Now that the Court Challenges Are Over, The Cracks In Obamacare Come Into Focus

July 14th, 2015

Shortly after King v. Burwell was decided, I noted that now that the Chief Justice has effectively put on ice any future challenges to Obamacare, the law will, at last, have to stand on its own two feet–and it would be quite wobbly. Obamacare’s biggest challenge is Obamacare. Two stories from the past week shine a light on these fissuring cracks.

First Slate (of all places) writes of Obamacare’s skyrocketing premiums. It begins:

Now that the Supreme Court has once again saved Obamacare, can we have an honest talk about it?

Yes. While the challenges to the law were pending, supporters dare not say anything negative, lest it get in the way of the Chief’s Justice’s resurrection of the bill no one read. But now, we can have that “honest talk.”

The bill for the health care expansion is coming due, just as the recipients will be heading to the ballot box to vote in the first primaries for the 2016 election. More than a few are likely to be annoyed.

Last week Oregon’s insurance commissioner, Laura Cali, announced that the state had approved a 25 percent premium increase for the largest health insurer on the state’s exchanges. The second largest insurer did even better: It received permission to boost its monthly charge to consumers by 33 percent.

Oregon might be the first health insurance exchange equivalent of a penguin getting shoved off an ice floe, but it won’t be alone in the freezing-cold waters for long. For example, BlueCross BlueShield of Tennessee requested an average 36 percent price increase for the plans it offers—after receiving a 19 percent bump last year. And that sounds like a relative bargain compared with Minnesota and New Mexico, where the BlueCross BlueShield family is looking for increases of more than 50 percent. Even if the final numbers are lower than the asks, it seems quite likely these states will approve substantive premium increases.

The problem is simple. As Trudy Lieberman reported this month in Harper’s, the ACA made a decent stab at solving the problem of Americans lacking insurance. Unfortunately, the bargain struck to get the bill to a point where lobbyists for the hospital, insurance, and pharmaceutical industries to sign on, or at least not fight it, did not adequately address the issue of overall medical costs.

Yes, the ACA was a series of bargains. It was not, as the Chief Justice inaptly reduced it, all about “improving” health care markets. There were many competing interest at stake. One of the biggest compromises was to do little-to-nothing to actually control costs. And now, costs continue to rise. And for those ineligible for subsidies, premiums may rise so high it becomes no longer worth it to buy insurance. Yes, we are not out of the woods.

In the meantime, you shouldn’t need a political consultant to tell you why consumers paying hundreds of dollars—or even more than $1,000 a month—for health insurance they are required to buy and often can’t afford to use might well get angry. Once you name something the Affordable Care Act, people oddly expect the product on offer to be affordable. Who’d have thunk it?

Second, The Hill Reports that Lobbyists are launching a full-frontal assault on the “Cadillac Tax” which goes into effect in 2018.

A coalition of K Street health giants are teaming up to fight the ObamaCare tax on high-cost insurance plans known as the “Cadillac tax.”

The newly launched campaign, called the Alliance to Fight the Forty, includes more than a dozen pharmaceutical companies, insurance plans and unions including Pfizer, Blue Cross Blue Shield and the Laborers International Union.

The group, led by the American Benefits Council, filed a lobbying registration Friday afternoon.Efforts to fight the Cadillac tax have amplified in the wake of a recent Supreme Court ruling affirming the Affordable Care Act late last month. With no major court challenges remaining against the law, lobbyists are redoubling their efforts to peel back particularly unfavorable provisions.

I’ve written at great length about the Cadillac Tax. Long story short, it imposes a 40% excise tax on most generous health insurance plans (including my own). It will result in two-thirds of businesses taking steps to avoid the tax, nearly 90% of employer-sponsored plans being cancelled, and employees being put onto the Obamacare exchanges. Of course businesses want to stop this. But they can’t.

Can’t we just get rid of it? The Obama Administration insists they will veto it for one simple reason. Even with CBO’s voodoo math, the only way to score this behemoth as budget neutral was to account for the billions of dollars the cadillac tax would bring in. If the Cadillac Tax is eliminated, where is that revenue going to come from? The negative economic impact of Obamacare will skyrocket.

This morning the New York Times used this sentence to describe the President’s proposed deal with Iran.

“Mr. Obama will be long out of office before any reasonable assessment can be made as to whether that roll of the dice paid off.”

I think this sentiment describes so much of what has happened since 2009. The benefits can only be judged in the long-term. The President has prematurely taken a victory lap and spiked the football. The real challenges begin as his term winds down.