On My Burwell Bet: I Win!

In a totally unsurprising turn of events, I was proven right once again.  The Supreme Court upheld, not the actual text of the law, but the IRS and HHS interpretation of the law that allows subsidies paid out through the federal exchange rather than just through the State exchanges, as the actual law requires.

All is as I’ve foreseen.  As I wrote back in March:

 So in spite of the actual text of the law limiting subsidies to State exchanges, I predict that the Court will find against the plaintiffs and rule that the subsidies can pass through the Federal exchange.

I did think that Justice Roberts would, if given enough cover to keep the subsidies might vote against it to show his “independence” however even with a court majority, he either wanted to be counted with the free stuff gang, or he just wanted to shoot a bird at conservatives who criticized him for his last Obamacare decision.

Screw you guys!

Message received Roberts.

This was a simple case.  The text of the law was pretty specific; there were multiple Gruber statements and statements by others involved in the law that that it was specifically written that way to force States to start their exchanges, and it didn’t matter.  Politics trumped law.

And now; on to gay marriage, when we’ll learn that the founders, when they wrote the constitution in 1787, really intended gay marriage…

My Burwell Bet

Supreme Court

 

The Supreme Court is hearing oral arguments today for yet another Obamacare case, this time, it’s King v. Burwell.  What’s the case about?  In short, from the text of the ACA:

“…the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer’s spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311…”

The key phrase is “an Exchange established by the State.”  So since most States didn’t set up an exchange forcing people into the Federal exchange, none of the subsidies given for health plans through the Federal exchange are legal.  The ACA plainly stated that subsides could only go through State exchanges and the IRS, which crafted a rule allowing subsides through the Federal exchange, overstepped its boundaries outside of the text of the law and is in error.  This should be an open and shut case.  The IRS violated the text of the law, it was wrong, and subsidies should be halted from going through the Federal exchange, right?

Heh!

I don’t believe the law has anything to do with how the Supreme Court arrives at decisions.  If there were any questions to that, the way the Court handled the individual mandate should settle them.  The Court is a political animal.  If it were ever truly interested in a just and reasoned weighing of law and the Constitution, those days are long passed. Of course that makes it easier for me to predict the Court’s behavior.

That’s how I was able to predict the Court’s decision over the individual mandate.  As I wrote then:

“My gut feeling is that the odds are better than even that the court will uphold the mandate.  I base that on the fact that the mandate has 4 automatic votes for.  So that means that only one vote is needed to be swayed among the other five Justices who actually have to study this case (unlike Ginsberg and Breyer, who will be windsurfing instead of reading law books). “

I was right because the Court decision (Robert’s changing his vote) was purely political.  So since I’m feeling cocky, I’ll go ahead and lay my marker down now.  So in spite of the actual text of the law limiting subsidies to State exchanges, I predict that the Court will find against the plaintiffs and rule that the subsidies can pass through the Federal exchange.  The 4 liberal judges will of course vote to uphold the subsidies because…Obama.  The magical swing vote will either be Kennedy or Roberts.  If Kennedy votes against the plaintiffs, then Roberts, to save the law, will vote for.  But if Kennedy votes for the plaintiffs; abolishing the Federal subsidies, then Roberts will vote against, since he will then have a free vote to show his independence; as long as it means nothing.

Of course, I could be totally wrong and the Court could surprise me.  But no breath holding on my part.

 

 

 

 

Obamacare Math

I’m no mathematician, but I’ve come to some interesting conclusions from “running the numbers” on the Obamacare debacle.

First, about 14 million people are covered under the individual health insurance market.

Of those, in 2013, 13% were covered by grandfathered plans; or plans that could be renewed for 2014.  So that’s 1.82 million who for sure can “keep their plans;” at least for 2014.

That means as many as 87% of individual health plans could be cancelled.

We know for sure that as of last week (this is a week by week changing number) 4.8 million people have already gotten cancellation notices.  These are people who were covered this year, and if they want to continue to be covered, need to choose and purchase new insurance plans by January 1st.

The CBO estimated that 7 million people would be covered in the health insurance exchanges in 2014, but that was an estimate based on a fully functional Obamacare website.  I’ve no doubt that that the Obamacare site will eventually be fixed, but how long will that take?  I’m pretty comfortable guessing that the problems will not be fixed by the end of November, as promised by the administration.

The administration estimates that 200,000 people have signed up for coverage with the exchanges by mid-November.  That means as of right now, of the people who had coverage under the individual health insurance market this year, 4.6 million of them still don’t have coverage for 2014.   Although I’m sure that the number of enrolled people will steadily increase over the next few weeks, does anyone think that the remaining people who lost their coverage because of the Obamacare requirements will have coverage by the start of the New Year?

Even the Obama administration isn’t that optimistic.

That means that thanks to Obamacare, more people will start off the year without health insurance coverage than had it this year.  Congratulations President Obama!  You’ve successfully wrecked the nation’s health insurance market!   I think the administration should have applied the lessons learned from the Hypocratic Oath: First, do no harm.  Instead, the administration burned down the house, only to learn that their plans for the new house were incomplete.

If the percentage of uninsured in this country is greater this time next year than it is now, it will be pretty clear who will be responsible for it.  I hope someone is smart enough to remind people of that for the elections.

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Schadenfreude, and the Obamacare Timebomb

Considering the disaster of a rollout that Obamacare turned into, you would expect a lot more schadenfreude from the political right.  After all, it’s the President’s signature domestic policy.  For good or ill (and it’s mostly ill), this will be the domestic program that will be identified with President Obama.  And so far it’s a mess.  So why aren’t conservatives happy?  Part of it I think is that the right is still licking its wounds from the shutdown debacle.  They are still trying to heal a party that was pointless split for no good reason.  See?  I’m still trying to heal.  But the major part of this is that unlike a lot of wacky social programs that the left invents, screws up, and leaves to move on to the next big thing, healthcare is something that affects everyone.  The damage that Obamacare has done to the entire nation’s healthcare system, not just to the minority in the individual insurance market, is extensive, and much of it is permanent.  So there is no schadenfreude to be found in mocking the woman who said, “I was all for Obamacare until I found out I was paying for it.”

Fool, you’ve doomed us all.

If Obamacare had only ruined the healthcare system for those who supported it, then yes, the right would have the freedom to cackle with glee and point fingers, but eventually, this will affect everyone.

OK we’re still doing the finger pointing, but we’re not happy about it.

Right now the big Obamacare story is the website, which is a mess, but eventually the website will get fixed.  The problem goes far beyond the website.  The health insurance plans in the exchange depend on getting enough young health people to enroll to keep the cost of premiums down for the next year.  They need people paying but not using healthcare to afford the people who will enroll and will be sick and will be using healthcare; a lot.  That’s what insurance is all about after all.  If those young healthy people don’t show up and enroll, then you are left with more people taking out of the insurance pool than are putting into it.  That spells extremely high rates for premiums in 2015, or collapse of the exchange insurance groups.

And what could be pulling healthy young people from enrolling in an exchange insurance plan?  In a word; Medicaid.

So far (and admittedly this is a changing number) the majority of enrollees under the Obamacare exchanges are enrolling in Medicaid.  Under Obamacare the Medicaid expansion increased the Medicaid Eligibility to 138% of the Federal Poverty Line.  So all of those young healthy hipsters, particularly the ones who have extremely low incomes like students, are being enrolled, but they are being enrolled as Medicaid clients, not people in the actual private insurance groups.  So rather than contributing to the insurance pool, these healthy young people will basically be put on the dole, to drain the Treasury of funds to support healthcare that they could have otherwise been contributing to.

So if in the upcoming year we have insurance plans filled with the sick, while the healthy coast on Medicaid, than that’s a bomb that will blow Obamacare wide open.

Great plan geniuses.

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The “Don’t Fund it” Option

The latest, and perhaps last, opportunity to toss a few stop sticks in front of Obamacare is coming up with the upcoming 2014 spending bill.  The Tea Party coalition wants to strip Obamacare funding from the spending bill, giving the President the option of either vetoing the bill, and effectively shutting down the government October 1st, or signing the spending bill stripped of Obamacare funding; stopping it in its tracks.  It’s not repeal, but it’s a delay, and delaying Obamacare implementation I would think is worth taking some chances.  Obamacare is bad law and worse public policy, and if there is a clear path to even delaying this bill (hopefully for some future period in which there is a change in political leadership), then that path should be followed.  Of course there are two (at least) problems with this: the House leadership and establishment Republicans want nothing to do with this idea, and it’s not clear there is an effective path to getting Obamacare defunded.

Official portrait of United States Senator Mik...

Official portrait of United States Senator Mike Lee. (Photo credit: Wikipedia)

The “Don’t Fund it” option is a real organized effort.  It even has a website to track the progress and pledges of the various Republican Senators and Senate candidates. However, as usual, the establishment is opposed to doing anything that might make either Democrats or the Washington media mad at them.  This default bowing to possible media reaction means that they don’t want to take the chance of looking “obstructionist” in front of the national media.  Speaker Boehner is particularly uninterested in anything that would make the House Republicans look confrontational. So I cheer the Tea Party Republicans who are willing to take a risk at slowing down a bad law.

On the other hand…

The House Republicans have failed to impress in follow-through before. Last year’s fiscal cliff disaster was an eye opening view into how dysfunctional the House Republicans can be.  Before Christmas they voted against an option, what was then known as “Plan B” in order to finally agree and vote for a worse plan, as I chronicled last January.  These guys are not master strategists.  This isn’t House of Cards. It’s not even Pee Wee’s Playhouse. I’ve seen no evidence that there are wheels within wheels of planning and maneuvering to accomplish the goal of defunding Obamacare.  Both the debt ceiling fight and the fiscal cliff debacle demonstrated the amateur hour of the GOP and nothing they’ve done since last December has given me any confidence that they have learned from past mistakes and could prevail in this fight.

That’s not to say there aren’t options available to getting Obamacare defunded.  Some ideas include:

The Republicans could fund the government in multiple spending bills, isolating the Obamacare funding into a separate bill, and basically passing everything but that. Then it will be on the Democrats in the Senate to vote against the rest of the clean government funding.

They could just add an amendment to the bill holding off the implementation of Obamacare for one, two, or even three years. Since the exchanges and a lot of other moving parts aren’t ready, this might be tempting for some Senate Democrats. Obama basically did something similar by fiat.

The House Republicans could offer to fund Obama’s infrastructure and jobs bill with the funds that are not spent on Obamacare implementation.

These are just a couple of ideas that I thought of, off the top of my head.  I imagine a skilled parliamentarian would have a much longer, and perhaps more realistic list.  But in reality it seems unlikely that there is either a skilled parliamentarian or a list of options of any kind available. So I’m left to wonder,

–      Is there an actual strategy that has a possible favorable outcome?

–      Are there contingency plans depending on different possible White House or Senate Democrat responses?

–      Is there a united message and talking points for all participants to use in media contacts?

–      Has this scenario been “war-gamed?”

I wouldn’t be surprised if none of these issues had been seriously considered.  And that’s why, although I would love, love, love to throw my whole hearted support behind a “don’t fund it” plan, I would only want to do it if I thought there was at least a reasonable chance of success, rather than the Republicans ending up worse off than if they had just done nothing, and the media spinning the Republicans as both stupid and evil, like with the fiscal cliff.  And there is a possibility that the Republicans could end up worse off than if they hadn’t done anything.  If the President and Senate Democrats stand firm (and why wouldn’t they?), all the blame will be spun in the media as Republicans taking away Social Security from the elderly, paychecks from the military… you get the idea.  At that point the ball will be in the Democratic court, and they may have their own conditions to get government funded again.

Catching a few media interviews with Senator Mike Lee over the past week, I didn’t get any indication that there was a well thought of plan that has a reasonable chance of success.  Instead, it sounded more like a last gasp.

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Romney goes all in with Ryan

This was not the Vice Presidential pick I was expecting.  I was going along with the conventional wisdom on this one and assuming either Rob Portman or Tim Pawlenty.  Usually, you almost always can count on going wrong when relying on the conventional wisdom, but Mitt Romney seems like a conventional wisdom kind of guy, so the safe guesses seemed likely to me.  So I was surprised when I heard on the news that Paul Ryan was Romney’s VP pick.

In general terms, Ryan is a good pick.  He’s bright; in fact, bright enough that the average IQ of the House of Representatives will drop a good deal when he leaves. He can also present his arguments clearly and concisely.  One of my favorite all time political video clips is the Obamacare Health Summit, in which Ryan demolished the fiscal rationale behind the Obamacare CBO report in a few minutes, with a scowling Obama looking on.

Ryan was right on Obamacare, but it still passed.

And that’s the problem with the Ryan pick.  The President’s campaign strategy for this year has been to avoid economic issues and engage in personal attacks and demagoguery.  That’s the purpose of the various “war on…” ads.  2010’s “Throw Granny off a Cliff,” featuring a Ryan look alike rolling a wheelchair bound grandmother type off the edge of a cliff, is a harbinger of the type of campaign we can expect from the Obama administration.  When Democrats portray Republicans, they are usually shown as either stupid or evil, depending on what they think fits better.  With Ryan, it’s clearly going to be evil.  Will we see ads portraying Ryan as a blade welding, hockey mask wearing killer, slicing and dicing the elderly in rest homes?  Don’t laugh; after throwing granny off a cliff, will Ryan stop at nothing?

Ryan doesn’t really bring the key battleground States, like Portman (Ohio) or Rubio (Florida) would.  Romney is going for an ideological and ideas pick.  With Ryan, he’s showing that the thrust of his administration is going to be to get our fiscal house in order.  That’s a great thing and a vital one, but it plays into the Obama administration’s yearlong campaign strategy.  The White House is probably popping the corks on the bottles of champagne.  If you’re running a campaign based on demagoguery, you couldn’t have hoped for better than a Ryan pick.

Just like on Obamacare, Ryan is right on our budgetary and fiscal issues, but as Obamacare shows, being right doesn’t mean you will win the votes.

Looking at the race in the beginning of the year, I figured it would be Obama winning in a squeaker.  Months later, with the Ryan pick, I still lean that way.  But at least the battle grounds are clearly drawn, and we know what the race is about: saving our country from fiscal chaos and trying to restore the nation, or stripping the treasury of every dollar and eating our seed corn; eat, drink, and be merry, because tomorrow we may be a third rate, ruined power.  I think if the American people are given that clear choice, they’ll make the right decision.  The problem is, the few undecided voters will be viewing the race through the lens of the big three network nightly news programs, and they are all three firmly on Team Obama.

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Obamacare and its Successors

For those keeping score, once again, I was right and the so called experts were wrong.  The Supreme Court upheld Obamacare, 5-4.  The solid liberal block only had to peel off one of the Justices who actually read the constitution.  So the bad news?  Obamacare upheld.  The good news?  I was right once again!

Based on just a brief commentary I’ve heard so far on the decision, there is actually some other good news.  The court upheld the individual mandate based on the taxing power of the constitution, not the commerce clause.  So when it came to deciding if the commerce clause meant the government could do anything, they punted.  So rather than ignoring the constitution, they merely ignored the text of the law.  That’s a far better situation than if the court had decided to not recognize any limits to the commerce clause.  This is no Kelo.  This is a political decision that was only about this particular law.  It didn’t set a legal precedent.

But this doesn’t really change the playing field, at least not yet.  Even if the Court had repealed Obamacare in its entirety, we still would have been left with the situation of having to replace it with something.  This only pushes back the date to when we can do that; until we have a Republican President.  That makes a Romney win all the more important.  Politically, this might even be beneficial to Romney.  It would fire up a base who was otherwise rather “meh” on him.

So, assuming a Romney victory, what can we replace the shambling corpse of Obamacare with?  It’s not enough to get rid of Obamacare, declare victory, and go home.  The reason Obamacare had any traction in the first place was because there was a universal recognition that our healthcare system was broken.  It cost too much and didn’t cover enough people.  Even with Obamacare out of the way, the real issues that it was advertised to address remain.

Luckily there have been many alternatives proposed, and the pool of various reform plans is large enough to provide a good mix of alternatives to the slap dash political Frankenstein’s monster that was the Patient Protection and Affordable Care Act. The most obvious place to check with first is with the proposed healthcare plan of Mitt Romney.  Some of the major proposals of Romney’s plan include:

End tax discrimination against the individual purchase of insurance

Block grants to Medicaid.

Cap non-economic damages in medical malpractice lawsuits

Empower individuals and small businesses to form purchasing pools

Allow consumers to purchase insurance across state lines

Unshackle HSAs by allowing funds to be used for insurance premiums

Promote alternatives to “fee for service”

Encourage “Consumer Reports”-type ratings of alternative insurance plans

Most of these ideas are common features of other alternative health care reform proposals.  It shares similar features with the National Center for Policy Analysis proposal, the Heritage Foundation, the Competitive Enterprise Institute, the GOP, and the Options Act, a bill currently in committee in the House (as HR 4224).  All of these proposals are similar enough in their general outlines that one bill could probably be crafted out of them rather quickly.

One of the more interesting plans came not out of a think tank or campaign headquarters, but from a businessman, John Mackey, the CEO of Whole Foods.  His plan came out of his experience of trying to provide health care benefits to his employees.  Like the other proposals, Mackey supported equalizing the tax laws so that individual and employee health insurance plans had the same tax treatment, competition across state lines, and tort reform.  He also wanted to allow a check box on tax forms to allow a contribution to a fund to provide healthcare for people not otherwise covered, and expand the use of Health Savings Accounts, which are utilized extensively in the Whole Foods health care plan provided to their employees.

Naturally liberals were apoplectic that the CEO of the place where they purchased their overpriced arugula was proposing a counter proposal to the one Dear Leader was proposing.  The publication of Mackey’s article in the Wall Street Journal lead to a short lived lefty boycott of Whole Foods, at least until liberals decided they couldn’t find a more expensive place to purchase their organic veggies.

All of these proposals are all well and good in and of themselves, and would probably do a good job at “bending the cost curve” as the President inaccurately claimed Obamacare would do.  However they don’t do as much to reduce the number of people uninsured or dealing with people with pre-existing conditions.  Those are issues as important as bending the cost curve is.  That solution was John McCain’s healthcare proposal for the 2008 election.  McCain’s plan would have provided a tax credit for low & middle income people to be applied to their health insurance premium.  A good idea, except that he applied it to both individual and employee plans, boosting the cost of his program (although well below even friendly Obamacare estimates).

Recognizing the extra cost associated with Pre-existing conditions, McCain’s advisors were considering a proposal to have risk rated the tax credit so that people with pre-existing conditions would get a higher tax credit based on the rated expense of their particular condition.  He also supported State based risk pools, similar to the ones in Obamacare.

So looking at all of these plans together, shaking them up in a big healthcare reform bag and baking at 350°, this is what I’ve come up with as key features of a good alternative to Obamacare:

1)       Equalizing the tax treatment between individuals and businesses for health insurance premiums.  This would mean giving a first dollar deduction to individuals and families on their taxes plus for low and middle income people, a tax credit that would be applied to the health insurance premium.  McCain’s plan had a $5000.00 tax credit for family insurance premiums.  That would probably need to be updated and perhaps indexed to the growth in the cost of health care insurance premiums.

2)      I like the proposal to have a formula to increase the health insurance premium tax credit based on the severity of the pre-existing condition, but some pre-existing conditions are so severe that they are not insurable at any price.  For those, I go along with the state risk pools; not as a separate insurance plan, but as a secondary payer to the member’s regular primary insurance.  By applying and being accepted into a state pool, the member will be able to purchase regular insurance at regular prices and the diagnosis’s and procedures related to the members’ severe pre-existing condition the risk pool would pay as a secondary payer, similar to the way worker’s comp and auto accident insurance are handled.

These two main points handle the bulk of our current uninsured and pre-existing conditions crisis.  Of course I concur with the bulk of the other alternative reforms as well, such as Romney’s idea to allow purchasing pools for small businesses and other organizations.  I’m not clear as to why we would prohibit organizations like churches from organizing their own insurance purchasing pools.

There are many other options to Obamacare.  Options that are cheaper, more efficient, and would actually facilitate expanding healthcare, that are not top down statist solutions that guarantee to be more expensive and reduce consumer choice and little else.

Tags:  Politics, News, Obamacare, John Mackey, Whole Foods, Mitt Romney, Healthcare Reform, health insurance tax credit, pre-existing condtion,