Last week the Congressional Budget Office reported that it expects that the Internal Revenue Service and the Department of Health and Human Services will spend up to an additional $200 billion over the next decade on administering Obamacare. That's in addition to the estimated $1 trillion that will be spent in 2014-2019 under the new healthcare law.
Much of the money will go to hiring hundreds of thousands of bureaucrats to administer Obamacare over the next decade. But in the short term, the additional dollars will bankroll a two-pronged campaign to re-elect congressional Democrats. The Department of Health and Human Services will not only provide talking points in defense of Obamacare, it is preparing to use the new law for short term political gain and in ways that could make health insurance less affordable and available in 2014.
As Politico noted: "The Obama administration…gave more shape to its health reform selling strategy: Focus on the early roll-out of tangible benefits and, if all goes as planned, win over a skeptical public more than any argument ever could."
This strategy involves much more than trying to win a media battle. HHS Secretary Kathleen Sebelius who is leading this effort said she expects the process to involve "hand-to-hand combat" with insurance companies.
To that end, Sebelius and the White House have appointed someone with lots of experience and a zest for trench warfare against health plans. Sebelius picked Jay Angoff to head the Office of Consumer Information and Insurance Oversight at HHS.
Angoff is a class-action litigator who specialized in and made millions by suing insurance companies for "price gouging." As insurance commissioner of Missouri he was famous for going after insurers he believed had too much in reserve (too profitable). In a study he prepared for the trial attorney trade that was funded Center for Justice and Democracy, he claimed insurers were artificially inflating the premiums they charged doctors for malpractice insurance, which in turn drove health care prices through the roof.
He will now be running one of the most powerful offices in HHS or in any federal agency. He has control over developing and enforcing new rules for insurers, organizes the temporary high-risk pools, collecting information abut health plans and setting up and running new state exchanges.
Single payer and consumer groups are gleeful: After Angoff's appointment, his former law partner Cyrus Mehri told the New York Times: "Having been a state insurance commissioner, Jay can see through the games insurance companies play. He will put teeth into the law. He will create a whole new federal regulatory regime to rein in the abuses and excesses of the industry."
In fact Angoff's tenure in both Missouri and New Jersey is associated with driving out health insurers and driving premiums sky high. He told a group: "One of the reasons that our state health plan in Missouri is not doing as well today as it did in the first five years is that we got greedy. We had so much bargaining power that we kept rebidding the contract and kept squeezing these guys because we had the power to do so." Thanks to Angoff's strategy there are fewer plans and higher costs. Similarly, when he worked for New Jersey governor Jim Florio, he helped draft and implement the New Jersey health law eliminating lower premiums for healthy people in favor of letting everyone pay one price regardless of how sick they were. The bill also required insurance companies to provide coverage to people who didn't have coverage before they got sick.
As a result, since 1993, New Jersey's insurance premiums have increased faster and are the most expensive in the country. Since 2003, the number of people covered by employers has fallen.
Angoff is now in charge of telling health plans how much they should spend on what HHS will define as "clinical care" to determine whether they are spending the required 80-85 percent of revenues on health care. And his office handles all complaints about premium hikes, most of which are due before the election. By setting premiums low and payouts high, Angoff and Sebelius are betting that health plans will simply pay doctors and hospitals less and consumers will benefit. In fact it will lead to fewer choices of doctors and health plans.
Angoff should know. As he said of his experience in Missouri: "We got tremendous savings. This was a great system, we saved a ton of money and it was terrific for the consumer for five years. However, after five years it wasn't so terrific…a lot of carriers merged, and I take some responsibility or blame for that."
Now Angoff is responsible for applying his approach nationwide. If his track record is an indicator of what's to come, Angoff will push health plans to the brink of default and a government "bailout." Which is what many supporters of Obamacare wanted in the first place.
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