One short week after President Obama signed his health care overhaul into law (P.L. 111-148), a string of press stories has already revealed the broken promises, double standards, and economic damage created by Democrats’ government takeover of health care:
Broken Promises: On the very day the President signed the health care bill into law, an Associated Press article highlighted that one of Democrats’ immediate “deliverables”—a ban on pre-existing condition exclusions for children—“provided a less-than-complete guarantee that kids with health problems would not be shut out of coverage.”[i] Specifically, while the law requires insurance companies to cover all pre-existing conditions for children enrolled in their policies, it permits carriers to deny new applications outright. Thus this “reform” could have the perverse incentive of encouraging insurance companies not to accept children with pre-existing conditions at all, rather than imposing some limitations on their coverage.
Likewise, news articles have pointed out that the funding for a national high-risk pool may be insufficient to meet the coverage needs of all individuals with pre-existing conditions.[ii] The pool, which the law requires be established within 90 days, received only $5 billion in funding to last through 2014.[iii] As states’ risk pools spend a total of $2 billion annually, it seems unlikely that $5 billion could meet both existing and expected demand—raising the prospect of yet more federal spending on health care to meet the new influx, or no coverage options for individuals with pre-existing conditions.[iv]
Double Standards: While the Senate was debating a reconciliation bill designed to “fix” problems in the original health care law, press reports focused on another loophole that exempted some from the law’s requirement that Congressional staff obtain their health benefits in the new exchanges, beginning in 2014.[v] Many considered it an “inequity” and an “outrage” that staff in leadership and committee offices—including the staff for the Democrat leaders who wrote the health bill—would be exempted from the law’s new regime.[vi] Yet when Republicans offered an amendment to close this loophole, and to make sure that executive branch political appointees—including officials in the Departments of Health and Human Services and Treasury charged with implementing the law—would also receive their health benefits through the new exchanges, 56 Democrats voted to kill this common-sense reform.[vii]
Economic Damage: Within days of the bill being signed into law, companies came forward to revise their balance sheets, reflecting the damage that the law’s new taxes would have on their earnings. Caterpillar went first, taking a $100 million hit due to loss of a tax subsidy for providing retiree prescription drug coverage;[viii] John Deere[ix] and AT&T[x] followed, reporting impacts of $150 million and $1 billion, respectively. The actions by these three companies represented the leading edge of an expected $14 billion drop in corporate earnings as a result of the law’s enactment—losses that will harm businesses’ ability to grow and re-hire workers in the middle of a struggling economy.[xi] Perhaps most ominously, AT&T noted that it “will be evaluating prospective changes to the active and retiree health care benefits offered by the company” as a result of the bill’s passage, proving the falsehood of President Obama’s claim that “If you like your current plan, you can keep it.”[xii]
Just as worrisome, the market for Treasury bonds suffered a drop-off in demand last week, as “passage of [the] health bill rekindle[d] worries about rising deficits.”[xiii] If the health law results in a rapid spike in interest rates as investors lose confidence in America’s ability to curb skyrocketing federal spending, mortgage buyers and businesses large and small will suffer.
In addition, states must work to calculate the cost of the law’s many unfunded mandates on their Medicaid programs. California’s department of health estimated that raising physician reimbursements in Medicaid will alone cost $2 billion per year, which may be passed on in the form of additional job-killing taxes at the state level on top of the more than $500 billion in new federal taxes already enacted into law.[xiv]
Unfortunately, rather than re-evaluating the scope and breadth of their health care takeover in a way that would not wreak havoc on the nation’s struggling economy, Democrats seem intent on “shooting the messenger” by extracting retribution for companies that dare speak politically inconvenient truths. The House Energy and Commerce Committee scheduled an April 21 hearing to examine the claims made by Caterpillar and others that the law will increase their taxes and health care costs. Committee Chairman Henry Waxman wrote a threatening letter to the companies demanding a rash of information, and calling the companies’ assertions about rising costs “a matter of concern”—leading some to question whether the entire hearing stands as an attempt to intimidate companies who have the temerity to challenge Democrats’ rosy view of health care “reform.”[xv]
With losses for companies already piling up, promises broken, and Democrats voting to exempt the officials charged with implementing the new law from most of its direct effects, many may wonder how the first week of Democrats’ brave new health care world in any way resembles the “reform” promised by President Obama and the majority.
[i] Ricardo Alonso-Zaldivar, “Gap in Health Care Law’s Protection for Children,” Associated Press March 24, 2010, http://finance.yahoo.com/news/Gap-in-health-care-laws-apf-4272209396.html/print?x=0
[ii] Anna Wilde Mathews, “High-Risk Health Pool Faces Start-Up Hurdles,” Wall Street Journal March 27, 2010, http://online.wsj.com/article/SB10001424052748703409804575144161178237490.html.
[v] Erika Lovley and Patrick O’Connor, “Health Bill May Exempt Top Hill Staff,” Politico March 24, 2010, http://dyn.politico.com/printstory.cfm?uuid=8D6D0626-18FE-70B2-A84ECBF02A169921.
[vii] Senate Record Vote 69 of 2010, http://senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=111&session=2&vote=00069.
[viii] Bob Tita, “Caterpillar Takes Hit on Health Care,” Wall Street Journal March 25, 2010, http://online.wsj.com/article/SB10001424052748703312504575142313494421460.html.
[ix] “Deere Sees $150 Million Hit from Health Care Reform,” Reuters March 25, 2010, http://www.reuters.com/article/idUSN2521686220100325.
[x] “AT&T to Book $1 Billion Cost on Reform,” Bloomberg March 26, 2010, http://www.businessweek.com/news/2010-03-26/at-t-to-take-1-billion-charge-on-health-care-reform-update1-.html.
[xi] “Obama Tax’s $14 Billion Charge Starts at Caterpillar,” Bloomberg March 25, 2010, http://www.businessweek.com/news/2010-03-25/obama-drug-tax-s-14-billion-profit-cut-starts-with-caterpillar.html.
[xii] “AT&T to Book $1 Billion Cost.”
[xiii] Tom Lauricella, “Debt Fears Send Rates Up,” Wall Street Journal March 26, 2010, http://online.wsj.com/article/SB10001424052748704094104575144244213486742.html.
[xiv] Michael Luo, “Some States Find Burdens in Health Law,” New York Times March 27, 2010, http://www.nytimes.com/2010/03/27/health/policy/27impact.html?hp.
[xv] Byron York, “Democrats Threaten Companies Hit Hard by Health Care Bill,” Washington Examiner March 29, 2010, http://www.washingtonexaminer.com/politics/Democrats-threaten-companies-hit-hard-by-health-care-bill-89347127.html.