that the Court rendered optional. States can replicate Maine’s lawsuit challenging this arbitrary attempt to limit the Court’s ruling.

Collectively, states can shield all employers and at least 12 million taxpayers from the law’s new taxes, and still reduce federal deficits by $1.7 trillion, simply by refusing to establish Exchanges or expand Medicaid.

Congress and President Obama have already repealed the third new entitlement program the PPACA created—the Community Living Assistance Services and Supports Act, or CLASS Act—as well as funding for the “co-op” plans meant to serve as an alternative to a “public option.” A critical mass of states exercising their vetoes over Exchanges and the Medicaid expansion can force Congress to reconsider, and hopefully repeal, the rest of this counterproductive law. Real health care reform is impossible until that happens.

Health Matrix Releases “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA”

Health Matrix: a Journal of Law-Medicine at Case Western Reserve University School of Law has released “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” a paper I coauthored with CWRU law professor Jonathan Adler. From the abstract:

The Patient Protection and Affordable Care Act (PPACA) provides tax credits and subsidies for the purchase of qualifying health insurance plans on state-run insurance exchanges. Contrary to expectations, many states are refusing or otherwise failing to create such exchanges. An Internal Revenue Service (IRS) rule purports to extend these tax credits and subsidies to the purchase of health insurance in federal exchanges created in states without exchanges of their own. This rule lacks statutory authority. The text, structure, and history of the Act show that tax credits and subsidies are not available in federally run exchanges. The IRS rule is contrary to congressional intent and cannot be justified on other legal grounds. Because tax credit eligibility can trigger penalties on employers and individuals, affected parties are likely to have standing to challenge the IRS rule in court. 

This paper led to one of the most important (and ongoing) legal challenges related to the PPACA. Access the full paper here.