Obamacare’s Political Future

Democrats and establishment Republicans, i.e., RINOs, depend upon the public’s short memory to get them through tough times. These politicians figure that no matter how much you dislike what they are doing they needn’t worry if they can get it done in an off-election year, or at least several months before the election. Voters will forget by the time the election comes around, they think, on the theory that we are all so preoccupied with the struggle to survive and live some semblance of a decent life we won’t have time to remember the foul deeds done in Washington D.C.

Obamacare was only a concept for a long time before the actual bill was passed by the House in 2009. In a short time the American people figured out that all the hope and change promised by Obama was hype and propaganda. Obamacare was finally forced through around 100 days ago with sneaky partisan maneuvering the likes of which are rarely seen because it was deeply unpopular by that time. The Democrat apparatchiks in Washington still believe it will all be forgotten by November, and they will be saved from the wrath of the American people.

They could be right. It’s happened before with unnecessary and unwanted legislation. The Medicare prescription drug program was not wanted and was largely shoved down our throats by the Bush Administration. But within a few months voters seemed to have forgotten how much they disliked it. That may not be analogous though because voters were already fed up with Bush for other reasons. Furthermore, Obamacare has some nasty surprises coming that will sucker punch us. The medicare cuts are a good example.

Medicare advantage is an extremely popular program with seniors. The benefits are good and the premiums are low. You are allowed to choose your own doctor and you can switch doctors anytime. You can visit any doctor in the country who accepts it, and a lot more do if you have medicare advantage, and the benefits are either the same or near enough to suffice. In short, it’s a very good deal for seniors. A good deal that Obamacare will begin to take away as early as this fall. Even though it has been widely reported by the alternative media [the journalistas have not been successful in covering it up] there are still a lot of medicare clients who are not aware of what is about to happen to their health insurance.

James Capretta, writing in the July 27th edition of National Review, explains:

While it is true that the program is a massive entitlement, specifically designed to get the American middle class fully hooked on another expansive government benefit, Obamacare also — unlike the Medicare drug benefit — creates millions of losers. Democrats riddled it with budget gimmicks and sleights of hand to create the illusion of a fully financed program; but what it really does is redistribute resources within the health sector away from those who have good coverage today. As millions of today’s happily insured citizens begin to find out that their current arrangements have been disrupted, and, in some cases, terminated, to pay for the Obama administration’s government-centric takeover, their views of Obamacare will only sour further.

The problems will start this fall, well before the midterm elections, when millions of seniors enrolled in Medicare Advantage (MA) insurance plans start to get bad news in the mail about their coverage. The president and congressional Democrats despise the MA program because it is private, not government-run, insurance. They have wanted to cut it for years, and their supposed desire to find offsetting savings for another entitlement expansion provided the perfect cover to get out the axe. Over the next ten years, Obamacare’s cuts to MA payment rates will reach nearly $120 billion, according to the Congressional Budget Office.

In 2009, about 10.6 million Medicare beneficiaries — nearly one in four — signed up for MA insurance. Prior to Obamacare, that number was set to rise to nearly 14 million later in this decade. But no longer. With the cuts, MA insurance plans will have no choice but to dramatically scale back their offerings and benefits. Enrollment will plummet, falling by 35 percent compared with where it would have been without Obamacare. About 2 million seniors who are now in MA will get pushed out of their current coverage. What’s worse, all 10.6 million Medicare beneficiaries now enrolled in MA plans will face deep cuts in their benefits even if they get to stay in their plan, since virtually all MA plans, to stay in business, will be forced to charge higher premiums or cut back on what they offer. By 2019, the average cut in benefits will reach $800 per year per MA beneficiary.

The Democrats’ antipathy toward MA is entirely ideological. They argue that MA plans are overpaid by today’s formula, and claim to want only a fair competition between fee-for-service (the traditional Medicare model) and the private-insurance approaches offered to Medicare enrollees — but that is plainly not the case. In 1999, the Clinton administration killed the recommendations of the bipartisan Medicare Commission to move Medicare toward a level playing field precisely because it feared that fee-for-service’s expensive and bureaucratic structure could not compete with the more efficient models the private sector would develop. Indeed, every time a proposal has been floated for Medicare to include a truly competitive system of payment for private insurance and fee-for-service, the Democrats have attacked and killed the idea. They don’t want genuine consumer choice, because that would mean an erosion of political control over the health system. They prefer instead Medicare fee-for-service’s command-and-control payment regulations, which maximize power for politicians and regulators and artificially lower costs for fee-for-service coverage.

Their solution — embodied now in Obamacare — is to tie MA rates to fee-for-service’s payment systems. The result will be a massive exodus of plans and enrollees from the MA program, and unjustified regional disparities in the incidence of the cuts. For instance, high-cost and fraud-ridden South Florida has fee-for-service costs that are 70 percent higher than those of Portland, Ore., yet Portland would face a much steeper MA cut under the revised MA formula. Under Obamacare’s perverse incentives, profligacy is rewarded and cost cutting is punished.

Obamacare’s MA cuts will also hit low-income seniors disproportionately. Most retirees view the Medicare benefit as inadequate because its cost-sharing requirements can feel expensive to someone on a fixed income. Those who worked for large corporations and/or the government (at any level) tend to have additional insurance as a retirement benefit from their former employer. Those with relatively high incomes but without a retiree plan usually buy Medigap supplementary insurance. It’s only low-income seniors who don’t have that option — which is why they often sign up with MA plans that have lower copayments and deductibles than fee-for-service. They will suffer the most in the coming MA bloodbath.

It’s hard to imagine Medicare’s beneficiaries accepting the loss of hundreds of dollars in their current benefits without a fight. The last time Congress embarked on an ideological crusade to kill private insurance in Medicare, in 1997, seniors who were facing large benefit cuts forced their elected representatives to reverse them in very short order. There’s no reason to expect things will be different this time around. Indeed, the outrage is likely to be even more intense, because the purpose of the MA cuts is not to improve Medicare’s financial outlook or to reduce the budget deficit, but to pay for an expensive new entitlement for others.

Of course, the Medicare cuts in Obamacare go well beyond MA. The new law also cuts payments to hospitals, nursing homes, clinics, and hospice facilities. The Democrats claim these reductions are part of a grand plan to reform the “delivery system” and force new efficiencies on those providing services. But this kind of top-down cost cutting has been tried many times before in Medicare, and has never worked. Sometimes, the cuts have been reversed in response to political pressure from groups that represent providers of health care to seniors. Other times, the cuts remained in force, but service providers found ways to work around them and get paid just as much as they were paid before, often by increasing the number of claims they filed.

It’s not just medicare patients that are going to get a royal screwing by Obamacare. Most working-age Americans are currently in employer-provided health plans and they are about to get slammed by Obamacare also. Obama promised, endlessly it seemed, that nothing in his health care plan would upset existing arrangements. Who can count how many times he told us that if we liked our current plan we could keep it. What he neglected to mention is that Obamacare sets up a perverse array of incentives that are likely to set in motion a series of events that will lead to many if not most employers dropping their present group plans and dumping their employees into the government plan. This result is not unintended. That double negative cancels and means it was and is fully intended by the those benevolent dictators in Washington who claim to care so much about our welfare. Remember, Obamacare was driven by ideology, not beneficence. Democrats have long hated private insurance and they have always aimed to destroy it. Anyone having a hard time believing that should listen to the words of Donald Berwick, Obama’s new Medicare and Medicaid director, who was sneaked into position by a recess appointment in order to avoid having to answer tough questions in a Senate confirmation hearing. It is available here.

James Capretta explains again,

Douglas Holtz-Eakin, a former director of the CBO and now president of American Action Forum (AAF), and Cameron Smith, also of AAF, have analyzed the new law and found that it establishes strong incentives for employers to dump their current coverage, especially if they have a high proportion of low-wage workers. The law’s architects think they have prevented such dumping by forcing employers to make an all-or-nothing choice: They provide either for everyone, or for no one, including their higher-salaried workforce. But firms can work their way around the bureaucratic rules by reorganizing themselves into multiple companies with independent health arrangements. One way or another, employers will find a way to maximize their bottom line, even if that means terminating their health-insurance offerings.

Holtz-Eakin and Smith estimate that some 35 million people will get dumped by their employers into the government-managed insurance exchanges — which, in turn, would put the ten-year costs of Obamacare $500 billion above CBO’s projection. More important, it would force millions of people into the government-managed program, whether they wanted to be there or not, and would signal the beginning of a slow march toward an entirely government-run insurance system.

For these and other reasons fully explained by Mr. Capretta in his National Review article, the opposition to Obamacare is not likely to recede down the memory hole as has so much of the atrocious legislation foisted upon an unsuspecting public in the last 75 years. Opposition is more likely to intensify as more and more Americans discover the true effects that will hit them personally. Obamacare will not remain an abstract concept for much longer. Republicans would be wise to campaign on repeal of Obamacare.

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