Category: New Health Care Law

SCOTUS Saves Republicans in King v. Burwell

Health insurance veteran Bob Laszweski takes a contrarian approach to the Supreme Court upholding Obamacare tax credits in at least 34 states that did not establish their own exchanges. Instead of a loss for Obamacare opponents, Mr. Laszewski believes Republicans were saved from stealing defeat from the jaws of victory in King v. Burwell:

First, as any of us who know the market can appreciate, the Court just saved the Republicans from themselves. They were in no way ready to avoid the crisis that would have engulfed the individual market––half of those people on the exchange who would have lost their subsidies and the other half off-exchange that would have seen 30% to 50% rate increases––on top of the big increases already announced––without a quick fix.

The attempt to scuttle the law through the Supreme Court was ill conceived and Republicans are very lucky it did not happen.

Now Obamacare has to stand on its own going into the 2016 elections and the growing evidence is that won’t be any easier.

King v. Burwell: Health Insurers Rally

Health insurers’ shares enjoyed a nice rally today, as the Supreme Court endorsed the tax credits they receive via Obamacare exchanges. On a day when the S&P inched up 0.30 percent, health plans jumped:

Aetna – 3.99 percent

UnitedHealth Group – 2.65 percent

Cigna – 2.43 percent

Humana – 7.13 percent

Anthem – 1.41 percent.

Obamacare Beyond the Handouts

In the wake of the Supreme Court’s ruling, Holman Jenkin’s column from this morning’s Wall Street Journal is telling:

By one standard no government program can fail, and that’s the standard being applied to ObamaCare by its supporters: If a program exists and delivers benefits, the program is working.

And the polls indeed show that 74% of ObamaCare’s eight million enrollees are “satisfied” with their plans, because the polls fail to count the 12 million who are eligible but decline to enroll.

Steve Rattner, a Wall Street figure and President Obama’s former auto-bailout czar, insists in a recent New York Times op-ed that ObamaCare “is working,” by which he apparently means it’s in operation, which nobody denies. Mr. Rattner, like a lot of analysts, writes as if costs are benefits—as if millions of people lining up for something from the wallets of their fellow citizens, ipso facto, is proof of a worthwhile program.

I think Mr. Jenkins might be too gentle on Obamacare. Nevertheless, I appreciate his point. In fact, 86 percent is a remarkably low share of satisfied customers for something they get for free.

Just think: If the government (or anyone) just gave you $3,000 or more in cash, surely 100 percent of us would be “satisfied” with the program.

King v. Burwell: The People, Not The Judges, Will Replace Obamacare

With a 6-3 decision, The Supreme Court upheld King v. Burwell, the lawsuit asserting tax credits paid to health insurers in at least 34 states using the federal health insurance exchanges are illegal.

The majority admits the law is sloppy:

King v. Burwell: How Congress and President Obama Can Win

Perhaps within a few minutes, and certainly no later than next Monday morning, we will learn the Supreme Court’s verdict on King v. Burwell, the lawsuit alleging Obamacare tax credits in at least 34 states are illegal.

Victory for the plaintiffs will stop tax credits to health insurers covering most Obamacare beneficiaries, causing those individuals to face the full cost of their premiums. Congress and the president will have a responsibility to respond.

Unfortunately, Congressional leaders appear unwilling to accept this opportunity, publicly lamenting that the president would veto any bill passed in response to King v. Burwell.

We can do better. In a special publication published by NCPA, I propose six reform “buckets”, which should satisfy the priorities of both Congress and the president, should King prevail.

Lead more about our King v. Burwell proposal at this link.

Employer Benefit Plans’ Subsidy of Obamacare Increased

The administration has just increased the amount it will play plans under one of the “3 R’s” of Obamacare. Reinsurance, risk corridors, and risk adjustment are three mechanisms the administration uses to protect insurers from losing money in Obamacare.

Last year, I focused my efforts on limiting risk corridors, which exposed taxpayers to a potentially unlimited liability. This had a largely successful legislative result in Congress. Now, reinsurance has become a problem. As Ed Haislmaier of The Heritage Foundation has explained, reinsurance taxes all plans, including those covering the employer-based group market, to reduce risk in Obamacare.

Well, the administration collected more money than it expected from this tax:

Medical Device Excise Tax Repeal? Not So Fast

As discussed a few days ago, the House of Representatives has voted to repeal Obamacare’s medical device excise tax. The tax itself, obviously, is harmful. However, putting this at the top of the “to do” list for the repeal effort is a curious priority.

Repealing Obamacare Would Grow Economy; Reduce Number of Insured by 10 Million

I have asked, and the Congressional Budget Office has answered.

I have been urging the CBO to do a comprehensive estimate of all the effects of the Affordable Care Act, effectively for the first time since 2012. It did so last week. The main take-away is that “repealing the ACA would increase GDP by about 0.7 percent in the 2021–2025 period, mostly because provisions of the law that are expected to reduce the supply of labor would be repealed.”

CBO concludes repeal would increase deficits. However, this effect is much smaller than previous estimates, because this is the first time CBO has used so-called “dynamic scoring” – taking macroeconomic effects of repeal into account – instead of just the simple (“static”) book-keeping type of estimate:

Top Health Insurance Expert: Republican Responses to King v. Burwell Will Fail

Forbes colleague and insurance industry veteran Robert Laszewski has reviewed Congressional Republicans’ potential responses to a victory in King v. Burwell, the lawsuit that could upset Obamacare’s tax credits, and found them deeply wanting.

With respect to the House Republican proposal to give (what are effectively) block grants of Obamacare money to states:

I have no earthly idea how a state might opt out and build a brand new health insurance system in just a few months—and do it for what might only be two years!

With respect to Senator Johnson’s proposal (which I previously discussed), he is equally dismissive:

Obamacare’s Shrinking Revenues: Medical Device Excise Tax

The House of Representatives voted today to repeal Obamacare’s medical device excise tax, the 2.3 percent tax levied on medical devices sold in the U.S. The tax is certainly harmful. Whether it deserves the highest priority is another question.

The bill was scored by the Congressional Budget Office (CBO), which determined that it will increase the deficit by over $24 billion in the next 10 years. We seldom see explicit budget scores of individual Obamacare taxes. This score overlaps the original 2010 CBO score for four years, 2016 through 2019. Comparing the two scores (see Table 1) shows how much the taxes estimated revenues have shrunk – 36 percent, from $12.7 billion to $8.1 billion over the period.