In the News: Blog

Jun 26 2015

Ron in Dairyland

An inside look at Sen. Johnson's recent adventures in America's dairyland. 

Thank you for wanting to learn more about Senator Johnson’s bill to help America transition past the poorly written and disastrously implemented Affordable Care Act. 

Senator Johnson’s proposed Preserving Freedom and Choice in Health Care Act would prevent a crisis in the event the Supreme Court in the King vs. Burwell case reads the Affordable Care Act the way Congress wrote it.

The Johnson bill would allow Americans to keep their health plans, even those bought on Obamacare exchanges, and taxpayer subsidies available through Obamacare would continue through August 2017. In exchange, the bill would demand of the Obama administration the return of some of the freedom and choice taken away by Obamacare. 

These two essays by Senator Johnson explain why he offered this legislation: 

The Wall Street Journal: A Make-or-Break ObamaCare Moment
April 13, 2015 by Ron Johnson 

USA Today: My plan would protect patients
May 27, 2015 by Ron Johnson

 This is an independent view of his bill from the nation’s leading editorial page:

The Wall Street Journal: In Search of an ObamaCare Breakout
May 21, 2015 by The Wall Street Journal Editorial Board

A summary of the bill is here.

Frequently asked questions and answers are here.

The text of Senator Johnson’s bill is here.

The Milwaukee Journal Sentinel’s PolitiFact franchise seems to have a hard time being honest about what words mean. It’s not surprising, then, that they’ve found a kindred spirit in former Sen. Russ Feingold. The newspaper is covering for one of his gaffes, rating it as “mostly true.”

You be the judge.

First, the basic question: Senator Feingold said that Senator Johnson “is opposed to all government-assisted student loans.”

The statement is unequivocally false. Senator Johnson has a record of supporting government-assisted student loans. He voted in 2013, twice, in favor of them by voting for legislation to stabilize interest rates on subsidized student loans. The bipartisan legislation passed the Senate with 81 votes and was signed by President Obama.

You can read a summary here but the bill had the effect of lowering the interest rate from about 6.8% to 3.7%, as the Obama administration noted.

If the senator really did oppose government-assisted student lending, he could have voted no and allowed borrowers of subsidized loans to pay the same rate as those with unsubsidized loans.

Instead, by linking rates to the interest rates the federal government itself pays, the bill stabilized the program, ending what had been a cycle of arbitrary rate setting. This, and the fact that it locked in a loan’s rate for the life of that loan, gave certainty to student borrowers.

PolitiFact then insinuates that none of this counts because the reform – favored by President Obama – did not entirely satisfy liberals. This tells you where the Journal Sentinel’s political views are centered.

The newspaper then quotes a Democratic Party operative who cites Senator Johnson’s criticism of student loans’ current form as proof that, despites voting to stabilize student lending, he “is opposed to all government-assisted student loans.”

But saying that you’d would like the government to reduce its excessive role over time is not the same as saying that you’re “opposed to all government-assisted student loans.” It means you favor a transition to something with fewer negative unintended consequences.

Saying the “federal government shouldn’t even be involved in granting student loans,” is different than saying you’re “opposed to all government-assisted student loans.” The federal government has directly granted student loans only since 1994, long after the 1965 start of federal assistance to student lending through the private sector. The federal role expanded dramatically under the Obama administration. It is not opposition to all federal assistance to question whether these changes may be linked to spiraling costs and debt.

Voting to eliminate the federal Department of Education is not the same as being “opposed to all government-assisted student loans.” Federal assistance to students preceded the creation of what is now an entrenched bureaucracy. It is possible to question the effectiveness of the Department of Education without opposing all federal assistance in student lending.

What the senator is asking

Had Senator Feingold said that Senator Johnson has consistently pointed out that Washington policy on college assistance has serious negative unintended consequences, then he would have been right. Senator Johnson isn’t the first to say so: The U.S. secretary of education was making the case in the 1980s in the New York Times, for example, that increases in financial aid may enable colleges to raise tuition faster on the understanding that federal subsidies will help cushion the increase.

The numbers are telling. The cost of attending a four-year public university has risen about 2.5 times the rate of inflation since 1963. The rate such a school charges for a dorm room has risen at more than 3 times the rate of rental housing inflation since then, and even the cost of board at a four-year public university has risen at 1.3 times the rate of food inflation. The inflation-adjusted cost of a four-year public university actually fell slightly between 1963 and 1979, the year the Department of Education became a full cabinet agency. The inflation-adjusted cost has risen 162% since then – even as federal student lending has increased on average by 11.8% each year over that period.

This should lead anyone to question whether our current scope and scale of Washington’s involvement helps more than it hurts. But asking that question is not the same as being “opposed to all government-assisted student loans.” Senator Johnson believes we must find better ways of assisting students.

None of this seems to have penetrated the thinking at PolitiFact, which apparently sees the world in exactly the way a left-wing Democrat who spent 18 years in Washington would. From that standpoint, any deviation from the Democratic Party’s wishes for student lending – any rethinking, reform or attempt to do things more effectively – is the same as opposing all student lending.

The newspaper is free to hold such an opinion, even to peddle it on its news pages. Everyone else is free to say that PolitiFact’s pants are on fire.

Some liberal writer at the Huffington Post was excited to find out that I’ve been talking to Wisconsinites about how enthusiastically the entertainment media spread a “business is bad” message.

He seems to get hung up on the way I mentioned “The Lego Movie,” a children’s movie “in which the bad guy is a heartless businessman intent on destroying the world for profit. ‘That's done for a reason,’ Johnson said. ‘They're starting that propaganda, and it's insidious.’”

The writer, who’s named Ryan Grim, even links to a video of me talking to people in Cedarburg. I urge you to watch it, because I think I’m making a pretty good point: “Our news media is not on our side, certainly not entertainment media. I actually called a gentleman, it was probably a couple months ago, that was so upset when he took his children to an animated movie, 6- and 7-year-old children, to an animated movie -- and guess who the villain was. Evil Mr. Businessperson, OK? So it’s insidious it’s that propaganda starts very early.”

The Huffington Post writer, Grim, can’t seem to figure out why I or anyone else would say this about “The Lego Movie,” and he insinuates some kind of conspiracy. Actually, it’s pretty simple: I read a great piece in the Wall Street Journal in which an entrepreneur pointed out that the plot revolved around “the evil exploits of its villain, President Business.”

It was the latest, said the essayist, Doug Haugh, in a series of movies that reflexively say business leaders are villains:

“As the president of the energy company Mansfield, and the father of 6- and 7-year-old children, both of whom love animated movies, I have found that these characterizations hit me particularly hard. They prompt my children to view me not as the leader I’m supposed to be, but as a movie-villain incarnate.”

He’s tired of it. He wrote:

“Business leaders who work daily to increase their company’s income by making other people wealthier—whether it is their employees, customers, suppliers or stockholders—should provide a robust defense of wealth creation. They should explain how this process of free, mutually beneficial exchange makes both parties richer, growing the size of the pie, not taking a bigger slice at someone else’s expense.

“Businesses—which provide the products and services that make our lives more comfortable—are responsible for much of what has made America the richest nation in the history of the world.”

I agree. I called the guy, since I was so impressed by his essay. It was a good conversation.

But even if it weren’t for that essay, the point that “The Lego Movie” was an especially grievous slam on business was made by others. For instance, The Weekly Standard, the Economist, the Boston Globe – even the liberal Atlantic and the far-left New Statesman.

The strange thing isn’t that a kids’ movie was anti-business, it is that someone claiming to be a journalist never encountered the idea before.

I have said — and I will go on saying — that my predecessor, then-Sen. Russ Feingold, was the deciding vote for Obamacare, which squeezed by the Senate with a one-vote margin.

The Milwaukee Journal Sentinel claims otherwise, saying that "There is an element of truth in Johnson's claim” but that it is “mostly false” anyhow. This doesn’t surprise me, but it was disappointing that the newspaper didn’t bother sharing with readers the explanation I provided.

The statement

I said, “I’ll point out Sen. Feingold was the deciding vote on Obamacare. That’s not working out so good for Wisconsinites.”

The undisputed background

The Senate voted Dec. 23, 2009, 60-39 with 1 not voting, to invoke cloture on HR 3590, the vehicle for Obamacare. Then-senator Feingold voted yea. Had the vote failed, Obamacare would not have advanced.

So: Was Feingold the deciding vote?

Yes, obviously: As we are constantly reminded before elections, every vote is important. This time, that literally was true. If any yea vote – any – were instead a nay, the measure would have been stopped. Every yea vote, then, was decisive because any senator casting a yea vote could have, on her or his own, stopped the measure by voting otherwise.

The counterargument

I am aware that PolitiFact has developed a reflexive response to this reality. As the Tampa Bay franchise of PolitiFact reframed the issue in the case of Sen. Bill Nelson, “it's true that his vote was crucial -- as were the other 59 votes,” but most of those crucial votes did not have “a pivotal role.” That is, PolitiFact seems to have reimagined the issue to be not only whether a senator’s yea vote was indispensable but whose vote came last in some sort of vote-by-vote drama.

Other PolitiFact franchises used this same rationale on Sen. Udall, Sen. Shaheen, Sen. Warner, Sen. Merkley – and then-Sen. Feingold, the last time I noted the decisive nature of his vote on Obamacare. Interestingly, in most of these, the PolitiFact writers have been forced to concede that “there’s a sliver of truth” insofar as the vote of the Democrat in question was needed. But the writers then dismiss this by saying the Democrat in question wasn’t the only deciding vote.

I reject this dismissive analysis. The PolitiFact writers should have stopped when they correctly admitted that it was true every one of these Democrat votes was essential. At least they weren’t as openly obtuse as the writer who noted that Sen. Brown’s name comes early in an alphabetical roll call. That writer then went on to claim that because Sen. Ben Nelson of Nebraska held out longest in his public bargaining with his party’s leaders, he must have been the deciding vote. Several of the PolitiFact analyses resort to this same fall-back. This is what the Journal Sentinel tries to do.

This reveals a misunderstanding of how the Senate votes. Senators vote when they choose, not in alphabetical order. They may change their vote until the moment the vote is closed, so no vote is final until voting ends. Senators confer with each other, make up their own minds in their own time and are free to change them. It is not knowable which senator was last to make up his mind to vote yea, and it cannot be known how Sen. Feingold’s support of the bill influenced others senators’ votes for it.

My ruling about the Journal Sentinel

The Wall Street Journal concluded last year that Democrats in the Senate "each cast the decisive 60th vote," the same as the Democratic senator who, in 2012, exclaimed, “Everybody was a deciding vote!” This is the most honest assessment of a one-vote margin in a legislative body.

The Journal Sentinel claimed in 2010 that I was wrong to assess the situation this way. The newspaper may regard my continuing reference to the Feingold vote as my ruling on its claim.

May 23 

Memorial Day Program at Northern Wisconsin Veterans Memorial Cemetery in Spooner
http://dva.state.wi.us/Cem-northern.asp 

May 24 

Memorial Day Program at Southern Wisconsin Veterans Memorial Cemetery in Union Grove
http://dva.state.wi.us/Cem-southern.asp 

May 25 

Service at the Central Wisconsin Veterans Memorial Cemetery in King
http://dva.state.wi.us/PA-MemorialDay.asp#King 

Memorial Day Ceremony at Wood National Cemetery in Milwaukee
http://1.usa.gov/1L7qHZl

 

On tax deadline day, April 15, IRS Commissioner John Koskinen testified before my committee about the IRS’ implementation of Obamacare.

The IRS, probably the most feared civilian agency of the federal government, plays a central role in enforcing Obamacare’s individual mandate and in reconciling its subsidies. So, as chairman of the Homeland Security and Governmental Affairs Committee, I felt Koskinen (right) needed to hear what Americans have experienced.

Reports suggest that it hasn’t gone smoothly. One found that the IRS delayed refunds for “tens of thousands” of enrollees because of missing data from state-run health insurance exchanges. National Taxpayer Advocate Nina Olson said the refunds have been “held for quite a long time, since the beginning of the filing season.” Olson said that IRS employees were instructed not to tell callers why their refunds are suspended.

I read Mr. Koskinen a letter my office received from a Wisconsin couple detailing their experience with Obamacare. When filing their taxes, they learned that they will have to repay the government $11,550 that the government incorrectly used to subsidize the coverage the couple was forced to buy on the federally run exchange. The sum equals more than 18% of the couple’s income, the letter said.

“A $11,550 penalty on an annual income of approximately $60,000 for two people seems excessive,” the couple wrote, adding that they did “exactly what we were told” by the Obamacare exchange. Now, they fear they will have to raid their retirement fund to pay back what the government incorrectly calculated.

Mr. Koskinen later offered what I am sure he felt was comforting news. “You can do an online installment agreement that will allow you to spread those payments over time,” he said, so taxpayers “don’t have to immediately take draconian steps.” The IRS will charge them interest, he said, but rates now are “very low.”

That may seem accommodating to the IRS, but think about how people would end up in such a situation. Many people will unexpectedly end up owing the government money because Obamacare caused them to lose the coverage they had, forcing them to buy costly coverage through government-run exchanges that worked poorly. The government sent money to insurers on their behalf – money that, the fine print now says, they had to very carefully calibrate or they will unexpectedly have to pay the government.

If you buy coverage through an Obamacare exchange, you are required to estimate your income for next year. If you underestimate for any reason, you may be on a very costly hook.

But at least the government won’t charge you much interest for its costly error. How very generous.

Remember one year ago, when President Obama was claiming that unless Republicans again renewed the temporary, extra-long unemployment benefits enacted in the depths of the recession, the economy would suffer?

Remember how his advisers claimed that if Congress let unemployment benefits return to normal, 240,000 jobs would be lost, and how a New York Times columnist claimed it was because Republicans liked to “afflict the afflicted”?

Republicans did not heed the president. The unprecedented 99 weeks of extended benefits expired. Unemployment benefits returned to normal.

And last week, President Obama was declaring 2014 “a breakthrough year for America.” Remember that?

A groundbreaking new study explains why it was such a good year, Investors Business Daily reports: It was because Republicans ignored Obama’s advice, as 60% of the jobs gained last year were due to the cutoff of extended unemployment benefits.

I’ve said as much, but now others are saying so, too. IBD writes:

“Economists from the University of Oslo, the Institute for International Economic Studies and the University of Pennsylvania took advantage of the sudden end to this federal benefit across the country to see how it correlated with job growth.

“Their findings, published this week by the highly respected National Bureau of Economic Research, found that because Congress didn't listen to Obama, ‘1.8 million additional jobs were created in 2014 due to the benefit cut.’”

You can read the study itself here. It’s worth doing. Economists Marcus Hagedorn, Iourii Manovskii and Kurt Mitman point out just how well the economy did:

“Average employment growth was about 25% higher in 2014 than in the best of several preceding years. The employment-to-population ratio rose. The unemployment rate declined sharply. In contrast to typical predictions, the labor force participation rate suddenly halted its steady secular decline.”

The majority of the effect, the economists write, was because Congress cut off the extra-long benefits. Naysayers claimed this would cause discouraged unemployed people to stop looking entirely – to drop out of the labor force. That didn’t happen, the researchers write, because cutting benefits encourages job creation:

“Not only did the unemployed not drop out of the labor force because of losing entitlement to benefits, but instead those previously not participating in the labor market decided to enter the labor force. . . . The increased availability of jobs than draws non-participants into the labor market.”

Others have already been saying this. North Carolina cut back on extended benefits earlier. Liberals implied this was immoral, but it led to more people finding work. Other observers have been noting the helpful effects of the national cut-off already.

None of this is to imply that unemployed people were lazy. I’m not saying that, nor were conservatives. But government programs, even well-intentioned ones, often have unforeseen effects. Incentives matter. That’s a piece of science that the president and his party should start paying attention to.

“It's enough to make you wonder,” IBD writes, “how much more growth we'd enjoy if other parts of Obama's ‘middle class economics’ were jettisoned.”

The faculty of Harvard is in an uproar, the New York Times reports – the changes to employee health coverage that already hit almost everyone else in America have come to the elite university.

“Professors at Harvard have until now generally avoided the higher expenses that other employers have been passing on to employees,” the paper reports. But health care benefit costs are rising quickly, faster than the university’s revenue or the salaries it pays faculty, the Times reports. Some of those soaring costs are driven by Obamacare, according to the paper – “provisions in the health care law that extend coverage for children up to age 26, offer free preventive services like mammograms and colonoscopies and, starting in 2018, add a tax on high-cost insurance, known as the Cadillac tax.”

graph premiums

So the faculty will pay:

“The university is adopting standard features of most employer-sponsored health plans: Employees will now pay deductibles and a share of the costs, known as coinsurance, for hospitalization, surgery and certain advanced diagnostic tests. The plan has an annual deductible of $250 per individual and $750 for a family. For a doctor’s office visit, the charge is $20. For most other services, patients will pay 10 percent of the cost until they reach the out-of-pocket limit of $1,500 for an individual and $4,500 for a family.”

The plan could have saved some money by narrowing the network of providers, the paper reports, but “some of Boston’s best-known, most expensive hospitals are affiliated with Harvard Medical School. To create a network of high-value providers, Harvard would probably need to exclude some of its own teaching hospitals, or discourage their use.”

Even after these changes, the Times reports, Harvard’s plan will cover 91% of the cost of health care for the typical employee – far more generous a benefit than what Americans forced to buy coverage on Obamacare’s government-run “exchanges” will get. Still, professors are outraged. One tells the paper that increased out-of-pocket costs amount to a pay cut. “It’s equivalent to taxing the sick,” says another.

No, actually it’s equivalent to paying a doctor something for services received — because that’s what it is. It’s what most of America does.

That is the most striking part of the article: These people who are surprised and offended at having to pay part of the cost of their health care include those who have prescribed this exact approach, the Times reports:

“For years, Harvard’s experts on health economics and policy have advised presidents and Congress on how to provide health benefits to the nation at a reasonable cost. But those remedies will now be applied to the Harvard faculty, and the professors are in an uproar. . . .

“The university says the increases are in part a result of the Obama administration’s Affordable Care Act, which many Harvard professors championed.”

A fundamental problem with the Orwellian-named “Affordable Care Act” is that it takes away freedom and choice from consumers – forcing millions to drop the health plans they chose, cutting off access to doctors they trusted. This was part of the design of Obamacare. It was prescribed by experts who believed it would benefit “average Americans.” That we-know-best attitude is part of why Obamacare has remained so unpopular, so unaccepted by the American people.

Now the result is hitting the experts themselves. Perhaps this will be the Harvard faculty’s George McGovern moment.

Vermont is a model for America on health care, the Wall Street Journal sensibly pointed out earlier this week. That’s because Vermont is “where the purest progressive version of ObamaCare has imploded.”

Vermont’s Democrat Governor Peter Shumlin (at right) ran for election in 2010 promising a “single-payer” health system – one in which the government paid for all health care by taxing people, like the “public option” that liberals (including President Obama) wanted in Obamacare. Shumlin hired experts such as Jonathan Gruber to come up with a government-only plan, got the legislature to pass it, and ran for re-election on it.

He knew it mattered nationally: “If Vermont gets single-payer health care right, which I believe we will, other states will follow,” said Shumlin at the time. “If we screw it up, it will set back this effort for a long time. So I know we have a tremendous amount of responsibility, not only to Vermonters.”

Then last week, he canceled it. There will be no single-payer plan – socialized medicine -- in Vermont.

As the Journal explains, “Mr. Shumlin’s budget gremlins concluded the plan was too expensive and would damage the state economy.

“As crises of faith go, this is Mikhail Gorbachev circa 1991 territory. Mr. Shumlin ran in 2010 on an explicit single-payer platform in the most liberal state east of California, and the plan was conceived as a model for other states. He called his retreat ‘the greatest disappointment of my political life so far.’ May there be others.”

Shumlin realized the plan was simply too expensive. The Journal explains:

“Under the Vermont plan, all 625,000 state residents were to be automatically enrolled in the government plan, with the same benefits for all. As with Medicare, employers would be subject to a payroll tax that would reduce wages, and workers would pay a premium based on a sliding income scale. . . .

“If Mr. Shumlin would give to each according to his need, he would take from each far more than his ability to pay. The state accountants estimated that his plan required an 11.5% tax on worker payroll, with no exceptions.

“Individuals, meanwhile, would have paid as much as 9.5% of earnings, which would have applied to everyone making more than four times the poverty level, or $102,220 for a family of four—hardly the 1%. The full $2.59 billion in necessary funding would roughly double current state revenues (about $2.85 billion today).”

This wouldn’t save Vermonters money. For one thing, the plan mandated not gold-plated insurance but platinum-plated – it mandated an “actuarial value” of 94%, meaning that patients would cover only 6% of the cost of their care. This is a certain formula for patients and providers paying no attention of cost and value. It instead would have tried to control costs by imposing punitively low payment rates on providers. The federal government tries this now with its single-payer system for the poor, Medicaid, leading to shortages of doctors who will accept Medicaid patients.

Worse, it shifted the costs in ways taxpayers would see as unjust. Even liberal media observers admit this. “The proposed taxes would ask higher earners to spend more on health care than they do now — in some cases, far more,” noted the website Vox, which also pointed out that an 11.5% payroll tax hits high-wage payrolls much harder than low-wage ones. And remember where the burden of payroll taxes falls: On workers’ wages. Don’t believe me? Ask Jonathan Gruber.

It was all too much for Vermont to afford. The Journal lauds Shumlin for waking up:

His ideological comrades are rarely dissuaded by the prospect of economic damage, as ObamaCare proves. But Mr. Shumlin has succeeded in making Vermont a national model: By admitting that single payer will make health care both more expensive and less efficient, he has shown other states what not to do.”

Perhaps he had little choice: If Vermont really did add 21% more in tax to incomes, the people it hoped would pay for everyone’s health care could have fled to another less hostile state. If single-payer is imposed nationally, where can the targeted taxpayers run? Simple: They can work and earn that much less, to the detriment of the people they would have employed or served.

Let this be a warning, then, as the nation thinks about what will replace the mess of Obamacare. Putting more power and money into the hands of government isn’t just morally wrong, it’s unaffordable.