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6 Years Later: The Failures of Obamacare

Everything we were promised with Obamacare has yet to come to fruition: keep your plan! lower prices! tens of millions insured! and a litany of other broken promises and predictions.

Obamacare was signed into law on March 23, 2010. The Weekly Standard took the time to perform a thorough examination on the current state of Obamacare, an audit perhaps, comparing what was promised and what has been delivered. Their findings are sobering. It also offers some remedies of the most egregious maladies plaguing this particular legislation. I have reprinted the article in its entirety below, because it is chock-full of good information:

Three years ago, on the eve of Obamacare’s implementation, the Congressional Budget Office (CBO) projected that President Obama’s centerpiece legislation would result in an average of 201 million people having private health insurance in any given month of 2016. Now that 2016 is here, the CBO says that just 177 million people, on average, will have private health insurance in any given month of this year—a shortfall of 24 million people.

Indeed, based on the CBO’s own numbers, it seems possible that Obamacare has actually reduced the number of people with private health insurance. In 2013, the CBO projected that, without Obamacare, 186 million people would be covered by private health insurance in 2016—160 million on employer-based plans, 26 million on individually purchased plans. The CBO now says that, with Obamacare, 177 million people will be covered by private health insurance in 2016—155 million on employer-based plans, 12 million on plans bought through Obamacare’s government-run exchanges, and 9 million on other individually purchased plans (plus a rounding error of 1 million).

In other words, it would appear that a net 9 million people have lost their private health plans, thanks to Obamacare—with a net 5 million people having lost employer-based plans and a net 4 million people having lost individually purchased plans.

None of this is to say that fewer people have “coverage” under Obamacare—it’s just not private coverage. In 2013, the CBO projected that 34 million people would be on Medicaid or CHIP (the Children’s Health Insurance Program) in 2016. The CBO now says that 68 million people will be on Medicaid or CHIP in 2016—double its earlier estimate. It turns out that Obamacare is pretty much a giant Medicaid expansion.

To be clear, the CBO—which has very generously labeled Obamacare’s direct subsidies to insurance companies as “tax credits,” even though sending money to insurers doesn’t lower anyone’s taxes—isn’t openly declaring that Obamacare has reduced the number of people with private health insurance or that it has doubled the number of people on Medicaid or CHIP. Rather, the CBO maintains that Obamacare has actually increased the number of people with private health insurance by 9 million and has increased the number of people on Medicaid or CHIP by (just) 13 million. But it would seem that the only reason the CBO can make these claims is that it has moved the goalposts.

That is, the CBO has significantly altered its estimates for what 2016 would have looked like if Obamacare had never been passed. In 2013, the CBO projected that, in the absence of Obamacare, 186 million people would have had private health insurance in 2016, and 34 million people would have been on Medicaid or CHIP. The CBO now maintains that, in the absence of Obamacare, only 168 million people would have had private health insurance in 2016 (a reduction of 18 million people from its 2013 projection), while 55 million people would have been on Medicaid or CHIP (an increase of 21 million people from its 2013 projection). Somehow the hypothetical non-Obamacare world has changed a lot in the past three years. (The CBO doesn’t explain how this could have happened.)

Even the CBO’s revised figures for a non-Obamacare world, however, can’t gloss over the fact that Obamacare has failed to hit its target for private health insurance by 24 million people. To see that, one must simply compare Obamacare’s new tally of 177 million to its 2013 target of 201 million.

The CBO doesn’t release retroactive scoring of Obamacare. Try finding, for example, tallies from the federal government (whether from the CBO or otherwise) on what Obamacare has actually cost so far. Rather, the CBO is like a handicapper who predicts the results of horseraces, but then never bothers to publish the races’ actual results.

Now that it’s clear enough, however, that Obamacare is basically an expensive Medicaid expansion coupled with 2,400 pages of liberty-sapping mandates, it’s time for a winning Obamacare alternativeto emerge, one along the lines of what Ed Gillespie almost rode to victory in the Virginia Senate race. Such an alternative should address the longstanding inequity in the tax code—between employer-based and individually purchased insurance—while adhering to four basic notions:

1. It shouldn’t touch the tax treatment of the typical American’s employer-based plan.

2. It should close the tax loophole on the employer side—which says that the more you spend (on insurance), the more you save (in taxes)—by capping the tax exclusion at $20,000 for a family plan (while letting anyone with a more expensive plan still get the full tax break on that first $20,000).

3. It should offer a simple tax break for individually purchased insurance that isn’t income-tested and thus doesn’t pick winners and losers (in marked contrast with Obamacare, which is all about picking winners and losers.)

4. It shouldn’t provide direct subsidies to insurance companies like Obamacare does. (The federal government provides a tax break for mortgage interest paid—it doesn’t directly pay a portion of people’s mortgage bills. Likewise, it shouldn’t directly pay people’s health insurance bills as if it were some kind of “single payer.”)

In addition, anyone crafting an Obamacare alternative should keep this important point in mind and express it publicly: Far from being the gospel truth, the CBO’s scoring is more like a wild guess that will never be checked against future reality.

CBO Examines Taxing Drivers By the Mile As a Revenue Raiser

According to an economist at the Congressional Budget Office (CBO), the federal government should examine the question of taxing drivers by the mile as a means of raising higher revenue for highway programs.

According to the Washington Examiner, “Chad Shirley, CBO’s deputy assistant director for microeconomic studies, gave a presentation that says federal gas tax revenues are falling short of federal spending on highway programs. But to resolve that problem, Shirley didn’t propose less federal spending, and instead offered three suggestions.”

1) Charge drivers more through the implementation of a “vehicle-miles traveled charges.”
2) Charging them more when traffic is bad. Shirley calls that “congestion pricing.”
3) Charging tolls on “additional existing interstates.”

The idea of a “vehicle miles traveled tax,” or a “VMT” tax, was considered in 2011 in a bill that never came to fruition. That plan “foresaw the installation of equipment on people’s cars and trucks that would measure how far they drive, and the collection of taxes electronically through a reading of those devices at gas stations.”

Whether or not these new suggestions will be considered again remains to be seen. The CBO says that its three suggestions are not higher taxes or fees, but as an attempt to “make federal highway spending more productive for the economy.”

Such proposals are invasive of people’s privacy, and represent another ridiculous attempt at trying to regulate the behaviors of people.

CBO Predicts 2 Million Fewer Workers By 2025 Due to ACA Impact


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As part of the “Working Paper Series” published by the Congressional Budget Office (CBO), the CBO just released their latest work entitled, “How CBO Estimates the Effects of the Affordable Care Act on the Labor Market.” Essentially, the CBO projects that the labor force will be about 2 million full-time-equivalent workers smaller ten years from now, in 2025, than it would have been without the implementation of the Affordable Care Act (ACA).

“The Affordable Care Act (ACA) will make the labor supply, measured as the total compensation paid to workers, 0.86 percent smaller in 2025 than it would have been in the absence of that law, the Congressional Budget Office estimates. Three-quarters of that decline will occur because of health insurance expansions, which raise effective tax rates on earnings from labor — for instance, by phasing out health insurance subsidies as people’s income rises—and thus reduce the amount of labor that workers choose to supply. The labor force is projected to be about 2 million full-time-equivalent workers smaller in 2025 under the ACA than it would have been otherwise. Those estimates were based mainly on CBO’s calculations of the effects of the law’s major components on marginal and average tax rates and on the agency’s analysis of research about the change in the labor supply resulting from a change in tax rates. For components of the law that were difficult to express in terms of changes in tax rates, CBO based its estimates on a review of the available literature about similar policy changes.”

“All told, CBO estimates that in 2025, the ACA’s reduction in the labor supply, measured as total compensation, would range from 0.4 percent to 1.3 percent. The agency’s central estimate is 0.86 percent. In other words, the effect could be about 50 percent smaller or 50 percent larger than the agency’s central estimate because of potential variations in labor supply responses to the ACA’s provisions. Accounting for potential variations in other aspects of the estimates would widen that range.”

You can read the entire paper, about 20 pages long, here.

Obamacare Enrollees Must Double To Meet Budget Projections, Stay Solvent


A piece from the Washington Times this week hammers out what most of us already know — that Obamacare is lagging severely behind its initial projections for participants. The lackluster enrollment in turns impacts the financial side of Obamacare because it has missed key targets that were counted on in budget planning.

The Obama Administration has tried all sorts of gimmicks so far to tout Obamacare as a success. First it was caught counting dental plans among enrollment figures to bolster numbers, and then it slashed last year’s CBO estimate for 2015 enrollees by more than three million down to 9.1 million in order to show success if it passed the target amount (hint: it did, at 9.9 million).

Additionally, the Obama Administration has delayed implementing various parts of the bill due to backlash from citizens and businesses alike over plan availability, and also as an effort to stave off sharp premium increases which we were told would never happen. Remember how Obamacare would save $2500/family?

The article is a good overview of the current state of Obamacare. It’s worth it to read in full below:

President Obama will need to more than double the number of Americans enrolled in Obamacare exchange plans to reach 21 million next year, the target set in budget projections, in what is shaping up as the next major test for the health care law.

As of June, the Department of Health and Human Services counted 9.9 million customers who have bought plans through the federal HealthCare.gov portal and a handful of state-run exchanges.

That puts the administration ahead of it’s own estimates for 2015, but is less than half what the Congressional Budget Office projected for 2016, showing just how much work officials have ahead of them as the next round of enrollment begins in less than two months.

That puts the administration ahead of it’s own estimates for 2015, but is less than half what the Congressional Budget Office projected for 2016, showing just how much work officials have ahead of them as the next round of enrollment begins in less than two months.

“It is definitely something that people pay attention to,” said Rachel Klein, director of organizational strategy at Families USA, a nonprofit that advocates for affordable health care.

The tax during the first year was $95 or 1 percent of income above the filing threshold — a relatively minor bite. This year, the penalty will be $325 or 2 percent of income, and by 2016 it will be $695 or 2.5 percent of income.

“The substantial increase in penalties under the individual mandate next year is a big wild card,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a nonpartisan health policy organization. “We’re in unchartered territory here about how effective these bigger penalties will be in nudging people to get insured.”

“The marketplaces are working,” Mr. Levitt added, “but higher enrollment would both improve the insurance risk pool and reduce the number of Americans uninsured.”

The individual mandate was included in the Affordable Care Act of 2010 to make sure enough healthy Americans signed up, spreading out the costs for higher-risk customers.

A divided U.S. Supreme Court upheld the mandate in 2012 as an appropriate use of Congress’ taxing power.

But congressional Republicans are still intent on scrapping the health care law, and may use a fast-track budget procedure known as “reconciliation” to take a swing at it.

GOP leaders say they may not be able to eviscerate the law through the budget, but Brendan Buck, a spokesman for House Ways and Means Committee Chairman Rep. Paul Ryan, said repealing the individual mandate is “definitely on the table.”

“This law is only being held together by mandates and coercion, and that’s why we continue to look at ways to repeal the mandates and give people more freedom and choices,” Mr. Buck said.

Even as it struggles to meet the 2016 enrollment projection, the Obama administration is on track on other measures, including a CBO estimate that 17 million fewer people lack insurance this year because of the health care law.

But in setting lofty goals for the exchanges, the CBO estimated the effect of the individual mandate and other potential changes, including the belief that employers would shift workers onto the exchanges or that customers would enter the Obamacare marketplace ahead of late 2017, when they can no longer hold plans that do not comply with the law.

Under political duress, the White House let customers transition to compliant plans to keep Mr. Obama’s notorious promise that people who like their plans can keep them under his law.

Sizing up reality versus long-range estimates, Health and Human Services has begun to set its own, more modest goals for exchange enrollment, ignoring CBO’s guess of 12 million for 2015 and setting the mark at 9.1 million enrollees. So far, it’s besting its less ambitious goal.

The agency says it is doing its own evaluation of the marketplace and will likely announce its enrollment targets for 2016 before signups begin in November.

“At this point, the Congressional Budget Office’s projected enrollment total for 2016 seems overly optimistic,” Mr. Levitt said. “Enrollment may reach that level eventually, but I doubt it will happen by next year.”

Obamacare Has Hit Only About 2/3 of CBO’s Initial Target for Enrollment


Jeffery Anderson over at The Weekly Standard took a peek at Obamacare’s initial projected enrollment numbers and compared them to the current actual figures. What he found was that Obamacare is not as widely successful as the rosy Congressional Budget Office (CBO) estimates from 2010.

“Given that Obamacare’s supporters like to take the Congressional Budget Office’s overly optimistic scoring of the president’s signature legislation as gospel, it’s fun to look at how poorly Obamacare is actually doing in relation to earlier CBO projections. When the Democrats rammed Obamacare through Congress in 2010 without a single Republican vote, the CBO said that the unpopular overhaul would lead to a net increase of 26 million people with health insurance by 2015 (15 million through Medicaid plus 13 million through the Obamacare exchanges minus 2 million who would otherwise have had private insurance but wouldn’t because of Obamacare).

Fast-forwarding five years, the CBO now says that Obamacare’s tally for 2015 will actually be a net increase of just 17 million people (10 million through Medicaid plus 11 million through the Obamacare exchanges minus 4 million who would otherwise have had private insurance but won’t, or don’t, because of Obamacare).

In other words, Obamacare is now slated to hit only 65 percent of the CBO’s original coverage projection for 2015.

Obamacare’s under-publicized failure on this key point is attributable to a variety of factors, including but not limited to the following: People aren’t thrilled with Obamacare-compliant insurance’s high cost and limited doctor networks, and some would even rather pay a fine for refusing to buy such insurance than pay its premiums; the Supreme Court ruled that part of Obamacare was unconstitutional, thereby giving states more freedom not to help expand it; and HealthCare.gov has been more reminiscent of DMV.org than of Expedia.com.

In addition (and just as the CBO originally projected), the bulk of Obamacare’s net coverage gains are coming from dumping people into Medicaid (59 percent of the current projected net increase in 2015), not from getting people enrolled in private insurance (41 percent). Of course, President Obama rarely if ever talks about that aspect of Obamacare — but Republicans should.”

Desperate to get more people enrolled too, the Obama Administration announced last month another “special enrollment period” around tax time this year, to allow those who found out they have to pay a penalty/tax/fee instead of having insurance in 2014, the opportunity to not make the “mistake” again.

Those who opted not to have insurance in 2014 are fined $95, or 1% of their income, whichever is greater, which they pay when then file their 2014 taxes this year. In 2015, the fine increases to $325 or 2% of income. Enrollment in the special enrollment period has been lackluster so far.

The Administration just doesn’t seem to get that many people still don’t think Obamacare to be such a great piece of legislation, and certainly aren’t tripping over themselves to purchase an Obamacare plan.