By Sally C. Pipes
President Obama marked the fourth anniversary of the passage of ObamaCare this week by promising to spend the next year “working to implement and improve on it.” He has his work cut out for him. Four years on, the Affordable Care Act has failed to deliver what its name formally promised—and is shaping up to be decidedly unaffordable for taxpayers. Consumers ought to hope that ObamaCare doesn’t make it to the age of five—and that lawmakers enshrine market-friendly, patient-centered reforms in its place.
Four years after passage—and six months after they were supposed to be fully operational—ObamaCare’s insurance exchanges are still malfunctioning. Last week, just days before the end of the open-enrollment period, the Philadelphia Inquirer discovered that the federal exchange website, HealthCare.gov, was displaying incorrect information about the subsidies for which shoppers should qualify.
The trillion dollars the Administration has earmarked for subsidies won’t make insurance more affordable if consumers can’t actually claim them. Online insurance marketplace eHealthInsurance estimated last week that ObamaCare had pushed premiums in the individual market up by as much as 59 percent this year, thanks to its myriad and costly new benefit mandates, taxes, and fees. Industry officials now say that rates could double in many areas of the country next year.
With the cost of coverage skyrocketing, it’s no wonder that enrollment has lagged the Obama Administration’s goals. One-fifth of those whom the Administration has counted as “enrolled” don’t appear to have paid their premiums. So they don’t actually have coverage.
Further, despite millions of dollars in advertisements, endless stumping by the president, and promotion by the likes of NBA stars Kobe Bryant and LeBron James, the exchanges have failed to attract anywhere near enough young people. Without sufficient premium income from these young, largely healthy individuals, the marketplaces will not be able to shoulder the costs associated with treating older, less healthy folks. Officials originally estimated that 40 percent of enrollees would need to be between the ages of 18 and 34 for the exchanges to be solvent. Thus far, this coveted demographic has accounted for just 25 percent of enrollment. If the exchanges flop, taxpayers could be forced to bail them out.
Small businesses that had been promised repeatedly by Obama that they’d save money learned in late February that two-thirds of them would see their premiums climb because of the law.
ObamaCare is even failing to expand coverage to the uninsured. A McKinsey study found that only a fraction of those who enrolled in the exchanges had previously been uninsured. The same study found that half of those who did not enroll pointed to “affordability”—or a lack thereof—as their main reason for choosing not to purchase coverage.
With the exchanges foundering and several directors of state exchanges resigning (The Oregonian dubbed Cover Oregon’s leadership changes “a major managerial house-cleaning”), the Administration has taken to rewriting the law to try to avoid open revolt. The over 5 million consumers whose plans were previously canceled because they didn’t meet ObamaCare’s stringent benefit requirements can now keep them through 2017, three years longer than the law originally prescribed. The Administration has also given people whose plans were canceled a “hardship exemption” so that they can dodge the individual mandate through 2016.
Many of those who have chosen to buy ObamaCare-approved coverage have been outraged to find that their policies permit them to visit only a handful of doctors and hospitals. So much for the President’s oft-repeated promise, “If you like your plan, you can keep it.” The Administration has responded by forcing plans to expand their provider lists in 2015. That decision may only hike rates further come next year. And recent media stories have been confirming as much.
By tweaking the law on the fly, the Administration is punting its problems down the road. Industry officials specifically point to the Administration’s various delays and changes as the main culprit for rate hikes. One insurance company representative told The Hill that his firm’s rates would triple on the exchange next year.
It doesn’t have to be this way. We can expand access to coverage for those with preexisting conditions, reduce costs, and lower the uninsured rate without disrupting Americans’ coverage and increasing their premiums. The president chose to cover those with pre-existing conditions in the most expensive way possible—by requiring insurers to offer policies to all comers and forbidding them from charging anyone more than three times what they charged anyone else. So insurers just hiked rates for everyone.
A more cost-effective way to minister to those with pre-existing conditions is by expanding federal funding for state-level high-risk pools. Many such pools were functioning well before ObamaCare, furnishing coverage to those who couldn’t get it on the open market without jacking up premiums for the rest of the population.
Meanwhile, the chief obstacle to covering the uninsured is affordability. Market forces could break that barrier down. Letting consumers buy across state lines, for instance, would increase competition among insurers and encourage state regulators to limit unnecessarily costly benefit mandates. Expanding health savings accounts (HSAs), where people can save money pre-tax for health care services, would give patients control over their health care dollars and encourage them to spend wisely. The explosive growth of HSAs in the employer market is one reason that health costs have been growing more slowly than the historical average in recent years.
Another way to make health insurance more affordable? Allow individuals to purchase coverage with pre-tax dollars, just as businesses can. Such a move would grant consumers the opportunity to choose coverage that suits their needs and budget—not their employer’s. And to ensure that low-income individuals could take advantage, the government could offer a refundable tax credit toward the purchase of health insurance.
As ObamaCare turns four, a clear majority of Americans stands opposed to it. Here’s to hoping that this anniversary is among the law’s last.
Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Forbes.
The Affordable Care Act turned four years old last Sunday. So how’s it working out for you? If you’re one of the millions who lost, or risk losing, the insurance you already had, your answer is probably “not so great.”
If you’re a young person who realizes that ObamaCare wants you to pay much higher insurance premiums to subsidize older and sicker Americans, your answer is probably “not so great” also.
Not even considering the HealthCare.gov website disaster, and the totally dysfunctional Cover Oregon website debacle, it appears there may be more people losing their health insurance coverage than have gained new coverage under this deeply flawed law.
The Congressional Budget Office estimates that the law will cause the equivalent of two million jobs to be lost by 2017.
The 2013 PolitiFact Lie of the Year was President Obama’s oft told fib that “If you like your health care plan you can keep it.”
When the first ObamaCare open enrollment period ends on March 31, its flaws will be hard to gloss over. Rather than carve out even more exemptions to the law, the administration should admit that they got it wrong. Then we can have an honest discussion about how to move toward real insurance reform using market principles that offer true affordable alternatives to the Affordable Care Act, which has proven anything but.
Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.
Sunday, March 23, was the fourth anniversary of the passage of the Patient Protection and Affordable Care Act (“ObamaCare”). Cascade founder and senior policy analyst Steve Buckstein predicted then that ObamaCare would “represent much more a violation of individual liberty than an improvement in American health care.”
Four years later, the law remains mired in controversy, confusion, and dysfunction. The ACA has been challenged from numerous constitutional, philosophical, and moral angles; and the Supreme Court will hear a case this week challenging the ACA on First Amendment grounds.
Buckstein wrote in 2010:
When we founded Cascade Policy Institute in 1991, our mission was, and still is, to promote public policy alternatives that foster individual liberty, personal responsibility and economic opportunity. This bill threatens to set us back in all three areas:
Individual liberty will be violated as the federal government takes away even more of our options regarding what insurance, if any, we choose to purchase and how we purchase it.
Personal responsibility will be decimated as the federal government tells us “don’t worry about taking care of yourself; we’ll do that collectively from now on.”
Economic opportunity will be stifled as the tax burden on individual workers, employers and investors go up, not down. Without meaningful cost controls, health care costs will spiral, leading to higher federal deficits and to even more government involvement in the economy.
When the bill’s supporters tell us that every other industrialized country has national health insurance, our response should be, “America is not every country; America is supposed to be the land of the free.”
We now see that most of these predictions are coming all too true. Not even considering the HealthCare.gov website disaster, and the totally dysfunctional Cover Oregon website debacle, it appears that more people may be losing their health insurance coverage than have gained new coverage under this deeply flawed law. The Congressional Budget Office now estimates the law will cause the equivalent of two million jobs to be lost by 2017. The 2013 PolitiFact Lie of the Year was President Obama’s oft-told fib, “If you like your health care plan you can keep it.” Only a fraction of those who have signed up under ObamaCare exchanges are the “young and healthy” the scheme needs to pay higher premiums to subsidize the “old and sick.” It seems that younger people would vote for Obama, but they won’t follow him off a health care cost spiral cliff.
With the first ObamaCare open enrollment period ending on March 31, its flaws will certainly be hard to gloss over.* Rather than carve out even more exemptions to the law, the administration should admit that they got it wrong. Then we can have an honest discussion about how to move toward real insurance reform using market principles that offer true affordable alternatives to the Affordable Care Act, which has proven anything but.
* The administration is now expected on March 26th to announce an extension of the March 31st open enrollment deadline for certain individuals.
Cascade Policy Institute President & CEO John A. Charles, Jr. spent 17 years heading the Oregon Environmental Council (1980-1996). He just completed his 17th year with Cascade. Why did he make the change and what has he learned along the way? Join us for an entertaining talk from a “recovering statist” who will share thoughts from his essay in the recently-published book, “Why We Left the Left”.
Presentation and Q&A
Hors d’oeuvres and dessert buffet, and a no-host bar will be provided.
Early-bird pricing: Prior to April 15th, $20.00/person.
After April 15th, registration increases to $25/person.
By Sally C. Pipes
Young people appear to have abandoned President Obama less than two years after sending him back to the White House. Only 41 percent of Americans 18 to 29 approve of his job performance, according to a recent poll from Harvard’s Institute of Politics.
Even more—56 percent—disapprove of ObamaCare, his chief domestic policy achievement. Many of these “young invincibles”—folks between the ages of 18 and 34―are expressing their disapproval by refusing to enroll in the law’s health insurance exchanges. If this trend keeps up, the exchanges could collapse.
The Congressional Budget Office (CBO) estimates that 40 percent of enrollees must be young and healthy for the exchanges’ finances to work. Here’s the logic behind that conclusion. Young people, while not quite invincible, are far less likely to get sick—and thus to use their coverage. So many will pay premiums without claiming much in benefits in return. Those premiums are supposed to go toward subsidizing the cost of coverage for older, sicker adults.
It doesn’t look like exchange enrollment will meet the administration’s target. Colorado just reported that a scant 7 percent of its exchange enrollees are between 18 and 24. More than four times as many are between the ages of 55 and 64. Sixteen percent are between 25 and 34.
Despite Cover Oregon’s $21-million, youth-friendly marketing campaign, Oregon is tied with West Virginia for last place in young sign-ups. As of March, Oregon remains the only state with an exchange in which people can’t self-enroll online in one sitting, and the manual application backup process may further discourage young adult enrollment.
Nationwide, as of late February, about 27 percent of the four million people who have signed up for coverage through the marketplaces are young adults. That’s only a slight improvement over January, when 24 percent of enrollees were young.
At the outset, the Obama Administration estimated that 1.6 million of enrollees in February would be young people. Their guess was a bit off—just over 800,000 had signed up by the beginning of the month. According to the New York Times, the Obama Administration hasn’t been able to translate the “get-out-the-vote” prowess it displayed in the 2008 and 2012 presidential elections into the health insurance realm. Only 9 percent of those who have purchased policies are aged 18 to 25. The 26 to 34 band accounts for 16 percent of enrollees.
And the situation isn’t likely to improve. A study from NerdWallet, a personal finance website, predicts that young adults who opt for the financial penalty associated with remaining uninsured, which goes into effect on April 1 and amounts to $95 or 1 percent of income this year, could save more than $1,000 compared to someone who buys insurance. That savings even includes the cost of visits to the doctor’s office. If that hypothetical young person has to visit the emergency room, he still could be better off uninsured—$700 better, according to the study.
The enrollment problem may even go beyond the young invincibles. Twenty to 30 percent of people whom the administration counts as having “purchased” insurance via the exchanges have yet to actually make a payment to cover the premium. So they don’t actually have insurance. These folks could be in for a rude awakening if they don’t find out that they’re uncovered until they’re at the doctor’s office or hospital.
The government’s enrollment numbers even demonstrate that the program is failing to accomplish its core goal of providing coverage for the uninsured. According to McKinsey and Co., only 11 percent of the 2.2 million people enrolled through December were previously uninsured.
Nowhere are the failures of the exchanges more apparent than in the Latino community. Nearly one-third of Latinos are uninsured—almost twice the national average. Latinos also skew younger than other ethnic groups. And they were staunch supporters of President Obama in 2012; the president took Hispanics by a 2.6 to one margin. Yet in California, only 20 percent of enrollees are Latino—even though the group accounts for 46 percent of all folks eligible for premium subsidies in the state.
State and federal officials are paying an awful lot for these subpar enrollment numbers. The cost per enrollee ranges from $1,500 in California to nearly $57,000 in Hawaii. The government has invested $205 million in the president’s birthplace to enroll just 3,614 people. Washington, D.C. has signed up just over 5,000 people on its exchange—despite taking in more than $133 million in federal money. Those 5,000 folks put the District 12 percent of the way toward its enrollment goal.
If enrollment continues to skew older and sicker, insurance companies will have to raise premiums. As that happens, fewer people will sign up. Others will drop their coverage. Both outcomes will drive costs for individuals and taxpayers up even further.
The White House has essentially given up on its initial goals of 40 percent young invincibles in a crowd of seven million enrollees by the end of March. Moving the enrollment goalposts may mute some of the political blowback from the exchanges’ failures. But it won’t change the math that underpins the exchanges. That could spell trouble for patients expecting affordable coverage—and taxpayers who may be called upon to shell out more to give it to them.
Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Forbes.
Please join us for Cascade’s monthly Policy Picnic led by Cascade Policy Institute research associate William Newell on Wednesday, March 26th, at noon.
Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to sixteen guests on a first come, first served basis, so sign up early.
Advocates on all sides of the public education spending-versus-results debate cite various statistics to make their respective cases. Some argue that more money leads to better results. Others claim that spending more dollars per student―at least in the ways our public school system has spent them―makes little or no difference in educational outcomes; and it appears the evidence is strongly on their side.
A new Cato Institute study, State Education Trends: Academic Performance and Spending over the Past 40 Years, uses adjusted state SAT score averages to track educational performance trends over the last four decades. The findings are staggering: Academic performance has declined despite large increases in real per-pupil spending.
According to Cato, “The study reveals that the average state has seen a three percent decline in academic performance despite a more than doubling in inflation-adjusted per-pupil spending. More strikingly, every state school system in the country has suffered a collapse in productivity over the last 40 years. Essentially, there has been no correlation between state spending and academic performance.”
In Oregon, public education spending has increased 60% in real terms, yet SAT scores have been flat. The study’s results demonstrate that throwing more money at public education has been ineffective at improving student performance. Rather than spend even more, we should let parents direct education funding to the schools of their choice. Unleashing consumer power gets more bang for the buck throughout the economy; it’s time to put it to work in education as well.
Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.
By Clark M. Neily III
Does America have an “activist” judiciary that constantly involves itself in policy disputes best left to the other branches? Several Supreme Court justices have publicly expressed that view recently, but they are dead wrong.
Indeed, given the breathtaking abuses of power we have seen by other branches lately, the prospect of judges becoming even less vigilant about protecting citizens from overweening government should be deeply troubling.
As I explain in my new book, Terms of Engagement: How Our Courts Should Enforce the Constitution’s Promise of Limited Government, the very institution of limited government has become imperiled by an epidemic of judicial abdication. What America needs is judicial engagement: consistent, conscientious judging in all cases, without bent or bias in favor of government. Unfortunately, we’re not getting it.
Take the Supreme Court’s decision to uphold the greatest expansion of federal power since the New Deal by rewriting the Affordable Care Act (aka “ObamaCare”) to transform the requirement that Americans purchase government-approved health insurance from a mandate enforced by a financial penalty, into an option with an additional tax payment for those who choose not to exercise it.
Never mind that the Affordable Care Act refers to this payment as a “penalty” 18 times; and never mind Chief Justice Roberts’s recognition of the fact that the “[t]he most straightforward reading of the mandate is that it commands individuals to purchase insurance.” According to Roberts’s understanding, the justices’ role was not to strike down or uphold the law based on “the most natural interpretation of the mandate,” but instead to bring their own creativity to bear in rationalizing a constitutional basis for the law if possible.
But that’s not judging; it’s advocacy. Judges are supposed to remain strictly neutral in all cases, including ones challenging the constitutionality of a law. Recall how Roberts compared judges to umpires in his confirmation hearing to be Chief Justice. Umpires, of course, do not bend over backwards to avoid calling outs or strikes against the home team the way Roberts did in changing ObamaCare’s insurance provision from a mandate to an option in order to uphold the law.
For those who take seriously James Madison’s assurance that the powers of the federal government would be “few and defined,” that decision was a travesty. Unfortunately, it was not an anomaly. Instead, it reflects a judicial mindset much in vogue among conservatives (and sophisticated liberals who understand its power to clear the way for even more government) that calls for reflexive deference toward the other branches in most areas of law―from the allocation of power between federal and state governments, to economic and business regulations, to property rights and the use of tax policy to manipulate individual behavior.
Compare the absence of meaningful judicial review in those areas with Justice Ruth Bader Ginsburg’s recent lament in The New York Times that the current Supreme Court is “one of the most activist courts in history,” or Justice Antonin Scalia’s characterization of activist judges as “Mullahs of the West.” Even Justice Anthony Kennedy has jumped on the bandwagon, arguing that “[a]ny society that relies on nine unelected judges to resolve the most serious issues of the day is not a functioning democracy.”
But America is not a democracy. It is a constitutional republic in which majorities are forbidden from pursuing a host of policies, including ones that violate individual rights or enable legislators and bureaucrats to exercise powers they do not lawfully possess. Preventing those things from happening is not judicial activism; it’s judicial engagement. And as recent events involving the IRS, the NSA, the Department of Justice, and countless other misbehaving agencies make plain, we need a lot more of it.
*This article originally appeared on FoxNews.com.
Clark M. Neily III is a senior attorney at the Institute for Justice and director of the Institute’s Center for Judicial Engagement. He is the author of Terms of Engagement: How Our Courts Should Enforce the Constitution’s Promise of Limited Government. Neily will be a guest speaker for Cascade Policy Institute in Portland in March 2014.
By William Newell
Portland is brainstorming regulations for temporary lodging made possible by websites like Airbnb. Airbnb describes itself as a “community marketplace for people to list, discover, and book unique accommodations around the world.” The proposed rules would make homeowners pay a tax, get a permit, and follow certain limitations. Portland’s slow and conditioned acceptance of home lodging businesses serves as a microcosm of one of America’s most troubling problems: our fatal conceit.
Individual liberty is a founding principle of American government and one of our most sacred rights. We protect our individual liberty in part because the dynamism that liberty affords individuals is necessary for a flourishing society. The only time individual liberty is to be attenuated is when one individual interferes with the rights of another.
Portland’s rules simply encourage a political system that erodes liberty and takes with it America’s diversity, dynamism, and drive. If a widow living on a fixed income wants to rent a room to help make ends meet, why should she be stopped because her home wasn’t “zoned” for lodging? If a young couple rents an extra room to pay off college loans, should they have to pay tourism taxes? Those who advocate for bans or restrictions not aimed at mitigating externalities and protecting individual rights are really questioning the underlying dignity and respect we should each be afforded.
*In his essay on the failures of central planning, The Fatal Conceit, Friedrich Hayek argued that individuals are best suited to know their own circumstances and to act to improve them. Actions based upon the presumption of superior knowledge by governments to impede individual endeavors tend to fail and to create more harm than otherwise would have occurred.
William Newell is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization. He is a graduate of Willamette University.
A new report released today shows that if the Oregon State Land Board sold or leased the 93,000-acre Elliott State Forest, public school funding would increase by at least $40 million annually.
Roughly 85,000 acres of the Elliott State Forest are managed for the primary purpose of raising funds for public schools. These lands are known as “Common School Trust Lands,” and the Oregon State Land Board is required by law to manage them for the trust beneficiaries: public school students. Net receipts from timber harvest activities on the Elliott are transferred to the Common School Fund (CSF), where assets are invested by the Oregon Investment Council in various financial instruments. Twice each year, public school districts receive cash payments based on the investment returns of CSF assets.
Due to environmental litigation, the State Land Board lost $3 million managing the Elliott State Forest in 2013. As a result, the Land Board has recently decided to sell 2,700 acres of the Elliott. An independent analysis conducted for Cascade Policy Institute by economist Eric Fruits shows that selling or leasing the entire forest would dramatically increase the semi-annual returns to public schools, and would do so in perpetuity.
According to Cascade president John A. Charles, Jr., “The Land Board has a fiduciary duty to manage the state trust lands for the benefit of the public schools. Losing $3 million on a timberland asset worth at least $600 million is likely a breach of that duty. The Land Board is doing the right thing by taking bids to sell parcels of the Elliott, and should continue to pursue a path of selling or leasing larger portions of the forest. There is no plausible scenario of Land Board timber management that would bring superior returns to public schools than simply disposing of these lands and placing the funds under the management of the Oregon Investment Council.”