Trump’s Business Approach

Here’s a surprise:  Congress is mired in disputes about the new legislation that is supposed to “repeal and replace” the Affordable Care Act (or at least claims to do something to deal with the ongoing problems with President Obama’s signature legislation).  There was supposed to be a vote on the legislation on the floor of the House of Representatives yesterday, but the tally got postponed over concerns that the legislation might fail.

President Trump has been involved in the wrangling, and last night he weighed in with what the Washington Post described as an “ultimatum.”  According to the Post, Trump told the Republicans in the House to either pass the legislation on Friday, or reject it, in which case Trump will move on to other items on his agenda.  Trump apparently will leave it up to the Republicans in the House to figure out whether they can agree or not.

the-interview-donald-trump-sits-down-with-business-insiderIt’s an interesting approach, and I suspect that it comes from Trump’s years of working in the business world.  Corporations typically don’t engage in open-ended negotiations, allowing events to marinate and slowly come together — which often seems to be how Congress works (if you believe that Congress works at all).  Instead, because there’s a time value to money and limits to corporate resources that can be expended on potential deals that don’t materialize, corporations set establish priorities, set deadlines, and push.  Once a deadline gets set, it becomes another means of applying pressure to the parties to reach an agreement, and if the deal doesn’t get done by the deadline, typically that takes the transaction off the table, the corporation moves on, and there is no going back.

Trump’s approach to this legislative test is, obviously, also informed by political considerations; he wants to set a deadline so members of Congress are actually forced to do something concrete, and we don’t have the lingering story of “what’s going to happen to Obamacare” attracting all of the media attention and detracting from the other things he’s trying to accomplish.  It’s a gamble, because if the legislation Trump is backing doesn’t pass, he could be painted as a failure in the early months of his Administration, making it less likely that he’ll be able to obtain passage of other parts of his agenda, like tax reform.  We already knew that Trump is a gambler, of course — his whole campaign was a bizarre, otherworldly gamble that paid off.  Now he’s bringing some of that high-stakes, business world approach to the legislative political realm.

We shouldn’t be surprised, by now, that Trump is going to continue to gamble and continue to do things in confounding ways.  Today we’ll get another lesson in whether his approach can actually work in Washington, D.C., even on a short term basis.

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Meanwhile, Back In The Real World

This week Aetna announced that it would be withdrawing from many of the states in which it offers health care plans on the Affordable Care Act exchanges.  Aetna participated in exchanges in 15 states, and it will be withdrawing from 11 of those 15.

mw-de672_aet_20_20150202162433_zhIt’s more bad news for “Obamacare,” which has seen other major insurers back away from offering plans, too.  Aetna says its decision is prompted by substantial losses it is experiencing on the exchanges, all of which arises from the fact that the pools of covered individuals has turned out to be sicker than was originally forecast — and therefore more likely to need expensive care.  If fewer insurers offer plans on the exchanges, there obviously will be less competition, and less choice.  As Aetna’s decision reflects, however, the effect will vary on a state by state basis.

In the meantime, premiums on the exchange plans are going up — and the “individual mandate” penalty for not having health insurance is ratcheting up, too.  In 2017, the average penalty will be $979 per household.  The question is whether the threat of having to pay a $1000 penalty will drive more people to enroll, and whether those currently uninsured people who do enroll will be healthier and therefore help to hold down the costs of the plans for the insurers who offer them, so more even insurers don’t exit the plans.  Ever since the Affordable Care Act was passed, the question has been whether the exchanges can avoid the “death spiral” in which enrollment shrinks, leaving only sick people in the plans, causing ever-greater losses and ever-increasing premiums that simply can’t be sustained.

The Affordable Care Act is unquestionably the signature domestic policy achievement of the Obama Administration.  It’s also another huge government program seeking to force behavioral changes that is anathema to both fiscal conservatives and social libertarians.  In any rational world, a presidential election would be a forum for discussing whether, and if so how well, “Obamacare” has worked — and what alternatives would be.

Of course, we don’t have such discussions about actual policy issues or the real-world performance of important initiatives like the Affordable Care Act in this election.  No, we’re too busy talking about Donald Trump’s latest idiotic foot-in-mouth-episode, or Hillary Clinton’s health issues, or other extraneous topics.  This is the most content-free presidential election in my memory.

We need to remember that the real world is still out there.

Meanwhile, Back At The Issues . . . .

While our easily distracted nation has been preoccupied with political horse races, insults on debate stages, and brawling at campaign rallies, some of the real issues facing the country plod on.  It’s just that no one is paying any attention to them.

Consider the Affordable Care Act, known colloquially as Obamacare.  It’s been up and operational for several years now.  So, how is it doing?

A man looks over the Affordable Care Act signup page on the HealthCare.gov website in New York in this photo illustrationIt turns out that Obamacare is facing a number of challenges and is in what a recent Washington Post editorial describes as “an awkward place.”  The problem is that although people are still enrolling, they’re not doing so at the rates that were forecast when the new law’s financial viability was evaluated.  If there are fewer enrollments than were estimated, or the mix of new enrollees doesn’t include as many young and healthy people as was originally projected, then the Affordable Care Act could produce substantial premium price increases rather than what the statute’s name promises.

Another aspect of this complicated law is whether it is offering good insurance choices for people.  The Investor’s Business Daily recently published an article that focused on how the Affordable Care Act is working in Mississippi, which is one of the underinsured places that were a focus of the statute in the first place.  The IBD article found that enrollments of uninsured people in Mississippi were disappointing — just 38% of those eligible for subsidies — that the premium costs for the cheapest “bronze” plans are spiking, and that the increased expense may cause some people to opt for paying the uninsured, individual mandate tax rather than buying insurance as they are supposed to do.  Still other articles, from the New York Times and elsewhere, have reported that many people believe that while subsidies might be holding down premium costs in some states, high deductible amounts, which require the insured person to pay cash out of pocket before the insurance kicks in, are making some plans bought on the exchanges unaffordable and unusable.

The Affordable Care Act was a huge new governmental program, hotly debated and the subject of strong opposition from Republicans.  How is it working, really?  We deserve to know, and un any rational world, candidates of both parties would be debating that very important issue.  In this crazy year, however, the news media and the public have been distracted by the Trump phenomenon and all of its embarrassing nuttiness, so even in Republican debates the Affordable Care Act gets short shrift.  And does anyone really believe that, if Donald Trump somehow becomes the Republican nominee, he’ll work to understand the workings of this complex law, and be able to say anything other than that it is a “disaster” and he’ll “repeal and replace it with something much better”?

When A Reporter’s Story Makes A Difference

Earlier this week The Associated Press reported that the federal healthcare.gov website — the portal that many Americans have used to search for health care plans under the Affordable Care Act — was sharing private information about users with a number of third-party entities that specialize in advertising and analyzing internet data for marketing purposes.  The AP reported that the personal information made available to those entities could include age, income, ZIP code, and whether a person smokes or is pregnant, as well as the internet address of the computer that accessed the healthcare.gov website.

The federal government responded that the point of the data collection and sharing was simply to improve the consumer experience on the healthcare.gov website and added that the entities were “prohibited from using information from these tools on HealthCare.gov for their companies’ purposes.”  The latter point seems awfully naive — once data gets put into detailed databases on powerful computer systems, who is to say it is not used to help a third-party company better target pop-up ads for their other clients? — and in any case ignores the ever-present risk of a hacking incident that exposes the personal information to criminals.  Privacy advocates and Members of Congress also argued that the extent of data collected went beyond what was necessary to enhance customer service.

On Friday the AP reported that the Obama Administration had changed its position and reduced the release of healthcare.gov users’ personal data.  Privacy advocates remain concerned about the website’s data collection and storage policies and the available data connections with third parties — connections which conceivably could be used to access personal information — but the Administration’s response at least shows some sensitivity to privacy issues and is a first step toward better protecting personal information.

It may not amount to a huge matter in the Grand Scheme of Things, but it’s gratifying when an enterprising reporter’s story can expose a troubling practice and cause a change in a way that benefits the Average Joe and Jane.  It’s how our system is supposed to work, and it’s nice to see that it still work when journalists do their jobs and do them well.

Adding Up The Obamacare Tab

When the Affordable Care Act was passed, its drafters contemplated that states would design their own health care exchanges, with the federal healthcare.gov website serving as a kind of backstop.  That turned out to be a miscalculation.  More than 60 percent of the states — 36 out of 50 — elected not to create their own health care exchanges.

At the time, some critics argued that the decisions of states with Republican governors to refrain from building their own websites was politically motivated.  In retrospect, however, the decisions to eschew developing state-specific health care exchanges seem more like a wise recognition of the limitations of state capabilities, because the experiences of states that did attempt their own websites have been decidedly mixed.

Six of the 14 states that chose to create their own exchanges — Masschusetts, Oregon, Nevada, Maryland, Minnesota, and Hawaii — have had severe functionality problems and have become tremendous cash drains and political albatrosses.  In Massachusetts, Oregon, Nevada, and Maryland alone, the federal government has paid at least $474 million to support the establishment of non-functional exchanges, and that cost total seems certain to increase significantly.  In those states, Democratic politicians are blaming the website contractors and threatening litigation, and Republicans are saying that the states never should have attempted to build the exchanges in the first place.

Obamacare has become such a political football that every fact and development gets spun to death — but if we can’t learn from the current reality, and recognize that mistakes were made in the legislation and its conception, then we are just compounding our problems.  In all, the Kaiser Family Foundation estimates that about $5 billion in federal funds that have been shelled out to states to allow them to assess whether to create state-specific exchanges and then, in some cases, to support their creation.  That’s an enormous sum of money, and it is becoming clear that a significant part of it has been wasted.  Whatever happens with Obamacare, let’s at least hope that in the future we refrain from enacting statutes that require states to develop large-scale, complicated technological systems, on their own, with the federal government picking up the tab.  As the mounting Obamacare costs demonstrate, that approach is fraught with peril.

The Obamacare Deadline Arrives

Today is March 31. It’s the “Obamacare” deadline that we’ve been hearing about for months, the end of the open enrollment period on the health care exchanges — although the federal government has extended the deadline for a week, to allow people who claim to be in the midst of applying to complete the process.

How is the process going? We know for sure that a lot of money and effort has been spent in encouraging people to apply by the deadline. The federal government has spent millions on TV ads and social media banners, alerting people to the deadline and encouraging people to “get covered.” President Obama himself has led the charge. Over the past few weeks, you couldn’t go to a website or social media outlet without seeing an ad. It’s been, by far, the largest, most visible, and probably most expensive government-sponsored ad campaign in my lifetime. It’s blown the “click it or ticket” and anti-drunk driving campaigns out of the water.

Has the ad campaign worked? According to information provided by the government, enrollments surged as the deadline neared. By mid-March, the government reported that 5 million had enrolled, then 6 million a few days ago. Some people hold out hope that enrollments might hit 7 million. The 7 million figure has some significance, because the Congressional Budget Office initially forecast that 7 million enrollments were needed during the open enrollment period, although the CBO later revised that forecast to 6 million.

It’s not entirely clear what these numbers represent. There are supposed to be 48 million residents in the United States who do not have health insurance; 7 million is only a small fraction of the uninsured whole. What do we do about the remaining millions of uninsured people? Moreover, it’s not clear how many of the people who have enrolled through the exchanges were formerly uninsured, either. Many of the users of the health exchange websites apparently were people who were insured but whose policies were terminated because they lacked mandatory provisions required by the Affordable Care Act. There are also valid questions about how many of the enrollees have actually paid premiums and therefore have coverage.

There will be a lot of information coming our way over the next few days and weeks about Obamacare. The Affordable Care Act is such a hot-button issue — and the impending elections in November will keep it so — that supporters and opponents of the law are sure to massage and select the data to favor their positions. The average voter would do well to apply skepticism to the messaging from both sides of the Obamacare debate.

If you’re someone who bought a new policy through healthcare.gov, the ultimate question about your fellow enrollees is: who are these people, and how sick are they? Insurance fundamentally involves a pooling of risk, and the cost of health insurance is directly tied to who else is in your pool. If you’re in a group with lots of young, healthy people who don’t need much health care, your premiums will be lower than if you’re in a group with a preponderance of sick people who regularly need expensive medical attention. We won’t know the true actuarial makeup of the new plans until the people who are covered begin to make claims, the claims get processed and paid, and the insurance companies look at the results and decide whether the pricing of the plans needs to be adjusted — and if so by how much. If health care costs increase dramatically, few people are going to consider Obamacare a success no matter how many people have enrolled.

It will be nice to see some new ads once the March 31 deadline passes, but everyone needs to take a deep breath. This initial deadline is just one step in a very long process, and we won’t know the outcome until we are much farther down the road.

Our Cutting-Edge Government

On Saturday the Washington Post published a stunning news article — one of those pieces that make you shake your head in wonder and disgust.

The story, by reporter David Fahrenthold, is about how the Office of Personnel Management — the main agency charged with human resources function for federal employees — processes the retirement paperwork of those federal employees. And “paperwork” is apt, because even though it is March 2014, the process is done almost entirely by hand and almost entirely on paper. Imagine! And to make it even weirder, it all happens underground, in a remote abandoned mine in Pennsylvania that received paper forms by the truckload and is filled with filing cabinets. That’s right — filing cabinets.

Using its antiquated process, it takes 61 days for the Office of Personnel Management to complete the retirement process. By contrast it takes Texas two days.

Does any large private company still process personnel actions on paper and by hand? Do any still maintain filing cabinets of sensitive personnel documents?

No wonder these guys botched the job of designing a functioning website!