Once again for the Obama administration, lofty promises are giving way to hard reality. On September 22, 2010, in an informal discussion regarding the healthcare bill, the president contended that “as a consequence of the Affordable Care Act, premiums are going to be lower than they would be otherwise; health care costs overall are going to be lower than they would be otherwise. And that means, by the way, that the deficit is going to be lower than it would be otherwise.” That was then. Over the weekend it was revealed that MIT economist Jonathan Gruber, the chief architect of ObamaCare, backtracked on the analysis he performed two years ago. He told officials in Wisconsin, Minnesota and Colorado the price of insurance premiums will “dramatically increase” under the reforms.
Gruber didn’t merely rebut the president’s contention. He rebutted his own, made in 2009, after he reviewed a report by the insurance industry that contended premiums would rise sharply with the passage of the healthcare bill. At that time Mr. Gruber argued that the industry report failed to take into account government subsidies provided to help moderate-income Americans purchase insurance, or administrative overhead costs he predicted would “fall enormously” once insurance polices were sold through the anticipated government-regulated marketplaces, or exchanges. “If you literally take the data from the Congressional Budget Office (CBO) you can see that individuals will be saving money in a nongroup market,” he said.
The CBO was less sanguine, saying it couldn’t forecast what would happen to premiums because “so many uncertain variables come into play.”
Some of the so-called variables surrounding Obamacare have already come into play. First and foremost were the waivers to the plan, issued by an administration with a track record of doing favors for certain constituencies. The actual number of waivers granted remains in question. The Hill claims that as of January, 1,231 companies had received waivers from the plan. ABC News had the number at 1,471 in July of 2011.
Regardless, Republicans contended that the waivers were either politically inspired or represented a fundamental flaw with the legislation. “I think it is an understatement to say that these waivers have been controversial,” said Rep. Cliff Stearns, a Florida Republican, during an interview in March of 2011. “If they needed a waiver in 2011, won’t they need a waiver in 2012, 2013?” Steven Larsen, head of a section of the Health and Human Services department that oversees President Barack Obama’s health care law disagreed. “The annual limit waiver process has been carried out in a way that reflects a commitment to transparency and responsible implementation,” he said. “The overriding purpose of this waiver program is to ensure that Americans do not lose their health coverage before better health insurance options become available in 2014.”
Who’s right? On Friday June 17, 2011, the Obama administration announced it was ending the program as of September 22, 2011 in order to avoid what the Huffington Post characterized as a “potential political distraction ahead of next year’s elections.” Political albatross might have been a bit more accurate.
The next variable that came into play was the CLASS (Community Living Assistance Services and Supports) Act. The original premise of the CLASS Act, a government-sponsored long-term care plan similar to those available in the private sector, was that it would be self-supporting. Those who signed up for the voluntary program would have paid a monthly premium of about $100 for insurance coverage promising cash benefits averaging no less than $50 a day. Furthermore, the CBO, which scored the healthcare bill as reducing the deficit by $210 billion in the years 2012-2021, contended that $86 billion of these savings came from CLASS. Why? Because the program would have taken in premiums for five years, before it paid out claims, making it appear to be “deficit-reducing”–in the near term.
Yet there were doubts about the ability of the program to be self-sustaining from the start, especially if a smaller group of relatively unhealthy Americans were the majority of users. Naysayers also noted that once the program got beyond the ten-year window used to calculate the above CBO numbers, the program would be inundated by cost overruns. As a result, Congress voted that the Health and Human Services (HHS) Secretary had to ensure that the program would be sustainable for 75 years before certifying it.
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