Archive for November, 2015

Medicaid Expansion Is Proving to Be a Bad Bargain for States

Tuesday, November 10th, 2015

New ObamaCare enrollees and costs have exceeded estimates and threaten to swamp budgets.
By Evelyn Everton & Chris Hudson

Advocates in Washington of the Affordable Care Act have been fighting tooth and nail to preserve the president’s signature health-care law—and they’re fighting even harder to expand it in the states. Conservative lawmakers in our home states of Utah and Florida recently defeated a combined three proposals to expand Medicaid under ObamaCare. They were absolutely right to do so, as the fiscal messes in states that did expand Medicaid demonstrate.

Recall that the Affordable Care Act was designed to essentially bribe states to expand their Medicaid programs: The feds offered to pay 100% of additional costs through 2016, dropping to 90% by 2020. This “free money” prompted 30 states and the District of Columbia to take the deal. Democratic activists have joined with state hospital lobbies to pressure lawmakers in the remaining 20 state capitals to follow.

That was certainly the case this year in Utah and Florida, where we live. This spring the Utah state Senate passed a Medicaid expansion bill backed by Gov. Gary Herbert, who espoused the “free money” argument during his January State of the State address. “We can either watch our hard-earned tax dollars remain on the table in Washington, D.C.,” he said, “or we can bring back a significant amount of our own money to be spent on Utahans.” The more conservative House, which noted the proposal’s $328 million price tag over 10 years, never passed the bill out of committee.

In September Mr. Herbert and five other state leaders—colloquially, the “Gang of Six”—came back with a revised, and even worse, offer. The proposal would create 16 new taxes on health-care providers, amounting to roughly $50 million annually by 2021. Starting in 2017, this would cost each hospital about $4.5 million a year, and each doctor roughly $800. Taxes would also have been levied on ambulances, podiatrists, opticians, chiropractors and even nurses. House Republicans rejected it 56-7 in an October caucus vote, effectively killing Medicaid expansion for the rest of this year.

A more heated fight consumed Florida this spring, when Senate leaders tried to fold Medicaid expansion into the state’s annual budget. According to the Florida Senate Committee on Appropriations, it would cost state taxpayers $96.6 million in the first two years, and a yet-to-be -determined amount when the state assumed its full 10% share in 2020.

The Florida House, concerned over the unknown future liabilities, refused to pass the plan. This led to a budget standoff, forcing a 20-day special session in June. After almost seven hours of debate, the chamber rejected the Senate’s proposal 72-41.

Florida and Utah taxpayers will thank their legislators in the years to come. Consider the experience of the states that did expand Medicaid. “At least 14 states have seen new enrollments exceed their original projections, causing at least seven to increase their cost estimates for 2017,” the Associated Press reported in July.
The AP says that California expected 800,000 new enrollees after the state’s 2013 Medicaid expansion, but wound up with 2.3 million. Enrollment outstripped estimates in New Mexico by 44%, Oregon by 73%, and Washington state by more than 100%.
This has blown holes in state budgets. Illinois once projected that its Medicaid expansion would cost the state $573 million for 2017 through 2020. Yet 200,000 more people have enrolled than were expected, and the state has increased its estimated cost for covering each. The new price tag? About $2 billion, according to the Chicago Tribune. TPUB -3.17 %

Enrollment overruns in Kentucky forced officials to more than double the anticipated cost of the state’s Medicaid expansion for 2017, the AP reports, to $74 million from $33 million. That figure could rise to $363 million a year by 2021.

In Rhode Island, where one-quarter of the state’s population is now on Medicaid, the program consumes roughly 30% of all state spending, the Providence Journal reports. To plug this growing hole, Rhode Island has levied a 3.5% tax on insurance policies sold through the state’s ObamaCare exchange.

Even Ohio, whose Republican Gov. John Kasich is running for president on a platform of fiscal responsibility, finds itself in a Medicaid bind. State spending on the program has grown by $5.8 billion since 2011. The Ohio Department of Medicaid projects that by 2017 spending will total $28.2 billion—a 59% increase during Mr. Kasich’s tenure.
Unlike the federal government, most states have strict balanced-budget requirements. As Medicaid costs spiral, lawmakers must cut spending from vital priorities like education and infrastructure, raise taxes or do both.

Which is to say that expanding Medicaid under the pretense that it represents “free money” from the federal government is the epitome of being penny-wise and pound-foolish. State legislators in Florida and Utah who rejected these temptations deserve much credit for their principled stands. Lawmakers in the remaining 18 states that have yet to accept ObamaCare’s Medicaid expansion would do well to follow their lead and stand firm against this deceptive bargain.

Ms. Everton and Mr. Hudson are Utah and Florida directors of Americans for Prosperity.

What’s wrong with ObamaCare

Thursday, November 5th, 2015

Michael Tanner 10-28-15

Low enrollment, failing co-ops, rising premiums — the headlines continue to roll in. Somewhere in an alternative liberal universe, Paul Krugman is writing yet another column telling us that Obamacare is a success. Just this week the New York Times economic guru told us — again — that “President Barack Obama, Nancy Pelosi, and Harry Reid, who pushed the Affordable Care Act through despite total opposition from the GOP, have a lot to be proud of.” Why? Because — you guessed it — “the Affordable Care Act has been a success.” But out in the real world, the bad news keeps coming, drop by drop, drip by drip, until we are seeing a virtual flood of Obamacare awfulness.

No doubt, the Affordable Care Act can claim some modest achievements. The number of Americans without health insurance is down significantly, although there is a question about how much that is due to the ACA and how much to other factors, like the end of the recession. And some predictions by Obamacare opponents, including me, have not yet come to pass. For example, health-care costs have not spiked. Instead, they have pretty much continued their ten-year trend of moderation, suggesting the ACA has had little impact, good or bad. Other issues remain up in the air. For instance, studies are mixed about Obamacare’s impact on jobs. But overall, the tide of bad news is pretty hard to ignore. RELATED: Obamacare Enters Downward Spiral as Co-ops Fail and Enrollment Slows Just last month, the administration was forced to announce that next year’s Obamacare enrollment will be relatively flat — far below projections.

The White House says it expects just 10 million people to be enrolled in Obamacare by the end of 2016. That’s up slightly from the 9.1 million who will have signed up by the end of this year, but it’s just half the most recent Congressional Budget Office projection that as many as 20 million Americans would be enrolled. I guess no amount of cajoling, bribery, or punishment can make people buy a lousy product. ADVERTISING The poor enrollment won’t be helped by the news that yet more problems with have surfaced. According to Robert Pear of the New York Times, recent tests of some of the new features of the website have — surprise — uncovered bugs. Details of health plans like deductibles and participating doctors have been displayed inaccurately, and “officials and insurers are finding that the solution to one problem may create new problems.” RELATED: Thousands of Obamacare Enrollees Lose Their Plans, Again The last few weeks have also brought us the news that the ACA’s vaunted health-care co-ops are failing across the country. This month, the co-ops in Oregon, Colorado, Tennessee, and Kentucky announced that they would be winding down operations because of lower-than-expected enrollment and solvency concerns. They join four other co-ops that previously announced they would be closing their doors.

In total, only 15 out of the 23 co-ops created by the law are planning to stay in business. As a result of the most recent closures, hundreds of thousands of people will lose their insurance plans. But then, we already knew that “If you like your plan, you can keep it” was not a priority for Obamacare advocates. Share article on Facebookshare Tweet articletweet And let us not forget the news that health-insurance premiums are shooting up. According to independent analysts, premiums for exchange-based plans are expected to rise 12 to 13 percent nationwide on a weighted-average basis for the open-enrollment period starting November 1. But the nationwide average obscures some truly horrific increases in some states. The weighted-average premium increase in Minnesota, for example, will be an astounding 41 percent. In Alaska, premium hikes will top 39 percent. And in Tennessee, rate hikes will exceed 28 percent. In fact, in a dozen states, rate hikes of more than 20 percent have already been approved by regulators. And in another five states, rate hikes of more than 20 percent are pending, including a potential 28 percent increase in North Carolina. It’s becoming harder and harder to keep calling it the Affordable Care Act.

The much-feared adverse-selection death spiral that could wreck the entire insurance market may be starting. But perhaps most worrisome, the much-feared adverse-selection death spiral that could wreck the entire insurance market may be starting. According to researchers with the Urban Institute and the Robert Woods Johnson Foundation, medical loss ratios (MLRs) are threatening the viability of insurers in as many as 27 states. Medical loss ratios represent the proportion of the premiums collected by an insurer that are paid out in benefits. Obamacare set its MLR target at 80 percent of premiums, and in fact it penalized insurers that paid out less than 80 percent. But the Urban Institute and Johnson Foundation researchers found that average MLRs across all health plans sold on 16 state exchanges ranged from 90 to 99 percent — nearly the whole amount collected in premiums. And in 11 other states it’s even worse: MLRs actually exceeded 100 percent of premiums collected. In Massachusetts, the home of Romneycare, the MLR reached 121 percent of premiums. Insurers obviously cannot stay in business for long if they pay more in benefits than they collect in premiums. Losing money on the products you sell is not a good business model. More Obamacare Progressives, Take Note: Obamacare and Gun Control Did Not Propel You to Victory Last Night Obamacare Is Dead Obamacare Is Still Failing One reason for the high MLRs is adverse selection. The young and healthy simply haven’t signed up for Obamacare in the same numbers as those who are older and sicker.

The only way for insurers to offset their skyrocketing MLRs is to hike premiums still further. The researchers suggest that premiums in the worst states could have to rise by an average of 34 percent, and possibly as much as 52 percent. But premium hikes of that magnitude would almost certainly further discourage younger and healthier Americans from buying insurance (even with increased Obamacare fines . . . er . . . penalties . . . er . . . taxes starting next year). Should that happen, stay tuned. Oh, and just this week, the New York Times reported that “Tens of thousands of people with modest incomes are at risk of losing health insurance subsidies in January because they did not file income tax returns.” Those low-income Americans whom Obamacare was supposed to help are most likely to lose their subsidies, because they make too little money to file federal income taxes.

An IRS memo from July revealed that at that time, 710,000 taxpayers who received exchange subsidies had not filed a tax return or requested an extension, as was required. But, hey! Don’t worry, be happy. Obamacare is a success. — Michael Tanner is a senior fellow at the Cato Institute and the author of Going for Broke: Deficits, Debt, and the Entitlement Crisis. You can follow him on Twitter @mtannercato, or on his blog,

ObamaCare’s slow motion implosion

Thursday, November 5th, 2015
Andy Puzder Nov. 1, 2015

Health and Human Services Secretary Sylvia Burwell announced recently that she expects 10 million people to be enrolled in health-care coverage through ObamaCare’s exchanges by the end of 2016. What she didn’t mention was that in March of last year the Congressional Budget Office predicted that 21 million people would be enrolled in 2016—more than double the new estimate.

The administration says the difference can be explained away: For instance, fewer companies dropped coverage than expected, thus fewer employees are migrating from employer-sponsored plans to the exchanges. “We haven’t seen much of a shift at all,” Richard Frank, a health and human services assistant secretary, told USA Today.
But the question isn’t where Americans are getting health insurance. It is whether ObamaCare will provide more Americans with affordable insurance for decades to come.

Supporters credit ObamaCare with helping nine million uninsured Americans find coverage in 2014. But a new paper from the Heritage Foundation, however, suggests that nearly all of the increase came from adding nearly nine million people to the Medicaid rolls. In other words, ObamaCare expanded coverage in 2014 to the extent that it gave people free or nearly free insurance. That goal could have been accomplished without the Affordable Care Act. To justify its existence, ObamaCare must make affordable private insurance available to a broad cross-section of uninsured Americans who are ineligible for Medicaid. But with fewer people buying insurance through the exchanges, the economics aren’t holding up. Ten of the 23 innovative health-insurance plans known as co-ops—established with $2.4 billion in ObamaCare loans—will be out of business by the end of 2015 because of weak balance sheets.

And while rates vary widely by state, the cost for private insurance through the exchanges is also increasing dramatically. An analysis by consulting firm Avalere Health released on Friday shows that some of the most popular insurance plans in the ObamaCare exchanges will experience double-digit premium hikes in 2016. One problem is that nearly half of the 10.5 million uninsured people eligible for ObamaCare are between the ages of 18 and 34—and young people tend to be healthy and unwilling to pay for pricey coverage they don’t need. But propping up ObamaCare requires this group’s subsidizing the medical costs of the aging and ill. So far, no luck. It makes sense for healthy young people to pay a penalty rather than purchase the insurance. And in 2015 that’s what 6.6 million people did, according to the IRS. Next year the minimum penalty increases to $695 or 2.5% of income above $10,000, whichever is greater. In many cases, that’s still much cheaper than insurance.

At our company, CKE Restaurants, we offer eligible employees ObamaCare-compliant coverage. We used federal guidelines and set our employee monthly contribution for the least expensive Bronze plan at $1,116 a year, or about 25% of the annual premium. The company pays the rest, and the deductible is $5,500. But even when next year’s higher penalty kicks in—2.5% of income above $10,000—an employee would need to earn more than $50,000 a year for the penalty to exceed the premium.
Then there is another problem: It is easy to avoid or limit exposure to the penalty with some simple tax planning, as there are 30 different exemptions (which 12 million people claimed last year) and the IRS collects the penalty by reducing an employee’s tax refund.

The uninsured also know they can receive medical care at the emergency room. And if they fall ill, they can always purchase insurance during the next enrollment period, because ObamaCare eliminated existing conditions as a justification for denying coverage.

Our employees are smart enough to figure this out. Of our company’s 5,453 eligible employees, only 420 enrolled. Our experience isn’t unique, according to press reports. A March survey by the consulting firm Mercer found “virtually no change between 2014 and 2015” in the average percentage of employees signed up for employer-sponsored health plans. Mercer found a 1.6% increase in the absolute number of enrolled employees, but that happened thanks to a growing workforce, not the law.

How have things changed under ObamaCare? Wealthy Americans continue to have health insurance, albeit at a higher price. But they can afford it. Many middle-class Americans are paying higher premiums they can hardly afford. And then millions more low-income Americans have heavily subsidized insurance or Medicaid coverage.
However, millions of other Americans who enjoyed good individual insurance before ObamaCare have found themselves forced out of affordable plans, with their new premiums rising rapidly. Other middle- and working-class Americans who were uninsured are still uninsured and paying the penalty or claiming an exemption. That isn’t affordable care. In many cases, it isn’t care at all.
Mr. Puzder is the chief executive officer of CKE Restaurants.

Remington Arms says “Goodbye New York”

Thursday, November 5th, 2015

Gov. Andrew Cuomo (D-NY) Doesn’t Want Them

Remington, one of the world’s largest gun manufacturers, will on Monday join Gov. Robert Bentley (R) to announce they are bringing over 2,000 jobs to Alabama. Most of the jobs will be relocated from their Ilion, NY plant, and the initial investment in Alabama will be $87 million.

Founded in 1816 in upstate New York, the company is one of the nation’s oldest continuously operating manufacturers. Remington is the only U.S. manufacturer of both firearms and ammunition products and one of the largest domestic producers of shotguns and rifles.

Remington first began considering new locations after the New York legislature passed the Secure Ammunition and Firearms Enforcement (SAFE) Act in response to the tragic shootings in Newtown, Conn. It broadened the definition of so-called “assault weapons” to include a wide range of guns, including the Bushmaster, which was being manufactured at Remington’s New York plant.

A month ago Gov. Andrew Cuomo (D-NY) said “extreme conservatives” who are “right-to-life, pro-assault-weapon, anti-gay,” have “no place in the state of New York.” Gov. Bentley responded “In Alabama we strongly support and uphold our great U.S. Constitution on which our nation and our states were founded.

“The Constitution serves to protect individual freedoms. Among them are those guaranteed in the Second Amendment, which protects the right of the people to keep and bear Arms. We will protect the freedoms of individuals and welcome any one or any company to Alabama to discover as so many have, that we are a pro-business state filled with good, hardworking people.

“If Gov. Cuomo doesn’t want hard working pro-life and pro-2nd Amendment people in his state, we will gladly take them here in Alabama.”