Topic: Health Care & Welfare

Are Democrats and Republicans Colluding to Preserve Congress’ Obamacare Exemption?

I have written about the special (and illegal) Obamacare exemption the president has granted Congress.

It turns out, this exemption polls poorly. Opposition is north of 90 percent, unites Obamacare opponents and supporters, and has the potential to oust incumbents members of Congress who accept an special exemption that other Americans don’t get.

You might think that Republican and Democratic party committees would be salivating at the prospect of using this issue to oust incumbents of the other party. At a minimum, you would think that Obamacare opponents (i.e., Republicans) would drive a wedge between the law’s supporters (i.e., Democrats) and the public by forcing supporters to vote on a measure eliminating the exemption. Doing so could elect more new Republicans in 2014 by allowing them attack incumbent Democrats thus: “My opponent voted for Obamacare, and then voted to give himself and his well-paid friends in Congress a special exemption that the people of this state/district don’t get. That’s just wrong.”

Yet it appears the National Republican Senatorial Committee and the Democratic Senatorial Campaign Committee have negotiated a truce on this issue. If true, both parties have agreed not to give voice to the will of the people by attacking members of the other party who consent to this special privilege granted to members of Congress. If true, it would confirm what I have written previously: “America has a two-party system. But it’s not Republicans versus Democrats. It’s the ruling class — Republicans and Democrats — against everyone else.”

I can hardly imagine a more powerful argument for allowing unlimited spending by independent groups to advocate the election or defeat of political candidates. That is, I can hardly imagine a more powerful argument against “campaign finance reform.”

The New Republic: Obama Kinda Lied a Little about Obamacare

On Monday, The New Republic’s Jonathan Cohn admitted that President Obama “made a misleading statement about Obamacare rates” during his press conference on Friday. The magazine’s Twitter feed (@tnr) announced:

Whoops! The president (accidentally, we think) told a little #Obamacare lie on Friday.

During his press conference, the president said:

[When it comes to people without access to employer-sponsored coverage,] they’re going to be able to go on a website or call up a call center and sign up for affordable quality health insurance at a significantly cheaper rate than what they can get right now on the individual market. And if even with lower premiums they still can’t afford it, we’re going to be able to provide them with a tax credit to help them buy it. [Emphasis added.]

The problem, Cohn writes, is that:

while some people will pay less than they pay today, some will pay more. They will primarily be young, healthy men who benefited from preferential pricing in the past, were content with coverage that had huge gaps, and are too wealthy to qualify for the law’s tax credits—which are substantial but phase out at higher incomes…

But somebody listening to Obama’s press conference probably wouldn’t grasp that distinction. They’d come away thinking their insurance will be cheaper next year. For some, it won’t be. Obama isn’t doing himself, or the law, any favors by fostering a false expectation.

Big Business Gets Yet Another Obamacare Delay That Individuals Don’t

“I didn’t simply choose to delay this on my own,” President Obama reassured the nation about his unilateral decision to delay Obamacare’s employer mandate. “This was in consultation with businesses all across the country,” he said, as if that made the situation better instead of worse. Obama threw his “consultants” another bone when he decided to delay the reporting requirements the law imposes on employers, also until 2015. The president’s generosity toward large corporations will be financed by the American taxpayer. The Congressional Budget Office projects these delays will cost taxpayers another $3 billion in new government spending and reduce federal revenues by $9 billion, for a total increase in the federal debt of $12 billion. Yet the president fails to show the same concern for individual taxpayers. When the House of Representatives, including dozens of Democrats, voted to extend the same break to individuals by delaying Obamacare’s individual mandate by one year, President Obama threatened to veto that bill. Bizarrely, he also threatened to veto another bill (approved by an even broader bipartisan majority) that would make legal his illegal delay of the employer mandate.

So perhaps we should not be too surprised now that the New York Times reveals yet another delay the president approved at the behest of big business:

In another setback for President Obama’s health care initiative, the administration has delayed until 2015 a significant consumer protection in the law that limits how much people may have to spend on their own health care.

The limit on out-of-pocket costs, including deductibles and co-payments, was not supposed to exceed $6,350 for an individual and $12,700 for a family. But under a little-noticed ruling, federal officials have granted a one-year grace period to some insurers, allowing them to set higher limits, or no limit at all on some costs, in 2014…

[F]ederal officials said that many insurers and employers needed more time to comply because they used separate companies to help administer major medical coverage and drug benefits, with separate limits on out-of-pocket costs…

A senior administration official, speaking on condition of anonymity to discuss internal deliberations, said: “We knew this was an important issue. We had to balance the interests of consumers with the concerns of health plan sponsors and carriers, which told us that their computer systems were not set up to aggregate all of a person’s out-of-pocket costs. They asked for more time to comply.”…

Theodore M. Thompson, a vice president of the National Multiple Sclerosis Society, said: “The promise of out-of-pocket limits was one of the main reasons we supported health care reform. So we are disappointed that some plans will be allowed to have multiple out-of-pocket limits in 2014.”

It is a sign of Obamacare’s complexity that the Obama administration felt it needed to issue this delay. It is a further sign of the law’s complexity that this delay was announced in February, yet is only coming to light now.

Guess Who’s One of the Hill’s ‘100 People to Watch This Fall’

I guess I’ll have to tout this myself. Last week, the Hill newspaper put me on its list of “the 100 people you can’t ignore this fall if you’re wondering how events in Congress and the White House will play out.” Here’s the write-up

Michael Cannon Director of health policy studies at the Cato Institute
 
Think the Supreme Court has settled the question of ObamaCare’s legality? Not if Cannon has anything to say about it. Cannon is a tireless advocate for the argument that the IRS has illegally implemented the healthcare law’s insurance subsidies, which will help low-income households cover the cost of their premiums. 
 
His argument is that healthcare law, as written, does not allow for the subsidies to be used in healthcare marketplaces that are set up by the federal government.
 
He helped the state of Oklahoma file a lawsuit against the subsidies, and a group of small businesses filed a separate suit on the same grounds, in case Cannon’s runs into procedural roadblocks.
 
If the lawsuits Cannon has spearheaded are successful, they could have a devastating impact on the healthcare law. A final decision in favor would stop the flow of tax subsidies to people in more than half of the states, making ObamaCare far less attractive to consumers and stripping away much of the law’s promise of affordability.

Corrections and amplifications. The argument is as much Jonathan Adler’s as mine; we develop it together in this law-journal article. The argument is not that the IRS is illegally implementing otherwise lawful subsidies; it is that the IRS is trying to dispense some $700 billion in illegal subsidies that Congress expressly did not authorize, and impose illegal taxes on millions of employers and individual Americans starting in 2014; that the Obama administration is attempting to tax, borrow, and spend nearly $1 trillion without congressional authorization. Finally, I am neither a party nor counsel nor financier to either Pruitt v. Sebelius or Halbig v. Sebelius.

Harvard Health Policy Review on the IRS’s Illegal ObamaCare Taxes

In the just-released Spring 2013 issue of Harvard Health Policy Review, I have an article titled “ObamaCare: The Plot Thickens.” The article examines the IRS rule that purportedly implements ObamaCare’s tax credits, but actually violates that statute by taxing, borrowing, and spending hundreds of billions of dollars contrary to Congress’ explicit instructions. (The article is a less-technical version of my Health Matrix article (coauthored with Jonathan Adler), “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”) Here’s an excerpt:

In broad daylight, the Internal Revenue Service is attempting to tax, borrow, and spend [roughly] $800 billion—contrary to both the express language of the PPACA and congressional intent. Thus in addition to other abuses that have recently come to light, the IRS is attempting to tax millions of employers and individuals without congressional authorization…

In this still-unfolding narrative, the Obama administration’s actions are triply anti-democratic. First, the IRS is violating a direct constraint that popularly elected legislators placed on the executive branch. Second, it is violating that duly enacted statute for the purpose of denying popularly elected state officials the vetoes Congress gave them over certain provisions of the statute. And third, it is violating the statute because administration officials either cannot fathom or will not accept that Congress meant to do what it clearly did.

Obama administration officials continually emphasize that the PPACA is “the law of the land.” That remains to be seen, in more ways than one.

Free Trade in Medical Services? Bring It On!

The NY Times has a long article about the U.S. medical system, in which it notes how much cheaper things are abroad. I’ll leave it to my colleague Michael Cannon and others to comment on the accuracy of the piece, if they see anything worth commenting on.  I just want to weigh in on a trade policy aspect.  Economist Dean Baker responded to the article with a post that starts off as follows:

The NYT has an article today on the enormous savings available to people who had major surgeries performed in Europe rather than the United States. The piece reports that the cost of hip replacement or knee replacement surgery in the United States are more than five times higher than they are in comparable quality facilities in Europe. (The gap would be even larger with facilities in Thailand and India.)

This shows the enormous potential gains from increased medical trade. In effect, our hospitals, doctors, and medical equipment makers benefit from tariffs on the order of 500 percent or more. If the Obama administration really is interesting in promoting growth through trade it would be difficult to imagine a sector with larger potential gains than trade in medical care. The agreements would focus on setting clear liability rules, accreditation systems, and removing obstacles for insurers and government programs that prevent them taking advantage of lower cost medical services in other countries.

I think he is absolutely right that there are enormous gains to be had here.  I’m not sure about the recommendations he makes in the last sentence – I would want to talk to a health care expert about specific barriers before endorsing his proposals.  But I have no doubt that making it easier to trade medical services across borders would be of great benefit to consumers. If there are barriers getting in the way of trade, let’s get them out of the way.

But here’s where things get interesting.  Baker seems to think he has caught free trade advocates in some hypocrisy.  The post is entitled “Will Medical Trade Be Included in the EU Trade Deal and the TPP? If Not, Why Not?,” and he says:

If the trade deals do not include major openings on medical trade then it would be a clear example of why these deals are in fact about selective protectionism rather than free trade. Past trade deals have been quite explicitly focused on putting U.S. manufacturing workers in direct competition with the low paid manufacturing workers in developing countries.

Anyone who believes in free trade would want U.S. doctors and other professionals subjected to the same sort of competition. Otherwise, they really only want to use trade to lower the wages of less educated workers to benefit the the wealthy. (Low wages means cheap help.) It is dishonest to call that policy “free trade.”  

He then tweeted: “For some reason “free traders” don’t understand trade in medical services: Gains from eliminating protections enormous”.

Thus, his suggestion seems to be that there are some free traders out there who are arguing for free trade only in the manufacturing sector, not in professional service sectors, and as a result the two big trade talks going on right now might exclude these services.

Let me respond by noting that I have never met any free traders who take the view that professional services, or any other sectors (except perhaps defense), should be excluded.  Of course, if they did, they wouldn’t really be free traders.  Free trade doesn’t make a distinction between sectors.  So, to Dean Baker, let me just say that I, a confessed free trader, whole-heartedly endorse the idea of free trade in medical services!  And I’m pretty sure all other free traders feel the same way.

That’s not to say there aren’t people (i.e., special interest groups) out there who want protection for the medical service sector, just like there are people who want protection for the manufacturing sector.  No doubt U.S. doctors would love to impose a 25% tariff on foreign medical services, just like the tariff we impose on imports of SUVs.  But that’s just special interests doing what they always do, in all policy areas.  It’s our job to fight their efforts, and hopefully Baker will join in.  Baker mentions the Europe and Pacific trade talks underway right now.  With some good arguments and a bit of luck, those talks will go a long way towards getting rid of any protectionism in these and other sectors.