Chris Jacobs' Writing Archive
Tag: Budget
The Real Threat to Seniors: Single Payer
No sooner had the president's budget arrived on Capitol Hill last Monday than the demagoguery began. Within hours of the budget's release, Sen. Brian Schatz (D-HI) tweeted that "One party wants to expand Medicare and Medicaid and the other wants to cut them." The facts, however, show a different contrast—one party attempting to keep a promise to seniors, and another abandoning that promise to fund other priorities.
First, the budget would not "cut" Medicare. As multiple administration officials explained during congressional hearings on the budget, Medicare spending would continue to rise every year under the president's proposals. Only in a government town like Washington could lawmakers say with a straight face that a reduction in projected spending increases constitutes a "cut."
Second, the budget's biggest changes to Medicare spending stem from a problem Democrats exacerbated as part of Obamacare. As the Wall Street Journal and others have demonstrated, since the law's enactment, hospitals have gone on a spending spree, buying physician practices and reclassifying them as "outpatient clinics" so they can jack up their payment rates. The budget proposal would expand upon an idea first enacted under President Obama, paying all providers the same amount for a service, no matter where it is provided.
Third, the budget proposals would yield tangible benefits to seniors through lower Medicare cost-sharing. A proposed rule released in July found that one of these changes would lower beneficiary co-payments by $150 million in one year. If enacted in full, seniors would see billions of dollars in savings over the ten-year budget window.
Fourth, and most importantly, legislation Schatz supports wouldn't "expand" Medicare and Medicaid, it would eliminate them. Sen. Bernie Sanders' single-payer bill, which Schatz has co-sponsored, would, in addition to ending Medicaid, liquidate the Medicare trust funds, using the proceeds to finance the new government-run program. As I noted last year, that makes Sanders' bill, as well as similar legislation introduced in the House last month, not "Medicare for All" but "Medicare for None."
That raid on the Medicare trust funds represents not just an accounting gimmick, but a statement of Democrats' priorities—or, rather, the lack of them. Medicare has long-term funding problems, which the president's budget attempts to address. But in using the Medicare trust funds as a piggy bank to finance a single-payer system—the full cost of which Democrats have no idea how to fund—the party shows how, in trying to provide all things to all people, it will abandon the most vulnerable.
Perhaps the best rebuttal to "Medicare for None" came from, of all people, Rep. Steny Hoyer (D-MD). In a speech on the House floor in September 2009, Hoyer said:
At some point in time, my friends, we have to buck up our courage and our judgment and say, if we take care of everybody, we won't be able to take care of those who need us most. That's my concern. If we take care of everybody, irrespective of their ability to pay for themselves, the Ross Perots of America, frankly, the Steny Hoyers of America, then we will not be able to take care of those most in need in America.
Therein lies the true flaw in the left's logic. Whereas the president's budget would work to protect Medicare for vulnerable seniors, Schatz, Sanders, and their supporters would liquidate the Medicare trust fund to finance "free" health care for Mark Zuckerberg and Elon Musk. The choice between the two paths seems as obvious as it is clear.
This post was originally published at The Federalist.
Author chrisjacobsPosted on March 19, 2019 April 22, 2019 Categories Costs, Coverage, MedicareTags "Cuts", Bernie Sanders, Big Hospitals, Brian Schatz, Budget, Cost-sharing, Elon Musk, Mark Zuckerberg, Medicare, Medicare trust fund, Ross Perot, Single payer, Steny Hoyer, The Federalist, Wall Street Journal
Ocasio-Cortez Wants Congress to Stop Pretending to Pay for Its Spending
Get used to reading more storylines like this over the next two years: The left hand doesn't know what the far-left hand is doing.
On Wednesday, incoming House Speaker Nancy Pelosi (D-CA) faced a potential revolt from within her own party. Rep.-elect Alexandria Ocasio-Cortez (D-NY) and several progressive allies threatened to vote against the rules package governing congressional procedures on the first day of the new Congress Thursday, because of proposed changes they believe would threaten their ability to pass single-payer health care.
A resolution (or a political fudge) to the problem remained unclear as of press time, but the controversy illustrated not just the ongoing heartburn progressives will cause House leaders this Congress, but fundamental questions of fiscal policy.
Ocasio-Cortez and her allies object to Pelosi's attempt to reinstate Pay-as-You-Go (PAYGO) rules for the new 116th Congress. Put simply, those rules would require that any legislation the House considers not increase the deficit over five- and ten-year periods. In short, this policy would mean that any bill proposing new mandatory spending or revenue reductions must pay for those changes via offsetting tax increases and/or spending cuts—hence the name.
Under Republican control, the House had a policy requiring spending increases—but not tax cuts—to be paid for. Pelosi would overturn that policy and apply PAYGO to both the spending and the revenue side of the ledger.
Progressives object to Pelosi's attempt to constrain government spending, whether in the form of additional fiscal "stimulus" or a single-payer health system.
However, Pelosi's spokesman countered with a statement indicating that the progressives' move "is a vote to let Mick Mulvaney make across-the-board cuts." Mulvaney heads the Office of Management and Budget, which would implement any sequester under statutory PAYGO.
Regardless of what the new House decides regarding its own procedures for considering bills, Pay-as-You-Go remains on the federal statute books. Democrats re-enacted it in 2010, just prior to Obamacare's passage. If legislation Congress passed violates those statutory PAYGO requirements (as opposed to any internal House rules), it will trigger mandatory spending reductions via the sequester—the "across-the-board cuts" to which Pelosi's spokesman referred.
To Pay for Spending—Or Not?
Progressives think reinstituting PAYGO would impose fiscal constraints hindering their ability to pass massive new spending legislation. However, the reality does not match the rhetoric from Ocasio-Cortez and others. Consider, for instance, just some of the ways a Democratic Congress "paid for" the more than $1.8 trillion in new spending on Obamacare:
A CLASS Act that even some Democrats called "a Ponzi scheme of the first order, the kind of thing Bernie Madoff would have been proud of," and which never went into effect because the Obama administration could not implement it in a fiscally sustainable manner;
Double counting the Medicare savings in the legislation as "both" improving the solvency of Medicare and paying for the new spending in Obamacare;
Payment reductions that the non-partisan Medicare actuary considers extremely unlikely to be sustainable, and which could cause more than half of hospitals and nursing homes to become unprofitable within a generation;
Tax increases that Congress has repeatedly delayed, and which could end up never going into effect.
On the other hand, however, compare those fiscal gimmicks to the Republicans in Congress who passed a Medicare prescription drug benefit in 2003—one the Medicare actuary believes will cost $7.9 trillion over the next 75 years—without paying for the new entitlement. Whereas Republicans made no attempt to pay for the spending on the Part D benefit, Democrats said they paid for the new spending on Obamacare—but used countless gimmicks and unrealistic assumptions to do so.
A Bipartisan Spending Addiction
An external observer weighing the Part D and Obamacare examples would find it difficult to determine the less dishonest approach to fiscal policy. It reinforces that America's representatives have a bipartisan addiction to more government spending, and a virtually complete unwillingness to make tough choices now, instead bequeathing massive (and growing) amounts of debt to the next generation.
In that sense, Ocasio-Cortez and her fellow progressives should feel right at home in the new Congress. Republicans may criticize her for proposing new spending, but the difference between her and most GOP members represents one of degree rather than of kind. Therein lies the problem: In continuing to spend with reckless abandon, Congress is merely debating how quickly to sink our country's fiscal ship.
Author chrisjacobsPosted on January 3, 2019 January 4, 2019 Categories Costs, MedicareTags Accounting gimmick, Alexandria Ocasio-Cortez, Budget, Cadillac tax, CLASS Act, Debt, Double counting, Exchange subsidies, George W. Bush, Government spending, Medicare actuary, Medicare Modernization Act, Medicare Part D, Mick Mulvaney, Nancy Pelosi, Omnibus, PAYGO, Ponzi scheme, Productivity adjustments, Sequester, The Federalist, Unsustainable
What Mitch McConnell and Congressional Democrats Get Wrong about Entitlements
Sometimes, as parents often remind children in their youth, two wrongs don't make a right. This held true on Tuesday, when Democrats erupted over comments by Senate Majority Leader Mitch McConnell (R-KY) on entitlement reform.
In returning to "Mediscare" tactics, Democrats made several false claims about entitlements. But so did McConnell, who blithely omitted what a Republican majority did earlier this year to worsen the country's entitlement shortfall.
What McConnell Got Wrong
In an interview with Bloomberg earlier this week, McConnell claimed that the significant increase in the deficit this past fiscal year "is not a Republican problem. It's a bipartisan problem: Unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future."
McConnell spoke accurately when he said in an interview that Medicare, Social Security, and Medicaid serve as the primary drivers of our long-term debt. He stood on less firm ground when he told Bloomberg that "the single biggest disappointment of my time in Congress has been our failure to address the entitlement issue." Contra McConnell's claim, Congress—a Republican Congress—actually did address the entitlement issue this year: they made the problem worse.
This Republican Congress repealed a cap on Medicare spending—the first such cap in that program's history. It did so as part of a budget-busting fiscal agreement that increased the debt by hundreds of billions of dollars. It did so even though Republicans could have retained the cap on Medicare spending while repealing the unelected, unaccountable board that Democrats included in Obamacare to enforce that spending cap.
By and large, both parties have tried for years to avoid taking on entitlement reform. But Democrats included an actual cap on Medicare spending as part of Obamacare, and Republicans turned around and repealed it at their first possible opportunity. That makes entitlements not just a bipartisan problem—it makes them a Republican problem too.
What Democrats Got Wrong
Following the McConnell comments, liberal Democrats gleefully ran to Twitter to claim that Republicans were "coming after your Medicare."
But McConnell's comments suggested just the opposite. He noted that, while entitlements serve as the prime driver of the nation's long-term debt, any changes to those programs "may well be difficult if not impossible to achieve when you have unified government." McConnell said the same thing in a separate interview with Reuters on Wednesday: "We all know that there will be no solution to that, short of some kind of bipartisan grand bargain that makes the very, very popular entitlement programs in a position to be sustained. That hasn't happened since the '80s."
Even though Congress needs to start reforming entitlements sooner rather than later—even if that means one political party must take the lead—McConnell indicated he would do nothing of the sort. In fact, his comments implied that Congress would not do so unless and until Democrats agreed to entitlement reform, giving the party an effective veto over any changes. Yet Democrats, who never fail to demagogue an issue, attacked him for those comments anyway.
House Minority Leader Nancy Pelosi (D-CA) went one further. Not only did she issue a press statement claiming that "Republicans are setting in motion their plan to destroy [entitlements]"—when McConnell's comments suggested just the opposite—she went on to claim that "under the GOP's twisted agenda, we can afford tax cuts for billionaires, but not the benefits our seniors have earned."
Actually, they haven't "earned" those benefits. Seniors may have "paid into" the system during their working lives, but the average senior citizen receives far more in benefits than he or she paid in taxes, and the gap continues to grow.
Making a Tough Job Worse
In this case, two wrongs not only did not make a right, they made our country worse off. Like outgoing Speaker of the House Paul Ryan (R-WI), McConnell wishes to absolve himself of blame for the entitlement crisis, when he made the situation worse.
On the other side, Pelosi and her fellow Democrats continue the partisan demagoguery, perpetuating the myth that seniors have "earned" their benefits because they see political advantage in defending nearly infinite amounts of government subsidies to nearly infinite numbers of people. For all their love of attacking "science deniers," much of the left's politics requires denying math—that unsustainable trends can continue in perpetuity.
Likewise, the media provides little help enlightening the American people about the fiscal mess our country faces. Despite a focus on health policy during the midterm election campaign, I fail to recall any stories demonstrating how seniors haven't really "earned" all the entitlement benefits they receive.
At some point, this absurd game will have to end. When it finally does, our country might not have any money left.
Author chrisjacobsPosted on October 19, 2018 January 4, 2019 Categories Costs, MedicareTags Bloomberg, Budget, Deficit, Entitlement reform, Fact check, Independent Payment Advisory Board, Medicaid, Medicare, Mediscare, Mitch McConnell, Nancy Pelosi, Omnibus, Paul Ryan, Per capita cap, Reuters, Social Security, Tax reform, The Federalist
Mixed Messages on Paul Ryan's Entitlement Record
Upon news of House Speaker Paul Ryan's retirement Wednesday, liberals knew to attack him, but didn't know exactly why. Liberal Politico columnist Michael Grunwald skewered Ryan's hypocrisy on fiscal discipline:
Ryan's support for higher spending has not been limited to defense and homeland security. He supported Bush's expansion of prescription drug benefits, as well as the auto bailout and Wall Street bailout during the financial crisis…Ryan does talk a lot about reining in Medicaid, Medicare, and Social Security, for which he's routinely praised as a courageous truth-teller. But he's never actually made entitlement reform happen. Congress did pass one law during his tenure that reduced Medicare spending by more than $700 billion, but that law was Obamacare, and Ryan bitterly opposed it.
For the record, Ryan opposed Obamacare because, as he repeatedly noted during the 2012 campaign, the law "raided" Medicare to pay for Obamacare. (Kathleen Sebelius, a member of President Obama's cabinet, admitted the law used Medicare spending reductions to both "save Medicare" and "fund health care reform.")
That said, as I noted last March, he and other Republicans made exactly zero attempt to undo Obamacare's "raid" on Medicare as part of "repeal-and-replace" legislation. Regardless, the Politico article, titled "Paul Ryan's Legacy of Red Ink," generally labeled him as ineffective, or worse, hypocritical, at reducing spending.
Compare that with a Vox article, titled "Paul Ryan's Most Important Legacy is Trump's War on Medicaid": "[Paul] Ryan's dreams are alive and well. Through work requirements and other restrictions, President Donald Trump could eventually oversee the most significant rollback of Medicaid benefits in the program's 50-year history." It goes on to talk about how the administration "is carrying on Ryan's Medicaid-gutting agenda."
Which is it? On fiscal discipline, is Ryan an incompetent hypocrite, or a slash-and-burn maniac throwing poor people out on the streets? As in most cases, reality contains nuance. Several caveats are in order.
First, Ryan's budgets always contained "magic asterisks." As the Los Angeles Times noted in 2012, "the budget resolutions he wrote would have left that Medicare 'raid' in place"—because Republicans could only achieve the political goal of a balanced budget within ten years by retaining Obamacare's tax increases and Medicare reductions." The budgets generally repealed the Obamacare entitlements, thus allowing the Medicare reductions to bolster that program rather than financing Obamacare. The budgets served as messaging documents, but generally lacked many of the critical details to transform them from visions into actual policy.
Second, to the best of my recollections, Ryan never took on the leadership of his party on a major policy issue. Former GOP House Speaker John Boehner famously never requested an earmark during a quarter-century in Congress. Sen. John McCain's "Maverick" image came from his fight against fellow Republicans on campaign finance reform.
But whether as a backbencher or a committee chair, Ryan rarely bucked the party line. That meant voting for the Bush administration's big-spending bills like the Medicare Modernization Act and TARP—both of which the current vice president, Mike Pence, voted against while a backbench member of Congress.
Third, particularly under this president, Republicans do not want to reform entitlements. As I noted during the 2016 election, neither presidential candidate made an issue of entitlement reform, or Medicare's impending insolvency. In fact, both went out of their way to avoid the issue. Any House speaker would have difficulty convincing this president to embrace substantive entitlement reforms.
In general, one can argue that, contrary to his image as a leader on fiscal issues, Ryan too readily followed. Other Republicans would support his austere budgets, which never had the force of law, but he would support their big-spending bills, many of which made it to the statute books.
On one issue, however, Ryan did lead—and in the worst possible way. As I wrote last fall, Ryan brought to the House floor legislation repealing Obamacare's cap on Medicare spending. This past February, that repeal became law.
Ryan could have sought to retain that cap while discarding the unelected, unaccountable board Obamacare created to enforce it. As a result, Ryan's "legacy" on entitlement reform will consist of his role as the first speaker to repeal a cap on entitlement spending.
Primum non nocere—first, do no harm. Ryan may not have had the power to compel Republicans to reform entitlements, but he did have the power—if he had had the courage—to prevent his own party from making the problem any worse. He did not.
Author chrisjacobsPosted on April 16, 2018 January 3, 2019 Categories Costs, Coverage, MedicareTags Accounting gimmick, Budget, Double counting, Entitlement reform, Hypocrisy, Independent Payment Advisory Board, John Boehner, John McCain, Los Angeles Times, Medicaid, Medicare, Medicare Modernization Act, Michael Grunwald, Paul Ryan, Politico, TARP, The Federalist, Vox
Is the CBO Director Breaking the Law to Help Paul Ryan Bail Out Obamacare?
Why would an ostensibly nonpartisan Congressional Budget Office (CBO) director violate the law and the word he gave to Congress only a few short weeks ago? Maybe because Paul Ryan asked him to.
In late January, I wrote about how the House speaker wanted CBO to violate budget rules to make it easier for Congress to pass an Obamacare bailout. At the time, House leadership aides dismissed my theories as unfounded and inaccurate speculation. Yet buried on page 103 of Monday's report on the budget and economic outlook, CBO did exactly what I reported on earlier this year—it changed the rules, and violated the law, to make it easier for Congress to pass an Obamacare bailout.
The Making of a Budget Gimmick
The question at the heart of the scorekeeping dispute involves Obamacare's cost-sharing reductions (CSRs). Last fall, President Trump cancelled those payments to insurers, because Obamacare failed to include a valid constitutional appropriation for them. But after that, insurers built the costs associated with lower cost-sharing—which the statute requires them to provide, whether the CSR payments continue or not—into their premiums for 2018.
Because of the interactions between the (higher) premiums and federal premium subsidies (which went up in turn), the federal government will likely spend more on subsidies this year without making CSR payments than with them.
Therein lay the basis of the budgetary gimmick Ryan and congressional leaders wanted CBO to help them accomplish. House staffers wanted CBO to adjust its baseline and assume the higher levels of spending under the "no-CSR" scenario. By turning around and appropriating funds for CSRs, thereby lowering this higher baseline, Congress could generate budgetary "savings"—which Republicans could spend on more corporate welfare for insurers, in the form of reinsurance payments.
The Problem? It's Illegal
As I previously noted, the House's scheme, and CBO's actions on Monday to perpetrate that scheme, violate the law. Section 257(b)(1) of the Gramm-Rudman-Hollings Act (available here) requires budget scorekeeping agencies to assume that "funding for entitlement authority is…adequate to make all payments required by those laws."
Obamacare very clearly included an entitlement on the Department of Health and Human Services (HHS) to make CSR payments to insurers. For the budget baseline, whether it included a valid appropriation to fund that entitlement represents an entirely separate—and irrelevant—matter. Because Obamacare created an entitlement to CSRs for insurers, the budget office when calculating its baseline must—repeat, must—assume full funding of same, and therefore none of the higher spending associated with a "no-CSR" scenario.
Following my January post, Rep. Dave Brat (R-VA) asked CBO Director Keith Hall about this issue at a House Budget Committee hearing. Hall noted that CBO had been treating the cost-sharing reductions "as an entitlement, so it's"—that is, the full funding of CSRs in the baseline—"remained there, unless we get direction to do something different. We're assuming essentially that the money will be found somewhere, because it's an entitlement."
In a separate exchange with Rep. Jan Schakowsky (D-IL) at the same hearing, Hall went even further: He said, "We've treated the cost-sharing reductions actually as an entitlement, at least so far until we get other direction from the Budget Committee."
On multiple occasions, then, Hall made crystal-clear that CBO would not alter the scoring of the cost-sharing reductions absent explicit instructions to do so.
Then Comes the Flip-Flop
Yet Monday's document on the budget outlook did exactly what Hall said mere weeks ago that CBO would not. A paragraph deep in the section on "Technical Changes in Outlays" included this nugget:
Technical revisions caused estimates of spending for subsidies for coverage purchased through the marketplaces established under the ACA and related spending to be $44 billion higher, on net, over the 2018–2027 period than in CBO's June baseline. A significant factor contributing to the increase is that the current baseline projections reflect that the entitlement for subsidies for cost-sharing reductions (CSRs) is being funded through higher premiums and larger premium tax credit subsidies rather than through a direct appropriation.
In the span of a few weeks, then, Hall and CBO went from "We're assuming essentially that the money [i.e., the CSR appropriation] will be found somewhere" to the exact opposite assumption. Yet the report mentions no directive from the budget committees asking CBO to change its scorekeeping methodology, likely because the committees did not give such a directive.
In a footnote on the same page, CBO admits that their revised assumption violates the law: "Section 257 of [Gramm-Rudman-Hollings]…requires CBO to assume full funding of such entitlement authority." CBO followed Section 257 of Gramm-Rudman-Hollings elsewhere in Monday's budget report.
In analyzing the status of the Medicare trust fund, which CBO projects will become exhausted in fiscal year 2026, Footnote A of Table C-1 notes how the baseline "shows a zero [balance] rather than a cumulative negative balance in the trust fund after the exhaustion date"—because that's what Gramm-Rudman-Hollings requires:
CBO may try to make the semantic argument, implied in the passage quoted above, that it continues to assume full funding of CSRs, albeit through indirect means (i.e., higher spending on premium subsidies) rather than "a direct appropriation." But that violates what Hall himself said back in late January, when he laid out CBO's position, and said it would not change absent an explicit directive—even though the budget report nowhere indicates that CBO received such direction.
It also violates sheer common sense that the budget office should assume "funding for entitlement authority is…adequate to make all payments" by assuming that the administration does not make all payments, namely the direct CSR payments to insurers.
Coming Up: An Embarrassing Spectacle
During his testimony before the House and Senate Budget Committees this week, Hall may make a spectacle of himself—and not in a good way. He will have to explain why he unilaterally changed the budgetary baseline in a way that explicitly violated his January testimony. He will also have to justify why CBO believes Gramm-Rudman-Hollings' direction to assume full funding for "all payments" allows CBO to assume that Congress will not make direct CSR payments to insurers.
Conservatives should fight to expose this absurd and costly budget gimmick, and demand answers from Hall as to what—or, more specifically, whom—prompted his U-turn. If Hall wants to transform himself into the puppet of House leadership, and break his word to Congress in the process, he should at least be transparent about it.
Author chrisjacobsPosted on April 11, 2018 January 3, 2019 Categories Costs, Coverage, RegulationsTags Accounting gimmick, Bailouts, Budget, Budget and Economic Outlook, Congressional Budget Office, Cost-sharing reductions, Cronyism, Dave Brat, Exchange subsidies, Gramm-Rudman-Hollings Act, House Budget Committee, Illegal, Jan Schakowsky, Keith Hall, Paul Ryan, Senate Budget Committee, The Federalist
Conservatives Have Themselves to Blame for Ominous Omnibus
Several years ago, I kvetched to a friend about various ways I found myself unhappy with my life. My friend listened attentively, and when I had finished, responded calmly and succinctly: "Well, what are you going to do about it?"
Conservative members of Congress face a similar dilemma this week, as they return to Washington for the first time since Congress passed a massive omnibus spending bill just before Easter. Politico last week highlighted senators' concerns about a closed process in the Senate. Sen. John Kennedy (R-LA) went so far as to say the floor process, and the lack of amendment votes, "sucks."
But in both the Senate and the House, the floor process "sucks" only because members allow their elected leaders to make it so. Members of Congress have it within their collective power to change the ways their respective chambers act—if only they have the political will to act.
Consider the floor process in the House. The morning after Congress passed the omnibus, a staffer bragged to me about how his boss voted against the sprawling spending legislation. But my follow-up query spoke volumes: "Did your boss vote against the rule allowing for consideration of the bill?" The staffer hung his head and said that he hadn't.
Therein lies the problem. Fully 210 Republican members of Congress voted to approve a rule that allows the House of Representatives to vote on a 2,232-page bill a mere 16 hours after its public release. In so doing, they blessed House leadership's tactics of negotiating a budget-busting bill in secret, springing it on members without time to read it, and ramming it through Congress in a take-it-or-leave it fashion.
Or, to put it another way, those 210 Republican members of Congress signed their judgment over to the Republican leadership, which made all the decisions that mattered regarding the bill. Conservatives complained that, for the rule governing debate on the omnibus, House Republican leaders gaveled the vote to a close too quickly. Fully 25 Republicans did vote against the rule bringing the omnibus to the House floor, and if a few more that wanted to vote no had been given time to do so, the rule might have failed.
That argument misses the point. Whereas 90 House Republicans voted against final passage of the omnibus, on the truly important vote—the vote to allow the House to debate the omnibus legislation—only 25 House Republicans voted no. If even half of the members who voted no on the underlying bill also voted no on the rule, the rule would have failed overwhelmingly. Instead, dozens of conservative Republicans voted only against the bill itself—when everyone knew their no votes wouldn't make a difference, because Democrats would support the omnibus en masse.
The conservatives who would not vote against the rule governing the omnibus also bear responsibility for the next omnibus. Had conservatives voted down the rule governing the omnibus, they could have demanded concessions to prevent future instances of congressional leaders ramming massive spending bills down Congress' throat.
For instance, they could have demanded that Senate Majority Leader Mitch McConnell (R-KY) commit the upper chamber to passing a budget, and considering spending bills individually on the Senate floor this summer. But because not enough conservatives voted against the rule, they received exactly no procedural concessions, ensuring Congress will resort to another massive, catch-all omnibus spending bill late this year or early next.
A very similar dynamic exists in the Senate. Despite their complaints, Kennedy and his Senate colleagues have failed to use their considerable powers to demand changes to that process. In the Senate, a single member can make long speeches, object to passing legislation by unanimous consent, and object to routine procedural requests. One senator or a handful of senators using such tactics for any period of time would quickly attract the attention of Senate leaders—and could prompt a broader discussion about how to open up Senate floor debate.
Instead, senators just whine to Politico about the awful process, while exercising none of their considerable powers to change that process. It seems rank-and-file senators remain cowed by comments like that by Senate Majority Whip John Cornyn (R-TX), who in February attacked as "bad behavior" efforts by Sen. Rand Paul (R-KY) to demand an amendment vote on—the horror!—reducing government spending.
In democracies, people generally get the type of government they deserve. That axiom applies as much to the internal functioning of Congress as it does to Congress' role in the country as a whole. If members of Congress don't like the process their leaders have developed for debating (or not debating) legislation, they need only look in the mirror.
Author chrisjacobsPosted on April 11, 2018 January 3, 2019 Categories Costs, RegulationsTags Budget, House Rules Committee, John Cornyn, John Kennedy, Mitch McConnell, Omnibus, Politico, Rand Paul, The Federalist, Transparency
The Rising Costs of Medicaid Expansion in Louisiana
A recent Associated Press story claimed that Louisiana's Medicaid program is spending less than expected. Don't you believe it. By multiple measures, Medicaid expansion has proved a budget buster — with worse outcomes ahead.
Take the claim that "more than $535 million of the less-than-projected spending is in the Medicaid expansion program." But Medicaid expansion's enrollment, or costs, have not dipped below projections. Far from it, in fact.
In 2015, the state's Legislative Fiscal Office estimated that expanding Medicaid eligibility would raise spending on benefits by $5.8 billion over five years under moderate enrollment, or $7.1 billion over five years in a high enrollment scenario — roughly $1.2 to $1.4 billion annually.
Compare those numbers to the Louisiana Department of Health and Hospitals' January estimate. Instead of costing $3.45 billion this fiscal year, Medicaid expansion will "only" cost taxpayers $2.91 billion. In other words, rather than nearly tripling the 2015 cost estimates, expansion will instead exceed the original high-end projections by a mere 108 percent.
Expansion supporters claim that, despite this skyrocketing spending on Medicaid, Louisiana will end up saving money. Accept for just a moment these advocates' laughable concept that Louisiana's federal Medicaid matching dollars grow on trees, and come at no cost to Louisianans. The argument that expansion saves Louisiana money has its roots in questionable assumptions and fiscal gimmicks.
First, the Department of Health's analysis touting purported "savings" to the state ignores the "woodwork effect" — individuals already eligible for Medicaid who only sign up because of the "hoopla" surrounding expansion. The analysis trumpets the individuals previously enrolled in Medicaid for whom the state can receive a higher federal match, saving the state money. However, it does not examine the opposite phenomenon — whether the publicity surrounding expansion has increased enrollment in populations for which the state must pay a larger share of costs.
In 2015, the Legislative Fiscal Office assumed no "woodwork" effect when analyzing the effects of expansion. But since then, enrollment in Medicaid expansion has skyrocketed. While the Edwards administration first claimed only 300,000 would sign up for expansion, enrollment now exceeds 460,000. A serious fiscal analysis would use the exploding enrollment numbers to study the "woodwork" issue afresh; the Department's did not.
Second, the analysis also ignores the issue of "crowd-out" — individuals dropping private coverage to enroll in government programs. In 2015, the Legislative Fiscal Office assumed that between 67,000 and 89,000 individuals would drop their private coverage to enroll in "free" Medicaid; that coverage would cost $1.3 billion over five years, $99 million of that coming from the state general fund.
Particularly given the higher than projected enrollment since the 2015 estimate, the department should analyze the costs to taxpayers associated with individuals who dropped private coverage to join a government program. It has not.
Third, the proposed savings rest on a budget gimmick: Providers and insurers agreeing to pay higher taxes — because those "taxes" generate themselves money. The doctors, hospitals and insurers agree to give more funds to the state, the state collects federal Medicaid matching dollars on that money, and then gives both the state and federal funds right back to hospitals and insurers.
If this fiscal maneuvering — providers raising taxes on themselves to obtain more government funding — sounds like a scam to you, you're not alone. None other than Joe Biden called it as much back in 2011. Other liberal researchers have called the gimmick "egregious" and a "national disgrace."
President Trump's budget endorsed legislation that would crack down on this "Medicaid tax gimmick," and in 2010 the bipartisan Simpson-Bowles commission endorsed eliminating it entirely. With our nation facing trillion-dollar deficits, Washington will soon have to return to fiscal discipline, putting both parts of the Medicaid expansion in Louisiana — Obamacare's enhanced federal match for able-bodied adults, and the tax gimmick used to pay Louisiana's portion of expansion costs — under threat.
Far from small or stable, Medicaid expansion in Louisiana has become a sprawling monstrosity built on a fiscal house of cards. Policy-makers should examine ways to unwind the expansion sooner rather than later, before it starts falling down of its own weight.
This post was originally published in the Shreveport Times.
Author chrisjacobsPosted on March 16, 2018 January 3, 2019 Categories Costs, Coverage, Medicaid and SCHIPTags Accounting gimmick, Budget, Cost estimates, Crowd out, Enrollment freeze, Joe Biden, John Bel Edwards, Louisiana, Medicaid expansion, Pelican Institute, Provider taxes, Shreveport Times, Simpson-Bowles, Woodwork effect
Who Really Proposed the Obamacare Bailout in the Trump Budget?
Maybe it was Colonel Mustard in the conservatory with the revolver. Or Professor Plum in the library with the candlestick.
The story behind the Obamacare bailout proposed in last week's budget has taken on a mysterious tone, akin to a game of Clue. My Thursday story focusing on the role played by White House Domestic Policy Council Chair Andrew Bremberg prompted pushback from some quarters about the actual perpetrator of the proposal. As a result, I spent a good chunk of Friday afternoon trying to gather more facts—and found definitive ones hard to come by.
On Friday, some sources told me they were "99.9 percent certain" Bremberg had nothing to do with the proposal, and only learned about it after the administration released the budget publicly last Monday. I also heard comments suggesting Bremberg had proposed settling insurers' lawsuits for some time, as one way to signal to insurers that the administration would offer them a "stable" environment in the Obamacare exchanges, consistent with my prior story.
As to the accuracy of my initial theory, people I trust and respect arrived at strikingly different views. However, I found surprising unanimity on one count: No one—but no one—wants to take credit for inserting the proposal to pay $11.5 billion in risk corridor claims. As someone told me: "You raise a valid question. If Andrew Bremberg didn't insert the proposal into the budget"—and this person didn't think he did—"then how did it get in there?"
Therein lies a huge problem. To call the inclusion of a $11.5 billion proposal in the president's budget that no one in the administration seemed to know about, or wants to take credit for, a prime example of managerial incompetence would put it mildly. Either career staff inserted it in the budget, and the political staff did not have the antennae or bandwidth to understand its consequences and take it out, or a few political appointees and career staff hijacked the budget process, with most other individuals unaware of the situation until the budget's public release.
To borrow a politically loaded phrase, someone—or a group of someones—colluded to get this language included in the budget. Its inclusion could cost federal taxpayers literally billions of dollars.
Last month, a three-judge panel at the Court of Appeals for the Federal Circuit heard oral arguments in insurers' cases against the federal government for unpaid risk corridor claims. (For more background on the issues in the risk corridor lawsuits, see my March 2017 testimony before a House Judiciary subcommittee.) The Justice Department argued on behalf of the federal government that, in enacting appropriations language prohibiting taxpayer dollars being used for risk corridor claims, Congress had abrogated any obligation to pay insurers' remaining claims under the risk corridor program.
By submitting a budget proposal to "request mandatory appropriations for the risk corridors program," the White House completely undermined and undercut the arguments its own Justice Department had made in court a few short weeks ago, that the federal government owes insurers nothing.
In other words, whomever inserted this policy U-turn into the budget, just as the judges ponder a ruling in the insurer lawsuits, may have effectively "tanked" the government's case. Either by leading to an adverse ruling, or by prompting the Justice Department to settle the case at a much higher cost, this move could cost taxpayers billions.
A Pro-Life Administration, Or Not?
Unfortunately, it gets worse. While the budget did include new funds for insurers, including the controversial risk corridors bailout described above, it did not include a single word proposing that such funds prevent taxpayer dollars from going to plans that cover abortion.
In the debate on bailing out Obamacare, not a single Republican leader—from House Speaker Paul Ryan to the administration—has called the inclusion of robust pro-life protections a must for any legislation giving taxpayer funds to insurers. Take, for instance, Sen. Lamar Alexander, who after admitting in October he hadn't even considered the issue, said an executive order could add pro-life protections—even though Republicans criticized an executive order as insufficient when President Obama used one to appease pro-life Democrats at the time of Obamacare's passage.
There's a reason for the deafening silence: Republicans know that any legislation that funds insurers and provides robust pro-life protections will not pass. Democrats will object to its inclusion. Given the choice between passing up on an Obamacare bailout or abandoning their pro-life principles, Republicans have given every expectation that they will choose the latter course. (They shouldn't bail out Obamacare regardless, but that's a separate story.)
Regardless of who proposed these, it doesn't take a detective to understand how a policy reversal that could cost taxpayers billions and a pending U-turn by Republicans to fund abortion coverage represent a major one-two punch against conservatives. But the mysterious origins and mangled management of the risk corridor proposal adds a further layer of insult to injury, a triple whammy of a tough week for the administration.
Author chrisjacobsPosted on February 19, 2018 January 2, 2019 Categories Costs, Coverage, RegulationsTags Abortion, Andrew Bremberg, Bailouts, Budget, Court of Federal Claims, Department of Justice, Executive Order, House Judiciary Committee, Hyde Amendment, Judgment Fund, Lamar Alexander, Paul Ryan, Risk corridors, Stability bill, The Federalist, Transparency
Politico's Dumbest Headline Ever Trivializes Rand Paul's Budget Protest
So much for the romance surrounding the famous scene in "Mr. Smith Goes to Washington" where the title character successfully filibusters a bill, rousing the public to his side. Politico claimed that similar tactics surrounding a budget agreement last week led to the "dumbest shutdown ever." In reality, however, the brief lapse in appropriations had serious underlying causes, and the flip way its correspondents covered the incident led to arguably the dumbest headline in Politico's history.
To explain the shutdown in brief: Congressional leaders arrived at a budget agreement last week, just before the existing spending bill expired on Thursday at midnight. Having only introduced the bill hours previously, Senate leaders pushed to pass it Thursday afternoon, before the prior spending bill expired.
However, Sen. Rand Paul (R-Kentucky), frustrated by both the higher levels of spending in the agreement and Senate leaders' refusal to allow votes on his amendments to reduce that spending, prevented a vote on passing the agreement until early Friday morning—causing an all-night session of Congress, and a brief shutdown of the federal government until the spending bill was signed into law.
Paul's actions protested two important issues: Skyrocketing spending and deficits, and Congress passing massive spending bills without reading them or allowing anyone to offer amendments. But the Politico report by Rachael Bade and Seung Min Kim trivialized the incident, calling it a "spectacle," "extraneous drama," and a "sideshow" full of "absurdity." Their own phraseology amplified quotes such as those from an unnamed Republican aide, who called the floor drama "even more stupid than the name of the new Kardashian baby."
So Paying for Stuff Congress Buys Is 'Stupid'?
Why would reporters take such a cavalier attitude toward otherwise weighty matters? Four possible reasons come to mind.
First, the natural inclination to blame the individual or individuals perceived as responsible for causing havoc with the schedule. Few politicians or reporters on Capitol Hill expected to spend Thursday evening and much of Friday morning covering all-night drama surrounding the appropriations bill. The missed flights, cancelled dinner plans, and other last-minute chaos largely redounded on Paul's head, even though Senate leaders could, and should, have avoided that drama by planning more than a few hours ahead.
Second, a desire to avoid antagonizing leadership officials who provide reporters valuable intelligence and gossip. Another Politico article published Thursday noted that "leaders miscalculated by waiting until the last minute and hoping Paul would go along"—but waited to do so until its twenty-first paragraph.
If, instead of the headline at issue, Politico had led its story by pointing out that tactical stupidity by Senate Majority Leader Mitch McConnell (R-Kentucky) led to the shutdown—belying his November 2014 and December 2017 statements that "We will not be shutting down the government"—how quickly do you think the majority leader's press staff would have responded to Politico reporters' questions this week?
Always Selective 'Concern' for Process
Third, reporters' natural bias towards bipartisan agreements, underpinned by an implicit assumption that bipartisan agreements are inherently good. Whereas last year's partisan attempts to "repeal-and-replace" Obamacare led to myriad stories about Republicans violating their pledges for transparency (an exception to rule two above), the bipartisan budget deal aroused much less indignation from the press about the secretive process used to craft it.
A contrarian might ask the obvious question: If the bill is so good, why not give lawmakers time to read and understand its contents, rather than ramming through a 652-page bill spending hundreds of billions of dollars in a 24-hour period?
Fourth, for all their self-righteousness about the First Amendment, reporters don't demonstrate a consistent concern for other parts of the democratic process. If senators had denied reporters access to areas of the Capitol, and claimed that they didn't want to "reward bad behavior"—as Senate Majority Whip John Cornyn (R-Texas) said of Paul's demand for an amendment vote—would those reporters have merely recorded Cornyn's words and left the issue alone, as Politico's reporters did?
Of course not. But when officials at the Centers for Medicare and Medicaid Services (CMS) earlier this month tried to shut out a reporter for what CMS officials viewed as an inaccurate article—or, to coin a phrase, "bad behavior" by a journalist—the Association of Health Care Journalists filed protests with CMS, and published multiple stories on the kerfuffle (which Politico dutifully covered).
If they care about democracy as much as they claim, the reporters who consistently hyperventilate every time President Trump makes (idle) threats towards the press might spend more time promoting sunshine and accountability throughout government. But instead of highlighting Paul's efforts to enhance transparency in government—is a single amendment vote on a 652-page bill really too much to ask?—the "dumbest shutdown ever" story ridiculed these efforts. It's why the story represents Politico's dumbest headline ever.
Author chrisjacobsPosted on February 16, 2018 January 2, 2019 Categories CostsTags Budget, Centers for Medicare and Medicaid Services, Fact check, John Cornyn, Mitch McConnell, Politico, Rachael Bade, Rand Paul, Seung Min Kim, The Federalist, Transparency
The White House's Plan to Bail Out Obamacare AND Fund Abortion Coverage
The White House released its budget proposal this morning. Apart from the fact that the budget abandons any attempt to get to balance within ten years (or ever), a footnote buried deep in the document hides key proposals: Bailing out Obamacare health insurers to the tune of tens of billions of dollars, and taxpayer funding of abortion coverage.
On page 141, footnote 6 of Table S-6, showing the president's policy proposals, includes the following admission: "The Budget requests mandatory appropriations for the risk corridors program and for cost-sharing reduction payments."
The White House document claims that these proposals would have "no deficit effect," but the U.S. Department of Health and Human Services (HHS) budget in brief provides additional detail about the sums at issue, noting that the budget "assumes outlays of $11,513 million (post-sequester) for the risk corridors program."
There you have it: At least $11.5 billion in corporate welfare payments to insurers for risk corridors, and more for cost-sharing reductions.
About Risk Corridors
While risk corridors have faded in the public debate over the past two years, they remain a potent issue for health insurers. See a full explanation of the issue, but here's a summary.
The Obamacare risk corridor program intended to provide a financial cushion for the first three years of the law's exchanges (2014-16). Plans with high profits would pay some of the excess back, to subsidize plans with outsized losses. The text of Obamacare never included an explicit appropriation for risk corridors. The Government Accountability Office admitted as much, calling risk corridors a "user fee" program.
To prevent the Obama administration from using funds from elsewhere to subsidize corporate welfare to insurers, Congress enacted restrictions prohibiting the use of taxpayer funds to bail out risk corridors. Under these restrictions, insurers with losses could only receive as much money from the risk corridor program as insurers with gains paid into the program.
In Obamacare's first few years, most insurers suffered massive losses, so the money coming in to the risk corridor program by no means equaled the requests for funds from the program. As a result, several insurers sued in the Court of Federal Claims, requesting payment from the Judgment Fund of the Treasury for their unpaid risk corridor obligations. Many of those cases remain on appeal.
While both the White House and HHS budgets include few details about this proposal, it appears that they would pre-emptively surrender the pending legal cases by paying insurers more than $11.5 billion in risk corridor obligations that insurers claim they are owed. The budget further proposes making these payments exempt from the budget sequester.
About Cost-Sharing Reductions
President Trump himself cancelled the cost-sharing reduction payments (CSRs) to insurers in October, correctly noting that the Obama administration made these payments without a legitimate congressional appropriation. Rather than conducting scrutiny of the Obama administration's unconstitutional actions, or examining why both insurers and state insurance regulators assumed for far too long that these unconstitutional acts would continue, the budget instead proposes a return to the status quo, pretending like the events of last fall never happened.
The White House's proposal on CSRs looks downright conservative, however, compared to the budget gimmick being contemplated by Speaker of the House Paul Ryan (R-WI). The White House budget indicates that spending on CSRs would have no deficit effect, because the Gramm-Rudman-Hollings statute requires budgetary agencies to assume full funding of entitlements (including CSR payments) when developing their fiscal baselines.
Ryan, however, finds this legal requirement an inconvenient truth. He wants to direct the budget agencies to raise the spending baseline artificially, so Congress can then "lower" the spending baseline right back to where it is now—and spend the phony "savings" from this gimmick on more corporate welfare to insurers.
Forcing Taxpayers to Fund Abortion Coverage
Another point of note: Passing either one of these proposals would by definition result in taxpayer funding of plans that cover abortion. The administration did not include any language prohibiting the use of CSR or risk corridor funds for plans that cover abortion. Therefore the White House presumably endorses federal taxpayer funding of abortion coverage.
This episode represents but the latest attempt to bail out Obamacare without even considering the implications on the life community. Sen. Lamar Alexander (R-TN) did exactly the same thing back in October. Moreover, Democrats will undoubtedly block any attempt to fund Obamacare insurers that includes robust pro-life protections (i.e., the Hyde amendment).
The budget proposal means Trump administration is now actively working to codify not one but two Obamacare bailouts that a Republican Congress denied to the Obama administration—doing liberals' bidding for them. Moreover, the failure to include any pro-life protections on these bailouts represents at best a massive managerial oversight, and at worst an insult to the pro-life community. For those who thought that last week's budget deal represented the nadir for conservative principles among this administration, think again.
Author chrisjacobsPosted on February 12, 2018 January 2, 2019 Categories Costs, Coverage, Premiums, RegulationsTags Abortion, Alexander-Murray, Bailouts, Budget, Court of Federal Claims, Cronyism, Department of Health and Human Services, Department of the Treasury, Donald Trump, Government Accountability Office, Gramm-Rudman-Hollings Act, Hyde Amendment, Judgment Fund, Lamar Alexander, Paul Ryan, Risk corridors, Sequester, Stability bill, The Federalist, Unconstitutional
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