Kathleen Sebelius Runs for the Exits

Published April 17, 2014

Consumer Power Report #415

Kathleen Sebelius is resigning, and Rachel Maddow is right not to be happy about it, not one little bit. For once, I completely agree with Maddow’s analysis. This surprise resignation presents Republicans with an unexpected opportunity to refocus the conversation on Obamacare’s negatives, offers a chance to force vulnerable Senate Democrats to take a hard vote on Obamacare six months before the midterms, and serves to disrupt what had been a positive few days of media spin for the health care law, turning it into another conversation about the law’s many failings.

About a month ago, in a conversation with a Senate Democratic aide, the topic of Sebelius – “Auntie K” – came up. The assumption was shared that there was no way Sebelius would be leaving HHS prior to the November midterm elections – indeed, the aide claimed her position was essentially unassailable given the negative attention her resignation or firing would draw. And besides, any nomination fight, no matter who the nominee is, would become an opportunity for Republican Senators to pile on while Democratic Senators were put in an awkward position. No, the conventional wisdom said Sebelius would stay, at least until November 2014.

So much for the conventional wisdom. Reaching out to the aforementioned aide, and to Republican aides as well, I found unanimous surprise at the step – they learned it from the media, not from trial balloons from the administration. In any case, it appears this resignation presents Republicans with a golden opportunity to reignite their crusade against Obamacare with Sylvia Burwell’s nomination as a proxy for all the problems with the law. Burwell is a political loyalist and a veteran of the shutdown fight with no record on health care, and she likely will be coached to avoid answering questions about specific challenges with implementation at HHS.

Senate Republicans actually have an advantage here in the wake of the Nuclear Option’s implementation: They can easily come up with a list of facts they claim the administration has hidden, details kicked aside, statutes ignored, and a host of other challenging questions on accountability over the implementation (and non-implementation) of the law. A list of every question Sebelius has dodged over the past several years would suffice. By demanding answers before the HHS nomination moves forward and refusing to rubber stamp the president’s pick, Republicans could force vulnerable Democrats to take a vote that ties them both to the Nuclear Option and Obamacare six months before a critical election.

And Democrats know this. Here’s Tom Daschle talking to The Daily Beast:

While the invocation of the “nuclear option” by Senate Majority Leader Harry Reid last fall means that Burwell’s confirmation would only require 51 votes and not be subject to a filibuster, it doesn’t mean the process will be easy. Senate Republicans will surely use the process to push their message on Obamacare and to get more information about the implementation of the Affordable Care Act from the administration. Although Burwell was confirmed to head OMB by a vote of 96–0, Daschle cautioned that he thought she wouldn’t have an “easy ride.” As he noted because Obamacare “is such a contentious issue that will be reflected in the hearings.”

Other factions of the left are out there claiming that this resignation is a good thing – and that somehow it’s a sign of Sebelius’s huge success with Obamacare. But even if that’s what the White House thinks, Maddow’s frustration, in my view, is a wiser assessment of how this will play, and her description will be absolutely accurate if Republicans are smart enough to seize this opportunity. Maddow herself compared it to a sports team that “stops halfway through their victory lap to fire the coach” – no one thinks that’s the way it works. And given that Sebelius was just days ago committing to staying through November to see the next round of implementation through, only the most severe partisan is going to believe this wasn’t a step taken through the lens of 2014. Even the media frame on this from the ][http://vlt.tc/1e5b”>New York Times, of all places, is “Sebelius Resigns After Troubles Over Health Site”. And that’s the truth.

— Benjamin Domenech



The Census Bureau, the authoritative source of health insurance data for more than three decades, is changing its annual survey so thoroughly that it will be difficult to measure the effects of President Obama’s health care law in the next report, due this fall, census officials said.

The changes are intended to improve the accuracy of the survey, being conducted this month in interviews with tens of thousands of households around the country. But the new questions are so different that the findings will not be comparable, the officials said.

An internal Census Bureau document said that the new questionnaire included a “total revision to health insurance questions” and, in a test last year, produced lower estimates of the uninsured. Thus, officials said, it will be difficult to say how much of any change is attributable to the Affordable Care Act and how much to the use of a new survey instrument. …

“We are expecting much lower numbers just because of the questions and how they are asked,” said Brett J. O’Hara, chief of the health statistics branch at the Census Bureau.

With the new questions, “it is likely that the Census Bureau will decide that there is a break in series for the health insurance estimates,” says another agency document describing the changes. This “break in trend” will complicate efforts to trace the impact of the Affordable Care Act, it said.

A major goal of the law is to increase the number of people with health insurance. The White House reported that 7.5 million people signed up for private health plans on the new insurance exchanges and that enrollment in Medicaid increased by three million since October. But the administration has been unable to say how many of the people gaining coverage were previously uninsured or had policies canceled, so the net increase in coverage is unclear.

Health policy experts and politicians had been assuming that the Census Bureau would help answer those questions when it issued its report on income, poverty and health insurance, based on the Current Population Survey. The annual report shows the number of people with various kinds of health insurance and the number of uninsured for the nation and for each state.

SOURCE: New York Times


A recent survey of 148 insurance brokers shows that ObamaCare is sending premiums rising at the fastest clip in decades.

“For the last, about, five years they’ve been doing this survey, so this was the largest percentage increase in any quarter since they’ve been doing (it),” said Scott Gottlieb of the American Enterprise Institute.

“But at 12 percent, 11 percent increase on average across all the states – that puts it at the upper end of any increase we’ve seen for decades.”

That is the national average in a survey done by Morgan Stanley. But in some states, it found rates are soaring.

“There are specific states with exorbitant increases,” Gottlieb said. “Delaware had 100 percent increase, Florida had a 37 percent increase, Pennsylvania 28 percent increase, California had a 53 percent increase in their premiums.”

Rates vary widely, often depending on the state and how highly regulated it was to begin with. Analysts, however, say the main reasons for the higher costs are not medical inflation, but rather the requirements of ObamaCare itself.

“There are certain regulations and certain requirements that had to be in there. And because of that it’s driven up the costs of these benefits,” said John DiVito of the Flexible Benefit Service Corporation, which represents hundreds of agents. Rate hikes include ten essential health benefits along with more than 20,000 pages or regulations.

The reported hikes are for the first policies issued under ObamaCare in 2014.

The Congressional Budget Office or CBO issued a report Monday saying the average premium for the silver plan this year will be $3,800, or just over $300 a month, rising to $4,400 in 2016, 15 percent below its earlier estimates in 2009.

Those early, higher estimates make costs now look better – but that does not include deductibles of as much as $5,000.

SOURCE: Fox News


Health-insurance premiums for plans sold on the Affordable Care Act’s exchanges will be lower than previously expected, according to a report released Monday by the Congressional Budget Office.

The findings, by Congress’s nonpartisan spending analysts, result largely from the fact that insurance companies have redesigned plans on the government-run exchanges to shave costs. CBO found that individual policies on those marketplaces have narrower networks of doctors and lower reimbursement rates for health-care providers than is typical of employer-sponsored health plans.

As a result, CBO expects the federal government to spend about $165 billion less over the next decade on subsidizing health-insurance plans for lower earners than the office projected two months ago. Total spending on those subsidies is projected at $1.032 trillion between 2015 and 2024. The report was part of a broader federal spending update released Monday.

The health law’s impact on insurance premiums is one of the most closely followed aspects of President Barack Obama’s signature domestic achievement. Within weeks, actuaries who set premiums for health plans are due to start filing next year’s rates, giving more insight into what consumers could pay for plans next year.

CBO still sees premiums rising over the next decade, but not as significantly as it had previously expected, particularly in the next few years. The office didn’t offer specific projections for rates. Instead, it focused on how lower-than-expected premiums would reduce the tax subsidies for plans, since those are pegged to the cost of policies.

See the rates for health plans available through HealthCare.gov, the federal insurance exchange.

The office said the average size of a federal subsidy for each enrollee getting one in 2015 will be $4,250, rather than $5,330. In 2024, that will increase to $7,170, instead of $8,370, according to the new projections.

SOURCE: Wall Street Journal


Proponents of the Affordable Care Act (ACA) insist that the law will extend health insurance to millions, expand access to health care, and improve Americans’ overall health. But, as the New York Times recently reported, at least 20 percent of the new enrollees have not paid their premiums. They therefore do not really have insurance. But even for those enrollees paying premiums, having health insurance is not the same thing as getting good health care, or any health care. In fact, it doesn’t matter how many Americans obtain insurance under the ACA. Most will have difficulty finding a physician.

Many Americans could lose their employer-provided insurance if firms decide that paying the ACA penalty–and maybe giving small raises to their employees–is cheaper than offering health insurance as a benefit of employment or reduce workers’ hours (the ACA does not mandate coverage for part-time employees). These newly uninsured workers will either have to enroll in Medicaid, if their income is low enough, or purchase a plan on one of the state and federal insurance exchanges. Those eligible for exchange subsidies may end up better off economically as their premiums will be so low, but both the exchange and Medicaid options are fraught with problems.

States are already struggling under huge budget deficits from their existing Medicaid programs. Since states lose federal funding if they adjust their Medicaid eligibility guidelines, their only option for reducing deficits is to cut already-low Medicaid reimbursement rates. Physicians are already reluctant to treat Medicaid patients under current rates that are a fraction of private and Medicare rates. Cutting reimbursements will exacerbate the physician-access problem and could lead to closures of so-called “safety-net” hospitals that care for many of the poor and uninsured. These hospitals have long depended on federal Disproportionate Share (DSH) payments to offset the cost of caring for the uninsured. But the ACA severely cuts DSH payments on the assumption that the uninsured will gain either Medicaid or private insurance. If large numbers of patients remain uninsured, safety net hospitals’ financial difficulties will be compounded by their obligation to provide uncompensated care.

Those who do get coverage through the exchanges and pay their premiums will also struggle to get medical care. The ACA requires insurers to accept every patient regardless of risk, provide expansive benefits packages, and eliminate caps on lifetime benefits. Looking to control costs, most insurers are offering exchange plans that severely limit the number of doctors and hospitals patients can visit. Some state exchanges–including New York’s–don’t offer a single plan that covers visits to out-of-network doctors or hospitals. Many people will not be able to see the physicians who have treated them for years, use facilities providing the most appropriate treatment, or access care within a reasonable time and distance from their homes. Some specialty hospitals have been excluded from all exchange plans.

If this scenario sounds familiar, it’s because we’ve seen it before, during the failed managed-care experiment of the 1990s. Patients and physicians quickly became disenchanted with the restrictions and bureaucratic complexity of Health Maintenance Organizations (HMOs). At least patients had options then. They could avoid HMO restrictions by buying broader, more expensive insurance plans. Many plans available now on the state exchanges are highly restrictive, HMO-like networks.

SOURCE: City Journal


A free market alternative for public employees begun here has the potential to save taxpayers billions of dollars nationwide and revolutionize the way Americans pay for their health care.

Devon Herrick, global health policy fellow at the National Center for Policy Analysis in Dallas, told Oklahoma Watchdog.org the agreement for the Surgery Center of Oklahoma to provide lower cost medical procedures to Oklahoma County employees is innovative and potentially revolutionary.

“The bottom line is taxpayers (and employers) desire to get value for what it spends on health benefits,” Herrick said. “The best way to do that is to align the incentives of workers and taxpayers (and employers). Consumers will seek out these bargains if they are given the appropriate incentives and the tools to do so.”

The Surgery Center drew national attention two years ago, when it became the first hospital group in the country to set and disclose to patients the cost of each of its medical procedures.

Prices for Surgery Center procedures are generally a fraction of those of competing hospitals that bill through traditional health insurance.

Watchdog.org recently calculated the cost of 10 surgeries through late March at the Surgery Center at a total of $58,565. Comparable cost at other hospitals for those 10 procedures would have been over $200,000.

Should hospitals across the country offer competitive pricing to local, county and state employees with health care coverage underwritten by taxpayers, the cost savings could be in the billions of dollars.

SOURCE: Watchdog


Nicholas Bagley and I have been debating whether the Independent Payment Advisory Board should play a role in the Senate’s consideration of Sylvia Mathews Burwell’s nomination to replace Kathleen Sebelius as Secretary of Health and Human Services. Congress ostensibly created IPAB to do what Congress itself seems unable to do: cut Medicare spending. (Critics therefore call IPAB a “death panel,” but one could just as defensibly call it a “life panel.”) It’s bad enough that Congress would create a super-legislature with the power to set government spending levels. But IPAB is so much more. Whether by design or by accident, IPAB can impose taxes, appropriate funds, and ration care – with virtually no oversight from Congress, the president, the courts, or voters. As HHS Secretary, Burwell could come to wield IPAB’s sweeping powers unilaterally. I want to take another stab at explaining why Bagley and I approach this question differently, as well as highlight an aspect of it he may have overlooked.

Bagley writes, “If you want to fight over IPAB, fine. But it has nothing – nothing – to do with Burwell,” because “Burwell will never exercise IPAB’s powers.” The first quotation is objectively untrue, and the second is most likely false. ObamaCare makes the Secretary of Health and Human Services a voting member of IPAB. Moreover, if confirmed, Burwell will likely exercise enough of IPAB’s powers on her own to give senators ample reason to question her views on how IPAB should go about its business.

What Bagley should have said is that it is unlikely Burwell would exercise IPAB’s most sweeping powers. ObamaCare grants the Secretary unilateral power to tax and spend and ration care only if Medicare spending grows above a certain rate, and only [if] IPAB fails to exercise those powers itself for some reason – for example, if the president hasn’t appointed or the Senate hasn’t confirmed any appointed members, which happens to be the case. Experts think it is unlikely that we will see the surge in Medicare spending that would trigger all of IPAB’s powers.

But that is not equivalent to saying that IPAB’s most sweeping powers will never fall into Burwell’s hands. Yes, the experts say Medicare spending is unlikely to grow at the rate necessary to make that happen. But the recent slowdown in Medicare spending growth took the same experts by surprise. So who knows? What Bagley means is that the probability that Burwell would exercise IPAB’s powers is very small.

SOURCE: Forbes


Medicaid expansion is an expensive endeavor that studies show does not provide better or more-affordable health care. Many of the expansion plans that Pennsylvania legislators are considering would use federal dollars to expand the state’s Medicaid program to more people, creating new costs that the federal government may not always be willing or able to cover, leaving state taxpayers on the hook for the new liabilities.

Pennsylvania has yet to approve an expansion of Medicaid. But in September 2013, Gov. Tom Corbett released a proposal that would accept federal funds and extend Medicaid to about 500,000 individuals, who would be moved into the ObamaCare federal health insurance exchange.

Like several other programs being considered in other states, Corbett’s proposal, known as “Healthy PA,” emulates Arkansas’ premium assistance model. Under the Arkansas model, the state provides funds for those newly eligible for Medicaid to purchase private insurance through the ObamaCare insurance exchange. Medicaid recipients choosing the private option would face many of the same requirements as traditional Medicaid beneficiaries, including co-pays and a premium-sharing requirement. Participants would be required to pay a portion of their premiums, up to $35 per month.

According to the Commonwealth Foundation, Healthy PA would make several changes to the state’s current Medicaid program, including a reduction in the cap on certain medical services, which would cut the funds managed care organizations use to pay doctors; a reduction in the number of benefit packages in traditional Medicaid from 14 to two; a premium-sharing requirement based on a sliding scale of $1 to $25 per month; and new co-pays for doctor visits.

SOURCE: Pittsburgh Tribune Review