Sunday, December 18, 2011

The Essential Cynicism Behind HHS’ Decision on Essential Benefits

Various press reports regarding Friday’s HHS guidance on essential health benefits have highlighted the fact that the “decision” amounted to a political punt for the Administration.  The Wall Street Journal noted how the guidance “sidestepp[ed] contentious fights” as part of “an attempt by the Administration to defuse Republican criticism that the law gives the federal government too much control over Americans’ medical care.”

The political gamesmanship by the Administration goes even further than that.  The guidance noted that if a state chooses not to select a benchmark for the essential health benefits, the default benchmark will be a typical small employer plan, a position consistent with the Institute of Medicine report on the essential health benefits released in October.  But HHS also allowed states the “flexibility” to benchmark their coverage package to the federal employees’ Blue Cross plan, which HHS stated contains 95 percent of all benefit mandates.

As we noted on Friday, had HHS chosen to keep the essential health benefits benchmark to the cost of a typical small business plan, states that wanted to require additional mandates would have had to foot the bill for those mandates themselves, under Section 1311 of the Obamacare statute.  Instead, HHS’ “flexibility” gave the states carte blanche to impose all the new mandates they like – knowing that federal taxpayers will foot the bill through higher subsidy payments.

CongressDaily reported that the guidance “likely means that the intense lobbying efforts to ensure certain benefits are in or out of the package will now shift from the federal government to the states, as interest groups try to influence which plan state officials choose as their model.”  In other words, the Administration just gave “consumer groups” – i.e., their liberal base – a nice big incentive to go out and mount political campaigns in the states to tack on even more benefit mandates, because states imposing additional mandates won’t have to pay the bill for their own decisions.

The political undertones of incentivizing liberal groups to go out and mount a series of pro-Obamacare lobbying campaigns in an election year cannot be denied.  Unfortunately though, taxpayers are likely to foot the bill for this gamesmanship.  States have collectively imposed more than 2,000 separate benefit mandates to date due to lobbying from special interest groups.  And the “beggar they neighbor” attitude promoted by the HHS guidance, whereby Washington foots the bill for state giveaways to special interest groups, will only encourage more feats of fiscal irresponsibility.