July 11, 2013

Obamacare: Critical System Failure

Before the July 4th holiday, the Obama Administration issued its infamous blog post by an Assistant Secretary of Treasury announcing the President planned to delay for one year his health care law’s employer mandate. Three days later, buried in 606 pages of regulations, the Administration quietly revealed that state exchanges will not be required to verify either people’s annual household income or if they get affordable insurance coverage from their employer. When a person applies for an exchange subsidy, states can just accept it based solely on the honor system. The government cuts a check – no questions asked.

To find out who is eligible to buy insurance, and how much subsidy help they get, the exchange will have to consult a data hub. That data hub isn’t built yet, but it is expected to merge income information from the IRS, disability information from the Social Security Administration, citizenship information from the Homeland Security Department, and income determinations for Medicaid coverage. States are scrambling to update their IT systems in order to talk to the hub. If there were ever any question whether the health care law’s data hub would be fully operational on time, the answer now clearly appears to be “no.”

The President and his top health care advisor, HHS Secretary Kathleen Sebelius, continue to assert that Obamacare’s exchanges will be ready on October 1. Last week’s stunning employer mandate delay and income verification announcements call their claims into question. Let’s take a look at the alarming pattern of delays, glitches, and bumps plaguing the President’s health law implementation:

  • 1099 Paperwork Burden. Section 9006 of the health care law mandated every business, charity, and local government entity to submit a copy of tax form 1099 for business transactions totaling $600 or more annually. The requirement would have dramatically increased routine business expenses like phone service, office products, and shipping. In April 2011, that part of the law was repealed.
  • Waivers. The Obama Administration quickly realized the health care law’s annual benefit limit mandates would force some employers to drop insurance coverage for their workers – or pay significantly higher premiums. Rather than admit the President’s law would drive up costs and lead to fewer choices for Americans, HHS created a temporary waiver program. The Administration granted more than 1,700 waivers covering more than 4.1 million people – over half were enrolled in a union health insurance plan.
  • Child Only Insurance Plans. In 2011, Senator Enzi found that the health care law’s guaranteed issue mandate compelled insurers to stop offering child only health insurance plans in several states. After conducting a review, the HELP Committee released a report showing that insurers in 17 states no longer sold child-only health plans due to fears people would apply for coverage only after their children got sick.
  • Early Retiree Reinsurance Program. Obamacare included a $5 billion program to help employers and unions subsidize the cost to pay for retirees with high health care costs who are not yet eligible for Medicare. The program began in the summer of 2010 and was slated to last until 2014. But it ran out of money two years early, forcing the Administration to shut it down.
  • Federal High Risk Pool. The health care law’s temporary high risk pool is called the Pre-Existing Condition Insurance Plan Program (PCIP). It is a separate program from the 35 state-based high risk pools that were in place before Obamacare’s enactment. States could choose to run the PCIP (which 27 states have done) or to have the federal government operate it for them (which 23 states and the District of Columbia have chosen). Before the program was implemented, CBO estimated the PCIP could cover 200,000 people a year with its $5 billion appropriation. Recent estimates show the program currently covers 110,298 people. But even with lower than projected enrollment, the Administration was forced to stop enrolling people because the PCIP ran out of money.
  • CLASS Act. The law established a brand new, federal long-term care entitlement program called the Community Living Assistance Services and Supports (CLASS) program. The President and other Democrats knew the math didn’t add up, but they stayed silent. Because participants had to pay premiums for five years before collecting benefits, Democrats wanted to use this Washington Ponzi scheme as a budget gimmick to pay for the health care law’s new spending. On October 14, 2011, HHS admitted CLASS could not be implemented, and Congress repealed it.
  • Small Business Health Options Program (SHOP). The President promised small businesses that his health care law would lower employer costs. In fact, the White House repeatedly touted the law’s SHOP as a tool employers would have at their disposal allowing them to offer affordable health insurance to their workers. Fast forward three years, when the Obama Administration finally had to admit it can’t get the job done and announced plans to delay the program’s implementation.

One thing is obvious: the Administration’s health care roll-out is in shambles. The list of the law’s costly implementation failures grows with each passing day – and there are only 82 days to go until the law’s October 1 deadline. The time has come to permanently delay Obamacare for all Americans – before the train wreck occurs.

Health Care Headlines

The Buffalo News: “Wegmans cuts health benefits for part-time workers” The grocer that has been continually lauded for providing health insurance to its part-time workers will no longer offer that benefit. The decision was related to changes brought about by the Affordable Care Act.

Sioux City Journal: “Sioux City insurance office to close; 106 jobs lost” Citing concerns about the new federal health insurance law, Wellmark Blue Cross/Blue Shield said Wednesday it will shutter its First Administrators office in Sioux City, eliminating 106 jobs. Wellmark, Iowa's largest health insurer, attributed the decision to the “ever-increasing number and complexity of federal regulations, mandates and the rising costs associated with these changes.”

The Hill, Op-Ed: “Analysis: HHS is No. 1 in violations of anti-paperwork law” ObamaCare implementation has led to a surge in violations of a federal law designed to minimize paperwork burdens, according to a new analysis. The American Action Forum found that HHS has violated the anti-paperwork statute more than any other department in the past three years.

CNN: “For Fatburger and Others, Obamacare Delay Came Too Late” Delaying the Obamacare employer mandate has simply put off rules business had already started adjusting to.

The Washington Post: “Health Insurance Marketplaces Will Not Be Required to Verify Consumer Claims” The Obama Administration announced Friday that it would significantly scale back the health law’s requirements that new insurance marketplaces verify consumers’ income and health insurance status.

Bloomberg, Op-Ed: “Six Inconvenient Truths About Obamacare” The White House’s decision last week to delay part of its health-care overhaul illustrates six truths about the law that its supporters can’t easily acknowledge.

Time: “Obamacare Delay Increases Costs and Complications” The Obama Administration’s recent announcement that the Affordable Care Act’s employer mandate will kick in a year late could ripple beyond the brief extension, increasing costs and complicating implementation of other vital parts of the law.

New York Times: “Sebelius Defends Law and Zeal in Push to Insure Millions” Secretary Sebelius is the No. 1 public advocate for the health care law, the President's top domestic initiative, and an easy target for Republicans.

Issue Tag: Health Care