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The Secret Swipe At Obamacare — And You

The Secret Swipe At Obamacare — And You

By Michael Hiltzik, Los Angeles Times (TNS)

Underscoring how much mischief can result when Congress acts in haste and in secret, hidden away in the year-end omnibus spending bill being acted on this week is an attack on a key provision of the Affordable Care Act long targeted by the GOP.

The provision involves risk corridors, which are designed to stabilize insurance premiums in the first few years of the law. The year-end spending bill quietly erodes funding for the provision.

Republicans have chosen to label the provision a “bailout” for insurance companies. I’ve labeled that position the most cynical attack on Obamacare, because those who advance it — notably Sen. Marco Rubio (R-FL) — obviously know it’s a lie. They know it’s actually a consumer protection feature, so calling it “corporate welfare,” as Timothy P. Carney did this week in the Washington Examiner, is a neat bit of disinformation. Adding to the cynicism, the same provision is an essential part of Medicare Part D, which the GOP enacted in 2003.

Here’s another sick irony: One of the raps on the risk corridor provision is that it was “buried deep” in administration explanations of the bill, as Rubio put it. But in fact, the ACA was extensively debated and available for scrutiny by any legislator who chose. The attack on the provision, however, actually is “buried deep” in the year-end spending bill: it’s on page 892 of the 1,603-page bill, which has barely been debated at all.

Let’s see how risk corridors work, and how they’re undermined by the spending bill.

It was well understood that health insurers would have difficulty pricing their plans in the individual market in the first years of the ACA, starting in 2014. Not only would some insurers be entering that market in volume for the first time, but the market itself would be dramatically altered by the flood of new customers and such ACA rules as the prohibition on exclusions for pre-existing conditions. Some insurers will end up setting their premiums too low, and therefore will have to pay out benefits higher than they expected; others will set their rates too high, and will capture a windfall.

Without a safety valve, these miscalculations could have an impact on premiums the following year, as insurers tried to adjust. So insurers that set prices more than 3 percent below a set target get a reimbursement from the government, and those that overprice by the same margin have to pay some of the windfall to the government. Importantly, the arrangement is temporary: it expires after 2016, by which time it’s assumed that insurers will know what they’re doing.

Obviously, this isn’t a “bailout,” since it protects underpricing insurers only on the margins, while also providing a check on profiteering. The Congressional Budget Office, moreover, has projected that over time, the risk-corridor program will produce an $8-billion profit for the government, because overpricing insurers will be paying back more than underpricing insurers collect.

Some smart conservatives acknowledge that risk corridors are a good idea. As Yevgeniy Feyman of the Manhattan Institute informed Forbes readers in January, “Any conservative reform plan for universal coverage will have to use similar methods of risk adjustment. … If you want insurers to participate more broadly in the individual market, you’ll need to offer a carrot to offset the unavoidable uncertainties.”

Nevertheless, Congressional Republicans couldn’t resist taking a swipe at this little-understood provision in the ACA, and Democrats weren’t sufficiently attentive, or caring, to call them out on it. The year-end spending bill forbids the Dept. of Health and Human Services to use any outside government funds to pay out adjustments to insurers. On the face of it, the government can only use surplus coming in from overcharging insurers for that purpose. (That’s the interpretation healthcare expert Tim Jost gives to Dylan Scott of Talking Points Memo.)

For the moment, that makes the provision little more than a symbolic swipe at Obamacare. But that could change, and the CBO projections could be wrong. In that event, the Republicans’ little act of vandalism could end up costing ordinary citizens money. Nice work, GOP. Extra points for pulling it off in the dark.

Photo: Gage Skidmore via Flickr

A Reckless ‘Repair’ To Obamacare

A Reckless ‘Repair’ To Obamacare

By Michael Hiltzik, Los Angeles Times (MCT)

The GOP manifesto published by the Wall Street Journal last week over the names of Republican leaders John Boehner (R-OH) and Mitch McConnell (R-KY) included a tweak to the Affordable Care Act they say would provide Americans with “more hours and better pay.”

Don’t believe it.

Their proposed change would threaten the livelihoods of as many as 81 million workers. It would have precisely the opposite effect they claim. The bottom line is that it would be a handout to cheeseparing employers, not a gain for their workers. If the two GOP leaders really want to fix Obamacare, the Supreme Court last week gave them a path to do so.

And their rationale is specious, too. Boehner and McConnell say their overall plan involves “renewing our commitment to repeal Obamacare, which is hurting the job market along with Americans’ healthcare.” Their focus is on raising the definition of full-time work in the Affordable Care Act from 30 hours to 40.

Because employees working less than 30 hours don’t have to be covered by health insurance under the act, Boehner and McConnell say that restoring the “traditional” definition of full-time employment would remove an “arbitrary and destructive government barrier” to full-time job creation.

This idea is based on the notion that employers are gaming the part-time rule to escape their health coverage obligations. Paul Van de Water of the Center on Budget and Policy Priorities raises a couple of pertinent points about this.

First, there’s nothing to say that employers inclined to cut their workers’ hours to evade the act wouldn’t do the same whether the employees work 30 hours or 40. And here’s the key: There are a lot more of the latter than the former.

In 2013, according to the Bureau of Labor Statistics, there were 10.2 million workers notching 30 to 34 hours a week, or 7.4 percent of the workforce; that’s the class most vulnerable to having their work hours shaved to become ineligible for coverage.

But 60.9 million Americans worked exactly 40 hours — 43.8 percent of all workers. It wouldn’t take much to cut many of them to 39 hours or below, removing them from the jurisdiction of the Affordable Care Act. People already working 30 to 39 hours a week — about 20 million more — would still be excluded from coverage.

Not all those workers would be vulnerable. Most people working 40 hours or more already get health coverage from their employer, but about 9 percent don’t, according to a study by the Commonwealth Fund. The study finds that raising the full-time threshold to 40 hours would more than double the number of workers at risk of a reduction in hours.

What makes the rationale of Boehner and McConnell specious is that the idea that Obamacare has triggered a rise in part-time work is nothing but a cherished myth of anti-Obamacare conservatives. Month after month, the myth is disproved — most recently by the employment report released Friday.

That report showed that workers employed part time for “economic reasons” — at their employers’ choice, not their own — fell again in October, to 7.03 million on a seasonally adjusted basis, down an additional 76,000 from the month before. The figure now is lower than it’s been at any time since October 2008.

Is there an Obamacare effect? The figures simply don’t show it. Anti-Obamacare dead-enders such as Charles Koch and Mortimer Zuckerman made much of the spike in part-timers last June; as we and others explained, that had nothing to do with the Affordable Care Act but reflected the usual flood of students taking summer jobs.

If Boehner and McConnell really want to do the right thing by American voters, the Supreme Court last week gave them an opening by accepting the infamous King/Halbig issue for review. These are the cases that questioned whether Americans who get their coverage through the federal insurance exchange, rather than state exchanges, are entitled to federal premium subsidies. Most experts, including the legislators who drafted the ACA, say they are, but a clutch of conservative opponents have relied on an ambiguous phrase in the law to say those 7 million Americans should be denied premium assistance.

Now that the GOP controls the House and the Senate, the outlines of a deal to make the Supreme Court case moot are easy to find. The GOP dearly wants to eliminate the ACA’s medical device tax and its employer mandate. Neither change would fundamentally harm the ACA’s ability to bring affordable insurance to the uninsured masses, and both are favored by many Democrats. So give them to the Republicans — in return for a legislative fix to the subsidy language. President Obama won’t sign anything that undermines the ACA, but here’s betting that this is a deal he’d make.

But by trying to tweak the full-time definition, Boehner and McConnell are heading back in the direction of obstructionism. They’re using nonexistent statistics to justify a change in policy that will hurt scores of millions of Americans.

Michael Hiltzik is a columnist for the Los Angeles Times. Readers may send him email at mhiltzik@latimes.com.

AFP Photo/Alex Wong

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Chevron Swamps A Small Town With Campaign Money And Bogus News

Chevron Swamps A Small Town With Campaign Money And Bogus News

By Michael Hiltzik, Los Angeles Times (MCT)

A few weeks ago, we described how the giant oil company Chevron was barraging little Richmond, California (pop. 107,000), the site of one of its major refineries, with corporate PR disguised as community “news.” Its instrument was an objective-looking website, known as the Richmond Standard, purporting to be a news portal for residents of Richmond.

Now Chevron (2013 revenue: $21.4 billion) is trying to influence the upcoming municipal elections in Richmond, which pit a pro-Chevron bloc of City Council members against an anti-Chevron bloc.

So far this year, Chevron has poured an astounding $2.9 million into three campaign committees in Richmond. Of that, at least $1.4 million has gone to a committee supporting the pro-Chevron candidates and $500,000 to a committee opposing the candidate critical of Chevron, including the current mayor, Gayle McLaughlin. The figures suggest that Chevron is preparing to spend at least $33 for every voting-age resident of the city.

We know this largely because of the superb reporting of Harriet Rowan of the website Richmond Confidential. Rowan, 26, is a first-year student at UC Berkeley’s Graduate School of Journalism, which operates Richmond Confidential to provide practical experience for its students while creating a counterweight to the pap emanating from Chevron’s Richmond Standard.

Richmond Confidential may be one of the most important news-gathering enterprises in the country right now. The site runs on a relative shoestring — a Ford Foundation grant that funded its launch ran out some years ago — but it demonstrates how important it is to balance corporate PR in what is, essentially, a company town.

“Richmond Confidential has established a very solid identity, and its credibility is not questioned,” said Robert Rogers, its faculty advisor. “The students are learning while practicing journalism that has a real impact in the community.”

Richmond Confidential performs a crucial service because the city receives only spotty coverage from the mainstream Bay Area dailies: the San Francisco Chronicle, Oakland Tribune and Contra Costa Times. But its ability to compete is necessarily limited; the students are unpaid, and the site shuts down during the summer, when school is out.

It’s true that there’s sometimes a downside to such one-sided corporate political influence. In 2010, Pacific Gas & Electric spent more than $40 million to pass a ballot initiative that it drafted, to undermine municipal public power systems. It went down to defeat. Justin Levitt, an election law expert at Loyola Law School in Los Angeles, says disclosure of corporate spending “may be a signal to voters to vote the other way. Chevron may not be doing its preferred candidates a favor.”

Still, leaving coverage of the election to Chevron’s PR organ could be disastrous for Richmond’s residents. For example, you won’t find a peep about Chevron’s political spending in the Richmond Standard. That’s par for the course: The website’s entire staff, an employee of Chevron’s PR firm named Mike Aldax, told me last month that “if you’re looking for a story that’s critical of Chevron, you’re not going to find it in the Richmond Standard.”

Give Aldax a point for candor. But maintaining utter silence about the source of the largest block of campaign spending in the entire city is a bit extreme, even for an openly bogus community news website. There’s no mention of Chevron’s contributions to the election even in the Standard’s section devoted to Chevron corporate announcements, which is titled “Chevron Speaks.” (“That doesn’t surprise me,” Rowan of Richmond Confidential says, “but it does point out what they are and are not interested in covering.”)

What the Richmond Standard does provide, along with its customary fare of police blotter items and announcements from community groups, are nasty stories about Chevron’s critics on the City Council.

One leading target of the Standard is the Panama-born and openly gay Vice Mayor Jovanka Beckles, who long has been the target of vitriolic heckling from the audience at City Council meetings. She’s also a frequent critic of Chevron.

When the heckling boiled over at a council meeting in July, the Standard implied that she instigated the fracas — its headline read “Jovanka Beckles’ drama-filled night in council chambers leads to call to police.”

In fact, as other reports suggested, the heckling started from the audience, and it was Beckles herself who called police — to walk her safely to her car after the meeting. For more complete, and fairer, reports placing the event in the context of four years of frequently obscene harassment of Beckles, you’d have to read reports from the San Francisco Chronicle and Contra Costa Times. You can come to your own conclusion about who’s at fault, but Richmond Standard’s take is essentially indistinguishable from that of a Chevron-funded anti-Beckles campaign website.

Chevron says its campaign activities reflect its support for “city leaders who share our commitment to policies that foster an economic environment where business can thrive and create jobs to make Richmond an even more attractive place to live and work.”

And more inviting for Chevron. The oil company’s contributions surely overwhelm all other candidate spending in the city this year. Chevron’s independent expenditure committee, Moving Forward, fashions itself as “a coalition of labor unions, small businesses, public safety and firefighters associations.” But as Rowan documented, 99.7% of its funding comes from the oil company.

For a corporation to manipulate a municipal election on this scale should be illegal. Chevron may pose as a company enjoying its free speech rights, as secured through the Supreme Court’s 2010 Citizens United decision, but a pincer movement employing pantsfuls of money and misleading, manipulative “news” demonstrates the potential of a big company’s speech to drown out every other voice.

Loyola’s Levitt may be right that disclosure laws sometimes signal voters to steer clear of candidates supported by big money. But when a company controls the bulk of election spending and a major community news source too, as Chevron does in Richmond, voters may not even hear the signal.

Michael Hiltzik is a columnist for the Los Angeles Times. Readers may send him email at mhiltzik@latimes.com.

Photo: Michael Moore via Flickr

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Big Business Should Be Saying Thanks To Obama

Big Business Should Be Saying Thanks To Obama

By Michael Hiltzik, Los Angeles Times

It was widely noticed two weeks ago that the Standard & Poor’s 500 index, the most important stock market indicator, had hit a milestone by crossing 2,000 for the first time.

It was less widely noticed that on that day, you would have notched a 148 percent gain if you had bought stocks on the day of President Barack Obama’s inauguration. In other words, the 2,000-point S&P was another manifestation of the Obama bull market — but nobody seems to call it that.

Big business continues to grouse about the White House, as it has done pretty much nonstop since Jan. 20, 2009. The very day after the S&P record close (the index closed Tuesday at 1,988.44) came yet another attack on Obama’s policies by the U.S. Chamber of Commerce — this one a largely evidence-free assertion that the Affordable Care Act “has incentivized employers to hire part-time workers over full-time ones.” Neither the Bureau of Labor Statistics nor the Congressional Budget Office has found signs of this effect, which is a favorite right-wing shibboleth.

The hostility of business and industry to Obama has become a byword over the years, from plutocrats complaining about being disrespected to bankers complaining that they’re woefully misunderstood. Yet judging by the stock market’s performance, no president has been as good for the capital markets since Bill Clinton (who also was detested by the business community). By some measures Obama also handily outranks that beacon of Republican business-friendliness, Ronald Reagan.

Here are some rough figures to ponder: After their full eight years in office, Clinton had presided over a run-up in the S&P 500 of about 210 percent; Reagan 118 percent. Obama hasn’t served his full term yet, of course, but as of Tuesday’s close the S&P is showing a gain of about 147 percent. If the market remains flat from here or gains, Obama will also have outrun Dwight Eisenhower, who notched a 129 percent gain during his term.

Obama beats Reagan and trails only Clinton among postwar presidents in many partial-term measures too. At Day 2,000 of his term, as was calculated by Russ Britt of MarketWatch in July, the stock market had gained 142 percent; for Reagan it was up about 88 percent and for Clinton 176 percent at the same stage.

The booby prize belongs to George W. Bush, down about 39 percent during his term.

In many ways, of course, this is a misleading exercise. Presidents have much less influence over the economy, not to mention the stock market, than they’re typically given credit for. But since they’re invariably blamed by the opposition party for market slumps that occur on their watch, it’s only proper to ask why this president, in particular, isn’t getting credit for a substantial bull run.

Occasionally a commentator will begrudgingly award Obama props for the economy’s performance, even in conservative publications, but on the whole he seems to get poor marks for economic stewardship.

Consider a curious recent piece by Daniel Gross in the Daily Beast: Gross says most of the credit for the stock market should go to the Federal Reserve and to U.S. corporations’ ability to tap foreign markets — but he also acknowledges that Obama was able to “reverse the free fall of late 2008 and early 2009, stop the panic, and create the conditions for growth.” Those are pretty significant policy achievements for which the Obama administration receives almost no credit. As for the Fed, let’s not forget that Obama did appoint Janet Yellen as chairwoman, in part because of the understanding that she would continue the policies of her predecessor, Ben Bernanke.

One frequently overlooked point is that, although presidents can’t always do much to push the economy or stock market higher, their mistakes can do much more to push both lower. George W. Bush is the gilt-edged example: His tax cuts, debt-fueled spending on military adventures and indifference to regulation all helped drive the U.S. economy off the cliff in 2008. He deserves every scrap of blame that can be mustered for the 40 percent decline in the S&P 500 during his term, and for the years of hangover since.

None of this means that the U.S. economy is doing as well as it should, or that businesses don’t have some reason for unhappiness with the Obama White House. Obama’s housing policies have been ineffective. Job growth has been steady but too slow — thank a recalcitrant Congress for that. Business doesn’t like regulation, which it has been getting plenty of, at long last.

More to the point, the stock market run-up in some ways underscores the structural problems of the U.S. economy, which really demand more attention from policymakers in the White House. Those gains have been concentrated among the upper echelons of the income pyramid, very much at the expense of the working class. (Don’t tell me that “workers are shareholders too” — the effect on their wealth and income from pension fund holdings is minuscule compared with the ground they lost through wage stagnation.)

One of the most persistent phenomenons in American history is that big business never recognizes when it’s getting a break. In 1934, when Franklin Roosevelt watered down the Securities Act that created the Securities and Exchange Commission, progressives were outraged.

Wall Street should remember FDR “with gratitude,” wrote an infuriated progressive in the New Republic. But he knew that wouldn’t happen — the stock exchange, he predicted, “will turn upon Roosevelt with fury.” So it did, even though FDR did more than any other individual to save Wall Street from extinction.

The pattern still holds today.

Michael Hiltzik is a columnist for the Los Angeles Times. Readers may send him email at mhiltzik@latimes.com.

Photo: Sebastian Alvarez via Flickr

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