Memo To Congress: “You’re In The Hot Seat If Obamacare Is Overturned”
In oral arguments before the Supreme Court in March, lawyer Paul Clement made the case that the simplest way to dispense with the 2010 health-care-reform law would be to overturn it entirely: If the Court finds that the individual mandate is unconstitutional, it should strike down the whole thing. “The better answer might be to say, ‘We’ve struck the heart of this act; let’s just give Congress a clean slate,'” said Clement, representing the National Federation of Independent Business and the 26 states that oppose the law.
On its face, Clement’s logic seems simple: If you’re going to monkey with a giant piece of legislation that restructures nearly one-fifth of the U.S. economy, it’s best not to get into the weeds. Just let Congress start from scratch. But this argument misunderstands what would happen if the sprawling law is suddenly moot. Unlike partial revocations, which would give Congress time to fix potential glitches, a complete invalidation would start several policy fires that would require immediate congressional action. And members of Congress have not spent much time planning for this scenario.
First up: Medicare. The Affordable Care Act changed the formulas that Medicare uses to pay providers from top to bottom. It shifted growth rates, boosted some providers’ pay, and baked in financial incentives for doctors and hospitals that achieve quality benchmarks. It also codified many of the Medicare payment adjustments that it passes every year. (After all, when you have one big health bill moving, why not throw in everything?) Since 2010, regulators have acted on those changes, and the Centers for Medicare and Medicaid Services pays out 100 million medical bills each month according to the new pay scale.
If the law is overturned, no one is sure what figures the system would use. Should CMS continue to pay providers at the rates set by the law? Or should it go back to 2009 levels? Both Donald Berwick, who ran CMS under President Obama before he joined the Center for American Progress last year, and Gail Wilensky, who held a similar post during the presidency of George H.W. Bush and is now at Project HOPE, said they don’t know the answer. The House Ways and Means and Senate Finance committees would need to move fast to establish a clear legal authority for CMS to pay providers.
Furthermore, CMS operates using an antique IT system that makes it difficult to enact quick changes. Last year, when Congress looked like it might not pass routine legislation to forestall a big cut to physician pay rates, CMS Deputy Administrator Jonathan Blum told reporters that the system could hold claims for only 10 days before the computers crashed. Congressional staffers say they would probably need to freeze the current rates for weeks or months to give CMS time to switch back to the old pay scale.
Sen. Tom Coburn, R-Okla., a physician and a member of the Senate Finance Committee, which has jurisdiction over Medicare, opposes the law. But, he says, “there’s going to be a lot of chaos.” Although “there are discussions going on all the time,” Coburn says, few decisions have been made. On the House side, a Republican aide says that staffers are making preparations, but members are not concerned about a real emergency if the law is struck down. “I don’t think, overnight, there’s going to be this immediate panic,” the aide said.
The health-care law also reauthorized several long-standing federal programs, including the Indian Health Service, the principal care provider for nearly 2 million American Indians and Alaska natives. And it dedicates billions of dollars to expand community health centers and the health care workforce. If it disappears, the legal authority for those programs or their funding would disappear with it. If Congress doesn’t want these programs to shut their doors and shed workers, it will need to reauthorize them quickly. Many of these programs have enjoyed broad bipartisan support for decades, and it’s unlikely that even Republicans clamoring for repeal of the health care law would want to see them eradicated.
A complete erasure of the health care law could also spell trouble for the Centers for Disease Control and Prevention. The law’s Public Health and Prevention Fund, despite recent reductions, is set to dole out about $10 billion for community health ventures over 10 years. But because of recent appropriations cuts, the agency is using $825 million of that sum to pay for bioterrorism response-planning, lead-poisoning prevention, immunization programs, and many other core functions this year. Without new appropriations, these public-health programs will face instant, dramatic cuts. Sen. Robert Casey, D-Pa., a member of the Health, Education, Labor, and Pensions Committee, says he has not talked to his Democratic colleagues about contingency plans, and he is not optimistic that much would pass in this Congress. “The last time we did this, it took 30 years,” he says.
Since the Court is not especially likely to overturn the entire law, few lawmakers — including party leaders — have planned for it. “You asked whether there have been discussions,” said Senate Minority Whip Jon Kyl, R-Ariz., who is a member of the Finance Committee. “The answer is yes. But there have been no conclusions reached yet.” In this Congress, though, even if both chambers ready blueprints in time, it’s hardly clear that anything could become law.
By: Margo Sanger-Katz and Meghan McCarthy, The Atlantic, June 25, 2012
Mitt “Embracing Radical Ryan”: Top Paul Ryan Aide Jumps To The Romney Campaign
The top policy aide to House Budget Committee Chairman Paul Ryan has joined Mitt Romney’s presidential campaign, in an indication of Romney’s embrace of Ryan’s legislative proposals.
House Budget Committee Policy Director Jonathan Burks has left his post to become deputy policy director for the Romney campaign, according to Burks and Republican aides. The hire highlights Romney’s relationship with Ryan and embrace of the Wisconsin Republican’s proposals to slash domestic spending and overhaul Medicare by allowing beneficiaries to eventually purchase private coverage. It could also fuel speculation about the likelihood of Romney picking Ryan as his vice presidential nominee.
Romney has edged closer to Ryan’s plans even as President Obama and congressional Democrats make it clear that their own opposition to Ryan’s Medicare proposals will be a top campaign theme. On ABC’s This Week with George Stephanopoulos on Sunday, Romney campaign adviser Eric Fehrnstrom said the candidate “is for” the Ryan budget. “He believes it goes in the right direction,” Fehrnstrom said. Romney’s camp has also highlighted contacts between the former Massachusetts governor and Ryan.
Spokesmen for the Romney campaign and the Budget Committee declined to comment on Burks’s move.
By: Dan Friedman, The Atlantic, June 8, 2012
“Warped Moral Universe”: Why The GOP Want’s To Raise Taxes On The Poor
Citing the widely-repeated meme on the right that 47 percent of Americans pay no federal income tax (not to be confused with taxes in general), James Kwak has two theories:
The first is that the modern Republican Party is funded by the very rich… The result is that the parties’ platforms now reflect the wishes of their major funders, not their median voters. This is why Republican presidential candidates spent the primary season competing to offer the most generous tax breaks to the rich—while Paul Ryan’s budget slashes Medicare, a program supported by the Tea Party rank and file. For the rich people who call the shots, it’s simply in their interest to lower taxes on the rich and raise them on the poor. End of story…
The other, even-more-disturbing explanation, is that Republicans see the rich as worthy members of society (the “producers”) and the poor as a drain on society (the “takers”). In this warped moral universe, it isn’t enough that someone with a gross income of $10 million takes home $8.1 million while someone with a gross income of $20,000 takes home $19,000.* That’s called “punishing success,” so we should really increase taxes on the poor person so we can “reward success” by letting the rich person take home even more. This is why today’s conservatives have gone beyond the typical libertarian and supply-side arguments for lower taxes on the rich, and the campaign to transfer wealth from the poor to the rich has taken on such self-righteous tones.
The most trafficked post ever on my own site continues to be this Graph of Doom look at the Newt Gingrich’s tax plan back when he was still running. It was stunning then and now how much the Republican primary candidates were tripping over each other to demonstrate how much they would give back to the ultra-rich. (See here for a full comparison of all the candidates.)
But, as Kwak says, they really seem to be invested in this Randian stuff. It should also be a reminder how badly Republicans are likely to govern. There on the ups now not because of any actual argument, but because of 1) the continuing unemployment crisis and 2) their skill at organizing. Their actual policy ideas would be laughable if they didn’t have an actual chance of becoming law.
There’s a halfway plausible argument that Romney would prefer to go big on Keynesian stimulus, like Nixon did, but when it comes to domestic policy, a determined Congress holds the whip hand. Be warned.
By: Ryan Cooper, Washington Monthly Political Animal, June 6, 2012
“Right Wing Social Engineering”: What Romney’s Medicare Plan Actually Does
DC journos have spent much of the 2012 election trying to answer the question of how exactly a President Romney would govern. On one side, there are the skeptics who never bought into Romney’s rhetoric during the Republican nomination. They argue Romney is, at heart, still a moderate northeastern governor, a businessman unsuited for the extremism that has come to dominate his party. Others are equally convinced that Romney must be taken at face value. Sure he might have positioned himself in the middle while he governed a state dominated by Democrats, but he has spent the past five years running for president full-time, aligning himself with every right-wing whim over the course of his two campaigns. He’s the Republican who sought the endorsement of Ted Nugent, discarded a gay spokesman, and calls corporations people. Lest we forget, it was Romney who was poised to run as the right-wing challenger to John McCain and Rudy Giuliani in 2008 before Mike Huckabee swooped in to steal the evangelical vote.
The best measure to get at the real Romney is to read his actual proposals and ignore the standard posturing at campaign stops or TV interviews. These are the documents directed primarily at the obsessive political class, barely noticed by your average voter, thus freeing Romney to be closer to his true self. They’re probably the most important piece of evidence for any politician before an election. As Jonathan Bernstein has convincingly argued, presidential pledges should be taken at face value, as newly elected presidents are almost always constrained by the commitments they made during the campaign.
When weighed by this measure, Romney is undoubtably aligned with the far right-wing vision of his policy, particularly on budgetary and fiscal matters. He’s advocated not only for the extension of the Bush tax cuts, but has suggested even further reductions in the U.S. tax rate that would heavily benefit the wealthy. He’s endorsed the Paul Ryan budget wholesale, an Ayn Randian vision of the limited government that even Newt Gingrich termed “right wing social engineering” when it was initially introduced.
One of the key elements of the Ryan/Romney overlapping vision is how the government should handle the exploding costs of Medicare. The New York Times delved into Romney’s proposals in contrast with Obama’s in an article Tuesday. The piece unfortunately falls into the pitfalls of equivocating newspaper journalism, weighing both plans largely by the attacks poised by the opponent rather than independent descriptions of what each candidate is suggesting. Romney’s plan is introduced as “ending Medicare as we know it” in Obama’s words, while the article introduces the Affordable Care Act as such:
The president’s 2010 health care law, Mr. Romney says, “could lead to the rationing or denial of care for seniors,” as it will squeeze nearly a half-trillion dollars from the growth of Medicare over 10 years while putting the program’s future “in the hands of 15 unelected bureaucrats.”
Either side of the political divide can agree that Medicare is on a perilous path. Health care expenditures as a whole are eating up an increasingly large share of the country’s GDP, and the number of Medicare enrollees is set to jump as the Baby Boomers start to retire. The government has projected that by 2024 the Medicare fund will no longer be able to match the full cost of expected benefits.
This concern is one of the primary reasons Obama pushed health care reform early in his administration. Alongside the measures that make it easier for low and middle income Americans to purchase health insurance, the Affordable Care Act takes a first stab at tackling the looming problem. The bill included a variety of measures to incentivize cheaper, more effective health care to bring down costs throughout the health care market, along with a medical advisory board that will suggest best practices to keep the tab lower on Medicare.
Meanwhile, Romney and Ryan’s strategy is to largely ignore the general growing cost of health care, instead focusing on Medicare itself. They would turn Medicare into a premium support plan—essentially a voucher program that would shift the burden of health spending off the government ledger by forcing future retirees to spend far more of their own funds on health services. These vouchers would initially meet the value of buying insurance on the private market, but they would soon fall behind the actual cost for consumers if the general price of health care continues to rise unabated.
Romney has not yet released a proposal with all of the details, but it is safe to assume that his premium support plan would largely follow the model set forth by Ryan. Under that plan—which has already passed the Republican controlled House before it was blocked by Democrats in the Senate—all Medicare enrollees who enter the program beginning in 2023 would have to enter the voucher program, and, as the Center for Budget and Policy Priorities has highlighted, by 2050 Medicare expenditures would be 35 to 42 percent lower for each participant, primarily by shifting the cost burden onto enrollees rather than lowering the overall cost of the care they consume.
Yes, Medicare expenditures would be lowered—but on enrollees’ dime.
By: Patrick Caldwell, The American Prospect, May 15, 2012
“Pinhead Density Arguments”: There Was A Reason Conservatives Once Supported The Individual Mandate
Of all the arguments being waged over the Affordable Care Act — or, as the Obama campaign now likes to refer to it, “Obamacare” — the one dominating the Supreme Court this week is perhaps the most conceptually trivial.
The individual mandate requires consumers to purchase health insurance in order to eliminate the problem of free riders — people who don’t purchase insurance until they get sick or injured or those who never purchase insurance and end up passing on to the rest of us the costs of care they can’t afford. Detractors argue that the mandate unconstitutionally infringes on personal liberty by forcing Americans to purchase health insurance. But compare it to three ways of addressing the free- rider problem in health care that are clearly, indisputably, constitutional:
• Single payer: The federal government increases income taxes and, in return, guarantees everyone government-provided health-care insurance. There is no option to opt out of the taxes. This is how most of Medicare works, though the insurance kicks in only after you turn 65.
• Late-enrollment penalty: The single-payer approach only holds for “most of” Medicare because the Medicare Prescription Drug Benefit works a bit differently. For every month that you don’t enroll after becoming eligible at age 65, your premium rises by one percentage point.
• Tax credits: Under various health-care proposals — including the plan of Rep.Paul Ryan (R-Wis.) — the tax code is changed to give families a tax credit for purchasing private health insurance. Families that choose to go without insurance, or simply can’t afford it, would not receive the tax credit.
All of these plans share the same basic approach: They impose a financial penalty, either before or after the fact, on those who forgo health insurance. Single payer does it through taxes, Medicare Part D through premiums and Ryan’s plan through tax credits.
Now consider the individual mandate. Here’s how it works: Starting in 2016, those who don’t carry insurance will be annually assessed a fine of $695 or 2.5 percent of their income, whichever is higher.
Skeptics of government should clearly prefer the individual mandate to single payer. In fact, the individual mandate was developed by conservative economist Mark Pauly as an alternative to single payer. “We did it because we were concerned about the specter of single-payer insurance, which isn’t market-oriented, and we didn’t think was a good idea,” Pauly told me last year. In the 1990s, the individual mandate was also the Republican counterproposal to President Bill Clinton’s health-care bill, and in 2005, it was the centerpiece of Massachusetts Gov. Mitt Romney’s health-care reforms.
The Medicare Part D model doesn’t really work as an alternative to the individual mandate because it requires the federal government to set the cost of premiums. That’s possible with the over-65 set, because the government controls the market. To import that idea to the under-65 market, however, would require vastly more governmental intrusion into the health-care space.
The tax credit, meanwhile, is essentially indistinguishable from the mandate. Ryan’s plan offers a $2,300 refundable tax credit to individuals and a $5,700 credit to families who purchase private health insurance. Of course, tax credits aren’t free. In effect, what Ryan’s plan does is raise taxes and/or cut services by the cost of his credit and then rebate the difference to everyone who signs up for health insurance. It’s essentially a roundabout version of the individual mandate, which directly taxes people who don’t buy health insurance in the first place.
“It’s the same,” says William Gale, director of the Tax Policy Center. “The economics of saying you get a credit if you buy insurance and you don’t if you don’t are not different than the economics of saying you pay a penalty if you don’t buy insurance and you don’t if you do.”
Interestingly, Ryan’s plan imposes, if anything, a harsher penalty on those who don’t purchase health insurance. Ryan’s tax credit is far larger than the individual mandate’s penalty, and much easier to enforce. Under Ryan’s plan, if you don’t purchase insurance, you don’t get the credit. End of story. Conversely, the Affordable Care Act doesn’t include an actual enforcement mechanism for the individual mandate. If you refuse to pay it, the IRS can’t throw you in jail, dock your wages or really do anything at all.
This leads to one of the secrets of Obamacare: Perhaps the best deal in the bill is to pay the mandate penalty year after year and only purchase insurance once you get sick. To knowingly free ride, in other words. In that scenario, the mandate acts as an option for purchasing insurance at a low price when you need it. For that reason, when health-policy experts worry about the mandate, they don’t worry that it is too coercive. They worry that it isn’t coercive enough.
The mandate is considered more effective than tax credits because people seem more inclined to take action to avoid penalties than to receive benefits. That’s worked extremely well in Massachusetts, for instance, where there’s been almost no free-rider problem at all. So while it’s not different as a matter of economics, it’s a bit different as a matter of behavioral economics. In that way, the mandate does a little more to solve the free-rider problem with a little less action from the government.
Randy Barnett, a conservative law professor at Georgetown University, agrees that there’s some similarity between the two approaches. But he warns that that doesn’t make them legally equivalent. “Just because the government does have the power to do X, doesn’t mean they have the power to do Y, even if Y has the same effect as X,” he says. “There’s no constitutional principle like that.”
Although that’s true, it also leaves us in a peculiar spot. The constitutional argument over Obamacare is a dispute over a technicality. We agree that it’s constitutional for the government to intervene far more aggressively in the market. We agree that it’s constitutional for it to intervene in an almost identical, albeit slightly more roundabout, manner. We’re just not sure if the government needs to call the individual mandate a “tax” rather than “a penalty,” or perhaps structure it as a tax credit. As Pauly puts it, “This seems to me to be angelic pinhead density arguments about whether it’s a payment to do something or not to do something.”
Of course, this battle isn’t really about the constitutionality of the individual mandate. Members of the Republican Party didn’t express concerns that the individual mandate might be an unconstitutional assault on liberty when they devised the idea in the late 1980s, or when they wielded it against the Clinton White House in the 1990s, or when it was passed into law in Massachusetts in the mid-2000s. Indeed, Sen. Jim DeMint (S.C.), arguably the most conservative Republican in the Senate, touted Romney’s reforms as a model for the nation. Only after the mandate became the centerpiece of the Democrats’ health-care bill did its constitutionality suddenly become an issue.
The real fight is over whether the Affordable Care Act should exist at all. Republicans lost that battle in Congress, where they lacked a majority in 2010. Now they hope to win it in the Supreme Court, where they hold a one-vote advantage. The argument against the individual mandate is a pretext for overturning Obamacare. But it’s a pretext that could set a very peculiar precedent.
If the mandate falls, future politicians, who will still need to fix the health-care system and address the free-rider problem, will be left with the option of either moving toward a single-payer system or offering incredibly large, expensive tax credits in order to persuade people to do things they don’t otherwise want to do. That is to say, in the name of liberty, Republicans and their allies on the Supreme Court will have guaranteed a future with much more government intrusion in the health-care marketplace.
By: Ezra Klein, The Washington Post, March 31, 2012
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