December 20,2013

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Hatch: ObamaCare’s Problems are Deeply Rooted in DNA

In Speech, Utah Senator Says of Obama Administration’s Latest Change Allowing Catastrophic Coverage, “It seems that the Obama Administration is just making all of this up as they go along.”

WASHINGTON – In a speech on the Senate floor today, Finance Committee Ranking Member Orrin Hatch (R-Utah) outlined ongoing challenges that have plagued the implementation of ObamaCare and said recent updates to the website will not resolve the fundamental flaws of the President’s signature domestic policy.  Hatch also reacted to the Obama Administration’s announcement that Americans will be allowed to replace their canceled health care plans with “catastrophic” coverage plans.  

“The Administration has admitted that it bungled the rollout and tried to cover up for what Politifact dubbed Lie of the Year by passing the buck to states and insurers as to whether individuals would be able to keep their plans for the next year.  But, let’s be clear about this: Obamacare’s problems are deeply rooted in its DNA and are far bigger than just a website,” said Hatch.

Hatch further noted that the Administration’s recent announcement to allow Americans with canceled insurance plans to either buy catastrophic plans or avoid the requirement that they buy health insurance altogether is leading to significant confusion.  

“It’s been less than a full day and already this decision is causing confusion among insurers. It will almost certainly do the same for consumers,” said Hatch. “It seems that the Obama Administration is just making all of this up as they go along.  Undoubtedly, many people will suffer the consequences of this ineptitude.”

Below are Hatch’s full remarks delivered on the Senate floor today:
Mr. President, I rise today to discuss the debacle that is the so-called Affordable Care Act. I don’t think there’s anyone in this chamber – Republican or Democrat – that would dispute that, thus far, the implementation of this law has been a disaster, particularly with regard to the website and the President’s promise that “if you like your health care plan you can keep it.      

The Administration has admitted that it bungled the rollout and tried to cover up for what Politifact dubbed Lie of the Year by passing the buck to states and insurers as to whether individuals would be able to keep their plans for the next year.  

But, let’s be clear about this: Obamacare’s problems are deeply rooted in its DNA and are far bigger than just a website.   

Is the website causing the cost of health insurance premiums to go up dramatically?  

Is the website causing businesses to force more and more employees to work part-time?  

Is the website sending out cancellation notices to patients and consumers telling them that their health care plans are no longer available?  

Of course not.  

Yet, as the functionality of the website continues to improve, the administration is starting to talk as if EVERY problem with the law has been fixed and that all the other issues going to simply dissolve.  

But, Mr. President, we know that’s not the case.  

In reality, the problems with Obamacare are only beginning.  I’d like to take a few minutes to discuss some of the problems we’re going to be seeing in the future as the President’s health law continues to be implemented.

I have to say that, when it comes to Obamacare, it’s a little difficult to make predictions.  That’s because the administration has gone to great lengths to muddy the waters with delayed deadlines and unilateral policy changes.  

However, I think we can look through the opaque waters and identify at least six general areas where we can expect to see major problems in the coming months.  

Number One:  We’re going to continue to see problems with the implementation of Obamacare.

Like I said, there have undoubtedly been improvements to the website.  But there are still issues that are far from resolved.

Let’s just look at enrollment in the exchanges to see how things are going.

As of November 30, roughly 365,000 individuals had enrolled in health insurance coverage through the state and federal exchanges.  That’s a small improvement from the numbers we saw at the end of October, but still FAR short of the benchmarks the Department of Health and Human Services had set for enrollment in the exchanges.

Originally, HHS touted a goal of enrolling seven million people in the exchanges by March of 2014.  

And, according to a memo obtained by the Associated Press, HHS projected that, on the way to reaching that goal of seven million enrollees, they’d enroll roughly half a million people in the first month.  Yet, after two months, they were still more than 100,000 people short of that one-month benchmark.  

The same memo projected that they’d have 3.3 million enrollees by the end of the 2013.  Yet, if they’re going to reach that target, they’ll have to enroll nearly 10 times as many people as they’ve enrolled so far in just the next week and a half.

Sure, many of these enrollment problems are due to the poorly designed and poorly executed website.  But, even with the website’s improvements, it would take a substantial miracle for the administration to meet its enrollment goals for the coming months.

There are other significant problems to be concerned about, most notably, those associated with the premium-subsidy program administered by the IRS.  

Earlier this month, the Treasury Inspector General for Tax Administration issued a report that found that the IRS has an inadequate system in place for preventing fraudulent premium subsidy payments from occurring and that people’s personal information will likely be at risk.  

There are real questions as to whether the IRS can effectively verify the income of those applying for these subsidies.  I have also raised this concern on a number of occasions.  

Similar tax subsidy programs – including, for example, the Earned Income Tax Credit (EITC) – that are paid out before they are verified have improper payment rates as high as 25 percent.  

If we see the same improper payment rate on these Obamacare subsidies as we do on the EITC, it will end up costing tax payers hundreds of billions of dollars over the next ten years.   
As I’ve said in the past, the Obamacare premium subsidies – with the lack of security and safeguards – are a fraudster’s dream.  

Mr. President, the administration may claim that, with the recent improvements to the website, all is now right with the world.  However, as you can see, there are a number of administrative problems that, even with a functional website, have yet to be resolved.  

Number Two: Americans will be left without coverage due to the problems with Obamacare.

As a result of the dismal rollout of Obamacare, many Americans – particularly those that have tried to enroll in the exchanges – could very well end up being uninsured for a time.

Last week, an article appeared in the Washington Post that told the stories of people who were forced out of their existing health plans due to Obamacare’s coverage mandates, but are unable to sign up for new plans on the exchange due to the failings of the website.   

The deadline for signing up for coverage that starts on January 1, 2014, is December 23, 2013.  Anyone who has been kicked off their plan that is unable to sign up before that date – which is just a few days away – will find themselves facing a gap in medical coverage.  

For the chronically ill or for people with expensive medical conditions, this gap in coverage will be particularly acute.

These people are, according to the Washington Post, “Obamacare’s biggest losers.”  And, yet ostensibly, these are the very people that this law was supposed to help.

Another reason that countless Americans may end up seeing gaps in coverage is simply because they will be unable to navigate the ever-changing landscape that is Obamacare’s dates and deadlines.  

Due to the failures of the rollout, the administration has delayed or shifted virtually every deadline associated with obtaining and paying for coverage.  For example, like I said, the deadline for enrolling in insurance coverage that starts on January 1st is December 23rd.  The deadline for actually getting the first premium payment to insurers is December 31st.  Both of these dates have been moved at least once already and could be moved again.  On top of that, the administration has issued statements “encouraging” insurers to extend their own deadlines for payment and enrollment.

This is on top of the delays in the Employer Mandate, the Shop Exchanges, and the countless other provisions we’ve seen delayed or extended over the past year.  

People are bound to be confused by all of these changes.  It is nearly impossible for anyone, let alone those with serious medical conditions, to keep track of the ever-changing deadlines the administration keeps issuing.  And, with no clarity as to when people should sign up and who they should pay and when, it’s a virtual certainty that many consumers will find themselves uncovered for a period of time through no fault of their own.  

The administration added to all of this uncertainty last night with the announcement that it was going to allow people with canceled insurance plans to either buy catastrophic plans or avoid the requirement that they buy health insurance altogether.  It’s been less than a full day and already this decision is causing confusion among insurers. It will almost certainly do the same for consumers.  

It seems, Mr. President, that the Obama Administration is just making all of this up as they go along.  Undoubtedly, many people will suffer the consequences of this ineptitude.  

Number Three:  There will continue to be spikes in premiums and other costs.

We’ve already seen what’s happening to the price of insurance in the individual market.  Thanks to Obamacare, millions of people have already lost their existing health insurance and have found that their options on the exchanges come with much higher premiums.

This sticker shock has been widely reported.  

But, that’s not end of the prices problem.  

Unfortunately, many people are also finding that their out of pocket costs will be dramatically increased thanks to higher copayments and prescription drug costs included in plans on the exchanges. In many cases, it’s difficult for patients to determine which medications are covered on the Obamacare plans.  Unlike in Medicare Part D, the Obamacare website does not have a plan finder that would enable consumers to search for plans based on drug coverage.  These new costs are particularly high when compared to the insurance plans that were recently canceled.  

But, it’s not just happening in the individual market.  These price spikes are also hitting people with employer-provided insurance.  

According to a recent poll by the Associated Press, nearly half of Americans with job-based or other private insurance say their policies will be changing next year, mostly for the worse.

Sixty-nine percent say that the cost of their insurance will be going up.

Fifty-nine percent say their annual deductibles or copayments are increasing.  

The Affordable Care Act did little to rein in the actual cost of health care.  When you add in the costs associated with the law’s mandates and regulations, costs are going up, particularly for small businesses, our main job creators.    

A recent survey of small business owners by the National Federation of Independent Business confirmed that this is already starting to happen.

In the survey, 64 percent of small businesses reported that they paid more for employee health insurance premiums in 2013 than they did in 2012.  

Small business owners consistently cite the rising cost of health care as their top business concern.

This brings us to the next obvious prediction.

Number Four: Millions of people will lose their existing employer-provided health insurance.

Once again, we’re all familiar with President Obama’s infamous promise: “If you like your health care plan, you can keep it.”

But, little has been said about the threats Obamacare’s mandates pose to people who get their health insurance from their employers.  

Put simply, the health law was designed specifically to invalidate existing health care plans – those deemed inadequate by the drafters of the law – in order to force people into more expensive plans with expanded coverage they don’t necessarily want or need.  This applies to both individual market plans and employer-provided plans alike.    

The administration’s own estimates – published in the Federal Register – predicted that tens of millions of Americans with employer-sponsored insurance will see their plans invalidated by the Affordable Care Act’s mandates and regulations.

According to recent analysis from the American Enterprise Institute, as many as 50-100 million insurance policies in the employer-provided insurance market will see their plans canceled next fall when all business plans must be fully compliant with Obamacare’s insurance mandates.  

At that point, businesses will have to face a difficult choice: Offer a more expensive health care plan to their employees, or send employees into the exchanges.  And, as we’ve already seen, that is not a great place to be.  

Number Five:  Health Insurers will either leave the market or face bankruptcy.

One of the foundational assumptions made by the drafters of the Affordable Care Act was that the costs to insurers of providing vastly expanded coverage would be offset when more young and healthy patients are brought into the risk pools.  Indeed, this is almost the entire basis for the Individual Mandate.

The problem is that, so far, this doesn’t seem to be happening.  And, there’s good reason to question whether it ever will.

With the ever-increasing cost of insurance as a direct result of Obamacare, there will likely be many who opt to stay out of the market altogether.  There is ample data to support this conclusion.

For example, in a poll released earlier this month from the Harvard Institute of Politics, those in the millennial generation – the very people that proponents of Obamacare desperately need to add to the insurance pool – were shown to be highly skeptical of the law.  

In the poll, a majority of 18-29 year-olds disapproved of the Affordable Care Act and said that it will increase their health care costs.  Only 18 percent of respondents in that age group said that they thought the law would improve their health care.  

Clearly, the authors of Obamacare thought that the Individual Mandate, along with a strong sense of civic duty, would coerce people into acting against their own interests and paying expanded costs for coverage they don’t necessarily want or need.  However, in the real world, where people weigh costs and benefits before making a decision, millions of people are more likely to pay a fine instead of entering a skewed and unstable insurance market where the costs are forever going up.  

And, without a greatly expanded risk pool of younger, healthier consumers, it’s just not going to be worth it for many insurers to stay in the market.  Those insurers who do stay and try to stick it out will do so at greater risk to their financial future.  

Insurers aren’t the only ones facing a dismal economic outlook as a result of Obamacare, which brings me to my final prediction.

Number Six: Obamacare will continue to be a drag on business and our overall economy.

It isn’t just patients and consumers that are suffering under Obamacare.  Employers are also facing difficulties as a direct result of Obamacare.

As I’ve discussed here on the floor at length, in anticipation of the Employer Mandate, businesses all across the country have either reduced employment or stopped hiring.

Workers that had full-time jobs before the passage of Obamacare are finding themselves moved into part-time work because, under the law, employers will be forced to provide coverage for full-time workers.

Even the unions, who were among the biggest supporters of the health law when it was being debated in Congress, have come out and said that the law is destroying the 40-hour work week for American workers.  

Last week, the National Association of Manufacturers released its quarterly survey of its members, which showed overwhelmingly that the President’s health care law is having a negative impact on the manufacturing sector.  

According to the survey, more than 20 percent of manufacturers have cut or decelerated their business investment as a result of Obamacare.  Nearly one quarter of them have either reduced employment or ceased hiring.  Roughly a third of them say they have reduced their business outlook for 2014 as a result of the so-called Affordable Care Act.  And, more than 77 percent – nearly eight in ten – of manufacturers cited rising health insurance costs as a primary business challenge.

In other words, Mr. President, at a time when our economy is still growing at a sluggish pace and job growth remains lackluster, the President and Democrats in Congress continue to support a health care law that is making America a much more difficult place to do business and to find and keep a job.  

And, it’s only going to get worse as this wears on.  

Mr. President, these are just some of the problems we’re going to see in the coming months as a direct result of Obamacare and they aren’t going to go away so long as the Affordable Care Act remains in place.  

As I see it, with 2013 coming to a close, the President and his allies here in Congress are at a crossroads – they have two choices.

They can continue to double-down on the same failed policy that is increasing the cost of health insurance in this country and causing millions of people to lose their existing coverage and will continue to wreak havoc well into the future.  

Or, they can, for once, try to work with Republicans on replacing this failure with something that has a real chance of success.  I hope that, eventually, they choose the latter.  But, needless to say, I won’t keep my hopes up.   I yield the floor.