Consumer Power Report #443
The 2014 election will have an enormous impact on a number of policy discussions, but in no arena of policy will the impact be felt as thoroughly as Obamacare. With the Senate in Republican hands and more than 30 governorships headed to the GOP – including key pickups or defenses in Florida, Illinois, Kansas, Maine, Maryland, Massachusetts, Michigan, and Wisconsin – Obamacare will now face unprecedented opposition and challenges.
What shape will those challenges take? The likeliest demand on the part of the conservative base is for a real vote to repeal Obamacare and replace it, so far as can be achieved through the tricky reconciliation process. The demand will likely have to be met by leadership to satisfy conservatives who’ve been elected with the promise to make repeal a priority. The reconciliation process requires only 51 votes, and as such would face a veto from the president. But forcing him to veto is key for many conservative groups, who will demand more than just a show vote blocked by Democratic filibusters.
The reconciliation process will play out in the spring, and after that, the real negotiations are likely to begin. There will be separate votes forced on the individual and employer mandates, on making the insurance risk corridors budget-neutral, and on smaller issues like the medical device tax.
But the real aspect that will change here will be the opening of negotiation: Only now will Republicans be able to determine where President Barack Obama is willing to negotiate, something he has avoided thus far thanks to the insulating efforts of Harry Reid and the power of his various executive actions to implement the law as he sees fit.
For instance: In the course of prior budget negotiations, the White House indicated it would be willing to increase the amount states would have to pay toward their Medicaid expansions as one of the potential tradeoffs. With Republicans holding ground in so many states that remain unlikely to expand Medicaid – such as Kansas, Maine, and Wisconsin – there are diminishing returns for avoiding such increases, and it’s possible this matching amount could change in the course of coming negotiations. This could cause the legislature in marginal states, such as Virginia, to fear that expansion could end up costing them far more in matching tax revenue than current estimates indicate.
Republicans also will attempt to dismantle the law in other ways, both through rifle-shot bills aimed at particularly unpopular aspects, and through newly expanded oversight powers to subpoena records and investigate the implementation failings of the law. Avik Roy suggests seven measures the Senate could pass.”> While it’s unlikely measures altering the work week requirements, Independent Payment Advisory Board, or regulations and subsidies within Obamacare’s exchanges will pass in a method that sustains a veto, it’s worth attempting and each step will likely attract some Democratic support. The real aim will be to throw out vote after vote, forcing those Senators up for re-election in 2016 to stand by the law or break with their fellow Democrats. And some goals are more achievable, such as demanding transparency from the Congressional Budget Office and eliminating health insurance excise taxes.
Additionally, the time is now for Republican Senators to put forward their replacement plans, some of which could be passed through the reconciliation process. Several pieces of legislation have been introduced, and they will be adapted in some form and passed before the 2016 election. How much of the law is truly repealed remains to be seen, and Senate Republicans may feel forced by the expansion-minded governors in their own party to propose alternatives on the Medicaid front beyond mere block-granting.
Republicans now have an opportunity to do more than take votes for show. They have the opportunity to test Obama’s devotion to his signature legislation. What has to stay, and what could go? They’ll find out only once they begin pressing the issue, which for many of the newly elected Republicans is priority number one.
— Benjamin Domenech
IN THIS ISSUE:
Nearly half of voters on Tuesday said Obamacare went too far, according to exit polls.
Forty-seven percent of those who cast ballots in the midterms said the 2010 health care law, which opened for enrollment a year ago, went too far. On the other hand, 26 percent said the law didn’t go far enough, CNN exit polls reported.
Only 22 percent said Obamacare was just about right.
Obamacare remained an issue in many of the midterm battles following a complicated year of enrollment and registrations and state exchanges. Twenty-five percent of voters said Obamacare was the most important issue facing the country, compared with 45 percent who said the economy is their top concern.
The exit poll survey of 11,522 voters nationwide was conducted for AP and the television networks by Edison Research. This includes preliminary results from interviews conducted as voters left a random sample of 281 precincts Tuesday, as well as 3,113 who voted early or absentee and were interviewed by landline or cellular telephone from Oct. 24 through Nov. 2. Results for the full sample were subject to sampling error of plus or minus 2 percentage points; it is higher for subgroups.
SOURCE: Lucy McCalmont, Politico
A Republican Senate means the GOP will likely get one step closer to their often-promised effort to eradicate Obamacare, sending repeal legislation to the president’s desk. But once the near obligatory vote is cast to undo the Affordable Care Act, expect Republicans to keep chipping away at pieces of the law that they (and a good number of Democrats) don’t like. For starters, keep an eye on the taxes that fund the law and the requirements that people have health insurance or that businesses must offer coverage. And don’t rule out efforts to pick at the law (or outright repeal it) using reconciliation in the Senate, which requires only 51 votes.
In addition to the Affordable Care Act, holding both the House and Senate gives Republicans full control over the congressional debate on Medicare and Medicaid. While Medicare reforms might be considered too politically dangerous for Republicans ahead of the 2016 presidential election, expect plenty of attention on Medicaid.
Below we break down some of the biggest changes coming to health policy in the 114th Congress:
Utah Republican Sen. Orrin Hatch is widely expected to keep the top Republican spot on the powerful Senate Finance committee, where he will have a chance to shape the upper chamber’s approach to all things Affordable Care Act, Medicare and Medicaid. Hatch has focused on undoing individual provisions of Obamacare, like the medical device tax, during his time as ranking member of the committee, something he will almost certainly keep up now that he has the power to call administration officials to testify in front of the Finance committee.
Hatch has also been a player in proposing Medicare and Medicaid reforms. In 2013 he introduced a plan with House Energy and Commerce committee chairman Fred Upton (R-Mich.) to give states far more control over their Medicaid programs, and shift the formulas used by the federal government to determine Medicaid funding to a per capita system. He also introduced a plan this year with Sens. Richard Burr (R-N.C.) and Tom Coburn (R-Okla.) to replace the Affordable Care Act that included significant Medicaid reforms.
The big question for the Senate Health, Education, Labor and Pensions committee is which Republican member will lead it. Sen. Lamar Alexander (R-Tenn.) is the current ranking member, but Sen. Mike Enzi (R-Wyo.) has a few years left under Senate Republican rules to reclaim the top spot on the committee that has jurisdiction over parts of Obamacare and the Food and Drug Administration. Neither has said what their plans are yet when it comes to leading the committee.
SOURCE: Marissa Evans, Morning Consult
Technology gaps in HealthCare.gov are expected to cause consumers and insurers a fresh batch of complications after the site reopens for health-plan enrollment this month, insurance-industry officials say.
Millions of Americans are expected to buy or change plans using the federal portal when the second year of enrollment under the Affordable Care Act begins Nov. 15. But some back-end parts of the system have had problems and others haven’t been built, triggering difficulties that could affect tens of thousands of people when new plans kick in next year.
Consumers who bought policies on the exchange for 2014 and switch to a different insurer for 2015 could end up enrolled in two plans, with bills for both, in January, according to two industry officials. Others who stopped paying premiums for their plans this year could find themselves automatically re-enrolled in those plans for 2015 regardless of whether they want them.
Meanwhile, lower-earning Americans who receive federal tax credits to offset the cost of their coverage might not get a form they need to file their 2014 taxes because the federal government has an incorrect address for them, these officials say.
The problems, while expected to cause headaches for shoppers, insurance companies and the Obama administration, aren’t likely to result in the disastrous complications that crippled the first year of health-law enrollment. They won’t fully surface until next year, when bills and tax information begin rolling in for exchange enrollees.
The issues are expected to primarily affect those who enrolled in 2014 plans through HealthCare.gov, a group that totals about five million people. Insurance industry officials said they can’t predict exactly how many consumers will experience the problems, but they could reach tens of thousands of people, one official said. The scope of the problems depends in part on how many people follow the advice of the administration, consumer groups and some insurers, who are encouraging consumers to comparison-shop and switch plans if they can get a better deal.
Brian Adams, who sells fireplaces in Indianapolis, is like many of the nation’s small-business owners. As the cost of providing health benefits has climbed, he has struggled to afford coverage for his employees – a problem the new health care law was designed, in part, to address.
But a year after the law’s introduction of the insurance exchanges, provisions that were supposed to help small businesses offer employee health benefits are largely seen as a failure. And Mr. Adams, like many of his fellow business owners, is sending employees to the exchanges to buy their own coverage instead.
Nancy Smith, who runs the Great Arizona Puppet Theater in Phoenix, made a similar decision. Her business employs only a handful of people who need insurance, and she was able to offer only plans with high deductibles. She and her employees decided buying individual policies made the most sense.
“Everyone wanted to do it because our costs were too high,” she said.
Most of the focus on the Affordable Care Act has been on whether individuals can find affordable coverage through the online marketplaces. But the law also had the goal of creating a robust insurance market for small businesses by making tax credits available to businesses that provide coverage and creating small-business exchanges where companies could more easily find low-cost plans.
The small-business exchanges were barely functional in most states last year, and it remains to be seen whether the Obama administration will manage to stop the steady decline in the number of employers offering coverage to their workers. The administration is poised to try again when open enrollment begins on Nov. 15.
Federal officials say they do not know how many small businesses signed up for coverage in the small-business exchanges, but the numbers are likely to be very small. In California, for example, only 12,000 people were enrolled through the state’s small-business exchange, compared with more than a million who enrolled as individuals there. To date, few businesses have availed themselves of the tax credits available for purchasing coverage for low-wage workers.
SOURCE: Reed Abelson, New York Times
Outlawing insurance premium subsidies in states without their own healthcare exchanges would lead to “disastrous consequences,” the Obama administration argued in a brief filed Monday in Halbig v. Burwell, a case that could have major ramifications for the nation’s new healthcare law.
“It would deprive millions of Americans of insurance and create a gaping hole in the individual-coverage provision,” according to the brief filed with the U.S. Court of Appeals for the D.C. Circuit. “The loss of customers would have disastrous consequences for the insurance markets in the affected states, which would remain subject to the act’s nondiscrimination requirements but without the safeguards that Congress found essential to preventing adverse selection. The result would be the very death spirals the act was crafted to avoid.”
At issue is whether the IRS’ interpretation of the language of the Patient Protection and Affordable Care Act is correct. The IRS has been interpreting the language to mean that consumers may receive premium tax credits in states that are relying on HealthCare.gov because they didn’t establish their own insurance exchanges.
One part of the law, however, says the tax credits are available only to Americans who enrolled “through an exchange established by the state.” The IRS argues that the law’s clear intention was to offer subsidies to Americans in all states.
The court is scheduled to hear oral arguments in the case en banc, or before the full panel of judges, Dec. 17. A three-judge panel of the court already heard the case and, in a divided ruling, said subsidies should not be allowed in states without their own exchanges. But that decision was vacated in September when the D.C. Circuit Court decided to hear the case en banc.
A recent Senate Budget Committee (SBC) Republican report about the fiscal effects of the Affordable Care Act (ACA, or so-called “Obamacare”) has stimulated public and press interest. The report concluded that whereas earlier analyses appeared to find the ACA would reduce deficits, updated analysis employing Congressional Budget Office (CBO) methodology finds it is worsening deficits.
I am already on record as finding that the ACA worsens federal deficits, albeit for different reasons than the SBC study. My 2012 study showed that the ACA worsened budget deficits relative to prior law; CBO’s earlier projection of deficit reduction was instead in comparison with a baseline scenario it is required to use under congressional scorekeeping rules. Importantly, that baseline assumes substantial future spending increases will be enacted in any event. It’s only in comparison with this spending-increase baseline that the ACA appeared to reduce the deficit.
Unlike mine, SBC’s study compares the ACA only to the scorekeeping baseline imposed on CBO. In addition, the SBC analysis updates projections for recent CBO findings concerning the ACA’s costs and its effects on the labor market. I believe the SBC finding to be correct, as I will detail below. If so, this means the ACA worsens the deficit irrespective of whether you compare to prior law (as in my study) or the scorekeeping baseline (as in SBC’s).
SOURCE: Charles Blahous, Economics21