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A few days ago, UnitedHealthcare announced that the possibility of withdrawing from the Obamacare health insurance exchanges. This is a significant announcement, as UnitedHealthcare is one of the biggest insurers in the country. The impact of withdrawl would affect hundreds of thousands of people with regard to their healthplans; the timing — right before 2016 elections — would be critical.
HHS is predicting 10 million enrollees in 2016, which is half of what was originally projected when Obamacare was passed. It’s unlikely that enrollment will suddenly surge this year, which means that the financial instability of the entire model will continue.
If UnitedHealthcare decides to discontinue next year, those with their coverage will have to — yet again — choose another plan, but this time from a smaller list of coverage providers. Since Open Enrollment begins in the fall, right around Election time, such a move could wreak havoc on the final stretch.
One economist suggests that prices will increase even more.
“The year 2017 is significant for insurers, because that’s the year when several programs designed to mitigate risk for insurers through federal backstops go away. The hope was that those programs would act as training wheels for Obamacare in its first few years of implementation, but after that, the insurers were supposed to be able to thrive on their own. UnitedHealth’s statement suggests otherwise.
If UnitedHealth and other insurers decide to exit, remaining insurers will be forced to take on even more high-risk enrollees, prompting them to either raise rates further or exit themselves. That in turn would deprive individuals of choices and remove competition, a key purpose of the exchanges.”
So don’t expect United to suddenly see a reason to get back into the 2017 market, not without hefty risk-corridor subsidies — which under any other circumstances would be called “corporate welfare.” Given that Congress isn’t likely to reverse course and underwrite ObamaCare losses, the path to the exit remains the likely course for United, and perhaps some of its competitors, too.
United says it will remain committed to its Medicaid and Medicare businesses, and of course it will stick with its employer-based group coverage, where the issues of ObamaCare regulation have less impact.”
“But UnitedHealth and other insurers need more Americans to come into the public exchanges because the patients that are signing up for coverage are sicker, making a “higher overall risk pool,” insurance executives say. It’s a key reason many Americans are seeing rate increases of 10 percent or more across the country on public exchanges.
United has discovered that the trade-offs in mandates and forced coverage don’t pay off. It’s a bait-and-switch for insurers by the Obama administration, but it’s even worse of a bait-and-switch for consumers.
Subsidies do not mitigate the fact that consumers have to pay both the premium and then thousands of dollars for care out of their own pocket before insurance takes effect, except in rare and catastrophic circumstances.
Consumers used to have an option for that kind of health insurance – catastrophic coverage, used to indemnify against unforeseen major health events. Those policies featured low premiums and left routine care for consumers to negotiate directly with providers on a cash basis. Combined with health-savings accounts (HSAs), those plans offered a rational approach to balancing health and economic requirements, especially for younger consumers who rarely need more than one or two clinic visits a year, which would cost far less than either comprehensive-coverage premiums or deductibles even in the pre-ACA era.
Instead of “affordable care” promised by President Obama and Democrats, consumers have instead discovered they have effectively been forced to pay for catastrophic health insurance at comprehensive-plan prices. They have become victims of a bait-and-switch scheme that the government would vigorously prosecute – if it wasn’t masterminding the scheme itself.”
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In recent years, President Obama has issued his Fall Unified Agenda right around Thanksgiving, as most of the country is preparing for the holiday season. This year was no different. This past Friday, the 2015 regulatory list was released.
According to Forbes, “the Fall 2015 Agenda reports on 3,297 rules and regulations at the ‘active,’ ‘completed’ and ‘long-term’ stages, many of them holdovers from earlier volumes. This is down from 3,415 last year.
Active (these include pre-rule, proposed and final): 2,244 (there were 2,321 last fall)
Completed: 554 (629 last fall)
Long-term: 500 (465 last fall)
TOTAL: 3,297 (3,415 last fall)
The Agenda appeared pretty much like clockwork every spring and fall, usually April and October, between 1983 and 2011. But recent releases seem timed to draw as little attention as possible, appearing often at holiday weekends:
Fall 2012: The Friday before Christmas (that Monday was Christmas Eve)
Fall 2013: The day before Thanksgiving
Fall 2014: The Friday before Thanksgiving
Fall 2015: The Friday before Thanksgiving
And more:
“The Fall 2015 Agenda reports on 218 ‘economically significant’ rules and regulations at the ‘active,’ ‘completed’ and ‘long-term’ stages. This is up from 200 at this point last year.
Active (pre-rule, proposed, final): 149 (131 last fall)
Completed: 36 (31 last fall)
Long-term: 33 (38 last fall)
TOTAL: 218 (200 last Fall)
The Fall Agenda includes environmental and energy regulations, such as rules for pesticides and coal; these new items come on the heels of other environmental rules earlier this year including smog, fracking, and carbon dioxide emissions. The American Action Forum calculated the financial impact of “regulation in 2015 to a whopping $183 billion — about half from final rules and the other from proposed rules.”
To view the Fall Unified Agenda, go here.
People go into business to do things and make things in this great country of ours — not to comply with government diktats. The unprecedented growth of bureaucratic regulations has been one of the key factors of our lackluster, anemic economic recovery.
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The State Department, in tandem with the IRS, will soon have the ability to “block Americans with ‘seriously delinquent’ tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category.” This new law will likely begin in January 2016.
The roots of this new law began back in 2012, a report issued by the GAO suggested the possibility of tying tax collection to passport issuance, in an effort to collect revenue. Soon thereafter, Senator Harry Reid introduced a bill in Congress that did just that, with a threshold of $50,000 in delinquency. The bill been attempted several times in Congress over the last few years.
Most recently, the new rule proposal is tucked into a highway-funding bill (HR22) that currently sits in committee and is likely to be voted on sometime in December.
Though there will be exceptions to the rule (emergency and humanitarian travel, for instance), valid criticisms of the rule were raised earlier this year in Forbes. For instance the proposal “isn’t limited to criminal tax cases or even situations where the government fears you are fleeing a tax debt. In fact, if the bill is passed you could have your passport revoked merely because you owe more than $50,000 and the IRS has filed a notice of lien.
A $50,000 tax debt is easy to amass today. In addition, tax liens are pretty standard. The IRS files tax liens routinely when you owe taxes. It’s the IRS way of putting creditors on notice so the IRS eventually gets paid. In that sense, the you-can’t-travel idea seems extreme. Some commentators noted that a far smaller sum of unpaid child support can trigger similar passport action. Others attack the proposal as potentially unconstitutional.”
The Joint Committee on Taxation has estimated that the new law would raise about $400 million over the next decade.
A serious problem, however, looms for millions of U.S. citizens living abroad. Passports, obviously, are essential for travel, residency permits, banking, school, and work visas; yet, the IRS has documented trouble with getting mail properly to ex-pats.
The Wall Street Journal mentioned noted that ” a report issued in September by the Treasury Inspector General for Tax Administration, or Tigta, a watchdog agency, found that the IRS sent 855,000 notices to U.S. citizens abroad in 2014. According to the report, ‘IRS data systems aren’t designed to accommodate the different styles of international addresses, which can cause notices to be undeliverable.’
The Tigta report said that ‘current IRS processes for addressing international mail issues are ineffective or nonexistent.’ In response, the IRS said that Tigta’s recommendations wouldn’t overcome the agency’s ‘budgetary, statutory, and operational constraints.’ ”
The implementation of this new law will be worthwhile to watch in the coming months, especially as it will likely affect those living abroad.
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A must read from the Washington Examiner today on the subject of Obamacare, insurance companies, and bailouts. I republished the article in full.
The Department of Health and Human Services attempted to reassure private insurers on Thursday that they’ll be able to recover losses from participating in Obamacare by claiming it was an “obligation” of the U.S. government to bail them out.
At issue is a provision within the law known as the risk corridors program. Under the program, which runs from 2014 through 2016, the federal government is to collect money from health insurers doing better than expected and use those funds to provide a federal backstop to other insurers who incur larger than expected losses from rising medical claims. The idea was to provide training wheels to insurers in the first years of Obamacare’s implementation, and to take away any incentive for insurers to cherry pick only the healthiest customers.
Republicans, fearing that this could turn into an open-ended government bailout in the event of industry-wide losses, included a provision in last year’s spending bill that limited the program, requiring HHS to pay out only from the pool of money collected, rather than supplementing it with other sources of government funding. President Obama signed that bill.
Now that insurers have been able to look at medical claims, what they’ve found is that enrollees in Obamacare are disproportionately sicker, and losses are piling up. For the 2014 benefit year, insurers losing more than expected asked for $2.87 billion in government payments through the risk corridors program, but HHS only collected $362 million from insurers performing better than expected. Thus, the funds available to the federal government only amounts to 12.6 percent of what insurers argue that they’re owed.
So insurers are not happy. And now the industry lobbying group America’s Health Insurance Plans — which happens to be helmed by Marilyn Tavenner, who previously oversaw the implementation of Obamacare as head of the Centers for Medicare and Medicaid Services — is aggressively fighting for more money.
In a statement issued Thursday, the same day that the nation’s largest insurer, UnitedHealth announced it may exit Obamacare due to mounting losses, Tavenner said, “We’ve been very clear with the administration about the serious challenges facing consumers and health plans in this Exchange market. Most recently, nearly 800,000 Americans have faced coverage disruptions as a result of the significant and unexpected shortfall with the risk corridors program. When health plans cannot rely on the government to meet its obligations, individuals and families are harmed as a result. The administration must act to ensure this program works as intended and consumers are protected.”
In an effort to reassure the industry, CMS, the HHS agency Tavenner previously led, issued guidance reiterating that HHS would use money collected from insurers in 2015 and possibly 2016 to make up the $2.5 billion shortfall that exists in 2014.
But what happens if there still isn’t enough money, and after 2016, the program is taking in less than the money sought by insurers?
HHS said it, would “explore other sources of funding for risk corridors payments, subject to the availability of appropriations. This includes working with Congress on the necessary funding for outstanding risk corridors payments.”
The agency further added: “HHS recognizes that the Affordable Care Act requires the Secretary to make full payments to issuers, and HHS is recording those amounts that remain unpaid following our 12.6 percent payment this winter as fiscal year 2015 obligation of the United States government for which full payment is required.”
In reality, this doesn’t mean much at all. Risk corridor payments for 2016 won’t be due until mid-2017, and by that point, it will be an issue for a future Congress and future president. Nothing that a previous administration’s HHS said in 2015 will really matter.
That said, this is another demonstration that for all of Obama’s sanctimonious rhetoric about taking on insurance companies. In reality, his signature legislative achievement was to put government in bed with private insurers. And now that his pet project backfired, he wants taxpayers to take care of those very insurance companies he spent years railing against.
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In an effort to encourage people to sign up for the Affordable Care Act, the Obama Administration has boosted the low cost of premiums — the part that is subsidized. What they aren’t mentioning is that in exchange for low monthly costs, enrollees face high deductible costs.
“Most Americans will find an option that costs less than $75 a month,” President Obama said. Additionally, Sylvia Mathews Burwell, the Secretary of Health and Human Services, issued a report analyzing premiums in the 38 states that use HealthCare.gov. “Eight out of 10 returning consumers will be able to buy a plan with premiums less than $100 a month after tax credits,” she said.”
The trade-off for low-ish premiums means that many Obamacare plans have high deductibles. “The Internal Revenue Service defines a high-deductible health plan as one with an annual deductible of at least $1,300 for individual coverage or $2,600 for family coverage.”
But in many states, deductibles are even higher than that. According to Hot Air, “in many states, more than half the plans offered for sale through HealthCare.gov, the federal online marketplace, have a deductible of $3,000 or more. Once you add in several hundred dollars per month for your plan premium, a rate that may or may not be lower than it used to be and add in a $3,000 or more deductible, the average individual could be paying over $5,000 out of pocket in a year before their ‘affordable’ insurance kicks in. This is true for employer sponsored plans as well.”
These costs are exorbitant for working class families. If they are already needing to seek health insurance and subsidies through the Obamacare exchanges, how can they possibly have the capability to find several extra thousand dollars in their budgets in order to pay out-of-pocket costs to meet their deductibles before their insurance really kicks in. With unemployment high and wages flat, these rising deductibles (and also premiums in many cases) hit Americans hard.
And don’t forget, plans purchased are for 2016. The Obamacare penalty fee continues to ramp up for those who decide to forgo health insurance coverage entirely for this coming year. Those considering opting should be reminded of what the financial costs will be to do so.
Your penalty tax is the greater of either 1) a flat-dollar amount based on the number of uninsured people in your household; or 2) a percentage of your income. If you are able to go by the flat-dollar amount, the fee increases to $695 in 2016 plus half that amount for each uninsured child under age 18. Your total household penalty is capped at three times the adult rate. If you qualify for the percentage of your income, it is 2.5% for this coming year.
It is increasingly clear as we continue along the path of the Affordable Care Act that this legislation truly is not affordable.
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Congress is slated to take up the Fed Oversight Reform and Modernization Act (FORM Act) this week. The FORM Act. It includes four key policy changes. A summary from the Daily Signal:
1) Require the Federal Reserve to Operate Under a Rules-Based Framework.
Throughout its history, the Fed has operated within a purely discretionary policy framework. Rules-based monetary policy, on the other hand, gives a central bank a clear set of guidelines that credibly commit it to future policy actions.
Naturally, central banks will be hesitant to support this type of policy change because it limits their discretionary authority, but the FORM Act would allow the Fed to choose its own monetary policy rule. Furthermore, the new framework would give the Fed the flexibility to stop following its policy rule, provided that it explains its decision to Congress.
This approach would greatly reduce uncertainty concerning the Fed’s future policy actions without overly restricting the Fed.
2) Restrict the Fed’s Emergency Lending Authority.
The Fed has a long history of lending to insolvent firms, and the best approach to fixing this problem would be to eliminate the Fed’s emergency lending authority.
The FORM Act doesn’t go this far, but it would implement restrictions aimed at making it more difficult to lend to insolvent firms at subsidy rates of interest, a major problem during the 2008 crisis.
3) Audit the Fed.
Many commentators have pointed out that the Federal Reserve is already subject to financial audits, but the Fed’s monetary policy decisions are off limits to Government Accountability Office (GAO) audits. The FORM Act would remove the restrictions that prevent such GAO audits, thus allowing for a retrospective exam of the Fed’s monetary policy actions.
Critics paint these policy audits as harassment of the Fed, but the GAO is an independent, nonpartisan congressional watchdog that regularly investigates federal agencies. Several former GAO officials have even pointed out that critics of “Audit the Fed” are maligning the GAO. No aspect of what the Federal Reserve does should be off limits to the GAO.
4) Establish the Centennial Monetary Commission.
The FORM Act’s Centennial Monetary Commission is a bipartisan congressional commission based on the one proposed in the Centennial Monetary Commission Act of 2013. The goal of this type of policy would be to “establish a commission to examine the United States monetary policy, evaluate alternative monetary regimes, and recommend a course for monetary policy going forward.”
The commission’s recommendations would not bind Congress to implement any legislation, but it would provide Members of Congress with information they need to fulfill their constitutional responsibilities for monetary policy. Moreover, such a commission would provide a public venue for both critics and supporters to discuss the Fed’s past operations and the appropriate role for the central bank going forward.”
Both President Obama and Fed Chairwoman Janet Yellen vehemently opposes the monetary reforms. “In a letter Monday to House Speaker Paul Ryan and Minority Leader Nancy Pelosi, Yellen called the proposed law a “grave mistake,” that would undermine Fed policy and the greater U.S. economy.” Yellen further claimed that the FORM Act could cause “millions of Americans to suffer” and would “politicize monetary policy.” Likewise, President Obama threatened to veto the bill if it passed because “the proposal would politicize the Federal Reserve’s monetary policy decisions.”
Peter Wallison from AEI provided some perspective on the FORM Act; he contends that the FORM Act is a positive bill that will bring greater information to financial markets. “Indeed, lack of information on something as important as monetary policy can be harmful to investors and to the economy as a whole, because investors and businesses deploy capital based on what they think will happen to interest rates in the future. The less information, the riskier these deployments are; the riskier they are, the more costly they are to make — which is why they may not be made at all. In addition, lack of information introduces unnecessary market volatility, as investors and businesses have to buy or sell securities — or even cancel contemplated transactions — because facts about the Fed’s policies have now come to light that show investors or businesses were operating on the wrong assumptions. This volatility is also costly for the economy.”
Congress has not yet voted on the FORM Act, and it is unknown whether it has the ability to pass. Nevertheless, the conversation about financial reform, and the role of the Fed — who has not always acted independently in recent years — is worthwhile.
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As previously noted, the government debt skyrocketed $339 billion the first day after the debt ceiling was lifted via the spending deal. Now, after 10 days (Nov 12), the total new debt has reached $462 billion.
The initial spike was the result of replenishing the funds that have been total new debt”>”frozen”. “The government began bumping up against the debt limit in March and was borrowing from other funds — using “extraordinary measures” — to keep from breaching the $18.1 trillion level. Treasury Secretary Jacob Lew was able to stretch that borrowing through the end of October.”
The $339 one-day splurge was the greatest Treasury jump ever recorded, but still comparable to actions in recent years. In August 2011, after a negotiation was reached, the Treasury debt increased $238 billion on one day; likewise, in 2013 in a similar scenario, the debt rose $328 billion on one day.
Of what does the $339 consist? “About $199 billion is public debt, which is money borrowed from outside sources, and $140 billion is borrowing from within government accounts. As of Monday, the gross total debt stood at $18.6 trillion, with $13.4 trillion of that public debt borrowed from the outside.”
By the end of Obama’s presidency, government debt is projected to be about $20 trillion — nearly double that which existed when Obama became President ($10.6 trillion). Already, the government is running a deficit. 1 month in to the fiscal year (beginning October 1), spending exceeded revenues by $136 billion. “up 12 percent compared with the previous October, as spending ballooned and taxes remained nearly flat. It was the worst October since 2010, when the government was still spending on the stimulus and was on pace for a deficit of more than $1 trillion that year.”
The situation looks mighty bleak right now.
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David Walker was a former head of the Government Accountability Office under Presidents Clinton and Bush. He recently spoke out about the crippling US debt, pointing out that the national debt is far greater than what is understood — more than three times the amount.
Walker told radio host John Catsimatidis, “If you end up adding to that $18.5 trillion the unfunded civilian and military pensions and retiree healthcare, the additional underfunding for Social Security, the additional underfunding for Medicare, various commitments and contingencies that the federal government has, the real number is about $65 trillion rather than $18 trillion, and it’s growing automatically absent reforms,”
He further pointed out, “If you don’t keep your economy strong, and that means to be able to generate more jobs and opportunities, you’re not going to be strong internationally with regard to foreign policy, you’re not going to be able to invest what you need to invest in national defense and homeland security, and ultimately you’re not going to be able to provide the kind of social safety net that we need in this country.”
Walker also called for both sides to join together in order fix the problems and put aside partisan politics. Unfortunately, actions like proposed recent SSDI bailout only worsen the situation. It reallocates $150 billion over the next three years comes from the Social Security Trust Fund in order to rescue the nearly bankrupt SSDI Trust Fund. This obfuscates the reality of unfunded liabilities and kicks the can down the road.
Walker’s call to make hard choices and severely reform the burgeoning entitlement debt crisis is the only way to truly fix the future. It is refreshing to hear someone speak candidly about the problems everyone is afraid to face.
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The Social Security Administration had record spending in fiscal year 2015, totaling $944,143,000,000. This total includes Social Security payments, disability payments, Supplemental Security Income payments, and the costs to administer these programs.
From CNSNews:
“As of September, there were 59,737,817 beneficiaries getting Social Security or disability benefits, according to the SSA. At the same time, according to the Bureau of Labor Statistics, there were 148,800,000 people who had either a full- or part-time job in the United States. That means there were only 2.49 people with jobs for each of the 59,737,817 Social Security and disability beneficiaries.
At the same time, there were only 121,839,000 people with full-time jobs in the United States in September, according to BLS. Those 121,839,000 full-time job holders equaled about 2.04 for each of the 59,737,817 people getting Social Security or disability benefits.
The $944,143,000,000 spent by the Social Security Administration in fiscal 2015 equaled about $6,345 for each of the 148,800,000 persons in the country with a job as of September. It equaled about $7,749 for each of the 121,839,000 people with a full-time job.
The $944,143,000,000 that the Social Security Administration spent in fiscal 2015 was also $381,637,000,000 (or about 68 percent) more than the $562,506,000,000 that the Treasury says the government spent on the Department of Defense and military programs during the year.”
The spending items include:
— $733,716,000,000 in benefits payments from the Old-Age and Survivors Insurance Trust Fund
— $3,505,000,000 in payments to cover administrative expenses for that fund
— $4,258,000,000 in payments to the Railroad Retirement Account
— $143,009,000,000 in disability benefit payments
— $2,881,000,000 in payments for administrative expenses for the disability trust fund
— $419,000,000 in additional payments to the Railroad Retirement Account.
— $58,901,000,000 for the Supplemental Security Income Program.
This was an increase of $33 Billion from fiscal year 2014. A quick analysis of the beneficiaries for the month of October included: “39,968,311 retired workers, 2,330,148 spouses of retired workers, 641,654 children of retired workers, 6,077,209 survivors of deceased workers, 8,922,858 disabled workers, 143,164 spouses of disabled workers, and 1,749,236 children of disabled workers.”
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The Bureau of Labor Statistics released its latest monthly report today. The October numbers women’s employment retreated just slightly from the record it set in September: 56,540,000 women over the age of 15 were unemployed.
Overall, 94,513,000 people in America were out of work during the month of October. This is the lowest it has been in 38 years; only 62.4% of Americans age 16 and above were either looking for work or working.
The Obama Administration still continues to tout the unemployment rate as being low — this month it was tabulated to be 5%. But the only reason it is low is because so many people HAVE given up working or even looking for work, which is accurately reflected in the labor participation rate. With fewer people being counted as “working,” the unemployment numbers calculated among a smaller pool of people makes the rate sound smaller.
But everyday Americans are not fooled by statistics.
