H&R Block Helped Shape Obamacare, Now Set For Gigantic Payday

Screen Shot 2015-02-25 at 11.21.40 AM

RICHARD POLLOCK
Reporter

Richard Pollock is the former Washington bureau chief of PJTV.
Get your billions back, America! (And give a bunch of it to H&R Block.)

Five years ago, a bevy of high-priced H&R Block lobbyists worked on the tax preparation company’s behalf to shape the Affordable Care Act.

And this April 15, those efforts are set to pay off in a big way for the company.

H&R Block is well positioned to earn more than $100 million in additional fees from low-income Obamacare enrollees as they face the daunting challenge to properly file this year’s complicated health-related tax forms.

Consumers are familiar with H&R Block’s massive “Get Your Billions Back” ad campaign that includes direct appeals to Obamacare recipients who will have to file health information on this year’s IRS tax forms.
WATCH:

Reached by The Daily Caller, H&R Block refused to discuss the lobbying role it played in 2009 and 2010 — when many special interests were working behind the scenes to shape important elements of the health-care law.

The company has admitted Obamacare will impose major changes on taxpayers, stating in a Jan. 5 press release that the health-care law had produced “the biggest tax code change in the last 20 years.”

H&R Block’s decision to seek windfall profits from the Obamacare law also has riled some of its competitors, which are instead providing free help to low-income enrollees in filling out the complex tax forms.

Ryan Ellis, the tax policy director at Americans for Tax Reform and a former H&R Block senior preparer told TheDC that the company hopes to profit from the plight of Obamacare enrollees and those without health insurance who, for the first time, will have to file special tax forms related to their health-care coverage.

Ellis said the Obamacare participants are the “real target audience. It’s an alignment of interest.”

Ellis noted that H&R Block’s profits would easily exceed the fees it collects from Obamacare tax forms.

HHS Messed Up 800,000 Obamacare Tax Forms

Screen Shot 2015-02-20 at 3.43.20 PM

February 20, 2015 About 800,000 people received tax forms with incorrect information about their Obamacare coverage, officials from the Health and Human Services Department said Friday.

The errors occurred on a new form that helps Obamacare enrollees figure out whether they qualify for a subsidy that would pay all or part of their premiums, and how big that subsidy should be. Information used to calculate those subsidies was wrong on about 20 percent of tax forms, HHS officials said. The errors would cause some taxpayers to claim too large a subsidy and others to claim less than they’re actually eligible for.

Andy Slavitt, principal deputy administrator of the Centers for Medicare and Medicaid Services, said the agency is already notifying taxpayers of the mistake and will be sending out revised forms. The “vast majority” of Obamacare enrollees haven’t filed their taxes yet, and can simply use the new, corrected information when they do, Slavitt said. But, of the 800,000 people who received inaccurate forms, about 50,000 have already filed their taxes, Slavitt said.

The IRS is figuring out how to handle those returns. Obamacare’s subsidies are tied to the cost of “benchmark” plan in each region. But these 800,000 tax forms list the wrong premium for those plans. Slavitt said HHS is still investigating how the error occurred.

The 800,000 errors affected people who live in the 37 states using HealthCare.gov for enrollment. State-run exchanges send out their own tax forms—and those documents were error-prone, as well. California’s exchange reportedly mailed 100,000 incorrect tax forms to its Obamacare enrollees.

— Correction: An earlier version of this story inaccurately stated that consumers received these forms from the IRS. They were actually sent by HHS.

How One Nebraska Woman Lost Her Health Insurance Three Times Under Obamacare

Screen Shot 2015-02-18 at 11.02.19 AM

Dec. 26, 2014, was strike three for Pamela Weldin.

The day after Christmas, Weldin, of Minatare, Neb., had logged on to Facebook to find a message from a friend of hers. Included in the note was a link to anarticle from the Omaha World-Herald announcing that CoOportunity Health, a nonprofit health insurance company offering plans in Nebraska and Iowa, had been taken over by state regulators.

The insurer, one of 23 Consumer Operated and Oriented Plans, or co-ops, started with the backing of the federal government and received $145 million in loans from the Centers for Medicare and Medicaid Services. But, CoOportunity’s expenses and medical claims would far exceed its revenue for 2014.

“Merry Christmas to me,” Weldin, a dental hygienist turned Pampered Chef director, said in an interview with The Daily Signal of when she read the article.

A month later, Iowa Insurance Commissioner Nick Gerhart announced his intent to liquidate CoOportunity Health and encouraged those who were covered by the nonprofit to seek insurance elsewhere.

“I’ve been pulled into the middle of all this through no fault of my own, and there’s nothing fair about it. It is what it is, and you move forward,” said Pamela Weldin, who lost health insurance coverage three times.

For Weldin, 58, the insurer’s liquidation marked the third time she would lose her health insurance under Obamacare, the third time she would head to HealthCare.gov to shop for coverage, and the third time she would have to purchase a brand new plan.

“I’ve been pulled into the middle of all this through no fault of my own,” she said, “and there’s nothing fair about it. It is what it is, and you move forward.”

Obamacare’s Co-Ops

Co-ops are no stranger to the insurance market, and lawmakers hoped the nonprofit insurance companies would help infuse competition and choice into markets where there were limited options.

However, the co-ops created under the law would be slightly different from those already in existence—to help the new insurers get off the ground and meet state reserve requirements, the federal government provided $2 billion in startup and solvency loans.

>>> One Year After Obamacare’s Implementation, Taxpayer-Funded Co-Ops Struggle to Survive

Twenty-three co-ops serving 26 states were ultimately licensed and received federal loans including CoOportunity.

According to the latest quarterly filings, more than 520,000 people enrolled in insurance coverage through the co-ops through September.

An analysis conducted by The Daily Signal earlier this month, though, found that all but one of the co-ops experienced operating losses through September.

Centers for Medicare and Medicaid Services did not return The Daily Signal’s request for comment.

Photo: Paul Hennessy/Polaris/Newscom

Strike One

In the months leading up to the Affordable Care Act’s implementation on Oct. 1, 2013, millions of Americans began receiving notices from their health insurance companies informing them their policies had been cancelled.

Weldin was one of them.

The Nebraska woman, who was diagnosed with carpal tunnel syndrome 15 years ago, had purchased catastrophic coverage through Humana after moving from San Diego, Calif., which she kept until 2013—right before Obamacare’s implementation.

That year, she received a cancellation notice from the insurance giant. The company had decided to pull out of Nebraska and wouldn’t sell plans to Nebraskans through HealthCare.gov, the federal government’s health insurance exchange. Eight other insurance companies followed suit.

Cancellation Humana 1

By the start of 2014, Weldin would be left without insurance.

Like millions of other Americans who also received cancellation notices, she logged on to HealthCare.gov on Oct. 1, 2013, to browse and purchase new health insurance. But, like millions of other Americans who attempted to sign on to the site, she was a victim of its disastrous launch.

For two months, Weldin attempted to complete her application and was successful by mid-December.

Through CoOportunity, Weldin purchased a platinum level plan with premiums costing $307 a month.

>>> Obamacare Co-Ops Cost Taxpayers $17,000 Per Enrollee

Strike Two

Weldin’s insurance with CoOportunity went into effect Jan. 1, 2014, and she had the insurance for most of that year.

Like some consumers, Weldin had issues with the coverage she received through the law. Her original doctor, located seven hours away in Colorado, was no longer in network, and Weldin’s plan included services she would never need. At 58 years old, the former dental hygienist had a difficult time understanding why she would need maternity coverage, but it was included in her plan.

Her new platinum plan included a $2,500 deductible, and Weldin qualified for the tax credits touted by the administration.

Then, in November 2014, CoOportunity notified Weldin that they would no longer be offering platinum plans.

(Photo: Pamela Weldin)

For the second time, Weldin “muddled through” HealthCare.gov to purchase a new health insurance plan. Again, she encountered issues with the website and had to wait until December before securing coverage with CoOportunity. Weldin ultimately selected a silver-level plan for $165 a month.

“Here you are, trying to do the right thing, trying to be responsible and have coverage and be diligent,” she said. “And still, I have all these problems and glitches and everything.”

Photo: Polaris/Newscom

Strike Three

It wasn’t long after purchasing her new insurance with the co-op that Weldin learned CoOportunity was in financial trouble.

One day after Christmas, she read that Iowa state regulators had taken over the nonprofit insurance company, and officials warned it could go under.

CoOportunity originally expected just 12,000 consumers to purchase coverage through the nonprofit. They ended up enrolling 120,000, many of whom were sicker and had costly health issues.

As a result, CoOportunity’s expenses and medical claims exceeded their revenue from monthly premiums, which were priced too low.

The state asked the Centers for Medicare and Medicaid Services for additional money, but the agency denied its request.

“You had a perfect storm happen here,” Gerhart said.

For Weldin, the new year brought grim news. She learned that CoOportunity would be liquidated. She would be out of health insurance yet again.

150217_ObamacareLoss+3_Quinn

“The CoOportunity people were helpful and wonderful,” Weldin said. “They answered questions. I really didn’t end up dealing with people who were adversarial or contentious. They sincerely wanted to help people and give out new information, and now they’re going to be unemployed.”

Gerhart told The Daily Signal the state acted quickly in notifying consumers about CoOportunity’s liquidation to ensure no one would have a lapse in coverage. So far, more than 80,000 have moved to other plans.

“They faced a crisis, and their claims were eating up all the surplus and reserve [money],” he said. “It was an unfortunate situation, but we had to step in.”

For the third time in less than two years, Weldin had lost her health insurance. And for the third time, she went to HealthCare.gov to select a new plan from a new company.

Now, Weldin has health insurance through Blue Cross Blue Shield. The “silver lining,” she said, is that Weldin is able to see her original doctor and nurse practitioner in Colorado. But the cost of her monthly premiums increased to $235.

“We have a president who said, If you like your plan, you can keep it. If you like your doctor, you can keep it. You will have choices,’” Weldin said. “All three things were an outright lie.”

8 GOOFS IN JONATHAN GRUBER’S HEALTH CARE REFORM BOOK

Screen Shot 2015-02-17 at 3.56.32 PMBook filled with lies

by MATT PALUMBO | FOUNDATION FOR ECONOMIC EDUCATION | FEBRUARY 17, 2015

In one of life’s bitter ironies, I recently found a book by Jonathan Gruber in the bin of a bookstore’s going-out-of-business sale.

It’s called Health Care Reform: What It Is, Why It’s Necessary, How It Works. Interestingly, the book is a comic, which made it a quick read. It’s just the sort of thing that omniscient academics write to persuade ordinary people that their big plans are worth pursuing.

In one of life’s bitter ironies, I recently found a book by Jonathan Gruber in the bin of a bookstore’s going-out-of-business sale. It’s called Health Care Reform: What It Is, Why It’s Necessary, How It Works. Interestingly, the book is a comic, which made it a quick read. It’s just the sort of thing that omniscient academics write to persuade ordinary people that their big plans are worth pursuing.

Health Care Reform: What It Is, Why It’s Necessary, How It Works

In case you’ve forgotten — and to compound the irony — Gruber is the Obamacare architect who received negative media attention recently for some controversial comments about the stupidity of the average American voter. In Health Care Reform, Gruber focuses mainly on two topics: an attempted diagnosis of the American health care system, and how the Affordable Care Act (the ACA, or Obamacare) will solve them. I could write a PhD thesis on the myriad fallacies, half-truths, and myths propounded throughout the book. But instead, let’s explore eight of Gruber’s major errors.

1: The mandate forcing individuals to buy health insurance is just like forcing people to buy car insurance, which nobody questions.

This is a disanalogy — and an important one. A person has to purchase car insurance only if he or she gets a car. The individual health insurance mandate forces one to purchase health insurance no matter what. Moreover, what all states but three require for cars is liability insurance, which covers accidents that cause property damage and/or bodily injury. Technically speaking, you’re only required to have insurance to cover damages you might impose on others. If an accident is my fault, liability insurance covers the other individual’s expenses, not my own, and vice versa.

By contrast, if the other driver and I each had collision insurance, we would both be covered for vehicle damage regardless of who was at fault. If collision insurance were mandated, the comparison to health insurance might be apt, because, as with health insurance, collision covers damage to oneself. But no states require collision insurance.

Gruber wants to compare health insurance to car insurance primarily because (1) he wants you to find the mandate unobjectionable, and (2) he wants you to think of the young uninsured (those out of the risk pool) as being sort of like uninsured drivers — people who impose costs on others due to accidents.

But not only is the comparison inapt, Gruber’s real goal is to transfer resources from those least likely to need care (younger, poorer people) to those most likely to need care (poorer, richer people). The only way mandating health insurance could be like mandating liability car insurance is in preventing the uninsured from shifting the costs of emergent care thanks to federal law. We’ll discuss that as a separate error, next.

2: The emergency room loophole is responsible for increases in health insurance premiums.

In 1986, Reagan passed the Emergency Medical Treatment and Active Labor Act, one provision of which was that hospitals couldn’t reject emergency care to anyone regardless of their ability to pay. This act created the “emergency room loophole,” which allows many uninsured individuals to receive care without paying.

The emergency room loophole does, indeed, increase premiums. There is no free lunch. The uninsured who use emergency rooms can’t pay the bills, and the costs are thus passed on to the insured. So why do I consider this point an error? Because Gruber overstates its role in increasing premiums. “Ever wonder why your insurance premiums keep going up?” he asks rhetorically, as if this loophole is among the primary reasons for premium inflation.

The reality is, spending on emergency rooms (for both the uninsured and the insured) only accounts for roughly 2 percent of all health care spending. Claiming that health insurance premiums keep rising due to something that accounts for 2 percent of health care expenses is like attributing the high price of Starbucks drinks to the cost of their paper cups.

3: Medical bills are the No.1 cause of individual bankruptcies.

Gruber doesn’t include a single reference in the book, so it’s hard to know where he’s getting his information. Those lamenting the problem of medical bankruptcy almost always rely on a 2007 study conducted by David Himmelstein, Elizabeth Warren, and two other researchers. The authors offered the shocking conclusion that 62 percent of all bankruptcies are due to medical costs.

But in the same study, the authors also claimed that 78 percent of those who went bankrupt actually had insurance, so it would be strange for Gruber to claim the ACA would solve this problem. While it would be unfair to conclude definitively that Gruber relied on this study for his uncited claims, it is one of the only studies I am aware of that could support his claim.

More troublingly, perhaps, a bankruptcy study by the Department of Justice — which had a sample size five times larger than Himmelstein and Warren’s study — found that 54 percent of bankruptcies have no medical debt, and 90 percent have debt under $5,000. A handful of studies that contradict Himmelstein and Warren’s findings include studies by Aparna Mathur at the American Enterprise Institute; David Dranove and Michael Millenson of Northwestern University; Scott Fay, Erik Hurst, and Michelle White (at the universities of Florida, Chicago, and San Diego, respectively); and David Gross of Compass Lexecon and Nicholas Souleles of the University of Pennsylvania.

Why are Himmelstein and Warren’s findings so radically different? Aside from the fact that their study was funded by an organization called Physicians for a National Health Program, the study was incredibly liberal about what it defined as a medical bankruptcy. The study considered any bankruptcy with any amount of medical debt as a medical bankruptcy. Declare bankruptcy with $100,000 in credit card debt and $5 in medical debt? That’s a medical bankruptcy, of course. In fact, only 27 percent of those surveyed in the study had unreimbursed medical debt exceeding $1,000 in the two years prior to declaring bankruptcy.

David Dranove and Michael L. Millenson at the Kellogg School of Management reexamined the Himmelstein and Warren study and could only find a causal relationship between medical bills and bankruptcy in 17 percent of the cases surveyed. By contrast, in Canada’s socialized medical system, the percentage of bankruptcies due to medical expenses is estimated at between 7.1 percent and 14.3 percent. One wonders if the Himmelstein and Warren study was designed to generate a narrative that self-insurance (going uninsured) causes widespread bankruptcy.

4: 20,000 people die each year because they don’t have the insurance to pay for treatment.

If the study this estimate was based on were a person, it could legally buy a beer at a bar. Twenty-one years ago, the American Medical Association released a study estimating the mortality rate of the uninsured to be 25 percent higher than that of the insured. Thus, calculating how many die each year due to a lack of insurance is determined by the number of insured and extrapolating from there how many would die in a given year with the knowledge that they’re 25 percent more likely to die than an insured person.

Even assuming that the 25 percent statistic holds true today, not all insurance is equal. As Gruber notes on page 74 of his book, the ACA is the biggest expansion of public insurance since the creation of Medicare and Medicaid in 1965, as 11 million Americans will be added to Medicaid because of the ACA. So how does the health of the uninsured compare with those on Medicaid? Quite similarly. As indicated by the results from a two-year study in Oregon that looked at the health outcomes of previously uninsured individuals who gained access to Medicaid, Medicaid “generated no significant improvement in measured physical health outcomes.” Medicaid is more of a financial cushion than anything else.

So with our faith in the AMA study intact, all that would happen is a shift in deaths from the “uninsured” to the “publicly insured.” But the figure is still dubious at best. Those who are uninsured could also suffer from various mortality-increasing traits that the insured lack. As Megan McArdle elaborates on these lurking third variables,

Some of the differences we know about: the uninsured are poorer, more likely to be unemployed or marginally employed, and to be single, and to be immigrants, and so forth. And being poor, and unemployed, and from another country, are all themselves correlated with dying sooner.

5: The largest uninsured group is the working poor.

Before Obamacare, had you ever heard that there are 45 million uninsured Americans? It’s baloney. In 2006, 17 million of the uninsured had incomes above $50,000 a year, and eight million of those earned more than $75,000 a year. According to one estimate from 2009, between 12 million and 14 million were eligible for government assistance but simply hadn’t signed up. Another estimate from the same source notes that between 9 million and 10 million of the uninsured are not American citizens. According to the Centers for Disease Control and Prevention, slightly fewer than 8 million of the uninsured are aged 18–24, the group that requires the least amount of medical care and has an average annual income of slightly more than $30,000.

Thus, the largest group of uninsured is not the working poor. It’s the middle class, upper middle class, illegal immigrants, and the young. The working poor who are uninsured are often eligible for assistance but don’t take advantage of it. I recognize that some of these numbers may seem somewhat outdated (the sources for all of them can be found here), but remember: we’re taking account of the erroneous ways Gruber and Obamacare advocates sold the ACA to “stupid” Americans.

6: The ACA will have no impact on premiums in the short term, according to the CBO.

Interesting that there’s no mention of what will happen in the long run. Regardless, not only have there already been premium increases, one widely reported consequence of the ACA has been increases in deductibles. If I told you that I could offer you an insurance plan for a dollar a year, it would seem like a great deal. If I offered you a plan for a dollar a year with a $1 million deductible, you might not think it’s such a great deal.

A report from PricewaterhouseCoopers’ Health Research Institute found that the average cost of a plan sold on the ACA’s exchanges was 4 percent less than the average for an employer-provided plan with similar benefits ($5,844 vs. $6,119), but the deductibles for the ACA plans were 42 percent higher ($5,081 vs. $3,589). The ACA is thus able to swap one form of sticker shock (high premiums) for another (high deductibles). Let us not forget that the ACA exchanges receive federal subsidies. Someone has to pay for those, too.

7: A pay-for-performance model in health care would increase quality and reduce costs.

This proposal seems like common sense in theory, but it’s questionable in reality. Many conservatives and libertarians want a similar model for education, so some might be sympathetic to this aspect of Gruber’s proposal. But there is enormous difficulty in determining how we are to rank doctors.

People respond to incentives, but sometimes these incentives are perverse. Take the example of New York, which introduced a system of “scorecards” to rank cardiologists by the mortality rates of their patients who received coronary angioplasty, a procedure to treat heart disease. Doctors paid attention to their scorecards, and they obviously could increase their ratings by performing more effective surgeries. But as Charles Wheelan noted in his book Naked Statistics, there was another way to improve your scorecard: refuse surgeries on the sickest patients, or in other words, those most likely to die even with care. Wheelan cites a survey of cardiologists regarding the scorecards, where 83 percent stated that due to public mortality statistics, “some patients who might benefit from angioplasty might not receive the procedure.”

8: The ACA “allows you to keep your current policy if you like it… even if it doesn’t meet minimum standards.”

What, does this guy think we’re stupid or something?

Follow

Get every new post delivered to your Inbox.

Join 1,037 other followers