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Posted at 9:23 AM ET, 01/24/2011

GOP looks to make Affordable Care Act less fiscally responsible

By Ezra Klein

Over at Kaiser Health News, Lexie Verdon, Bara Vaida and Jordan Rau report on the next phase of the GOP's assault on the Affordable Care Act, which involves, as Rep. Dave Camp put it, an effort to "prune it branch by branch." The six branches they seem to eyeing first? The 1099 reporting requirement, the individual mandate, the Independent Payment Advisory Board, limitations on the use of flexible spending accounts, the CLASS Act and the tax on insurers.

Three of those items -- the 1099 provision, the limits on flex accounts, and the tax on insurers -- raise money to pay for the legislation. One of them, the Independent Payment Advisory Board, is a promising and potentially transformative idea for controlling costs in Medicare. The individual mandate, of course, is an effort to bring down premiums in the individual and small-group markets by making sure that healthy people purchase insurance when they're healthy, not just when they get sick. Of the six ideas, only the CLASS Act is a new benefit.

It's perfectly fair to believe these six provisions problematic. I'd reform the 1099 requirement myself. But it's worth noting that the parts of the legislation that Republicans understand to be vulnerable and unpopular -- and that they plan to specifically attack -- are the fiscally responsible parts. Which are also the parts of the bill that they pretty much deny exist, or deny will work. If the IPAB is such a feckless idea, for instance, why bother repealing it?

Perhaps it's all a matter of perspective: It's not that the Republicans think the bill, as currently written, increases the deficit. It's that they think it will once they're done with it -- when its cost controls are shredded and its pay-fors undone -- and they don't want to saddle future generations of Americans with the costs of a bill that looks like that.

By Ezra Klein  | January 24, 2011; 9:23 AM ET
Categories:  Health Reform  
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Comments

Didn't they just block a change to the 1099 reporting requirement right before the election? Is this some cynical ploy to tie 1099 reform, which Dems support, to something the Dems oppose, so they can beat the "X voted to increase red tape for small business" drum? Although those kinds of votes don't really affect elections anyway, right?

Posted by: _SP_ | January 24, 2011 9:31 AM | Report abuse

--*GOP looks to make Affordable Care Act less fiscally responsible*--

That's really twisting it, isn't it, Klein?

DeathCare sucks nearly a trillion dollars out of the private economy over ten years in order to achieve that fiscal responsibility, and will do grave damage to innovation, efficiency, and quality along the way. That's what the Congress should be working to stop.

Posted by: msoja | January 24, 2011 9:46 AM | Report abuse

and _SP_ why did Dems put it in there anyway if they're against it. Oh yeah to dummy up the figure a bit more.


Actually Ezra I'll keep saying you need to watch MA as to how they're affecting costs.

http://www.boston.com/news/local/massachusetts/articles/2011/01/21/blue_cross_blue_shield_of_massachusetts_says_new_pay_plan_working/?page=full


Capitation. The only way to truly reduce costs and look, patient care is improved too!

Posted by: visionbrkr | January 24, 2011 9:50 AM | Report abuse

//cite
So far, the Obama administration has issued waivers to 222 entities, including businesses, unions and charitable organizations. Of that total, 45 were labor organizations.

A total of 1,507,418 enrollees are now included in the waivers. More than one-third -- 512,315 – of the enrollees affected were insured by union health plans.
//end cite

http://cnsnews.com/news/article/seiu-locals-including-chicago-chapter-wa

Posted by: msoja | January 24, 2011 10:15 AM | Report abuse

It's all a matter of perspective. At one point, some folks erroneous thought that the PPACA was fiscally responsible, just as some folks -- at some point -- considered Massachusetts to be fiscally responsible. We now know -- we don't need to estimate... we have the facts in hand -- that the PPACA is not fiscally responsible (and, as a parallel, that Massachusetts has more than $28 BILLION IN UNFUNDED LIABILITIES), so it seems like a good time to correct at least a few of the mistakes made by Pelosi's 111th Congress. Let's begin with three.

* The 1099 reporting requirement. Both the IRS and businesses have determined that the expense of meeting the requirement exceeds the revenue produced by the requirement. Nobody wants it... nobody thinks it will raise revenue. The only reason to keep it is to bolster false claims that the PPACA is fiscally responsible, which it is not.

* The individual mandate. In a perfect world, the majority vote sustaining the Constitutional Point of Order raised in the Senate last year would have prevented passage of the individual mandate; alas, though, the necessary super-majority could not be obtained, so the federal Courts were forced to strike down the mandate as unconstitutional. Any revenue generated by the now-struck-down mandate must be made-up from other sources: to leave the defunct mandate on the books would be fiscally irresponsible and might cause some confusion about the limits of Congressional authority. Again, the only reason to keep the IM on the books is to bolster false claims that the PPACA is fiscally responsible, which it is not.

* The Independent Payment Advisory Board. Like the individual mandate, the IPAB is Constitutionally dubious: can Congress delegate its lawmaking and oversight authority to an unelected panel (or individual) responsible to noone? Wouldn't it be more prudent for elected officials to enact legislation which fulfills the intent of the IPAB? Of course, it is possible for Congress to regulate federal payments for medical services and, more importantly, it is possible for The People to remove Members of Congress who fail to regulate in a manner deemed acceptable by The People. Keeping the IPAB on the books strips The People of their absolute right to determine the scope and nature of government and bolsters false claims that the PPACA is fiscally responsible, which it is not.

Posted by: rmgregory | January 24, 2011 10:20 AM | Report abuse

"It's not that the Republicans think the bill, as currently written, increases the deficit. It's that they think it will once they're done with it -- when its cost controls are shredded and its pay-fors undone -- and they don't want to saddle future generations of Americans with the costs of a bill that looks like that."

Recent Republican legislative victories are all about saddling future generations with debt. Wars, tax cuts, Medicare Part D, TARP (although that one surprised us by not costing much), etc. The House abandoned pay-go on the first day. They know that Americans may care about the deficit, but they do note VOTE based on the deficit, and deficits are crucial to their "drown the beast" long-term strategy.

Posted by: suehall | January 24, 2011 10:21 AM | Report abuse

And three more:

* Limitations on the use of flexible spending accounts. Few, if any, individuals favor the limitations due to the fact that such limitations increase payments to physicians. For example, under the PPACA, FSA monies can be used for OTC drugs only if a physician first writes a prescription. The only reason to keep the FSA restrictions on the books is to bolster false claims that the PPACA is fiscally responsible, which it is not.

* CLASS Act. Yes, creating a new entitlement is perhaps not the best means of reducing the burden federal debt imposes on individuals and businesses. Since nobody has ever believed that the CLASS Act is fiscally responsible, there's no reason to keep it on the books.

* Tax on insurers. Admittedly, PPACA proponents prefer this massive new tax to be known as a tax on insurers rather than as a direct tax on low- and moderate-income workers; howver, under the PPACA, hard-working union-free middle-class Americans pay the tax "on insurers" through mandated payments to these insurers. The tax does generate revenue... indeed, it robs money from the poor, gives a cut of the proceeds to insurers and to the federal government, and then sends the remaining pitance back in the form of a feigned promise of "coverage" which all parties agree cannot be met by the pool of available care-givers. The only reason to keep the massive new tax on the books is to bolster false claims that the PPACA is fiscally responsible, which it is not.

We need to act now to prevent the mistakes of Pelosi's 111th Congress from becoming a debt burden which can never be satisfied. Hopefully, the President will address the growing national debt problem in his upcoming message: we certainly don't want the whole nation to follow the path of Massachusetts, Illinois, and the other insolvent states.

Posted by: rmgregory | January 24, 2011 10:30 AM | Report abuse

msoja

"wailwailwailDeathcarewailwailwailwailfreedom!!wailwailwailwail"

The delivery reforms will be far more critical towards cost control than anything on the payment side. I can live with a Wyden-Brown type state exemption so long as IPAB continues to be afforded the teeth to roll out these reforms on a national scale.

Posted by: belegoster | January 24, 2011 10:33 AM | Report abuse

--*The delivery reforms will be far more critical towards cost control than anything on the payment side.*--

Delivery reforms. There is a whole lotta nebulosity built into those two words. Sort of like Hope and Change. That we can believe in. If we just have faith.

Yeah, collectivism is a religion.

Delivery reforms. I believe!

Posted by: msoja | January 24, 2011 10:50 AM | Report abuse

If nothing else, Ezra continues to prove he's not up for an honest debate about the ACA. He continues to trot out pot-shots at the GOP criticisms, instead using concepts like 'math' (from real financial analysts, not fellow progressive hacks) to actually address the criticisms.

Not that Ezra will ever address it, but here's one more CBO miss-bound-to-happen I ran across as I scanned the CBO report....go to the CBO score of the ACA and turn to "Table 2". On the first page you will see a line item called "Reductions in Annual Updates to Medicare FFS Payment Rates." You will see that Democrats and the CBO counted $196 BILLION of savings from this in the first ten years.

This refers to 'savings' claimed to come from various efficiency and modernization improvements. Each year Medicare estimates how much such improvements should be saving doctors and hospitals to treat Medicare patients, and in the ACA Democrats simply assumed to cut Medicare reimbursement rates accordingly to pass 100% of those 'savings' back to the government.

However, there are two problems with this assumption:
1) imagine you are a salesman being paid half-salary, half-commissions. Your company gives you a new laptop with super-duper software they claim will allow you to achieve 10% more commissions each year than you get now. However, they cut your base salary by the exact same amount, so your net annual pay increase is $0. Exactly how motivated do you think you will be to use the new technology to it's promised full potential, if your company is simply going to take every penny of the presumed benefit back for themselves?

2) the second problem was pointed out by the CBO itself:
"An argument against this option is that reducing the payment updates might cause some providers to lower the quality of care they provided, or to stop serving Medicare beneficiaries altogether. "

Let me interpret....if this item is really implemented, many doctors/clinics will simply drop their Medicare patients. So much then for the Obama promise that you can continue going to whichever provider you choose...because your provider may not agree to see you any more.

Given these two obvious problems, it's unlikely the full $196 billion of savings for this assumption in the CBO score will ever be achieved.

But that's just a real financial analyst talking, not a left-wing progressive-policy propagandist looking to obscure every problematic number in order to continue the lame claim of 'deficit reduction' held in the yellowing CBO report on their desk.

Posted by: dbw1 | January 24, 2011 11:06 AM | Report abuse

Klein is correct to note that CLASS is a fiscally responsible part of the ACA.("But it's worth noting that the parts of the legislation that Republicans understand to be vulnerable and unpopular -- and that they plan to specifically attack -- are the fiscally responsible parts"). This totally voluntary insurance plan, is totally paid for by customers' premiums (the law specifically states "No federal tax dollars shall be used to pay for benefits"). It is one of the very few parts of ACA that actually saves Medicaid money (according to CBO)

Posted by: HappyDay4 | January 24, 2011 12:48 PM | Report abuse

HappyDay4,


so when the voluntary CLASS act's funding is completely inadequate will Democrats be willing to send Grandpa out of his nursing home or will they try to find some way to fund it through government payout?

You do understand the funding mechanism of this is completely inadequate with the current and future costs of assisted living care don't you? For example you could pay 30 years into the "voluntary" program as you put it and likely get a portion of 5 years of nursing home care. What if you need 10, or 20 or 30 or more?

Posted by: visionbrkr | January 24, 2011 12:54 PM | Report abuse

visionbrkr:
"so when the voluntary CLASS act's funding is completely inadequate will Democrats be willing to send Grandpa out of his nursing home..."

No, what will happen is Democrats will cry and whine about how Republicans are trying to kick grandpa out of the nursing home when the GOP House refuses to add more funding for this poorly conceived program.

The ACA is sort of like school-lunches in the 1990's. Democrats just wanted to get all the programs 'authorized' in the ACA, and kicked the can of funding the programs down the road to the GOP.

The game of Democrats then will be to accuse Republicans of trying to kill babies and grandma if GOP leaders even dare to consider scaling back the massive funding required to support all the unfunded promises contained in the ACA.

Posted by: dbw1 | January 24, 2011 1:14 PM | Report abuse

--*The game of Democrats then will be to accuse Republicans of trying to kill babies and grandma*--

And, sadly, "babies and grandma" will join with the Democrats in accusing conservatives of wishing them dead, no matter how stupid their own part in taking part in the laundering of stolen goods.

Posted by: msoja | January 24, 2011 1:36 PM | Report abuse


visionbrkr asks a good question: "...you could pay 30 years into the "voluntary" program as you put it and likely get a portion of 5 years of nursing home care. What if you need 10, or 20 or 30 or more?"

The CLASS Act isn't meant to cover ALL LTC costs, but the CLASS plan provides a foundational level of benefits FOR A LIFETIME (until death or benefits are no longer needed). And yes, the plan is totally voluntary.

Posted by: HappyDay4 | January 24, 2011 1:49 PM | Report abuse

HappyDay4,

so you really don't answer my question of "who pays for Grandpa" when the funds run out and they most certainly will run out.

and why is this necessary when private companies have been selling LTC insurance for years?

You've also got adverse selection concerns (no mandate here). What's to stop only the sick from purchasing this and making this completely unsustainable as the healthcare market has become without a requirement for coverage that blends out the risk pools.

Posted by: visionbrkr | January 24, 2011 2:10 PM | Report abuse

Hi, visionbrkr:

You write: "so you really don't answer my question of 'who pays for Grandpa' when the funds run out and they most certainly will run out." ANSWER: Medicaid (which mean taxpayers) and families pay, as they do now. Medicaid allows few choices, requires people to become empoverished before qualify for benefits, and is unsustainable financially. Families are already really stretched, and searching for ways to plan for something better. The CLASS Act responds to this need by creating an affordable (for many) totally voluntary, consumer-financed insurance plan to provide better options for the Middle Class.

Posted by: HappyDay4 | January 24, 2011 2:33 PM | Report abuse

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Posted by: birdiegray | January 25, 2011 5:46 AM | Report abuse

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