Category Archives: Obamacare

Daugaard may want to read this CBO report before expanding Medicaid

One of the key parts of Governor Daugaard’s budget address was the recommendation to expand Medicaid in South Dakota. I mostly oppose this move because it will increase the federal debt and reduce the purchasing power of all Americans. There are other reasons to oppose Medicaid expansion however. The CBO has just released a report showing the negative impacts of ACA (Obamacare) on the labor market. This report offers further reason for not expanding Medicaid in South Dakota.

ACA overall impact on the labor market

Before looking at the impact of Medicaid expansion is might be worth taking a moment to see how CBO estimates ACA as a whole will impact the labor market over the next decade. Specifically the exchange subsidies will negatively impact the job market. The report estimates that over the next decade about 2 million jobs will be lost due to ACA. Most of that loss due to health insurance expansions.

This from the report:

Both kinds of subsidy increase the resources of recipients, reducing work incentives through the income effect. In addition, the subsidies decline as income increases, reducing the return on earning additional income. That decline is effectively an increase in recipients’ effective marginal tax rate, so it generally reduces their work incentives through the substitution effect. CBO also expects that the subsidies, by reducing the burden of unemployment, will create additional work disincentives for people who are unemployed for part of the year

Basically the subsidies create even more regressive income tax brackets, making it very hard for people to do better for themselves financially. I know many proponents of the current income tax brackets say it is progressive and that it helps the poor. Yet after working in a tax office for a number of years now I can say that a progressive income tax system (especially accounting for EITC) does disincentivize many taxpayers. People will suddenly have a good year where they can pay their bills and have a little left over, only to find out they went up a tax bracket and may have actually gone backwards. ACA is going to amplify that problem with the current regressive income tax brackets.

Medicaid Expansion

The number of people who have a disincentive from working due to Medicaid expansion is lower than those with a disincentive due to subsidies, but it still a large amount. CBO estimates that expanding Medicaid will decrease the labor supply earnings over the next decade by 0.05% overall (compared to the labor supply earnings decrease of 0.43% due to subsidies). Most of this reduction in labor force will come from the newly eligible Medicaid enrollees. Since this is lower-income labor being talked about, that 0.05% of labor supply earnings translates to a reduction in the labor force by about 4%; which in turn means a 0.03% decrease in the labor supply (measured by compensation) due to newly eligible Medicaid enrolees.

Medicaid expansion provides the same disincentive to work that the progressive tax brackets create. That is why of the labor supply lost due to Medicaid expansion will occur for people who are newly qualified because of the law change. Medicaid expansion may on paper sound like a way to help poor people. But it almost appears that Medicaid expansion is nothing but a way to keep people from trying to do better for themselves financially.  Hopefully Governor Daugaard and the SD legislature will take this into account when discussing Medicaid expansion during the 2016 session.

All ACA effects on supply of labor

Before I end this post it is worth looking at one chart. This shows the various portions of ACA that the CBO estimates will negatively impact labor supply (as a percentage change in earnings). Notice that overall ACA will possibly cost almost 1% of labor participation earnings.

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Now the HHS wants to choose the health insurance plan for those auto-renewing on the exchange?

Proponents of ACA (Obamacare) have often said that this is not a government takeover of healthcare. Of course there have also been other untruths such as bringing the cost of healthcare down and being able to keep your doctor. Technically proponents of ACA may be correct in one aspect, this is not a direct takeover of healthcare, but rather an attempt to directly take over the healthcare insurance industry. Of course controlling the money that flows into the healthcare industry can been seen as a default attempt to take the industry over.

What would happen if the Department of Health and Human Services (HHS) decided it was their job to pick the plans of people re-enrolling themselves on the exchange? That is what they are proposing in new regulations recently released. Current law allows exchange enrollees in most states auto-renew their plan each year with the same plan. The proposed change would allow HHS to switch the default option and let HHS choose the best plan for them upon re-enrolling. Why would HHS want this power? Here is what Charles Hughes over at CATO has to say:

In one sense, it is not surprising that HHS is at least exploring this option. Automatic renewal presents a host of potential problems.

Due to the way the law designed the exchange subsidies, many of these people will end up paying significantly more if they automatically renew. An analysis by the New York Times found that people in the most popular plans would face an average premium increase of 9.5 percent. This could end up affecting millions of people, as a recent Gallup poll found that 68 percent of respondents said they planned to renew their current plan.

This would be a way for the HHS to artificially make it seem exchange prices are staying low for those enrolled. It would also potentially cause problems for those very same people when going to a doctor and suddenly find out they are on a lower plan that no longer covers their doctor of preference. That isn’t quite the same as government takeover of healthcare, but it sure is close enough to cause some serious havoc to people’s lives. Of course the HHS doesn’t have to worry about how they are impacting people’s lives; instead the HHS only has to make it look like they are doing things that will theoretically help people.

So no, this is not technically a takeover of healthcare. It is actually worse. It is intervention without regards to how it impacts people’s lives.

PS. Somewhat related. Remy over at Reason.tv released this video a couple of weeks ago in response to Obamacare architect Jonathan Gruber saying the American people are too stupid to explain truths about Obamacare.

Apparently I’m supposed to do a Hobby Lobby post

For the last day my inbox has been filling up from some people wondering why I haven’t done a post on the Hobby Lobby SCOTUS decision. Or as one emailer puts it: “the beginning of the end for Obamacare”. Well, simply put, the SCOTUS decision is far from a victory. In the end the decision really did nothing and is not worthy of much time.

To keep this post short and free up time for more important topics I’ll just pass on a quick bullet list of what the Hobby Lobby decision means:

  • This decision was not a victory against Obamacare. The contraception requirement comes from the HHS as a regulation. It does not directly come from the text of ACA.
  • Hobby Lobby wasn’t even trying to get an exemption from the whole contraception requirement. They really only wanted to stop the requirement to pay for certain UID’s and day-after pills.
  • Very few companies will actually be able to apply this very narrow and specific exemption. Even fewer will bother trying.
  • The decision undermines anyone trying to show the mandates are unconstitutional. By showing targeted exemptions can be created, SCOTUS is actually saying the ability of the government to mandate purchases is constitutionally sound.
  • Every conversation about the Hobby Lobby case seem to end up with the “War on Women”. I fail to see how companies not wishing to pay for contraceptives is a war on women. To me the bigger war on women is the regulators that won’t allow certain birth control methods to be used without a doctor’s note.
  • Every conversation about Hobby Lobby also seems to end up talking about Viagra, and why it should be covered by insurance. This issue actually has some legs, but not because of the war on women thing. Instead it is thanks to Viagra being covered back in the 90’s that insurance companies were being forced to cover contraceptives. Personally I think neither should be mandated or taxpayer subsidized.
  • This decision did nothing to make corporations have the same rights as people. Actually if anything the decision removed the rights of Corporate owners to collectively use their rights; unless they fit into an ambiguous ‘closely held’ category of corporation.

I could probably keep going with the bullet points. But why bother. In the long-term this SCOTUS decision will impact very little. The decision was too narrowly targeted and failed to actually address any true constitutional question.

There, now that post is out of the way. By the way, those of us living in Aberdeen will have a Hobby Lobby in the future.

PS. How about a good Remy video about Cough Drop Mandates!

I can renew my non-compliant health plan through 2016

nohcgovToday South Dakota Governor Dennis Daugaard made an announcement that many of us should be cheering on. This from the press release:

Gov. Dennis Daugaard announced today that the State will allow insurers to renew existing insurance plans for individuals and small groups, regardless of whether the plans comply with the provisions of the federal Affordable Care Act.

The decision will allow insurers to renew existing “non-compliant” insurance plans on or before Oct. 1, 2016, for individuals and for groups with 51 to 100 employees.

This is great news. I am one of the many consumers who is self-employed and purchases health insurance directly for my family. According to the press release this ability to renew non-compliant health plans will impact over 83,000 people in South Dakota; and potentially save them over $70,000 in the next two years.

I’ve heard many supporters of ACA say the plans on the exchange are ‘cheaper’. I would downright refute that claim. Even with the increased costs of my ‘non-compliant’ plan caused directly from ACA, I still am able to get cheaper insurance by keeping my current plan that I like. Here is the math I am using to come to this conclusion:

Current Monthly premium for my non-compliant (yet best suited to me) plan: $592.30

Monthly premium for the cheapest plan closest to my current coverage on the South Dakota Healthcare Exchange: $847.00

Increased premium cost per month: $254.70

Increased premium cost per year: $3056.40

I can’t speak for other people, but I can definitely say my budget is not flexible enough to spend another $3,000 a year for a plan that is less tailored to my families needs. There are plans that are cheaper. But after researching them I found I would lose some specialists doctor options I have with my current plan. The specialist options in my current plan has more flexibility in where I can go; which is very important because I have two family members with serious pre-existing conditions.

That is the other thing that gets tiring to hear about from the pro-ACA crowd. A big part of ACA was getting people with pre-existing conditions to be accepted by insurers. I can attest that plans did exist before that allowed for these family members to be covered (I did have to make sure we never lapsed coverage or risk losing coverage for that condition). A huge law passed by legislators (that didn’t understand what was in the law) was not the best way to tackle insurance companies denying customers because of pre-existing conditions. There were, and still are, other solutions available.

Ironically the plan I have now was considered high-cost (for its coverage) has now become a low-cost plan compared to alternatives provided through the Healthcare Exchanges. The only problem I see in the short-term is that I don’t think Wellmark will keep my non-compliant policy around for more than two years. The healthcare exchanges are money-makers for the big insurance companies. It really doesn’t make financial sense for them to keep an old policy around when they can use the coercive force of the federal law to charge more money for ‘better’ plans. I guess I’ll have to cross that bridge when I get to it.

PS. I haven’t posted enough songs lately. Here is Remy on the promise that people can keep their plan:

Latest Remy song shows how the new healthcare law is impacting employment

It’s time again for another Remy song. This one shows how the new healthcare law has impacted the employment situation in the United States.

Well, I can’t very well post that video without including Dolly Parton’s original song. Here is a great fan video of Nine to Five I found on YouTube:

And I can’t end this post without doing at least one more Remy video. This song was released by Remy a couple of years ago, but with the so-called fiscal conservatives in DC faltering and raising the debt ceiling I believe it is worth resurrecting this tune:

Where will the Canadians flee for healthcare once Obamacare has destroyed our healthcare system?

johnny_automatic_runningThe Ludiwig von Mises Institute of Canada has an interesting post mentioning that tens of thousands of Canadians go outside of their country for healthcare.  As we continue to implement Obamacare it is important to keep in mind what has happened in Canada and ask ourselves if we want  doctor shortages and waiting lines in the United States.

This from the blog post:

To deal with these shortages and long lines, nearly 42,000 Canadians opted to pay for their own operations by fleeing the country to seek services elsewhere. Waiting times for patients who had consulted with specialists increased to 9.6 weeks in 2013, up from 9.3 weeks the previous year. As the Fraser Institute recently reported , sick Canadians have fled the country to avoid “the consequences of waiting for care such as worsening of their condition, poorer outcomes following treatment, disability or death. And some may have done so simply to avoid delay and to make a quicker return to their life.”

As the United States continues to implement Obamacare it is important to decide if we want to continue down the path of centrally controlled healthcare. Actually this post from the Ludiwig von Mises Institute of Canada brings up another unintended consequence of Obamacare: where will Canadians go for quality and timely healthcare once Obamacare has destroyed the United States healthcare system? Hopefully we can get rid of ACA before we need to find out the answer to that question.

To end this post I will include a portion of the Fraser Institute report mentioned above:

That a considerable number of Canadians traveled and paid to escape the well-known failings of the Canadian health-care system speaks volumes about how well the system is working for them. It leaves open the question of just how many more Canadians might choose medical tourism outside Canada if given the opportunity.

Is that a statement we want said about the US healthcare system in a few years?

A closer look at the ACA reinsurance tax and the Union Tax Fairness Act

scales-of-justiceTwo days ago Senator Thune’s office sent out a press release about the Obama administration’s proposed rule to exempt Unions from the reinsurance tax. For those unfamiliar with the reinsurance tax here is a brief definition from the press release:

The ObamaCare reinsurance tax is scheduled to begin in 2014 and requires all self-insured plans to pay a tax for each person covered under a health plan. The tax was designed to provide funds to health care plans in the ObamaCare exchanges to help absorb the cost of care for people with pre-existing conditions.

Many Unions utilize what is known as Taft-Hatley plans. Taft-Hatley plans are multi-employer and usually industry specific. These plans are great for union workers that change employers often due to nature of their work. These plans also happen to be administered between the union and the employers; no third-party is usually involved. The lack of a third-party is where the problem comes from.

Here is the 42 U.S.C. 18061(b)(1)(A), the portion of ACA in question:

(b) Model regulation
(1) In general
In establishing the Federal standards under section 18041 (a) of this title, the Secretary, in consultation with the National Association of Insurance Commissioners (the “NAIC”), shall include provisions that enable States to establish and maintain a program under which—
(A) health insurance issuers, and third party administrators on behalf of group health plans, are required to make payments to an applicable reinsurance entity for any plan year beginning in the 3-year period beginning January 1, 2014 (as specified in paragraph (3);

This paragraph has the wording that allows Obama to give special favor to unions. According to this the reinsurance tax applies to “health insurance issuers” and “third party administrators”. It could technically be argued that Taft-Hatley plans do not fall under either of these categories. In fact here is the finding from the HSS in the Federal Register (p. 71):

Therefore, we propose that for the 2015 and 2016 benefit years, a “contributing entity” would mean: (a) a health insurance issuer; or (b) a self-insured group health plan (including a group health plan that is partially self-insured and partially insured, where the health insurance coverage does not constitute major medical coverage) that uses a third party administrator in connection with claims processing or adjudication (including the management of appeals) or plan enrollment. The proposed modification for the 2015 and 2016 benefit years would exclude from the obligation to make reinsurance contributions those self-insured plans that do not use a third party administrator for their core administrative processing functions – adjudicating, adjusting, and settling claims (including the management of appeals), and processing and communicating enrollment information to plan participants and beneficiaries.

Basically since self-insured plans without a third party administrator are not mentioned in 42 U.S.C. 18061(b)(1)(A) the HHS finds the reinsurance tax does not apply to those plans. Reading the text it isn’t hard to see how they are able to interpret it that way. I disagree with their interpretation, but that doesn’t mean their interpretation is wrong. The Obama administration actually appears to have found legal backing for giving special treatment to Union plans over other plans.

Thune explains in his newsletter why these Taft-Hatley plans would indeed be getting special treatment and why that is bad for other Americans:

The reinsurance tax, which is scheduled to begin in 2014, was designed to provide funds to health care plans in the ObamaCare exchanges to help absorb the cost of care for people with pre-existing conditions. This tax is scheduled to raise a total of $25 billion by 2016. If unions are granted this special carve out by the president, the burden will shift to all other self-insured plans, requiring them to pay more to meet the amount of revenue required by law.

I disagree that this was a “special carve out by the president”. Rather I believe this section is an ‘oops’ found by the Obama administration and being used to keep favor with Unions. Whether intentional or not, the removal of self-insured plans without administrators means the reinsurance tax will take in much less revenue than projected. With less revenue coming in it will mean the costs of ACA will have to be made up in other places.

Another option would be to add self-insured plans without a third party administrator to the reinsurance tax. That is what Thune is trying to do with the Union Tax Fairness Act 0f 2013 (S. 1724). Here is Section 2 of the bill:

Notwithstanding any other provision of law, the payments required to be made by health insurance issuers and third party administrators (on behalf of group health plans) under section 1341(b)(1)(A) of the Patient Protection and Affordable Care Act (42 U.S.C. 18061(b)(1)(A)) shall be applied equally to all such issuers and administrators and may not be waived on behalf of any such issuer, administrator or group health plan.

I’m not sure this would ‘fix’ the problem. Nothing in Thune’s bill directly addresses the self-insured group plans without a third party administrator. I think to actually ‘fix’ the problem Thune has to add language for self-insured group plans without a third party administrator. Thune’s bill seems aimed at preventing the Obama administration from waiving groups having to pay the reinsurance group. The approach being taken by the Obama administration is not about waiving the law for a special group; rather the approach being taken by the Obama administration is that self-insured group plans without a third party administrator are not included in this portion of the law. Thune needs to address this issue before pushing too hard for this bill, or he will simply be pushing a bill that reinforces what is already in the law.

Hopefully DC politicians will find a way to make the reinsurance tax apply equally to all groups. But I have no hope that will happen. Obama wants to reduce the cost for Unions going into the 2014 election, so he will get it. There is very little anyone can do about it. Taking the matter to court will end up in a DC Federal Court; which recently Senator Reid went nuclear on the filibuster so Obama could add three unnecessary judges (who also are likely loyal to the Obama administrations goals). Right now I still feel the best tool against Obamacare will be nullification at the state level. We simply can’t expect DC to keep from giving special treatment to large lobbying groups (such as Unions).

In 2014 the South Dakota legislature should follow Obama’s example and nullify parts of Obamacare

nohcgovA couple of week ago I took a look at the actual text of the Affordable Care Act (ACA) to determine where Obama got the authority to unilaterally ‘fix’ people losing their existing health insurance coverage. Of course there is no portion of ACA that allows the President to change the law; and there also happens to be no place in the Constitution that allows this either. Essentially the move is asking state insurance regulators to ignore the law because the Obama administration simply won’t enforce it for the next year. A portion of me is angered that the President would once again openly ignore rule of law in favor of gaining political points. But a bigger portion of me is glad Obama took this approach because it shows states what they can and should do moving forward: nullification!

Earlier this week South Dakota took a first step when the State Insurance Director Meirle Scheiber released this statement:

“The South Dakota Division of Insurance will allow healthcare insurers the flexibility to extend current plans in 2014. The decision came down to protecting South Dakotans who would have lost their health insurance coverage through no fault of their own, even though the federal government is only allowing this flexibility for an additional year.”

Technically it is not legal for Scheiber to make this move. Yet it gives the South Dakota legislature a good starting point for making this temporary ‘fix’ a permanent solution. Our legislators should have the LRC draft up a law that would permanently allow carriers in South Dakota to sell plans that were in existence before 2014. This legislative fix would codify the action taken by Obama. It would also be a nullification victory for those of us that believe in the 10th Amendment. And most important it would also be a victory in the battle to reduce the impact of Obamacare on the economy.

It is almost certain the Obama administration would oppose such an action and the law’s constitutionality would be questioned in federal court. That is a good thing! States need to be more proactive in keeping the power of the federal government in check. Similar nullification laws could be  created for other parts of federal law that are in dispute. Instead of trying to nullify the all of Obamacare it may be easier to get smaller portions nullified.

Unfortunately since Reid went nuclear with the filibuster it is quite likely the federal courts are going to be filled with judges sympathetic to a large federal government. But the fact that this route will be hard and may potentially fail should not prevent the South Dakota legislature from trying. The alternative of doing nothing about an overreaching federal government certainly isn’t going to work any better.

Remy releases the If You Like Your Plan You Can Keep It rap

Remy has created another great video. This one takes on the “If you like your plan you can keep it” line repeated many times by President Obama. Even if you don’t like rap I would give the video a view, there are a few good lines in there!

Because sometimes one video is not enough. Here are three other videos worth watching from Remy about Obamacare.

This was released this last Halloween, and is truly scary:

This song was released as an ‘entry’ in the Obamacare video contest:

And finnaly, this video goes back to the Sandra Fluke Congressional Hearing testimony. This is one of my favorite Remy videos.

Centralized healthcare support falling right along with Obama

Last month I posted about President Obama’s rapidly declining approval rating. Things are not getting much better for the President. At that time 53% of respondents disapproved of his job performance. According to the Quinnipiac Poll released on November 12, 2013, the Presidents disapproval rating is now at 54%. That slight shift isn’t actually the big news. The bigger news from this poll is the demographics of some voting blocks thought to typically support a populist Democrat candidate such as Obama. Here are some interesting disapproval ratings by demographic:

  • 51% of women disapprove of the way Obama is handling his job. I personally believe this number has more to do with a larger problem with the DC Democrat Party. Democrat politicians in DC have made ‘women’s issues’ into cookie cutter political issues that actually comes off as quite condescending to many women.
  • 47% of moderates disapprove of Obama’s job performance. This is just slightly above the 46% that approve. Yet losing moderate support is a sign people don’t believe Obama’s ‘I’m not a true socialist’ stance.
  • 55% of those in $50k-$100k  and 52% of those in <$50k annual household income levels disapprove of Obama’s performance. Obama and the national Democrat Party often tout these households as those they are ‘helping’. Hopefully this is a sign more people care about economic freedom for everyone than upholding and old and worn-out concept of class-warfare. It is time to move past the tired Democrat Party strategy of increasing class-warfare; and instead focus on social freedoms like they sometimes pretend to do.
  • 54% in the age 18-29 demographic now disapprove of Obama’s job performance. Technically all age demographics show they disapprove of Obama’s performance. However this young demographic is most telling because this demographic likely won him the 2008 election. It appears Obama’s charisma no longer works on the youth now that they see he is no different from Bush.

It is not just Obama that is losing in the polls. Gallup released a poll on Nov 18, 2013, asking respondents if the is the responsibility of the federal government to ensure all Americans have healthcare coverage. 56% of respondents said it is NOT the government’s responsibility to prove healthcare coverage. That is a dramatic change from the Pre-Obama years. Here is a chart showing the polling for this question since 2000:

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Image Source: Gallup

It is interesting looking at this chart. Since Obama took office the country has basically been split over the issue. However the last two years show a dramatic move of public opinion towards keeping the federal government out of centralized planning of healthcare coverage. It is good to see so many people waking up to the economic and liberty dangers that come with centrally planning such a complex and important portion of the nation’s economy. It also shows there may be leverage to actually repeal Obamacare in the future.

Personally I feel few (if any) laws should ever be made based upon polls. That is what has caused too many bad populist pieces of legislation over the decades. However it might be worthy to look at repealing laws such as Obamacare due to polls. Even if we can’t stop Congress and the President from enacting bad laws, we might be able to force them into repealing some of the very bad ones. It will be interesting to see how many DC Democrat politicians leave the Obamacare ship moving into the 2014 election. By that time it may actually be a liability to have Obama on their side.