Tag: Obamacare

You Gotta Love the Kaiser Family Foundation

The folks at the Kaiser Family Foundation will publish studies that explain how ObamaCare creates “an incentive to avoid enrolling people who are in worse health” such as “by making [insurance] products unattractive to people with expensive health conditions.”

Then, when their own polling shows three of the public’s top four health care concerns are the very sort of health-insurance features ObamaCare pushes insurers to adopt, they spin it as evidence the public does not want Congress to reopen ObamaCare.

Could It Be Unconstitutional to Raise the Obamacare “Tax” for Not Purchasing Health Insurance?

As many predicted, especially us at Cato, the Affordable Care Act is beginning to make health insurance less affordable for many Americans. Part of the problem, in a nutshell, is precisely what my colleague Michael Cannon described in 2009, the young and the healthy avoiding signing up for health insurance and choosing to pay the fine, or, as Chief Justice John Roberts would call it, a tax.

MIT economist Jonathan Gruber, often described as an architect Obamacare, recently said that some of these problems can be alleviated by increasing the “tax” on those without insurance. “I think probably the most important thing experts would agree is we need a larger mandate penalty,” said Gruber.

Depending on how high the penalty goes, there could be a constitutional problem with that. In the opinion that converted the “penalty” into a constitutional “tax,” Chief Justice Roberts described the characteristics of the “shared responsibility payment” that made it, constitutionally speaking, a tax rather than a penalty. One of those characteristics is that the penalty was not too high: “for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the ‘prohibitory’ financial punishment in Drexel Furniture.” In Drexel Furniture, also known as the Child Labor Tax Case, the Court struck down a 10 percent tax on the profits of employers who used child labor in certain businesses. One reason the Court struck it down was because its “prohibitory and regulatory effect and purpose are palpable.”

Review of Side Effects and Complications: The Economic Consequences of Health-Care Reform

In the latest issue of Cato Journal, I review Casey Mulligan’s book, Side Effects and Complications: The Economic Consequences of Health-Care Reform.

Some ACA supporters claim that, aside from a reduction in the number of uninsured, there is no evidence the ACA is having the effects Mulligan predicts. The responsible ones note that it is difficult to isolate the ACA’s effects, given that it was enacted at the nadir of the Great Recession, that anticipation and implementation of its provisions coincided with the recovery, and that administrative and congressional action have delayed implementation of many of its taxes on labor (the employer mandate, the Cadillac tax). There is ample evidence that, at least beneath the aggregate figures, employers and workers are responding to the ACA’s implicit taxes on labor…

Side Effects and Complications brings transparency to a law whose authors designed it to be opaque.

Have a look (pp. 734-739).

Gerson: If Trump Wins, Blame ObamaCare

Washington Post columnist and former Bush 43 speechwriter Michael Gerson has not always been charitable toward libertarians. He has been pretty good on Donald Trump and ObamaCare, though, and today he ties the two together:

Only 18 percent of Americans believe the Affordable Care Act has helped their families…A higher proportion of Americans believe the federal government was behind the 9/11 attacks than believe it has helped them through Obamacare…

Trump calls attention to these failures, while offering (as usual) an apparently random collection of half-baked policies and baseless pledges (“everybody’s got to be covered”) as an alternative. There is no reason to trust Trump on the health issue; but there is plenty of reason to distrust Democratic leadership. No issue — none — has gone further to convey the impression of public incompetence that feeds Trumpism.

Read the whole thing.

Urban Institute Study Only Counts Part of ObamaCare Premiums When Comparing Them to Employer Plans

In a new report, scholars from the Urban Institute claim ObamaCare premiums “are 10 percent below average employer premiums nationally.” There is variation among states. The authors report ObamaCare premiums are actually higher in 12 states, by as much as 68 percent. 

At Forbes.com, I explain the Urban scholars aren’t making the “apples to apples” comparison they claim to be:

The Urban Institute study instead engages in what my Cato Institute colleague Arnold Kling calls a game of “hide the premium.” As ACA architect Jonathan Gruber explained, “This bill was written in a tortured way” to create a “lack of transparency” because “if…you made explicit that healthy people pay in and sick people get money, it would not have passed.” When it did pass, it was due to what Gruber called the “huge political advantage” that comes from hiding how much voters are paying, as well as ”the stupidity of the American voter.”

That lack of transparency has allowed supporters to claim the ACA is providing coverage to millions who are so sick that insurance companies previously wouldn’t cover them, while simultaneously claiming Exchange coverage is no more expensive than individual-market coverage prior to the ACA or than employer-sponsored coverage. When we incorporate the full premium for Exchange plans, the smoke clears and we see Exchange coverage is indeed more expensive than employer-sponsored coverage. There ain’t no such thing as a free lunch.

If you think this is fun, just imagine the shell games we could play with a public option.

Read the whole thing.

A 51-Percent Premium Hike Rescues ObamaCare In Pinal County

Demonstrator Ryan Thomas, a supporter of U.S. President Barack Obama's health-care law, the Affordable Care Act (ACA), holds an "ACA is here to Stay" sign after the U.S. Supreme Court ruled 6-3 to save Obamacare tax subsidies outside the Supreme Court in Washington, D.C., U.S., on Thursday, June 25, 2015. The U.S. Supreme Court upheld the nationwide tax subsidies that are a core component of President Barack Obama's health-care law rejecting a challenge that had threatened to gut the measure and undercut his legacy. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Ryan Thomas

Pinal County, Arizona was in danger of being the first second third fourth place where ObamaCare caused insurance markets to collapse. As of last month, every private health insurance company now selling ObamaCare coverage in the county announced it would no longer do so in 2017. Had that scenario come to pass, it would have tossed nearly 10,000 residents out of their Exchange plans and left them to buy ObamaCare coverage outside of the Exchange, with no taxpayer subsidies to make the coverage “affordable.” If they didn’t buy that unaffordable coverage, ObamaCare would still subject them to penalties, at least until the Secretary of Health and Human Services intervened.

It appears that Pinal County has avoided that fate. Blue Cross Blue Shield of Arizona has announced that, despite reservations, it will sell ObamaCare coverage in Pinal County next year. Pinal County now joins 13 other Arizona counties, one third of counties nationwide, and seven states that will have only one carrier in the Exchange.

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.

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