Tag: employer mandate

Romney Can Run, but He Can’t Hide from Romneycare

Massachusetts Governor Mitt Romney announces today that he will be a candidate for president.   His announcement is expected to tout his business experience and to portray him as the candidate best able to deal with the country’s economic problems.  But one thing you are not likely to hear him talk about is his Massachusetts health plan, Romneycare.

Of course, Romney has already tried to put this issue away with a speech in Detroit last month, and he would probably be happy to never talk about it again.   But if Romney really believes he can hide from the Romneycare fallout, he is badly mistaken. 

Cato scholars have issued several reports detailing the many failings of Romneycare.  Those studies can be found here , here , here and here for instance.  

In his Detroit speech, Romney trotted out three defenses.  First, he says that his plan, unlike Obamacare, did not increase taxes. That is technically true — if you consider only the legislation as Romney signed it. However, it is also true that the legislation relied heavily on federal subsidies — more than $300 million — and was still underfunded. Romney’s successor was forced both to cut back on some benefits that the plan originally offered and to raise the state’s cigarette tax by $1 per pack ($154 million annually) to help pay for the program. The state also imposed approximately $89 million in fees and assessments on health-care providers and insurers. 

Similarly, Romney claims that his plan only costs about one percent of the Massachusetts budget and is, therefore, not a budget-busting, big government program.  In making this claim, however, Romney fails to note that that accounting does not take into account more than $300 million annually in federal funds.  Nor does it count the costs that were pushed off onto Massachusetts businesses and taxpayers through the individual and employer mandates, or the costs of increased insurance premiums.

And, finally, Romney criticizes Obamacare as a “one size fits all” federal plan, whereas his plan was implemented in only one state. That’s true. Governor Romney only messed up the health-care system in Massachusetts, while President Obama has messed up health care for the entire country. Of course, as governor, Romney didn’t have the power to impose his model outside of his state. He now says that he opposes any national plan, calling for states to experiment with different approaches as the “laboratories of democracy.” That would certainly be an improvement over Obamacare. On the other hand, he has repeatedly said that he sees the Massachusetts plan as a model for the nation and has urged other states to copy his approach.

Governor Romney faces many challenges in convincing voters that he really does want to reduce the size, cost, and intrusiveness of government.  For example, Romney has recently been pandering to Iowa voters by renewing his support for ethanol subsidies.  On other issues, he has been a big supporter of federal involvement in education. He backed No Child Left Behind and once called for the federal government to buy a laptop computer for every child born in America. His record as Massachusetts governor was decidedly mixed. In the Cato Institute’s biannual ranking of governors on fiscal issues, Romney received a grade of only “C.” His philosophy of governing can be seen from his comment, “I’d be embarrassed if I didn’t always ask for federal money whenever I got the chance.”

But the biggest single obstacle to his candidacy remains Romneycare.  Unless and until he finds a way to deal with this albatross, he will be a weak and wounded frontrunner.

Opposition to ObamaCare Hits New High in Kaiser Family Foundation Poll

The following chart shows that ObamaCare’s unfavorables reached 50 percent in the latest Kaiser Family Foundation poll.  That’s higher than at any point since KFF started tracking ObamaCare’s unfavorables in January 2010.  The KFF poll also found that opposition is much more intense than support; 19 percent view the law very favorably, while 34 percent view the law very unfavorably.  Despite the availability of the these nuggets, KFF’S press release chose to deemphasize the surge: “Americans Remain Divided Over Health Reform With An Uptick In Public Opposition As GOP Ramped Up Repeal Campaign.”

Even more entertaining was this chart, which purports to show that Americans oppose defunding ObamaCare by nearly 2-to-1.

Dig a little deeper, though, and you’ll find that 16 percent of the public opposes defunding ObamaCare because they want to see the law flat-out repealed.  A less-misleading pie chart would show that 33 percent approve of defunding, 16 percent say “don’t defund, just repeal” (total: 49 percent), and 46 percent disapprove of defunding ObamaCare.

Other findings include:

  • 76 percent of the public oppose the individual mandate (and 55 percent oppose it even after hearing arguments for and against);
  • 69 percent support cutting spending on ObamaCare’s coverage expansions;
  • 60 percent believe ObamaCare will increase the deficit, while only 11 percent believe it will reduce the deficit;
  • 52 percent support cutting Medicaid;
  • 51 percent oppose ObamaCare’s employer mandate; and
  • 51 percent oppose ObamaCare’s new taxes on over-the-counter medications for HSA, FSA, and HRA holders.

Despite these generally sensible views, 68 percent believe that Congress can balance the budget without cutting Medicare.

KFF/HRET Survey, Part III: Employers Can’t Shift to Workers a Cost that Workers Already Bear

In a previous post, I promised to address the negative spin that the Kaiser Family Foundation put on its annual Employer Health Benefits Survey, released this month.  I do so in an op-ed that ran today at the Daily Caller.  An excerpt:

The Kaiser Family Foundation recently issued its annual survey of employer-sponsored health benefitsdeclaring: “Family Health Premiums Rise 3 Percent to $13,770 in 2010, But Workers’ Share Jumps 14 Percent as Firms Shift Cost Burden.” That’s half-right — but the other half perpetuates a myth about employee health benefits that stands in the way of real health care reform….

[Y]ou pay the full cost of your health benefits: partly through an explicit $4,000 premium and partly because your wages are $9,770 lower than they otherwise would be.

Kaiser therefore claims the impossible when it says that firms are shifting costs to workers.  Employers cannot shift to workers a cost that workers already bear. Yet this year, as in past years, the Associated PressBloombergCNNKaiser Health NewsThe Los Angeles TimesThe New York TimesNPRThe Wall Street Journal, and The Washington Post uncritically repeated the cost-shifting myth.

The bolded sentence is Cannon’s Second Rule of Economic Literacy.  (Click here for the first rule.)

I have also collected a series of excerpts from past Kaiser Family Foundation surveys showing this is a persistent issue.  Here are a few:

1998: “Workers in small firms bear a much larger share of the financial burden for health benefits than employees of larger firms.”

2005: “The average worker paid $2,713 toward premiums for family coverage in 2005 or 26% of the total health premium.”

2007: “Annual Premiums for Family Coverage Now Average $12,106, With Workers Paying $3,281”

The folks at the Kaiser Family Foundation were exceedingly gracious when I approached them to discuss this issue.

Obama Flip-Flops on the Individual Mandate (Again)

The individual mandate has been a tricky issue for Barack Obama, leading him to make some impressive self-reversals.

When campaigning against Hillary Clinton for the Democratic presidential nomination, Obama came out hard against an individual mandate to purchase health insurance, alleging that Clinton would garnish workers’ wages and that Massachusetts’ individual mandate has left many residents “worse off”:

He even dismissed an individual mandate by saying, “If a mandate was the solution, we could try that to solve homelessness by mandating everybody buy a house”:

Once president, of course, Obama endorsed and signed into law both an individual mandate and an employer mandate.

During the debate over ObamaCare, Obama likewise mocked George Stephanopoulos – no really, he mocked the poor guy– for suggesting the individual mandate is a tax. Obama didn’t mince words: “I absolutely reject that notion.” The relevant exchange begins three minutes into this video:

Now, the Obama administration says the individual mandate is a tax. According to The New York Times:

When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”…

Administration officials say the tax argument is a linchpin of their legal case in defense of the health care overhaul and its individual mandate, now being challenged in court by more than 20 states and several private organizations.

(My colleagues Randy Barnett and Ilya Shapiro explain how this flip-flop shows the constitutional challenges to ObamaCare aren’t quite as frivolous as supporters claim.)

The next time Obama is in the mood to reverse himself on the individual mandate, he might consider this statement from June 2009:

When you hear people saying, “socialized medicine,” understand that I do not know anybody in Washington who is proposing that–certainly not me.

When the government makes health insurance compulsory, that is socialized medicine.  (Why else would ObamaCare win plaudits from Fidel Castro?) It would be nice to hear the president admit it.

ObamaCare Is Undermining Economic Recovery, Job Growth

In a recent Wall Street Journal oped, Carnegie-Mellon economist Allan Meltzer explains how ObamaCare is delaying economic recovery:

Two overarching reasons explain the failure of Obamanomics. First, administration economists and their outside supporters neglected the longer-term costs and consequences of their actions. Second, the administration and Congress have through their deeds and words heightened uncertainty about the economic future. High uncertainty is the enemy of investment and growth…

Mr. Obama has denied the cost burden on business from his health-care program, but business is aware that it is likely to be large. How large? That’s part of the uncertainty that employers face if they hire additional labor…

Then there is Medicaid, the medical program for those with lower incomes. In the past, states paid about half of the cost, and they are responsible for 20% of the additional cost imposed by the program’s expansion. But almost all the states must balance their budgets, and the new Medicaid spending mandated by ObamaCare comes at a time when states face large deficits and even larger unfunded liabilities for pensions. All this only adds to uncertainty about taxes and spending.

Meltzer concludes that the Obama administration is making the same mistake as FDR: “President Roosevelt slowed recovery in 1938-40 until the war by creating uncertainty about his objectives. It was harmful then, and it’s harmful now.”

For more on the harm caused by government-created uncertainty, read my colleague Tad DeHaven’s recent posts.

NYT: Attorneys General Advance “a Credible Theory for Eviscerating” ObamaCare

The New York Times‘ Kevin Sack reports on the legal challenge to ObamaCare’s individual mandate launched by 20 state attorneys general:

Some legal scholars, including some who normally lean to the left, believe the states have identified the law’s weak spot and devised a credible theory for eviscerating it…

Jonathan Turley, who teaches at George Washington University Law School, said that if forced to bet, he would predict that the courts would uphold the health care law. But Mr. Turley said that the federal government’s case was far from open-and-shut, and that he found the arguments against the mandate compelling.

“There are few cases in the history of the court system that have a more significant assertion of authority by the government,” said Mr. Turley, a civil libertarian who acknowledged being strange bedfellows with the conservative theorists behind the lawsuit. “This case, more than any other, may give the court sticker shock in terms of its impact on federalism.”

Supporters claim the individual mandate will pass muster with the Supreme Court because in the past the Court has declared that the U.S. Constitution’s interstate commerce clause authorizes Congress to regulate non-commercial activity that affects interstate commerce. Sack writes:

Lawyers for the government will contend that, because of the cost-shifting nature of health insurance, people who do not obtain coverage inevitably affect the pricing and availability of policies for everyone else. That, they will argue, is enough to satisfy the Supreme Court’s test.

But to [the attorneys’ general outside counsel David] Rivkin, the acceptance of that argument would herald an era without limits.

“Every decision you can make as a human being has an economic footprint — whether to procreate, whether to marry,” he said. “To say that is enough for your behavior to be regulated transforms the Commerce Clause into an infinitely capacious font of power, whose exercise is only restricted by the Bill of Rights.”

Sack’s article contains an inaccuracy.  He writes:

Congressional bill writers took steps to immunize the law against constitutional challenge…They labeled the penalty on those who do not obtain coverage an “excise tax,” because such taxes enjoy substantial constitutional protection.

In fact, the law uses the term “excise tax” several times, but never in reference to the penalty for violating the individual mandate.  It describes that penalty solely as a penalty.  (The law does refer to the penalty for violating the employer mandate as a tax, but not an excise tax.)

As my Cato colleague Randy Barnett explains, that means supporters cannot reasonably claim that the individual mandate’s penalty is a tax, because that’s not what Congress approved.  As Cato chairman Bob Levy explains, even if supporters do claim that penalty is a tax, it would be an unconstitutional tax, because it does not fit into any of the categories of taxes the Constitution authorizes Congress to impose.

The “substantial constitutional protections” afforded to excise taxes do not protect the individual mandate.

Reid Won’t Even Tell His Base What He’s Asking Them to Swallow

Here’s my answer to today’s “Big Question” on The Hill’s Congress Blog:

Now that the “public option” is dead, both the Left and the Right should be able to agree: the Senate bill is nothing but a $450 billion bailout of the private insurance companies.

In fact, the bailout may be several multiples of that figure.

That $450 billion just represents checks that the Treasury would write to private insurance companies. The Reid bill would also force nearly every U.S. citizen to fork over cash to the private insurance companies — no matter how lousy a deal they offer. A recent CBO memo reveals that Reid has been meticulously working behind closed doors to conceal the full cost of his private-insurer bailout.

The Left and the Right should insist that Reid produce a complete CBO score that reveals the full cost of his bill’s private-insurer bailout — in particular, the cost of the individual and employer mandates.

Left-wing Democrats will follow their own consciences when deciding how to vote. But they should force Reid to be honest about what he’s asking them to swallow.