Liberals not fail to consider defending the unjustified. The latest example is a relatively reliable entity talking about how a program plagued with fraud complaints may disappear as scheduled — because then the economy may suffer. Talk about taking Keynesianism also past its natural limits: After all, those fraudsters buy items with the money they’ve stolen. Simply think of the multiple results!
That’s the implicit connotation of a recently published Commonwealth Fund record talking about how allowing increased Obamacare subsidies to fall when they expire at year end had “lead … to insurance losses, job cuts, and billions in lost state and local revenue”. That position not only contradicts Commonwealth’s positions from not too many years ago, but it also attempts to justify waste and fraud within the health care system.
Remember’ Bending the Curve?’
Just over a decade ago, during the Obamacare debate, groups on the left talked about the need to “bend the cost curve”. The term refers to the imperative to reduce rather than increase overall health care spending as a share of the economy so workers won’t have their pay raises overwhelmed by simultaneous increases in premiums, deductibles, and the cost of health care generally.
In December 2007, as the 2008 presidential campaign began heating up, Commonwealth put out a magnum opus on this issue, titled ( what else? ) ” Bending the Curve: Options for Achieving Savings and Improving Value in U. S. Health Spending”. You can read a summary of the larger paper here.
The policies proposed in the 2007 paper tend toward the heavy hand of government. The paper discusses payment for medical services based on” clinical and cost-effectiveness of alternative treatment options”, which some might view as rationing of care ( particularly when done by government ), not to mention higher taxes on cigarettes and sugar-sweetened drinks, which some conservatives might deride as a “nanny state” approach to reducing health care costs. The premise that the nation could expand health care to all, while still lowering health expenses by a cumulative$ 1.5 trillion over 10 years, doesn’t appear to have come to fruition. ( Have your health care costs gone down lately? )
But the 2007 Commonwealth paper emphasized the need to lower health care spending overall and even gave a nod to the need for policies that” correct … price signals in the health care market”. Too bad that, nearly two decades later, Commonwealth has thrown both principles out the window.
Obamacare Subsidies Are Raising Health Care Costs
The more recent study spends all its time analyzing the supposed economic harm that will result if the enhanced Obamacare subsidies expire at year end as scheduled. The paper doesn’t even mention that those subsidies are increasing, rather than decreasing, health care spending.
Along with expanding eligibility, such that some households with incomes in the hundreds of thousands of dollars can qualify for “low-income” subsidies, the enhanced Obamacare regime also makes “benchmark” coverage “free” for consumers — that is, they pay not a penny out of pocket. As anyone with any knowledge of economics can attest, making coverage “free” will 1 ) encourage more people to sign up while 2 ) lowering the threshold for people to derive value from their “free” insurance.
As I wrote in The Federalist last year, the Congressional Budget Office ( CBO ) believes that, should the enhanced subsidies expire as scheduled, approximately 1.5 million individuals will take over a year to respond to the subsidies ‘ expiration. Based on the CBO analysis, many individuals may have signed up at one time for coverage because it was “free”, but they do not use or value their policies much and only retain them because the government keeps auto-renewing them into a subsidized “free” plan.
Likewise, multiple reports have suggested that the enhanced subsidies have led to an epidemic of fraud in the exchanges. Brokers are signing people up for plans, or switching the plans individuals did sign up for, without the enrollees ‘ knowledge, just to receive sizable commissions. In some states, more individuals are receiving the richest subsidies than are in the income brackets that qualify them for said subsidies, suggesting that many enrollees are lying about their income to receive “free”— albeit fraudulent — health coverage from Washington.
It’s About the Costs, Stupid!
To paraphrase a famous journal article from June 2012, health care is not a jobs program. It exists to provide health care, period. If the federal government paid people to dig ditches and then fill those ditches back in, that would create jobs as well. No one has been so foolhardy as to propose such a waste of taxpayer resources — at least not yet. But a paper defending a program associated with myriad reports of fraud because it supposedly creates jobs comes pretty darned close.
The question is whether the spending on the enhanced subsidies is giving us an appropriate “bang for the buck” when it comes to various metrics, most notably containing health care cost inflation. The answers overwhelmingly suggest it does not. Congress should act accordingly and let the increased subsidies expire.
