Tag: health care reform

Wisconsin Health Secretary: ‘No Such Thing as a State-Run Exchange’

Dennis Smith directed the Medicaid program for President George W. Bush and was a health care analyst at the Heritage Foundation before becoming Wisconsin Gov. Scott Walker’s (R) secretary of health. The following excerpts are from a [subscription only] article at WisPolitics.com:

In his first extensive interview since a U.S. Supreme Court ruling largely upheld the federal law, the Department of Health Services chief said fed deadlines are likely to change and that the lack of guidance on setting up the exchanges makes any state-run exchange “a fantasy.”

Part of the reason why Smith says Wisconsin hasn’t moved forward with a health exchange plan is because he believes the deadlines will be pushed back.

“We have no other plan that we are taking because we think the reality is the federal government cannot meet its deadlines for implementing PPACA,” Smith said. “No one knows what a federal exchange looks like. The two major components that an exchange is supposed to do, which is determine eligibility and to complete the business transaction to pay premiums to health care plans that millions of Americans are supposed to pick, nobody knows what those look like. The administration has failed to release a credible business plan where objective observers could conclude that they’re going to pull this off.

Smith also said that none of the states currently setting up exchanges would likely meet federal regulations and that there’s “no such thing as a state-run exchange.”

“They were going to be asking for the resumes for the people who sit on the board of overseeing an exchange,” Smith said. “They were micromanaging the governance structure. They didn’t have to do that, they chose to do that. But that’s slowing the process and the decision making.”

The secretary especially pointed to questions on who will be eligible for the exchanges and the appropriate level of tax credits for participants. He claimed the rules on determining accuracy of tax credit payments were too “nonchalant,” and could result in the IRS having to recover thousands of dollars because of potential inaccuracies.

“It’s not that they don’t have answers because they’re withholding it from us, it’s that they don’t have answers because they don’t have answers,” Smith said. “These are critical policy issues, critical technical issues. Again, what are you building if you don’t know who’s eligible? What are you building if you don’t know what the flow is out of the treasury to the health plan?”

…”They have a mess on their hands,” Smith said… “You have to fundamentally say, ‘No, that just isn’t working, we have to go back to the drawing board.’

“And that is not being partisan in the slightest. That is facing reality.”

And that’s from a guy who continues to support the concept of a government-created health insurance exchange.

McConnell Had It Right: Government Should Not Pursue Universal Coverage

I’m a bit late to this party, but Senate Minority Leader Mitch McConnell (R) was of course right to tell Fox News’ Chris Wallace last weekend that the federal government should not pursue universal coverage:

Wallace: In your replacement [for ObamaCare], how would you provide universal coverage?

McConnell: Well, first let me say the single best thing we can do for the American health care system is to get rid of ObamaCare…

Wallace: But if I may sir, you talk about “repeal and replace.” How would you provide universal coverage?

McConnell: …We need to go step by step to replace it with more modest reforms…that would deal with the principal issue, which is cost…

Wallace: …What specifically are you going to do to provide universal coverage to the 30 million people who are uninsured?

McConnell: That is not the issue. The question is, how can you go step by step to improve the American health care system…

Wallace: …If you repeal ObamaCare, how would you protect those people with pre-existing conditions?

McConnell: …That’s the kind of thing that ought to be dealt with at the state level…

Naturally, the Church of Universal Coverage caught the vapors. But Time’s Mark Halperin says McConnell’s stance, while embarrassing, is “not a politically dangerous place to be”:

McConnell would have seemed less evasive and could have stopped Wallace in his tracks had he said, “We will not pursue universal coverage because that causes more people–not fewer–to fall through the cracks in our health care sector.”

‘Health Law Critics Prepare to Battle Over Insurance Exchange Subsidies’

The New York Times:

WASHINGTON — Critics of the new health care law, having lost one battle in the Supreme Court, are mounting a challenge to President Obama’s interpretation of another important provision, under which the federal government will subsidize health insurance for millions of low- and middle-income people.

Starting in 2014, the law…offers subsidies to help people pay for insurance bought through markets known as insurance exchanges.

At issue is whether the subsidies will be available in exchanges set up and run by the federal government in states that fail or refuse to establish their own exchange…

“The language of the statute is explicit,” Mr. Blumstein said. “Subsidies accrue to people who obtain coverage through state-run exchanges. The I.R.S. tries to get around that by providing subsidies for all insurance exchanges. That interpretation will almost certainly be challenged by someone.”

The most likely challenger, Mr. Blumstein said, is an employer penalized because one or more of its employees receive subsidies through a federal exchange. Employers may be subject to financial penalties if they offer no coverage or inadequate coverage and at least one of their full-time employees receives subsidies.

Michael F. Cannon, director of health policy studies at the libertarian Cato Institute, said the link between subsidies and penalties was a crucial part of the law.

“Those tax credits trigger the penalties against employers,” Mr. Cannon said. If workers cannot receive subsidies in states with a federal exchange, their employers cannot be penalized, he said.

Tax credits are not subsidies, of course. But ObamaCare’s $800 billion of refundable premium-assistance tax credits and cost-sharing subsidies are three parts subsidy (i.e., government spending) and only one part tax reduction.

HHS Offers to Pay Six Years of Operating Costs for Some States’ ObamaCare Exchanges

That’s my read of this.

ObamaCare gives HHS the authority to make unlimited grants to help states create Exchanges. But that authority expires on December 31, 2014. HHS just issued an announcement that they will issue grants right up to midnight on December 31—and that some of those grants will be so big that they will last for five years:

Q4: What is the last day that a State can spend its award?

A4: Grantees are encouraged to drawdown funding within their budget period (up to one year for Level One and up to three years for Level Two grants); however, at the recommendation of CCIIO’s State Officer and at the discretion of the Grant Management Officer, grantees may receive a no-cost extension that will allow them to spend funding up to the expiration date of the project period. At HHS’s discretion, a project period can be extended for a maximum of five years past the date of the award. Note, however, that all spending of §1311(a) funds awarded under a cooperative agreement must be consistent with the scope of the statute, FOA, and terms and conditions of the awarded cooperative agreement. [Emphasis added.]

The last sentence is there just to make sure no one suspects them of violating the law, wink-wink.

Since HHS can make unlimited grants in the first year that Exchanges are supposed to operate (2014), this means HHS is trying to pay for the operating expenses of some states’ Exchanges for six years (2014-2019).

Anti-Universal Coverage Club in the Washington Post

Ezra Klein:

Michael Cannon, director of health-care policy at the libertarian Cato Institute, formed the “Anti-Universal Coverage Club,” whose members “reject the idea that government should ensure that all individuals have health insurance.” This attitude is now the norm within the Republican Party, even if it is rarely acknowledged so starkly.

Dear Republicans: You’re welcome.

Is the Individual Mandate a Tax?

From my 2010 paper “Obama’s Prescription for Low-Wage Workers; High Implicit Taxes, Higher Premiums”:

President Obama argues that a legal requirement for individuals to purchase health insurance is not a tax. Yet many economists, including some of President Obama’s economic advisers, consider it to be a type of tax.

Princeton University health economist Uwe Reinhardt writes, “[Just because] the fiscal flows triggered by [the] mandate would not flow directly through the public budgets does not detract from the measure’s status of a bona fide tax.”

MIT health economist Jonathan Gruber writes, “Suppose … the government mandated that everyone buy full insurance at the average price… . This would not be a very attractive plan to careful consumers … who could view themselves as essentially being taxed in order to support this market, by paying higher premiums than they should based on their risk.”

President Obama’s National Economic Council chairman Larry Summers writes, “Essentially, mandated benefits are like public programs financed by benefit taxes.”

Sherry Glied, President Obama’s appointee to assistant secretary for planning and evaluation at the Department of Health and Human Services, writes, “The individual mandate … is in many respects analogous to a tax. It requires people to make payments for something whether they want it or not.”

When the Clinton administration proposed an individual mandate in 1993, the CBO went so far as to treat the mandatory premiums that Americans would pay as federal revenues and include them in the federal budget. So far, the CBO has not done the same for the mandates in the House and Senate bills. (As Reinhardt suggests, that does not imply that those mandates are not a tax.)

Each bill would also impose penalties on individuals (and employers) who do not comply with the health-insurance mandates. Those penalties would be paid to the Internal Revenue Service along with one’s income taxes.