ObamaCare Might Just Wipe Out New York City’s Public Hospitals


Like Ebola or disco, ObamaCare is the gift that just keeps on giving. It’s an incredible success story that isn’t just wrecking havoc across the lives of middle class people who had health insurance before ObamaCare wrecked theirs, it’s also trashing socialized medicine everywhere.

Thanks to the Affordable Care Act, aka ObamaCare, Uncle Sam will cut more than $800 million in payments to the city’s Health and Hospitals Corp, by Fiscal Year 2019.

The president’s signature law slashes federal payments that long helped out hospitals serving lots of patients who lack insurance. The idea was that the law would boost coverage so dramatically the aid would be unnecessary.

Except that illegal immigrants don’t qualify for ObamaCare coverage — and they make up a big chunk of the city’s uninsured population.

One more reason Obama needs to urgently legalize and ObamaCareize illegal aliens. And if this is happening here, you know it’s happening in every major city with a big illegal population.

In ObamaCare’s first full year, New York was supposed to see its ranks of uninsured drop 7.2 percent. Oops: It only fell 1.3 percent.

But the federal subsidies are dropping anyway. So the Health and Hospitals Corp. faces huge shortfalls that will leave it with just $44 million in cash reserves in FY 2019, down from $1 billion this year.

In short, the city’s entire public-hospital system is headed to fiscal collapse, even with new taxpayer subsidies.

ObamaCare. It really, really works (at destroying things).

Your Obamacare premiums are going up. Way up in some cases.

Obamacare premiums are risingThe “Affordable” Care Act may be looking for a new name in the near future. As Fox News and the Wall Street Journal are reporting, the next round of health care premium cost adjustments are coming down the pike, and you’ll never guess where things are heading. Okay… you probably guessed already.

The Wall Street Journal is reporting today that Obamacare rates are about to shoot up, in some cases as much as 40%. The rate increases requested by insurance carriers vary state by state, but the overall picture is bad.

“In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016,” the Journal reports. “The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase. In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%.”

The Washington Examiner reported today that in Oregon the primary insurance carrier is facing costs (payouts) exceeding premiums (income) by just over 60%. “Moda Health, which serves roughly half of (Oregon’s) individual market, is aiming to raise rates by an average of 25.6 percent. As Jed Graham of Investor’s Business Daily noted, Moda’s costs for 2014 – the first year of Obamacare’s exchanges — exceeded its premiums by 61.5 percent.”

Not all of the states are looking at rate increases in that range. Some of them are “only” going to be asking for increases in the ten percent range. But the direction is still consistent, and it isn’t down. You may recall that during the entire debate in the run up to the passage of Obamacare we were assured that one of the overarching purposes of the legislation was to halt the skyrocketing cost of health insurance, as well as making sure that more people could afford it. We were told this tale by Nancy Pelosi, though she later seemed to have forgotten saying it. Later, the message was fine tuned a bit and we were told that costs would not rise as quickly. On can only imagine what health insurance would cost in New Mexico without this legislation since they’re looking at a more than fifty percent jump in a single year.

So what’s causing this? The analysts who are already weighing in have concluded that the young and healthy are not signing up. This means that most of the new customers coming into the market are older and sicker and costing the insurance companies more money than the federal government planned to pay them through executive fiat and regulation of a free market system. Who could have possible predicted that, aside from nearly every fiscal conservative writing about it for years on end? It’s a mystery, I tell you.

One of our colleagues at Red State seems to believe that the fix was in long before the ink was dry on this deal.

So insurers accomplish the regulatory capture of our caring and compassionate government. The Unaffordable Care Act allows them to petition for ridiculous rate hikes and thereby make obscene and unjustifiable profits at taxpayer expense. The people getting paid by the insurers watch all of this with a gimlet eye. They see the fat wallets and want their cash-stuffed envelope as well. Companies like Air Methods then charge the insurers ridiculous rates in line with the ridiculous rates that the insurers will not pay. At that point, these costs get passed to the insured patient who can’t afford them. This is how the Unaffordable Care Act helps make healthcare that much more unaffordable.

Keep in mind that none of this happens in a vacuum. It’s not just those who are signed up through the Obamacare exchanges who will be seeing higher costs. (Assuming that the taxpayer funded subsidies don’t cover the spread, that is.) Even if you have your own insurance or are getting a policy through your employer, the costs are going up. So I guess everything worked out okay in the end, right? We should elect a whole new pack of Democrats to bring more comprehensive reform to our nation’s pressing concerns.

This post first appeared on Hot Air.

U.S. welfare rolls explode under Obamacare

Obamacare with money‘If you can get things for free, why pay for them?’

The Affordable Care Act, or Obamacare, has created more dependency on government and perverted the capitalist foundations of America, according to a top surgeon.

“You just can’t keep giving everything away to people without them working for it,” said Dr. Lee Hieb, former president of the Association of American Physicians and Surgeons. “It’s not capitalism when you let people who are able-bodied not contribute to society but take the spoils. I mean, that’s just not capitalism. We have too many people that don’t work to eat.”

Obamacare appears to be worsening America’s dependency issue. The Associated Press reported food-stamp enrollment increased in 11 states between January 2013 and the end of 2014, the period during which Obamacare went into effect.

Ten of those 11 states expanded Medicaid under the ACA, and six of them used new online enrollment systems that made it easy for customers to sign up for both Medicaid and food stamps at the same time. Such streamlined application systems were built specifically for the health-care overhaul.

In total, nearly 632,000 people were added to the food-stamp rolls in those 11 states during that period, at an estimated cost of almost $79 million a month to the Supplemental Nutrition Assistance Program, the food-stamp program also known as SNAP. This came at a time when the national economy was improving and food-stamp enrollment declined nationwide.

Dr. Jane Orient, executive director of the Association of American Physicians and Surgeons, sees the phenomenon as part of a government attempt to place more Americans under its thumb.

“Self-reliant Americans are being crushed by taxation and regulation, directly and indirectly, and turned into government dependents,” Orient said. “How can you resist if government can cut off your food and medicine?”

In almost all of the 16 states that didn’t expand Medicaid, food-stamp rolls have been decreasing as the economy improves.

Hieb, author of “Surviving the Medical Meltdown: Your Guide to Living Through the Disaster of Obamacare,” said Obamacare’s Medicaid expansion damaged the American medical system by dropping people from their private insurance and putting them on Medicaid.

“People think that all these people getting on Medicaid through Obamacare were uninsured,” Hieb said. “That’s not true. A number of those people had private insurance, but now, because they qualify under these new guidelines, why not have somebody else pay for your health insurance? So instead of paying for health insurance, they’re taking Medicaid.”

She continued, “So you’ve turned paying patients into nonpaying patients. It’s absolutely, clearly a failing economic model, and I don’t understand how smart people believe it. I just don’t understand how they do not see that point.”

Be medically prepared for health disaster! Get Dr. Lee Hieb’s “Surviving the Medical Meltdown: Your Guide to Living Through the Disaster of Obamacare”

Hieb, an orthopedic surgeon, has observed firsthand the damage Medicaid expansion has done to hospitals. She recently reached the end of a contract to perform surgery two-and-a-half days a week at a small hospital, and she is now looking for a similar arrangement. However, she says she’s found hospitals are running scared from orthopedic surgeons like her because they fear they won’t make enough money to pay the surgeons’ salaries.

According to Hieb, the hospitals are struggling to bring in money because of the increase in Medicaid patients and corresponding decrease in private-pay patients. Medicaid does not reimburse hospitals as much as private insurance does. Hospitals have also struggled to cope with Medicare provider payment cuts and increased administrative paperwork.

But while Medicaid expansion has hurt hospitals, it has been a boon to health-care consumers. In states that expand Medicaid, adults with incomes up to 138 percent of the federal poverty level must qualify, and states are allowed to set even higher thresholds. Before the ACA took effect, the median Medicaid eligibility limit for parents was 106 percent of the federal poverty level. Medicaid expansion also made adults without dependent children eligible for the first time.

Hieb said she believes Americans are smart enough to act in their own financial self-interest, and, for many who hover just above the poverty level, that involves taking advantage of the welfare system. Hieb lives among the patients she serves in rural Iowa, and she says they know how to look out for themselves.

“It’s a mistake to think that all these poor people are children who cannot navigate this very complex medical system,” Hieb asserted. “These are the people who have figured out if you don’t make $35,000 a year working, it’s not worth working because you can do that well if you know how to work the system of welfare.”

If people can cobble together enough disability payments, unemployment payments and food stamps to earn a halfway decent living, Hieb argued, they are smart enough to hitch themselves to Medicaid, even if they might be able to afford health insurance on their own.

“People act in their own economic self-interest,” Hieb said. “If you can get things for free, why pay for them?”

She answered her own question: “One, because that’s ethical, and two, medical providers cannot be in business unless somebody actually pays the bill.”

Kitzhaber scrapped workable Oregon health exchange for political benefit



Former Oregon Gov. John Kitzhaber was told in early 2014 that the Obamacare state health care exchange his administration spent $305 million building could be made operational. But his administration chose instead to scrap the project and seek a scapegoat to keep the fiasco from harming his re-election, according to evidence turned over to congressional investigators.

The materials, reviewed by The Washington Times, include emails and memos between state officials and campaign aides as well as a transcript of a conversation from a state official turned whistleblower that suggests federal tax dollars were sacrificed for political convenience.

The memos show Mr. Kitzhaber’s election campaign aides took the unusual step of instructing state officials on how to handle the Cover Oregon exchange project, especially when the project was abandoned just before its launch. The campaign aides even sought to supervise the testimony of a state official appearing before the U.S. Congress.

The memos suggest that the decision to scrap the project before it launched — creating a massive loss for federal taxpayers and inconvenience to thousands of customers — was driven more by politics than merit, according to the chairman of a House committee investigating the matter.

“There is a curious crossover between the political and the executive branch in Oregon, and it doesn’t smell right, and it doesn’t look right and there’s a lot of smoke,” said Rep. Jason Chaffetz, Utah Republican and chairman of the House Oversight and Government Reform Committee. “There are hundreds of millions of dollars that need to be accounted for. It’s highly suspicious, and we intend to get to the bottom of it.”

Mr. Kitzhaber resigned this year amid an ethics scandal that remains under federal criminal investigation. He raised suspicion in April 2014, during his re-election campaign, when he shut down the oft-delayed Cover Oregon health care exchange just weeks before its scheduled launch.

Janet Hoffman, criminal defense attorney for the former Oregon governor, declined to comment Monday evening.

The state had accepted $305 million in federal aid to build the exchange, and its shutdown required Oregon to spend another $41 million to join the federal Obamacare exchange as an alternative. It is one of several state health care exchanges that have struggled under Obamacare.

About half of the 17 health insurance marketplace exchanges set up by states have had financial trouble, and three of them — in Nevada, New Mexico and Oregon, which collectively received $517 million in federal funding — are now using the federally facilitated marketplace instead.

Hawaii announced last week that it may be forced to ditch its exchange this year because of financial problems, and technical problems are prompting Minnesota and Vermont to consider using the HealthCare.gov exchange as well.

The Oregon episode has spurred a significant legal battle, as the main contractor for the project, Oracle Corp., has accused state officials of engaging in conflicts of interest and exercising such poor oversight that it jeopardized a project that otherwise would have succeeded.

The state has countered by suing Oracle, accusing it of shoddy work.

Evidence from official documents gathered by congressional investigators or obtained under open records laws suggests Mr. Kitzhaber’s aides applied pressure to kill the project even though the governor had been told the exchange could be fixed and made operational.

Emails recovered from computer servers show Mr. Kitzhaber was directly told in February 2014 by Cover Oregon’s director that the state exchange’s problems could be fixed with additional testing and training.

“Cover Oregon’s perspective of system readiness is that the system can function with a 90+ percent of accuracy for 90-95 percent of the population,” Cover Oregon’s director at the time, Bruce Goldberg, wrote the governor. “[Oracle] emphasized that best practice would be to release the ‘final’ system and test for 5 or 6 months.”

In another email to the governor in February, Mr. Goldberg wrote: “Right now reviews seem mixed but more positive than negative,” and despite problems with logins, “It appears some of the problems can be overcome with training.”

Another key figure to emerge as a whistleblower is Carolyn Lawson, the Oregon Health Authority’s former chief information officer. She is suing the state, claiming she was wrongfully terminated for refusing to go along with the administration’s narrative that the exchange was so flawed that it needed to be shut down.

The exchange was supposed to open in October 2013 but was delayed because of technical glitches. Oracle said it could have had the entire system operational by February 2014, but state officials and Kitzhaber campaign aides plotted to shut it down, the memos show.

Ms. Lawson has produced a transcript of a conversation she had shortly before she was terminated suggesting that the Kitzhaber administration was seeking a scapegoat for the shutdown.

“Somebody has to be held to blame for this — it’s going to be [Cover Oregon’s former Executive Director] Rocky [King] or it’s going to be Oracle or it’s going to be you. We want it to be Oracle, but it can be you if you want,” an Oregon Health Authority official was quoted as telling Ms. Lawson, who recorded the conversation in a letter her attorney sent to the state.

When Ms. Lawson refused to follow the Oregon Health Authority script, she was immediately terminated, according to information her attorney filed with the state.

“You will be resigning today. It’s going to be for personal reasons. You can write the resignation letter or we can write it for you,” another health authority official was quoted as telling Ms. Lawson in the information her attorney made public.

Ms. Lawson’s attorney, David Angeli, said his client was not available for interviews.

An Oregon Health Authority spokeswoman declined to comment.

The state exchange program struggled under Mr. Kitzhaber, a Democrat who supported Obamacare.

From the initiation of the project in 2011 to the point in April 2014 when state officials ultimately decided to abandon the state portal, Cover Oregon had four executive directors, each with no formal or practical information technology training or experience, Oracle told The Times.

“We were hired to assist Oregon develop technical solutions as we have done in countless other states and for the federal government. The system registered hundreds of thousands of Oregonians and was fully functional by February 2014,” Deborah Hellinger, an Oracle spokeswoman, said in an email. “Unfortunately, along the way it became clear that the process in Oregon was being managed by unaccountable campaign consultants whose primary concern was the political implications for the former-Governor and in shifting blame away from state mismanagement.”

Clyde Hamstreet, who briefly served as interim executive director for Cover Oregon in 2014, acknowledged political pressure from the Kitzhaber administration to abandon the exchange. He also concluded that gross mismanagement at Cover Oregon, not technical neglect by Oracle, led to the exchange’s repeated delays.

In a report he delivered to state officials in August, Mr. Hamstreet wrote that there was “little accountability among management” working on the exchange and “high level objectives were not aligned and executives were frequently at odds with one another, at times displaying unprofessional conduct such as territorial behavior, open hostilities, and use of strong profanities in verbal communications.”

Two other companies retained as outside consultants by the state to examine the exchange’s difficulties — First Data and Maximus — corroborated Mr. Hamstreet’s concerns in their own reports, saying the state’s poor oversight was responsible.

“The decision to not use an overall system integrator for the project departs from best practices. This decision created a lack of accountability on the project. It contributed to a lack of scope control, a delay in requirements definition, and unrealistic delivery expectations,” First Data concluded in an April 23, 2014, report.

Maximus, the state’s quality assurance vendor for the project, raised concerns about the decision not to use a system integrator in an initial risk assessment report as early as Nov. 3, 2011, and reported as late as October 2013 — when the website was scheduled to launch — that efforts were continuing to “lock down” the scope of the project.

Mr. Hamstreet told The Times that he endured political pressure in trying to get the exchange launched.

“I was sensitive, given media coverage that the polling on the Cover Oregon brand name could become fodder for political purposes unless it was done carefully and was focused directly on operational questions,” Mr. Hamstreet said in an interview. “I did not know what the campaign committee was thinking.”

Just weeks before the governor announced that Oregon’s federally funded health care marketplace would be abandoned, he gave a green light to a top campaign operative to effectively commandeer the fate of Cover Oregon.

On Feb. 8, 2014, political operative Patti McCaig — who was not a state employee — wrote an email to Mr. Kitzhaber and his fiancee, Cylvia Hayes, that assigned roles to other campaign operatives to manage Cover Oregon.

“It’s clear we need more accountability and follow thru from the campaign and some specific, intensive management of the Cover Oregon issues. I do not think the governor’s office has the staff capacity on the Cover Oregon piece,” she wrote, adding that state officials “need to be managing from the gov[ernor’s] office, bridging the information gap with the campaign, and most importantly identifying and teeing up the critical and emerging Cover Oregon issues for the combined team so we can develop a plan and be more prepared both at the state level and the campaign.

“We need one person who’s entire purpose is getting their head around this from a communication/planning perspective and providing the rest of us with the right level of information to make informed decisions.”

Mr. Kitzhaber responded in all capital letters: “this sounds very good to me!!!”

Oregon law prohibits campaign officials from specifically directing state government activities, and the federal Hatch Act prohibits the use of taxpayer resources for political activities. The act applies to executive branch federal employees and to state and local employees who are principally employed in connection with programs financed in whole or in part by federal loans or grants.

One week later, on Feb. 16, 2014, Ms. McCaig wrote to Mr. Kitzhaber and his chief of staff, Mike Bonetto, that “being mindful of not putting too much on paper, I did want to put together an org chart, goals, and overview together for the Cover Oregon team a SWAT Team [that] is a combined team of both public and private resources.”

On April 2, Ms. McCaig announced that she would take control of a critical conference call.

“I’d like to run tonight’s meeting and I think it should be limited to Cover Oregon issues — specifically: 1) IT recommendation: content, process, and timing 2) Greg Van Pelt’s appearance tomorrow: goal for committee/Oregon, detailed schedule, response, spokespeople 3) Hamstreet: Contract, reporting authority, messaging, spokespeople.”

Mr. Van Pelt, a key adviser to Mr. Kitzhaber, was scheduled to testify about the exchange debacle before the U.S. House Oversight and Government Reform Committee in Washington in the subsequent days.

The beginning of the end came on April 9 when Ms. McCaig set forth an eight-step plan to phase out Cover Oregon.

On the possibility of “investing further in the Oregon option the consensus is to let it go. We don’t see a path to save it. Regardless, the Cover Oregon Board would hear and accept the federal exchange recommendation April 22, 23, or 24.”

On April 25, 2014, Cover Oregon’s board voted to switch to the federal exchange.

The Washington Times made several attempts to contact Ms. McCaig and other Kitzhaber political operatives copied on the email chains by phone and email, but none responded.

On Feb. 13, the same day Mr. Kitzhaber resigned the governorship, the House oversight committee sent him written notice that the misspent federal funds related to the Oregon health care exchange was under investigation by Congress, and the letter highlighted the campaign’s coaching of Mr. Van Pelt.

“Media reports indicated campaign staff even edited the testimony of a witness who testified before the Committee on April 3, 2014. It has also come to our attention that an employee in the Governor’s office instructed state officials to remove emails from your personal account from State servers,” the letter says.

Mr. Chaffetz said he does not believe Oregon’s failures mean all other state exchanges will necessarily fail.

“The abysmal failure of Oregon shouldn’t lead the rest of the country to go to a single-payer system. Utah has done quite well and would do better. We shouldn’t gravitate to the lowest common denominator,” he said. “Health and Human Services gave hundreds of millions of dollars to Oregon. We need to figure out why that took place and how that one essentially got flushed down the toilet.”

– The Washington Times

Tom Price’s New Obamacare Alternative Is Just What the Dr. Ordered

Tom Price and his Obamacare planTom Price’s New Conservative Obamacare Alternative Is Just What the Dr. Ordered Congressman Tom Price (R., Ga.) (Allison Shelley/Getty)

House Budget Committee chairman Tom Price released a new Obamacare alternative that Bill Kristol calls “the strongest Obamacare alternative offered in Congress to date.” The Washington Post’s Greg Sargent writes of Price’s proposal that “it’s good to have a fleshed out plan, because it helps clarify the differences between the parties on health reform.” He continues, “GOP reforms would likely translate into lower-quality plans and a coverage expansion that would benefit fewer people. But that would be the tradeoff Republicans would make to achieve their goal of less government spending and interference in the market than that which occurs under Obamacare.”

In truth, GOP reforms like Dr. Price’s would translate into lower-cost insurance, higher-quality care, and tax cuts that would benefit more people — namely millions of Main Street Americans. But raising costs while lowering quality is the tradeoff that liberals would make to achieve their goal of consolidating and centralizing power, coercing Americans into buying things they don’t want, and dumping millions of “newly insured” into Medicaid. The new Price alternative, which is based on the Obamacare alternative advanced by the 2017 Project (which I run and Kristol chairs), is the latest proposal from one of the few Republicans who has been putting out Obamacare alternatives since before the Democrats passed their massive health-care overhaul in open defiance of public opinion.

While the bill number of Price’s legislation remains the same (H.R. 2300), the proposal has changed and is now uniquely suited to unite the full spectrum of Obamacare opponents, from tea-party conservatives to centrist independents. Indeed, Price’s new alternative drew 46 original co-sponsors — that is, House members who signed on by Day One — including Jeb Hensarling and Marsha Blackburn. (To put that feat into perspective, the previous version of H.R. 2300 didn’t have any co-sponsors on Day One.)

Price’s legislation brings us that much closer to repealing Obamacare and replacing it with real reform that would move things in a conservative direction from the pre-Obamacare status quo. The new model of H.R. 2300 differs from the prior model in several key ways. Instead of a combination, in the individual market, of income-based tax credits and tax deductions, it now calls for simple age-based tax credits, which will let people quickly see what they’ll receive, reduce the I.R.S.’s role, and avoid work-disincentives.

In addition to making it easier for people to have and use health savings accounts, it now offers a one-time tax credit of $1,000 per person for having or opening an HSA. Instead of an open-ended tax break for employer-based insurance, it now closes that tax loophole while continuing to give those with employer-based insurance their full tax break on insurance that costs up to $20,000 for a family or $8,000 for an individual. In other words, the tax treatment of the typical person’s employer-based plan wouldn’t change one bit (and anyone with, say, a $23,000 plan, would still get the full tax break on the first $20,000).

Price’s alternative, therefore, would deal with both costs and coverage while finally fixing a longstanding inequality in the tax code for millions of middle-class Americans who have to buy health insurance on their own. Since the 1940s, those with employer-based insurance have gotten a generous tax break, while those without employer-based insurance generally have not. Obamacare’s 2,400-plus pages managed to assault Americans’ liberty without correcting this unfairness in the tax code. Price’s 242-page bill achieves what Obama’s could not — at one-tenth the length.

Under Obamacare, the typical 40-year-old single woman, making just $35,000, gets $0 in Obamacare subsidies — she’s too young and too middle class. (Obamacare is for the near-elderly and near-poor.) Under Price’s proposal, she’d get a $2,100 tax credit, which, assuming she doesn’t itemize her taxes, would come entirely in the form of a tax cut. She could use that tax credit to buy the insurance of her choice on the open market, not the insurance the federal government compels her to buy through a government-run exchange. And if she chose to buy a low-premium plan that costs, say, $1,800, she could put the extra $300 into an HSA.

Writing of “the contrast between the two parties on what each really wants for [health-care] reform over the long haul,” Sargent argues that “while Obamacare continues to poll badly, there’s no particular reason to assume that contrast would benefit Republicans.” However, a poll last fall by McLaughlin & Associates found that, with “a conservative alternative” on the table that deals with both costs and coverage, 60 percent of Americans supported repeal, while only 32 percent opposed it. (38 percent of those polled were Democrats, compared with just 32 percent who were Republicans.)

Since Obamacare was first unveiled, Americans have disliked its liberty-sapping, cost-hiking mandates, and they’ve opposed the arrogance of politicians and bureaucrats who think our health-care system can be better run — by them — from Washington. Americans have been poised to embrace repeal, but they’re waiting for conservatives to offer up a credible alternative. Price’s legislation brings us that much closer to repealing Obamacare and replacing it with real reform that would move things in a conservative direction from the pre-Obamacare status quo. — Jeffrey H. Anderson is executive director of the 2017 Project, which is working to advance a conservative-reform agenda, including a winning alternative to Obamacare.

Read more at: http://www.nationalreview.com/article/418565/tom-prices-new-conservative-obamacare-alternative-just-what-dr-ordered-jeffrey-h

How Medicare Advantage Investors Profited

On Wall Street, Feb. 3, 2011, was mostly a ho-hum day. But not for companies that sell Medicare Advantage plans.

Several of those that offer the privately run Medicare coverage option hit the jackpot, tacking on billions of dollars in new value after federal officials signaled they might go easy on health plans suspected of overcharging the government.

The stocks took off after the federal Centers for Medicare and Medicaid Services advised the plans in a memo that it was rethinking a move to ratchet up audits. Some of these plans are run by publicly traded insurance companies whose fortunes can rise and fall on a whiff of change in Medicare policy.

At the time, health insurers were bracing for tougher audits, fearing they could wind up owing the government millions of dollars as a result.

The memo was sent to Medicare Advantage plans, but wasn’t available to the general public.

A CMS spokesman said the two-paragraph memo was routine and that officials did nothing wrong in sending it out. But the advisory appears to contradict CMS regulations that urge officials to wait until after markets close to disclose information that could move stocks. The episode also raises fresh questions about the security and timing of so-called market-sensitive disclosures — and just who gains access to the information.

“When the memo was released by people at the agency, they had to be brain dead if they thought it would not quickly make its way into the hands of those who influence stock prices,” said Lynn E. Turner, a former Securities and Exchange Commission official and expert on financial reporting requirements.

Big Jump

CMS said it began sending out the memo on an internal message system at 9:30 a.m. on Feb. 3 and it took “several hours” to reach all of the 6,500 health plan recipients.

By mid-afternoon, a CMS official in Washington noted that shares in three major Medicare Advantage insurers had “shot up” as a result.

“There’s also an incredible volume — an atypical number of buyers and sellers,” CMS official Misha Segal wrote in an email to several agency higher-ups at 2:37 p.m. (See the email traffic below.)

UnitedHealth Group, the nation’s biggest Medicare Advantage company, rose 4 percent, which “is nearly $2 billion in ‘newly created equity’ for the company,” according to Segal. “This is a big jump.”

The huge stock rally — and the role CMS played in sparking it — is disclosed in agency emails and other records obtained by the Center for Public Integrity through aFreedom of Information Act lawsuit.

CMS officials, in a statement, said nothing was amiss.

The memo “was routine, appropriate and did not contain sensitive information. This standard memo was simply a reminder that CMS would thoroughly evaluate all the comments received and that we anticipated potential future changes based on the input we received. No non-public information was provided in this message.”

Yet even the suggestion of an upcoming Medicare policy shift can trigger a stampede of buying or selling of health care stocks — and raise questions about how closely agency officials followed CMS regulations written to prevent this sort of Wall Street windfall.

The rules say officials should “strive to err on the side of caution” by waiting until after markets close at 4 p.m. Eastern Time to make announcements “because it is sometimes difficult” to predict what will roil stock prices.

The wait is to “allow the investment community broad access to the information and time to fully analyze the announced change before reacting to it,” according to a September 2010 CMS policy statement. CMS also regularly cautions employees to keep market-sensitive deliberations under wraps. (See the policy statement below.)

Signaling changes

But the February 2011 memo from Cheri Rice, acting director of the Medicare Plan Payment Group, stated that CMS “anticipates making changes” to the much-feared audit process. The memo arrived at a time when the industry — and stock market analysts — were worried that the audits could hurt the companies’ bottom lines.

Indeed, the memo brought a strong reaction. Justin Lake, then an analyst at UBS Investment Bank, flagged the memo as “breaking news from CMS” in a research note sent via email at 1:33 p.m.

“We have been reading CMS notices for 10 years now and don’t EVER remember the agency indicating explicitly that there were changes coming in between publishing preliminary and final rules such as this. Very interesting indeed,” Lake wrote.

Lake speculated that it could signify a “kinder/gentler CMS” that would be less aggressive about clawing back widespread overpayments to Medicare Advantage plans. Such a stance would be “very bullish” for Medicare Advantage stocks, he said.

It’s not clear how the UBS analyst obtained the memo. Lake, who recently joined a hedge fund in Connecticut, declined comment through the firm.

At 2:07 p.m., a second CMS official remarked that Lake’s analysis “is generating huge amounts of interest from the markets. Bank of America just called me too,” he wrote.

In his 2:37 p.m. email, Segal cited Lake’s note as the biggest driver of the market: “The sales team at UBS must have gotten on [the] phones and convinced a bunch of analysts and traders that this was a big deal,” Segal wrote.

Much of the other chatter within CMS as the stocks gained ground was redacted from the volley of emails released to the Center for Public Integrity.

Still, it’s clear that agency officials were caught off guard. Stock in Humana Inc., the country’s second biggest Medicare Advantage plan, rose by 5 percent. HealthSpring, also a Medicare insurer, was up 4 percent. It all happened on a day when the Standard & Poor’s 500 index was roughly flat, according to the CMS mid-afternoon analysis.

CMS spokesman Aaron Albright said the memo was a “standard communication” and suggested the markets had overreacted. “We can’t control how people react to a memo like this,” he said.

While investors may have welcomed CMS easing up on Medicare Advantage audits, taxpayers, both then and now, have much less cause for applause.

The audits that the industry was hoping to scale back assess the accuracy of a billing tool called a “risk score,” which is supposed to pay insurers higher rates for taking sicker people and less for those with few medical needs.

By 2011, CMS officials had been struggling for years to track overspending tied to inflated risk scores. A 2009 agency study found that some plans had exaggerated how sick patients were to boost their payments, for instance. And by the agency’s own account, “improper” payments to Medicare Advantage plans cost taxpayers billions of dollars annually, as the Center for Public Integrity first reported last year.

Despite growing losses from improper billing, CMS officials have repeatedly caved into pressure from the industry to scale back the consequences of these audits, which are known as Risk Adjustment Data Validation — or RADV.

CMS posted a draft regulation on Dec. 20, 2010, that outlined how the audits would be conducted and asked for comments. In the Feb. 3 memo, CMS official Rice wrote: “We are thoroughly evaluating all comments and anticipate making changes to our draft, based on input we received.”

The amount of money in dispute could be growing along with the Medicare Advantage program, whose annual cost now exceeds $150 billion.

More than four years after the February 2011 memo was sent, CMS still hasn’t finished even the first round of the RADV audits. “These audits are underway. CMS is auditing 30 contracts and we do not have a specific timeframe for completion,” agency official Albright said.

CMS has come under fire in recent years over how it releases policy information — and to whom. In Dec. 2011, Sen. Chuck Grassley, R-Iowa, criticized the agency for conducting briefings on behalf of hedge funds and so-called “political intelligence brokers” who seek to profit as a result. The SEC also has regulations on disclosure.

CMS also is at the center of an ongoing probe into whether 2013 Medicare Advantage rate information was leaked in advance of the public announcement.

This piece comes from the Center for Public Integrity, a nonpartisan, nonprofit investigative news organization. To follow CPI’s investigations into Medicare and Medicare Advantage waste, fraud and abuse, go here. Or follow the organization on Twitter: @Publici.

A $394 million Obamacare tax for Illinois

(AP) — There’s more than a touch of absurdity in the way an industry fee in President Barack Obama’s health care law is being passed along to state taxpayers.

As Alice in Wonderland might say, a curious tax just got curiouser. The burden to states could mount to $13 billion in less than a decade.

The Health Insurance Providers Fee was aimed at insurance companies. The thinking went: Because insurers would gain a windfall of customers, they ought to help pay for the expansion of coverage. Insurers say they have raised prices for individuals and small businesses to cover the new tax.

As it turns out, they are raising their prices to state Medicaid programs, too.

The federal government issued guidance in October requiring states to build the tax into what they pay for-profit Medicaid health plans that serve low-income people. The first year’s tax was due to the IRS in September, and state governments are now settling up with insurance companies.

Illinois will pay $394 million to cover the tax through 2023, estimates a 2014 report by actuarial firm Milliman. The state is starting to make higher payments to cover the tax, even as Gov. Bruce Rauner has proposed making $1.5 billion in cuts to Medicaid providers such as hospitals for the upcoming budget year.

It works like this: State governments pay insurers for the tax. The insurers then pay the tax to the federal government. The federal government then reimburses part of the cost to the states.

It may sound absurd, but it’s not amusing to state governments, which wind up losing 54 cents for every dollar of the insurance tax. State taxpayers end up the biggest losers, without any added benefit to their state’s low-income Medicaid patients.

“It’s like a merry-go-round with an extra loop in the middle,” said Rebecca Owen of the Society of Actuaries.

The extra loop? The health law tax is not deductible for the insurance companies when they file their corporate income taxes, and state governments must kick in extra to cover that cost, too.

“If they’re following the standard of practice, there’s no wiggle room” for states to shift the burden back onto the companies, Owen said.

It’s particularly troubling because more states are turning to private sector Medicaid managed care to keep health care costs down. An estimated 70 percent of Medicaid patients are covered by these types of plans.


The fee on health insurance companies was one of several new taxes Congress used to pay for the health care law.

“They had a naive notion we were going to get something from insurers” who were gaining many new customers from the health law, said economist Douglas Holtz-Eakin, president of the American Action Forum, a center-right public policy institute. “It defied any notion of good tax policy.”

Most nonprofit insurers are exempt, but there’s no exemption for profit-making Medicaid managed care companies that collect payments from state governments with the promise of providing better care at lower costs.

The states with the most managed care will be hurt the most. Florida will pay up to $1.2 billion over 10 years, according to the Milliman report. The same for Pennsylvania. Texas will pay up to $1 billion and Tennessee as much as $884 million. For California, the decade’s total will be up to $798 million and for Georgia, $647 million.

While the quirk in the law has been known to insurers and actuaries, the impact is just starting for states. A standard-setting board for actuaries just published a memo that clears up any remaining doubt that state governments must pay higher rates to cover the tax.

The health insurance industry wants the tax repealed, arguing that it increases prices to consumers. But largely unrecognized is the surprising effect of the tax on Medicaid and state governments.

“At the end of the day it remains a terrible policy no matter how it’s implemented, and everyone would welcome its repeal. I mean, you’re essentially having one level of government tax another to do this,” said Matt Salo, executive director of the National Association of Medicaid Directors.

Republicans have patchy plans to replace Obamacare

ObamacareThe list of Republican plans to deal with the potential fallout from a pivotal Obamacare case before the Supreme Court is growing longer, although Republicans have yet to coalesce around a game plan with just six weeks before the court is expected to rule.

The justices will decide by the end of June whether the IRS is unlawfully distributing Obamacare subsidies to people who use the federally run health care insurance exchange. The law offers  tax credits to exchanges “established by the state,” but the administration insists that Congress intended to help all Americans, no matter where they live.

If the subsidies are struck down, President Obama will blame Republicans for cheering on the lawsuit and demand a quick extension of subsidies to all 50 states so more than 6 million people will keep their coverage.

Republican majorities in Congress instead have forged a patchwork of alternatives to rescue Americans affected by the case, known as King v. Burwell, so they aren’t blamed for the fallout.

They added two more plans in recent days. One is a comprehensive replacement for Obamacare from a senior House member, and the other would let states either stay the course or opt into a system that allows consumers to use a block of health care funds as they see fit.

“The Republicans are divided over what to do,” said G. Terry Madonna, a politics professor at Franklin and Marshall College in Lancaster, Pennsylvania. “There is no easy solution.”

House Minority Leader Nancy Pelosi, California Democrat, said Republicans risk political ruin if they spurn a quick fix to the Affordable Care Act — all that’s needed is a phrase or two — but Republicans insist they are on the right path.

“I think it’s important we put a positive solution and patient-centered solution out there, and I think we’ll be able to do so and will do so,” said Rep. Tom Price, a Georgia Republican who filed a revamped version of his replacement bill last week.

His bill would repeal Obamacare entirely and leave states in charge of Medicaid instead of expanding it and scrapping mandates that require Americans to hold insurance or buy policies with government-specified standards. It would offer tax credits to people who purchase insurance on their own on the individual market, although the latest version bases the credits on age instead of income.

Another plan, by freshman Sen. Bill Cassidy, Louisiana Republican, would give states three ways to respond to a ruling that strikes the subsidies. States could set up exchanges under Obamacare, do nothing and lose federal support or — and this is what the senator wants — opt into a third path titled the Patient Freedom Act.

“When I campaigned to represent Louisiana in the Senate, I promised that I’d fight for a free market alternative that gives doctors and patients — not government bureaucrats — the power,” Mr. Cassidy said in a Friday email to supporters.

His proposal would scrap Obamacare’s mandates and offer either state block grants or federal tax credits to help people access care. The money would go directly to the patients — not insurers, as Obamacare tax credits do — through health care savings accounts, a tax-advantaged fund that conservatives support because they feel it forces patients to draw from their health care dollars wisely.

The Louisianan said his plan could complement other solutions, such as a proposal by Sen. Ron Johnson, Wisconsin Republican, to lock in Obamacare’s subsidies through 2017.

If the court rules against Obamacare subsidies, states could let their residents rely on the Johnson plan in the immediate aftermath and then turn to his proposal when their legislatures meet.

Thirty-one Republican senators, including Senate Majority Leader Mitch McConnell of Kentucky, have co-sponsored Mr. Johnson’s bill, which would eliminate Obamacare’s mandates on individuals and employers but allow its subsidies to continue to flow to existing customers until Republicans have a chance to win the White House.

Freshman Sen. Ben Sasse, Nebraska Republican, also wants to offer financial assistance to people affected by King, but outside of Obamacare’s framework, so states are not tempted to embrace the law.

Under his transition bill, Americans affected by the court’s ruling could keep their Obamacare coverage during an 18-month grace period, akin to the COBRA health insurance law (the Consolidated Omnibus Budget Reconciliation Act) for people who leave or lose their jobs. The government would cover 65 percent of their premiums for the first six months before phasing down assistance 5 percent each month until it disappears after another year.

The Assets and Liabilities of Jeb Bush

Establishment favorite also has problems among Republicans

Former Florida Gov. Jeb Bush waiting to speak during the commencement ceremony at Liberty University in Lynchburg, Va., this month.
Former Florida Gov. Jeb Bush waiting to speak during the commencement ceremony at Liberty University in Lynchburg, Va., this month. PHOTO:DREW ANGERER/GETTY IMAGES

Five months ago this week, Jeb Bush got a beat on the world by announcing he was forming a committee to explore running for president. That means enough time has passed to frame the Bush paradox: He is the establishment favorite in a party that almost always picks that candidate, but has walked into an election cycle in which that isn’t necessarily the case.

The powerful assets Mr. Bush brings to the table have been on full display since his December move. He can raise prodigious amounts of money from the party’s business and finance wings, and enjoys the backing of many GOP power brokers and most of his family’s network of supporters. He is an articulate candidate with a conservative record as Florida’s governor, yet crossover appeal to moderates. He is better than other governors and former governors at discussing the national-security issues that are rising on GOP voters’ priority list.

But as the weeks have gone by, it’s also been easy to see Mr. Bush’s problems within his party. Conservative skepticism is higher than some anticipated, based largely on his support for Common Core education standards and broad immigration reforms. Rival candidates— Mike Huckabee and Sen. Rand Paul in particular—have tapped into an antiestablishment strain within the party that works against Mr. Bush. The loss of two elections to Barack Obama has left some yearning for a generational change that is being exploited by—ironically enough—Sen. Marco Rubio, something of a Jeb Bush protégé.

Any rational analysis has to rate Mr. Bush as the slight favorite within an exceptionally crowded field of Republican contenders, though it’s way too early to draw definitive conclusions. What is possible, based on an analysis of polling data and the shape of the race ahead, is to define two significant problems Mr. Bush faces, as well as two big advantages:

First, the problems:

The Republican party has changed. Since his brother and father were elected, the party has become more populist and has been altered by the rise of the tea-party movement and the absorption of its messages and foot soldiers.

In a broad examination of party-identification trends, Public Opinion Strategies, a Republican polling firm that helps conduct the Wall Street Journal/NBC News survey, found that the party’s three largest subgroups now are tea-party supporters, self-identified conservatives and white Southerners. Moreover, in the last few years, the Republican party has become more male in composition.

These trends don’t necessarily work to Mr. Bush’s favor. In the latest Wall Street Journal/NBC News poll, he is the top choice among Republicans overall, by a small margin, but scores somewhat better among women than among men, better among moderates than among conservatives, and is the top choice of just 6% of self-described tea-party supporters.

The Romney experience left a bitter aftertaste. The nomination, followed by the defeat, of Mitt Romney in 2012 has left some Republicans questioning the party’s tendency to nominate the big name whose time has come. Democrats didn’t do that when they picked Barack Obama over Hillary Clinton in 2008, the argument goes, and they won the White House twice as a result.

Mr. Bush isn’t quite the same next-in-line choice that Mr. Romney was. Still, the Romney experience has opened the way for rivals such as Sen. Ted Cruz to argue that Republicans lose general elections because they don’t excite and turn out their conservative base. While that analysis is open to question, the Journal/NBC News poll found Mr. Bush behind both Sen. Paul and Sen. Cruz among Republican primary voters who didn’t vote for Mr. Romney.

Here are two big Bush advantages:

The conservative anti-Bush vote is being splintered. There is no single populist/antiestablishment/tea-party/evangelical alternative to Mr. Bush, but rather a whole series of them. That reduces the chances that any one rival can, at least for a while, reach the critical mass necessary to be seen as the singular alternative. Which leads to the second big advantage:

A long nomination contest benefits Jeb Bush. The longer a fight goes on, the more important it is to have a lot of money to wage it. Mr. Bush is tops in that category.

More than that, Mr. Bush has a plausible answer to conservative criticism of his support for Common Core education standards—that he’s for high standards at the state level, not federal coercion in imposing them—that will benefit from more time and opportunity to deliver it.

And to the extent the nominating contest moves into big swing states on the March and April calendar—Ohio, Florida, Illinois, Missouri, Pennsylvania—it will reach relatively more natural Bush voters than may be found in some of the early states. A marathon may suit Jeb Bush just fine.

Obama’s Major Regulations Cost More Than $80 Billion Annually

Obama's regulationsThe major regulations imposed by the Obama administration now cost Americans more than $80 billion a year—twice as much as the rules issued by the Bush administration at the six-year mark, according to a Heritage Foundation report released today.

Lawmakers must act on a range of reforms in order to stem the massive expansion of the regulatory state.

The report, “Red Tape Rising: Six Years of Escalating Regulation Under Obama,” documents an increase of 27 major rules in 2014, which brings the administration’s total to 184.

By comparison, at this point during the presidency of George W. Bush, only 76 major rules had been adopted at a cost of $30.7 billion—38.5 percent of the Obama cost total.

The actual cost of the Obama rules is obscured by the failure of agencies to fully quantify the impacts for 12 of the 27 major regulations issued last year. This absence of cost analyses represents a major dysfunction in the administrative process.

The need for reform of the regulatory system has never been greater. The White House, Congress, and federal agencies routinely ignore regulatory costs, exaggerate benefits and breach legislative and constitutional boundaries.

At this point during the George W. Bush presidency, only 76 major rules had been adopted at a cost of $30.7 billion—38.5 percent of the Obama cost total.

Regulation of securities and the banking system dominated rulemaking in 2014, accounting for 13 of the 27 major rules issued, most of which were adopted under the 2010 Dodd-Frank financial regulation law.

The Department of Energy ranked second in the number of major rules issued last year. All six of those rules restrict energy use in items ranging from power adaptors for cellphones and laptops, and coolers in ice cream parlors and grocery stores. The rules alone will cost consumers and businesses hundreds of billions of dollars.

Many more regulations are on the way, with another 126 economically significant rules on the administration’s agenda, such as directives to farmers for growing and harvesting fruits and vegetables; strict limits on credit access for service members; and, yet another redesign of light bulbs.

Among the most anticipated rules is finalization of the Environmental Protection Agency’s stricter standards on emissions of ozone, which many analysts predict will be the most costly regulation ever imposed by any agency.

Congress should take immediate steps to control this excessive regulation and to prevent further harm to the economy, and to the personal liberties of Americans. There is a great need for increased scrutiny of regulations to ensure that each is constitutional and necessary, and that costs are minimized.

The reform agenda should include requiring every major regulation to obtain congressional approval before taking effect, as called for in the proposed REINS Act. Other vital steps include requiring any legislation that imposes new red tape to undergo an analysis of its impact before it can be voted on, establishing sunset dates for all major rules, and subjecting independent agencies such as the Federal Communications Commission and Securities and Exchange Commission to the White House regulatory review process.

Such reforms, by themselves, will not solve the long-standing problem of regulatory overreach. But they represent a down payment toward the goal of reducing the red tape that entangles Americans and the U.S. economy.


James Gattuso handles regulatory and telecommunications issues for The Heritage Foundation as a Senior Research Fellow in its Roe Institute for Economic Policy Studies. Read his research.

Diane Katz, who has analyzed and written on public policy issues for more than two decades, is a research fellow in regulatory policy at The Heritage Foundation.Read her research.