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The latest news on Obamacare from Business Insider

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    Doctor and nurse in a lab

    Over the weekend, the Washington Post posted a great, long story about how Medicare and most private insurers are basically making up the prices they pay for services.

    The short version is this: Medicare bases its payment for any medical procedure on an estimate of how resource-intensive that procedure is. One of the most important resources that goes into a procedure is a physican's time. So Medicare has the American Medical Association survey doctors about, for example, how long it takes to perform a colonoscopy.

    The doctors answering the surveys know they are used to set Medicare reimbursement rates. You can guess what happens next: The doctors vastly overestimate how long procedures take, in an effort to boost how much they get paid.

    According to research by the Post, if Medicare's time estimates were correct, many doctors would be spending more time doing procedures each day than their clinics are open—and a handful would be working more than 24 hours a day.

    Barbara Levy, the doctor who chairs the AMA committee conducting the survey, admitted to the Post that “all of the times are inflated by some factor."

    But she still defended the process, arguing that even if the times are wrong on an absolute basis, they are relatively right: everything gets inflated by about the same amount, and Congress can offset the inflation by pushing down the amount it will pay per unit of doctors' time.

    That's not exactly a heartening defense, especially because the inflated time estimates help doctors argue their payments are being unfairly cut. The medical lobby has repeatedly succeeded in getting Congress to "patch" the Medicare formula that is intended to control the growth of Medicare payments, arguing that otherwise doctors will drop out of Medicare.

    When I tweeted about this article on Saturday, some conservatives pointed to it as exposing the folly of government involvement in medical pricing. But private insurers aren't doing any better. The Post notes that most simply adopt Medicare's point system, and then pay more per "point" than Medicare does, meaning they keep the same mispricing while paying more overall.

    But the biggest outrage about this system is not the mismeasurement. It's that we're paying doctors for their time instead of for keeping patients healthy. The amount of time that a doctor spends performing a colonoscopy has nothing to do with how useful it is to the patient. Paying more for longer procedures just encourages physicians to perform more and longer procedures.

    This story is a reason to be hopeful about capitated payments, Accountable Care Organizations, and other reforms that are intended to shift away from paying for procedures and toward paying for quality of care. What we really want is for doctors to keep patients healthy, and to only perform procedures if they serve that goal cost-effectively.

    Paying for outputs instead of inputs will make it less important for Medicare to know how long a colonoscopy takes—and will make medical pricing less of a racket.

    SEE ALSO: White House delays key Obamacare provision for one year

    Join the conversation about this story »

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    Rembrandt Abraham Isaac

    By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls . . . become 'profiteers', who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished not less than the proletariat. As the inflation proceeds . . . all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless….

    – John Maynard Keynes

    One of the more frequent and important questions I get asked when I travel is whether I think we will see inflation or deflation. My usual flippant answer is "Yes," and then I go on to explain that there is no simple answer. Over what time period? In what country? And by what means do you want me to measure inflation or deflation? Today we take a look at part of a white paper I am working on with Jonathan Tepper, the co-author of Endgame, on this topic. I think you will find it interesting reading on a summer's day. And I have to quickly mention the absolute disaster that is happening before our eyes in the labor market. Our kids are getting skewered (the polite word) by unintended consequences of the Affordable Care Act. We need a bipartisan fix quick, before we damage an entire generation.
    But first, let me call your attention to a dynamite conference at which I'll be speaking in October. It's "3 Days with Casey," the Casey Research Summit for 2013, to be held October 4-7 in Tuscon, Arizona. In addition to the indomitable, incredible Doug Casey, my friends Ron Paul, Lacy Hunt, Rick Rule, and Don Coxe will all stand and deliver, along with a bunch of other outstanding speakers, including Jim Rickards (author of Currency Wars), Paul Brodsky (I love this guy's stuff!), and Chris Martenson (author of The Crash Course). And of course you get the whole Casey research team. Thoughts from the Frontline readers can get a special early bird discount here. Come help me celebrate my 64th birthday!

    A Temporary Problem

    Back in 2010, a number of analysts (including me) noted an unintended consequence buried in the Affordable Healthcare Act (aka ObamaCare). Employers are not required to provide insurance for temporary workers, and a temporary worker is defined as someone who works under 29 hours per week. Many of us noted that this would result in businesses shifting workers from full-time to part-time. The answer from AHA supporters was that "No, it wouldn't" or that the effect would be small. There was no real way to know, of course. I and others could only point to our experience of how the real world works. If you defined the cut-off for part-time work at 35 or 39 hours a week instead of 29, the economics of ObamaCare simply got blown out of the water. But the bill passed, and now it's law.

    And now the argument is over. It is clear that businesses have indeed responded to the rather perverse incentives in the law. A year ago, growth in full-time employment far outpaced increases in temporary employment. That trend has reversed this year. Mort Zuckerman wrote in an op-ed piece in the Wall Street Journal this week:

    The jobless nature of the recovery is particularly unsettling. In June, the government's Household Survey reported that since the start of the year, the number of people with jobs increased by 753,000 – but there are jobs and then there are "'jobs."' No fewer than 557,000 of these positions were only part-time. The June survey reported that in June full time jobs declined by 240,000, while part-time jobs soared 360,000 and have now reached an all-time high of 28,059,000 – three million more part-time positions than when the recession began at the end of 2007.

    That's just for starters. The survey includes part-time workers who want full-time work but can't get it, as well as those who want to work but have stopped looking. That puts the real unemployment rate for June at 14.3%, up from 13.8% in May.

    The US Chamber of Commerce summarizes the situation:

    "Small businesses expect the AHA requirement to negatively impact their employees. Twenty-seven percent say they will cut hours to reduce full-time employees, 24 percent will reduce hiring, and 23 percent plan to replace full-time employees with part-time workers to avoid triggering the mandate."

    Younger people and those whose jobs could readily be farmed out to plenty of potential replacements are in danger. There are many jobs that can almost as easily be done by two people working 20-25 hours as by person working 40-50 hours. And that is what is happening. As Zuckerman notes, if you count those who have only temporary employment though they want full-time work, the unemployment rate rose last month from 13.8% to 14.3%. This is recovery?

    I have seen this happen in my own family (and to a union member, no less!). How can you support yourself on a part-time job? Juggling two part-time jobs takes a lot more than 40 hours a week and increases the costs of getting to and from work. And under the AHA, the government, not the employer(s), is going to have to pick up that bill if a part-time worker is going to have health insurance.

    Republicans want to repeal ObamaCare. Many are not interested in anything short of that outcome. Democrats don't want to change anything and won't touch legislative fixes, afraid to be seen as opening up the whole issue before the next mid-term elections. But we are seriously damaging the ability of people to get work and be able to support themselves and especially the opportunity for younger people to get work that can result in acquiring skills and moving upward on the income scale. The definition of part-time should revert to the traditional standard: if you work less than 40 hours a week, you are part-time.

    I get that that destroys the economics of ObamaCare. But do we want to see our children as unintended casualties in a political war over healthcare? A bill has been introduced to fix this problem in the Senate. The US Chamber of Commerce survey is telling us the direction we are currently headed in. Do we really want to wait until things get even worse?

    And now, let's think about inflation, together with my co-author, Jonathan Tepper.

    Any Bonds Today?

    Can you imagine Julia Roberts and Gwyneth Paltrow helping the US government sell bonds or Jay Z and Justin Timberlake composing songs about Treasury bills? It would not be the first time Hollywood stars or famous musicians tried to help the government sell its debt.

    The last time the US government had an enormous load of debt, it used Hollywood stars to help sell government debt. The Treasury Department conducted a massive public relations campaign through radio, newspapers, and film. During World War II, war bond rallies were held throughout the country, and Hollywood stars such as Bette Davis and Rita Hayworth traveled around the country to promote war bonds. The great Irving Berlin even wrote a song titled "Any Bonds Today?" and Berlin's tune became the theme song of the Treasury Department's National Defense Savings Program.

    The government also enlisted cartoon characters, actors, comedians, and musicians to encourage people to pay income taxes. Donald Duck told viewers it was their "duty and privilege" to pay income tax. Abbott and Costello appeared in advertisements to get people to pay taxes, and Irving Berlin wrote songs not only about bonds but songs about taxes like "I Paid My Income Tax Today."

    While the war bond and income tax drives garnered all the press, the real reason the US was able to borrow so much and with so little burden had nothing to do with the glitz and glamor of movie stars. The US government borrowed easily because the Federal Reserve printed money to keep interest rates low. Borrowing is very easy when a central bank has your back.

    How did it work in practice? As is the case today, the Treasury wanted to borrow cheaply then, and the central bank was happy to accommodate. In 1942, after the United States entered World War II, the Federal Reserve officially agreed to fix interest rates on government bonds at a low level. To maintain the pegged rate, the Fed was forced to give up control of the size of its balance sheet. Unsurprisingly, the Fed bought and held all available short-term US treasuries and almost all long-term government bonds.

    The costs of paying for World War II pushed the national debt up sharply, from around 40% of GDP before the war to a peak of nearly 110% as the war ended. But a combination of strong economic growth, tight fiscal policies, and financial repression brought the debt back below 50% of GDP by the late 1950s. (Currently our government debt has reached about 90% of GDP and continues climbing very sharply.)

    During the war years, the Federal Reserve pegged long-term interest rates at extremely low levels so the government wouldn't have to pay much to fund itself. To make sure that inflation didn't spike, the government instituted wage and price controls. After the war, the price controls disappeared and inflation rose very quickly, averaging about 6.5 percent annually from 1946-51. By the postwar price peak nine years later, wholesale prices had more than doubled, and the stock of money had nearly tripled.

    Normally, such high inflation would have made it much more expensive for the government to borrow money. But after being pressured by the Treasury, the Federal Reserve agreed to keep on pegging long-term government bond yields at 2.5% until the spring of 1951, when the Federal Reserve finally refused to print money to keep bond yields low. Because of the coordination between Federal Reserve and the US Treasury, real yields on government bonds were very negative during the years following World War II. With negative real yields, borrowers win and lenders lose. The clear winner was the US government, and the loser was anyone who bought and held US bonds. The combination of very low government bond borrowing costs and high inflation ate away a sizable chunk of the government's debt burden.

    The same thing is happening today in almost all government bond markets around the world. Governments are winning, and investors are losing. The Federal Reserve is helping the Treasury to borrow cheaply while the government expands its deficit spending and debt accumulation. Using inflation and low bond yields this way to reduce government debt is called financial repression.

    The government and central banks also contribute to higher inflation by pretending inflation is always under control. For example, throughout the Greenspan and Bernanke years, the Fed consistently chose to focus on lower inflation measures whenever doing so suited the central bank. You can see this in the semiannual monetary policy reports to Congress, specifically in the inflation forecasts made by the members of the Federal Open Market Committee. Until July 1988, inflation forecasts used the implicit deflator of the gross national product, but then the Fed switched to the Consumer Price Index. In February 2000, the Fed replaced CPI with the personal consumption expenditures (PCE) deflator. Thus from July 2004 onward, inflation forecasts have employed the core PCE deflator that excludes food and energy prices. Using lower and lower, less comprehensive estimates for inflation has allowed the Fed to pretend that it is meeting its mandate – but by ignoring high inflation readings. In the meantime, interest rates have been kept too low, and the inflation rate has consistently remained above the Federal Funds rate.

    But measuring inflation is not so easy. The vast majority of readers have no idea about the rather contentious nature of the debates that go on in academic conferences about arcane topics such as the minutiae of how to measure some minor aspect of inflation. Passions run deep. Careers are made. Once you delve into how things are actually done, you realize that what we think of as an inflation number is actually an approximation of an idea the very definition of which can change over time.

    Your perception of inflation (and everyone else's) has a very close relationship to how stock markets perform over time. Indeed, one of the questions we are both regularly asked wherever we speak is something along the lines of "What do you think inflation or deflation will be?" And the answer is not easy: it depends on a number of factors that vary from country to country.

    In general, the trend for the last 75 years has been one of inflation. Sometimes, in some countries, inflation has spun out of control. At other times you see outright deflation. Neither one promises good times for investors. Ever-falling inflation or low inflation is the best environment for investing. But given the paramount importance of the inflation/deflation debate, we need to briefly investigate what inflation is and is not.

    To continue reading this article from Thoughts from the Frontline – a free weekly publication by John Mauldin, renowned financial expert, best-selling author, and Chairman of Mauldin Economics – please click here.

    © 2013 Mauldin Economics. All Rights Reserved.

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    ted cruz mike lee

    Byron York has a good post at the Washington Examiner pouring cold water on the idea that Senate Republicans will shut down the federal government in order to force the defunding of Obamacare implementation.

    The idea, from Sen. Mike Lee (R-Utah) is that Republicans should refuse to vote for any continuing resolution—that's the appropriation bill that Congress will have to pass to keep the government open past Sept. 30—if it contains money to implement the health care law.

    Lee's strategy won't work because the CR is must-pass legislation. If Republicans tie an Obamacare-defunding demand to it, no bill will pass, and they'll get blamed for shutting down the government, which will be unpopular.

    Eventually, they'll cave, the government will reopen, the health law will still be implemented, and the Republicans will suffer political damage. It's a strategy that's just asking for pain.

    Lee and his colleagues understand this. York got a quote from an anonymous Republican Senate aide explaining why various Tea Party senators want to pursue the strategy even though they know it's doomed:

    "We have to try," says the Senate aide. "Having this fight will show the people who sent us here that we are a party of principle. And after we lose this fight, all of our guys are going to have an issue that we can run on and win."

    The key phrase in this quote is "all of our guys." Which guys is he referring to?

    A government shutdown wouldn't endear Senate Republicans to the public as a whole. That's why Republican senators like Tom Coburn (Okla.) and John Cornyn (Tex.) are publicly dissing the Lee strategy.

    But it would give Tea Party senators like Rand Paul (Ky.) and Ted Cruz (Tex.) big, public opportunities to "stand up to Obamacare" and improve their standing with the sort of very conservative voters who have a lot of influence in the Iowa caucuses. A government shutdown as a Hail Mary against Obamacare might be the sort of thing Cruz could run on and win Iowa.

    It's a good example of the diverging incentives facing individual Republican officials and the party as a whole. Individual senators can benefit by picking fights that make it harder for the party to build a majority electoral coalition. But in this instance, most senators seem to realize that would be a mistake.

    It won't be that hard to get a CR through the Senate. The more difficult question will be the House, where individual members are more conservative and represent districts where they can more easily disregard broad public opinion.

    But last time House Republicans had the opportunity to force a government shutdown, in March, they got gun-shy, realizing that the shutdown fights of 1995-6 under Speaker Newt Gingrich did not play out well for Republicans.

    Boehner may have to break the "Hastert Rule" to pass the CR: That is, he'll let it come to a vote and pass mostly with Democratic support. But far from angering his caucus, he will be giving them exactly what they want. They will be able to avoid a government shutdown fight without ever having to vote to fund Obamacare.

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    Barack Obama Trayvon Martin

    WASHINGTON (Reuters) - President Barack Obama's decision to delay implementation of part of his healthcare reform law will cost $12 billion and leave a million fewer Americans with employer-sponsored health insurance in 2014, congressional researchers said Tuesday.

    The report by the non-partisan Congressional Budget Office is the first authoritative estimate of the human and fiscal cost from the administration's unexpected one-year delay announced July 2 of the employer mandate - a requirement for larger businesses to provide health coverage for their workers or pay a penalty.

    The analysts said the delay will add to the cost of "Obamacare's" insurance-coverage provisions over the next 10 years. Penalties paid by employers would be lower and more individuals who otherwise might have had employer coverage will need federal insurance subsidies.

    "Of those who would otherwise have obtained employment-based coverage, roughly half will be uninsured (in 2014)," CBO said in a July 30 letter to Representative Paul Ryan, Republican chairman of the House of Representatives Budget Committee.

    Under Obama's healthcare reform law, employers with 50 or more full-time workers were supposed to provide healthcare coverage or incur penalties beginning January 1. But the requirement will now begin in 2015.

    The delay intensified doubts about the administration's ability to implement Obama's signature domestic policy achievement and stirred Republican calls for a similar delay in another Obamacare mandate that requires most individuals to have health insurance in 2014.

    The Republican-controlled House followed up the administration's decision by voting on July 17 for its own measures to delay the employer and individual mandates. Neither piece of legislation is expected to succeed in the Democratic-controlled Senate.

    State and federal officials are racing to set up new online health insurance exchanges, where lower-to-moderate income families that lack health insurance will be able to sign up for federally subsidized coverage beginning on October 1. The poor will also be able to sign up for Medicaid coverage in 23 states that have opted to expand the program.

    Most large employers already offer health insurance and CBO said few are expected to drop coverage because of the delay.

    But the change will still result in a $10 billion reduction in penalty payments that some employers would have made in 2015 for failing to provide coverage next year, CBO said.

    The change also means another $3 billion in added costs for exchange subsidies. That is because about half of the 1 million workers who would have gained employer-sponsored coverage next year will now obtain insurance through the exchanges or via public programs including Medicaid, CBO said.

    Other changes, including an increase in taxable compensation resulting from fewer people enrolling in employment-based coverage, will offset those factors by about $1 billion.

    CBO now puts the net cost of Obamacare's insurance coverage provisions at around $1.38 trillion over the next 10 years, vs. its May baseline projection of $1.36 trillion.

    (Reporting by David Morgan. Editing by Fred Barbash)

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    ted cruz sincere hand over heart

    Here is how far apart two factions of the Republican Party are on the possibility of a government shutdown this October over the issue of defunding the Affordable Care Act. 

    One side has dubbed the other "The Surrender Caucus"— the ones who have given up hope on defunding and repealing the law.

    If that's the case, they're happy to "surrender." The other side, they say, doesn't have a plan, can't get "anything off the runway," and is playing with fire to boost enthusiasm and fundraising.

    "Dr. Coburn applauds and shares their desire to dismantle the health care law, but the idea has zero chance of getting off the runway," said an aide to Sen. Tom Coburn (R-Okla.), who has been one of the main conservative opponents of the strategy.

    "We’re better off highlighting the president’s desire to violate spending levels he agreed to."

    But most Republicans acknowledge that this effort is, so far, a small GOP operation led by the "wacko bird" conservative firebrand coalition of Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah) — along with Sen. Marco Rubio, who continues to move right after his role in helping to pass the Senate's immigration bill. 

    They are backed by conservative organizations like Heritage Action, the Club for Growth, and FreedomWorks.

    One of those groups, Heritage, is ramping up pressure by hosting town halls this month in nine U.S. cities — and Cruz will make an appearance in Dallas. In total, 12 Republican senators have signed a letter to Senate Majority Leader Harry Reid, saying they will not vote to advance any continuing-resolution bill that provides funding for the health-care law. 

    "The important thing is that we spend the next two months talking to people about why we need to defund Obamacare," said Dan Holler, the communications director at Heritage Action. "If we do it right, what you do on Oct. 1" after a possible shutdown is worried about then.

    There are two problems "The Surrender Caucus" sees with this strategy. The first, and most obvious, is that the politics of a shutdown aren't great for the GOP. Polling is clear — Republicans are not viewed favorably by the majority of Americans, and they'd likely be blamed in the case of a shutdown.

    According to a Wall Street Journal/NBC poll released last week, 56% say the GOP is "too inflexible." By a 3-to-1 margin, people are more likely to say Republicans are "too partisan" (67%) than "unifying" (22%).

    The second, and less obvious, is that stripping the appropriations bill of funding for Obamacare might not solve Republicans' problems. That was the argument advanced by the Washington Examiner conservative columnist Byron York last week. The difference, he wrote, comes in how Obamacare is primarily funded:

    The far bigger portions of the program, including the billions and billions of dollars in subsidies that will start going to Americans on Jan. 1, are mandatory spending, an entitlement funded by an automatic appropriation which is written into law and runs without further congressional action. To change that, Congress would have to change Obamacare.

    And to change Obamacare in that fashion would require 67 votes. Even Cruz has admitted that his effort doesn't have the 41 votes in the Senate right now that would be required for a filibuster of the CR bill. 

    But even though some of the party's most conservative have come out in vocal opposition — and the number of senators signing the letter to Reid have dwindled from 17 to 12 — advocates of the plan to defund Obamacare believe that a long, hot five-week stretch at home will build pressure on the holdouts. 

    They point to the Tea Party-affiliated town halls that have popped up 

    since the beginning of President Obama's time in office, which helped shift what was then an ongoing debate over how to reshape the nation's health care laws.

    Charles Krauthammer Fox News

    "There are a lot of folks who already seem to know how this is going to play out," Holler said. "But we know when Congress goes back home, their constituents are going to say, 'Hey, why aren't you fighting?' ... There's a lot of momentum building for this approach."

    But heading into Congress' break, even the most conservative aren't latching on. In a scathing column on Friday, Washington Post columnist Charles Krauthammer ripped Cruz and Lee as "nuts."

    Those who fancy themselves tea party patriots fighting a sold-out cocktail-swilling establishment are demanding yet another cliff dive as a show of principle and manliness.

    But there’s no principle at stake here. This is about tactics. If I thought this would work, I would support it. But I don’t fancy suicide. It has a tendency to be fatal.

    This is why, as Krauthammer points out, Obama is practically "goading Republicans into trying" their shutdown tactic. Democrats, meanwhile, are dumbfounded. They point to GOP leadership for what it now views as a problem, saying it has given too much free reign to the young Cruz and Lee.

    "They can't keep the wacko birds in the loony bin," said one senior Democratic Party official.

    Thus far, neither Senate Majority Leader Mitch McConnell nor House Speaker John Boehner has ruled out including a measure to defund Obamacare in any potential continuing resolution bill. Further complicating items include the fact that McConnell is now facing a primary challenger in a tough 2014 election bid that will serve, in part, as a referendum on his conservative credentials.

    It also means that this will likely drag on as long as Cruz and Lee want to keep talking it up.

    "McConnell has been totally silent on this. Even Boehner has at least signaled that he’s against the Tea Party path to shutting down the government," said one Senate Democratic aide.

    "McConnell’s lack of ‘profile in courage’ is giving the Rubio/Lee/Cruz faction a reason to believe that their theater on this is worthy of attention, when in fact it’s just so obviously a distraction that has no chance of succeeding."

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    Goldman Sachs' new monthly chartbook is out, and it leads with a list of the trades and investment strategies that have and haven't been working so far this year.

    Leading the way is health care stocks.

    The basic investment thesis argues that with the Affordable Care Act, aka Obamacare, comes lots of new volume for the health care companies.

    Meanwhile, gold is just not working.

    From Goldman Sachs:

    goldman market trades working

    SEE ALSO: The Moment Of Truth Has Arrived For The American Economy

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    Paul Ryan budget

    WASHINGTON (Reuters) - Influential Republican congressman Paul Ryan disagreed on Sunday with the idea of using the threat of a government shutdown as a means of trying to get rid of President Barack Obama's signature healthcare law known as "Obamacare."

    Ryan, chairman of the House Budget Committee and a former vice presidential candidate, said he strongly backs the goal of repealing Obamacare but added there were other, more effective ways of achieving it than by refusing to approve any government funding bill that includes money for the program.

    "I think there's going to be a better strategy to actually achieve our goal of ultimately delaying and ultimately replacing Obamacare," the Wisconsin congressman told the CBS talk show "Face the Nation."

    Ryan said the shutdown strategy amounted to "swinging for the fences" and wouldn't succeed in gutting Obamacare.

    The Republican Party is divided over calls from some conservatives to oppose any annual spending bills that include money for Obamacare. That effort could get in the way of lawmakers' ability to meet an October 1 deadline to pass a funding measure for the federal government. Without such a measure, many government agencies would shut down.

    Ryan, author of a Republican budget plan that calls for steep cuts in domestic programs, is considered a possible Republican presidential candidate for 2016.

    Republicans have been on a quest to try to kill Obama's 2010 healthcare law, which is due to begin being implemented in October. They argue that it will burden businesses with higher costs and hurt job creation.

    Several Republicans who are potential 2016 presidential rivals to Ryan back the shutdown threat, including Texas Senator Ted Cruz, Florida Senator Marco Rubio and Kentucky Senator Rand Paul. But other Republicans view the strategy as reckless and say it's bound to fail.

    Ryan said trying to use the annual spending bills as leverage on Obamacare wouldn't work because it is an entitlement program and most of the money for it is not subject to the annual appropriations process.

    Even if Republicans were to succeed in withholding so-called "discretionary" spending for Obamacare, the law would live on, Ryan said.

    "Rather than sort of swinging for the fences and trying to take this entire law out with discretionary spending, I think there are more effective ways of achieving that goal. We think that we can do better by delaying this law," he said.

    (Reporting by Caren Bohan; Editing by Eric Beech)

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    Jonathan Chait takes a look at the Republican Party's "insane Obamacare boycott," in which the party refuses to cooperate at all in the implementation of the law in hopes of demonstrating that it is doomed to failure. He says (emphasis mine):

    The party remains fully committed, without dissent, to a full-on boycott of any measures to help the law function in any way... The Republicans’ Obamacare boycott will increasingly render the party useless for an expanding list of constituencies. Yet the Obamacare boycott remains a policy of universal agreement within the party.

    This isn't true. Well, maybe it's true in Congress.

    But the Republican Party has high-profile dissenters from the obstruction-only consensus: Nine Republican governors who are working to implement the Medicaid expansion. This is the provision that offers Medicaid to everyone making up to 133% of the federal poverty line, accounting for about half the expansion of insurance coverage in Obamacare.

    Some Republican governors who back the expansion, like Chris Christie (N.J.) and Susana Martinez (N.M.), are working with Democratic state legislatures that are eager to participate. And Rick Scott (Fla.) has been unsuccessful in getting the expansion through his Republican-held legislature.

    But as many as four totally Republican-held states may end up cooperating with the President. Two governors, Jack Dalrymple (N.D.) and Jan Brewer (Ariz.), have already managed to twist arms and get Republican-led legislatures to pass the expansion. And two more, John Kasich (Ohio) and Rick Snyder (Mich.), are still trying.

    Their reason is easy to understand: The federal government pays for the entire expansion in its first few years, and then 90% of it from 2017 onward. Turning down the expansion means turning down nearly free money the federal government wants to send to your state. It's a high price to pay to spite the president and pander to the conservative base.

    Refusing to take the expansion is also likely to cause hospital closures. That's because Obamacare cuts payments to hospitals that compensate them for treating the uninsured, on the grounds that many of the current uninsured are supposed to end up on Medicaid. That's a political disaster waiting to happen in 2014 and 2015 for Republicans who won't take the expansion.

    Chait's right to call out the unsustainability of the Republican strategy to obstruct Obamacare at every turn. But the Republican "consensus" on it isn't just set to crack under industry-group pressure; at the state level, it's already falling apart.

    SEE ALSO: Why Medicaid-Expanding Arizona Governor Jan Brewer Is The Most Interesting Politician In America

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    Chris Christie

    If Gov. Chris Christie (R-N.J.) wants to win the presidency in 2016, he needs to look conservative enough to be the Republican nominee and moderate enough to be president.

    He's successfully executing one part of a strategy to do this: Convincing liberal commentators that he's an unreconstructed conservative given too much credit for moderation. When he draws their fire, he convinces conservatives that he's one of them.

    For example, in the New York Magazine cover story on Christie this week, Benjamin Wallace-Wells wrote that Christie holds "conventionally conservative positions on many issues," such as being "opposed to government programs for the poor."

    That sort of description helps Christie's standing with conservatives, but it's not accurate. Christie actually takes quite a generous view on programs for the poor. Check out these passages from Christie's February budget proposal (emphasis added):

    The Christie Administration has demonstrated its commitment to providing subsidized health coverage for uninsured children by maintaining the income eligibility level for children's coverage at 350% of the federal poverty level—the second highest coverage level in the country...

    Governor Christie is taking action to expand health care coverage for New Jersey’s most vulnerable citizens through Medicaid. New Jersey already has one of the most expansive and generous Medicaid programs in the nation, including the second highest eligibility rate for children. Expanding Medicaid will mean that more New Jerseyans at or near the poverty line will have access to critical health services, while saving New Jersey taxpayers approximately $227 million in fiscal year 2014 alone.

    The Medicaid expansion is particularly key here. Christie is the most prominent Republican politician who is bucking the party on the issue. But a lot of commentators (e.g. Jonathan Chait) have been under the misimpression that he's rejecting the expansion.

    That's probably because they saw headlines like this Reuters one from June: "New Jersey's Christie Vetoes Medicaid Expansion Bill."

    Here's what happened. Christie included the Medicaid expansion in his 2013-14 budget, which passed. Then the Democratic-controlled legislature passed another bill to make the expansion permanent.

    Christie opposes this. He wants to reauthorize the expansion annually in the state budget, thus reserving the option to stop participating if the federal government cuts its financial support of the program. So he vetoed the bill. But the important move on Medicaid expansion stands — its authorization for the next year in the state budget.

    This is a classic, Christie-era New Jersey kabuki move. Christie and the Democrats who lead the legislature are actually moderates who agree on a lot. Christie is willing to work with them to finance generous government programs, and they are willing to work with him to cut the cost of public employee benefits. But to placate their bases, they have to find issues to scream at each other about.

    Hence the permanent Medicaid bill, which allowed Democrats to say they were standing up to Christie to fight for the health care law and allowed Christie to veto an Obamacare bill. But it did not actually affect the policy that both sides agreed on: New Jersey will take the Medicaid expansion.

    Unlike Mitt Romney, he's found a way to sell himself to the right without actually moving to the right.

    If someone actually picks up his budget books, Christie will be outed as a moderate. So far, his bluster is speaking more loudly than his record.

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    cadillac vsportUnder Obamacare, the government won’t start taxing employers who offer so-called “Cadillac” health benefits to their workers for another five years, but companies are already starting to cut back on such plans.

    “Employers can’t wait until 2018 and make one huge change to their plans,” says Tracy Watts, a senior partner with Mercer. “They’re already starting making changes now, so that in 2018 it won’t be as hard for employees.”

    Under the Affordable Care Act, companies will have to pay an excise tax on plans that cost more than $10,200 for an individual or $27,500 for a family. The employer will have to pay a 40 percent tax on the cost each plan above those levels. (There will be higher thresholds for retiree health plans and for high-risk professions, though the details of those have yet to be announced.) 

    Many people would be surprised to learn that their current plan would be considered a “Cadillac” plan under Obamacare rules.

    “Most of us pay high premiums, and don’t feel like we have a high-cost policy,” says Cynthia Weidner, vice president of health and welfare and consulting at HighRoads. “Everyone thinks, ‘I don’t have a Cadillac plan, my coverage stinks.’”


    Actually, even the average health plan costs more than the Cadillac thresholds mandated by Obamacare - about $10,522 per employee, according to the Society for Human Resource Management. (The law includes premiums paid by both the employer and the employee.) At that price, employers would pay a 40 percent tax on the $322 difference—about $130. For a company with 10,000 employees, that equates to a $1,300,000 tax bill.

    However, it’s not just large companies that are worrying about the excise tax. “It’s an issue for every single employer, particularly for state and local governments,” says J.D. Piro, senior vice president of Aon Hewitt’s health and benefits legal team. “Governments tend to offer more expensive health benefits than private businesses, and workers often accept lower wages in exchange for those benefits.” (For this reason, unions strongly objected to this provision in the law before it was passed.)

    Making it more difficult for employers, some of the minimum requirements of health plans under Obamacare are driving up the cost of plans, just as employers are looking for ways to push costs down. All plans, for example, must now fully cover all preventative care treatments, maternity care, and emergency care.

    A Mercer study conducted last year found that 42 percent of employers said that if they made no changes to the plan, they’d be hit by the excise tax in 2018. Mercer projects that it will hit 55 percent of employers by 2022.  The survey found that 59 percent of employers would take steps to lower the cost of their plan, with 26 percent saying they'll do whatever is necessary to lower costs below the threshold amount.


    Critics of the Cadillac component of Obamacare claim that tying the tax merely to the total cost of the plan unfairly puts the burden on smaller companies and those with older, sicker work forces, because they may pay more money for coverage that’s not as generous as that of bigger firms with better bargaining power with the insurers. “Because the tax is triggered by high premiums, the tax will hit many workers with ordinary, not exceptionally generous health plans,” Elise Gould wrote in a May paper for the Economic Policy Institute.

    The “Cadillac” thresholds are indexed to inflation, but health care costs have historically increased at a faster pace than inflation, so it will hit an increasing number of employers each year. The intent of the tax is to force consumers with the best health plans to have to pay more costs out of pocket, which, in theory, would force them to make more cost-conscious decisions when it comes to expensive tests and frequent doctor’s visits.

    Already, companies are increasing the share of costs shouldered by employees by raising deductibles on the plans that they offer. From 2008-2011, the average employee’s deductible increased 17 percent from 2008-2011, but last year alone the deductible went up 13 percent.

    In addition to higher deductibles, employers are raising copays and reducing prescription drug coverage as much as possible while still meeting the ACA mandates. They’re also offering new, lower-cost plans to employees and increasing the employee-cost of their most comprehensive plans. Employers are hoping this will drive more consumers into the lower-priced plans and allow them to eventually drop the highest-priced plans, Watts says.

    Looking beyond health insurance plans themselves, employers are increasingly turning to wellness programs as a means of cutting their healthcare costs, Piro says. So expect to see even more benefits like gym reimbursement, smoking cessation initiatives, and disease management programs.

    Another option that more employers are considering is moving toward a defined-benefit health plan, in which they give their employees a set amount of cash (below the Cadillac threshold), and allow them to choose and purchase insurance for themselves via private exchanges. The upshot of such benefits is that employees can design and select their own plan options, but the overall value of their plans will still likely be less than their benefits they currently enjoy.

    “It’s ironic because the point of the Affordable Care Act was to expand coverage to the 30 million people who don’t have it,” Watts says. “But a byproduct of that is that the employer-sponsored plans just aren’t going to be as good as they once were.

    More from the Fiscal Times:

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    John Boehner

    The political and finance worlds are abuzz with "September angst." And in Washington, the angst is looking like it will be pushed back — but it could be much more daunting than originally thought.

    That's because House Republicans and aides are signaling — according to The Washington Examiner's Conn Carroll and National Review's Robert Costa — that they will shift focus from using a potential government shutdown as leverage to negotiations over the debt ceiling. 

    Here's the gist, via Costa:

    Sources tell me the House GOP will probably avoid using a shutdown as leverage and instead use the debt limit and sequester fights as areas for potential legislative trades. Negotiations over increasing the debt limit have frequently been used to wring concessions out of the administration, so there may be movement in that direction: Delay Obamacare in exchange for an increased debt limit.

    Under this scenario, the GOP would pass a 60-day continuing resolution that keeps the government funded at existing levels under sequestration through the end of November — right around the time the debt ceiling will need to be raised. Then, House leadership would use Democrats' wishes to get rid of sequestration levels to extract concessions. 

    It's unclear, exactly, where the Affordable Care Act would fit into this. Republicans could plausibly tie in delays in certain parts of the law — which they still believe is the best strategy at eventually toppling the law altogether — to certain roll-backs in sequestration-level funding, or to some kind of hike in the debt ceiling. 

    As The Washington Post's Greg Sargent points out, this represents a very strategic risk for House Speaker John Boehner. 

    After the fiscal cliff deal in January, Boehner said in an interview with the Wall Street Journal that he did not view the debt ceiling as the "ultimate leverage" in budget talks with Obama.

    He said that the sequester cuts would be better leverage, and his gamble paid off big time. Republicans raised the debt ceiling last time, the sequester kicked in, and, so far, the doom and gloom predicted by the Obama administration hasn't been felt in large part.

    Going back to making the debt ceiling a focal point represents a risk. The 2011 fight pummeled the Republican image, and it led to a downgrade in the nation's credit rating.

    Sargent also points out that the negotiations on Obamacare would have to come after enrollment in insurance exchanges begins on Oct. 1. In essence, Republicans would be demanding a delay in Obamacare implementation as it is being implemented, in exchange for not letting the country default on its obligations.

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    John Boehner Eric Cantor

    Reuters is reporting Thursday on a strategy that appears to be picking up steam within the Republican Party — moving on from threatening a potential government shutdown to using the debt ceiling as leverage to force action on the Affordable Care Act. 

    There's not a lot new here from what GOP aides were discussing last week. But Reuters does report that an aide to House Majority Leader Eric Cantor said the debt limit could be a "good leverage point" on Obamacare — the most candid on-the-record admission that the strategy is being discussed in a proposal to appeal to the more conservative members of the party that want Obamacare defunded.

    According to discussions with aides last week, the GOP could pass a 60-day continuing resolution that keeps the government funded at existing levels under sequestration through the end of November — right around the time the debt ceiling will need to be raised. Then, House leadership would use Democrats' wishes to get rid of sequestration levels to extract concessions. 

    But it is unclear right now where the Affordable Care Act would fit into this. Republicans could plausibly tie in delays in certain parts of the law — which they still believe is the best strategy at eventually toppling the law altogether — to certain roll-backs in sequestration-level funding, or to some kind of hike in the debt ceiling. 

    Some, like The Washington Post's Ezra Klein, are already freaking out about this possibility, comparing the trade of a government shutdown fight for one over the debt ceiling to "trading the flu for septic shock." The possible breach of the debt ceiling — and a default on obligations — would be more catastrophic than a government shutdown, which would have real effects but would mostly come as an inconvenience.

    It also represents a very strategic risk for House Speaker John Boehner. 

    After the fiscal cliff deal in January, Boehner said in an interview with the Wall Street Journal that he did not view the debt ceiling as the "ultimate leverage" in budget talks with Obama in the near-term.

    He said that the sequester cuts would be better leverage, and his gamble paid off. Republicans raised the debt ceiling without issue. Meanwhile, the sequester cuts began kicking in. And, so far, the doom and gloom predicted by the Obama administration hasn't been felt, in large part.

    Going back to making the debt ceiling a focal point represents a risk. The 2011 fight pummeled the Republican image, and it led to a downgrade in the nation's credit rating.

    It's also worth pointing out the negotiations on Obamacare would have to come after enrollment in insurance exchanges begins on Oct. 1. In essence, Republicans would be demanding a delay in Obamacare implementation as it is being implemented, in exchange for not letting the country default on its obligations.

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    After a decade of rapid increases, employer-provided health care costs are still rising faster than our paychecks can keep up.

    According to a new report from the Kaiser Family Foundation, the average annual premium for families and individuals increased to $16,351 and $5,884, respectively, in 2013. Both costs have risen more than twice as fast as wage growth (1.8%) and four times as fast as inflation (1.1%).

    The big picture is even tougher to digest. 

    Health premiums shot up more than 80% over the last decade, the report shows, for both employers and employees. Businesses have seen their costs rise 80% since 2003, while their employees now pay 89% more for health care.  

    On top of that, today more than one-third of workers are enrolled in health plans that come with at least a $1,000 deductible, meaning they are out a thousand bucks before their insurance even kicks in, Kaiser found.

    There's at least one positive side to the report, however. The rate of health care cost growth seemed to stagnate this year, which should help assuage some fears over whether the introduction of the Affordable Care Act (Obamacare) would mean higher premiums across the board. 

    “We are in a prolonged period of moderation in premiums, which should create some breathing room for the private sector to try to reduce costs without cutting back benefits for workers,” Kaiser President and CEO Drew Altman, Ph.D., said in statement. 

    But it's not fair to credit Obamacare entirely for the slowdown in health care costs. 

    "Economists argue that the lackluster economic recovery is leading Americans to seek out less health care services and point to the trend of employers keeping premiums lower by shifting costs into higher deductibles and co-pays," writes Think Progress' Igor Volsky. "But certain structural changes in the health care system may also be at play, including the 'less rapid development of new medical care treatments,' greater reliance on generic drugs and more efficient provider practices." 

    Also helping matters, the majority of businesses are stepping in to make their workers healthier as a whole. More than three-quarters of employers offer at least one wellness program and nearly 60% offer at least one disease management program, Kaiser found. 

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    united parcel service ups

    UPS has decided, as a result of increased costs and provisions of the Affordable Care Act (ACA), to stop covering employee's spouses who can get coverage from their own employer, according to a memo obtained by Kaiser Health News

    Some effects of Obamacare are already being felt, like having to provide insurance for employee's children under the age of 26. Costs are going to increase starting in 2014, as companies have to pay fees to fund research on medical intervention effectiveness and cover those employees who currently opt out of insurance.

    UPS makes the cut in the fact of health care costs that rose $49 million in the first half of fiscal 2013 alone, which it attributes largely to the ACA, according to the Wall Street Journal.

    This move will likely be particularly unpopular as it can be difficult and costly for married couples to have separate insurance. Many other employers allow spousal coverage for a fee, which UPS considered, but chose not to allow.

    A full 250,000 of the company's 322,000-strong American workforce is unionized, and will still be able to insure their spouses under their union contracts. Only about 15,000 spouses will be affected, leading to saving of around $60 million, according to a company spokesman. 

    Pretty much every large employer is going to be combing through their health care expenses to figure out what more they might cut.

    When UPS looked at other companies' health coverage plans while trying to make its decision, it found that 35% of them plan a similar move next year.

    Below is a portion of the company's memo which explains the policy change. The full memo is available here.

    Screen Shot 2013 08 22 at 6.59.45 PM

    Screen Shot 2013 08 22 at 7.00.15 PM 


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    Barack Obama CNN

    President Barack Obama said in an interview aired Friday that some Republican lawmakers will not speak out against shutting down the government because they are afraid of how conservative radio host Rush Limbaugh will talk about them on the air. 

    Obama lumped in Limbaugh with other common Republican sentiments, such as fear of a primary challenge from a more conservative opponent.

    Some Republican congressmen, led prominently by Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah), have urged fellow party members to get behind a plan to not fund any continuing-resolution bill that funds the Affordable Care Act. 

    "Nobody thinks that's good for the middle class," Obama told CNN's Chris Cuomo in an interview. "So the question is ultimately, if you are putting the American people first, if you are prioritizing them, then this shouldn't be that difficult.

    "And I've made this argument to my Republican friends privately. And, by the way, sometimes they say to me privately, 'I agree with you, but I'm worried about a primary from, you know, somebody in the Tea Party back in my district,' or, 'I'm worried about what Rush Limbaugh is going to say about me on the radio. And so you got to understand, I'm — it's really difficult.'"

    "Well, you know what? I can't force these folks to do what's right for the American people, because they're independently elected, it's a separate branch of government, and I don't have a vote in Congress. But what I sure as heck can do is stay focused on what I know will be good for the American people."

    Obama has publicly expressed this sentiment before. In the aftermath of the fiscal cliff deal in January, he slammed Limbaugh and Fox News for being what he saw as a major source of partisan gridlock in Washington. 

    Here's the clip:


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    Hospital waiting roomIn the UPS memo explaining why the company was ending health-care coverage for working employee spouses was a finding, based on "market data," that 35% of the companies it examined will join them in the practice next year.

    We know such moves are becoming more popular, but according to a 2012 Mercer survey cited by The Wall Street Journal, only 6% of companies with more than 500 employees exclude spouses who could get coverage elsewhere.

    The UPS figures may overstate things. A Towers Watson survey found that about 12% of companies will exclude working spouses next year. Still, as 2014 approaches, it looks like there are going to be significantly more spouses and families who will be forced to change up their health insurance. 

    The motivation for companies is clear, as they'll face initially higher costs starting next year. Many already impose a fee or surcharge for working spouses who choose to use their plans, but taking away coverage altogether is a bigger cost saver. 

    It's still going to make a lot of those affected extremely angry. At first glance, this sounds innocuous; all of these spouses are eligible to be covered by their own employer, so no big deal.

    In reality, it can be difficult and often expensive for married couples to have separate health-insurance plans. It means having to deal with two different insurers and two different sets of paperwork, potentially having to use different medical providers, and a host of other difficulties. 

    And since dual-earning couples who prefer the simplicity of one plan tend to go with whichever employer offers better or less expensive coverage, these sorts of moves may force some couples to pick a less appealing plan just because it covers both of them.

    That's a benefit for employers who take this step. They get to stop covering both the employee and their spouse if they switch. 

    Relatively few employers have taken this step, but the highly publicized move by an employer as large as UPS could well convince more of them to do so.

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  • 08/26/13--18:37: Will Obamacare Destroy Jobs?
  • Barack Obama first termHealth reform may make Americans work less

    BEFORE the recession, Richard Clark’s cleaning company in Florida had 200 employees, about half of them working full time. These days it has about 150, with 80% part-time. The downturn explains some of this. But Mr Clark also blames Barack Obama’s health reform. When it comes into effect in January 2015, Obamacare will require firms with 50 or more full-time employees to offer them affordable health insurance or pay a fine of $2,000-3,000 per worker. That alarms firms that do not already offer coverage. But for many, there is a way round the law.

    Mr Clark says he is "very careful with the threshold". To keep his full-time workforce below the magic number of 50, he is relying more on part-timers. He is not alone. More than one in ten firms surveyed by Mercer, a consultancy--and one in five retail and hospitality companies--say they will cut workers’ hours because of Obamacare. A hundred part-timers can flip as many burgers as 50 full-timers, and the former will soon be much cheaper.

    Opinions are furiously divided as to whether the unintended harm caused by health reform will outweigh its benefits. Republicans, who have always hated the whole package, howl that it will destroy jobs. Nonsense, say Democrats; it will promote growth and boost employment. Since the law has so many moving parts, it is hard to predict who is right. But there is a risk that a lot of workers will be hurt.

    American health insurance and employment are uniquely entangled. During the second world war, firms began using health insurance to woo scarce workers. Some 57% of employers now offer it, covering nearly 150m people. Company-provided insurance is not taxed, and workers like it because the alternative is abysmal. On the individual market, insurers charge the sick exorbitant rates.

    All this has had strange effects on the labour market. Workers stay in bad jobs for fear of losing insurance. As the cost of insurance rises, employers lower wages. Health costs seem to depress hiring, too. A study found that from 1987 to 2005, industries that offered health insurance saw jobs grow more slowly than those that did not. No such pattern was seen in those industries in Canada, where people receive health insurance from the government.

    Land of confusion

    Into this jumble comes Obamacare. From January next year insurers will no longer be allowed to charge the sick higher rates. If only the sick were to seek coverage, costs would explode, so the law requires everyone to be insured or pay a fine. To make this easier for those not already covered, Obamacare will create online shopping places for health insurance, called exchanges. People who cannot afford coverage will receive generous subsidies.

    Mr Obama has said that workers who like their company-provided insurance will be able to keep it. This is like promising that if you like sunshine, it won’t rain. Actually, it is even more misleading. When he shakes up the health-care market, employers will have no choice but to respond.

    Last month Mr Obama delayed the employer mandate by a year, to give firms more time to comply. For the moment, large firms that already cover workers are unlikely to stop doing so, predicts Mercer. But coverage is changing nonetheless. Many firms are making workers pay more of their health bills. Obamacare includes a tax on generous health plans, starting in 2018, which is making some employers reconsider lush benefits. Unions, which fought for them, are livid. At the other extreme, some low-paid workers may want their employers to drop insurance, so they can receive subsidies on the exchanges.

    More worrying, though, is the possibility that Obamacare may kill jobs. In 2010 the Congressional Budget Office (CBO) projected that it would shrink employment by 0.5%. The law’s many provisions would pull in opposite directions. Some would raise employment, the CBO predicted. For example, by expanding Medicaid (health care for the poor) to those with higher incomes, Obamacare would remove a disincentive to work. People who might have turned down extra work for fear of losing their Medicaid would now take it, ran the argument.

    Other provisions would reduce employment. Partly, this would be because employers like Mr Clark will cut jobs and hours to avoid being subject to the law. (Unions publicly fret about the threat to the 40-hour week.) But mostly, the CBO thinks it would be because people will choose to work less. Obamacare’s subsidies will boost the finances of poor workers; they may therefore work fewer hours. After examining employment and subsidised insurance in Tennessee, Craig Garthwaite of Northwestern University and his colleagues estimate that Obamacare’s subsidies will prompt up to 940,000 workers to leave the labour force. Many will be older people, keen to retire early.

    Another concern is that Obamacare will lower wages. For example, if firms that do not now offer insurance comply with the mandate, their costs will jump. Nearly 60% of such firms say they will offer coverage, according to Mercer. As health costs rise, they may pay their staff less. A study in Massachusetts found that, roughly speaking, every extra dollar spent on insurance comes out of wages.

    The White House, however, points to various ways in which Obamacare might boost employment. By making it easier for individuals to buy health insurance, it should make it less frightening for them to switch jobs or start their own companies. Democrats claim the law will lower health costs for firms. Tax credits for small businesses will make it cheaper for them to offer health insurance. Measures to reward efficient health care will reduce the cost of treatment. If insurance becomes cheaper, firms will have more money to hire workers and raise wages. In 2010 David Cutler of Harvard University estimated that Obamacare’s cost-control measures would create up to 400,000 jobs each year.

    However, Casey Mulligan of the University of Chicago contends that Obamacare’s distortions to the labour market will outweigh any growth from lowering health costs. By adding his estimates to those of Mr Cutler, Mr Mulligan predicts that Americans will work 3% less in 2015 than they otherwise would have.

    Interestingly, the number of jobs in sectors most affected by Obamacare, such as retail, leisure and hospitality, have grown relatively quickly, notes Alec Phillips of Goldman Sachs. But the hours worked in such industries have grown more slowly, suggesting a reluctance to add more full-time jobs (see chart).

    When the final diagnosis is done, Obamacare may have nasty side-effects.

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    (Reuters) - Aetna Inc has decided not to sell insurance on New York's individual health insurance exchange, which is being created under President Barack Obama's healthcare reform law, the fifth state where it has reversed course in recent weeks.

    The third-largest U.S. health insurer has said it is seeking to limit its exposure to the risks of providing health plans to America's uninsured, but did not give details about its decision to pull out of specific markets.

    "We believe it is critical that our plans not only be competitive, but also financially viable, in order to meet the long-term needs of the exchanges in which we choose to participate. On New York, as a result of our analysis, we reluctantly came to the conclusion to withdraw," Aetna spokeswoman Cynthia Michener said.

    The New York decision comes as states finalize the roster of health plans that will be offered to millions of uninsured Americans beginning on October 1.

    Aetna and its newly acquired Coventry Health unit, a low-cost provider that caters to individuals and Medicaid beneficiaries and provides private Medicare policies, still have applications to sell coverage in 10 states, based on publicly available information.

    Michener said the full list of state exchanges where Aetna will participate is still being finalized.

    The new online insurance exchanges are the lynchpin of Obama's healthcare reform, representing a massive technology build-out that has run up against multiple delays and political opposition in many states. In their first year, the exchanges aim to provide coverage to 7 million uninsured Americans, many of whom will be eligible for government subsidies.

    Aetna's large competitors, such as UnitedHealth Group Inc and WellPoint Inc, have also planned limited entries into the new exchanges while they wait and see whether they operate smoothly and whether enough healthy people sign on to offset the costs of sicker new members.

    "We've got this period where the exchange experience, the exchange sentiment, and news headlines are probably not going to be very flattering and that's not going to have a positive impact on turnout," said Jefferies & Co analyst David Windley.

    "Longer-term, those kinks will get ironed out, more people will get comfortable and in (the next few years) more people will be accessing their health insurance through an exchange of some sort," he said.


    Aetna signaled last month that it was considering withdrawing some applications because of its purchase of Coventry, which also had filed documents to sell insurance plans on exchanges around the country.

    "We have taken a prudent risk-based approach to both our overall exposure and exposure within a given marketplace," Chief Executive Officer Mark Bertolini said on a conference call with analysts at the time.

    Since then, it has withdrawn applications in Maryland, Ohio, Georgia, and Connecticut, where it is based. In Maryland, Aetna's decision came after state regulators ordered the company to lower rates dramatically from what it had proposed.

    Aetna also has filed applications in Florida, Arizona and Virginia, where the federal government will operate the exchanges, and in Washington, D.C., which is running its own exchange.

    Coventry filed applications to sell insurance in Florida, Iowa, Kansas, Louisiana, Nebraska, North Carolina, Ohio and Virginia, according to those states' insurance departments. Iowa is working with the government on its exchanges while the rest are being run entirely by the federal government.

    Coventry withdrew its applications in Georgia and Maryland when Aetna bowed out but it remains in Ohio. It also withdrew earlier this month from Tennessee.

    Aetna and Coventry may also have filed plans in other states that have not released any information about participants.

    Insurance plans in the 33 states that have defaulted to the federal government exchanges must be approved by the Department of Health and Human Services (HHS), and then insurers sign off on them. Earlier this week, HHS delayed the sign-off deadline to mid-September after originally aiming for early next month.

    Michener said the company will continue to serve small business and large business customers in New York and will offer products to individual consumers outside of the exchanges.

    Only 17,000 or so people in New York currently buy individual insurance, but the exchange is expected to bring in 1 million people during the first three years. The exchange announced insurance participants on August 20. Aetna was not on the list.

    (Reporting by Caroline Humer; Editing by Michele Gershberg and Eric Walsh)

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    WorryWith a month left to go before the new health care exchanges roll out, many consumers still feel confused about what to expect.   

    Nearly 70% of consumers told that they don't feel that they have enough information to figure out how the new marketplaces will affect their own personal finances. 

    No surprise there. Until the marketplaces open up and get a chance to work, it's difficult to estimate how much consumers can expect to pay for coverage. In the meantime, a lot of misinformation has been spread about what exactly the new health care exchange will mean for consumers. 

    Here are two of the biggest misconceptions about the new exchanges: 

    Myth 1: "I have to shop for health insurance using the new marketplace even if I have a job with benefits."

    This is a common misconception regarding the ACA. The vast majority of Americans already have affordable health insurance through their employer, meaning they won't have to hit up the ACA marketplace at all. If that includes you, all you have to go do is opt into your employer's coverage if you haven't already. If you are enrolled, keep doing what you're doing. 

    Myth 2: "If I have to sign up for insurance in the marketplace, I'll pay full price."

    There are some 48 million uninsured Americans in the U.S. who will be required either to pick up an insurance plan under the ACA or enroll in Medicaid. The good news is that the odds that you'll pay sticker price for a policy are quite slim.

    Nearly 40% of uninsured consumers will qualify for federal subsidies, which will significantly reduce the price of premiums. And thanks to the Medicaid expansion, the rest of the uninsured may qualify for those benefits (see if your state is implementing the Medicaid expansion). The Medicaid expansion makes all individuals earning less than $15,900 and families of four earning less than $32,500 eligible. And it gets better.

    For new Medicaid enrollees, the government is picking up the entire cost of enrollment for the first three years. 

    The KFF has put together an excellent subsidy calculator online, which you can use to estimate how much you can expect to pay after federal subsidies are factored in. You'll be able to apply for these subsidies directly through the health care marketplaces after they open in October.

    Try it out below: 

    Still have burning questions about the Affordable Care Act? Drop me a line at or sound off in the comments below.

    SEE ALSO: Here's what happens if you don't sign up for Obamacare

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    NOTE: This post was originally published on Friday, September 6.

    Tom Perez got the job as Secretary of Labor just two days ago. All smiles with the Veep for the affair.

    After the payroll numbers this morning Perez goes on CNBC and talks about how great things are, and what a good job Obama is doing. But 6:15 into the clipthe point is made that last month the average work week fell to the lowest level in six months. Perez is asked if Obamacare is forcing companies to cut worker’s hours to 29/week. Perez fired back with an unequivocal, pre-planned response:

    "There is no correlation at all"


    The response by Perez runs counter to what I have read; it also runs counter to my own inquires. In my small town there is a decent sized regional grocer. I’ve made a point of asking the ladies who ring things up how many hours they work. The answer is that in this store the policy is that all ‘front end’ personnel are restricted to 29 hours (the food preparers are not subject these rules).  One person told me, “they said it was because of the government insurance”.

    My anecdotal information does not stand up against Mr. Perez’s  claim of no correlation. However, the following articles/clips do stand up. The NBC bit is pretty much a slap in the face for Mr. Perez and his boasts. Either all of these news outlets are making stuff up, or Perez is blowing smoke.

    NBC – Obamacare Causing Workers Hours to be Cut to 29 Hours All Across the Country

    CNBC – Businesses claim Obamacare has forced them to cut employee hours

    WSJ – ObamaCare’s Definition of a Full-Time Job Needs Revising

    NY Daily News - Companies cut part-time worker hours to avoid Obamacare requirement

    Fox - ObamaCare pushing Americans into part-time work, critics say

    Forbes – Who Can Deny It? Obamacare Is Accelerating U.S. Towards A Part-Time Nation

    The Hill - Cruz: ObamaCare is ‘forcing’ employers to cut workers’ hours

    Zero Hedge – The “Obamacare Part-Time Jobs” Effect Goes Mainstream

    Obamacare is a huge deal. It will have significant consequences on the economy. It’s very important that those consequences are understood, and, if necessary, changes have to be made to minimize the negative consequences. I understand that Perez has to walk and talk the party line as payoff for the new corner office. That’s just the way of things in D.C. But Perez crossed the credibility line on his second day at the job.

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