We All Could Get Tax Cuts If Congress Repeals Obamacare Mandate to Lower Rates

The Senate should be commended for including repeal of Obamacare’s individual mandate in its tax reform plan. Repealing the mandate that forces individuals to buy health insurance would provide tax relief to millions of Americans who can’t afford the rising costs of Obamacare and otherwise would be subject to the tax penalty.

The Congressional Budget Office estimates that over 10 years repealing the mandate would increase federal revenue by $338 billion. This additional revenue should be used to lower tax rates for all Americans, not used to expand special-interest credits and deductions.

Repealing the individual mandate can be good for tax reform. But more importantly, it is destructive and poorly designed health care policy. My Heritage Foundation colleagues Whitney Jones, Marie Fishpaw, and Edmund Haislmaier explain in a recent commentary for The Daily Signal:

The individual mandate is Obamacare’s requirement that every American enroll in health insurance or be fined. The idea was to push lots of healthier people—who didn’t need or want Obamacare’s expansive, overpriced coverage—to buy those plans in order to subsidize the cost of care for others.

But the experience with Obamacare over the last four years shows that the individual mandate does not work.

According to the most recent IRS reports, 6.2 million tax filers chose to pay the tax penalty rather than buy Obamacare insurance, 12.7 million tax filers obtained an exemption from the mandate, and 4.3 million tax filers omitted their health insurance status on their tax return.

In total, 23.2 million tax filers paid the fine, obtained an exception, or simply ignored the individual mandate.

They go on to explain that, up to this point, the IRS has not fully enforced the individual mandate. However, this coming tax year, Americans will be required to report health care coverage on their tax returns in order to receive a tax refund. Including repeal of the individual mandate in tax reform also allows Congress to cut taxes by another $338 billion over 10 years.

Congress should not use this new headroom to further increase any credits or special deductions. This seems to be what the Senate is proposing. The most recent changes to the Senate version of the Tax Cuts and Jobs Act would repeal the individual mandate but use the money to add another $350 to the child tax credit.

Rather than increasing the child tax credit or adding back in deductions for property taxes (as Sen. Rand Paul, R-Ky., has proposed), this money should be used to further lower tax rates on all Americans, not just a select few.

Repealing the individual mandate would provide relief to millions of Americans just when they are about to need it most. The full power of the IRS is about to start enforcing Obamacare’s tax penalty. Tax reform must address such a looming penalty.

Tax reform should repeal the individual mandate for numerous reasons. How Congress uses the additional revenue also will be important. Lawmakers should focus on further lowering tax rates, rather than adding to already burgeoning credits for select taxpayers.

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Senate to Add Obamacare Repeal to Tax Bill, and Some House Members Support, Too

As Congress works to pass tax reform by the end of the year, Senate Majority Leader Mitch McConnell, R-Ky., announced that a repeal of Obamacare’s individual health care mandate would be added to the Senate version of the tax bill.

“We’re optimistic that inserting the individual mandate repeal would be helpful,” McConnell said Tuesday, speaking about getting the bill passed. 

Sen. Mike Lee, R-Utah, called repealing the individual mandate a “fantastic” way to help working families. “By itself, repealing the individual mandate is good policy and good politics. It is one of the most unpopular parts of Obamacare,” Lee said in a statement provided to The Daily Signal.

Sen. Ron Wyden, D-Ore., announced his opposition to the repeal, saying it would “cause millions to lose their health care, and millions more to pay higher premiums, all to pay for more tax breaks for multinationals,” according to The Washington Post.

Conservative Sens. Rand Paul, R-Ky., and Tom Cotton, R-Ark., announced their support for repealing the mandate.

Neither the House or the Senate version of Republicans’ tax reform plan had originally included repeal of the Obamacare individual mandate, and the current House version still does not.

“I urge the House to include the mandate repeal in their tax legislation,” said Cotton in a statement, where he also said that repealing the mandate pays for more tax cuts for working families and protects them from being fined by the IRS for not being able to afford insurance that Obamacare made unaffordable in the first place.”

Republican Study Committee Chairman Rep. Mark Walker told The Daily Signal in an interview Monday that he thought House members would be favorable to adding repeal to the tax bill. “In the House, do I think it could pass? Yes,” Walker said. “From what I am hearing that we will move, a majority of our conference as well as senators, would be OK moving forward” with repeal.  

In a statement Tuesday, Walker said, “Adding the repeal of the individual mandate to tax reform could be the most consequential step this Congress takes to date in fulfilling our promises to the American people to both reform the tax code and repeal Obamacare,”

“We agree with President Donald Trump that it should be included,” he added.

Rep. Jim Banks, R-Ind., told The Daily Signal in an interview Monday that the House should vote to repeal the individual mandate as part of the tax reform plan.

“It does appear that there are Democrats in the House or the Senate who … are on board with the tax reform so [for] Republicans in the House [who] already voted once to repeal the individual mandate, there’s no reason why we couldn’t get 217 votes to do that again,” Banks said.

The top tax writer in the House, Texas Republican Rep. Kevin Brady, mentioned the possibility of the mandate repeal being part of tax reform Nov. 2.  “The president feels very strongly about including this at some step before the final process and he’s told me that twice by phone and once in person,” said Brady, the chairman of the House Ways and Means Committee.

On Wednesday, the Congressional Budget Office significantly revised its estimate on how much repealing the individual mandate in Obamacare would reduce deficits in the federal budget to $338 billion between 2018 and 2027, down from the $416 billion between 2018 and 2026.

Trump has made passing tax reform a goal of his first year in office and tweeted on Monday his support for repealing the individual mandate of Obamacare as part of tax reform.

“The president’s tweet … was a clear signal from the White House that he’s fully in support of repealing the individual mandate in tax reform,” Banks said, adding:

But even leading up to his tweet, there has been a lot of momentum and discussion via House and Senate members that that’s the right thing to do and it offers a great deal more in savings to give us room to do more within tax reform, so it’s a commonsense way forward with a lot of broad support among center-right members in the House and the Senate.

Trump also said Nov. 2 that the passage of tax reform would be “a big beautiful Christmas present,” for American taxpayers.

The House Republican tax plan, released Nov. 2 by Brady, House Speaker Paul Ryan, R-Wis., and other GOP members condenses the current seven tax brackets to three, nearly doubles the standard deduction, and caps the amount taxpayers can write off in state taxes at $10,000.

The Senate Republican tax plan, released Nov. 8, eliminates the state and local tax deduction and keeps the current seven brackets but lower rates.

Rep. Ted Yoho, R-Fla., said repealing the individual mandate within the tax plan would mean great relief for business people.

“I think it’s doable and I think it’s something we should do,” Yoho said in an interview with The Daily Signal, adding:

By getting rid of the individual mandate, you are going to see more people get on employer health care plans and you should see a drop of the overall cost of insurance.

Repealing the individual mandate could also advance Obamacare repeal if Congress decides to pursue it in 2018, Ed Haislmaier, a senior research fellow in The Heritage Foundation’s Center for Health Policy Studies, suggested in a statement to The Daily Signal.

“If the mandate is repealed as part of tax reform, then any related coverage effects will no longer be a factor the next time Congress takes up broader repeal and replace legislation,” Haislmaier said.

According to Investors Business Daily, about 8 million people faced penalties in 2016 for not complying with the Obamacare individual mandate.

According to The Intercept, Sen. Susan Collins, R-Maine, who announced she would not support a bill that partially repeals Obamacare in September, said at the time, “I have been strongly leaning no, but I wanted to have the estimate of the coverage problem confirmed by CBO before reaching a final decision.”

The Los Angeles Times also reported in September that “Collins’ announcement [on her Obamacare decision] followed the release of a preliminary CBO analysis of a bill sponsored by Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La. The office predicted ‘the number of people with comprehensive health insurance that covers high-cost medical events would be reduced by millions.’”

Marie Fishpaw, director of domestic policy studies at The Heritage Foundation’s Institute for Family, Community, and Opportunity, said repealing the individual mandate as part of the tax reform package is overdue.

“This would provide relief to millions of Americans forced to either buy health insurance in a market broken by Obamacare’s mandates or pay tax penalties,” Fishpaw said. “While Congress still must provide broader relief from Obamacare’s costly insurance regulations, repealing the individual mandate in the tax bill would be a strong first step in the right direction.”

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Senate Makes Bold Move, Includes Repeal of Obamacare’s Individual Mandate in Tax Bill

News broke on Tuesday that the Senate will include repeal of Obamacare’s individual mandate in its final tax bill.

This is something President Donald Trump has called for, and it’s exactly the right move.

It’s critical that Congress take every opportunity to undo Obamacare’s damage. Repealing the individual mandate is a great place to begin the necessary work of undoing Obamacare regulatory burdens and tax increases that have driven up costs and reduced plan value and availability .

The individual mandate is Obamacare’s requirement that every American enroll in health insurance or be fined. The idea was to push lots of healthier people—who didn’t need or want Obamacare’s expansive, overpriced coverage—to buy those plans in order to subsidize the cost of care for others.

But the experience with Obamacare over the last four years shows that the individual mandate does not work.

According to the most recent IRS reports, 6.2 million tax filers chose to pay the tax penalty rather than buy Obamacare insurance, 12.7 million tax filers obtained an exemption from the mandate, and 4.3 million tax filers omitted their health insurance status on their tax return.

In total, 23.2 million tax filers paid the fine, obtained an exception, or simply ignored the individual mandate.

And with good reason—the products they were being forced to buy were from a private market broken by Obamacare’s many regulatory mandates. Plan prices skyrocketed and plan quality and availability dropped.

In the face of this situation, many Americans had to choose: Do I buy an overpriced product that doesn’t meet my needs, or do I pay a tax penalty and look for other alternatives?

With costs for plans continuing to rise, and possibly outpacing the ability of individuals to pay, it’s likely that a growing number of individuals will determine that it’s better to pay the penalty than pay for overpriced coverage.

And pay they will. Until now, the IRS has been lax in its enforcement of the mandate. However, this upcoming tax year the IRS will begin to actively enforce the individual mandate by requiring proof of health insurance coverage.

In previous years, Americans have been able to omit reporting health care coverage and still receive a tax refund. No longer will this be the case.

Moving forward, the IRS will refuse the submission of a tax return unless it includes proof of coverage, a coverage exemption, or payment (read: tax) for lack of coverage.

Repealing the individual mandate would provide relief to millions of Americans who have to either buy a health insurance product they don’t want, or pay tax penalties.

It’s possible that coverage numbers would go down at least somewhat after repealing the individual mandate. But that wouldn’t be because people are being kicked off of coverage. It would be because some Americans will either drop plans that are a bad deal for them, or not buy those plans in the first place.

Rather than forcing people to buy coverage that government bureaucrats think they should have, lawmakers should focus on creating market conditions that allow Americans to buy plans that they actually want.

That requires Congress to roll back the broken Obamacare regulations that are driving up the cost of insurance for millions of Americans—including the benefit mandates, actuarial value standards, and rating restrictions that drive up the cost of premiums.

Moreover, if Congress wants to encourage people to buy coverage rather than force them to do so, it could provide regulatory relief to the states to give them options to reward healthy individuals for buying and keeping continuous coverage.

Congressional leaders need to get back to work to undo Obamacare’s damage, and the Senate is leading the way by placing the individual mandate on the chopping block.

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Conservative Senator Renews Calls for Transparency After CBO Revises Obamacare Mandate Estimate

The Congressional Budget Office significantly revised its estimate on how much repealing the individual mandate in Obamacare would reduce deficits in the federal budget.

“I feel like I’m trapped in a game of Calvinball,” Sen. Mike Lee, R-Utah, said in a statement. “Just a few months ago the CBO had us playing by one set of rules for debating health care policy and now we are being told those rules have been completely changed for tax policy. This is simply unacceptable.”

Earlier this year, CBO had said repealing the Obamacare mandate would reduce deficits by $416 million. In the revised estimate, released Wednesday, it predicted it would reduce the deficit by $338 billion.

Rep. Kevin Brady, R-Texas, said Friday that Republican’s tax plan unveiled Nov. 2 could potentially include a repeal of the individual health care mandate in Obamacare.

CBO director Keith Hall said the CBO would estimate that repealing the individual mandate in 2019 would “reduce federal budget deficits by $338 billion between 2018 and 2027 relative to CBO’s most recent baseline.”  He also wrote on the agency’s website:

The agencies are in the process of revising their methods to estimate the repeal of the individual mandate. However, because that work is not complete and significant changes to the individual mandate are now being considered as part of the budget reconciliation process, the agencies are publishing this update without incorporating major changes to their analytical methods.

In December 2016, the CBO estimated that repealing the individual mandate and other provisions such as marketplace subsidies would reduce deficits in the federal budget by $416 billion between 2018 and 2026.

Lee said to counter the CBO’s lack of transparency, Congress must pass the CBO Show Your Work Act of 2017.

The Act, according to Lee’s office, would “require the CBO to publish its data, models, and all details of computation used in its cost analysis and scoring.”

The CBO would be able to retain its function as official scorekeeper of congressional budget proposals, however “the American people and the economic community would be able to see what’s going on in all those spreadsheets and algorithms,” according to Lee’s office.

The bill, which Lee introduced in August, currently has 14 co-sponsors including Sens. Roy Blunt, R-Mo.; Ben Sasse, R-Neb.; Tom Cotton, R-Ark.; Ted Cruz, R-Texas; Steve Daines, R-Mont.; Jim Inhofe, R-Okla; Ron Johnson, R-Wis.; James Lankford, R-Okla.; Rand Paul, R-Ky.; David Perdue, R-Ga.; Jim Risch, R-Idaho; Pat Roberts, R-Kan.; Mike Rounds, R-S.D.; Marco Rubio, R-Fla.; and Roger Wicker, R-Miss.  

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The Ugly Consequences of Single-Payer Health Care

The late, great Nobel Laureate economist Milton Friedman said it best: “There’s no such thing as a free lunch.”

Friedman’s pithy proverb reminds us that there is also no “free health care.” It’s a timely reminder, as Sen. Bernie Sanders, I-Vt., is making a public push for his “Medicare for All” bill.

While liberals have long advocated “single-payer” systems for health care, what’s new this time is that they are coalescing around a plan. Sixteen Senate Democrats are co-sponsoring Sanders’ bill, and 120 Democrats in the House have signed on to a similar approach.

Free Care?

This latest push for “single-payer” features the provision of “free health care” at the point of service from doctors, hospitals, and all other medical institutions.

The Sanders bill provides a comprehensive set of medical benefits and services, combined with “first dollar” coverage and outlaws all patient “cost sharing,” meaning no deductibles, no co-insurance, no copayments of any kind. Zero.

Sounds great, right? Well, P.J. O’Rourke, a prominent political humorist, improves on Friedman: “If you think health care is expensive now, wait until you see what it costs when it’s free.”

Make no mistake: If Americans were ever foolish enough to take Sanders’ “single-payer” prescription, they would suffer a fiscal fever the likes of which they have never even imagined.

>>> Read the full Heritage Foundation analysis of Sen. Sanders’ bill.

Last year, two separate analyses—one from the Urban Institute and another from Professor Kenneth Thorpe at Emory University—outlined in dreadful detail the fiscal consequences of Sanders’ 2016 proposal.

Though the analysts differed on their assumptions and calculated conclusions based on different models, they both came to the same conclusion: The Sanders “single-payer” bill is going to cost the American people far more than the senator and his academic and congressional allies claim, and the taxes to finance this massive enterprise are going to be huge.

Last year, Sanders estimated that over 10 years (2017 to 2026), new federal spending for his “Medicare for All” proposal would amount to $13.8 trillion.

By getting rid of all private insurance, including the unnecessary marketing and administrative costs and simplifying the system by junking today’s public-private mélange of payment and delivery, ordinary Americans would see big savings compared to their current health care spending.

Well, not quite. Thorpe, a former policy advisor to President Bill Clinton, projected that the full, 10-year cost of the plan would be $24.7 trillion.

Scholars at the Urban Institute, a prominent liberal think tank, estimated a stunning 10-year cost of $32 trillion. According to the Urban analysts, the Sanders plan would come up $16.6 trillion short of the revenues necessary to full pay for it. Socialism is expensive.

‘Feeling the Bern?’

While the Urban analysts did not model the tax impact of Sanders’ 2016 proposal, Thorpe did. He concluded that the senator’s 6.2 percent payroll tax, plus a 2.2 percent income-based premium tax, plus a whole series of special taxes on investments, dividends, “wealth,” and the hated “rich,” would not be sufficient pay for the program.

There are just not enough rich people to pay for socialized medicine.

Taxes would have to be higher—much higher. So Thorpe concluded that to fully finance Sanders’ plan, as the senator outlined it in 2016, would require a combination of higher payroll and income based premium taxes, amounting to a 20 percent tax on income.

As for the promised savings for ordinary Americans? Forget it. Taxes on working families would be substantial.

To fully fund Sanders’ single-payer plan, Thorpe estimated, 71 percent of working families would end up paying more than what they pay now under current law.

Loss of Freedom

There are other costs beyond the dollars and cents. As we have noted in a recent Heritage analysis of Sanders’ updated version of his bill, Americans would lose big chunks of their personal and economic freedom.

Recall that when former President Barack Obama was campaigning relentlessly for Obamacare, he promised—falsely—that, “If you like you like your health plan, you will be able to keep your health plan.”

In fact, under Obamacare, you never really had the freedom to keep what you liked. In 2013, on the eve of the very first year of Obamacare’s full implementation, 4.7 million health insurance policies were cancelled across 30 states, whether enrollees liked them or not.

Over the last three years, Obamacare’s health insurance costs exploded while personal choice and market competition collapsed. By 2016, Americans in 70 percent of U.S. counties were left with only one or two options.

Sanders and his 16 Senate Democratic colleagues deserve applause for their refreshing honesty. They make no pretense whatsoever that you can keep your health plan, regardless of your personal wants, needs, or preferences. You don’t count.

Under the Sanders bill, almost all private health insurance would be outlawed, including your employment-based health coverage. Today, nearly 60 percent of working-age Americans get their health insurance through private, employer-based plans.

Likewise, persons enrolled in existing government health programs—Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP)—would be absorbed into the new government health plan.

The Sanders bill not only abolishes private plans in the Obamacare exchanges, but kills off the popular and successful Federal Employees Health Benefits Program which provides benefits to over 8 million current and former federal employees. For military dependents, TRICARE would also be gone.

Curiously, the scandal-ridden Veterans Administration program and the troubled Indian Health Services would remain. Of course, both are ideologically correct: They are “single-payer” systems.

The Sanders bill would concentrate enormous power in the health and human services secretary, far beyond the already expansive administrative discretion that the secretary exercises today under Obamacare.

The secretary’s power would extend to the establishment of a national health care budget for all health care spending, provider payment, standards for provider participation, and the quality of care delivery.

Taxpayer funding of abortion, among other things, would be compulsory, and, at least from the language of the text, it appears that there would be no traditional conscience protections for doctors and patients opposed to unethical or immoral medical procedures.

The bill would allow for very limited private contracting between doctors and patients for medical care outside of the government system.

If a doctor and a patient wanted to contract privately for medical services, the doctor would have to give up treating all other patients enrolled in the government health plan and receiving reimbursement from the government for one full year.

Curiously, such an absurd restriction on personal freedom does not even exist in Britain’s National Health Service, the granddaddy of socialized medicine, where doctors freely practice in both the government program and the private sector.

Sanders and his colleagues have outlined a clear direction for America’s health policy: a government monopoly with centralized power over American health care financing and delivery; a massive increase in federal spending combined with promised savings that will not materialize; enormous tax increases that will reach deep down into the working class; new restrictions on personal and economic freedom; and, for patients who want or need something new and better, virtually no avenue of escape.

Sanders and his colleagues have put their vision—profoundly authoritarian—into legislative form. It is touted in the media and elsewhere as a viable alternative only in the wake of the Senate Republicans’ monumental failure to come together and enact an alternative to Obamacare.

Sen. John Barrasso, R-Wyo., has recently asked the Congressional Budget Office to score the cost of the latest version of Sanders’ plan.

Meanwhile, the president and the Congress should explain to the American people how a patient-centered, market-based set of reforms will reduce health insurance costs, improve access to quality care, and expand their personal freedom.

In short, they should outline their vision—and fight for it.

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Trump Right to Scale Back Obamacare’s Recruitment Mechanism

Wednesday, Nov. 1 will mark the beginning of the next open enrollment period in the Obamacare exchanges.

This will be the first enrollment season since the Trump administration changed the enrollment process and scaled back the “navigator” program.

The navigator program is a federal initiative designed to guide Obamacare enrollees as they jump through the system’s bureaucratic hoops, steering them to the health insurance program that best suits their needs.

Advocates of the navigator program were dismayed at President Donald Trump’s decision to cut funding for the program, claiming the cuts will “sabotage” Obamacare and block people from enrolling.

This narrative is simply false.

When Obamacare first launched, the navigators had a large customer base as millions of people were trying to figure out whether they qualified for the expanded Medicaid program or the new federal subsidies for insurance plans offered through the exchanges.

The vast majority of new customers were steered into Medicaid. But the stampede was short-lived.

Medicaid enrollment in the 24 states and District of Columbia states grew by 23.6 percent in 2014, but then by only 3.5 percent in 2015 and 1.1 percent in 2016.

That overall trend played out quite similarly at the individual state level. In Maryland, for instance, Medicaid rolls expanded by more than a third in 2014, but in the very next year, they only expanded by2 percent.

The pattern was similar on the new health insurance exchanges. In 2014, over 5 million people received subsidized exchange coverage. That figure grew to 7.4 million in 2015, but the following year it only grew to 7.6 million.

Moreover, many people who enrolled on the exchanges did so without the help of navigators. Instead, they chose to use licensed insurance agents or simply enrolled on their own, either online or in-person.

In California, for example—a state viewed as a model for running the exchanges—the government aggressively implemented Obamacare in 2014. But in the first year, California’s navigators enrolled only 9 percent of exchange enrollees. Over 40 percent of enrollees signed up without help, and 40 percent received help from licensed agents.

The following year, only 7 percent of enrollees used navigators, 36 percent enrolled by themselves, and 47 percent were enrolled by a licensed agent.

Not only is foot-traffic for the navigators down, more and more of it is moving away from the insurance exchanges. Soaring coverage costs are driving individuals out of the market. Today, there are half a million fewer Americans in the exchanges than last year.

And not only do navigators have fewer customers to serve, they have fewer products to sell. Like the customers they had hoped to serve, insurers are pulling out of the exchanges too.

As a result, many Americans not already insured through work or enrolled in government health programs find themselves in Obamacare exchanges that offer only one or two options for coverage. With choices that limited, most people don’t need a navigator’s help to pick one.

While the navigators’ customer base has declined dramatically—resulting in less need for their services—they still retained a hefty budget.

The navigators received their funding from a 3.5 percent user fee paid by those participating in the exchanges. Those fees amounted to $62.5 million in funding last year, up $2.5 million from the previous year.

In light of these facts, the president decided to cut navigator funding by 40 percent and infuse more accountability into the program.

Moving forward, funding will be based on performance and will reflect how well navigators assist the uninsured in finding health coverage. For example, if the navigators reach only 45 percent of their enrollment goals, their funding for the following year will be set at 45 percent of the previous year’s allotment.

The 40 percent cuts will force many navigator programs to lay off staff and reduce outreach services. And that’s as it should be.

The data clearly show the Obamacare exchanges have maxed out on all the coverage gains they can produce.

Congress should now concentrate on reforming Obamacare in ways that will provide relief—and options—for those who have to rely on the exchanges for coverage.

One way of doing so would be to cut the 3.5 percent user fee. If navigators aren’t being used to enroll, why should enrollees be charged a fee for their services?

Right-sizing spending on the navigator program is a good thing. Like most federal programs, it can use a healthy dose of accountability, one that ties funding to performance.

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Conservative Lawmakers Oppose Bill to ‘Bail Out Insurance Companies’

Conservative lawmakers oppose the Alexander-Murray health care legislation because they said it bails out health insurance companies.

The congressmen discussed the issue Tuesday at the Conversations with Conservatives panel. The health care legislation was introduced by Sen. Patty Murray, D-Wash., and Sen. Lamar Alexander, R-Tenn., after multiple attempts of Senate Republicans repealing Obamacare failed.

The Daily Signal’s Jarrett Stepman wrote about the Alexander-Murray bill last week:

Obamacare effectively told insurers to give low-income enrollees platinum-level coverage for the price of silver-level coverage, and promised to pay the additional cost (about 30 percent more) in the form of these back-door subsidies

The Alexander-Murray bill would essentially continue the cost-sharing payments for an additional two years to “stabilize” the market and keep premiums “low.””

All of the conservative congressmen present said they opposed the legislation, mentioning that health insurance companies do not need extra money.

“We haven’t cut taxes yet,” Rep. Jim Jordan, R-Ohio, said. “We haven’t repealed Obamacare yet. We haven’t started construction on the border security wall, but we’re going to bail out insurance companies? You got to be kidding me.”

Rep. Dave Brat, R-Va., pointed out the Senate failed to do any Obamacare repeal.

Brat said the bipartisan legislation “doesn’t reform Obamacare in any appreciative way.” He said a way to compromise would be to “stabilize the market” but still promote competition, which would lead to prices and premiums being lowered.

“A young kid coming out of college cannot buy a cheap insurance policy right now, so why is that?” Brat said. “If you answer that problem, then we’re open to that conversation, but right now, it’s a nonstarter.”

Rep. Matt Gaetz, R-Fla., said that every piece of health care legislation that has come out of the Senate from both parties has avoided hurting the profit of insurance companies.

Rep. Ralph Norman, R-S.C., said that first quarter profits of health insurance companies were good and that the companies don’t need the money. Rep. Mark Walker, R-N.C., added that Americans, not the insurance companies, are hurting from Obamacare. Rep. Scott Perry, R-Pa., also opposed the bipartisan legislation.

Murray and Alexander explained their reasoning behind the legislation in a joint statement.

“The goal of this bipartisan legislation is to stabilize and then lower the cost of health insurance premiums and ensure that Americans are able to purchase health insurance in the individual health insurance market,” both senators said in the joint statement. “This legislation is based upon witness testimony from four bipartisan hearings that the Senate health committee held last month.”

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Why the New Obamacare ‘Fix’ Is a Dud, and Why the Narrative Justifying It Is Wrong

While President Donald Trump’s response to the bipartisan health care proposal on Capitol Hill has slid from optimistic to negative, and then back to optimistic, he would be right to move away from this deal.

Despite its advocates’ claims, this proposal isn’t needed to help low-income Americans or stabilize the insurance markets—and is a major distraction from the steps really needed to help with both.

While Trump had made statements indicating he would potentially support a bipartisan bill to tackle health care reform, he quickly expressed concern over the proposal introduced by Sen. Lamar Alexander, R-Tenn., and Sen. Patty Murray, D-Wash., which would allegedly stabilize health care markets.

Trump Tweeted out on Wednesday:

The legislation has been billed as a way to address Trump’s recent executive order ending cost-sharing reduction payments to health insurance companies.

The common narrative is that Trump’s decision will collapse the health insurance market if there isn’t some way to “bail out” insurance companies that were promised Obamacare subsidies for offering higher-level plans at a cost below their value.

As The Daily Signal explained in May:

The cost-sharing reductions are subsidies designed to reduce out-of-pocket costs for low-income patients who purchase silver-level plans through Obamacare’s exchanges. The subsidies are only available to marketplace customers with an income between 100 percent and 250 percent of the federal poverty line ($12,000 to $30,000 for an individual).

In 2017, 7 million people—58 percent of marketplace enrollees—qualified for cost-sharing reductions, according to the Department of Health and Human Services.

These subsidies were challenged on constitutional grounds, as the funding was never appropriated by Congress.

The Trump administration has now effectively mooted that legal challenge by announcing that it will no longer pay the subsidies. However, some see the move as a dangerous step that will cause damage to the health insurance industry and dramatically increase premiums.

The subsidies, in general, are a poorly conceived idea. Obamacare effectively told insurers to give low-income enrollees platinum-level coverage for the price of silver-level coverage, and promised to pay the addition cost (about 30 percent more) in the form of these back-door subsidies.

The Alexander-Murray bill would essentially continue the cost-sharing payments for an additional two years to “stabilize” the market and keep premiums “low.”

Alexander said that he worked on this proposal to “help lower premiums and make insurance available to the 18 million Americans in the individual market in 2018 and 2019.”

This bailout is premised on the idea that without it, the health care markets will collapse and most Americans will see their premiums increase dramatically.

Some, like Vanity Fair’s Abigail Tracy, have insinuated that stopping the subsidies is simply a cunning plot by the Trump administration to wreck Obamacare.

“There doesn’t appear to be any policy upside to Trump’s move to sabotage the current health care system, except to use its failure as leverage to pass a new law,” she wrote.

But this is a false narrative.

States have already prepared for the withdrawal of these cost-sharing payments, and continuing to pay these subsidies will do little to either stabilize or destabilize health insurance markets for most Americans.

For instance, in July, California’s state Obamacare exchange announced that it “took steps to protect most consumers from any rate increases caused by the uncertainty surrounding cost-sharing reduction payments.”

The only customers who would be impacted would be silver-level plan purchasers who would experience an increase in their premiums but “also see an increase in the amount of financial assistance they receive, leaving their net payment virtually the same.”

Pennsylvania also made similar adjustments. The Pennsylvania Insurance Commission recently announced:

Because cost-sharing reductions are only available on silver plans, rate increases necessitated by the non-payment of these cost-reductions will be limited to silver plans. On-exchange bronze, gold, and platinum plans and off-exchange silver plans will not be impacted by these disproportionate increases.

In other words, insurance regulators in California, Pennsylvania, and other states are effectively converting this program into how it could have been better designed from the beginning—more generous coverage for low-income people that carries a higher up-front premium, but with higher up-front subsidies to match the costs.

According to The Hill, Haislmaier said that continuing the federally subsidized payments keeps the Obamacare market afloat, but does nothing for the vast and unsubsidized individual health insurance market.

>>> Here Are 7 Implications of Ending Obamacare’s Cost-Sharing Reduction Payments

“What is instead needed to stabilize the unsubsidized market is the removal of Obamacare’s cost-increasing insurance mandates and misguided regulations,” he said. “To fix that Obamacare-caused damage and lower the cost of insurance, Congress will need to make other policy reforms.”

Of course, this change is not in the Alexander-Murray bill, nor are there any meaningful proposals to fix Obamacare. It’s simply a costly proposal to fix a non-crisis as the real problems with our health care system go unaddressed.

The post Why the New Obamacare ‘Fix’ Is a Dud, and Why the Narrative Justifying It Is Wrong appeared first on The Daily Signal.

Why the New Obamacare ‘Fix’ Is a Dud, and Why the Narrative Justifying It Is Wrong

While President Donald Trump’s response to the bipartisan health care proposal on Capitol Hill has slid from optimistic to negative, and then back to optimistic, he would be right to move away from this deal.

Despite its advocates’ claims, this proposal isn’t needed to help low-income Americans or stabilize the insurance markets—and is a major distraction from the steps really needed to help with both.

While Trump had made statements indicating he would potentially support a bipartisan bill to tackle health care reform, he quickly expressed concern over the proposal introduced by Sen. Lamar Alexander, R-Tenn., and Sen. Patty Murray, D-Wash., which would allegedly stabilize health care markets.

Trump Tweeted out on Wednesday:

The legislation has been billed as a way to address Trump’s recent executive order ending cost-sharing reduction payments to health insurance companies.

The common narrative is that Trump’s decision will collapse the health insurance market if there isn’t some way to “bail out” insurance companies that were promised Obamacare subsidies for offering higher-level plans at a cost below their value.

As The Daily Signal explained in May:

The cost-sharing reductions are subsidies designed to reduce out-of-pocket costs for low-income patients who purchase silver-level plans through Obamacare’s exchanges. The subsidies are only available to marketplace customers with an income between 100 percent and 250 percent of the federal poverty line ($12,000 to $30,000 for an individual).

In 2017, 7 million people—58 percent of marketplace enrollees—qualified for cost-sharing reductions, according to the Department of Health and Human Services.

These subsidies were challenged on constitutional grounds, as the funding was never appropriated by Congress.

The Trump administration has now effectively mooted that legal challenge by announcing that it will no longer pay the subsidies. However, some see the move as a dangerous step that will cause damage to the health insurance industry and dramatically increase premiums.

The subsidies, in general, are a poorly conceived idea. Obamacare effectively told insurers to give low-income enrollees platinum-level coverage for the price of silver-level coverage, and promised to pay the addition cost (about 30 percent more) in the form of these back-door subsidies.

The Alexander-Murray bill would essentially continue the cost-sharing payments for an additional two years to “stabilize” the market and keep premiums “low.”

Alexander said that he worked on this proposal to “help lower premiums and make insurance available to the 18 million Americans in the individual market in 2018 and 2019.”

This bailout is premised on the idea that without it, the health care markets will collapse and most Americans will see their premiums increase dramatically.

Some, like Vanity Fair’s Abigail Tracy, have insinuated that stopping the subsidies is simply a cunning plot by the Trump administration to wreck Obamacare.

“There doesn’t appear to be any policy upside to Trump’s move to sabotage the current health care system, except to use its failure as leverage to pass a new law,” she wrote.

But this is a false narrative.

States have already prepared for the withdrawal of these cost-sharing payments, and continuing to pay these subsidies will do little to either stabilize or destabilize health insurance markets for most Americans.

For instance, in July, California’s state Obamacare exchange announced that it “took steps to protect most consumers from any rate increases caused by the uncertainty surrounding cost-sharing reduction payments.”

The only customers who would be impacted would be silver-level plan purchasers who would experience an increase in their premiums but “also see an increase in the amount of financial assistance they receive, leaving their net payment virtually the same.”

Pennsylvania also made similar adjustments. The Pennsylvania Insurance Commission recently announced:

Because cost-sharing reductions are only available on silver plans, rate increases necessitated by the non-payment of these cost-reductions will be limited to silver plans. On-exchange bronze, gold, and platinum plans and off-exchange silver plans will not be impacted by these disproportionate increases.

In other words, insurance regulators in California, Pennsylvania, and other states are effectively converting this program into how it could have been better designed from the beginning—more generous coverage for low-income people that carries a higher up-front premium, but with higher up-front subsidies to match the costs.

According to The Hill, Haislmaier said that continuing the federally subsidized payments keeps the Obamacare market afloat, but does nothing for the vast and unsubsidized individual health insurance market.

>>> Here Are 7 Implications of Ending Obamacare’s Cost-Sharing Reduction Payments

“What is instead needed to stabilize the unsubsidized market is the removal of Obamacare’s cost-increasing insurance mandates and misguided regulations,” he said. “To fix that Obamacare-caused damage and lower the cost of insurance, Congress will need to make other policy reforms.”

Of course, this change is not in the Alexander-Murray bill, nor are there any meaningful proposals to fix Obamacare. It’s simply a costly proposal to fix a non-crisis as the real problems with our health care system go unaddressed.

The post Why the New Obamacare ‘Fix’ Is a Dud, and Why the Narrative Justifying It Is Wrong appeared first on The Daily Signal.

Trump Says ‘I Can’t Support Bailing Out’ Insurance Companies Profiting From Obamacare

President Donald Trump said Wednesday that he could not support the bipartisan proposal to shore up Obamacare and stabilize the health insurance markets through 2019.

“I am supportive of Lamar as a person & also of the process, but I can never support bailing out ins co’s who have made a fortune w/ O’Care,” the president tweeted Wednesday morning.

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Trump said Tuesday evening at The Heritage Foundatation that he supports the efforts of Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., to fix the problems with Obamacare, but he insists that lawmakers “find a solution to the Obamacare mess instead of providing bailouts to insurance companies.”

The Trump administration announced last week that it will no longer fund a crucial feature of Obamacare that helps low-income Americans purchase health insurance on the Affordable Care Act state exchanges, known as cost-sharing reductions. The president and a number of conservative members of Congress label these subsidies as welfare, or bailouts, for insurance providers.

“The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system,” the White House said in a statement. “Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people.”

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The post Trump Says ‘I Can’t Support Bailing Out’ Insurance Companies Profiting From Obamacare appeared first on The Daily Signal.