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Posts Tagged ‘Medicaid’
May 18th, 2015 at 6:13 pm
CMS Hush-Hush on New ‘Epic’ Medicaid Rules

The Centers for Medicare and Medicaid Services won’t say what’s coming before it announces new rules for long-term managed care, the first in 13 years.

“The number of people enrolled roughly quadrupled, from 105,000 in 2004 to 389,000 in 2012,” reports National Journal. “And overall Medicaid spending on long-term care is projected to balloon from $60 billion annually to more than $100 billion in 2023, the Congressional Budget Office has estimated, as the baby boomers get older and require more care.”

Health care industry leaders are anxiously awaiting the new regulations without any indication of what’s coming. CMS has been working on the updated regulatory scheme for more than a year, and so far is keeping the people most effected in the dark.

“It’s a lot like the recent Mayweather-Pacquiao fight,” a representative of managed care plans is quoted as saying. “There’s lots and lots of hype around it, and it’s either going to be epic or it’s going to kind of fizzle.”

With President Barack Obama’s penchant for going big, it will be shocking if his administration opts for fizzle instead of epic. That nameless bureaucrats have this much control over major policy decisions says a lot about the real do-nothing tendencies of Congress. Rather than debate and deliberate over such a consequential matter, Members of Congress have outsourced their lawmaking function to an executive agency.

That’s not leadership. It’s a dereliction of duty.

April 28th, 2015 at 7:37 pm
On Entitlement Reform, Are Republicans All in This Together?

Recent statements by likely GOP presidential candidates indicate the answer may be no.

“Republican governors across the country, including several conservatives, couldn’t resist the siren song of federal dollars and chose to expand Medicaid under ObamaCare,” writes Stephen F. Hayes at The Weekly Standard. “The federal government promises to fully fund Medicaid expansion for three years, after which the federal dollars are phased out and states will be responsible for paying for the expanded program themselves.”

Those governors include John Kasich of Ohio and Chris Christie of New Jersey. Both argue they made the best of a bad policy situation. Former governor Mike Huckabee of Arkansas could also be added to the mix, since he has recently distanced himself from Wisconsin Congressman Paul Ryan’s entitlement reform package ahead of an anticipated presidential bid.

After three years of party unity – broadly speaking – on entitlement reform, Republican leaders seem to be charting different paths on how to tackle the issue. This can and should be a healthy exercise in deliberation and persuasion, precisely the kind of policy-centric debate so necessary in the primaries.

That is, if the conversation stays on topic. Kasich, for example, has already shown a willingness to demonize critics instead of responding with a better argument. To wit, when health policy expert Avik Roy asked Kasich how he could be against ObamaCare’s “top-down government” but support Medicaid’s version of the same, Kasich retorted, “Maybe you think we should put them [the poor] in prison. I don’t.”

Hillary Clinton’s attack machine couldn’t have said it better. For the good of the conservative movement, Kasich and the rest of the presumptive GOP presidential field should.

April 23rd, 2015 at 3:19 pm
Obama Admin Also Pressuring Kansas, Tennessee to Expand Medicaid or Lose Funds

First Florida, then Texas, and now Kansas and Tennessee have been told by the Obama administration that unless they expand Medicaid under the rules laid out in ObamaCare the federal government will withhold payments from local hospitals.

Florida’s Republican Governor Rick Scott is so angry at the move he’s promised to sue the Obama administration for violating a 2012 U.S. Supreme Court ruling prohibiting the feds from conditioning Medicaid funding on ObamaCare expansion.

Yet this is precisely what the Centers for Medicare and Medicaid Services (CMS) is doing. According to Kaiser Health News, CMS “confirmed Tuesday that it gave officials in [Kansas and Tennessee] the same message that had been delivered to Texas and Florida about the risk to funding for so-called ‘uncompensated care pools’ – Medicaid money that helps pay the cost of care for the uninsured.”

“Medicaid expansion would reduce uncompensated care in the state, and therefore have an impact on the [Low-Income Pool], which is why the state’s expansion status is an important consideration in our approach regarding extending the LIP beyond June,” a CMS official warned.

The reason states have resisted expanding Medicaid under ObamaCare is that it transforms a program currently helping discrete populations – e.g. pregnant women, the disabled, elderly, blind, and children from needy families – into a universal, taxpayer-funded health insurance program for every person earning less than 133 percent of the federal poverty level. That change translates into large amounts of new spending that will eventually lead to increased state taxes.

By making a state’s refusal to expand Medicaid a factor in deciding whether Medicaid dollars will continue to flow, the Obama administration is directly flouting a prohibition handed down by a 7-2 Supreme Court majority (liberal Justices Kagan and Breyer sided with their five more conservative colleagues). If the Supreme Court wants to ensure that its rulings will be taken seriously, it should fast-track Florida’s lawsuit and let the Obama administration know it must follow the law.

April 1st, 2015 at 6:01 pm
Reuters Runs Hit Job on Anti-ObamaCare GOP Governors

Today, Reuters ran the following headline claiming that Republican governors opposed to ObamaCare are really just a bunch of hypocrites: “Exclusive: Republican White House hopefuls attack Obamacare but take money”.

The evidence offered is a combined $352 million in federal grants that GOP governors Rick Perry (TX), Scott Walker (WI), Bobby Jindal (LA), and Chris Christie (NJ) applied for and won under the terms of ObamaCare. Lest any reader miss the theme of the article, the author writes, “Aides [to each governor] told Reuters they saw no contradiction in applying for these grants while criticizing the law as a whole.”

The aides – and by extension, the governors – are absolutely correct. According to the Reuters report, many of the grant programs predate the passage of ObamaCare, and the ones that originated with the controversial health care law are not connected to either the excessively expensive health insurance exchanges or the Medicaid expansion – the two policy devices loathed by fiscal conservatives. As a matter of policy then, there is nothing inconsistent about wanting to repeal a law to get rid of its bad elements while supporting parts that have no connection to them.

As if to walk back from its misleading headline, the Reuters piece says that “It’s not clear whether the Republican governors now considering running for the White House would protect these programs if they won the November 2016 presidential election.” Except that it is clear. So far, none of these governors have indicated that in repealing ObamaCare they would refuse to reinstate the non-controversial grant programs. Therefore, it’s reasonable to assume that these programs are safe.

Attention-grabbing headlines are necessary in the news business, but only if they’re true. The next time Reuters wants to ding GOP politicians for hypocrisy, it needs to bring much better evidence than this.

March 19th, 2015 at 6:11 pm
AEI Scholar: House GOP Budget Needs Work

James Pethokoukis of AEI argues that the new House GOP budget puts too much emphasis on cutting the deficit and not enough on increasing economic growth.

“Indeed, the entire thrust of the budget seems to be that the federal debt is America’s biggest problem,” he writes. “But where’s the evidence? Low interest rates are hardly signaling investor alarm. And not only is the federal debt issued in U.S. dollars, our currency is the world’s reserve. The U.S. is not Greece. The big economic danger here isn’t a debt-driven financial crisis. It’s chronic slow growth from having to sharply raise taxes if we don’t restructure entitlements in a way that promotes saving and work.”

Of course, House budget writers do intend to reform entitlement spending drivers like Medicare and Medicaid – and eventually, one hopes, Social Security. So from at least this standpoint Pethokoukis and the House Budget Committee seem to be in agreement that structural fixes are needed to get entitlement spending on a sustainable trajectory.

What seems to divide them, however, is the motivation for doing so. For the budget drafters it may be containing and reducing an exploding deficit. For Pethokoukis and others, it’s kick-starting the economy to generate more wealth up-and-down the income ladder.

One of these two motivations will ultimately decide what conservative entitlement reform looks like. It will be interesting to see which prevails in the run-up to 2016.

January 22nd, 2015 at 8:50 pm
Doctor Pay Raise Increases Medicaid Access

Think rationing health care spending has an effect of which patients doctors see?

A new study released by the New England Journal of Medicine found that Medicaid beneficiaries enjoyed a 7.7 percent bump in the number of appointments doctors scheduled with them when government reimbursement rates increased.

Unfortunately for the poor who use Medicaid, once ObamaCare’s temporary subsidy phased out, states didn’t have the extra money to continue the higher reimbursements to doctors.

And so, it’s likely that doctors will respond to the new (lower) price signal and cut back on the number of Medicaid patients they schedule.

From a policy perspective this study confirms that doctors respond to economic incentives, and that if we as a society are going to help the poorest of the poor get adequate health care Congress and the president need to start prioritizing federal spending so that there’s more money available to help those who need it.

If the folks in Washington, D.C. are looking for a place to start trimming, former U.S. Senator Tom Coburn’s (R-OK) “Wastebook 2014” is a good place to start.

January 18th, 2015 at 10:00 pm
Key ObamaCare Implementer Resigning

Marilyn Tavenner, the chief administrator of the Centers for Medicare and Medicaid Services (CMS), announced in an email last Friday to staff that she is stepping down at the end of February.

The move comes as something of a surprise, but the timing is similar to that of Tavenner’s former boss, Health and Human Services Secretary Kathleen Sebelius. Last year, Sebelius said she was leaving her post after ObamaCare’s initial enrollment period ended. Tavenner’s resignation is effective when the controversial health law’s second enrollment period concludes.

Tavenner’s time in office was marred by a glitch-ridden rollout of Healthcare.gov, the federal ObamaCare website that earned the ire of millions of Americans. She also came under fire for overstating ObamaCare’s enrollment figures by inaccurately including 400,000 dental plans that have never been counted toward health insurance numbers.

With Republicans in control of the Senate that will confirm Tavenner’s replacement, it will be interesting to see who President Barack Obama taps to fill her shoes.

October 9th, 2014 at 3:15 pm
Arkansas’ Medicaid Expansion Violated Obama HHS’ Own Budget Neutrality Rules

The Government Accountability Office (GAO) says that the State of Arkansas and the federal Department of Health and Human Services (HHS) violated federal guidelines when they agreed to expand Medicaid under a “private option” plan.

Arkansas was one of the first states to get permission from the Obama administration to expand Medicaid, but on different terms than laid out in ObamaCare.

Medicaid is the state-federal program that pays for health care services for the nation’s poor and disabled.

Under normal circumstances, Arkansas would only be allowed to get a waiver from ObamaCare’s expansion structure if it could prove that its plan would be budget neutral.

Guess what happened instead.

“According to federal regulations, the U.S. Department of Health and Human Services (HHS) has certain procedures they must follow when reviewing state requests for Medicaid waivers,” write experts at the Foundation for Government Accountability.

“One key component of any waiver is budget neutrality: states seeking waivers must demonstrate that they will not spend any more federal dollars under the waiver than they would have without the waiver. But as it turns out, the Obama Administration cut corners and ‘did not ensure budget neutrality’ requirements were actually met before approving Arkansas’ ObamaCare expansion.”

The result is an additional $778 million more in spending on Arkansas’ version of Medicaid expansion than would have occurred had HHS insisted on following its own budget neutrality rules.

The entire analysis of the GAO’s report is worth reading since it explains other serious problems with the Arkansas plan. Perhaps the most egregious is the depth at which the Democratic governor’s office and loyal state agencies went to mislead Republican state legislators on the true cost of the expansion. Evidence of bad faith negotiations like this make it impossible to have a substantive policy conversation. Even now there are reports that the governor is peddling incorrect information, and trying to silence opposition.

What’s emerging from the Arkansas fiasco is the extent to which supporters of bigger government will go to entrench their policies – truth, fairness and accountability be damned.

October 7th, 2014 at 6:06 pm
Pence-HHS Negotiations over How to Expand Medicaid Stall

A months-long negotiation over whether and how Indiana might expand Medicaid under ObamaCare may be coming to an impasse.

On Monday, Indiana Republican Governor Mike Pence emerged from a meeting with federal Health and Human Services Secretary Sylvia Burwell Mathews without any positive news.

“We had a substantive discussion, but we are not there yet,” Pence said in a statement quoted by the Indianapolis Star.

At issue is whether Indiana will be able to use ObamaCare’s Medicaid expansion dollars in a way that moves the program in a more market-friendly direction. As I’ve written before, conservatives can support reforms to entitlement programs so long as they move in that direction.

With HHS refusing to let Indiana require modest co-pays under its expanded Medicaid plain, the next move is up to Pence. He could weaken his proposal, but doing so would sacrifice any pretense his plan has for being fiscally conservative. On the other hand, he could stand firm on principle and absorb the potentially damaging criticism that he’s leaving almost $1 billion in federal Medicaid payments on the table – all of which is new taxpayer-financed spending.

Pence is thought to be a dark horse GOP candidate for president in 2016. His decision on this policy issue will go a long way towards determining how viable such a campaign would be.

September 23rd, 2014 at 5:24 pm
New ObamaCare Glitch Could Cost Doctors Millions

Doctors who spent heavily trying to comply with ObamaCare’s electronic health records mandate could still be hit with costly penalties.

ObamaCare gives doctors until October 1, 2014, to switch from paper-based to electronic health records. Failure to comply results in losing 1 percent of federal reimbursements for treating Medicare patients.

Here’s the rub.

“[P]hysicians who went electronic for the first time this year are discovering that [the Centers for Medicare and Medicaid Services, or CMS] won’t be ready to officially register the evidence of their work until mid-October. That means they will miss the Oct. 1 deadline, and CMS will withhold 1 percent of their 2015 Medicare payments,” reports Politico.

That means that a doctors’ group like Morganton Eye Physicians in North Carolina spent $1.3 million to buy and implement new software – and added $250,000 to its annual operating budget – only to be threatened with a $65,000 penalty because the federal government can’t meet its own compliance deadline.

One would think CMS has a moral obligation to waive compliance until the agency is able to do its job, but so far it’s requiring doctors to submit to a cumbersome hardship process. How does a business politely explain that the hardship exists completely because of government ineptitude?

Welcome to ObamaCare’s bureaucratic hell. More episodes to follow.

September 3rd, 2014 at 8:08 pm
Wyoming Latest to Consider Medicaid Expansion

In my column this week, I explain how not every Medicaid expansion through ObamaCare is necessarily a bad thing. The crux of my argument is that states that use the extra money to move the program in a more market-friendly direction – and as a consequence, make it more cost-conscious and consumer-driven – should be given a chance to test their ideas.

This means that Republican governors in Indiana, Iowa, Pennsylvania – and now perhaps Wyoming – should be given some space before conservatives conflate them with other GOP leaders who simply expanded Medicaid without bothering to wring any reforms from the Obama administration.

Every state is already in the business of participating in Medicaid. If conservatives are willing to consider Paul Ryan’s Medicare reform a step in the right direction, then we should extend the same courtesy to Republican governors who are trying to do something similar with Medicaid.

At least for now.

September 2nd, 2014 at 7:28 pm
Tennessee Opts Into ObamaCare Medicaid Expansion

Another news cycle, another Republican governor decides to expand Medicaid with ObamaCare dollars.

Last Friday, Tennessee Republican Governor Bill Haslam joined Pennsylvania’s Tom Corbett, Indiana’s Mike Pence and others in trying to carve out a middle ground between a straight yes or no on expansion.

Haslam hasn’t committed himself to specifics, saying only that “sometime this fall” his administration will submit an alternative plan to federal regulators.

States like Wisconsin, Indiana, Pennsylvania, Arkansas and Iowa have won various levels of approval to use ObamaCare’s increased Medicaid funding to provide subsidized health insurance plans to some of the poorest members of their populations.

Expanding Medicaid is a tempting offer because the federal government pays for about half of every dollar spent on the state’s program. ObamaCare makes taking the plunge almost irresistible since it pays for every dollar of expansion until 2017, and 90 percent of all new spending until 2020.  For sitting governors with term limits, that translates into an opportunity to get lots of credit for helping poor people before most of the bill comes due.

The politics of ObamaCare are constantly evolving, and the lesson for conservatives about the law’s Medicaid expansion is this: Unless there is a credible alternative to growing government, many politicians will opt for good press and worry about the policy implications later.

Heading into the 2016 presidential cycle, there needs to be a way to determine which ideas adhere to constitutional principles, preserve the free market and bolster human flourishing – which includes access to health care.

The sooner, the better.

August 29th, 2014 at 6:09 pm
Pennsylvania Governor Says Yes to ObamaCare Medicaid Expansion

After years of rebuffing calls to participate in ObamaCare’s Medicaid expansion, Pennsylvania Republican Governor Tom Corbett is changing his mind.

Sort of.

While the announcement comes as a bit of a surprise, it doesn’t appear to be a total loss for fiscal conservatives. (Others may disagree, of course.)

According to the terms of the agreement between Gov. Corbett’s office and the Centers for Medicare and Medicaid, Pennsylvania won’t simply be expanding its Medicaid program. Instead, it will use the extra dollars made available under ObamaCare to pay for (i.e. subsidize) private health insurance plans for newly eligible state Medicaid beneficiaries.

The agreement stipulates that Corbett’s alternative is being allowed as a five-year “demonstration project,” meaning that its future is not assured. Much will depend on how the project’s measurements are defined, if the reforms Corbett supports are to survive.

For now, Pennsylvania joins the ranks of Indiana, Arkansas and Iowa as states that are attempting to use ObamaCare’s Medicaid expansion to decrease their uninsured population – without, of course, breaking the bank.

It’s hard to see how that will happen, but we now have at least four states offering themselves as very costly social science experiments. It should be interesting to see what the results will show.

August 14th, 2014 at 3:25 pm
Like IRS, CMS Emails Go Missing

It looks like Lois Lerner – the former IRS manager at the center of the scandal targeting conservative groups – isn’t the only Obama administration official who lost emails subpoenaed by Congress.

Marilyn Tavenner, the head of the Centers for Medicare and Medicaid Services, is now believed to have deleted emails sought by congressional investigators trying to understand why Healthcare.gov had such a horrendous rollout.

“In order to stay below the agency’s Microsoft Outlook email size limit, Tavenner would regularly delete emails after copying or forwarding them to her staff for retention,” says the MSNBC report that broke the story. “However, Tavenner didn’t follow that procedure every time, meaning some emails never made it to her staff for safekeeping before being deleted.”

That could turn out to be a costly oversight for Tavenner.

As Jillian Kay Melchior points out, “Federal law tasks heads of all federal agencies with ‘mak[ing] and preserv[ing] records containing adequate and proper documentation of the organization, functions, policies, decisions, procedures, and essential transactions of the agency and designed to furnish the information necessary to protect the legal and financial rights of the Government and of persons directly affected by the agency’s activities.’”

Unlike Lerner who claims her IRS computer crashed taking with it unrecoverable emails – a claim disputed by IT experts inside and outside the tax-gathering agency – Tavenner, at best, is pleading that she’s too busy to follow the law. At worst, she’s the latest Obama administration official caught skirting her legal obligations to hide inconvenient truths.

To my knowledge, Tavenner isn’t considered an overt Obama loyalist, so it’s possible that the missing emails are a genuine oversight by a busy administrator. The trouble is, Tavenner works in an administration seemingly filled with people who are unwilling to comply with the kind of document sharing necessary for the people – through Congress – to understand and judge what unelected bureaucrats are doing. One of the tragedies of bad behavior by some is the suspicion it casts on everyone else on the team.

So be it.

Darrell Issa (R-CA), Chairman of the House Oversight Committee, has already pledged to hold hearings on alleged wrongdoing by agency heads when Congress returns from its August recess.

Don’t be surprised to see a hearing scheduled to get the truth about Tavenner’s missing emails.

May 15th, 2014 at 1:02 pm
ObamaCare’s Medicaid Expansion Will Cost California an Additional $1.2 Billion

“Nearly one-third of California’s total population – roughly 11.5 million people – will be enrolled in Medi-Cal next year, according to Gov. Jerry Brown’s administration,” reports the L.A. Times.

“Enrollment is expected to exceed previous estimates by 1.4 million, and administration officials said it would cost the state $1.2 billion more than originally thought.”

Brown’s health policy czar calls the jump in enrollment part of the “woodworking effect;” meaning that the media’s attention on ObamaCare’s insurance exchanges enticed many people to sign up, only to find out they already qualified for Medi-Cal (California’s name for its Medicaid program).

Readers may recall that ObamaCare expands eligibility for Medicaid into higher income brackets. To get states to go along, ObamaCare pays for all of the new spending associated with covering these new enrollees (at least until 2017). But for those who would have qualified under the old system – where states contribute 50 cents to every dollar spent – the state gets no relief.

This is the scenario California finds itself in as officials head into the budget negotiation season needing to find an additional $1.4 billion they didn’t plan for.

Ever the populist, Brown is reframing Sacramento’s miscalculation as a case of voters needing to fund their good intentions. “I’m proud we did it,” referring to the expansion as “a huge social commitment on the part of the taxpayers of California.” “But we also have to take into account this thing is growing.”

April 1st, 2014 at 6:48 pm
ObamaCare Promotion Driving Up Medicaid Applications

“According to a recent study by Avalere, the average application rate [for Medicaid] has increased 27 percent among non-expansion states and 41 percent for those expanding,” writes Angela Boothe of the American Action Forum.

For example, Tennessee – a state that chose not to expand its Medicaid program under ObamaCare – is still experiencing severe pressure on its budget due to high numbers of people trying to enroll. Though only the beginning of April, the Volunteer State has already enrolled the maximum number of people it projected to cover for the year. Adding to the pressure on state budget writers is the reality that by refusing to expand Medicaid under ObamaCare – which covers 100 percent of the increased costs until 2017 – part of the expense for covering the new enrollees falls on the state. If you work in a non-Medicaid state agency in Tennessee, beware bean counters wielding knives.

The Avalere report highlights the fact that ObamaCare creates a unique burden for non-expansion states like Tennessee. Because of the controversial health law’s media saturation, millions of people are aware that they are probably eligible for some sort of government assistance to purchase health coverage. Of these, many are discovering that they already qualify for Medicaid, even before ObamaCare was enacted. The awkward situation for states like Tennessee is that ObamaCare is still expanding Medicaid, just without any extra financial help.

If non-expansion states like Tennessee continue to see record Medicaid enrollment increases this year, don’t be surprised if anti-ObamaCare governors and legislatures start to rethink their opposition to expansion. Of course, as I’ve explained elsewhere, it would be a serious mistake to swap a three-year federal bailout for decades of increased costs by expanding Medicaid on ObamaCare’s terms. But for desperate lawmakers looking for a quick fix, ObamaCare’s “free money” may be too tempting to pass up.

March 19th, 2014 at 12:18 pm
California’s ObamaCare Exchange Expands Coverage, But at What Cost?

There is a lot of misreporting with ObamaCare numbers as the open enrollment period draws to a close March 31.

Consider these two examples from California.

First, Covered California – the state’s ObamaCare exchange – announced recently that more than 1 million people had applied for coverage and chosen an insurance plan. Liberal bloggers at the Daily Kos are cheering this news as a triumph. Before the enrollment period began last October, the state set as a goal 696,000 enrollments by the end of March. At 1,018,315 as of the end of last Saturday, ObamaCare supporters think they are 300,000 over their goal.

Except Covered California isn’t anywhere close. Look again at the goal and the announcement. California wants at least 696,000 people to be enrolled by the end of March. To date, they have over 1 million people who have applied to be enrolled. That’s not the same thing. In fact, in speaking recently to a source at Medi-Cal – the state’s Medicaid program – I was told that thousands of applications are in limbo across the state because computer systems at the state and county levels don’t talk to one another. This impacts Covered California’s numbers because many of the uninsured applying for insurance through the exchange qualify for the state’s expanded Medicaid program. To compensate for the technology failure, caseworkers are processing emergency requests by hand. So to recap, don’t be fooled by news about applications posing as enrollments.

The other example of misreporting is on the type of coverage most enrollees are choosing. The most popular plans also cost the least. That’s not surprising since ObamaCare requires people to purchase health insurance or pay a fine. On one hand, the increased number of policyholders does allow ObamaCare supporters to say the law is covering more people. But at what price? “[E]xperts worry plans with lower premiums could come with a different cost: Fewer doctors and hospitals could mean fewer choices and longer waits for care,” reports the San Jose Mercury-News.

Lower premiums also mean higher out-of-pocket costs. I’ve written previously about how reporting on lower-than-expected premiums ignores across-the-board spikes in deductibles. The IRS says that annual deductibles larger than $1,250 should be considered high. On California’s exchange, it’s common for the lowest priced plans to have deductibles in excess of $2,000 annually (and some as high as $4,500 or more).

When all the dust settles after March 31, it’s very likely that California won’t have hit its enrollment goal, and that of the enrollees it does have many will come to loathe the longer wait times and higher costs. Maybe then we’ll get more help from journalists in how ObamaCare insurance actually works. But probably not.

February 4th, 2014 at 1:59 pm
CBO: ObamaCare Incentivizes More Welfare, Less Work

A new report by the non-partisan Congressional Budget Office predicts the Affordable Care Act (i.e. Obamacare) will cause up to 2 million lower-income workers to leave the labor force over the next decade because they will make more in government benefits than as a private employee.

“CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor – given the new taxes and other incentives they will face and the financial benefits some will receive,” the agency says in Appendix C, Labor Market Effects of the Affordable Care Act: Updated Estimates (pdf).

The incentive to drop out of the workforce is one’s eligibility for a government subsidy to help pay for an insurance plan bought through an Obamacare exchange. Since eligibility for a subsidy phases out as a person’s income rises, people who will receive subsidies will have to factor in whether to take a job that makes more money, but will likely reduce or eliminate eligibility. In this scenario, taking the job may actually result in a net loss of income as the person must now pay for the full cost of health insurance.

The disincentive to work also applies to those hanging between Medicaid and Obamacare subsidies. Eligibility for Medicaid means the cost to the beneficiary is nothing (at least not directly). In this scenario, qualifying for a subsidy increases one’s out-of-pocket expenses, making it financially smart (for the individual) to work less and stay on Medicaid.

It’s important to emphasize that deciding to work less to receive more in government benefits is a financially rational decision for individuals to make, and one that any economist would readily predict. My hunch is that at least some of Obamacare’s architects knew this and designed their programs accordingly.

The problem, of course, is that convincing millions of people not to work is not financially sustainable for the country as a whole.

January 24th, 2014 at 2:29 pm
ObamaCare’s Medicaid Expansion Poses Risks for GOP Candidates

For all the attention given to Obamacare’s federal and state exchanges it’s easy to forget that expanding Medicaid remains the single biggest way the controversial law intends to increase the amount of people covered by health insurance.

And unlike the private plans available on the exchanges, every new Medicaid enrollee is completely dependent on the government.

In states where Democratic lawmakers chose to expand Medicaid under Obamacare, the spike in enrollments could pose problems for Republican candidates.

Greg Sargent, after noting that around 75,000 people have signed up for expanded Medicaid in West Virginia, asks, “How would the GOP Senate candidate in West Virginia, Rep. Shelley More Capito, respond if asked directly if she would take insurance away from all these people?”

Sargent’s liberal frame is sure to be echoed in the 2014 election as Democrats try to portray Republicans as heartless skinflints. In this telling, the only options are either to embrace Obamacare’s massive expansion of the welfare state or return to the status quo of sizeable numbers of people unable to get health insurance. (To combat this framing, Republicans should unite around an already existing proposal that gives them the upper hand.)

But that’s at the federal level. More locally, GOP gubernatorial candidates in states that (1) expanded Medicaid and (2) appear most likely to elect a Republican governor are staying mum about repealing Obamacare’s Medicaid expansion.

“None of these Republicans is pledging to repeal the Medicaid expansion put in place by a Democratic governor,” according to Jonathan Bernstein.

As Bernstein puts it, “Liberals assume that once benefits are extended, no government will take them away.”

Unless Republicans at the state level show the kind of policy moxie exhibited by Wisconsin’s Scott Walker, that prediction might come true.

January 3rd, 2014 at 2:52 pm
Study: ObamaCare Medicaid Expansion Could Increase ER Visits, Costs

A new study by a top flight team of academic researchers destroys the Obama administration’s premise for expanding Medicaid coverage.

The report, authored by researchers at MIT, Harvard and Columbia, focuses on an Oregon experiment to expand Medicaid that predates Obamacare by about five years. The findings show that giving Medicaid to an uninsured person increases the recipient’s visits to the emergency room up to 40 percent. This “runs counter to government assumptions that the newly insured would choose lower-cost options for care, such as doctors’ offices,” says Businessweek.

Avik Roy speculates that one of the reasons for why Medicaid enrollment increases unnecessary ER visits is that many doctors are refusing to accept new Medicaid patients because the federal government pays less than private insurance for the same service. Difficulty in obtaining primary care results in using the ER as the provider of first resort.

If the Oregon study is an accurate predictor of Medicaid patient behavior under Obamacare – and there is every reason to believe it is – then federal spending is about to soar.

With Obamacare’s Medicaid expansion already enrolling 3.9 million new people, the higher costs associated with emergency room visits could balloon actual spending far above the Obama administration’s current projections.

To make matters worse, previous research from Oregon shows that moving from no insurance to Medicaid does not improve health outcomes. Instead, it shifts the cost of care from the beneficiary to the taxpayer (and the provider who either eats the diminished compensation or passes it on to other patients).

So, to recap, Obamacare’s Medicaid expansion looks very likely to increase costs while having zero impact on the health of the beneficiaries.

Let this be a confirmation that the decision by governors who chose not to expand Medicaid under Obamacare was the sensible, scientifically proven way to go.