Obamacare’s an 8 out of 10, Except for States and People

Published April 9, 2015

Consumer Power Report #458

Asked to grade the performance of his signature law recently, President Barack Obama gave Obamacare an 8 out of 10.

“The reason I don’t put it at a 10 is because you can always improve something,” Obama told ABC News in an interview published Wednesday.

The White House has been more bullish lately about public acceptance of the largest overhaul to the healthcare system in decades, even as the American public remains divided about the Affordable Care Act. Polls repeatedly show that more Americans oppose the law than support it.

“Sixteen million people or more have health insurance that didn’t have it before,” Obama told ABC, adding that this is the lowest rate of uninsured Americans “since we started keeping records.”

The White House has preferred to keep the focus on the drop in the uninsured rate, deflecting GOP questions about the rising cost of healthcare and the inability of some consumers to keep their preferred coverage.

That’s quite a boldly positive grade. I wonder what kind of curve the White House is using? And do they think American citizens, who give Obamacare such poor marks, would give a similar grade if pressed? Consider the plight of Medicaid patients facing the false promise of care:

New Jersey’s Medicaid physician reimbursement rates – among the lowest in the country despite the state’s high cost of living – have long suppressed doctor participation in the program known as NJ FamilyCare.

But the decline from 46 percent to 38 percent participation rate in New Jersey may surprise lawmakers and policy makers, who anticipated President Obama’s health care law would entice more doctor interest. Obamacare raised Medicaid reimbursement rates in 2013 and 2014 to match Medicare rates.

Or consider the realities facing states, where the systems have thoroughly crashed. Would they agree with 8 out of 10?

The Shumlin administration is working with the state’s health insurance carriers to reconcile millions of dollars in billing discrepancies resulting from Vermont Health Connect’s lack of key functions.

The reconciliation process has been going on for about three weeks, according to Lawrence Miller, Gov. Peter Shumlin’s chief of health care reform. Because automated functions on the state’s online insurance exchange are not working, the state’s carriers – Blue Cross Blue Shield and MVP Health Care – have billed for millions in premiums that have not been paid.

The state has been scrambling to manually process paperwork to make up for the lack of automation on the website since its launch in October 2013. Miller said the focus has been on signing people up for coverage and helping them retain it.

“They were not necessarily processing terminations or cancellations as a very high priority,” Miller said.

Or what about taxpayers, people who are facing the deadline next week for filing who don’t have the right information? Eight out of 10 from them, too?

The government did not say how many people will be given extra time, though officials said in late March that 80,000 people were still waiting on their corrected tax forms. A total of 800,000 people had mailed the wrong forms.

“If a taxpayer receives their Form 1095-A before April 15 and is able to file using the form before the deadline, they should do so,” according to a statement from the Treasury Department released late Friday.

The delusional approach the White House has had toward Obamacare has been very consistent. They were confident in its launch. They were sure it would be a success in bringing down premiums and the deficit. They were convinced that once it arrived, people would love it. And now, even after none of that has gone as planned, they give themselves an 8 out of 10.

One wonders if they use the same policy toward internal performance reviews. It might explain a lot.

— Benjamin Domenech



A mix of business groups and labor unions are pushing to tee up the next big Obamacare fight: killing its so-called Cadillac tax.

It is, they say, the type of Obamacare “fix” that Republicans and Democrats can agree on – notwithstanding the problem of filling an $87 billion budget hole that nixing the levy would produce.

Many expect it to be the next protracted battle over Obamacare – one that threatens to become a headache for Democrats, many of whom never liked the tax despite supporting the law more generally.

It’s one of the last big parts of the Affordable Care Act to go into effect – lawmakers delayed the levy until 2018 in part because it is so controversial – but companies are wrestling with it now as they plan employee benefits. Some are already negotiating with unions over benefits that could spill into 2018.

“This is going to have a life of its own as the clock ticks closer to 2018,” said Rep. Joe Courtney (D-Conn.), a critic of the tax.

Though the nickname suggests it will apply to a select few, experts say a majority of employers could eventually face the prospect of imposing what will be the first-ever tax on health care benefits.

The IRS began last month spelling out the nitty-gritty of how exactly the tax will work, though it left out many of the details employers say they need.

At issue is a 40 percent excise tax on the health benefits companies provide their workers above a certain threshold. In 2018, the tax will hit insurance and related perks valued at more than $10,200 for singles and $27,500 for families. So for family benefits worth $30,000, the tax would apply to the $2,500 that’s above the limit.

Taxing those benefits represents a major shift in generations-old tax policy.

SOURCE: Brian Faler, Politico


When the Senate reconvenes on April 13, it will have 48 hours to pass legislation that repeals Medicare’s Sustainable Growth Rate – otherwise, physicians treating program beneficiaries will see their pay cut by 21 percent. That puts senators who have qualms with the legislation in a tight spot, pressuring them to vote on a bill they might otherwise want to spend more time debating.

While the SGR nominally went into effect on April 1, the Centers for Medicare and Medicaid Services (CMS) has thus far delayed implementing the cuts; on April 15, the center said, they will start processing payments. Senate Majority Leader Mitch McConnell (R-Ky.) said the chamber would take up the bill, H.R. 2, when lawmakers return from a two-week recess; before the chamber adjourned, Minority Leader Harry Reid (D-Nev.) stated his preference that there be “a very limited number of amendments” taken into consideration.

“Members will discuss the path forward, but we expect it will be done quickly,” Robert Steurer, a spokesman for McConnell, said in an email.

But that hasn’t stopped a handful of Senate Democrats from criticizing the bill for only funding the Children’s Health Insurance Program through fiscal year 2017. The 12 Democrats on the Senate Finance Committee said in a joint statement last month that they would like to see CHIP extended through fiscal 2019.

But extending CHIP for four years instead of two would make the bill more expensive, and some Republicans are already lukewarm about the fact that the legislation would add $141 billion to the deficit, according to an estimate from the Congressional Budget Office.

Most Senate Republicans appear willing to add to the deficit if it means repealing the SGR, but it’s still a hard pill for them to swallow, and for a select few it’s been a deal breaker. Freshman Sen. Ben Sasse of Nebraska urged his party colleagues in an op-ed to oppose the bill because it’s not fully paid for.

William Hoagland, senior vice president of the Washington-based Bipartisan Policy Center, said the pressure to pass the bill will likely preclude any amendments from garnering the 60 votes needed.

“Although I think senators will have an opportunity to vote on amendments and express their concerns, I don’t think it will change the outcome,” Hoagland said in an interview.

It is unclear whether Democrats will actually propose extending CHIP for four years when the Senate reconvenes. A Senate Democratic aide familiar with the matter said there has been “informal discussion” about offering an amendment to extend funding.

SOURCE: Jon Reid, The Morning Consult


Employers on these marketplaces may pay a certain percentage of a worker’s health care costs, as most do today. The exchanges also make it easier for employers to provide their workers with a set amount of money they can use to spend on coverage, leaving it up to employees to figure out how generous they want their coverage to be.

One concern with this approach is that employers’ contributions won’t keep up with the pace of health spending growth, though there’s no evidence yet that this has been happening in the past couple of years, according to the Kaiser Family Foundation. The research group warns, though, “it is a trend to watch for.”

The growth in these private exchanges last year was fueled by mid-sized companies with 100 to 2,500 workers, according to the Accenture report. There have been a few larger companies in recent years that have moved to private exchanges, like Walgreens and Darden Restaurants, which own chains including Olive Garden and Longhorn Steakhouse. But corporate giants haven’t really been migrating to these private marketplaces in a big way, as Reuters reported a few months ago.

That will change in the next few years, if Accenture’s predictions are right. Obamacare’s looming “Cadillac” tax on high-cost health insurance plans could drive more employers to contain their health costs if the tax isn’t altered in a significant way before the levy takes effect in 2018.

The 2010 health-care law also created similar public exchanges just for small businesses, but most of those suffered from severe technical problems in the law’s first enrollment period and have received scant interest so far. The public exchanges, known as SHOP, are available just to businesses with 50 or fewer full-time workers, but the marketplaces are set to expand next year to businesses with up to 100 employees.

SOURCE: Jason Millman, Washington Post


In a prior post, I wrote about Treasury/IRS regulations that contradict Section 36B and extend the ACA premium tax credit to some low-income unlawful aliens. In this post, I want to discuss another regulation that contradicts the statute. Although Section 36B provides tax credits only if your household income falls within a certain range (100 to 400 percent of the relevant poverty line amount), Treas. Reg. 1.36B-2(b)(6) rewrites the statute and provides credits to those who fall below the 100 percent amount.

Under the regulation, a person becomes an “applicable taxpayer” and therefore eligible for ACA tax credit if she gets health insurance on an exchange, the exchange estimates that her income falls with the 100–400 percent range, and she in fact gets advance payments, even though her annual household income is less than the 100 percent amount required by law. Being an applicable taxpayer carries significant consequences and can cause one’s employer to face severe penalties under Section 4980H. (More on that in a later post.)

It’s easy to come up with a policy supporting this re-write of Section 36B, but I can’t identify any statutory authority for doing so. Policy-wise, the regulation addresses a problem related to imperfections in the Exchange regime, under which differences between estimated household income and actual household income can lead to tax repayments. But authority-wise, Congress plainly and unambiguously limited the premium tax credit to persons who come within the 100 and 400 range; the Treasury lacks the authority to grant credits to persons outside that range.

Of course, I don’t blame the beneficiaries here. Say all you want about multinationals or private equity managers lobbying hard to get special tax breaks, but I don’t think that our country’s poorest persons somehow banded together and lobbied the IRS to give away the store.

Still, as a legal matter, Treas. Reg. 1.36B-2(b)(6) reflects a disturbing rule. Although the regulation contemplates that an “exchange” will estimate your income, the exchange does so with user-provided information. Consequently, the regulation encourages taxpayers who are below the statutory minimum of 100 percent to inflate their income, especially if they aren’t eligible for Medicaid. Unscrupulous tax advisors or enrollment counselors might also instruct taxpayers to game the system and get free tax credits. This is reminiscent of the EITC regime, where phantom income can be used to abuse the tax system.

The regulation also encourages inappropriate behavior because it turns low-income persons into “applicable taxpayers” only if advance payments are actually made. Usually, taxpayers can get premium tax credits in the form of either advance payments or refundable tax credits. But the regulation rewards those who inflate their income at enrollment time and offers no benefits for the cautious taxpayers who wants to claim a credit only at the end of the year.

SOURCE: Andy Grewal, Yale Journal on Regulation


Among the sophisticates it’s fashionable to despair over American progress against cancer, but the reality is that every year medicine makes steady and durable gains. On Monday the National Cancer Institute and other researchers published new findings on cancer’s incidence and death rate in the U.S. over the last decade that show better outcomes and longer lives.

The mortality rate fell 1.5% a year on average for all cancers from 2002 to 2011, while new cases of cancer dropped 0.5% a year over the same period. Improvements were notched for men, women and children, and across nearly all forms of cancer, especially the deadliest types of the lungs, breasts and colon. These remarkable trends have been relatively stable since the early 1990s and in some cases date to the 1970s.

In an important intellectual development, the official registries and statistics are beginning to reflect a more profound medical understanding of cancer, or rather cancers, which are genetic mutations that are now less and less defined by the tissues of the body where they develop.

Breast cancer is no longer tracked as a single disease but by its four major molecular subtypes that are approximated by hormone receptor status and expression of the HER-2 gene. Women with these subtypes have different risks and respond differently to treatments. For the first time, oncology researchers can now study breast cancers on a more accurate and granular level, which potentially could lead to more precise and better therapies targeted at specific cells.

This arrow of progress is a tribute in part to life-saving prevention like early diagnosis and less smoking. Congress deserves credit too for funding basic scientific research. But above all the U.S. has maintained a market for medicine that encourages experimentation and rewards innovation, even in the era of ObamaCare and despite the rigid and controlling drug-approval bureaucracy. Modern medicine is still allowed to advance at a much faster pace than government, thank goodness.

SOURCE: The Wall Street Journal