ACA/Obamacare: When Politically Supplanting One Entitlement with Another Entitlement Doesn’t Balance the Books

‘Earlier this month, the Obama administration reversed course on spending cuts to the popular Medicare Advantage program. Instead of a nearly 1% cut in payments, private health insurers that offer Advantage plans to seniors would get a 1.25% boost.

The turnabout hardly made news, which isn't surprising since it was the third year in a row that the administration said it was planning to cut payments only to reverse course.

It is, however, emblematic of the fiscal trouble ObamaCare has planted in the federal budget.


When ObamaCare was being debated, opponents said it relied on unsustainable spending cuts in Medicare, tax hikes that wouldn't work as expected, and other political land mines designed only so President Obama could claim when he signed the law in 2010 that: "It is paid for. It is fiscally responsible."

Recent events are proving opponents right.

Nearly half of ObamaCare's costs, for example, are supposed to be "paid for" by spending cuts to Medicare, including $136 billion from Medicare Advantage in the first 10 years.

But since the law took effect, the administration has tried to minimize the cuts to the increasingly popular Advantage program, which lets seniors choose from a wide range of subsidized private plans, and now accounts for a third of Medicare enrollees.

Medicare's Third Rail

The administration effectively canceled the first two years' Medicare Advantage cuts with $8 billion in bonuses paid out as part of a "demonstration project" widely derided as phony. It also delayed rules changes that would have led to further cuts.’

‘The other big chunk of Medicare savings — nearly $200 billion — is supposed to come from payment cuts to doctors and hospitals. But when the Centers for Medicare & Medicaid Services' chief actuarylooked at this provision, he said such cuts were "unsustainable" because 15% of Medicare Part A providers would operate in the red by 2018.

By 2040, "half of hospitals, two-thirds of skilled nursing facilities, and 90% of home health agencies" would be losing money. Congress just permanently repealed a payment cut plan for Medicare doctors, which Congress had repeatedly delayed since it was enacted in 1997.

Even the little-known "Medicare Improvement Fund" has proved troublesome. ObamaCare eliminated this fund for a one-time $20.7 billion savings. But in 2014, Obama signed a law that recreated the fund and put more than $200 million back into it.’ - ObamaCare's Financial Crisis Is Fast Approaching, IBD, 04/15/2015

Link to the entire article appears below:

http://news.investors.com/politics-obamacare/041515-747986-obamacare-taxes-and-spending-cuts-arent-working.htm

CBO: It Is No Longer Possible to Determine the Fiscal Impact of ACA/Obamacare. No Way! Way!

“For Democratic lawmakers who were hesitant to sign onto the sweeping 2010 health care law, one of the most powerful selling points was that the Affordable Care Act would actually reduce the federal budget deficit, despite the additional costs of extending health insurance coverage to the uninsured.

Four years after enactment of what is widely viewed as President Barack Obama’s key legislative achievement, however, it’s unclear whether the health care law is still on track to reduce the deficit or whether it may actually end up adding to the federal debt. In fact, the answer to that question has become something of a mystery.

In its latest report on the law, the Congressional Budget Office said it is no longer possible to assess the overall fiscal impact of the law. That conclusion came as a surprise to some fiscal experts in Washington and is drawing concern. And without a clear picture of the law’s overall financing, it could make it politically easier to continue delaying pieces of it, including revenue raisers, because any resulting cost increases might be hidden.

Charles Blahous, a senior research fellow at George Mason University’s free market-oriented Mercatus Center, calls the CBO’s inability to estimate the net effect of the law “a real problem.”

“The ACA’s financing provisions were assumed to be effective so as to get a favorable score out of CBO upon enactment, but no one is keeping track of whether they’re being enforced,” says Blahous, a public trustee for Social Security and Medicare. “We receive occasional updates on the gross costs of the law, but none on whether the previously projected savings provisions are producing what was originally projected.”

As a result, Blahous says, “there’s no barrier to continually rolling back the financing mechanisms without the effect on the ACA’s finances ever being fully disclosed.”

When Congress passed the health care law in 2010, the CBO estimated it would reduce the deficit by more than $120 billion over a decade, compared to the agency’s current-law baseline projection of spending, revenue and the deficit. That meant the health care law would, in effect, pay for itself and deliver an additional fiscal bonus.

The CBO based its estimate on the assumption that the law, which included hundreds of billions of dollars’ worth of Medicare cuts and tax increases to pay for health care subsidies, would be implemented as written. Now, after a chaotic start and a series of delays or adjustments in various provisions of the act, including an employer mandate that was expected to bring in new tax revenue, it’s unclear to what extent those promised savings are being realized.” - Fiscal Diagnosis Only Gets Tougher for Health Care Law, rollcall.com, 06/04/2014

Link to the entire article appears below:

http://www.rollcall.com/news/-233551-1.html?zkPrintable=true




Update: CBO throws in the towel on scoring ObamaCare, thehill.com, 06/04/2014

http://thehill.com/policy/healthcare/208314-cbo-to-stop-measuring-certain-o-care-effects

ACA/Obamacare and the Twin Subsidy “Silver” Plan

“May 02--Some 8 million people, including 151,352 Tennesseans, have enrolled in insurance plans through the Affordable Care Act marketplace, the government said Thursday.

That's just shy of half of the 305,628 Tennesseans the U.S. Department of Health and Human Services determined are eligible to enroll -- 169,740 of them with financial assistance

As in the U.S. overall, females made up slightly more than half of Tennessee enrollees, 55 percent. All but 20 percent of Tennesseans who enrolled were eligible for financial assistance to pay for their insurance plans. Most enrollees -- 72 percent -- opted for the midlevel "silver" coverage, with 18 percent getting a more basic "bronze" plan, and 6 percent and 3 percent, respectively, buying "gold" and "platinum" plans. One percent of Tennesseans chose catastrophic coverage available to certain people.” (1)

Upon further review, one needs to take note of the trend/pattern regarding the inordinate percentage applying for the “silver” coverage. The silver plan affords twin subsidies for those eligible. Twin subsidies? How so?

Depending upon income, number of proposed insured(s) applying regarding the policy, ages of the proposed insured and dependents in the household one can receive a taxpayer subsidy against total premium and a reduction in major medical deductible, reduction in the maximum out-of-pocket under major medical co-insurance and a reduction in doctor office co-pay.

The “silver” plan, via word of mouth, became very, very popular among ACA/Obamacare applicants. Stated alternatively, at the point sale, applicants had already predetermined “silver” as their plan choice by word of mouth referral from prior applicants. Applicants were well aware of the possibility of the twin subsidy regarding the “silver plan” and were seeking the twin subsidy.

Notes:

(1) ACA enrollment ends with 151,000 Tennesseans signed up, 05/01/2014, insurancenewsnet.com

　

http://insurancenewsnet.com/oarticle/2014/05/01/aca-enrollment-ends-with-151000-tennesseans-signed-up-a-497904.html#.U2u7miUU91u



　

Obamacare/Medicaid Enrollment Numbers, the Price and “Backed by the Full Faith and Credit of the U.S. Government.”

Obamacare is based upon insuring an estimated thirty million uninsured through ACA Exchanges and Medicaid. The CBO now projects the price of Obamacare to reach in excess of two trillion dollars. (1) (2) (3)

One has to fully appreciate that the few have decided to introduce a new entitlement and expand an existing entitlement through an entity that is seventeen plus trillion dollars in debt. Stated alternatively, the political power purveyors of a de facto bankrupt entity have introduced a new entitlement and expanded an existing entitlement. Not to worry as the spendthrift, the spendthrift to the tune of seventeen trillion plus dollars in debt, can fund the new and expanded entitlement. How so? (4)

These entitlements, other entitlements and a myriad of other U.S. government programs are “backed by the full faith and credit of the U.S. government.” Makes one feel warm and fuzzy, huh?

Then again, how valuable is such a promise? Maybe one should worry.

Yes, the government has the ability to tax or borrow to make good on its promises. Problem is: one would need to tax at near 100% to make good on all the debt and unfunded entitlements. One can not tax at 100% as private economic activity would end. A 100% tax on zero taxable revenue is zero. Borrowing? One has already borrowed the unfathomable sum of seventeen trillion dollars. (5) (6) (7)

What exactly does “backed by the full faith and credit of the U.S. government” mean when the phrase is constantly deployed to assure detractors that a proposition, a proposition brought into being by politicos through the mechanism of government, is solvent? One must appreciate that political power purveyors of a de facto bankrupt entity, that can not tax at a rate to make itself solvent, constantly rely on “the full faith and credit” each time one of their many, many, many existing propositions are questioned as to solvency.

When one aggregates all existing propositions and one considers the solvency of the aggregate, exactly how much meaning is conveyed when the supporter of any one of the propositions states: “backed by the full faith and credit of the U.S. government”?

　

Notes:
　

(1) Obamacare Now Estimated to Cost $2.6 Trillion in First Decade, The Weekly Standard, 07/11/2012

http://www.weeklystandard.com/blogs/obamacare-now-estimated-cost-26-trillion-first-decade_648413.html


(2) Estimated Cost of ‘Obamacare’ Is Now $2.6 Trillion — Nearly $1.7 Trillion More Than Obama Promised, Yahoo News, 07/11/2012

http://news.yahoo.com/estimated-cost-obamacare-now-2-6-trillion-nearly-042311293.html


(3) New CBO health law estimate shows much higher spending past first 10 years, Fox News, 03/14/2012

http://www.foxnews.com/politics/2012/03/14/cbo-health-law-estimate-shows-much-higher-spending-beyond-first-10-years/


(4) US Debt Clock

http://www.usdebtclock.org/


　
(5) Full faith and credit, investor words.com

http://www.investorwords.com/2109/full_faith_and_credit.html


(6) full faith and credit - Investment & Finance Definition, yourdictionary.com

http://www.yourdictionary.com/full-faith-and-credit


(7) The Laffer Curve: Past, Present, and Future, Art Laffer, 06/01/2004

http://www.heritage.org/research/reports/2004/06/the-laffer-curve-past-present-and-future


　

　

　

　



　

　

　

　

　

　

　

　

　

ObamaCare Spending Spike Coming Your Way?

"The convergence of the opening of the Obamacare exchanges and the end of the fiscal year could result in a huge spike in spending on Obamacare from the federal government in the coming weeks.


Spending by federal agencies typically surges at the end of the fiscal year as agencies rush to spend their remaining funds. If they do not spend all their allotted money, the agencies have to return the funds to the Treasury Department, a mechanism referred to as “spend it or lose it.

“We know that it happens. It is visible, it is apparent,” said Romina Boccia, a federal budget expert at the Heritage Foundation.


Boccia noted that agency spending in the last week of the fiscal year, which ends Sept. 30, is typically five times the weekly average for the rest of the year.


The Department of Health and Human Services (HHS), the principal agency tasked with implementing Obamacare, is no exception to this government-wide trend, according to an analysis by Public Notice, a nonprofit that analyzes fiscal and economic matters.


A Public Notice and Washington Free Beacon analysis of weekly spending on contracts by HHS over the past four years shows a distinct jump in spending in the last few weeks of the fiscal year. Average weekly spending on contracts between fiscal years 2010 and 2012 hovered under $500 million, although it steadily climbed above that over the last few weeks of the year. HHS spent on average over $2 billion in the last week alone between 2010 and 2012.



“The explosion of spending at the end of each fiscal year shows HHS has been operating like a department with money to burn,” said Bill Riggs, the deputy communications director for Public Notice." - Obamacare Spending Could Spike in Next Few Weeks, Washington Examiner, 08/13/2013


Link to the entire article appears below:


http://freebeacon.com/obamacare-spending-could-spike-in-next-few-weeks/