Tag: health reform

Trump Is Right & His Critics Are Wrong: Let Consumers, Employers Buy Insurance Across States Lines

An important part of Donald Trump’s health care agenda is his pledge to let consumers and employers avoid unwanted regulatory costs by purchasing insurance licensed by states other than their own, a change that would make health insurance both more affordable and more secure. The Congressional Budget Office has estimated that allowing employers to avoid these unwanted regulatory costs would reduce premiums an average of 13 percent. That’s a nice contrast to what Bill Clinton calls ObamaCare’s “crazy system where…people [who] are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half.”

A reporter recently wrote to me: “I’ve talked to many people – health policy experts, regulators, industry leaders – and none of them think it is a good idea. They worry that the policy would promote a race to the bottom, with insurers consolidating in states with the most lenient regulations. They say state regulators would lose their power to protect consumers. They argue that healthy people may save money by selecting cheaper plans, but sick people would end up paying more and/or have trouble accessing care.” Below is my response.

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What you have stumbled across is a grand conspiracy against consumers by industry, regulators, and left-wing ideologues.

The big, incumbent insurers like banning out-of-state purchases, because that protects them from competition.

Providers and patient groups like government mandates that force consumers to buy coverage for their products (mental health coverage, contraceptives coverage, acupuncture coverage, etc.). The freedom to purchase insurance licensed by other states would allow consumers to avoid those unwanted costs.

State insurance regulators like banning out-of-state purchases, because they are in the business of providing consumer protections, and the ban gives them a monopoly. Little wonder they produce what monopolies always produce: a high-cost, low-quality product.

The ideologues want to impose Gruber-style hidden taxes on consumers. The freedom to purchase insurance licensed by other states would allow consumers to avoid those hidden taxes.

It would be embarrassing if these groups said any of this explicitly, so they describe the prospect of losing their privilege as a “race to the bottom.”

Nonsense. There would be no race to the bottom. It would be a race to what consumers want: affordable, secure health coverage.

If letting people purchase insurance licensed by other states would lead to a vastly different health-insurance market than we have right now, it merely illustrates how far astray these groups have led us from the sort of health insurance consumers want.

In Fact, Prof. Reinhardt, This Is ObamaCare’s Fourth Death Spiral

Dr. Uwe Reinhardt, Professor of Economics and Public Affairs at Princeton University, speaks at a Bloomberg News health-care panel discussion in Princeton, New Jersey, March 23, 2004. Photographer: Christopher Barth/ Bloomberg News.

Princeton economist Uwe Reinhardt supports ObamaCare. He also thinks the law’s health-insurance Exchanges are doomed. An exodus of insurers—lots of Exchanges are down to one carrier; Pinal County, Arizona is down to zero carriers—has taken supporters and the media by surprise. It shouldn’t. Similar laws and even ObamaCare itself have caused multiple insurance markets to collapse.

Reinhardt jokes ObamaCare’s Exchanges look like they were designed by “a bunch of Princeton undergrads.” Those Exchanges are now experiencing “a mild version” of “the death spiral that actuaries worry about.” The extreme version has happened before. “We’ve had two actual death spirals: in New Jersey and in New York,” Reinhardt explains. “New Jersey passed a law that had community rating but no mandate, so that market shrank quickly and premiums were off the wall. You look at New York and the same thing happened; they had premiums above $6,000 per month. The death spiral killed those markets.” Community rating is a system of government price controls that supposedly prohibit insurers from discriminating against people with preexisting conditions.

And it’s not just New York and New Jersey where ObamaCare-like laws have caused health insurance markets to collapse. It also happened in Kentucky, New Hampshire, and Washington State.

In fact, the death spiral Reinhardt sees in the Exchanges would itself be the fourth death spiral ObamaCare itself has caused:

  1. Before they even took effect, ObamaCare’s preexisting conditions provisions began driving insurers out of the market for child-only health insurance. Insurers ultimately exited that market in 39 states, causing the markets in 17 states to collapse.
  2. ObamaCare’s long-term care insurance program – the CLASS Act – failed to launch when the administration could not make it financially sustainable. President Obama and Congress repealed it.
  3. Exchanges effectively collapsed in every U.S. territory, again prior to launch.
  4. Now, a nationwide exodus of insurers has left one third of counties, one in six residents and seven states with only one carrier. In Pinal County, Arizona, every insurer has exited the Exchange. The exodus goes beyond greedy, for-profit insurers. It includes more than a dozen government-chartered nonprofit “co-op” plans.

Reason on the House GOP Health Plan: “Like Obamacare—Except, Possibly, Worse”

Echoing concerns I expressed last week, Reason’s Peter Suderman notices a problem with House Republicans’ new plan to replace ObamaCare:

As it turns out, the health care policy that Republicans might pursue looks, well, a lot like Obamacare—except, possibly, worse.

Rather than offer ObamaCare-lite, Congress should repeal ObamaCare and then make health care better, more affordable, and more secure by moving toward a market system.
 
Sen. Jeff Flake (R-AZ) and Rep. Dave Brat (R-VA) have introduced legislation that contains the building blocks of such an approach.

House Republican Health Plan Might Provide Even Worse Coverage For The Sick Than ObamaCare

WASHINGTON, DC - JUNE 22: House Speaker Paul Ryan (R-WI) discusses the release of the House Republican plank on health care reform at The American Enterprise Institute for Public Policy Research on June 22, 2016 in Washington, DC. (Photo by Allison Shelley/Getty Images)

After six-plus years, congressional Republicans have finally offered an ObamaCare-replacement plan. They should have taken longer. Perhaps we should not be surprised that House Republican leaders* who have thrown their support behind a presidential candidate who praises single-payer and ObamaCare’s individual mandate would not even realize that the plan cobbled together is just ObamaCare-lite. Don’t get me wrong. The plan is not all bad. Where it matters most, however, House Republicans would repeal ObamaCare only to replace it with slightly modified versions of that law’s worst provisions.

Here are some of ObamaCare’s core private-health insurance provisions that the House Republicans’ plan would retain or mimic.

  1. ObamaCare offers refundable health-insurance tax credits to low- and middle-income taxpayers who don’t have access to qualified coverage from an employer, don’t qualify for Medicare or Medicaid, and who purchase health insurance through an Exchange. House Republicans would retain these tax credits. They would still only be available to people ineligible for qualified employer coverage, Medicare, or Medicaid. But Republicans would offer them to everyone, regardless of income or where they purchase coverage.
  2. These expanded tax credits would therefore preserve much of ObamaCare’s new spending. The refundable part of “refundable tax credits” means that if you’re eligible for a tax credit that exceeds your income-tax liability, the government cuts you a check. That’s spending, not tax reduction. ObamaCare’s so-called “tax credits” spend $4 for every $1 of tax cuts. House Republicans know they are creating (preserving?) entitlement spending because they say things like, “this new payment would not be allowed to pay for abortion coverage or services,” and “Robust verification methods would be put in place to protect taxpayer dollars and quickly resolve any inconsistencies that occur,” and that their subsidies don’t grow as rapidly as the Democrats’ subsidies do. Maybe not, but they do something that Democrats’ subsidies don’t: give a bipartisan imprimatur to ObamaCare’s redistribution of income.
  3. As I have tried to warn Republicans before, these and all health-insurance tax credits are indistinguishable from an individual mandate.  Under either a tax credit or a mandate, the government requires you to buy health insurance or to pay more money to the IRS. John Goodman, the dean of conservative health policy wonks, supports health-insurance tax credits and calls them “a financial mandate.” Supporters protest that a mandate is a tax increase while credits—or at least, the non-refundable portion—are a tax cut. But that’s illusory. True, the credit may reduce the recipient’s tax liability. But it does nothing to reduce the overall tax burden imposed by the federal government, which is determined by how much the government spends. And wouldn’t you know, the refundable portion of the credit increases the overall tax burden because it increases government spending, which Congress ultimately must finance with additional taxes. So refundable tax credits do increase taxes, just like a mandate.

Hillary Clinton’s Answer On Rising ObamaCare Premiums

As the number of people enrolling in ObamaCare Exchanges is falling below the Obama administration’s targets, Hillary Clinton faced a tough question at a town hall meeting in Ohio on Sunday night. Theresa O’Donnell, a Democratic-leaning voter complained that ObamaCare caused her family’s health insurance premiums to double from $5,880 per year to $12,972 per year. “I would like to vote Democratic, but it’s costing me a lot of money,” O’Donnell pleaded. “I am just wondering if Democrats really realize how difficult it’s been on working-class Americans to finance ObamaCare.” The audience applauded O’Donnell, showing once again that, really, not even Democrats like ObamaCare.

New CBO Numbers Show a Remarkably Simple Path to a Balanced Budget

A just-released report from the bean counters at the Congressional Budget Office is getting lots of attention because the bureaucrats are now admitting that Obamacare will impose much more damage to the economy than they previously predicted.

Of course, many people knew from the start that Obamacare would be a disaster and that it would make the healthcare system even more dysfunctional, so CBO is way behind the curve.

Moreover, CBO’s deeply flawed estimates back in 2009 and 2010 helped grease the skids for passage of the President’s failed law, so I hardly think they deserve any applause for now producing more realistic numbers.

But today’s post isn’t about the Obamacare fiasco. I want to focus instead on some other numbers in the new CBO report.

The bureaucrats have put together their new 10-year “baseline” forecast of how much money the government will collect based on current tax laws and the latest economic predictions. These numbers show that tax revenue is projected to increase by an average of 5.4 percent per year.

As many readers already know, I don’t fixate on balancing the budget. I care much more about reducing the burden of government spending and restoring the kind of limited government our Founding Fathers envisioned.

But whenever the CBO publishes new numbers, I can’t resist showing how simple it is to get rid of red ink by following my Golden Rule of fiscal restraint.

The CLASS Act: This Is Confidence-Inspiring?

In the Daily Caller, I explain how the failure of ObamaCare’s “CLASS Act” highlights the fatal flaws in the rest of the law:

As it turns out, CLASS collapsed even before its 2012 start date. The same thing happened when Obamacare imposed the same sort of price controls on health insurance for children in September 2010: the markets for child-only coverage collapsed in a total of 17 states, and are slowly collapsing in even more…

In the face of this setback, Obamacare supporters are naturally declaring victory. Jonathan Cohn of The New Republic sees “vindication.” Kevin Drum of Mother Jones proudly announces, “What happened here is that government worked exactly the way it ought to.” The Washington Post’s Ezra Klein instructs, “The CLASS experience should, if anything, make us more confident in the underlying law.” It’s hard to argue with such logic, but let’s try…

Obamacare inspires confidence in its supporters, then, because one part of the law throws a Hail Mary pass to prevent another part of the law from stripping Americans of the insurance that currently protects them from illness and impoverishment. Feel safer?

So if you’d like secure protection from illness and impoverishment, repeal ObamaCare. Or say your prayers.

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