Tag: Obamacare

Washington State Regulator Can’t Prevent ObamaCare from Destroying Child-Only Market

ObamaCare has touched off a battle between Regence Blue Cross Blue Shield and Washington State Insurance Commissioner Mike Kreidler. From the commissioner’s press release:

Kreidler orders Regence BlueShield to cover children

OLYMPIA, Wash. – Insurance Commissioner Mike Kreidler ordered Regence BlueShield this morning to stop illegally denying insurance to children, effective immediately.

“Regence is in clear violation of state law that prohibits insurers from denying insurance to people on the basis of age,” said Kreidler. “I was shocked and deeply disappointed when Regence announced its decision last week to stop selling insurance to kids.”

The Affordable Care Act requires all health plans to cover kids with pre-existing conditions…

Regence Blue Shield, the largest health insurer in the individual market, notified Kreidler on Sept. 27 that, effective Oct. 1, it would no longer sell individual health insurance policies to kids.

From Regence’s press release:

We were shocked by the Commissioner’s action and press statement this morning. This gross politicization of such a complex regulatory problem does not help address the very real economic challenges of providing coverage to Washingtonians seeking individual insurance policies, especially children.

Over the past several months, we have had at least five separate conversations with the Commissioner and his staff regarding planned changes to how we would cover children under age 19. Our goal in those discussions was and continues to be a solution that would allow us to serve all of our individual members – including children – without exacerbating costs and increasing coverage risks for the entire pool. Never once did the Commissioner or his staff express any concern that these changes might violate state law. We’re disappointed that the Commissioner appears to have suddenly changed his perspective…

We’ve been very clear that we will insure kids during open enrollment periods when the child is not the sole subscriber – and we will do so regardless of health status. Dozens of carriers across the country have found it necessary to adopt similar policies.

We disagree with the Commissioner’s action today and will consider how it might impact our ability to offer coverage to all individuals across the state. While more than ten carriers have deserted Washington’s individual market – leaving three today – Regence has continued to insure these members despite losses of more than $33 million in the last three years. While we remain committed to our individual members, we simply cannot expose our broader membership to greater risk. Therefore, we believe the changes we made are in the best interest of the nearly one million Washingtonians we serve today.

Washingtonians want and need an equitable, stable insurance market that people can afford. We want to avoid the mistakes of the 1990’s when a small minority was allowed to game the insurance system by purchasing insurance only when they were sick, which led to rate spikes and the collapse of the individual market.

Either way, the child-only market is toast.

Anti-Obamacare Rulings a Trend or Just Coincidence?

I’m fond of saying that lawsuits don’t proceed at Internet speed – meaning that people are disappointed when I tell them that a new constitutional challenge to uphold property rights or free speech or individual liberty generally will take years to get through the courts, or that we’ll have to wait several months for a court to issue an opinion in some front-page case.  But lately it does seem that developments from the ongoing legal challenges to Obamacare are coming faster and faster, as if the train has now left the station and, to badly mix metaphors, it’s snowballing to an eventual collision at the Supreme Court.

That “gaining speed” phenomenon is mainly coincidence – given the more than 20 Obamacare lawsuits out there, briefing schedules, hearings, and rulings are bound to overlap at some point – but it has been interesting to compare and contrast the events of the last 10 days.  To recap some of the high points, this summer Judge Henry Hudson denied the government’s motion to dismiss Virginia’s law suit (read my comments here and Cato’s brief here).  Then two weeks ago, Judge George Steeh granted a similar motion in a case brought by the Thomas More Law Center in Michigan – in a cursory opinion I react to here and critique in this op-ed.

Last Thursday, Judge Roger Vinson issued a 65-page opinion allowing most of the lawsuit brought by 20 states, the National Federation of Independent Business, and two individuals to proceed (my reaction here).   This is an important ruling spelling out the unprecedented nature of the power Congress purports to assert here, with the individual mandate of course but also in potentially commandeering state officials and coercing them with strings attached to Medicaid funds and other regulatory burdens.

Finally, yesterday Judge Hudson held a hearing in Richmond on the parties’ cross-motions for summary judgment – which means both sides agree that no material facts are in dispute and the court should go ahead and rule on the law without having a trial.  (Cato filed a brief for this stage of proceedings as well.)  By all accounts, the hearing went well for Virginia; Judge Hudson was skeptical of the government’s argument that individual decisions not to enter the insurance marketplace was the sort of “local economic activity that has a substantial effect on interstate commerce” that the Supreme Court has said marks the outer bounds of Congress’s power under the Commerce Clause.  The judge also indicated that he would issue an opinion by the end of the year.

This is all heartening news – the courts that are seriously grappling with these lawsuits (and especially the highest profile cases brought by the 21 states) actually think the Constitution places limits on federal power.  Then again, I can’t believe that question is even up for discussion!  Stay tuned – and keep track of all the lawsuits at healthcarelawsuits.org.

A Less-Than-Rigorous ObamaCare Fact Check

Kaiser Health News and The Washington Post have posted a piece titled “Campaign Claims: Health Law Myths And Facts,” which examines these common criticisms of ObamaCare:

  1. “The law amounts to a ‘government takeover’ of health insurance and health care.” The article’s conclusion: “it falls far short of a government takeover.”  That conclusion rests largely on the fact that “Medical care will be provided by private hospitals and doctors.”  But as I explain in this study, “it is irrelevant whether we describe medical resources (e.g., hospitals, employees) as ‘public’ or ‘private.’ What matters—what determines real as opposed to nominal ownership—is who controls the resources.”  Obama health official Jeanne Lambrew acknowledges as much: “the government role in socialized medicine systems [can include] public financing of private insurance and providers.”  And as I concluded in this study, “Compulsory ‘private’ health insurance would give government as much control over the nation’s health care sector as a compulsory government program.”  I wonder if the article’s authors spoke to anyone who raised this perspective.
  2. “The law will gut Medicare by cutting more than $500 billion from the program over 10 years; seniors will lose benefits and won’t be able to keep their doctors.” Conclusion: “The gutting of Medicare claim goes too far…What this means for seniors is a bit murkier.”  True enough: even if ObamaCare’s implausible Medicare cuts take effect, they clearly would not “gut” Medicare.  (BTW, click here or here for a politically sustainable way to restrain Medicare spending.)  The authors also note that Medicare Advantage enrollees would lose some benefits.  But when the article claims that ObamaCare will not eliminate any “basic” Medicare benefits, it neglects to mention that Medicare’s chief actuary estimates that the law could cause 15 percent of hospitals, home health agencies, and other providers to stop accepting Medicare patients.  If your hospital no longer accepts your Medicare coverage, is that not a benefit cut?
  3. “The law will cause 87 million Americans to lose their current coverage.” Conclusion: “How true is it?  Partly, at best. But evidence is limited.”  The House Republicans’ Pledge to America claims that ObamaCare “will force some 87 million Americans to drop their current coverage.”  The word drop is a bit strong; it’s more accurate to say that many Americans will have to switch to another plan, even if it’s just a more-expensive version of their current plan.   Indeed, HHS estimates that 69 percent of employer plans will have to do so by 2013.  Yet some people are being dropped from their current health insurance.  When Principal Financial Group leaves the market, its nearly 1 million enrollees will lose their current health plan.  Industry analysts expect more such departures.  Why no mention of that?
  4. “The law is driving up costs and premiums and will continue to do so over the next several years.” Conclusion: “There may be very small increases initially.”  Here the article is kinder to ObamaCare than even ObamaCare’s supporters are.  May be?  Even ObamaCare’s supporters admit the law will increase premiums for some people.  Very small increases?   Even HHS estimates that the requirement that consumers purchase unlimited annual coverage could increase premiums for some by 7 percent.  (There’s no mention of Blue Cross and Blue Shield of Connecticut, which says ObamaCare will increase premiums for some of its customers by nearly 30 percent.)  And why only initially?  Do the authors expect that there will be no premium increases when HHS eventually stops issuing waivers?  Or when HHS sets a minimum level of coverage that Americans must purchase in 2014?  Or that ObamaCare has solved the tragedy of the commons?  For support, the article claims, “the Obama administration, citing [various] estimates…says the law isn’t responsible for any increase greater than 1 to 2 percent.”  Actually, that’s not what the administration says – it’s what they want you to think they’re saying.  Read this letter and other administration utterances carefully.  They say “1-2 percent” when speaking of ObamaCare’s average effect on premiums, and “minimal” when speaking of anything other than the average effect.   (The administration’s threshold for “minimal” is presumably somewhere north of 7 percent.)
  5. “The law’s expansion of Medicaid will put massive pressure on state budgets at a time when many are already in crisis.” Conclusion: “The impact will probably be small, but it’s hard to say for sure.”  The article only cites figures generated by supporters of the law, who say the impact will be small.  Why just mention that there are figures from the other side?  Why not include them?
  6. “The new law uses tax dollars to pay for abortions.” Conclusion: “Open to interpretation.”  This was a missed opportunity to examine two crucial questions.  First, would federal insurance subsidies truly be segregated from the separate premiums that consumers in ObamaCare’s exchanges would have to pay for elective-abortion coverage?  Or would this just be an accounting gimmick?  What would happen, for example, if there were more abortions than an insurer anticipated, and those separate premiums proved insufficient to pay for them?  How would you keep one side of the ledger from spilling over into the other?  Second, would the availability of federal subsidies for health insurance plans that make elective-abortion coverage available as a rider increase enrollment in those plans?  If so, wouldn’t that implicitly subsidize elective abortions?  Rather than examine those questions, the article punted.

On the whole, I’d say this fact check may have been very kind to the new law.

Obamacare Suffers Another Legal Blow

Yes, Speaker Pelosi, the constitutional concerns people have with the health care legislation you rammed through Congress despite overwhelmingly negative public opinion are serious. The Florida court’s ruling, denying the government’s motion to dismiss the challenge to the new health care law brought by 20 states and the National Federation of Independent Business, mirrors the one we saw in July in Virginia’s separate lawsuit. These have been the most thoroughly briefed and argued lawsuits, so these significant and lengthy opinions conclusively establish that the constitutional concerns raised by the individual mandate and other provisions are serious. Nobody can ever again suggest with a straight face that the legal claims are frivolous or mere political gamesmanship.

And that should come as no surprise to those who have been following the litigation because the new law is unprecedented – quite literally, without legal precedent – both in its regulatory scope and its expansion of federal authority. Never before have courts had to consider such a breathtaking assertion of raw federal power – not even during the height of the New Deal. “While the novel and unprecedented nature of the individual mandate does not automatically render it unconstitutional,” Judge Vinson observed, “there is perhaps a presumption that it is.”

This means at the very least that “the plaintiffs have most definitely stated a plausible claim with respect to this cause of action.”

Just so – and the deliberate consideration that these district courts are giving to these serious constitutional arguments (unlike the Michigan judge’s perfunctory treatment last week) indicates that the probability that the Supreme Court will ultimately strike down the individual mandate continues to increase.

GAO: HHS Imposed an “Unusual” Prior Restraint on Speech during ObamaCare Debate

During the debate over ObamaCare, the Centers for Medicare & Medicaid Services took issue with some of the things that some of the insurers participating in the Medicare Advantage program were telling their enrollees about the legislation.  The Government Accountability Office has just released a review of CMS’s conduct in that episode:

Although CMS’s actions generally conformed to its policies and procedures, the September 21, 2009, memorandum instructing all MA organizations to discontinue communications on pending legislation while CMS conducted its investigation was unusual. Officials from the MA organizations and CMS regional offices that we interviewed told us they were unaware of CMS ever directing all MA organizations to immediately stop an activity before CMS had determined whether that activity violated federal laws, regulations, or MA program guidance. When asked about this directive, officials from CMS’s central office stated that, given the degree of potential harm to beneficiaries, the action was appropriate for the circumstances….

HHS expressed concern that our description of the September 21, 2009, memorandum as “unusual” makes it appear as though their suspension of all MA organizations’ communications on pending health reform legislation was inappropriate. It noted that directing an MA organization to immediately stop an activity while the agency determined whether violations had occurred was infrequent but not unprecedented…. We believe that the example provided—wherein CMS put its data collection activities on hold until the agency resolved concerns with interpretation of its own regulations—is not comparable to CMS instructing all MA organizations to stop sending information about health reform proposals to beneficiaries while it investigated potential violations. Moreover, our characterization of CMS’s action as unusual is based on discussions with MA organizations and CMS staff. They told us that they could not recall a previous example where CMS told all plans to stop an activity after a potential violation was discovered and prior to the completion of an agency investigation.

For the record, CMS lacked (and still lacks) a Senate-confirmed administrator.  It’s worth asking whether this prior restraint placed on speech critical of the administration came from Secretary of Health and Human Services Kathleen Sebelius, who is making quite a name for herself as an enemy of free speech.

A Hidden Cost of ObamaCare

Today at the Cato Institute, Duke University Prof. Chris Conover presented his estimates of the economic losses that will be created by the taxes necessary to fund ObamaCare.  This chart is taken from his presentation:

The Excess Burden of ObamaCare

Here’s Conover’s full presentation (with comments by former Congressional Budget Office director Douglas Holtz-Eakin), as well as his Cato Policy Analysis, and his op-ed.

Hiding the Cost of Government Leads to Bigger Government

At the Daily Caller, Duke University Prof. Chris Conover writes:

There you are, about to sign the papers, when the car salesman offers to throw in a $1,000 options package. He knows those options will cost you a further $440 by reducing the performance of your new car’s engine, but he doesn’t tell you that.

Sounds sleazy, right? Congress does it every day.

Politicians love to rail against car dealers and mortgage lenders who surprise consumers with hidden costs. Yet Congress hides from voters a huge part of the cost of government: the hidden costs of taxes, which include lost income and jobs. Failing to account for these costs creates a bias in favor of bigger government and a less efficient tax code.

Read the rest of Conover’s oped here, and his Cato study here.