Tag: health insurance exchanges

Roy: “The Arkansas-Obamacare Medicaid Deal: Far Less Than It First Appeared”

At Forbes.com’s Apothecary blog, the Manhattan Institute’s Avik Roy is cool to the idea of states implementing ObamaCare’s Medicaid expansion by putting those new enrollees in ObamaCare’s health insurance “exchanges”: 

When Arkansas Gov. Mike Beebe (D.) first announced that he had reached a deal with the Obama administration to use the Affordable Care Act’s private insurance exchanges to expand coverage to poor Arkansans, it seemed like an important, and potentially transformative, development. The myriad ways in which the traditional Medicaid program harms the poor have been well-documented, and it looked like Beebe had come up with an attractive—albeit expensive—way to provide the poor with higher-quality private insurance. A Good Friday memo from the U.S. Department of Health and Human Services, however, splashes cold water on that aspiration. It’s now clear that the Beebe-HHS deal applies a kind of private-sector window dressing on the dysfunctional Medicaid program, and it’s not obvious that the Arkansas legislature should go along.

The first reason states should not pursue the Beebe plan is that, like a straight Medicaid expansion, it would inhibit the pursuit of low-cost health care for the poor. 

The second reason is that it would cost even more than putting those new enrollees in the traditional Medicaid program. Economist Jagadeesh Gokhale, who advises the Social Security program on how to make these sorts of projections, estimates a straight Medicaid expansion would cost Florida, Illinois, and Texas about $20 billion in the first 10 years. And that’s in the wildly unrealistic event that the feds honor their committment to cover 90 percent of the cost. President Obama has already proposed abandoning that committment. Congressional Budget Office projections suggest the “Beebe plan” would increase the cost of the expansion by 50 percent. That too should be enough reason to reject the Beebe plan. Neither the state nor the federal government have the money to expand Medicaid at all. Volunteering to make the expansion even more expensive is lunacy. 

The Beebe administration is trying to make its plan seem no more expensive than a straight Medicaid expansion. How? By simply assuming state officials would voluntarily make a straight Medicaid expansion so expensive that the Beebe plan wouldn’t cost a penny extra. The illogic goes like this. If Arkansas were to expand traditional Medicaid, the state would likely need to increase Medicaid payments to doctors and hospitals in order to secure adequate access to care for new enrollees. That would make a straight Medicaid expansion so expensive that the Beebe plan would be no more costly, and might even cost less. 

It’s true, states that implement ObamaCare’s Medicaid expansion would have to increase provider payments to give new eligibles decent access to care. The problem is that Medicaid never does that. Medicaid is notorious for paying providers so little that it access to care is lousy. Medicaid does so year after year, even if people sometimes die as a result. The Beebe administration simply assumed that state officials would magically change such behavior, increase Medicaid’s provider payments to the same levels private insurers pay, and thereby volunteer to make an already-expensive Medicaid expansion even more unaffordable. In that fantasy world, the Beebe plan would be no more expensive. As an indication of how implausible that assumption is, no one had been talking about combining a straight Medicaid expansion with higher provider payments until the Beebe administration needed to make the governor’s plan seem slightly less unaffordable. 

Roy has soured on Beebe-style plans since reading some of the terms and conditions the Obama administration issued on Friday. Yet he still imagines there might be free-market-friendly ways to implement a massive expansion of the entitlement state. Thus he counsels states only to expand Medicaid in exchange for real reforms. We’ve heard that song and dance before. Republicans said the State Children’s Health Insurance Program and Medicare Part D – two Republican initiatives – would lead to Medicaid and Medicare reform. Instead, government got bigger and reform went nowhere. Lucy is going to pull the football here, too. If it is Medicaid reform you seek, the only free-market Medicaid reforms are Medicaid cuts. Roy’s criticisms of the Beebe plan are welcome, though it’s odd to find him to the left of officials in the 15 or more states that are flatly rejecting the expansion.

Issa: IRS Is Violating ObamaCare by Illegally Taxing Employers in 33 States

House Committee on Oversight and Government Reform chairman Darrell Issa (R-CA) writes in the Washington Examiner

To combat the sticker shock of Obamacare’s numerous requirements on health insurance premiums, the law creates expensive subsidies, which take the form of tax credits, for individuals who purchase a government-approved insurance plan. In order to avoid the appearance of a federal takeover of health care, the law ties the availability of these premium tax credits to an “Exchange established by the State.” Importantly, the way the law was written, if tax credits are not available within a state, then the expensive employer mandate tax does not apply to companies within that state.

With so many states refusing to play the role the law’s drafters envisioned, the Obama administration has embarked on a legally dubious effort to bypass the plain language of the law. Obama’s IRS has issued a rule that delivers the expensive subsidies through federally run exchanges as well. If it stands, this extralegal rule will undermine the decision-making role offered to states by Obamacare, and cause hundreds of billions of dollars of taxes and spending not authorized by the president’s health care law…

The language that limits tax credits to state-established exchanges should not now shock Obamacare’s supporters. Early in 2009, legal scholar Timothy Jost, one of Obamacare’s leading proponents, explicitly suggested linking the tax credits to state-established exchanges as a way to encourage states to set up the exchanges.

The Obama administration may be surprised and disappointed that many states have not found the refundable tax credit to be a sufficient incentive to set up their own exchanges, exposing their citizens to the other taxes and penalties associated with the law. But this does not justify the administration’s effort to ignore the plain language of the law that Obama championed and signed.

For more on this issue, see Jonathan Adler’s and my Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”

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.

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.

On ObamaCare’s Discriminatory Subsidies, Brewer Bows When Arizona Should Keep Slugging

Arizona Gov. Jan Brewer (R) recently set aside her vociferous opposition to ObamaCare’s costly Medicaid expansion by announcing she will support implementing that expansion in Arizona. A significant factor in her reversal, she claimed, was that if Arizona did not expand its Medicaid program, then some legal immigrants would receive government subsidies while U.S. citizens would get nothing.

Brewer’s analysis of this “immigration glitch,” and her remedy for it, are faulty. Fortunately, she, Arizona’s legislature, and its attorney general have better options for stopping it.

An odd and unforeseen result of the Supreme Court’s decision upholding ObamaCare is that, in certain circumstances, the law will now subsidize legal immigrants but not citizens. What triggers this inequity is a state’s decision to implement an Exchange – not the decision to opt out of the Medicaid expansion. (Even if a state implements both provisions, legal immigrants would still receive more valuable subsidies than citizens.) The good news is that states can therefore prevent this inequity simply by not establishing an Exchange. If Brewer wants to avoid this “immigration glitch,” there is no need to expand Medicaid. She already blocked it when she refused to establish an Exchange.

The bad news is that the Obama administration is trying to take away the power Congress granted states to block those discriminatory subsidies, and the punitive taxes that accompany them. Contrary to both the statute and congressional intent, the IRS has announced it will impose that witch’s brew in all states, even in the 32 that have refused to establish an Exchange.

Oklahoma attorney general Scott Pruitt has filed suit to stop that stunning power grab. If Brewer is serious about stopping the “immigration glitch,” the way to do it is by filing a lawsuit similar to Oklahoma’s, while adding a complaint that the Obama administration’s illegal subsidies also violate the Equal Protection clause.

Goldwater Attorney: ObamaCare-Compliant Exchange Would Violate Idaho’s Health Care Freedom Act

Idaho Gov. Butch Otter (R), who added Idaho to the multi-state challenge that sought to overturn ObamaCare as unconstitutional, now supports helping the Obama administration implement the law by establishing and funding a health insurance “exchange.” Exchanges are new government bureaucracies that enforce ObamaCare’s many regulations, channel billions in deficit-financed government subsidies to private health insurance companies, and help the IRS penalize individuals and employers who fail to purchase government-approved insurance. So far, some 32 states have refused to establish an Exchange themselves. If Idaho’s legislature authorizes an Exchange, they will make Idaho the only state where a Republican legislature and governor acted together to implement this essential piece of ObamaCare.

One could argue this is a debate Idaho shouldn’t even be having. Establishing an ObamaCare compliant Exchange would violate Idaho state law.

In a letter sent to Idaho legislators today, Goldwater Institute attorney Christina Sandefur explains, “establishing a PPACA state health insurance exchange in Idaho would conflict with the state’s Health Care Freedom Act.” Idaho’s Health Care Freedom Act protects the “right of all persons residing in the state of Idaho in choosing the mode of securing heatlh care services free from the imposition of penalties” including “any civil or criminal fine, tax, salary or wage withholding, surcharge, fee or any other imposed consequence.” Sandefur explains (as I have explained elsewhere), “State exchanges that conform to PPACA are inconsistent with this safeguard because they are the key vehicles for implementing the individual mandate tax,” as well as the penalties ObamaCare levies on employers under the employer mandate. Idaho’s Health Care Freedom Act forbids state officials or state-created non-profits from doing anything that helps to enforce such penalties: “No public official, employee, or agent of the state of Idaho or any of its political subdivisions, shall act to impose, collect, enforce, or effectuate any penalty in the state of Idaho that violates the public policy set forth in [this Act].” As a result, Sandefur writes, “Idaho public officials who operate exchanges would be violating state law,” and “the Attorney General is charged with taking legal action against those who do so.”

Otter himself signed the Health Care Freedom Act into law in 2010, and was the first governor in the nation to do so. The purpose of that Act was to prevent state officials from doing what Otter is now trying to do. “What the Idaho Health Freedom Act says,” Otter boasted at the time, “is that the citizens of our state won’t be subject to another federal mandate or turn over another part of their life to government control.” Yet he is now trying to subject Idaho residents to those mandates, and violating his own law to help the federal government implement ObamaCare. The best spin I can put on this is that Otter is getting some very, very bad advice about the Health Care Freedom Act and ObamaCare’s Exchanges.

The situation in Idaho is a replay of Arizona, which enshrined a similar Health Care Freedom Act in its Constitution. As Arizona officials were wrestling with whether to establish an Exchange, Sandefur and her Goldwater Institute colleagues threatened legal action if Arizona did so. That threat was likely a major factor in Gov. Jan Brewer’s (R) decision to oppose an Exchange.