Politics & Policy

Obamacare’s Crony-Bureaucracy Problem

(Photo Illustration: NRO; Image: Dreamstime)

One of the problems with big government is that it tries to do too many complex things it can’t do very well, like run national health-insurance programs for the poor and elderly. In order to get the job done, government bureaucracies often rely on unelected advisory groups from the private sector. These are made up of important people from whatever industry is relevant to the federal program or policy. In Medicare and Medicaid, for example, the government usually draws advisers from major hospitals and health-insurance companies.

You can imagine the opportunities for cronyism and conflicts of interest such a scheme might create. Medicare and Medicaid combined will spend about a trillion dollars this year to pay medical bills for tens of millions of poor and elderly Americans. Medicaid alone accounts for 15 percent of all health-care spending in the United States and pays for roughly one-third of all births every year. Those dollars go directly to hospitals, doctors, and insurance companies.

What makes the risk of corruption even greater is that many of the advisory groups the government puts together are relatively obscure. Most Americans — unless they work in Congress or write about health-care policy — have probably never heard of the Medicaid and CHIP Payment and Access Commission (MACPAC). It was created in 2009 to advise Congress on Medicaid policy as part of federal health-care reform before Obamacare; it was modeled after the Medicare Payment Advisory Commission (MedPAC), created in 1997 to fill a similar role for Congress on Medicare spending. Like MedPAC, MACPAC is supposed to be an independent, nonpartisan legislative agency. Its members are appointed by the U.S. comptroller general, who is also the head of the Government Accountability Office (GAO).

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But like so much else with Obamacare, MACPAC is beginning to look awfully partisan. In January, Republicans on the House Energy and Commerce Committee sent letters to MACPAC and the GAO questioning the selection process for the commission. Committee Chairman Fred Upton (R., Mich.) and Health Subcommittee Chairman Joe Pitts (R., Pa.) expressed concerns about conflicts of interest on a panel that’s supposed to be independent and nonpartisan, and inquired about the apparent lack of guidelines for determining who is eligible to serve on the commission.

They pointed to an amicus brief signed by MACPAC chair Sara Rosenbaum in House v. Burwell, a case now pending in the United States District Court for the District of Columbia. The suit challenges the use of money from the federal treasury to pay cost-sharing subsidies offered to insurance plans under Obamacare. The House claims the spending was never authorized by Congress. Rosenbaum was a sitting commissioner at the time she signed the brief in support of the defense, and she probably knew she would soon be named chair, which she was — one week later. She signed it anyway. Upton and Pitts wanted to know how Rosenbaum’s work could be viewed as “reasonably independent, objective, or credible by members when she has voluntarily chosen to become a party to a legal case against one of the branches of the federal government that she is supposed to advise in her role at MACPAC.”

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Good question. They also wanted to know whether MACPAC has any procedures in place to avoid conflicts among commissioners regarding legal cases like this, and whether GAO evaluates “advocacy or political activity that could result in a real or perceived conflict of interest” when appointing commissioners to MACPAC. After all, they note, the Congressional Budget Office (CBO) examines whether its panel of advisers have engaged in political activity or have a financial stake that might influence — or even “reasonably appear to influence” — their perspective on CBO-related issues. Does GAO do this, and if not, why not?

There are no procedures in place to avoid conflicts in legal cases like House v. Burwell beyond what a commissioner “feels” is a conflict.

Turns out, it does not. Last month, Rosenbaum responded to Upton and Pitts but glossed over their main concerns while dodging most of their questions. On disclosing conflicts of interest, Rosenbaum conceded that MACPAC could require commissioners to “declare any actual or apparent conflict of interest (financial or otherwise) on any specific issue that is the focus of our research, deliberations, or votes.” But she failed to explain what conflicts of interest or political activities would be required to be disclosed, gave no time frame or process for adopting the requirement, and failed to acknowledge the underlying problem that partisan activity, or just the perception of it, on the part of commissioners could harm MACPAC’s credibility (which is why, for example, MACPAC employees have prohibitions on political activity related to commission business).

Moreover, there are no procedures in place to avoid conflicts in legal cases like House v. Burwell beyond what a commissioner “feels” is a conflict. And how would that work? Like this: Rosenbaum declared that in her opinion, her involvement in the amicus brief was not “the type of activity that merits recusal,” and she made no indication she would remove her name from it. She agreed, apparently on the basis of her own feelings, not to do any future work on that particular case or other cases relating to Medicaid and CHIP, but didn’t say whether she would refrain from future legal work on Obamacare that isn’t related to those programs.

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Were Upton and Pitts making a mountain out of a mole hill? One little amicus brief couldn’t possibly compromise the credibility of a supposedly nonpartisan commission’s work, could it? Perhaps not, but it turns out the commission is rather more partisan than it lets on. Rosenbaum, a former domestic policy adviser in the Clinton White House, has a long history of donating to Democrats. Of course, there’s nothing wrong with private political giving, but a quick search of Federal Election Commission data on political donations at OpenSecrets.org reveals a startling pattern. Of the current commissioners for whom records are available (including Rosenbaum), the vast majority have been faithful Democratic party donors for years, with only two exceptions. One commissioner faithfully gave to former House majority leader Eric Cantor but otherwise gave to Democrats, and another gave to John McCain in 2008 and Romney in 2012. Four of the six commissioners whose terms expired last year have given exclusively to Democrats, as recently as 2014 and going back as far as 1992. (No records were listed for the other two.)

#share#What all this means is that MACPAC has a clear liberal bias. It is dominated by commissioners whose political preferences lean heavily Democratic, and it is lead by someone whose neutrality has been compromised by her choice to join a legal case against the branch of government she’s supposed to be advising. MACPAC might be useful in solving long-term problems with health-care entitlements if, like MedPAC, it were truly a data-driven, nonpartisan research organization. But it is not that. The imbalance in political contributions alone undercuts the commission’s pretense to objectivity, especially when it comes to a politically charged issue such as Medicaid reform under Obamacare.

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The depressing part of all this is that it’s not uncommon. A big part of the progressive scheme of government is to shield the mechanisms of government from political scrutiny through the artful use of administration and outsourcing. Call it crony bureaucracy.

The father of American progressivism, Woodrow Wilson, saw this coming. He thought the U.S. Constitution was outdated and that America needed a professional, Prussian-style administrative state, and that the chief hindrance to this in America was popular sovereignty. Public opinion was apt to be meddlesome in affairs Wilson thought should be left to expert administrators. Only after the state had taught the people “what sort of administration to desire and demand” would public opinion be able to “play the part of authoritative critic.”

#related#Bad as that notion is, at least Wilson understood that in order to preserve democracy, professional administrators had to answer to elected officeholders, and the public should have some role as critics. “Steady, hearty allegiance to the policy of the government they serve will constitute good behavior,” Wilson wrote of the administrative class. “That policy will have no taint of officialism about it. It will not be the creation of permanent officials, but of statesmen whose responsibility to public opinion will be direct and inevitable. Bureaucracy can exist only where the whole service of the state is removed from the common political life of the people, its chiefs as well as its rank and file.”

So much for all that. The MACPAC case reveals the machinations of a professional administrative class that is not only partisan, but seemingly immune to criticism even from the elected officials it purports to serve. To the general public, these appointed administrators are all but invisible, and yet they are charged to advise in the creation of policy for a bitterly disputed and still-unpopular federal health-care law.

At least one House Republican has floated the idea of giving Congress the power to appoint members to MACPAC. That might help in the short term. But in the long term, we’re going to have to decide if assigning the federal government so many major tasks, like running a trillion-dollar-per-year health-care system, is worth the price Americans inevitably pay in the coin of self government. 

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