Monday, November 26, 2012

November 26, 2012

ObamaCare Faces the Implementation Iceberg
by Paul Howard and Stephen Parente
November 26, 2012

Defenders of the Patient Protection and Affordable Care Act, aka Obamacare, can be forgiven for some post-election triumphalism. But their joy is likely to be short lived. Because the law put off implementation of most key provisions until after the 2012 election, voters cast their ballots on November 6 without knowing what Obamacare’s true effect will be on their tax bills, insurance costs, or access to care.

Delaying implementation until 2014 helped the president win re-election, but now the bill is coming due. The administration can’t forestall Obamacare’s massive regulatory impact any longer, and the result will keep Congress and the media occupied for months and years to come.

The administration has just begun to issue guidance (proposed rules) to the insurance industry on Obamacare’s most important (and expensive) insurance market “reforms.” Insurance plans must have clarity on these issues if they are to develop and price plans for the individual and small group markets both inside and outside of the exchanges.

Right now, insurance companies don’t have answers to some of the most critical questions. Dozens of other smaller, but still important rules are also outstanding from HHS that will affect what kinds of plans are available on the exchanges, and how much they will cost insurers and taxpayers.

Some of the recently issued rules, particularly on community rating (charging the same price to everyone regardless of health status) and limiting the premium difference between older and younger applicants are likely to increase prices for young people – and over half (55%) of the uninsured are under age 35.

If prices rise sharply for this group, they’re much less likely to buy coverage, since Obamacare lets them buy insurance for the same price even after they become sick. And if young people pass up coverage, the rates will rise for everyone else in the exchange – and for taxpayers who are footing the final bill.

The administration’s “damn the torpedoes” attitude toward implementation of Obamacare also ignores the significant amount of time it will take for stakeholders to comment on provisional regulations and for HHS to issue its final rules. Keep in mind that the law requires exchanges to begin enrolling people by next October.

To call this deadline ambitious given the enormous uncertainty facing the industry and state regulators is a massive understatement.

Many states are still evaluating their options. According to a recent report from Avalere Health, only 20 states are actively building insurance exchanges, with as many as 13 states of those states opting for some sort of partnership model with the federal government. The rest are simply going to allow the federal government to run their exchanges. That’s hardly a winning record for the exchanges, supposedly the crown jewel of Obamacare.

As for the federal exchanges that are supposed to be up and running in states that don’t want to or aren’t ready to operate their own exchanges, the outlook is equally uncertain. As health care consultant Robert Laszewski recently put it, “[T]he Obama Administration has said emphatically that they will be ready [to run federal exchanges], but so far they’ve produced no information about how they are going to do it.”

The virtual veil of secrecy surrounding creation of the federal exchange has led to skepticism that it will be in any position to operate as advertised.

Beyond insurance rules and insurance exchanges, Obamacare faces other enormous uncertainties, like how many states will embrace its Medicaid expansion after the Supreme Court decision last summer allowed them to opt-out. Currently, six states (Florida, Georgia, Louisiana, South Carolina, Mississippi, and Texas) are saying they’ll sit out the expansion. Large states such as New Jersey and Pennsylvania are on the fence.

Since Medicaid accounts for about half of Obamacare’s Medicaid expansion, and the exchanges are supposed to facilitate Medicaid enrollment, governors have leverage to push for changes to the program that will help them manage expenses.

So what’s the bottom line? The Obama Administration is just beginning to issue critical guidance to states and insurance companies about how insurance markets and insurance exchanges are supposed to operate. The majority of states aren’t in any position to operate their own exchanges, and the federal government isn’t prepared to step in and operate the exchanges for them—at least not according to the schedule laid out in the ACA. The Medicaid expansion is a giant question mark.

And, we haven’t even mentioned how looming tax and budget negotiations over the “fiscal cliff” and sequestration might affect implementation of Obamacare.

Here’s our prediction. HHS has already pushed the deadline on the state exchanges from December 14, and in some cases to mid-February. We expect that deadline to slide again in the coming months.

But we shouldn’t wait that long to address the underlying problem. Delaying exchange implementation has important federal budget implications, and may make it easier for Republicans and Democrats to agree on serious budget and entitlement reforms. If Republican governors can coalesce around demands for exchange flexibility and Medicaid reform, they can also give their colleagues in Congress more leverage to press for entitlement reforms.

Ironically, the president and his Democratic allies may have to grant more flexibility in operationalizing Obamacare than they ever did while ramming it through Congress in 2010. On the other hand, if Republicans want to maximize their own policy leverage and develop a credible health policy platform for 2016, they will have to figure out an “endgame” for health care reform that increases coverage and lowers costs.

The good news is that we’ll finally get to find out “what’s in” the Obamacare law. Won’t that be fun?

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The GOP must fight for its principles, or die
by David Garth
November 25, 2012
Today seems to be a day for pessimism.

A quick run around the internet and Twitter can reveal quite a bit. The words being spoken are by no means encouraging.

Moderates are blaming conservatives. Tea Partiers are blaming moderates. Various people are taking broadsides at Ann Coulter, Bill Kristol, Chris Christie, Grover Norquist, and, above all, Mitt Romney. The Paul supporters are promising to withhold any support from the GOP unless they support libertarian ideas. The establishment wants the party to slide to the left in an effort to woo minority voters. Some are saying that it is time to raise taxes, others are furious at the suggestion. Many are claiming that a strong third party is necessary to ensure survival.

It goes without saying that a third party may provide a means to restore America to conservative ideals. It may, however, guarantee that conservatives never win a national election again.

At this moment I am convinced that my party doesn't even know what it believes in anymore.

This is a lot bigger than an election. This is a matter of principle, of ideology. Planks are more than just parts of a ship. A political party must have a clearly defined and articulated set of values. If potential voters are drawn to those values the party wins. If not, they lose.

You never, ever, abdicate your fundamental worldview for a win in an election. This is called selling your soul. What is said about people that do that?

What is wrong with the Republican Party? Why is it that they feel that they have to dance around conservative principles? Which is more important - the principles themselves, or forsaking them for a victory?

It is really a simple premise. You believe that the U.S. Constitution is the rock on which or country is founded. You believe that a large federal government is a threat to individual liberty. You believe that the free enterprise system is the best system to ensure prosperity to the most people possible. You believe that socialism is dangerous.

If you believe it, THEN SAY IT. Plainly. Unabashedly. Without reservation.

These are the basic premises that our candidates must run on. They must offer examples from history on why they are right. They have to offer facts and solutions. Show the citizenry the record of big government/high taxes versus small government/low taxes. We have proven methods of success - run on them! The truth is more important than egos, more important than electoral success.

This is not the time for moderates or moderation. Republicans must provide a crystal clear alternative to the voters - a leviathan, intrusive federal government or a small, responsive government that believes in the individual and the rights of the individual states. Let the moderates decide what kind of future they want. Because the truth is that if the United States does not rediscover the basic tenets that made us great we are done. If we are at the point where a majority of our citizens are more concerned about getting things than preserving freedom the game is up. We may already be there, the last election said a lot.

So we may have one more chance. Are Republicans going to offer an alternative, or are they going to compromise with the forces and ideals that are causing our demise? The future of our nation is more important than electing a quasi liberal that happens to have an R by his or her name.

Our present situation reminds me of a quote from Abraham Lincoln:

"As a nation of freemen, we must live through all time, or die by suicide."

Did you catch that, Republicans? It is all up to you now. You are the only thing between the United States and the aforementioned suicide. Pull yourself together, gird your loins, and get ready to fight for the principles you supposedly espouse.

Unfortunately, we know what will happen if you don't.

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American Mismatch - There are plenty of jobs in manufacturing, but too few people with the necessary skills.
by Jillian Kay Melchior
November 26, 2012

In September, 238,000 American jobs went unfilled, despite employers’ best efforts. At the same time, unemployment was at 7.8 percent nationally. And believe it or not, this was no statistical oddity.

The manufacturing sector has long had trouble finding skilled applicants for its jobs. Around 48 percent of manufacturing companies are looking to hire, according to the most recent report from ThomasNet, a company that helps connect producers and suppliers. But 67 percent of manufacturing companies see a moderate to severe shortage of skilled workers, and last year, as many as 600,000 jobs went unfilled, according to a report from Deloitte and the Manufacturing Institute.

This mismatch embodies the best and worst of American culture. On the one hand, American manufacturers have bested their international competition, becoming even more efficient after their recent struggles. On the other, there’s been a cultural shift that denigrates the value of manufacturing work, instead pushing young people into ever more impractical fields of study.

The manufacturing sector’s triumph is pretty remarkable. The U.S. is the world’s largest manufacturer, contributing 18.2 percent of the total value added in worldwide production. (China, despite its abundance of cheap labor, comes in second at 17.6 percent.) Though other sectors are panicking about a fiscal cliff and putting expansion on hold, American manufacturing is plowing ahead. Ninety percent of manufacturers told ThomasNet they’re optimistic about the future, and 75 percent planned to expand their operations this year.

The manufacturing sector is also almost uniquely good to its employees. “No longer dirty, dark, or dangerous” has become an industry catchphrase. Careers in manufacturing are not, contrary to popular belief, merely monotonous assembly-line work; today, workers have to be good at problem solving, abstract thinking, and technology. And the pay is good. The Bureau of Labor Statistics reported that a manufacturing worker makes an average of $23.97 on hour as of October 2012. Manufacturing jobs are also more likely to come with good benefits than jobs in other industries, the Brookings Institute has reported. Furthermore, the manufacturing sector offers high-pay positions for people with low educational attainment; one manufacturing firm told National Review Online that it would pay a $54,000 starting salary to a high-school graduate who could competently repair and maintain machinery.

These job perks are partly caused by demand. Older manufacturing workers are retiring fast, and the work has become more high-tech, says Thomas Holdsworth, a spokesman for SkillsUSA, an organization that provides training for high school and college students. SkillsUSA works closely with the manufacturing sector, connecting it with prospective workers.

“We hear about skill shortage and skill gap,” Holdsworth explained. “Manufacturers say . . . ‘We have a shortage of workers, a shortage of people coming into our profession.’”

The skilled-worker shortage is an education problem. High schools have cut their shop classes, and students are pushed to attain at least a four-year college degree, no matter the major, says Linda Rigano, spokesperson for ThomasNet.

In high schools, “there’s been such a focus on — and this is going to sound terrible — kids going to school,” she said. “Not every kid is meant to go to college.” Meanwhile, manufacturing companies “are paying six figures. You’ve got all these kids who are coming out of college, and they can’t find a job. It’s heartbreaking.”

Young people are told that a four-year college degree is a minimal requirement for career success, but the numbers simply don’t bear this out.

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