2015 financial time bomb in state healthcare exchanges
One thing you have to remember about Obamacare is that much of the financial pain, such as steep penalties, is back ended so that by the time people wake up to reality, the law has been operating for years and it’s too late.
Here’s yet another example, the subsidies for state exchanges disappear in 2015, and that’s going to bust state budgets.
My formerly home state of Rhode Island and Providence Plantations is finding out how painful the end of those subsidies will be for HealthSourceRI, via ProJo, HealthSource RI proposes $26 million spending plan:
Rhode Island’s new Obamacare-mandated online health insurance marketplace, which launched Oct. 1, has proposed nearly $26 million in spending for the budget year that starts July 1, 2014.
But HealthSource RI, as it’s officially known, has not proposed how to pay for it once federal money runs out around Jan. 1, 2015.
“There’s nothing that says there won’t be more federal funds coming, but what we know now is that federal funds to date will cover all of the costs of the exchange up until mid-point FY15,” Governor Chafee’s spokeswoman, Christine Hunsinger, said Wednesday. “That’s for certain. It may be longer if we get lucky, get additional money, be efficient and do some other things. But up until mid-point FY15, that’s what we’re looking at.”
Rhode Island received about $84 million in federal grants to design and launch its version of the online insurance hub, which is a central part of President Obama’s health-care law.
But that grant money must be allocated by Jan. 1, 2015. After that, the federal government has said all exchanges must be financially self-sufficient.
Good times, huh? Like a drug dealer giving you drugs on the cheap until you are hooked, and then you’re on your own.
Rhode Island doesn’t have the money. Its budget, sinking under underfunded pension obligations and suffocated by municipal employee unions that run the state, likely will have to raise fees, taxes or some other revenue to pay for the new bureaucracy.
All this as cost projections to run the exchange are rising. Projo continues:
The Chafee administration has asked departments to submit two versions of their budgets: one showing how much it would cost to provide the same level of services and programs as this year (known as a “current services” budget) and another that would reduce that cost by about 7 percent.
HealthSource RI, which falls under the state Department of Administration’s budget, proposed a single version: a $25.8-million spending plan.
The budget is also higher than previous estimates.
HealthSource RI director Christine Ferguson told House lawmakers in September that the exchange could cost between $17.9 million and $23.9 million a year to operate.
John Kostrzewa at ProJo notes the potential impact:
Ferguson has proposed $25.8 million in spending for the exchange for the budget year that starts July 1, 2014, according to a request submitted to Governor Chafee.
But she has not proposed a specific way to pay for it and has not detailed how the operation would be paid for in later years. In effect, there is no clear business plan that any entrepreneur launching a start-up knows he has to have.
Ferguson told the crowd at a recent Publick Occurrences forum that the money to run the exchange in 2015 could come from a range of options, including an assessment on claims or an assessment on premiums paid by participants in the exchange….
Others, including Gary Sasse, former director of the Department of Administration and director of the Hassenfeld Institute for Public Leadership at Bryant University, have criticized the lack of a long-term business plan and the potential, financial impact.
“The exchange was created by executive order which can be changed by the next governor, not a statutory law,” Sasse said, “It does not have an identified permanent source of operating funds which could exceed $20 million annually. One option to fund the exchange on a continuing basis could be an insurance premiums tax which may have an impact on health insurance costs in a very competitive economic environment. Is this any way to make public policy?”
What a creepshow. The American public is being hooked on a plan being implemented without planning which has a timebomb set to expode in 2015.
Donations tax deductible
to the full extent allowed by law.
So maybe those GOP Governors that defaulted to Federal exchanges won’t be so dumb in 2015?
They are REALLY dumb if they pay for these exchange if the software doesn’t get fixed soon. Right now – all they get for free is a cluster frack!
Heh. Rick Scott at least thought about staring an exchange for Florida, but fortunately the legislature stood firm and said “no”.
As Gov. Scott should have know: there’s no promise of federal dollars down the road to cover the cost of the exchanges or the increase in Medicade/Medicare rolls.
That would have been on us, the taxpayers.
Federal money is the ultimate bait and switch. “Do it. It won’t cost you anything”. Then a few years later: “We need to share the costs”.
“O-Bum-a means the worst in everything!”
“O-Bum-a when you want the worst things in life!”
SMART POWER, FORWARD!
Sort of says, “Cloward-Piven”, dunnit…???
The knowledge of the budget deficits will hit before 2015, helping those governors up for re-election. My Governor turned down the $ in face of a lot of popular opposition because he said essentially what the Feds give, the Feds can take away. Sucks to be Charlie Crist then.
I believe that Hawaii is going to implement a 2% surcharge on those who sign up to finance their exchange.
Destroy state governments, added bonus.
We’re about to see if the citizenry of this country have learned anything at all from the pension problem, a problem whose consequences they have yet to confront.
Obamacare is one more spend-big, pay-later scam. To pile it on top of the unresolved government (all levels) pension problem is insanity – to sell it should be punishable by imprisonment.
As a side note, an $18 to $24 million swing in estimated cost for a program that begins only nine months out? A thirty three percent swing? Wow, she’s good. Leave yourself a little room for error, honey.
Way off topic: if you oppose bullying based on Political Correctness consider buying Barilla pasta.
They put it on sale locally and we stocked up!
I used to be in favor of gay marriage but then the slew of hate campaigns launched. Plus the brazen rejection of the People’s views. I live a dark blue state which voted strongly against gay marriage–only to be told by a gay judge that their voices were going to be ignored. He threw the vote out.
I’m not in favor anymore, it’s time to stand against the fascist elite oppressors. 🙂
Illinois is another state with too much unfunded pension liability to be thinking about a medicaid expansion and subsidies for the state exchange. But then again, the Democratic leadership in the state already has it all figured out. If you just stop paying bills, then there is money in the treasury to afford the $670,000 copper plated doors.
Certified pitchfork and torch proof, so the lawmakers don’t have to worry about the local rabble complaining.
Great post Professor.
The chilling effects of this creepshow brings me to a very false and disturbing talking point that the left, establishment Republicans, and even some “conservative” talking heads in the media are spouting. We must address this talking point since by and large I have not heard influential voices on our side properely addressing it.
The common excuse (surrender) used as rebuttal to the efforts of Ted Cruz and a few others that have being promoting the defund Obamacare narrative is that:
1. Obama won re-election in 2012
2. The SCOTUS upheld Obamacare
3. As such, “Obamacare is the law of the land”.
The implication is that the 2012 election was the will of the people. While on it’s face those statements are true, but the reality is that what we got was “bait and switch” in that election.
I pose the question …
Knowing NOW what we know TODAY would Obama be elected if the election was held today?
What we thought we were getting and what we were told:
1. “If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”
2. “Obamacare will reduce health care premiums by $2500 per family per year.”
3. “I will not sign on to any health plan that adds to our deficits over the next decade.”
The voting public en masse was duped on 11/6/2012. If the election in 2012 was a referendum on Obamacare, then without really knowing the chilling effects, did the public vote based on informed decisions?
Of course I pose a rhetorical question, but while many of us weren’t buying what we were being told, many others did. Those buying into the Obamacare lies was enough to make the difference in order to get Obama re-elected.
Who doesn’t want to save an average of $2500 per year?
Who doesn’t want for all citizens to have health care (expecially since those already with health insurance were going to save money)?
So much of the voting public already with good health care insurance (a majority of voters) would see this as not effecting them personally and “noble” in that it addressed pre-existing conditions and those without insurance.
The reality is that BHO’s election and re-election was based on lies, they knew they were were lying but still sold those lies anyway.
The talking point of the left and establishment Republicans … Obama won the election and SCOTUS upheld … that dog just don’t hunt. It must be countered at every opportunity.
It’s no co-incidence that the “goodies” were “front loaded” and the bad parts were not enacted until after the 2012 election. Look at how fast the employer mandate was delayed once the reality of the job losses and cut back of employee hours manifested. Again they push out the chilling effects now after the mid term elections.
Now we know employers are dropping or reducing health plans and that the premiums on the exchanges are nothing more than income redistribution. Many of those voting for Obama did so based on lies. So was the 2012 rigged? Yes.
To your point Professor … we will not see 2015 until 2015. That too is by design.
I am hoping that my rebuttal to the “but Obama won” argument can get spread to those that are fighting the fight and have influental voices on TV and radio and in blogs. I keep hearing the “but Obama won” argument over and over and many on our side respond with the “Deer in the headlight” look.
Listening to John McCain and others make the leftist argument and no one to challenge them straight on has me concerned.
Obama’s victory in 2012 was based on intentional lies.
Image what would happen if a product was sold on TV the way the way Obamacare was being sold. If I bought a car from Ford that was supposed to save me $2500 a year vs. my old car, then once I get it and drive it home and find out not only it didn’t save me $2500 a year, it actually cost me more money than my old car, and the new car didn’t work as well. And then millions more consumers have the same problem. The media would be all over that, there would be class action lawsuits.
The sickening part is that we can’t file a class action lawsuit for this “product” and we have no choice we are forced to buy this defective product.
I do not accept the “if rape is inevitable then you should lay back and enjoy it” argument coming from those who claim to be conservative. We must fight. Do not let that lame talking point persist.
The voting public en masse was duped on 11/6/2012. If the election in 2012 was a referendum on Obamacare, then without really knowing the chilling effects, did the public vote based on informed decisions?
I am not so sure about that. For one thing, the 2012 Presidential contest was between the father of ObamaCare and the father of RomneyCare. For that reason the GOP’s efforts to make the dangers of ObamaCare an issue were weak and sporadic (not to mention ineffective). Nor was the GOP especially keen on attacking the entitlement state, since many Republicans seem to believe they can administer the same staggering level of benefits without the bureaucratic nightmare we see today. In short, they aspire to be cut-rate Democrats.
For another, there is a streak of nihilism in many Obama voters. They are angry with Obama because the streets are not literally flowing with the blood of the filthy capitalist pigs (look at the bloodthirsty maniacs of Occupy Wall Street and in the comment sections of many lefty websites). They don’t give a hoot about how bad the economy gets so long as “the rich” get their comeuppance. Rage, rage, rage – and an ocean of self-pity – is their defining characteristic. Expecting these voters to make sane, rational choices is neither realistic nor likely. Nor are they a small segment of the voting population that can be ignored: the public schools, universities and media have caused their ranks to swell to frightening numbers.
“For one thing, the 2012 Presidential contest was between the father of ObamaCare and the father of RomneyCare”
That is true but only an additional rebuttal along with my points. What you are stating is basically the only thing the folks are on our side is using to push back on the “Obama won meme”. This only explains disatisfaction from Conservatives that stayed home.
However, if you look at the backlash now from Unions and if you actually go out and talk to “low information” voters and read their comments on the “Obamacare” Facebook sight and other non “right wing” blogs there is **huge buyers remorse** out there. Soon after the Exchange website opened up (rather tried to open up) those that could get in and wanted to sign up got the real sticker shock for the premium cost and high deductibles. Not everyone going to the exchanges are “on the dole”.
Yes Romney was a poor candidate, however, his losing margin was no landslide. Many of the “low information” types are not ideological and are just not “dialed in”. Many are now just realizing they were duped, these are not leftists in the context you describe.
What you are stating is basically the only thing the folks are on our side is using to push back on the “Obama won meme”. This only explains disatisfaction from Conservatives that stayed home.
What I said (actually, not basically) was that there was no real difference between Romney and Obama on the issue of government-mandated health insurance, and that is why he never was able to make a convincing argument against ObamaCare. Also, there are more than a few Republicans (Romney included) who share the Democrats’ nanny-government philosophy, and they had no intention of doing anything that would derail the federal gravy train. Senate Republicans like McCain were all for criticizing ObamaCare, until Ted Cruz called their bluff and said let’s vote on it. Then McCain and his fellow travelers unleashed his acid tongue on Cruz in a way they would never dream of doing with Obama.
As for the backlash against Obama because of ObamaCare, it is quite real, but so what? That will not stop the media from doing what they do every single day – run millions of dollars of free pro-Democrat/anti-Republican advertising under the guise of “news” and “entertainment”. That will not stop the unions and other leftist organizations from using bullying and harassing political tactics typically found in thugocracies like North Korea, Zimbabwe and Haiti. That will not stop the Holder Justice Department from turning US elections into a sick Third World joke. That will not stop the super-wealthy Hollywood glitterati from calling for more and more socialism while keeping themselves insulated from the clodlike public they detest. That will not stop lefty professors using their bully pulpit to bully others. No matter how bad ObamaCare gets – and we ain’t seen nuthin’ yet! – there will not be the tiniest slowdown in their headlong rush to turn America into a fascist hellhole. Count on it.
You made an odd comment about “takers” voting. If that were the case, if people were voting their economic self-interest and holding Obama responsible for his failures to deliver what he promised, Romney would have won easily (takers or no takers). By any rational standard, Obama has been a disaster. Yet that did not happen. Consider that McCain won 59,950,323 votes in 2008 in an awful year for Republicans. Romney, in a year which truly had the worst economic conditions since the Great Depression, managed a dead-cat bounce of 60,932,235 votes. No matter how bad things get under Obama, no matter how crooked and incompetent his administration is, the typical leftist voter is motivated by hate and a desire for revenge against anyone whoever disagreed with their warped worldview. Given a choice between food and political power, they will always chose the latter. And the leftists control just about every major institution in America, which magnifies their power to terrifying levels.
Finally, you spoke about low-information voters. One reason they are low information is that the GOP has ceased competing for their attention, let alone their vote. In 2012 Romney ran a strenuous, grueling campaign about nothing in particular. He gave passionate speeches about vague generalities. He specifically avoided putting the election on the only level that could have won it for him: as a choice between slavery and freedom, between starvation and plenty, between degradation and human dignity. Instead, Romney was the squishy don’t-frighten-the-horses campaigner that “moderate” Republicans are infamous for. No wonder he lost!
I made some mark-ups to your comments below. I think you are making some arguments I am not dis-agreeing on but miss the narrow focus of my long post. The Democrats and Rinos are using “Obama won” in their talking points and we must tear that down.
“What I said (actually, not basically) was that there was no real difference between Romney and Obama on the issue of government-mandated health insurance, and that is why he never was able to make a convincing argument against ObamaCare.”
Agree … however, those that stayed home, if they know NOW the scope of the damage as it is manifesting today, would they stay home today if the election were today knowing what we know now? Which way would those votes split now? Those that saw little difference in Romney or Obama couldn’t know what we knew, or else they would have been voting against Obama, and not necessarily for Romney, just to avoid the train wreck. In other words they did not see the train wreck coming.
“As for the backlash against Obama because of ObamaCare, it is quite real, but so what? That will not stop the media from doing what they do every single day – run millions of dollars of free pro-Democrat/anti-Republican advertising under the guise of “news” and “entertainment””.
You are making my point for me. The backlash is quite real, but that backlash did not exist on 11/6/2012 as the frontend was loaded with “goodies” and the negative effects held off until after Obama’s re-election. Obama’s re-election was a fraud, it was based on lies that many didn’t see on election day.
You are also making comments apparently as a rebuttal to me, but have nothing to do with my point, Obama won re-election due to folks not really seeing what the impact of the ACA would be. Therefore Obama had to lie to get re-elected, as such Obama’s re-election was a fraud. That is the most direct argument to “Obama won and Scotus upheld”.
“You made an odd comment about “takers” voting. If that were the case, if people were voting their economic self-interest and holding Obama responsible for his failures to deliver what he promised, Romney would have won easily (takers or no takers). By any rational standard, Obama has been a disaster.”
With 99 weeks of unemployment insurance checks, mass expansion of food stamps, disability on demand, and “free” health care the “takers” are not rational, they are dependent and lazy. Obama is their Lord and Savior and in their minds he wasn’t a failure, he delivered “transformation” as promised. It is in our minds that he is a failure, not theirs. You comment makes no sense in reality. Besides those un-insurable, the “takers” are the largest benefitting from the ACA, how on earth could they see this as a failure?
“Finally, you spoke about low-information voters. One reason they are low information is that the GOP has ceased competing for their attention, let alone their vote. In 2012 Romney ran a strenuous, grueling campaign about nothing in particular.”
Yes, and so what, says nothing to my point? My point is that low information voters are not largely ideologically based. Yes the low information voters are not reached by easily by the GOP, but that is not to say they were not duped and now have extreme “buyers remorse”. Many of these folks are not “takers” they are just average people that are not interested in politics at the levels we are. Many are hard working middle class people. Try communicating some with folks, many know now they were duped. Since they are not ideologically based they hold no allegiance to any party. But many that voted for Obama and had decent jobs with insurance believed the ACA would be of no impact to them. There are millions of these folks out there disgruntled that voted for Bambi, I believe your discussions on these subjects are limited to those already in our “choir”.
You speak as though there are only Ideologues (left and right) and “takers” voting. It’s not so. Low information voters are a huge chunk of the voting public. And not all
low information voters are not looking for handouts.
“And not all low information voters are not looking for handouts.”
“And not all low information voters are looking for handouts.”
There was no real good choice of candidates in 2008 and 2012, McCain and Romney are both wolves in sheep’s clothing – liberals posing as conservatives.
However, Obama’s election was the result WIDESPREAD VOTER AND ELECTION FRAUD – Chicago-Communist-Fascist style in 2012 even more than 2008.
Obama is an Alinksy communist thug and so are his followers.
Putting on my seldom worn “Make Obamacare work” hat, I wonder if you’re making a bigger deal out of this than warranted.
This is for setting up and running the exchanges, not subsidizing people’s policies, right?
So in theory there are significant upfront costs (especially since this is government contracting), lower maintenance costs (mostly depends on how good and flexible the government specified software is (I know, stop laughing)), and operating costs that partly scale with the population (people in front of screens, answering phone calls, fixing problems, office and machine room space, electricity, etc.).
I would suspect Rhode Island’s problem is that it’s so tiny, 1,050,292 people as of 2012 per Wikipedia, 42nd in the nation. There are a whole lot of relatively fixed costs to spread over not very many people.
Looking at the states by population, smallest first, the ones doing their own exchanges are, using this source (pick the state you want to the left):
Vermont (of course), which want to go single payer in 2017.
D.C. of course.
Delaware, no surprise.
Moving to bigger states:
New Hampshire went more Blue in 2012 and after that agreed to do a couple things, but not a full exchange.
Hawaii’s is famously dead in the water, hopes to launch soon.
Idaho, with half again as many people as Rhode Island, and a bit higher per capita income, is the first Red state to do its own exchange.
West Virginia, no surprise. Heck, Byrd moved so much of the government’s back end (in the computer system sense) to there they may well have an above average ability to implement these sorts of things.
New Mexico, which has a very large uninsured population, is complicated.
Nevada is doing their own.
Utah had one before Obamacare for small business, after some efforts got it OKed without requiring it extend to individuals.
There’s a in part face saving model called “partnership”, where states do things like “plan management and consumer assistance”, but the real meat is on Healthcare.gov.
Arkansas, in the process of turning Red, is doing a partnership.
Iowa, which is Purple, is doing a partnership.
Connecticut, Blue, famous home of insurance companies, 3.5 times the population of Rhode Island and double its per capita income, is of course doing their own.
Oregon is of course doing their own. Not starting well.
Kentucky, which is Purple, is doing one.
Colorado, Purple trending Blue before their fit of gun control, is not surprisingly doing their own. Not starting well.
I’m going to stop now except for possible outliers; there are no real surprises:
New Jersey, RINO Christie vetoed the legislature’s bills.
Michigan is doing a partnership, possibly very limited, RINO? governor Rick Synder “supported” a full exchange.
Illinois, corrupt, broke, rather more evenly split than many other states between the big city and the rest of the state, is doing a partnership for now. Whatever the governor wants to do, the legislature is so far not buying it.
New York is doing it by Cuomo’s executive order, the legislature failed to pass an exchange law. Hmmm, without a state subsidy of any sort that could get rather expensive for policy holders, then again they have 20 million residents (all but 2 million in NYC and its suburbs based on my memory of previous research), that’s a lot to spread the costs over.
To your comment …
“”This is for setting up and running the exchanges, not subsidizing people’s policies, right?””
The reality of the exchanges are for subsidizing peoples policies. Young and healthy must pay more to offset the older. Those making too much to be subsidized are paying more so others can be subsidized. This is pure redistribution of wealth … socialism specifically. Free health care (for some) is not free.
Not just the young subsidizing the old; also everyone being required to have “coverage” for things they’ll never use and things that are cheaper if the cost isn’t funneled through insurance companies. The cost “savings” can only come by denying you treatment even though you’re supposedly “covered” — not by people making wise decisions about the best way to spend their health dollars.
It was designed to fail. It will put the US into the position of having to go to single payer or take another step towards Cloward-Piven.
ObamaCare will be such an incredible failure that the people will rush to embrace a simpler, fairer system where the Federal Government will pay. That way, states like Rhode Island, Maryland, Illinois and other will get the fiscally sound states to fund their healthcare. That way, they can still pay their retired Leftists like Saudi princes.
Democrats operating inside Fannie and Freddie, screwed us already with the Ninja loans, and we are still subsidizing those entities, and banks stuck with underwater loans have still not marked to market.
That was the same Democrat gimmick, profiting from a bubble blown with teaser rates, given to people that couldn’t afford houses, even to illegals, out of “fairness”. Then the nation bailed them out, but even that was a bait and switch, as the banks got the bailout largesse, while elderly get 0% interest on hard earned savings.
Now states are sold health care plans they can’t afford long term, but which look good for the next election cycle. Feds again wait in the wings to coerce control from the responsible Americans. Much of responsible America is stuck in red counties under blue state control, thanks to big cities like Chicago.
“Three county Quinn” can’t even address pension reform, but he is already busy setting IL up for a bigger calamity later, as the Chicago machine rolls on. Communist Core curricula will surely train up a more fully indoctrinated youth, that will serve the state well, and finally extinguish the lamp of liberty.
I’m guessing that as gov’t continues to centralize everyone and everything within its iron fist that there will be an abundance of black markets starting up – of which I am not opposed to. (I have my opinions, too, just like Justice Roberts)
I hope I didn’t offend anyone by saying “black” markets. I could have said “black & white & red & yellow & Smurf blue” markets but its Friday and it has been a long week.
Y’all enjoy your exploding time bombs. Or come to Texas. We rejected the exchanges, the medi-whatever expansions, and while it gets a little warm here in the summer, we welcome like minded individuals…
Hasn’t Texas adopted the Common Core Curriculum (communist/Islamist propaganda) in the schools?
Hold my spot, I’m getting there as fast as I can.
And bringing lots and lots of guns and “get off my lawn” with me. 🙂
I have a legal question. We are forced to sign up for health insurance. In order for people being forced to do this, they must go to the exchanges. Yet, in order to sign up for the exchanges, you are force to sign a release of information and that release includes your information going to the cops. Now, how is that constitutional?
I might bring up the fact that many of us are being forced to take the government insurance. I am 64 and my insurance just dropped me. I have few options. The reason that I was dropped was because of Obamacare. My wife and child, on another policy, had their deductibles and out of pocket expenses raised by the IRS. Now, since when did the government start to adjust contracts and institute rules and regulations outside of normal business practice?
We either need a constitutional convention to role back this government or secession. The shutdown has convinced me that we have too much regulation and control. We also clearly have 800,000 people employed that we do not need.
Why do you think a Constitutional convention would go your way? Didn’t a majority re-elect Obama?
Sure, we now know that election was stolen, via not only the usual voter fraud but more particularly through IRS suppression of contra-Obama groups.
So, why won’t they simply do the same thing to steal a Constitutional convention?
Things that make you go “hmmmm”.
Need to divide the country roughly in half based on actual population numbers of people who want to go to this new country or that new country
(no polls, no tricks, like election day but there are bean counters representing both countries at every office that takes votes…ID or thumbprint and signatures required)
You draft yours, we draft ours…let’s see who prospers.
Obamacare is to America what the Nazi Enabling Act of 1933 was to the Weimar Republic. It was designed just as carefully, and by people just as evil.