Ted Cruz’s Obamacare Nightmare Becomes Reality

Jonathan Chait contends that Senator Ted Cruz’s Obamacare nightmare has become a reality.

“Once Americans had grown accustomed to the sweet comfort of affordable health insurance, Cruz foresaw, they would never give it up: ‘[Obama’s] strategy is to get as many Americans as possible hooked on the subsidies, addicted to the sugar. If we get to Jan. 1, this thing is here forever.’”

“Indications of Cruz’s prescience are popping up everywhere.”

“As the law shocked detractors last spring by exceeding its enrollment targets, the anti-Obamacare community fixated on a final hope: that consumers looking to enroll this fall for next year would encounter soaring premiums. Not only has the hoped-for premium shock failed to materialize, rates seem to be coming in actually lower than this year. In a market where annual large price hikes have occurred for decades, the result is almost unfathomably positive.”

“The Republican crusade against Obamacare is not ending; rather, it is shrinking and mutating … the next Republican candidate will be running in an environment where repealing the law would create millions and millions of now-identifiable victims. Since the start of the year, Obamacare has gone from a weakness Republicans were salivating at the chance to exploit to an issue they no longer want to talk about.”

Obamacare: It’s About Politics, not Policy

Sam Baker of National Journal: “Obamacare has taken on a political life of its own, largely separate from the complex series of health care policies it actually comprises.”

“The health care law has essentially become a proxy for the president who signed it—voters’ approval or disapproval of the Affordable Care Act is largely a reflection of how they feel about President Obama, rather than what they think the health care law has or hasn’t done.”

“Democrats hoped for years that Obamacare would become less of an abstraction once its biggest benefits kicked in. That doesn’t appear to be happening.”

Public approval of Obamacare is “a party-ID issue, not one about a particular set of health care policies.”

The Anti-Obamacare Absurdities Must End

Henry Aaron, David Cutler and Peter Orszag, writing in The New York Times, argue that the courts should reject the challenge to the Obamacare’s subsidies.

“We note that the statute, while vague at points, confirms, when read in its entirety, that tax credits are to be available on all the exchanges, nationwide. The law specifically instructed the secretary of health and human services to create and manage the exchanges for states that chose that option. And when the law was passed, everyone involved in the law’s passage understood that this directive vested federal exchanges with the same mission and authority as state-mandated exchanges.”

“Limiting tax credits to the 14 states that manage their own exchanges (along with the District of Columbia) would destroy this careful architecture … To keep premiums affordable, the law requires nearly everyone to buy insurance, and offers low- and moderate-income people financial help … If both the sick and the healthy buy insurance, premiums can be kept within reason.”

“The record is unambiguous: Congress, in 2010, understood and endorsed the links connecting the sale of insurance, the requirement to carry insurance and the financial aid to make it affordable.”

“If the full District of Columbia Circuit takes up the case, it should reject this sophistry … Whatever one thinks of the Affordable Care Act, it is absurd to argue that its drafters intended to make insurance unaffordable.”

The Inefficiency of America’s Health-Care System

Jared Bernstein: “The U.S. health-care system is uniquely inefficient. We spend far more than other countries on everything from hospital stays to MRIs to prescriptions to end-of-life care. It’s also the case that private-sector spending makes up a much larger share of health spending here than it does in other advanced economies.”

“Are these two facts causally related? The figure below … plots their intersection, with the public share of health spending on the Y-axis and the GDP share on the X-axis. Each dot is a country.”

“It may be possible to fix the inefficiencies and keep half of the U.S. system in private hands. That surely was a goal of the Affordable Care Act, as it was clear for political reasons that the legislation needed support from private stakeholders if it was going to pass. But my hunch is that it would be hard to move that U.S. dot to the left on the X-axis without also moving it higher on the Y-axis.”

Chart of Health care spending in advanced economies: share of GDP and public share of expenditures


Limited Doctor-Choice Plans Hold Promise

Sarah Kliff argues that narrow networks – or limited choice plans – “aren’t all bad.”

“Health economists actually tend to be quite fond of these products, as they help hold down spending. The potential for savings is big: limited choice plans can reduce patient spending by as much as a third, new research from economists Jon Gruber and Robin McKnight finds.”

“Using a natural experiment from Massachusetts, Gruber and McKnight find that patients who switched to narrow network plans had access to a smaller set of equally good hospitals. They used more primary care but went to the emergency room less. And these patients, along with their employers, ended up saving a whole bunch of money.”

“While Massachusetts’ experiment shows the potential of limited network plans, it doesn’t suggest that every foray into limited choice will go equally as well.”

“Its probably most fair to read this study as a proof of concept: set up correctly, limited choice plans can save money without sacrificing quality. Whether all plans work this way is something we’ll learn more about, as more people on Obamacare keep enrolling in these products.

Governor McAuliffe Retreats on Push for Medicaid Expansion

New York Times: “After fuming at state lawmakers and threatening unilateral action, Gov. Terry McAuliffe of Virginia took only modest steps on Monday to extend health care to the poor and disabled, retreating on the issue he has chosen to define his first eight months in office.”

“Mr. McAuliffe, who in June ordered his cabinet to devise a plan for unilateral action by Sept. 1, in the face of what he called Republican ‘demagoguery’ and ‘cowardice,’ announced that only 25,000 uninsured Virginians would be receiving coverage, far fewer than the 400,000 he has said are eligible if the state expands Medicaid under the Affordable Care Act.”

“The governor reportedly consulted legal experts on how much he could accomplish by executive action. The modesty of his orders on Monday reflected the reality of a State Constitution that forbids any spending without the legislature’s approval.”

“Mr. McAuliffe, not abandoning the issue, proposed lawmakers consider a public-private partnership that would expand coverage without drawing from the state’s general fund.”

A Wary Standoff on Obamacare?

Reason: “There is a shift happening. It’s not that Republicans are abandoning opposition to the law. But they appear increasingly uncertain about how to deal with it now that it has arrived.”

“Part of what’s happening here is that, in some sense, Obamacare’s Medicaid expansion has become a separate issue from the rest of the law …”

“The party’s current confusion about how to respond to the coming of Obamacare coverage expansion is, in large part, the consequence of this years-long refusal to develop any alternative policy preference. Republicans have long known that they are against Obamacare, but that’s all they knew. ”

“There has been a sort of settling of opinion on Obamacare in recent months; it’s clear that it’s unpopular, and that the repeated attempts to message into success aren’t working. But with the follies of open enrollment behind us, and the most obvious website problems mitigated, it’s also less of a priority than it once was.”

“The result is a convergence of sorts, and also a kind of wary standoff, in which both parties are grappling with the fact that Obamacare is unpopular, but also that millions of people are now receiving its benefits. Neither side knows quite how to respond. It’s like watching two boxers circle each other in the ring, holding in defensive positions.”


It’s an Obamacare Life Spiral, Not a Death Spiral

Jason Millman: “A new Kaiser Family Foundation analysis this morning examining the prices of these benchmark [silver] plans in 16 cities finds that they will fall, on average, by .8 percent next year. That means some of the most attractive plans will be cheaper, and it could mean the federal government will pay less in subsidies than expected.”


Paul Krugman: “One question we might ask here is, why is the news so good? The answer, I’d suggest — although I hope the real experts will weigh in — is that we’re actually seeing the opposite of a death spiral; call it a life spiral. For one thing, the huge surge in enrollments late in the day meant that the risk pool this year is better than insurers expected, and they now expect 2015 to be better still. Also, importantly, big enrollments mean that more insurers are entering the market, increasing competition. And, of course, the better the deal the more people will sign up: success feeds success.”

Textualism as a Tool for the Destruction of Obamacare

Jeffrey Toobin argues that the Halbig v. Burwell case “is the latest chapter of the legal assault on Obamacare, but it is also the most prominent instance of a larger fight over an ascendant legal theory known as textualism.”

“Scalia and other textualists often assert that their approach drains their judgments of political content: they simply read the statutes, consult a dictionary, and render their verdicts. As the Halbig case demonstrates, textualism is as politically fraught as any other approach to judging. The Halbig case is not an attempt to police unclear drafting but rather the latest effort to destroy a law that is despised by many conservatives.”

“The five appellate judges who voted to uphold the law were originally nominated by Democratic Presidents; the two who voted against it were chosen by Republicans. This reflects the real division over the Affordable Care Act–a political, rather than judicial, conflict. Textualism is not a dispassionate guide to a result; it’s merely a vehicle to a preferred outcome—the destruction of Obamacare.”

A Major Setback for an Obamacare Legal Challenge

Jonathan Cohn: “The latest big legal challenge to the Affordable Care Actthe one that could potentially deprive millions of people of subsidies, making it impossible for them to get insurancejust suffered a major setback in federal court.”

“The Circuit Court of Appeals in Washington on Thursday announced that it is withdrawing its July decision … so that the full panel of active judges on the court can rehear the case.”

“That doesn’t guarantee that a majority of judges on the D.C. Circuit will ultimately vote to overturn the initial decision. But there are many reasons to think that’s what will happen … So far the arguments have convinced only two federal judges, both of whom happened to be Republican appointees. The majority of sitting judges on the D.C. Circuit are Democratic appointees and now, thanks to the en banc hearing, the case is in their hands.”

Will the Supreme Court hear the case? “Most legal experts I know think the justices will, at the very least, wait to see how the full D.C. Circuit rules before taking the lawsuits seriously.”

Professor Andrew Koppelman: “If the Court was going to blow up Obamacare, it would have done so in the big case in 2012. After Roberts paid a big political cost for doing that, why would he now adopt this hyper-technical and unpersuasive legal argument, yanking away benefits that a lot of people are already receiving?”


Massachusetts Curbs Health Care Costs

Vox: “Massachusetts is running the country’s most aggressive experiment in controlling health-care costs — and the first year results suggest it could be working.”

“Two years ago, Massachusetts set what seemed like an ambitious goal: it would be the first state in the entire country that would put a firm cap on health-care spending.”

“Massachusetts’ budget cap kicked in last year and, earlier this morning, the state reported a victory: it stayed within the 2013 growth limits.”

massachusetts costs

“The good news: per capita health-care costs grew slower than Massachusetts had hoped. The bad news: medical spending still grew faster than overall inflation in the state.”

Medicare Spending is Actually Falling

Margot Sanger-Katz: “Medicare spending isn’t just lower than experts predicted a few years ago. On a per-person basis, Medicare spending is actually falling.”

“If the pattern continues, as the Congressional Budget Office forecasts, it will be a rarity in the Medicare program’s history.”

“This year, Medicare, which covers those 65 and older and people with disabilities, will spend about $11,200 on average for every person enrolled in the program. By comparison, it spent $12,000 three years ago, in inflation-adjusted dollars. The Congressional Budget Office forecasts that the number will fall below $11,000 by 2017 and stay below this year’s number until 2020.”

“The recent pattern reflects two main factors. One is that the baby boom generation is entering the program [Two:] Over the last few years, Medicare patients have been using fewer expensive medical services, particularly hospital care and prescription drugs.”

Screen Shot 2014-09-04 at 7.22.04 AM

A Medicare Cost Miracle

Paul Krugman writes that “something remarkable has been happening on the health-spending front, and it should (but probably won’t) transform a lot of our political debate.”

Krugman contends that the decrease in health spending, especially Medicare, “is a really big deal.”

“The slowdown in Medicare helps refute one common explanation of the health-cost slowdown: that it’s mainly the product of a depressed economy, and that spending will surge again once the economy recovers. That could explain low private spending, but Medicare is a government program, and shouldn’t be affected by the recession. In other words, the good news on health costs is for real.”

“But what accounts for this good news? The … big implication of the Medicare cost miracle is that everything the usual suspects have been saying about fiscal responsibility is wrong.”

“For years, pundits have … dismissed as worthless all the cost-control measures included in the Affordable Care Act. Inside the Beltway, cost control apparently isn’t considered real unless it involves slashing benefits.”

“Medicare is spending much less than expected, and those Obamacare cost-saving measures are at least part of the story. The conventional wisdom on what is and isn’t serious is completely wrong.”