Taxpayers Ultimately Get the Bill for Oregon’s Medicaid Expansion

By Thomas Tullis

Thirty states have already undertaken the Medicaid expansion encouraged by the Affordable Care Act. In Oregon, more than one in 4 people are now enrolled in Medicaid. Enrollment is nearly twice as high as originally thought, and now lawmakers are looking at a half-billion-dollar state deficit after grossly miscalculating the projection.

In an attempt to reconcile the $300 million Cover Oregon fiasco, the Kitzhaber administration had centered in on fast-track Medicaid enrollment. Oregonians were incentivized and encouraged to sign up for Medicaid, with ObamaCare extending the eligibility requirements to adults earning up to 138% of the federal poverty level.

With the expansion’s 76% increase in monthly enrollment, Oregon’s growth is second only to Kentucky. While many states have not expanded and have seen little to no growth in enrollment, Oregon boasts some of the highest percentages of average annual growth in Medicaid spending over the last few years.

As the federal government will soon require Oregon and other states to be responsible for part of Medicaid costs, lawmakers are already talking about increasing the nearly two-billion-dollar bipartisan hospital tax that Governor Kate Brown signed in March.

Health insurance policy is in desperate need of market-based reforms. A competitive free market can ensure quality and affordability. Government handouts and regulations simply drive up costs that in this case will be borne by taxpayers.

Thomas Tullis is a research associate at Cascade Policy Institute, Oregon’s free market think tank. He is a student at the University of Oregon, where he is studying Journalism and Political Science.

Press Release – Statement on the Supreme Court’s King v. Burwell Decision

June 25, 2015

FOR IMMEDIATE RELEASE

Media Contact:

Steve Buckstein

503-242-0900

steven@cascadepolicy.org

Cascade Policy Institute Statement on Today’s Supreme Court King v. Burwell Decision: More Oregonians will lose rather than win

PORTLAND, Ore. – The U.S. Supreme Court decision today in the King v. Burwell case is a sad reminder that the President of the United States and his Administration can arbitrarily interpret laws passed by Congress to suit their own purposes.

In this case, the Affordable Care Act clearly states multiple times in its text that federal subsidies to offset insurance premiums can only be granted to individuals purchasing policies through an exchange “established by the state.” When most states failed to establish such exchanges, the IRS arbitrarily decided to grant subsidies to individuals who purchased insurance through the federal exchange, healthcare.gov, as well. By a six to three vote, the Court told us that the President and his Administration need not follow the language of the law because in the Court’s opinion that could cause harm to the intent of the law which was to make insurance more affordable.

How this decision will affect Oregon is fairly clear. Oregon originally set up its own state-established exchange, Cover Oregon. But when that $305 million project failed to sign up one person for insurance on its flawed website, the Cover Oregon board voted to scrap the exchange and migrate Oregonians over to the federal exchange, healthcare.gov. Board members didn’t seem to care how this decision might impact subsidies for Oregonians, and after the fact said they were relying on federal assurances that they considered this arrangement a “supported state based marketplace”—meaning that it would still qualify for subsidies even if the Court were to rule opposite of how it ruled today.

What is clear now is that today’s decision could actually harm more Americans, and more Oregonians, than it helps. According to a March 3rd press release by Michael Cannon of the Cato Institute and Cascade Policy Institute’s Steve Buckstein, “If subsides are denied under a King ruling, Oregon will join the majority of states in reaping benefits.” Now that the King ruling has found for the government, the Cato Institute believes that “approximately 157,000 [Oregon] individuals likely will continue to be subject to the law’s individual mandate requirement,” and 890,000 working Oregonians “also will continue to be subject to the employer mandates that are putting downward pressure on our economy.” These negative results stem from the ACA’s provisions that as long as subsidies make insurance somehow “affordable,” then the act’s mandates to purchase it remain in place.

Cascade Senior Policy Analyst Steve Buckstein says, “Today’s Court decision does not end the discussion about who should control your health care and who should decide what, if any, insurance you must purchase at what price; but it does push that discussion farther into the future. It unfortunately postpones our ability to move toward a more individual, patient-centered health care and health insurance world. Oregonians who watched their state government bungle an expansive insurance exchange project using other people’s money should be a big part of this discussion.”

There’s a Sucker Born Every Minute

Last month, Oregon’s first commercial “wave energy” project near Reedsport was officially abandoned.

The lead developer, New Jersey-based Ocean Power Technologies, had been promoting a utility-scale power project featuring 100 buoys, each weighing 260 tons. That plan was downsized to 10 buoys―and then to none.

The company had previously received a subsidy of $430,000 in Oregon lottery funds, along with millions more from the federal government. Apparently, this wasn’t enough; the company announced plans to move its operations to Australia, where it has been promised $62 million in handouts by the government.

This is just the latest in a string of Oregon fiscal blunders. The state wasted more than $200 million on a non-functioning health insurance website. Another $180 million disappeared in planning studies for a bridge over the Columbia River than never got built. And Governor Kitzhaber hired an “education czar” who was compensated some $400,000 before taking off for New York after less than a year on the job.

Investors all over the world understand that Oregon is the place to come for easy money. The business plan is simple: Profits flow to private companies, while losses are bone by Oregon taxpayers.

A 19th-century circus impresario once remarked, “There’s a sucker born every minute.” He wasn’t talking about Oregon, but maybe this should be our new state slogan.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

Cover Oregon: Out of the Frying Pan

 

*This event is currently sold out. You can add your name to the waiting list by clicking the “Add to Waitlist” link in the Eventbrite registration box below.

 

Please join us for Cascade’s monthly Policy Picnic led by Cascade Policy Institute founder and senior policy analyst Steve Buckstein on Wednesday, May 21st, at noon.

Cover Oregon’s board has admitted its $200 million plus website failure, but the decision to move Oregonians to the healthcare.gov website could backfire big-time. Not only might the board not have the authority to pull the plug on Oregon’s health care exchange, but a federal court case threatens to deny Oregonians the tax credits that ObamaCare promised would make our insurance premiums “affordable.”  What else could go wrong?

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to sixteen guests on a first come, first served basis, so sign up early.

Sponsored By

Cover Oregon: Out of the Frying Pan…

On April 25th, after wasting more than $200 million in federal cash, Cover Oregon’s Board voted to pull the plug on Oregon’s failed ObamaCare health insurance exchange and go with the federal exchange technology as the “core” of its system. The first open enrollment period for Oregonians ends today. Oregon hopes to be back in business using the federal technology when the next enrollment period opens up on November 15.

The only problem is that―as I testified before the Board―the Affordable Care Act states some nine times that only individuals signing up through “state established exchanges” qualify for federal tax credits to make their insurance premiums more “affordable.” Those using the federal exchange aren’t eligible for these credits, although the Obama Administration has ignored the clear wording of the law and granted them anyway.

On March 25 the Federal D.C. Circuit Court of Appeals heard arguments on this in the Halbig v. Sebelius case. One judge seemed to telegraph how he might rule by stating, “There is an absurdity principle, but there is not a stupidity principle. If the law is just stupid, I don’t think it’s up to the court to save it.”

If the courts eventually rule against granting tax credits to those using the federal exchange, Cover Oregon’s Board may have just pushed many Oregonians out of the frying pan and into the fire.

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

In Oregon and Nationally, ObamaCare’s Exchanges Don’t Play Well with the Young

By Sally C. Pipes

Young people appear to have abandoned President Obama less than two years after sending him back to the White House. Only 41 percent of Americans 18 to 29 approve of his job performance, according to a recent poll from Harvard’s Institute of Politics.

Even more—56 percent—disapprove of ObamaCare, his chief domestic policy achievement. Many of these “young invincibles”—folks between the ages of 18 and 34―are expressing their disapproval by refusing to enroll in the law’s health insurance exchanges. If this trend keeps up, the exchanges could collapse.

The Congressional Budget Office (CBO) estimates that 40 percent of enrollees must be young and healthy for the exchanges’ finances to work. Here’s the logic behind that conclusion. Young people, while not quite invincible, are far less likely to get sick—and thus to use their coverage. So many will pay premiums without claiming much in benefits in return. Those premiums are supposed to go toward subsidizing the cost of coverage for older, sicker adults.

It doesn’t look like exchange enrollment will meet the administration’s target. Colorado just reported that a scant 7 percent of its exchange enrollees are between 18 and 24. More than four times as many are between the ages of 55 and 64. Sixteen percent are between 25 and 34.

Despite Cover Oregon’s $21-million, youth-friendly marketing campaign, Oregon is tied with West Virginia for last place in young sign-ups. As of March, Oregon remains the only state with an exchange in which people can’t self-enroll online in one sitting, and the manual application backup process may further discourage young adult enrollment.

Nationwide, as of late February, about 27 percent of the four million people who have signed up for coverage through the marketplaces are young adults. That’s only a slight improvement over January, when 24 percent of enrollees were young.

At the outset, the Obama Administration estimated that 1.6 million of enrollees in February would be young people. Their guess was a bit off—just over 800,000 had signed up by the beginning of the month. According to the New York Times, the Obama Administration hasn’t been able to translate the “get-out-the-vote” prowess it displayed in the 2008 and 2012 presidential elections into the health insurance realm. Only 9 percent of those who have purchased policies are aged 18 to 25. The 26 to 34 band accounts for 16 percent of enrollees.

And the situation isn’t likely to improve. A study from NerdWallet, a personal finance website, predicts that young adults who opt for the financial penalty associated with remaining uninsured, which goes into effect on April 1 and amounts to $95 or 1 percent of income this year, could save more than $1,000 compared to someone who buys insurance. That savings even includes the cost of visits to the doctor’s office. If that hypothetical young person has to visit the emergency room, he still could be better off uninsured—$700 better, according to the study.

The enrollment problem may even go beyond the young invincibles. Twenty to 30 percent of people whom the administration counts as having “purchased” insurance via the exchanges have yet to actually make a payment to cover the premium. So they don’t actually have insurance. These folks could be in for a rude awakening if they don’t find out that they’re uncovered until they’re at the doctor’s office or hospital.

The government’s enrollment numbers even demonstrate that the program is failing to accomplish its core goal of providing coverage for the uninsured. According to McKinsey and Co., only 11 percent of the 2.2 million people enrolled through December were previously uninsured.

Nowhere are the failures of the exchanges more apparent than in the Latino community. Nearly one-third of Latinos are uninsured—almost twice the national average. Latinos also skew younger than other ethnic groups. And they were staunch supporters of President Obama in 2012; the president took Hispanics by a 2.6 to one margin. Yet in California, only 20 percent of enrollees are Latino—even though the group accounts for 46 percent of all folks eligible for premium subsidies in the state.

State and federal officials are paying an awful lot for these subpar enrollment numbers. The cost per enrollee ranges from $1,500 in California to nearly $57,000 in Hawaii. The government has invested $205 million in the president’s birthplace to enroll just 3,614 people. Washington, D.C. has signed up just over 5,000 people on its exchange—despite taking in more than $133 million in federal money. Those 5,000 folks put the District 12 percent of the way toward its enrollment goal.

If enrollment continues to skew older and sicker, insurance companies will have to raise premiums. As that happens, fewer people will sign up. Others will drop their coverage. Both outcomes will drive costs for individuals and taxpayers up even further.

The White House has essentially given up on its initial goals of 40 percent young invincibles in a crowd of seven million enrollees by the end of March. Moving the enrollment goalposts may mute some of the political blowback from the exchanges’ failures. But it won’t change the math that underpins the exchanges. That could spell trouble for patients expecting affordable coverage—and taxpayers who may be called upon to shell out more to give it to them.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Forbes.

AP: Cover Oregon Is ObamaCare’s “Biggest Failure”

Seven weeks after launch, Oregon’s online health insurance exchange Cover Oregon still hasn’t enrolled one person, surprising out-of-state onlookers who would have voted Oregon “most likely to succeed.” An Associated Press story puts it this way:

“With all the problems facing the rollout of President Barack Obama’s health care overhaul, nowhere is the situation worse or more surprising than in Oregon, a progressive state that has enthusiastically embraced the federal law but has so far failed to enroll a single person in coverage through the state’s insurance exchange.”

The Oregonian has reported on numerous reasons for the delays, including last-minute federal rulemaking that set back Oregon’s website programming. Even so, Oregon received $245 million in federal money to build its online exchange, only to be processing 18,000 paper applications by hand three weeks into November.

It’s safe to say that dysfunction on this level would not be tolerated anywhere outside government: Imagine if your financial institutions were offline and nonresponsive for two months. The stunning failures of Cover Oregon and the federal website Healthcare.gov illustrate graphically how handing government vast control over important aspects of our personal and family lives results in even more loss of personal freedom than was foreseen when the Affordable Care Act was passed. Incompetence without accountability will have real consequences for those who, through no fault of their own, may find themselves without insurance on January 1.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

The Trouble with ObamaCare Is…Parking?

By John A. Charles, Jr.

Oregon is scrambling to open its new federally mandated health insurance exchange, dubbed Cover Oregon, on time October 1st.  Since the commodity being marketed is health insurance, one can only imagine the number of things going wrong: price quotes, online application forms, privacy protection, etc.

But when Cover Oregon’s Chief Operating Officer went on a recent multi-state conference call with President Obama to discuss the problems various states were having with their exchanges, she didn’t mention any of those issues. She said the number one problem for her organization was parking.*

When asked by the President to clarify, she said, “We have 150 employees at our Tualatin office, and only 96 parking spaces.” The President had to tell her that even the vast powers of the Oval Office did not extend to solving local parking shortages.

This was a classic Oregon moment. In a conversation about how the state will ration health care―an industry covering roughly one-seventh of the economy―we discover that management can’t even successfully ration parking for their own employees.

ObamaCare is already collapsing under its own weight. Things are likely to get much worse before they get better. 

* The source of this story was testimony by Rocky King, Executive Director of Cover Oregon. He told it on Sept. 16th in testimony to a joint hearing of the interim House and Senate health care committees in Salem. The hearing audio wasn’t posted immediately but it is now online here:
http://www.leg.state.or.us/listn/archive/archive.2013i/HHC-201309161400.ram.

The parking story begins at about 59:35 and ends at about 1:00:35 into the hearing.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.