The Corner

Mike Pompeo Reminds Max Baucus Who Engineered Obamacare’s ‘Train Wreck’

At a budget hearing on Wednesday, Democratic senator Max Baucus issued a startling critique of the president’s health-care law and its chief implementer, Secretary Kathleen Sebelius, whom he was addressing: 

I’m very concerned not enough is being done so far. When I’m home, small business have no idea what to do, what to expect. . . . As you well know, a lot of people have no idea about this. . . . I just see a huge train wreck coming down. I don’t see any results yet.

Secretary Sebelius responded that HHS was attempting to do a better job of disseminating information about the law, and noted that her department had requested additional money for outreach in the 2013 funding resolutions, but the funds were denied by Congress – even Baucus didn’t seem terribly excited to fund that anyway, wondering if such efforts were ”money down the drain.”

Now, Republican representative Mike Pompeo of Kansas has penned a letter about Baucus’s fretting to the senator in question, pointing out that he’s one of the architects of the train wreck:

Dear Senator Baucus,

I was stunned, and also saddened, to read of your complaint that Health and Human Services Secretary Kathleen Sebelius is doing an insufficient job informing the public about the Patient Protection and Affordable Care Act (PPACA), otherwise known as Obamacare.  My shock wasn’t because I disagreed: You’re right to say this legislation has led to great uncertainty for hard-working Americans, small business owners, and families.  No, I was shocked because you wrote this bill. . . .

President Obama’s proposal to rescind the Medicaid disproportionate share hospital payments for 2014 is an admission that this law will not work as written.  The IRS is violating the clear language of this law by planning to spend more than half a trillion dollars and tax millions of employers and individuals without congressional authorization.

No one in the country bears more responsibility for the complexity of this law than you.  When your supermajority couldn’t pass the bill using normal procedures, you and your Senate colleagues rammed through the final legislation by using parliamentary gimmickry.  Then, in the House, Speaker Pelosi cheerfully urged members to pass the legislation “in order to find out what’s in it.”

This was not good policy-making, and now we’re seeing the consequences.

Implementation is still going full steam ahead despite numerous problems—with your support. . . .

It’s worth reading the whole thing, but right there Pompeo hits upon two problematic aspects of Obamacare so far, both of which one of the principle authors of the law, Max Baucus, perhaps should have known and considered. For one, in the 26 states that have declined to set up their own health-care exchanges, a number that includes Senator Baucus’s Montana, the federal government is setting up its own exchanges, and will be providing direct tax subsidies and leveling tax penalties in those states – despite the fact that the law itself doesn’t appear to authorize them to do so (for a more in-depth explanation of this, see Michael Cannon of Cato’s pieces on NRO, or his paper about it with Jonathan H. Adler). That issue is currently the subject of ongoing litigation brought by the state of Oklahoma.

Second, Pompeo mentions the fact that the Obama administration has chosen to postpone cuts in “disproportionate share hospital [DSH] payments” for another year — which is of a piece with a good deal of delays in the law’s implementation that are result from a combination of Baucus’s bad design and HHS’s lack of capacity to implement universal health care in 36 months’ time, but also demonstrates a lot more than that.

As Pompeo suggests, it’s a tacit admission that the law isn’t working or won’t work as advertised, something Michael Cannon also wrote about for NRO, this week. DSH payments are given by the federal government to be distributed to hospitals to help them pay for “uncompensated care,” services rendered to people who lack health insurance and then fail to pay their own bills. Since insurance subsidies and especially the Medicaid expansion are supposed to reduce the number of uninsured, in theory, these payments can and should be cut as the law is implemented. But the cut is now being put off because, in practice, the uninsured population is going to be reduced by less than expected when the law was drafted. This is in part because the Supreme Court ruled that the federal government can’t use coercive funding to force states into accepting the Medicaid expansion, meaning fewer states are expanding the program than expected – admittedly an unexpected disappointment, but one Senator Baucus might have avoided by writing a law that didn’t rely on unconstitutional coercion. Moreover, other provisions of the law aren’t going to lead to as many people gaining insurance from employers or on the exchanges as expected for a variety of reasons – the models were probably simply optimistic and the penalties for those going without coverage are not that expensive, for instance, especially in the beginning, and especially by comparison with the much higher premiums healthy and young people will be facing on the individual market because of the law. In fact, Senator Baucus should remember that the more people are informed, via HHS’s wonderful contractors, about one provision of the law — guaranteed issue, meaning that anyone will be eligible to buy insurance no matter their health status — the less likely healthy people are to buy insurance, coming up short on the law’s main goal, leaving the health-insurance market even worse off, and driving premiums up for all.

Admitting that the DSH cuts can’t happen in 2014 also quietly begins to undermine, as Cannon explained, another supposed benefit of the law: the idea that wider insurance coverage will reduce costs overall, and even reduce premiums. In theory, with more insurance coverage and less uncompensated care, hospitals won’t have to shift the costs of those services onto other customers and their insurance premiums. But the DSH delay suggests that uncompensated care isn’t going to drop as much as planned, so even if that linkage worked, those actually buying insurance wouldn’t see much benefit (and the link itself is questionable, too — it was a major justification for Romneycare’s expansion, and hasn’t seemed to pan out in Massachusetts).

All of this is to say that, while Baucus’s testimony tried to explain why the president’s health-care law is still a good idea that’s being implemented poorly, the problems really spring from the bill itself, and the work of its authors. As Pompeo puts it, “Secretary Sebelius’s implementation of the law is certainly flawed, but the policy process produced a law that could not possibly be implemented successfully.”

Patrick Brennan — Patrick Brennan is a writer and policy analyst based in Washington, D.C. He was Director of Digital Content for Marco Rubio's presidential campaign, writing op-eds, policy content, and leading the ...

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