Sub­si­dies for Oba­macare up $10 bil­lion

Health care law ‘not sus­tain­able,’ Repub­li­can says

The Washington Times Weekly - - Politics - BY TOM HOW­ELL JR.

Tax­pay­ers will dole out nearly $10 bil­lion more next year to help peo­ple buy Oba­macare health care plans through the in­sur­ance ex­changes, ac­cord­ing to a study re­leased Thurs­day that high­lighted the spi­ral­ing costs of Pres­i­dent Obama’s sig­na­ture achieve­ment.

The fed­eral gov­ern­ment will spend $42.6 bil­lion to sub­si­dize cus­tomers’ Oba­macare plans, up from $32.8 bil­lion this year, the Cen­ter for Health and Econ­omy said, amid wide­spread ques­tions over the law’s abil­ity to sur­vive.

Premi­ums for Oba­macare’s bench­mark plans are ex­pected to spike an av­er­age of 22 per­cent next year, but un­der the com­plex law’s op­er­a­tions, tax­pay­ers fi­nance most of the costs. As a re­sult, the av­er­age monthly gov­ern­ment bill for each Oba­macare cus­tomer will rise from $291 this year to $367 next year, the anal­y­sis found.

“That’s not sus­tain­able,” said Rep. Kevin Brady, Texas Repub­li­can and chair­man of the House Ways and Means Com­mit­tee, which will have a ma­jor hand in try­ing to re­write the health care law when Congress con­venes next month.

Law­mak­ers also fear there is costly fraud in the pro­gram. The Gov­ern­ment Ac­count­abil­ity Of­fice on Thurs­day said fed­eral and state-run ex­changes ap­proved cov­er­age for nine out of 12 fic­ti­tious en­rollees who signed up out­side of the nor­mal en­roll­ment pe­riod be­cause of ma­jor live events, such as los­ing cov­er­age or get­ting mar­ried.

The ad­min­is­tra­tion says it is try­ing to crack down on peo­ple who game the sys­tem by us­ing “spe­cial en­roll­ment pe­ri­ods” to sign up only af­ter they be­come sick.

Start­ing in the mid­dle of this year, Oba­macare re­quired doc­u­men­ta­tion of cer­tain qual­i­fy­ing life changes, although a dozen state-run ex­changes don’t have to en­force the rules. GAO’s fake en­rollees were ap­proved for cov­er­age without pro­vid­ing doc­u­ments, of­fer­ing false in­for­ma­tion or ap­ply­ing through life events that don’t re­quire proof.

“This re­port con­firms what we’ve known all along: Bad ac­tors are tak­ing ad­van­tage of loose en­force­ment mech­a­nisms to ac­cess highly sub­si­dized health care plans,” said Mr. Brady; Rep. Fred Up­ton, Michi­gan Repub­li­can and chair­man of the House En­ergy and Com­merce Com­mit­tee; and Sen. Or­rin G. Hatch, Utah Repub­li­can and chair­man of the Se­nate Fi­nance Com­mit­tee.

The Obama ad­min­is­tra­tion in­sists its law is work­ing as in­tended, de­spite lo­gis­ti­cal, po­lit­i­cal and fi­nan­cial head­winds. A record num­ber of Amer­i­cans have health care cov­er­age, and the law’s tax in­creases will help de­crease fed­eral deficits, ac­cord­ing to the Cen­ters for Medi­care and Med­i­caid Ser­vices.

“The Af­ford­able Care Act is cov­er­ing 20 mil­lion Amer­i­cans, and 2017 mar­ket­place premi­ums re­main on par with the Con­gres­sional Bud­get Of­fice’s Novem­ber 2009 pro­jec­tions,” CMS spokesman Aaron Al­bright said.

Repub­li­cans haven’t fully sketched out how they would im­prove on Mr. Obama’s model, though they dropped hints in an elec­tion-year blue­print called a “Bet­ter Way.” It ties tax cred­its to age so they are fixed, grow over time and pro­vide older, sicker cus­tomers with more sup­port.

Al­low­ing fed­eral costs to in­crease along­side premi­ums, the plan says, “sends the wrong sig­nals to in­sur­ers.”

“Age-based [as­sis­tance] would al­lo­cate sub­si­dies in a more ef­fi­cient man­ner — older peo­ple cost more to in­sure — but the real money saver for the fed­eral gov­ern­ment is that the Repub­li­can sub­si­dies would not nec­es­sar­ily in­crease as quickly as premi­ums in­creased,” said Robert Laszewski, a health care pol­icy con­sul­tant in Alexan­dria, Vir­ginia.

Oth­ers say the Repub­li­can plan would avoid a net­tle­some process that tax fil­ers face un­der Oba­macare: rec­on­cil­ing how much sub­sidy they re­ceive with their in­come for the year. Fil­ers who un­der­es­ti­mate their pay must pay the ex­cess sub­sidy back to the IRS.

“A con­sumer can con­firm his age, but he might not know what he’s go­ing to make in the com­ing year,” said John Desser, a for­mer Ge­orge W. Bush ad­min­is­tra­tion health care of­fi­cial and vice pres­i­dent for gov­ern­ment af­fairs at eHealth, a web­site that con­nects users with pri­vate in­sur­ance.

Whether the sub­si­dies are gen­er­ous enough, how­ever, is still un­cer­tain.

“If the sub­sidy is a flat amount — only adjusted by age — it is pos­si­ble that the sub­sidy would only cover the cost of a cat­a­strophic in­sur­ance plan hav­ing a large de­ductible,” Mr. Laszewski said. “That wouldn’t nec­es­sar­ily be bad for mid­dle-in­come work­ers who could af­ford the de­ductible but could be a real prob­lem for poor peo­ple who would have trou­ble with a de­ductible of $1,000 or more.”

For now, the ad­min­is­tra­tion is urg­ing mil­lions of Amer­i­cans to brush aside Repub­li­can talk of “re­peal and re­place” and sign up be­fore key dead­lines so it is more dif­fi­cult for Don­ald Trump to un­ravel Oba­macare’s gains when he be­comes pres­i­dent.

Oba­macare cus­tomers had un­til mid­night Thurs­day to en­roll in cov­er­age that takes ef­fect Jan. 1. The ad­min­is­tra­tion said en­roll­ments through Dec. 10 ex­ceeded last year’s by 250,000, though its per­for­mance through this week’s cut­off will shed light on whether the ad­min­is­tra­tion can draw new cus­tomers and meet its tar­get of 13.8 mil­lion peo­ple by Jan. 31 — com­pared with 12.7 mil­lion who ini­tially signed up for this year.

Repub­li­cans ar­gue that even peo­ple who bought cov­er­age un­der Mr. Obama’s law face high out-of-pocket costs or nar­row doc­tor net­works.

“In truth, cov­er­age isn’t health care,” Mr. Brady told re­porters Thurs­day dur­ing a break in Repub­li­can brain­storm­ing ses­sions at the Li­brary of Congress.

Repub­li­cans haven’t de­scribed how long of a tran­si­tion pe­riod they will need to reach con­sen­sus on a re­place­ment and win over enough Se­nate Democrats to sur­mount a fil­i­buster of the plan, prompt­ing the health care sec­tor to warn of a cri­sis if in­sur­ers flee the in­di­vid­ual mar­ket and pa­tients lose cov­er­age.

Mr. Brady said the idea that 20 mil­lion Amer­i­cans will lose their health care cov­er­age un­der Repub­li­can lead­er­ship is the “new big lie.”

“There’s a lot of scare tac­tics out there on this,” he said. “My point is this: We can as­sure the Amer­i­can pub­lic that the plan they’re in right now, the Oba­macare plans, will not end on Jan. 20, that we’re go­ing to be pre­pared and ready with new op­tions tai­lored for them.”


Premi­ums for Oba­macare’s bench­mark plans are ex­pected to spike an av­er­age of 22 per­cent next year.

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