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Congress Scheming to Avoid Eating its Own Cooking on Obamacare

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You cannot make this stuff up. From Politico (hat tip MR):

Congressional leaders in both parties are engaged in high-level, confidential talks about exempting lawmakers and Capitol Hill aides from the insurance exchanges they are mandated to join as part of President Barack Obama’s health care overhaul, sources in both parties said.

The talks — which involve Senate Majority Leader Harry Reid (D-Nev.), House Speaker John Boehner (R-Ohio), the Obama administration and other top lawmakers — are extraordinarily sensitive, with both sides acutely aware of the potential for political fallout from giving carve-outs from the hugely controversial law to 535 lawmakers and thousands of their aides. Discussions have stretched out for months, sources said….

And what’s the reason? Oh, the policies might cost too much! But that is because Congresscritters have enjoyed particularly generous coverage. From a 2009 Truthout article:

But many feel Congress is out of touch. How, they wonder, can lawmakers empathize with the underinsured or those lacking insurance when they receive a benefits package — heavily subsidized by taxpayers — that most Americans can only envy?

Among the advantages: a choice of 10 healthcare plans that provide access to a national network of doctors, as well as several HMOs that serve each member’s home state. By contrast, 85% of private companies offering health coverage provide their employees one type of plan. Take it or leave it.

Lawmakers also get special treatment at Washington’s federal medical facilities and, for a few hundred dollars a month, access to their own pharmacy and doctors, nurses and medical technicians standing by in an office conveniently located between the House and Senate chambers.

Now there actually is a bit of an issue for the various Congressional aides. Since the Republicans have been in charge in the House, they’ve forced cuts in pay on Congressional staffers and on expense budgets for individual Congressmen. I can see some readers arguing that’s laudatory. It isn’t. The effect is to make the House even more elitist and dependent on lobbyists. As one staffer remarked, “The only people who can afford to take these jobs now are people who intend to cash out and become lobbyists or come from rich families.” Staffers now can’t get trade journals or go to conferences, and the impediments to getting independent sources of information gives the industry hacks even more influence than they had before.

Politico explains the issue for the staffers:

The problem stems from whether members and aides set to enter the exchanges would have their health insurance premiums subsidized by their employer — in this case, the federal government. If not, aides and lawmakers in both parties fear that staffers — especially low-paid junior aides — could be hit with thousands of dollars in new health care costs, prompting them to seek jobs elsewhere. Older, more senior staffers could also retire or jump to the private sector rather than face a big financial penalty.

Plus, lawmakers — especially those with long careers in public service and smaller bank accounts — are also concerned about the hit to their own wallets….

Sen. Richard Burr (R-N.C.) said if OPM decides that the federal government doesn’t pick up “the 75 percent that they have been, then put yourself in the position of a lot of entry-level staff people who make $25,000 a year, and all of a sudden, they have a $7,000 a year health care tab? That would be devastating.”

Burr added: “And that makes up probably about 30 percent of the folks that work on the Senate side. Probably a larger portion on the House side. It would drastically change whether kids would have the ability to come up here out of college.”

Aside: that $7000 appears to be rich, since a bronze plan for an individual is expected to cost between $4,500 and $5,800 a year in 2016. But the ouch is still there. From US News:

Eligibility for supports will be determined by the relationship of individual or family gross income levels to the national federal poverty level (FPL). In 2012, the FPL is $11,170 for a one-person household….

Up to 133 percent of FPL: Payments are 2 percent of income.

133 percent up to 150 percent of FPL: Payments begin at 3.0 and rise to 4.0 percent of income.

150 percent to 200 percent of FPL: Payments begin at 4.0 percent and rise to 6.3 percent of income.

200 percent to 250 percent of FPL: Payments begin at 6.3 percent and rise to 8.05 percent of income.

250 percent to 300 percent of FPL: Payments begin at 8.05 percent and rise to 9.5 percent if income.

300 percent to 400 percent of FPL: Payments are 9.5 percent of income.

So if we assume 2% annual inflation, the 2014 FPL would be roughly $11,620. $25,000 is 215% of the FPL. The staffer would pay 6.3% of his income, or $1,575, and get a tax credit for the rest.

If you read the article, Henry Waxman, one of the godfathers of Obamacare, contends this is all a misreading of the law and that the Federal government will take care of the costs to Congressmen and their staff. But Congress is apparently waiting for a decision by the Office of Personnel Management, and that bipartisan talks have been underway long enough for several proposals to have been sent to OPM suggests that the issue is real and a fix is in the making. The fact that so many Congresscritters are unsure of what the law means and how it might affect them and their employees is a telling reflection of the confusion and uncertainty in the public at large. Stay tuned.

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80 comments

  1. nonclassical

    ….bushbama insurance co $ubsidies parallel bushcheney pharamceutical co $ubsidies…

    entire intent is to generate campaign contribution…

    meanwhile, obviously congressional reps are having NONE of it…

    DLC bushbama completely ruins democrat brand…

  2. The Rage

    meh, whatever.

    I see little in the way of subsidies. Obamacare is one of the greatest headfakes in modern times.

    75% of its “law” will be gutted by 2014.

    1. petridish

      I have to agree. Please read this comprehensive analysis of Obamacare:

      http://www.paulcraigroberts.org/2013/02/03/obamacare-a-primer/

      in which the “bronze” plan is characterized as “cheapest and dry as dust with 60/40 coverage–a win-win for insurers.” (And all for the low, low price of $400-$500 per month.)

      There are so many twists and turns in this “law” it will be impossible to administer, let alone finance. The only question is how much injustice will need to be suffered before the unworkability is acknowledged.

      If the foreclosure situation is any indication, alot.

      1. diptherio

        Thanks for the link.

        Apropos of this here article, from your link:

        Herndon has been working on messaging various parts of the ACA that will be used by outreach partners, insurers and state Exchanges. Its messaging is not based on truth or evidence – Herndon actually stays away from any mention of facts as you read above regarding the cost of plans. Instead, its messaging is designed to mislead an uninformed public.

        Here are some examples of Herndon spin regarding the ACA:


        — Here’s an award winner: “Members of Congress will purchase their insurance at the Exchange. If members of Congress are part of the marketplace then it’s got to offer quality plans and protections.
        http://herndonalliance.org/resources/research/communications-tips-exchange-talking-with-voters.html [emphasis added]

        I guess they’ll have to stop using that talking point…

      2. Kokuanani

        So all of us who were saying, “NO law is better than passing this pile of crap” back when this was being debated, can we now say “I told you so”?

        Small satisfaction. Would have preferred that the whole thing fail initially.

    2. Gerard Pierce

      Actually it’s just Obama playing 12 dimensional chess. Once this clusterfuck is actually implemented, even the Republicans will retire in confusion and vote for single payer. On the other hand, maybe the whole thing is just the Democratic Party playing with itself(?)

    3. washunate

      Yep. That people fell for the headfake fascinates me. It doesn’t actually do anything substantive about why healthcare is so expensive that average people can’t afford it.

  3. mmckinl

    Of course we need “single payer” health care … These shenanigans just show how complex and convoluted all private insurance coverage is. Single payer would save 40% on health coverage for ALL Americans.

    Pharma, Health Insurance Companies, Hospitals and their minions cost America a trillion dollars a year for policies that it takes a lawyer to understand, drugs that don’t work and are actually dangerous while leaving tens of millions uninsured.

    1. Doug Terpstra

      Quite right, although your savings are more than 50%, when compared to the dozens of civilized countries with single payer.

      https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_(PPP)_per_capita

      It is still so hard for so many to grasp such a starkly immoral reality: that civilized countries pay half what we do — and get better outcomes! That blunt truth can’t be repeated often enough, because while facts are stubborn things, willful ignorance is seemingly carved in granite.
      The elemental evil and inequality of Obamacare is spotlighted by GOP Sen. Richard Burr’s own statement above. It’s purely unintentionally of course, but here it is. Simply substitute “American” for staff.

      “… if OPM decides that the federal government doesn’t pick up “the 75 percent that they have been, then put yourself in the position of a lot of entry-level staff people who make $25,000 a year, and all of a sudden, they have a $7,000 a year health care tab? That would be devastating.”

      Well, DUH! Is anybody in there? This is why Congress must swallow their own prescribed medicine and choke on it or chuck it out. The ongoing division of American society by these derelict, negligent leaders will soon be irreparable and irreconcilable. Then there won’t be enough rope and lampposts to go around.

      1. roots

        The ongoing division of American society?

        Brings to mind the HG Wells scifi novel where the brutish Morlocks (government and corporations) cook and eat the docile Eloi (the rest of us).

      2. Jerry

        Relative to reducing medical charges, I’ve heard that some of it has to do with allowing workers in the U.S from other countries….we provide work visas for farm workers, etc. but are not allowed to grant work visas for medical personnel (i.e. doctors, nurses, etc) The second thing I ponder is that Cuba provides very low cost medical education while medical personnel bemoan the cost of medical education in the US…

    2. Doug Terpstra

      And godfather Henry Waxman says not to worry, they’ll take care of their own, Americans as a whole be damned. What Why so we suffer such wretched, vile leaders? The only free healthcare they deserve are frequent, involuntary colonoscopies.

  4. albrt

    “a bronze plan for an individual is expected to cost between $4,500 and $5,800 a year”

    Is the bronze plan the one the unofficial scam artists are already selling, or is it the one the official scammers will start selling in 2014?

    http://www.correntewire.com/obamacare_clusterfuck_needless_complexity_and_slow_phase_in_enables_scammers_to_target_seniors

    The Rage is right, pretty soon people will start figuring out what a pile of crap Bushbamacare is, plus Congress will never come up with the money for the subsidies, and most of it will never be implemented.

    1. curlydan

      The exchanges are slated to open October 1st this year with coverage beginning Jan 1, 2014. It will be interesting to see the bronze/silver/gold breakdown.

        1. Ms G

          I agree — it can *only* be credit cards (considering that the bones of ACA are a big financial con against consumers).

          I’m waiting for yet another Luxe policy category to be inserted called “Superlative Platinum” (like “superlative Chained CPI”).

          That might be the policy-category they work out for the Congress persons who are horrified and outraged that they might have to stand in the same shoes as the victims of their legislation. “Superlative Platinum” would mean a cadillac health policy (99.9% reimbursement for all costs, no deductibles, no donuts) for Congress persons paid entirely by us, the taxpayers and victims of their ACA legislation.

          Just watch!

  5. Jim Haygood

    ‘Sen. Richard Burr (R-N.C.) said if OPM decides that the federal government doesn’t pick up “the 75 percent that they have been, then put yourself in the position of a lot of entry-level staff people who make $25,000 a year, and all of a sudden, they have a $7,000 a year health care tab? That would be devastating.’

    I am devastated … DEVASTATED … to learn that working people are going to be hurt by Obamacare!

    Has it occurred to my distinguished colleague from North Carolina that if a monster health premium is ‘devastating’ for a few thousand Hill rats, it might be a veritable train wreck when scaled up 10,000 times to the entire U.S. population?

    Central planning, comrades. I thought we could do it better than the former Soviets. But I was proven grievously wrong …

    1. Goin' South

      Let’s be honest here.

      This isn’t “central planning” by any stretch. “Central planning” would be a British-type system where the doctors worked for the government.

      Instead, it’s yet another subsidy to prop up broke-ass Capitalism. Citizens are being mandated to bail out medical insurance companies, pharmaceutical companies, medical equipment companies and overpaid doctors and hospital administrators.

      The burden is getting a little heavy at this point since we’re also propping up banks, “security” companies, MIC companies, car companies, power companies, etc., etc., etc.

      Maybe it’s time to let a failing system go under and try something new.

      1. Cynthia

        I agree, Goin’ South. ObamaCare is grounded in corporatism, not central planning. The healthcare industry is the tail that wags the HHS dog in Washington.

      2. Susan the other

        Exactly. Obama and Congress have managed to run the most contradicted and dysfunctional government on the planet. The absurdity of it all is staggering.

      3. Valissa

        Of course it’s central planning! Our leaders were all in cahoots about it! However not all central planning is created equal. Some programs in some countries are better centrally planned than others. Central planning is not a black & white issue, like everything else it’s in the huge gray zone.

      4. sierra7

        “Instead, it’s yet another subsidy to prop up broke-ass Capitalism. Citizens are being mandated to bail out medical insurance companies, pharmaceutical companies, medical equipment companies and overpaid doctors and hospital administrators.”

        Thank you!
        Add the “investment financial” industry….
        Truly we are witnessing the end writhings of late stage capitalism gagging on it’s concepts of “free markets”!

    2. Lambert Strether

      Sure its central planning. It’s central planning by the FIRE sector to maximize rental extraction. Most of the manuevering by the political class (of which a subset is the State) is kayfabe.

  6. Cynthia

    “HHS stages multimillion-dollar PR campaign to promote ObamaCare”

    The Ministry of Propaganda is in full effect, spending tax dollars to convince the ignorant masses of the efficacy and merit of this latest manifestation of the federal government’s alleged sagacity and benevolence, when all indications are that this hideous hydra of bureaucratic fantasy and control is every bit as awful and damaging in its consequences (intended and unintended) as had been widely predicted by those possessing a modicum of common sense and realism.

    http://freebeacon.com/a-tough-sell/

  7. Carla

    Richest country in the world, and suddenly our most important yardstick is the FPL. As Yves says, you can’t make this stuff up. Thanks for the post.

    1. washunate

      Right on.

      And it’s even worse than that. The asterisks you don’t see next to those summary descriptions of FPL subsidies are that it’s not calculated based upon a percentage of all medical costs as the snake-oil-salesmen imply (but never actually guarantee).

      Rather, it’s calculated based upon a percentage of employee-only health insurance premium costs, which patently disregards family insurance premium costs and non-premium costs (coinsurance, deductible, copay, denied treatments, time spent researching options, etc.).

  8. Mcmike

    How will obamacare work out? Hmm… Lessee… Lessee…

    He rolled over for the banks, completely. He rolled over for monsanto. He rolled over for oil & gas.

    Gee, i am just SURE he is gonna stick it to those insurance companies.

    The only mystery is how so many idjits insist on calling it socialism. When in fact it is the opposite – corporate fascism.

    1. ian

      Thats part of the game. The ‘ijits’ that call it socialism negate the charges of corporate fascism.

  9. katiebird

    As I understood it the WHOLE point of those who insisted that all varieties of Congress-Critters be included in the Exchanges was so they WOULD feel the effects and understand what the rest of us are feeling.

    Right now, it’s the fear of insecurity … $400-$500 for a Bronze Plan?? How the F* is any individual supposed to come up with that? It’s pure extortion.

    But, instead of fixing the problem, their solution is to exempt themselves?

    I am actually shocked at this.

    Where is Al Franken, or someone to shine a light on this stuff?

  10. David C Mace

    people making $25,000 with standard deducton and pone personal exemption will have $15,000 taxable income with about $1800 tax bill which will be elimintaed by their credit but they still will have paid 5800-1880 tax savings== 4000/yr or about $300 a month premium for shitty Bronze`coverage

    ???who can afford that ???

  11. PQS

    Well, now is the time to start talking “shared sacrifice” and “everybody in the pool” and all the other crap they’ve stuffed down our throats for years….

    I just cannot believe they didn’t think of this before.

    1. Ms G

      “shared sacrifice” and “everybody in the pool” and “skin in the game”

      Exactly. Now is *exactly* the time to be drowning their mail boxes with those slogans.

  12. katiebird

    Wanker, Ezra Klein’s take on this, No, Congress isn’t trying to exempt itself from Obamacare

    This isn’t, in other words, an effort to flee Obamacare. It’s an effort to fix a drafting error that prevents the federal government from paying into insurance exchanges on behalf of congressional staffers who got caught up in a political controversy.

    So, this problem for Congressional Staff is a “drafting error” but the one where the percent of your family income that goes for health insurance only counts what the Employee pays for their own part of their family plan — NOT the entire cost of the Employee’s Family Plan — is deliberate?

    If it’s NOT deliberate, why not (AT LEAST) fix that while they’re fixing the rest of the legislation.

    1. ian

      You lost me at ‘Ezra Klein’.
      His whole shtick is ‘why up is down and white is black’.

    2. Lambert Strether

      Klein vs. Politco makes me want to claw out my eyeballs, but it’s interesting to note that where Politico quotes “lawmakers and Capitol Hill aides” “in both parties” Klein does not say his “staffs” (not staffers? Wierd locution) are from both parties.

      So to me it looks like access journamalism by Klein, shocker. He sweetens his beat by helping Democrat staffers put the toothpaste back in the tube, they give him some “insider” information.

      Also this from Klein:

      This was an offhand amendment that was supposed to be rejected.

      Yeah, well, we heard that with the sequester too, but guess what: The House passed a bill, the Senate passed a bill, the President signed it, and the bill became a law. Best to assume all parties knew what they were doing, and the outcome satisfied them.

  13. charles 2

    “But we have to pass thebill so that you can find out what’s in it….” Indeed LOL !

  14. r stolte

    Feelin so sorry for those slime balls who didn’t read the bill before voting for it. Maybe they will recognize the value of reading skills after leaving their present job in government.

  15. afisher

    I don’t have a dog in this fight, but it would be interesting to know how many of the comment writers here would actually be directly impacted by ACA.
    Tell others that you do / don’t currently have healthcare and what you pay and your out-of-pocket cost.
    Everyone has an opinion and everyone can find and add their personal fav. link of “outrage” over this process.

    1. katiebird

      I’d love to share information about how the law will affect me. But, I don’t know yet. Several specific questions have not been answered.

      1. NotTimothyGeithner

        Part of the reason is the mythical exchanges which are advertised to all our woes aren’t being created. Obama like many before him to avoid criticism decided to pawn off the problem on the states, but unlike other times in U.S. history, the states are broke and have no appetite for creating the exchanges.

        Like this main story demonstrates, its not just that they were crooked. They didn’t do anything beyond reach some targets, probably established by Obama, and my guess is the delays in implementation were largely created in the hopes magic would happen and all the questions would be worked out, passing the buck, mostly. The staffers who wrote the original bill would move on. Their bosses would take the heat, not them.

        1. Nathanael

          Bingo. Obamacare has, so far, been a mirage. It’s completely unclear what it’s going to do.

          My state (NY) already has stronger regulations on almost (not quite all) issues. And the premiums for the available plans are… high enough that nobody in the state will be subject to the ‘no insurance tax’.

          Which makes me wonder whether Obamacare will do anything at all.

  16. drb28

    “…put yourself in the position of a lot of entry-level staff people who make $25,000 a year…”

    “a bronze plan for an individual is expected to cost between $4,500 and $5,800 a year”

    “That would be devastating.”

    Yet that’s exactly the position a lot of seniors in the country find themselves in. For example, I’m turning 65 in June and will have to go on Medicare. I started drawing SS at 62. My SS is higher than average [the average is a little over $1200/mo.] – about $1700/mo before taxes and insurance – or around $20K/yr. Medicare Part B costs $105/mo. My Medicare supplement plan – which includes prescription drug coverage – is $271/mo. And I’ll pay $20/mo. to keep my wife on my company retiree health insurance – that’s about $400/mo. or $4800/yr. If my wife was also 65 the cost would be double that – although we’d have her SS as well. And of course that doesn’t include any additional out-of-pocket costs for deductibles, etc. Fortunately for me I also have a small pension and savings and my house is paid for. Many people aren’t that fortunate.

    1. drb28

      p.s. – while my example is doubtless superior to the “bronze plan”, those entry level staffers doubtless don’t have to concern themselves much with prescription drugs, and probably get dental and vision plans from their employer as well. Neither of which is covered by Medicare or Medicare supplement plans and both of which become more necessary at my age than that of most Congressional staffers.

      1. PrairieRose

        Thank you, drb28. This is precisely the sort of real-world anecdote that our elected representatives (I know, an oxymoron) all need to hear. My parents recently passed away and lived mostly on social security and, as you note, they had to pay for supplemental insurance plus dental and vision that aren’t covered by Medicare. Additionally, in their state their social security benefits were taxed. They were not exactly going off to the Caribbean twice a year. Thank you, again.

        1. drb28

          @PrairieRose:

          You’re welcome. And it’s not just the pols – including the POTUS apparently – that need to get a clue. It’s also the Mitt Romneys of the world who think all us “takers” are somehow living large on SS and Medicare. Or, more likely, just don’t care. After all, how many people in their social set would ever actaully need either?

  17. washunate

    This is all quite hilarious (except that it’s horrifically tragic). PPACA didn’t solve a single major problem. So guess what, the main problems still exist.

    Shocker.

    1. Dr J

      It took me days to read the Intro to ECONNED because ALL OF THE ARGUMENTS USED TO SHOW THE COMPLEXITY AND ADAPTABILITY OF THE MARKET ARE JUST AS APPLICABLE TO THE BODY. In other words, if you want to rescue health care then we better stop trying to fix the human body with mechanical methods based on analytical processes. That is the part of the message of THE BOIDS AND THE BEES. Another part has to do with seeing the healthcare delivery system in the same light. Thanks Yves for seeing the economy as a CASY (Complex Adaptive System)

  18. leapfrog

    “But Congress is apparently waiting for a decision by the Office of Personnel Management,”

    OPM? Other People’s Money?

  19. Eliza

    Aside: that $7000 appears to be rich, since a bronze plan for an individual is expected to cost between $4,500 and $5,800 a year in 2016.

    Bloody Hell! Our family healthcare insurance plan costs us $12,000 per annum (excluding deductibles and copays!). through my husband’s employer now.

    We’d love to be able to pay $7,000 or less for our health insurance extortion…er, I mean healthcare policies.

    1. Yves Smith Post author

      Please read the post again.

      The newly hired staffer making $25,000 is assumed to be single.

      You are talking about a family.

      Apples and oranges. The IRS has pegged the rack rate for the average price of an Obamacare bronze plan for a family of 5 at $20,000. If you make less than $120,000 or so, you’ll get some tax credits to offset part of the cost.

      However, bronze plans are TERRIBLE. The insurance is supposed to pick up only 60% of the cost, between the deductible and co-pay.

    1. Valissa

      Nice job Lambert! Great collection of info! I’ve bookmarked the link so I can take those posts in slowly. Reading too many at one time would be way too depressing :(

    1. NotTimothyGeithner

      I don’t think this should be the strategy because it implies the ACA was an acceptable outcome. In the short order, we don’t want the Congress to exempt the staffers because those policies will attack their enabling class.

      The messaging should be Congress is once again protecting themselves they don’t think the policy is good enough for their junior staffers but its good enough for you. Hell, I would love for them to fix it, and then see what happens when they start running.

  20. rps

    The Congress morons have been on the taxpayer dole forever. What makes them think they’re better than their employer?

  21. Ms G

    ” … put yourself in the position of a lot of entry-level staff people who make $25,000 a year, and all of a sudden, they have a $7,000 a year health care tab? That would be devastating.”

    Yeah, dude. Welcome to our world, which you created.

  22. JeremyGrimm

    ObamaCare may provide the impetus needed to finally get a third party started. As a long time and now completely disaffected Democrat (yes I voted for Obama – or more accurately voted against Romney) I finally reached the same conclusion that many readers of nakedcapitalism arrived at long ago: There is no lesser of two evils.
    Without considering the ruinous costs for ObamaCare, the complexity of the regulations and their manifold traps make them extremely onerous, far beyond even the darker areas of our tax codes. As for the costs involved, their impact on anyone employed or unemployed without an approved health insurance plan will rapidly destroy of what remains of our middle class, and upper middle classes. Their effects on the poor combined with all the other penalties for being poor will push them to complete desperation. Those still employed and covered for the moment by an approved health care plan provided through their employer will feel the coercion of a powerful new lever for driving hours up and wages and salaries down. Unless it’s repealed very quickly I’m afraid ObamaCare will stir widespread unrest.
    It may be time to look more carefully at what options remain for leaving this country while we’re still allowed to leave.

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