Tactics and Defunding Obamacare

Published July 29, 2013

Consumer Power Report #383

We are seeing a tactical failure on the part of Republicans in Congress when it comes to the most recent push to defund Obamacare. Witness the reaction of Sen. Tom Coburn, Obamacare opponent and no fiscal squish, to the latest charge of the Light Brigade. Coburn’s reaction is a sign that defunders have pushed too far, overpromising to their constituents and choosing poor ground for their fight. Some Senators who signed on to Sen. Mike Lee’s defunding letter were never going to vote for any continuing resolution (CR) – but if people get too wedded to the idea that they can block something they clearly don’t have the votes to sustain, a deal will result with Senators McCain and Burr and a dozen other Republicans in the Senate to replace the language of a House-passed continuing resolution, and Speaker Boehner will get it through with Democratic votes to keep us from defaulting. That’s the end-game.

That said, Republicans can and should adopt a strategy where full-defunding is simply an opening gambit rather than a final demand. This is a disagreement about tactics, not aim – the vast majority of Republicans are committed to repeal, but know it’s impossible before 2017 – so the endeavor is about optics, not policy. Focus the issues on spending. You can start big and go smaller – passing a continuing resolution with a Balanced Budget Amendment and Obamacare defunding to emphasize the spending side and the costs of implementation; then one with a delay of all 2014 provisions, emphasizing the lack of protections to prevent fraudulent access to taxpayer subsidies; then one with just a one-year delay of the individual and employer mandates … half of which the administration is already doing anyway. The White House is delaying for employers but not individuals? Even the worst populist can make this argument, where the White House’s policy is unpopular even with Democrats.

Will this strategy result in a delay? Probably not, but that’s not the real aim, which is softening the ground for full repeal, emphasizing the uncertainty of the law’s implementation, and using this can-kicking CR exercise to make a clear point: that it’s the president’s hubris driving implementation of a law no one – not even its implementers in blue states – think is ready for prime time. In his own words:

And if Congress thinks that what I’ve done is inappropriate or wrong in some fashion, they’re free to make that case. But there’s not an action that I take that you don’t have some folks in Congress who say that I’m usurping my authority. Some of those folks think I usurp my authority by having the gall to win the presidency. And I don’t think that’s a secret. But ultimately, I’m not concerned about their opinions – very few of them, by the way, are lawyers, much less constitutional lawyers.

It’s worth remembering that tactical miscalculation has no partisan bent (see the most recent and most significant miscalculation from the White House, on sequestration). We have every indication that Obama has the utmost confidence in the permanence of his law and sees the repeal, defund, and delay efforts as merely childish screams. But in the context of the midterm elections, Obama may have underestimated the difficulties he has created for his party through his implementation efforts. Were he more willing to wheel and deal, it’s possible he could’ve kicked the can to next year, had a smoother implementation, and given himself better odds of retaining the Senate. Instead he’s pressing ahead with single-minded purpose, effectively giving up on accomplishing anything else legislatively in his second term, even as non-partisans like the HHS general counsel say in no uncertain terms that the law isn’t ready to go live.

I have been dismayed, but unsurprised, to see that the Department of Health and Human Services (HHS) is already spinning the launch of its federal health insurance exchange this October. The federal and state “exchanges” – HHS recently rebranded them “marketplaces” – are a linchpin of the Affordable Care Act (ACA) that would allow uninsured Americans to assess and select health insurance plans. Repeated HHS assurances that the systems will be ready for launch have been a critical factor in state decisions as to whether they should use the HHS portal or build their own; at least 14 states have wisely chosen to build their own systems.

A functional and legally compliant federal exchange almost certainly will not be ready on October 1 for those who will have no choice but to use the federal portal. The reasons for failure are not short timelines (Congress gave HHS more than three years), political interference (Congress has not focused on ACA systems), or complexity (states have built well-designed exchanges). The reason is plain old incompetence and arrogance.

Arrogance that can be exploited, but only if Obamacare opponents do so in a savvy manner, not in a foolish gambit.

— Benjamin Domenech



This is interesting:

One major problem is the so-called Independent Payment Advisory Board. The IPAB is essentially a health-care rationing body. By setting doctor reimbursement rates for Medicare and determining which procedures and drugs will be covered and at what price, the IPAB will be able to stop certain treatments its members do not favor by simply setting rates to levels where no doctor or hospital will perform them.

There does have to be control of costs in our health-care system. However, rate setting – the essential mechanism of the IPAB – has a 40-year track record of failure. What ends up happening in these schemes (which many states including my home state of Vermont have implemented with virtually no long-term effect on costs) is that patients and physicians get aggravated because bureaucrats in either the private or public sector are making medical decisions without knowing the patients. Most important, once again, these kinds of schemes do not control costs. The medical system simply becomes more bureaucratic.

The nonpartisan Congressional Budget Office has indicated that the IPAB, in its current form, won’t save a single dime before 2021. As everyone in Washington knows, but less frequently admits, CBO projections of any kind – past five years or so – are really just speculation. I believe the IPAB will never control costs based on the long record of previous attempts in many of the states, including my own state of Vermont.

If Medicare is to have a secure future, we have to move away from fee-for-service medicine, which is all about incentives to spend more, and has no incentives in the system to keep patients healthy. The IPAB has no possibility of helping to solve this major problem and will almost certainly make the system more bureaucratic and therefore drive up administrative costs.

To date, 22 Democrats have joined Republicans in the House and Senate in support of legislation to do away with the IPAB. Yet because of the extraordinary partisanship on Capitol Hill and Republican threats to defund the law through the appropriations process, it is unlikely that any change in the Affordable Care Act will take place soon.

The IPAB will cause frustration to providers and patients alike, and it will fail to control costs. When, and if, the atmosphere on Capitol Hill improves and leadership becomes interested again in addressing real problems instead of posturing, getting rid of the IPAB is something Democrats and Republicans ought to agree on.

SOURCE: Wall Street Journal


A growing trend:

Fewer American doctors are treating patients enrolled in the Medicare health program for seniors, reflecting frustration with its payment rates and pushback against mounting rules, according to health experts.

The number of doctors who opted out of Medicare last year, while a small proportion of the nation’s health professionals, nearly tripled from three years earlier, according to the Centers for Medicare and Medicaid Services, the government agency that administers the program. Other doctors are limiting the number of Medicare patients they treat even if they don’t formally opt out of the system.

Even fewer doctors say they will accept new Medicaid patients, and the number who don’t participate in private insurance contracts, while smaller, is growing – just as millions of Americans are poised to gain access to such coverage under the new health law next year. All told, health experts say the number of doctors going “off-grid” isn’t enough to undermine the Affordable Care Act, but they say some Americans may have difficulty finding doctors who will take their new benefits or face long waits for appointments with those who do.

CMS said 9,539 physicians who had accepted Medicare opted out of the program in 2012, up from 3,700 in 2009. That compares with 685,000 doctors who were enrolled as participating physicians in Medicare last year, according to CMS, which has never released annual opt-out figures before.

Meanwhile, the proportion of family doctors who accepted new Medicare patients last year, 81%, was down from 83% in 2010, according to a survey by the American Academy of Family Physicians of 800 members. The same study found that 4% of family physicians are now in cash-only or concierge practices, where patients pay a monthly or yearly fee for special access to doctors, up from 3% in 2010.

A study in the journal Health Affairs this month found that 33% of primary-care physicians didn’t accept new Medicaid patients in 2010-2011.

SOURCE: Wall Street Journal


California shifts to part-time call center:

In order to ensure Americans understand how to access the benefits available to them when many provisions of the Affordable Care Act go online October 1, the Obama administration announced last month that it is setting up a call center that will be accessible to Americans 24 hours a day.

One branch of that call center will be located in California’s Contra Costa County, where, reportedly, 7,000 people applied for the 204 jobs. According to the Contra Costa Times, however, “about half the jobs are part-time, with no health benefits – a stinging disappointment to workers and local politicians who believed the positions would be full-time.” The county supervisor, Karen Mitchoff, called the hiring process “a comedy of errors” and said she “never dreamed [the jobs] would be part-time.”

The Times indicates that a job posting advertised all of the jobs as full-time, and one call center employee, who said no reason for the apparent change was provided, told the paper, “It reminded me of that George Clooney movie where he goes around the country firing people [Up in the Air]. The woman said, ‘I know you were led to believe you would be full-time, but things have changed. … You are actually ‘part-time intermittent.'”

SOURCE: National Review Online


Not actually participate:

IRS employees have a prominent role in Obamacare, but their union wants no part of the law.

National Treasury Employees Union officials are urging members to write their congressional representatives in opposition to receiving coverage through President Obama’s health care law.

The union leaders are providing members with a form letter to send to the congressmen that says “I am very concerned about legislation that has been introduced by Congressman Dave Camp to push federal employees out of the Federal Employees Health Benefits Program and into the insurance exchanges established under the Affordable Care Act.”

The NTEU represents 150,000 federal employees overall, including most of the nearly 100,000 IRS workers.

Like most other federal workers, IRS employees currently get their health insurance through the Federal Employees Health Benefits Program, which also covers members of Congress.

House Ways and Means Committee Chairman Dave Camp offered the bill in response to reports of congressional negotiations that would exempt lawmakers and their staff from Obamacare.

“Camp has long believed every American ought to be exempt from the law, which is why he supports full repeal,” Camp spokeswoman Allie Walker said.

“If the Obamacare exchanges are good enough for the hardworking Americans and small businesses the law claims to help, then they should be good enough for the president, vice president, Congress and federal employees,” she also said.

SOURCE: Washington Examiner


Employer dumping, bankruptcy edition.

As Detroit enters the federal bankruptcy process, the city is proposing a controversial plan for paring some of the $5.7 billion it owes in retiree health costs: pushing many of those too young to qualify for Medicare out of city-run coverage and into the new insurance markets that will soon be operating under the Obama health care law.

Officials say the plan would be part of a broader effort to save Detroit tens of millions of dollars in health costs each year, a major element in a restructuring package that must be approved by a bankruptcy judge. It is being watched closely by municipal leaders around the nation, many of whom complain of mounting, unsustainable prices for the health care promised to retired city workers.

Similar proposals that could shift public sector retirees into the new insurance markets, called exchanges, are already being planned or contemplated in places like Chicago; Sheboygan County, Wis.; and Stockton, Calif. While large employers that eliminate health benefits for full-time workers can be penalized under the health care law, retirees are a different matter.

“There’s fear and panic about what this means,” said Michael Underwood, 62, who retired from the Chicago Police Department after 30 years and has diabetes and Parkinson’s disease. Mr. Underwood, who says he began working for the city when employees did not pay into future Medicare coverage, is part of a group suing Chicago over its plan to phase many retirees out of city coverage during the next three and a half years. “I was promised health care for myself and my wife for life,” he said.

Unfunded retiree health care costs loom larger than ever for localities across the country, and the health law’s guarantee of federal subsidies to help people with modest incomes afford coverage has made the new insurance markets tantalizing for local governments. A study issued this year by the Pew Charitable Trusts found 61 of the nation’s major cities wrestling with $126 billion in retiree health costs, all but 6 percent of that unfunded.

“The Affordable Care Act does change the possibilities here dramatically,” said Neil Bomberg, a program director at the National League of Cities. “It offers a very high-quality, potentially very affordable way to get people into health care without the burden falling back onto the city and town.”

But if large numbers of localities follow that course, it could amount to a significant cost shift to the federal government. Authors of the health care law expected at least some shifting of retirees into the new insurance exchanges, said Timothy S. Jost, a law professor at Washington and Lee University who closely follows the law. “But if a lot of them do, especially big state and local programs,” he said, “that’s going to be a huge cost for the United States government, and it’s mandatory spending.”

SOURCE: New York Times


The end of the 40-hour work-week continues:

White Castle is considering hiring only part-time workers in the future because of fears Obamacare will impose detrimental costs on its business, Vice President Jamie Richardson said in an interview with HuffPost Thursday …

The 2010 Affordable Care Act requires large employers to provide health benefits to full-time employees or face financial penalties. This employer mandate, a critical component of Obama’s health care reform, was delayed until 2015 earlier this month

White Castle employs around 9,600 workers nationwide and about half work full-time. Roughly 80 percent of White Castle’s full-time employees opt in to the company’s current health care plan and the company spends four to five times more in health care than it makes in net income annually, Richardson said.

The company’s high retention rate when it comes to participants in its health care plan is why it assigns such a large value to its increased costs due to Obamacare, he said. White Castle also does not foresee its health care enrollment numbers to go down significantly once Obamacare is implemented.

Many other restaurant chains that also first feared the health law would impose substantial costs on their business have since cut initial estimates, according to the Wall Street Journal. Wendy’s, for example, cut its estimate by 80 percent, citing a belief that employees will opt not to have insurance.

Other franchises are selling off restaurants in order to avoid the mandate.

SOURCE: Huffington Post


I’ll be participating in a panel on libertarian populism at Reason magazine’s offices in Washington, DC tomorrow at 1:30 PM. I hope you’ll consider attending.

SOURCE: Reason.com