Freedom Line Blog

Add Indiana to the list of states arguing that ObamaCare’s subsidies can’t be used on Healthcare.gov, the federal exchange.

The challenge is the same mounted by other states contesting the IRS’s unilateral decision to go against the clear language of ObamaCare which makes subsidies available only on state-based exchanges, a restriction intended to induce states to shoulder the implementation costs for fear of angering residents by exposing them to ObamaCare’s real costs.

U.S. District Judge William T. Lawrence will decide whether Indiana’s case has merit in October. Precedent from other circuits isn’t all that helpful, since the D.C. Circuit upheld the statutory scheme while the Fourth Circuit sided with the IRS.

The silver lining: Whatever Lawrence and the appellate circuit decide will further fragment ObamaCare’s implementation, increasing the likelihood that the Supreme Court will weigh in.

Whenever that happens, hopefully there will still be five votes to uphold the plain meaning of the law.

H/T: Indianapolis Star

It looks like the Obama administration’s much celebrated achievement of 8 million ObamaCare enrollments is actually dropping over time.

“The nation’s third-largest health insurer [Aetna] had 720,000 people sign up for exchange coverage as of May 20,” writes Jed Graham of Investor’s Business Daily. “At the end of June, it had fewer than 600,000 paying customers. Aetna expects that to fall to ‘just over 500,000’ by the end of the year.”

While no other insurance company has publicly reported declines as steep as Aetna, many others have not denied it is happening during recent conference calls discussing earnings.

Some attrition in ObamaCare signups is to be expected since a number of major life events could cause a change in status. Getting a new job with health benefits, for example. But the Obama administration’s refusal to publicize monthly enrollment numbers makes it impossible to get a clear picture of how well the law is working.

Which may be precisely the goal.

What makes conservatives so sure that the Obama administration will bailout insurance companies losing money under ObamaCare?

“According to a recent investigation conducted by the House Oversight and Government Reform Committee chaired by Darrell Issa, insurers widely expect to receive funds from the bailout program,” writes U.S. Senator Marco Rubio (R-FL). “One large insurer recently filed financial statements claiming they expect part of their revenue to come from American taxpayers via the ObamaCare bailout ‘fund.’”

Thwarted by the GOP majority in the U.S. House of Representatives who refuse to appropriate money for this part of ObamaCare, the Department of Health and Human Services “figured out a way to use general funds available through the Centers for Medicare and Medicaid Services to pay off health insurers,” says Rubio. “The effect is to circumvent Congress’ power of the purse for the purpose of bailing out health insurers with taxpayer funds.”

Whether it’s the CIA lying about spying on congressional investigators or IRS officials conveniently losing potentially damaging emails, executive branch officials in the Obama administration are destroying the ability of anybody outside their clique from being able to trust anything they say.

Because of ObamaCare’s mismatched incentive structure, some savvy commentators are warning of an impending, multi-billion dollar bailout of the insurance companies selling health care policies under the law.

“Pre-ObamaCare,” writes Dan McLaughlin, “insurers had to price their policies mainly by reference to market forces (albeit in an already heavily-regulated market)… Guess wrong and you lost money. But under ObamaCare, consumers no longer have the choice whether or not to buy policies, and insurance companies no longer face any risk of losing money, because they’ve been promised a bailout. Money will still be lost, but it will be taxpayer money, and you never run out of that, do you?”

McLaughlin is talking about ObamaCare’s “3 R’s” – reinsurance, risk corridors and the risk adjustment program. I’ve written about this multi-year, $20 billion bailout before. In different ways, each is designed to subsidize insurers for lost revenue traceable to the health law’s dysfunctional mandates. The threefold scheme was buried in the legislation to buy the support of large insurance companies who would have refused to participate without it.

Now the bill is coming due.

Based on interviews and documents containing discussions between Obama administration officials and insurance industry executives, a House Government Oversight report reveals that insurers are expecting the following payments:

1)      $640 million from the Risk Corridor program for the 2014 plan year

2)      $346 million from the Risk Adjustment program

The reinsurance program redistributes money among private insurance companies, as determined by the federal government.

The numbers quoted above are two to three times higher than originally anticipated because of the high level of adverse selection – i.e. too many older and sicker enrollees, not enough younger and healthier ones. The latter group is avoiding enrollment, preferring to pay ObamaCare’s relatively low penalty. But even that is a mirage. Reports are surfacing that as many as 25 million uninsured Americans are getting ObamaCare penalty waivers for next year; further increasing the federal budget deficit.

Bailouts can be nice, if they apply to you. But as a governing strategy, they eventually bankrupt the entire system.

After nearly a year of failed attempts, Vermont is firing CGI Federal – the company that bungled both the federal healthcare.gov and Massachusetts’ online insurance exchange – as its web designer.

“With Vermont still lacking a fully functioning health website more than 10 months after its glitch-plagued debut last October, Vermont officials said late Monday that they were pulling the plug on CGI’s CGI Technologies and Solutions’ contract,” reports Newsweek.

The decision will cost CGI almost $20 million, but at least Vermont has agreed not to sue the company for damages.

Vermont’s announcement follows several other states that have abandoned their original – and very expensive – ObamaCare websites. Some, like Nevada, Hawaii, and Oregon, are planning to cut their losses and transition to the federal healthcare.gov website. Others, like Massachusetts, Maryland, and now Vermont, are switching to new contractors hoping to recoup at least some of their investments.

Of course, there are success stories. State exchanges in Kentucky and Connecticut are routinely cited as well-functioning websites – though even these have glitches. However, the prevalence of so many high-profile failures indicates that this massive experiment in public-private partnerships has resulted in a huge transfer of wealth with precious little to show for it.

The House of Representatives made history today when it passed a bill allowing Congress to sue the President of the United States for failing to implement a federal law, reports the L.A. Times.

The legislation authorizes House Speaker John Boehner (R-OH) to file suit in federal court demanding that President Barack Obama enforce ObamaCare’s employer mandate, which requires companies with 50 or more full-time workers to purchase ObamaCare-compliant health insurance or pay a penalty.

House Republicans have been critical of President Obama’s unilateral delays in enforcing the mandate – now scheduled to go into effect in 2016 – because it spares Democrats and the Obama administration substantial political pain. If the law is so great, Republicans reason, then it should go into full effect.

As with other anti-ObamaCare measures to pass the House, this bill has virtually no chance of clearing the Senate where Democrats are in the majority. Still, it’s very presence helps Republicans draw a clearer contrast over where each party stands on the rule of law; in particular the president’s ability to pick-and-choose which parts of a statute he will – as he swore upon taking office – to faithfully execute.

Robert McDonald, former CEO of Procter & Gamble, is President Barack Obama’s nominee to run the scandal-ridden Department of Veterans Affairs.

McDonald’s nomination is catching some in the veterans’ community off-guard. Unlike previous VA Secretaries, he’s not a general – though he did graduate from West Point and serve for five years as an Army paratrooper before jumping to P&G.

He’s also neither a medical doctor, nor does he have experience administering a hospital; traits that some think would be useful for a person stepping into the nation’s largest health system with 1,700 facilities.

Indeed, the case being made for McDonald is that his background in brand management and customer service signals that Obama thinks the main problem at the VA is bad leadership.

Which brings us to an interesting question – Is McDonald’s job just to make the VA’s public face more attractive, or is it to get the sprawling department into tip-top, customer satisfaction shape?

The answer depends on how much latitude President Obama is giving McDonald to operate. For example, in places like Phoenix where staff and administrators falsified records to get performance bonuses, does McDonald have the authority to fire and hire political appointees as well as career civil servants? Does he have the flexibility to outsource patients to private medical providers in regions where the VA hospitals are overbooked?

Senate Republicans should ask McDonald these and other questions during his confirmation hearings. Veterans and their families deserve to know whether the VA’s new chief has the power to be a turnaround artist, or just a place warmer.

Oregon’s failed ObamaCare website is so fraught with failure the state is offering to pay employees bonuses just to keep them on the job.

After spending over $250 million – and retaining more than $50 million in federal grants – to build an ObamaCare health insurance exchange that failed to enroll a single person, Oregon decided to switch to Healthcare.gov, the federal equivalent.

Apparently, though, the crisis isn’t over. Since April, 27 staff members of Cover Oregon have left, taking with them valuable skills that can’t easily be replaced in time to transition to the federal website. To staunch the bleeding, Oregon is making a total of $650,000 in bonuses available to the remaining 163 employees, if they stay on till the end of the job.

As I explained in my column this week, state officials are primarily responsible for the costly disaster that is Cover Oregon. This news is just one more reminder that simple, avoidable mistakes by politicians and bureaucrats have huge and prolonged consequences.

H/T: NRO

Last week House Speaker John Boehner (R-OH) sent a letter to President Barack Obama demanding that “any veteran unable to obtain an appointment within 30 days [have] the option to receive non-VA care.”

This week it was revealed that 57,000 veterans have been waiting 90 days or longer for care from VA facilities.

But at a time when the White House is dithering, the acting VA chief is adopting Boehner’s approach.

“The interim VA secretary said he would spend $300 million to increase hours for VA medical staffers and contract with private clinics to see veterans who are unable to get care through VA medical centers,” reports the Washington Post.

Kudos to Sloan Gibson, the temporary VA secretary, for leveraging the private sector to care for those who’ve rendered the highest public service.

Fed up with a dysfunctional health exchange operated by Xerox, Nevada officials voted to terminate the contract and transfer responsibility to the federal government.

Apparently, spending $75 million to enroll about one-fourth the number of people initially projected convinced Nevada to throw in the towel.

Nevada joins Oregon, Maryland and Massachusetts as states who have scrapped their original state-based exchanges because of exceedingly poor performance.

The next domino to fall may be Hawaii, whose ObamaCare exchange – the Hawaii Health Connector – has registered just 8,500 people but needs at least 150,000 enrollees to ensure the program is self-sustaining.

Not surprisingly, Hawaiian officials are already being pressured to shut it down.

“According to a new report from S&P Capital IQ, 90 percent of American workers who receive health insurance from large companies will instead get coverage through ObamaCare’s exchanges by 2020,” writes Sally Pipes of the Pacific Research Institute.

Large companies are those that employ 10,000 workers or more. They cover 59 percent of the American workforce.

ObamaCare’s escalating barrage of mandates, fees and fines are estimated to extract “about $163 million to $200 million in additional cost per employer – or $4,800 to $5,900 per employee,” says Pipes. Compared to the $2,000 per employee fine for not offering health insurance, large employers will in effect be forced to dump workers on ObamaCare exchanges to stay profitable.

There are many aspects of ObamaCare that defy easy explanation, but this much is clear – Forcing large employers who want to provide health insurance to their employees to pay more than twice the price of compliance just doesn’t pencil.

The only financially sensible thing to do – from a company’s perspective – is to shove workers onto taxpayer-funded exchanges. That may keep the firm afloat, but it will only add to the federal government’s fiscal problems.

A CNBC report says that multiple states now operating an ObamaCare exchange could decide the costs are unsustainable and relinquish control to Healthcare.gov, the exchange run by the federal government.

The reasons are multiplying. Oregon decided to shutter its woebegone website after spending $248 million and failing to enroll a single person online. Massachusetts is abandoning its software program, but if its replacement isn’t ready to launch by the next enrollment period in November it plans to default to Healthcare.gov. Colorado and Rhode Island are trying to figure out how to make their exchanges financially viable once federal subsidies run out. And at least one expert thinks Nevada and Hawaii may also decide to let the feds be responsible for continuing IT updates and rules changes.

But it’s not like the once foundering Healthcare.gov is experiencing smooth sailing. Recent testimony before Congress confirmed the existence of duplicate enrollments that cast doubt on the Obama administration’s overall enrollment claims.

“Due to website glitches, some individuals may have enrolled multiple times,” explains the Illinois Policy Institute. “For example, if there are three people with one enrollment each and one person with two enrollments, the government will report this as five total enrollments. If the first three people paid for each of their policies and the fourth person paid for one policy, the insurer will report 100 percent payment. In this way, the government numbers may be further overstating enrollments.”

And with it, Healthcare.gov’s ability to handle the increased responsibility for processing many more people.

Oregon spent $248 million developing its own ObamaCare insurance exchange and never enrolled a single person online.

That kind of return on investment convinced state officials “to abandon the exchange entirely and switch to the federal website, the first state to do so,” writes Lou Cannon. “The Oregon board made its decision after being told it would cost $78 million to fix Cover Oregon compared to $4 million to $6 million to make the technical changes needed to join the federal exchange.”

Investigations are ongoing into why the state’s heavily bankrolled website was such a bust. Once thought to be a model for progressive high-tech governing, Cover Oregon is now a source of embarrassment for the state’s Democratic establishment.

Whatever the causes for the technology failure, Oregon’s switch to the federal alternative could hit enrollees hard. An estimated 70,000 Oregonians enrolled with paper applications through Cover Oregon, making many of them eligible for federal subsidies. However, the text of ObamaCare doesn’t make subsidies available if insurance is bought via the federal website. So far, the IRS isn’t making the distinction, but a three-judge panel at the D.C. Circuit seems ready to apply the law as written.

The intent of ObamaCare’s drafters was to reward state citizens with federal subsidies if they chose to shoulder the start-up costs associated with running a state-based exchange. Now that Oregon is pulling the plug on its failed website, its citizens may be losing the assistance they need to make ObamaCare affordable.

Any hopes the GOP had that Kathleen Sebelius’ resignation as HHS Secretary might convince fellow Obama Cabinet member Eric Holder to do the same were quashed on Friday.

“The Attorney General does not plan to leave before the mid-terms,” said a Justice Department official. “That does not mean that he is definitely leaving after the mid-terms, just that he is at least staying through that time.”

Prior to Sebelius taking the fall for ObamaCare’s disastrous rollout, it was Holder who was the face of bureaucratic scandal. Though voted in Contempt of Congress by the House of Representatives, Holder continues to stonewall investigators on details surrounding the “Fast and Furious” program that led to the deaths of at least one American and dozens of Mexicans.

Credit Sebelius with this much – At least the department she ran wasn’t responsible for killing anyone on her watch.

If President Barack Obama wants to improve income inequality he could start by removing ObamaCare’s barriers to working more hours.

“The savings from restricting hours worked can be enormous,” explains the Wall Street Journal. “If a company with 50 employees hires a new worker for $12 an hour for 29 hours a week, there is no health insurance requirement. But suppose that worker moves to 30 hours a week. This triggers the $2,000 federal penalty. So to get 50 more hours of work a year from that employee, the extra cost to the employer rises to about $52 an hour – the $12 salary and the ObamaCare tax of what works out to be $40 an hour.”

Liberals thought themselves clever by dropping full-time status to 30 hours per week from the traditional 40. What they didn’t count on was that the actual result would be an 11 hour per week pay cut.

Darrell Issa (R-CA), Chairman of the House Government Oversight & Reform Committee, wants the Census Bureau to explain why it failed to tell Congress that it would change the way it measures whether people have health insurance in the same year ObamaCare goes into effect.

The new survey produces a lower uninsured rate than previous versions asked by the Census Bureau. The concern is that the new lower numbers will make ObamaCare enrollment figures now and the in the future appear to be higher than they would have had the same questions been asked.

“A two-percent adjustment in the nationwide uninsured rate would represent a change in status for six million Americans and could be used in misleading arguments about the coverage impact of the Affordable Care Act,” Issa wrote in a letter to the Census Bureau.

Politically-motivated shenanigans are nothing new for ObamaCare, but this latest revelation indicates that even a highly respected agency like the Census Bureau – which researchers in several fields look to for objective data – is being used to push the narrative that the controversial health law is a historic success; data to the contrary notwithstanding.

H/T: Washington Examiner

Say it ain’t so!

Soon-to-be-former HHS Secretary Kathleen Sebelius “is considering entreaties from Democrats who want her to run against her old friend, Senator Pat Roberts, Republican of Kansas,” reports the New York Times.

It’s hard to see how this news is anything other than an attempt to put a softer spin on Sebelius’s disastrous tenure as the face of ObamaCare.

Considering how much the Left loathes her mismanagement of Healthcare.gov – driving down public confidence in government to record lows – it’s no surprise that friends of Sebelius are trying to rehabilitate her image by saying the former two-term Kansas governor could be just the candidate to topple Roberts.

Making the GOP spend money and time on a race they would otherwise win easily could burnish Sebelius’s ‘good soldier’ credentials. Actually winning the seat would give Democrats their first U.S. Senator from Kansas since 1939.

Still, whatever goodwill Sebelius had as governor has been forgotten long ago. In the current reality, it’s difficult to see how she could step down from such a bad job at HHS into an underdog Senate campaign and emerge as anything other than a twice rejected public servant.

After compiling three decades-worth of responses to health insurance questions, the U.S. Census Bureau is about to implement a new version that will make it impossible to compare insurance coverage data before and after ObamaCare.

Coincidence?

It gets better.

“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,” reports the New York Times.

In practical terms this means “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.”

According to the Times, the new survey has been in the works for awhile. But there is no explanation given for why it is going into effect in the same year when millions of Americans are transitioning to the ObamaCare regime. The controversial health law was sold as a way to extend coverage to tens of millions of uninsured Americans. Why would the non-partisan Census Bureau make it impossible for observers to see whether ObamaCare actually achieved its goal?

Whatever the official line, it’s difficult to understand the timing of this development as anything other than a naked attempt to avoid accountability.

Here’s a suggested question for GOP Senators to ask Sylvia Burwell – President Barack Obama’s nominee to succeed Kathleen Sebelius as Secretary of Health and Human Services – at her confirmation hearing next month.

Studies by the RAND Corporation and Goldman Sachs estimate as much as 20 percent of the claimed 7.5 million ObamaCare enrollments have not paid their first month’s premiums.

When enrollees start seeing how much their deductibles are – commonly $3,000 to $5,000 – many more may choose to stop paying ObamaCare’s higher out-of-pocket expenses.

If that happens, it’s really bad news for doctors and hospitals.

“Section 1412 of the health law gives consumers a 90-day ‘grace period’ before their subsidized plan is canceled for nonpayment. But insurers only have to keep paying doctors and hospitals for 30 days. The next 60 days of care on the care provider,” explains Betsy McCaughey.

“[I]t could pose a significant financial risk for medical practices,” the American Medical Association warns.

The HHS Secretary has no express power to bail out such care providers.

However, under the previous Secretary, the Department of Health and Human Services didn’t shy away from spending $8 billion without congressional authorization to hide Medicare Advantage cuts before the 2012 presidential election.

This and many other extra-legal actions by Secretary Sebelius have come to define HHS as the most powerful domestic federal agency.

Ms. Burwell, Do you think the absence of express authority to bail out care providers in the above situation limits you in any way from spending money for this purpose?

As Tax Day approaches, consider the bright side – at least there’s no ObamaCare form you have to fill out.

That changes next year.

“According to the agency, the IRS plans to include a specific line on the 1040 forms for taxpayers to ‘self-attest’ whether they purchased insurance,” reports Fox News. “It will most likely include a worksheet for taxpayers to calculate how much they owe – essentially either a flat penalty or a percentage of their income.”

Next year the penalty is either $95 or 1 percent of your income, whichever is greater.

The IRS plans to confirm whether taxpayers are telling the truth about purchasing insurance by getting enrollment records from insurance companies.

So along with increased paperwork, we can all look forward to a greater amount of government surveillance into our insurance (and eventually our health) records.

All in the name of helping us. Thank you, Big Brother.