$450 billion glitch

Seriously, what will it take for our lawmakers to READ the bill before they vote yes or no?  I don't about you, but I'm pretty sick and tired of these "glitches" and "surprises" they keep finding. 

March 2010, Nancy Pelosi: "We need to pass the bill so you can find out what's in it." 

http://blogs.forbes.com/aroy/2011/06/21/the-450-billion-glitch-3-million-extra-middle-class-americans-eligible-for-medicaid-benefits/

The $450 Billion Glitch: 3 Million Extra Middle-Class Americans Eligible for Medicaid Benefits

Wow. Philip Klein points us to this AP story, in which Richard Foster, Chief Actuary of the Centers for Medicare and Medicaid Services, says that, due to a glitch in

Obamacare, married couples of early retirees making around $64,000 a year will become eligible for Medicaid. According to Foster, as many as 3 million Americans will qualify for the benefit. It’s “a twist government number crunchers say they discovered only after the complex bill was signed.”

If we do a back-of-the-envelope calculation, in which the average annual Medicaid expenditure per early retiree is $15,000 per year, the ten-year cost of this glitch is $450 billion. “It’s almost like allowing middle-class people to qualify for food stamps, [Foster] suggested”:

“I don’t generally comment on the pros or cons of policy, but that just doesn’t make sense,” Foster said during a question-and-answer session at a recent professional society meeting…”This is a situation that got no attention at all,” added Foster. “And even now, as I raise the issue with various policymakers, people are not rushing to say … we need to do something about this.”

Indeed, administration officials and senior Democratic lawmakers say it’s not a loophole but the result of a well-meaning effort to simplify rules for deciding who will get help with insurance costs under the new health care law.

The reason for the glitch, if you can call it that, is that prior to Obamacare, retirees’ Social Security benefits were counted as income in order to determine eligibility for Medicaid. Post-PPACA, Social Security benefits are no longer counted as income for this purpose, allowing millions of additional Americans to qualify for taxpayer subsidies.

I’ve been talking a lot recently about the problem of employer dumping under Obamacare, which could cost taxpayers trillions of dollars. This new early-retiree problem is a serious one as well. Obamacare’s defenders argue that the law is fiscally responsible—but they fail to remember that government spending almost always exceeds official projections. I’ll be interested to see what they have to say about this latest development.

The AP story:

AP NewsBreak: A twist in Obama's health care law

WASHINGTON – President Barack Obama's health care law would let several million middle-class people get nearly free insurance meant for the poor, a twist government number crunchers say they discovered only after the complex bill was signed.

The change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid, said officials who make long-range cost estimates for the Health and Human Services department.

Up to 3 million more people could qualify for Medicaid in 2014 as a result of the anomaly. That's because, in a major change from today, most of their Social Security benefits would no longer be counted as income for determining eligibility. It might be compared to allowing middle-class people to qualify for food stamps.

Medicare chief actuary Richard Foster says the situation keeps him up at night.

"I don't generally comment on the pros or cons of policy, but that just doesn't make sense," Foster said during a question-and-answer session at a recent professional society meeting.

"This is a situation that got no attention at all," added Foster. "And even now, as I raise the issue with various policymakers, people are not rushing to say ... we need to do something about this."

Indeed, administration officials and senior Democratic lawmakers say it's not a loophole but the result of a well-meaning effort to simplify rules for deciding who will get help with insurance costs under the new health care law. Instead of a hodgepodge of rules, there will be one national policy.

"This simplification will stop people from falling into coverage gaps and may cause some to be newly eligible for Medicaid and others to no longer qualify," said Brian Cook, spokesman for the Centers for Medicare and Medicaid Services.

But states have been clamoring for relief from Medicaid costs, complaining that just these sorts of federal rules drive up spending and limit state options. The program is now one of the top issues in budget negotiations between the White House and Congress. Republicans are pushing for a rollback of federal requirements that block states from limiting eligibility.

Medicaid is a safety net program that serves more than 50 million vulnerable Americans, from low-income children and pregnant women to Alzheimer's patients in nursing homes. It's designed as a federal-state partnership, with Washington paying close to 60 percent of the total cost.

Early retirees would be a new group for Medicaid. While retirees can now start collecting Social Security at age 62, they must wait another three years to get Medicare, unless they're disabled.

Some early retirees who worked all their lives may not want to be associated with a health care program for the poor, but others might see it as a relatively painless way to satisfy the new law's requirement that all Americans carry medical insurance starting in 2014. It would help tide them over until they turn 65 and qualify for Medicare.

The actuary's office said the 3 million early retirees who would become eligible for Medicaid are on top of an estimated 16 million to 20 million people that Obama's law would already bring into the program, by opening it to childless adults with incomes near the poverty level. Federal taxpayers will cover all of the initial cost of the expansion.

A spokeswoman for the Senate Finance Committee, which wrote much of the health care law, said if the situation does become a problem there's plenty of time to fix it later.

"These changes don't take effect until 2014, so we have time to review all possible cases to ensure Medicaid meets its mission of serving only the neediest Americans," said Erin Shields.

But Republicans already see a problem.

Former Utah governor Mike Leavitt said adding early retirees will "just add fuel to the fire," bolstering the argument from Republican governors that some of Washington's rules don't make sense.

"The fact that this is being discovered now tells you, what else is baked into this law?" said Leavitt, who served as Health and Human Services secretary under President George H.W. Bush. "It clearly begins to reveal that the nature of the law was to put more and more people under eligibility for government insurance."

The Medicare actuary's office roughed out some examples to illustrate how the provision would work. A married couple retiring at 62 in 2014 and receiving the maximum Social Security benefit of $23,500 apiece could get $17,000 from other sources and still qualify for Medicaid with a total income of $64,000.

That $64,000 would put them at about four times the federal poverty level, which for a two-person household is $14,710 this year. The Medicaid expansion in the health care law was supposed to benefit childless adults with incomes up to 133 percent of the poverty level. A fudge factor built into the law bumps that up to 138 percent.

The actuary's office acknowledged its $64,000 example would represent an unusual case, but nonetheless the hypothetical couple would still qualify for Medicaid.

http://news.yahoo.com/s/ap/20110621/ap_on_go_ca_st_pe/us_health_overhaul_glitch