Broken Promises

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA Repeal >> Broken Promises (last updated 9.10.16)

Overview

Broken promises matter both from the standpoint of accountability and because the outcome might have been different if more accurate information had been available. For example, Medicare’s costs in its first 43 years ($1.4 trillion, 2005 dollars) turned out to be more than 10 times the original official estimate of  $129 billion ($3 billion annually (2005 dollars) x 43). Health policy experts David Blumenthal and James Morone concluded that “an accurate economic forecast might have sunk Medicare.” The same may well be true for the ACA.

Promises About Process

Transparent Health Reform Negotiations Broadcast on C-SPAN    

Wait 5 Days Before Signing Non-Emergency Bills    

Obama’s promise: He promised to wait five days before signing all non-emergency bills.
Reality:  This promise had been broken at least 10 times during his first three months in office; it was broken again in the case of the Affordable Care Act, which passed the House on March 21, 2010 and was signed into law on March 23, 2010.

No 50-Plus-One Strategy

Obama’s promise:  The president repeatedly promised a new bipartisanship, saying in October 2007  “we’re not going to pass universal health care with a 50-plus-one strategy.”
Reality: The ACA was enacted without a single Republican vote in the House or Senate. Apart from breaking candidate Obama’s promise, this was an unprecedented act in modern history in that no major piece of domestic policy legislation has been enacted without at least some (usually considerable) bipartisan support:

A related issue concerned the unprecedented process by which the law was engineered through Congress (this would have been avoided entirely were there bipartisan support). While ACA proponents note that reconciliation had been used in the past to enact major legislation (1996 welfare reform, 2001 and 2003 tax cuts) and even major health legislation (1997 Childrens Health Insurance Program, 1997 Medicare Advantage program, 1986 COBRA requirements) they also concede that “throughout 2009, Democratic leaders in Congress stated their preference for moving health reform legislation through the normal legislative process without using reconciliation.” Even though the reconciliation process had the political advantage of avoiding the need for a cloture vote to end a Senate filibuster, it also had 2 important downsides:

Yet ultimately, Congress for all practical purposes relied on the filibuster-proof reconciliation process to enact the ACA even though the entire bill could never have been passed through reconciliation using established procedures. Purists would argue that Congress did not violate any technical rules in passing the law whereas opponents would argue the procedure violated their spirit:

Promises About Substance

Universal Coverage

Obama’s promise: “I will sign a universal health care bill into law by the end of my first term as president that will cover every American” (June 23, 2007). An April 30, 2012 Obama re-election campaign commercial predicted that by 2016, 32 million more Americans will have health care coverage (2:40).
Reality: Politifact.com views this as a campaign promise kept since President Obama signed into law a plan that included an individual mandate with few exemptions. However, the Affordable Care Act will not deliver universal coverage. According to the latest CBO projections (March 2015), when fully implemented, the ACA will cover fewer than half of the nation’s uninsured (25 million (49%), leaving 26 million uninsured in 2023 (Table 2). In 2016, 23 million are expected to be covered–28% fewer than promised in the 2012 campaign.

No Taxes on Middle Class Families

Obama’s promise: “I can make a firm pledge under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes” (September 12, 2008).
Reality: By 2022, Obamacare will have imposed just over $1 trillion in new taxes. $318 billion of this will come in the form of taxes on payroll, dividends, capital gains, and other investment income specifically targeting taxpayers earning over $200,000 (singles) or $250,000 (married).
The remaining taxes will affect both middle-class and low-income families (figures in parentheses are House Ways and Means Committee revenue estimates for the period 2013-2022):

  • Cadillac Tax. The Cadillac tax on high-cost health plans ($111 billion) will tend to hit higher-than-average income workers (but certainly won’t be restricted to those above $200,000 in income). However, the threshold for determining which plans are taxed is indexed to general inflation rather than medical inflation. Consequently, Bradley Herring, a health economist at Johns Hopkins Bloomberg School of Public Health, estimates that as many as 75 percent of plans could be affected by the tax just in the next decade. See Excise Tax on Comprehensive Health Insurance Plans (Cadillac Tax).
  • Employer Mandate Penalties. ACA’s employer mandate penalties ($106 billion) will unquestionably affect the lowest-income workers, since they are the ones least likely to be covered through employer health plans.
  • Health Industry Taxes. Similarly, taxes levied on health insurers ($101.7 billion), drug manufacturers ($34.2 billion), and medical device manufacturers ($29.1 billion) nominally are levied on big corporations. But in keeping with the views of most economists, Congressional Budget Office, in November 2009 projected that these ultimately will be passed along to consumers in the form of premium increases or higher out-of-pocket spending.
  • Health Insurance Tax. Oliver Wyman, a well-known international consulting firm, has estimated the health-insurers tax alone is expected to increase premiums for single coverage by a minimum of $2,150 over the next 10 years while boosting family premiums by $5,080 during the same period.
  • Medicare Advantage Payment Reductions. Because of payment reductions Older people on Medicare Advantage plans, who tend to have lower-than-average incomes, will see premiums go up by $3,590 over 10 years according to the Oliver Wyman calculations.
  • Individual Mandate Penalties. The individual mandate ($55 billion)—which technically was not viewed by Congress as a tax, but was declared a tax by Chief Justice John Roberts in June 2012—will definitely hit households across the income spectrum. Likewise, the new limits on Flexible Spending Accounts ($24 billion) and the higher threshold for deducting medical expenses from one’s income tax ($18.7 billion) will hit average income families, not just those with high incomes.

All told, 70 percent of the tax burden imposed under the ACA will borne by a broad range of households, not just those with high incomes.

MedicareTaxes

 

Enable the Government to Directly Negotiate Drug Prices

Obama’s promise: “If a drug company — if the drug companies or a member of Congress who’s carrying water for the drug companies wants to argue that we should not negotiate for the cheapest available price on drugs, then I want them to make that argument in front of the American people” (January 31, 2008 Democratic primary campaign debate). “We’ll negotiate with the drug companies for the cheapest available price on drugs” (October 15, 2008 campaign debate with John McCain).
RealityAccording to CBS News: “It turns out, however, Mr. Obama reneged on this promise in a secretive way. In July the president praised the drug industry for its agreement to reduce its revenues by $80 billion over 10 years by discounting the cost of medicines for some seniors. After Congress sought to extract further funds from the pharmaceutical industry, however, it was revealed that the White House made some previously undisclosed deals to get the industry to stay at the negotiating table. ‘The White House had tracked the negotiations throughout, assenting to decisions to move away from ideas like the government negotiation of prices or the importation of cheaper drugs from Canada,’ the New York Times reported.”

Allow Drug Importation

Obama’s promise: “Allow consumers to import safe drugs from other countries” because “some companies are exploiting Americans by dramatically overcharging U.S. consumers” (campaign document).
RealityAccording to CBS News, this promise was scuttled in the same agreement that dispensed with direct price negotiations.

Promises About Impacts

Overview

  • Seven Obamacare Failures that Have Hurt Americans. (MarketWatch, 3.25.16) “Obamacare barely passed Congress in 2010. If people had known how it would develop, the health-care act would likely never have become law… Here are seven things about Obamacare that turned out to be very bad.
    • Low enrollment. Many people would not have jumped on the Obamacare bandwagon if they had known the relatively small number of Americans who would actually be enrolled on the exchanges by 2016. The Department of Health and Human Services estimates that between 9.4 million and 11.4 million signed up in 2016.
    • High numbers of uninsured. Under Obamacare, the number of uninsured was supposed to decline from 50 million to 22 million in 2016 and remain at that level. Instead, there are still 31 million uninsured, and the number is never projected to go below 29 million, according to CBO.
    • Lost doctors. Various sources note that a common (and popular) way to reduce premium costs has been to reduce the number of doctors in the insurer’s network, which leads to a much greater likelihood of people losing their doctors than without the ACA… According to a NIH study, 15% of plans offered on the exchanges exclude doctors from at least one kind of specialty.
    • Lost plans. Over the past year, the number of insurers offering plans in exchanges has dropped by nearly 6%. Many states have lost more than 80% of their insurers: Alabama went from 23 to 3, Arkansas went from 24 to 4, and Wyoming from 21 to 1, just to name a few. Only New York did not lose over half of its insurers, going from 28 to 15 insurers, a 46% decline.
    • Higher premiums. A report by the Kaiser Family Foundation and the Health Research & Educational Trust found that, since 2008, average employer family premiums have climbed a total of $4,865. From 2015 to 2016 the most popular exchange family plan, Family Silver, saw a 10% average increase in its premiums. In some states, premiums rose by nearly 40%. In 2015 the average annual family premium was $17,545 per year, and the average premium for a single policy was $6,251. Young men were particularly hard-hit. Average premiums rose by 49% from 2013 to 2014, the year Obamacare was supposed to go into effect.
    • Higher deductibles. Practically no one forecast that even after spending additional thousands of dollars a year for health insurance, families would have to spend thousands of dollars more on medical care before being able to take advantage of insurance for more than annual check-ups. Many people get sticker shock. The New York Times, long a cheerleader for Obamacare, reported that many people can’t afford to use the health insurance that they have purchased because of the deductibles.
    • High costs. The Office of the Actuary of the Center for Medicare and Medicaid Services has projected that Obamacare will result in an additional $274 billion in administrative costs alone over the period of 2014 through 2022. Legislative options that would repeal and replace Obamacare… are projected to save taxpayers even more: $474 billion over the 2016-2025 period, the Congressional Budget Office notes.
  • Aetna Has Revealed Obamacare’s Many Broken Promises.The health-insurance giant Aetna has announced it will exit 11 of the 15 health-insurance exchanges where it sells Obamacare plans. Aetna’s announcement comes on the heels of news that UnitedHealthcare, Humana, Blue Cross and Blue Shield of New Mexico, Blue Cross and Blue Shield of Minnesota, and Texas’ Scott and White Health Plan, and 70% of Obamacare’s failed Co-Ops, and other insurers will exit many or all of the exchanges for which they had previously shown such enthusiasm. The ongoing and nationwide exodus of insurers is just the latest piece of evidence that Obamacare is a failed law built on false promises. Obamacare’s only real selling point was that it supposedly guarantees access to care for people with expensive illnesses. President Obama repeatedly boasted that under Obamacare, it will be illegal for insurance companies to deny coverage to the sick because ‘all discrimination against pre-existing conditions will be prohibited.’ On the contrary, Obamacare itself is denying coverage to people with preexisting conditions.” Cannon, M.F. (TIME, 8.25.16)

Annual Premium Savings of $2,500 Per Family

Obama’s promise: “We’ll lower premiums by up to $2,500 for a typical family per year. .  .  . We’ll do it by the end of my first term as president of the United States” (June 5, 2008).
Reality: Taken literally, this promise failed spectacularly. According to the authoritative annual Kaiser Family Foundation/HRET Employer Health Benefits Survey, average premiums for family coverage (i.e., the kind of private coverage the “typical” family has) were $13,375 in 2009 and $16,531 in 2013. In short, average premiums for family coverage grew by $2,976 by the end of President Obama’s first term. Thus, it can be accurately said that both in direction and magnitude reality turned out to be the opposite of what the president pledged.
Strictly speaking, the original promise was based on an estimate of total national health spending savings–not premium savings, as reflected in the memo on which it was based. That said, candidate Obama’s claim that he could pull off such dramatic savings before the end of his first term cannot be dismissed as some off-script bit of puffery in a campaign speech. As Kevin Sacks at the New York Times reported: “Mr. Obama’s economic policy director, Jason Furman, said the campaign’s estimates were conservative and asserted that much of the savings would come quickly. “We think we could get to $2,500 in savings by the end of the first term, or be very close to it,’ Mr. Furman said.”  Subsequent advisors have only slightly modified the promise. For example, White House Deputy Chief of Staff Nancy-Ann DeParle told ABC News in September 2011 that the law needs to play out before savings materialize. She claimed that “by 2019 we estimate that the average family will save around $2,000.”
Nevertheless, some supporters have argued the president’s promise meant not that premiums would go down, but that they would be $2,500 a year lower than they would have been otherwise. Moreover, while he made the promise repeatedly on the campaign trail, candidate Obama usually didn’t claim it would be accomplished by the end of his first term.  But even if the ACA were given Obamacare 12 years to “bend the cost curve,” the best available estimates still show this promise will fail miserably. For three consecutive years, the Office of the Actuary at the Centers for Medicare & Medicaid Services has released 10-year projections that compare national health spending under Obamacare with spending assuming Obamacare had never been implemented. In each instance, the ACA increases aggregate national health spending above and beyond the amount that such spending would have increased otherwise.
The latest version of these projections, released in September 2013, shows that between 2010 and 2022, aggregate health spending will be $621 billion higher under the ACA scenario. For a typical family of four, this amounts to $7,579 over that 13-year period.
Some have argued that technically it would be possible for health spending to increase for the 30 million formerly uninsured Americans even as premiums dropped for those already covered. However, a 2008 study found that the average uninsured individual generates just under $1,000 in uncompensated care costs each year; the same study found that three-quarters of those uncompensated care costs are borne by taxpayers (federal, state, and local), leaving at most $285 (2013 dollars) per capita uninsured to be shifted to those with private health insurance, a small fraction of the premium increases being projected.
For this reason, the original promise was not very credible. At the time candidate Obama made it, Factcheck.org deemed the promise to be “overly optimistic, misleading and, to some extent, contradicted by one of his own advisers.” Yet rather than scale back the promise, President Obama on July 16, 2012, subsequently doubled-down on it, assuring small-business owners that “your premiums will go down.” He made this assurance notwithstanding the fact that by that time, in three separate reports between April 2010 and June 2012, the Medicare actuaries had demonstrated that the ACA would increase health spending. Consequently, the Washington Post fact-checker awarded the 2012 claim Three Pinocchios (“Significant factual error and/or obvious contradictions”).

Employer Premiums Falling by 3000 Percent

Obama’s promise: “How many people are getting insurance through their jobs right now? Raise your hands. All right, well, a lot of those folks, your employer, it’s estimated, would see premiums fall by as much as 3000%, which means they could give you a raise.” (March 15, 2010).
Reality: As Ed Morrissey explains, such a reduction in company premiums “would mean that the insurance companies would give employers thirty times what the employers used to pay in premiums, or roughly around a quarter-million dollars per employee. Memo to the White House: one can only reduce cost on an item 100%. That makes it free.” At the time of the statement, Greg Hengler wondered, “Does this mean that insurance companies will be paying us?”

No Increase in Deficit

Obama’s promise: “I will not sign a plan that adds one dime to our deficits” (September 9, 2009).
Reality: This pledge was made in President Obama’s speech before a joint session of Congress—well before either chamber had voted on a plan. Using rules that everyone recognized were grossly misleading, the CBO scored the plan as a small deficit reducer. However, the president was well aware that his plan was “full of gimmicks and smoke-and-mirrors” (in the words of Rep. Paul Ryan) many weeks before the final bill was passed. Ryan’s analysis left no doubt that the president was trying to put a $2.3 trillion health plan (over 10 years) into a wrapper appearing to cost only $1 trillion.
According to former CBO director Douglas Holtz-Eakin and Michael Ramet of the American Action Forum, “A more comprehensive and realistic projection suggests that the new reform law will raise the deficit by more than $500 billion during the first 10 years and by nearly $1.5 trillion in the following decade.”  Because the baseline scenario CBO is required to use is so unrealistic, CBO, GAO and the Medicare actuary all have made projections using a more realistic scenario known as the alternative fiscal scenario. As the independent, nonprofit, nonpartisan Committee for a Responsible Federal Budget put it: “It’s easy to say that the alternative fiscal scenario is probably a lot closer to where we are going, even if it has some flaws.” Or as Medicare’s own actuary has pointed out: “the projections shown in the report under current law are clearly unrealistic with respect to physician expenditures and, in addition, may well understate expenditures for most other categories of health care providers” (emphasis added).
Based on this more realistic (i.e., accurate) alternative fiscal scenario, the ACA has put the country on a path to add $6.2 trillion (2011 dollars) to the deficit over the next 75 years. Reasonable people might quibble about the president’s level of knowledge when he first made this pledge, but there is little doubt it has turned out to be a promise broken—by a rather extraordinary margin.
According to a 2016 Wall Street Journal analysis,  White House officials knew in 2009 that the administration’s cost containment promises lacked evidence: “In an Oct. 19, 2009 email, Mrs. Clinton asked Ms. Tanden, ‘Are you worried about the lack of cost controls in the current bills?’ Ms. Tanden replied that ‘the dirty little secret is that we don’t have a lot of good evidence on what works—in a way that Congress has any appetite to do. I mean, cost controls, as we all know, is [sic] attacked as rationing. So everyone likes to discuss this, including the Administration, but then on the other hand, says they won’t touch the benefits. Now there is a lot of fat in the system, but some of that excess is just too much care. Yet no one really wants care to be restricted.’ Not a month earlier, the President had promised Congress that the bill would save ‘hundreds of billions of dollars,’ according to ‘Democratic and Republican experts.’ In March 2010 he said that ‘we have now incorporated almost every single serious idea from across the political spectrum about how to contain the rising cost of health care.’ Ms. Tanden was telling Mrs. Clinton that the truth was closer to the reverse. She wrote that ‘the other problem’ is that the de minimis cost-control problems that ObamaCare did include ‘need some time to incubate because we don’t have all the evidence we need. . . . We may have oversold what these bills will (or even can) do.’”

If You Like Your Plan You Can Keep It

If You Like Your Doctor You Can Keep Your Doctor

Obama’s promise: “If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what” (June 15, 2009).
Reality: Plans in the Exchanges generally are much narrower than in the pre-ACA non-group market. As reported by Wall Street Journal:

  • “Insurers are slashing payments to medical practices in many of the plans they sell through the new health-law marketplaces—sparking worries that Americans signing up for coverage will have fewer doctors to choose from if low fees spark an exodus from the plans”
  • “More physicians may leave the plans as awareness of the new rates spread, doctors and experts said. Many doctors surveyed in September by the Medical Group Management Association said they weren’t aware of the fees they would be offered for treating patients gaining coverage on the exchanges. Of those that had heard, 37% said the rates offered were lower than Medicare, and 18% said they were lower than Medicaid rates, according to the survey.”
  • “Experts worry that a stratified system could emerge for the insured, where people who get health insurance through their jobs can go to a broad slate of doctors, while those newly covered in the exchanges get fewer choices. Depending on their plan, people may be able to see an out-of-network doctor and get some level of reimbursement. But many plans on the exchanges are HMO-style closed networks.  “It is going to be very tough for consumers to have accurate information about which physicians they really have access to,” said Paul Ginsburg, president of the Center for Studying Health System Change, a Washington think tank.”

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