Big Hospitals’ Obamacare Hypocrisy

As Republicans prepare legislation to repeal Obamacare, the health care industrial complex has raised a host of concerns. Notably, two hospital associations recently released a report highlighting the supposed negative implications of the reconciliation bill Congress passed, and President Obama vetoed, late last year.

While the hospitals allege that repealing Obamacare would decimate their industry, their report cleverly omits four inconvenient truths.

1. They Pushed Bad Ideas Because They Expect Bailouts

Kahn gave a simple, yet cynical, reply: “You could say, did you make a bad deal, and fortunately, I don’t think I’ll probably be working after 2020 [Laughter.]….I’m glad my contract only goes another six years. [Laughter.]”

Fast-forward those six years to earlier this fall, when the Congressional Budget Office (CBO) analyzed the effects of various Obamacare provisions on hospital margins. The report concluded that even under the best-case scenario—in which hospitals achieve a level of efficiency non-partisan experts doubt they can reach—the revenue from Obamacare’s coverage expansions will barely offset the negative effects of the productivity adjustments. Under the worst-case scenario, more than half of hospitals could become unprofitable by 2025, and the entire industry could face negative profit margins.

Kahn knew full well in August 2010 that Obamacare would eventually decimate his industry, through the cumulative effect of year-over-year reductions in Medicare payments. The laughter during his comments demonstrates Kahn thought it was one big joke. He and his colleagues cynically calculated first that they wouldn’t be around when those payment reductions really started to bite; and second that Congress would bail the hospitals out of their own bad deal—essentially, that hospitals are “too big to fail.”

2. Hospitals Supported Raiding Medicare to Pay for Obamacare

Last year’s reconciliation bill essentially undid the fiscal legerdemain that allowed Obamacare to pass in the first place. In the original 2010 legislation, Democrats used savings from Medicare both to improve the solvency of Medicare (at least on paper) and to fund the new entitlements.

The reconciliation bill would have repealed the new entitlements, and—in a truly novel concept—used Obamacare’s Medicare savings to…save Medicare. Instead, the hospital industry wants to continue the budget gimmickry that allows Medicare money to be spent twice and used for other projects.

3. Hospitals Believe Entitlements Are for Them, Not You

In theory, individuals receiving cash contributions in lieu of Medicaid coverage could improve their health in all sorts of ways—buy healthier food, obtain transportation to a higher-paying job, move to a better apartment closer to parks and recreation. But who would object to giving patients cash to improve their health instead of insurance? You guessed it: Hospitals.

Hospitals view Medicaid as their entitlement, not their patients’. That’s why hospitals have worked so hard for Obamacare’s Medicaid expansion. It’s also why they wouldn’t support diverting money from coverage into other programs (e.g., education, housing, nutrition, etc.) that could actually improve patients’ health more than insurance, which has been demonstrated not to improve physical health outcomes.

4. Insisting Health Care Is Their Personal Jobs Program

Hospitals will claim that repealing Obamacare will cost industry jobs, just as they pushed for states to expand Medicaid as a way to create jobs. But economic experts on both sides of the aisle find this argument frivolous at best. As Zeke Emanuel, a former Obama administration official, has noted: “Health care is about keeping people healthy or fixing them up when they get sick. It is not a jobs program.”

The health-care sector seems to believe they have a God-given right to consume at least one-sixth of the economy (and growing). Rebutting hospitals’ argument—that they, and only they, can create jobs—might represent the first step in lowering health costs, which would help non-health sectors of the economy grow more quickly.

This post was originally published at The Federalist.

Four Obstacles in Selling the Benefits of Medicaid Expansion to States

Last week, the White House released a report outlining the economic benefits to states of expanding Medicaid. The report continues a line of argument the Obama administration has used in encouraging states to expand Medicaid under the Affordable Care Act, the president’s health-care law.

The administration faces several obstacles in attempting to sell this argument to reluctant states.

The first is the argument I outlined yesterday—namely, the “poverty trap” exacerbated by several elements of Obamacare. In addition to concluding that the law as a whole will reduce the size of the labor force by the equivalent of approximately 2.3 million full-time workers in 2021, the Congressional Budget Office specifically has found that “expanded Medicaid eligibility under [the law] will, on balance, reduce incentives to work.” For instance, while individuals who exceed the threshold for Medicaid eligibility will likely become eligible for subsidized premiums on insurance exchanges, they would also become subject to thousands of dollars in premium payments and cost-sharing—all because of a potentially small increase in income. CBO has found that these kinds of “cliffs” discourage work.

Second, the Obama administration has rejected requests from states to impose work or job-search requirements in conjunction with the Medicaid expansion. While the administration has claimed to offer flexibility to states when it comes to altering the Medicaid benefit, it has steadfastly refused to consider any mandatory work or job-search requirement. Given the CBO’s analysis, the administration faces a rhetorical challenge in explaining how expansion can benefit the economy yet simultaneously reduce incentives to work—particularly as it declines to give states the ability through work requirements to mitigate against those disincentives.

Additionally, the White House report solely examines the benefits of increased federal funding to states without examining the source of that funding. Most notably, the health law included more than 18 tax increases, which according to the most recent CBO estimates will raise over $1 trillion in revenue—with obvious dampening effects on state economies.

Perhaps most importantly, various economists, including Harvard’s Katherine Baicker, have dismissed the notion that health care should serve as an economic engine. While the administration claims states that expand Medicaid will grow their economies, it has made no attempt to argue that expansion represents the most economically efficient use of those dollars—that the funds could not be better used building roads, returned to citizens, or even remain in the Treasury to reduce the federal deficit. In that sense, then, the administration might do well to heed one of its own former officials—Ezekiel Emanuel, former director of the Office of Management and Budget: “Health care is about keeping people healthy or fixing them up when they get sick. It is not a jobs program.”

This post was originally published at the Wall Street Journal Think Tank blog.

Obamacare’s War on Women

We noted this morning’s Wall Street Journal article outlining the many companies that are reducing the hiring of full-time workers due to Obamacare’s impending employer mandate.  But while the impact of Obamacare on jobs is well-known, perhaps less known is the fact that women will be hit hardest by Obamacare’s job cuts.

Because Obamacare’s mandate hits low-wage workers hardest, studies have demonstrated that women are disproportionately likely to be affected by the mandate.  For instance, in 2007 Harvard Professor Kate Baicker published an analysis examining the impact of one type of employer mandate.  Her work demonstrated that, under the scenario modeled, millions of low-wage workers would be “at substantial risk of unemployment” – and that the workers at risk “tend to be disproportionately low-education, minority, and female.”

Over the past several months, Democrats have spent countless hours drumming up charges of a Republican “war on women,” based on supposed attempts to restrict access to contraception.  But studies like the Baicker paper confirm that the real “war on women” is being waged by Democrats – whose policies will restrict access to jobs for hard-working females.

The Economic Cost of Medicare’s Inefficiencies

Amidst the debate about raising the debt limit and entitlement reform, it’s worth highlighting an article released earlier this week by two commissioners of the Medicare Payment Advisory Commission (MedPAC), which forms the basis for the board of “experts” included in Obamacare.  Both Kate Baicker and Michael Chernew conclude that Medicare is both fiscally and economically unsustainable in its current form and needs a fundamental restructuring:

The public financing of Medicare has particular implications for the economy.  Specifically, raising taxes to pay for public insurance exerts a structural drag on the economy even if the revenue is spent on care; the same is not true of unsubsidized, privately purchased care or insurance.  The net size and timing of the economic consequences depend on how the taxes are raised and how the revenue is spent.  Deficit spending on health care also carries an economic cost: taxes are required to pay back any borrowed money (with interest), and rising debt-to-GDP ratios may have calamitous effects on the country’s future ability to borrow….

An analysis performed by the Congressional Budget Office (CBO) before [Obamacare] was passed suggested that income tax rates would have to increase by more than 70% to finance health care spending that grew just 1 percentage point faster than the GDP — and by more than 160% to finance growth at the historical rate of 2.5 percentage points faster than GDP growth, increasing the income tax rate in the top bracket, for example, to 92% from 35%….

Medicare’s design generates inefficient utilization, which imposes broad indirect costs on all patients.  For example, fee-for-service payment discourages coordinated care, and if Medicare benefit or payment design encourages investment in inefficient resources or inefficient care patterns, that can also drive higher and inefficient private spending….

Even if [Obamacare] achieves its ambitious goals, Medicare would still need extra resources to solve this demographic problem [i.e., the retirement of the Baby Boom generation].  Although some additional resources could come from reducing waste in the system, no industrialized country has ever achieved sustained growth rates of health care spending below that of the GDP, so it seems unlikely that Medicare’s growth could be reduced below the projected [Obamacare] trajectory.

They conclude that Medicare’s current structure raises costs, kills jobs, and CANNOT be solved by tax increases.  Or, in other words, we don’t have a taxing problem – we have a spending problem.

What have Democrats suggested to solve this looming crisis?  Not much.  President Obama made vague paeans to additional entitlement means testing at his press conference this morning, but he has yet to issue ANY specific proposals for reform, despite being required by law to do soWhen will the President and Democrats finally bring forth a Medicare reform plan?

One Year Later: STILL Bad for Young People

Today the Administration continues to sell its unpopular health care law to younger Americans, hoping they will see its benefits.  In reality however, young people stand to lose, not gain, from the 2700-page measure:

Higher Health Insurance Premiums.  The law states that insurance carriers cannot charge older individuals more than three times the premiums paid by younger applicants – meaning premiums for the young will likely rise so premiums for older populations can fall.  A Rand Corporation analysis found that premiums for individuals under age 35 could rise by 17% due to this one mandate, while other analyses have even higher estimated premium impacts.  While supporting initiatives (such as state-based high-risk pools) that would provide affordable coverage to those with pre-existing conditions, the very narrow age variations allowed function as a significant transfer of wealth from younger to older Americans—and by raising premiums for young and healthy individuals, may discourage them from buying insurance at all.

Penalties for Those Who Cannot Afford Coverage.  The law imposes penalties on individuals who cannot afford to purchase a “government-approved” policy – one that meets all the new federal mandates and regulations imposed in the legislation.  As candidate Obama pointed out during his presidential campaign, in Massachusetts, the one state with an individual mandate, “there are people who are paying fines and still can’t afford [health insurance], so now they’re worse off than they were.  They don’t have health insurance and they’re paying a fine.”

Employer Mandate Will Hurt Women and Young Workers.  The law penalizes employers who do not provide “acceptable” coverage, forcing them to pay a “fair share” penalty of $2,000 per full-time employee.  Harvard Professor Kate Baicker’s analysis demonstrates that at least 5.5 million low-wage workers would be “at substantial risk of unemployment” due to new mandates on employers.  What’s more, women and young adults “face the highest risk of losing their jobs under employer mandates.”  The Congressional Budget Office has also confirmed that such mandates “could reduce the hiring of low-wage workers,” and lead to wage stagnation as compensation is diverted to comply with new federal mandates.  At a time when nearly one in four teens is unemployed, these harmful tax increases will hurt exactly the workers that the law intends to help.

Marriage Penalty.  The law bases health insurance subsidy thresholds on multiples of the federal poverty level, and because the poverty level for a two-person couple ($14,710) is less than twice the poverty standard for a single person ($10,890), couples who marry will see their eligibility for subsidies automatically decline when compared to two cohabiting individuals.  Many may view this policy as providing perverse incentives for couples not to marry.

Rising Debt a Fiscal Time Bomb for Future Generations.  At a time of record budget deficits, the health law spends $2.6 trillion in its first 10 years of full implementation.  Growing the debt problem by adding trillions more of federal spending will only increase the debt burden to be faced by future generations.

One Year Later: STILL Bad for Women and Families

While Democrats attempt today to sell their unpopular health care law to women, its provisions provide many specific reasons why women and families should oppose both the law and its harmful effects:

Marriage Penalty:  The law bases health insurance subsidy thresholds on multiples of the federal poverty level, and because the poverty level for a two-person couple ($14,710) is less than twice the poverty standard for a single person ($10,890), couples who marry will see their eligibility for subsidies automatically decline when compared to two cohabiting individuals.  Many may view this policy as providing perverse incentives for couples not to marry.

Another Marriage Penalty:  Among its more than half-trillion dollars in new taxes, the measure raises the payroll tax by a total of $210.2 billion – and the higher taxes apply to incomes of $200,000 for a single individual, but $250,000 for a family.  Thus a married couple with wage earnings of $195,000 each will pay $5,320 more in taxes than two single persons with the same salary.

Employer Mandate Will Hurt Women and Young Workers:  The law penalizes employers who do not provide “acceptable” coverage, forcing them to pay a “fair share” penalty of $2,000 per full-time employee.  Harvard Professor Kate Baicker’s analysis demonstrates that at least 5.5 million low-wage workers would be “at substantial risk of unemployment” due to new mandates on employers.  What’s more, women and young adults “face the highest risk of losing their jobs under employer mandates.”

Federal Funds for Abortion:  The law permits federal funds to subsidize plans covering abortion, permits a multi-state health plan to offer abortion coverage, and requires citizens in states that have opted-out of elective abortion coverage in their own exchange to fund federal subsidies for plans that cover elective abortion in other states.  These provisions will result in the federal government funding actions that violate decades-long precedents for federal health coverage – including that provided to Members of Congress – and that many find morally objectionable.

Rising Debt a Fiscal Time Bomb for Future Generations:  At a time of record budget deficits, the health law spends $2.6 trillion in its first 10 years of full implementation.  Growing the debt problem by adding trillions more of federal spending will only increase the debt burden to be faced by future generations.

Obamacare: Bad for Young Americans

Higher Health Insurance Premiums. The health care takeover[i] states that insurance carriers cannot vary premiums solely based upon family structure, geography, and age; insurance companies also cannot vary premiums by age by more than 3 to 1 (i.e., charge older individuals more than three times the premiums paid by younger applicants). Average premiums for individuals aged 18-24 are nearly one-quarter the average premiums paid by individuals aged 60-64.[ii] While supporting initiatives (such as state-based high-risk pools) that would provide affordable coverage to those with pre-existing conditions, the very narrow age variations allowed function as a significant transfer of wealth from younger to older Americans—and by raising premiums for young and healthy individuals, may discourage their purchase of insurance.

Higher Taxes for Those Who Cannot Afford Coverage. The health care takeover imposes a 2.5 percent tax on the income of all individuals who cannot afford to purchase a “government-approved” policy—that is, one that meets all the new federal mandates and regulations imposed in the legislation. Particularly given the higher premiums that will be imposed on young people for the reasons described above, some may agree with then-Senator Obama when he pointed out that in Massachusetts, the one state with an individual mandate, “there are people who are paying fines and still can’t afford [health insurance], so now they’re worse off than they were. They don’t have health insurance and they’re paying a fine.”[iii]

Tax on Jobs Will Hurt Young Workers. The health care takeover imposes a new tax on jobs by forcing employers who do not provide “acceptable” coverage to pay a “fair share” tax of $2,000 per full-time employee—nearly triple the $750 tax initially proposed. Harvard Professor Kate Baicker’s analysis demonstrates that at least 5.5 million low-wage workers will be “at substantial risk of unemployment” due to new mandates on employers.[iv] The Congressional Budget Office has also confirmed that such mandates “could reduce the hiring of low-wage workers,” and could lead to wage stagnation as compensation is diverted to comply with new federal mandates.[v] At a time when more than one in four teens is unemployed,[vi] these harmful tax increases will hurt exactly the workers that a health care bill is intended to help.

Marriage Penalty. The health care takeover bases health insurance subsidy thresholds on multiples of the federal poverty level, and because the poverty level for a two-person couple ($14,570) is less than twice the poverty standard for a single person ($10,830),[vii] couples who marry will see their eligibility for subsidies automatically decline when compared to two cohabiting individuals. Many may view this policy as providing perverse incentives for couples not to marry.

Rising Debt a Fiscal Time Bomb for Future Generations. The health care takeover spends $2.6 trillion in its first 10 years of full implementation—and the President’s budget proposes to address Medicare physician reimbursements through an additional $371 billion in new deficit spending not included in the legislation.[viii] Growing the problem by adding trillions more of federal spending will only increase the debt burden to be faced by future generations.

 

[i] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.

[ii] America’s Health Insurance Plans, survey of individual health insurance products, December 2007, http://www.ahipresearch.org/pdfs/Individual_Market_Survey_December_2007.pdf, Table 2, p. 7.

[iii] Democratic presidential debate in Austin, Texas, February 21, 2008, transcript available at http://www.cnn.com/2008/POLITICS/02/21/debate.transcript/index.html.

[iv] Kate Baicker and Helen Levy, “Employer Health Insurance Mandates and the Risk of Unemployment,” NBER Working Paper 13528, October 2007, http://www.nber.org/papers/w13528.pdf.

[v] Congressional Budget Office, “Effects of Changes to the Health Insurance System on Labor Markets,” July 13, 2009, http://www.cbo.gov/ftpdocs/104xx/doc10435/07-13-HealthCareAndLaborMarkets.pdf

[vi] Bureau of Labor Statistics, “The Employment Situation – February 2010,” http://www.bls.gov/news.release/pdf/empsit.pdf

[vii] Department of Health and Human Services 2009 Federal Poverty Level guidelines, http://aspe.hhs.gov/poverty/09poverty.shtml.

[viii] President’s Fiscal Year 2011 Budget Submission to Congress, February 2010, http://www.whitehouse.gov/omb/budget/fy2011/assets/budget.pdf, Table S-7, p. 162.

Obamacare: Bad for Women and Families

Marriage Penalty. The health care takeover[i] bases health insurance subsidy thresholds on multiples of the federal poverty level, and because the poverty level for a two-person couple ($14,570) is less than twice the poverty standard for a single person ($10,830),[ii] couples who marry will see their eligibility for subsidies automatically decline when compared to two cohabiting individuals. Many may view this policy as providing perverse incentives for couples not to marry.

Another Marriage Penalty. The health care takeover raises the Medicare payroll tax by a total of $210.2 billion.[iii] However, the threshold for the higher tax stands at $200,000 for a single individual, but $250,000 for a family. Thus a married couple with wage earnings of $195,000 each will pay $1,260 more in taxes than a single person with the same salary.

Tax on Jobs Will Hurt Women and Young Workers. The health care takeover creates a new tax on jobs by forcing employers who do not provide “acceptable” coverage to pay a “fair share” tax of $2,000 per full-time employee—nearly triple the $750 tax initially proposed. Harvard Professor Kate Baicker’s analysis demonstrates that at least 5.5 million low-wage workers would be “at substantial risk of unemployment” due to new mandates on employers.[iv] What’s more, women and young adults “face the highest risk of losing their jobs under employer mandates.”

The Congressional Budget Office has also confirmed that such mandates “could reduce the hiring of low-wage workers,” and could also lead to wage stagnation as wage compensation is diverted to comply with new federal taxes and mandates.[v] At a time when unemployment stands near 26-year highs, these harmful tax increases will hurt exactly the low-wage workers that health care bill is intended to help.

Federal Funds for Abortion. The health care takeover permits federal funds to subsidize plans covering abortion, permits a multi-state health plan to offer abortion coverage, and requires citizens in states that have opted-out of elective abortion coverage in their own exchange to fund federal subsidies for plans that cover elective abortion in other states. These provisions will result in the federal government funding actions that violate decades-long precedents for federal health coverage—including that provided to Members of Congress—and that many find morally objectionable.

Rising Debt a Fiscal Time Bomb for Future Generations. The health care takeover spends $2.6 trillion in its first 10 years of full implementation—and the President’s budget proposes to address Medicare physician reimbursements through an additional $371 billion in new deficit spending not included in the legislation.[vi] Growing the problem by adding trillions more of federal spending will only increase the debt burden to be faced by future generations.

 

[i] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.

[ii] Department of Health and Human Services 2009 Federal Poverty Level guidelines, http://aspe.hhs.gov/poverty/09poverty.shtml.

[iii] Joint Committee on Taxation analysis of substitute amendment to H.R. 4872 in concert with H.R. 3590, March 20, 2010, http://jct.gov/publications.html?func=startdown&id=3672.

[iv] Kate Baicker and Helen Levy, “Employer Health Insurance Mandates and the Risk of Unemployment,” NBER Working Paper 13528, October 2007, http://www.nber.org/papers/w13528.pdf.

[v] Congressional Budget Office, “Effects of Changes to the Health Insurance System on Labor Markets,” July 13, 2009, http://www.cbo.gov/ftpdocs/104xx/doc10435/07-13-HealthCareAndLaborMarkets.pdf

[vi] President’s Fiscal Year 2011 Budget Submission to Congress, February 2010, http://www.whitehouse.gov/omb/budget/fy2011/assets/budget.pdf, Table S-7, p. 162.

Obamacare: Bad for Low-Income Households

Millions of Jobs at Risk. The health care takeover creates a new tax on jobs by forcing employers who do not provide “acceptable” coverage to pay a “fair share” tax of $2,000 per full-time employee—nearly triple the $750 tax initially proposed.[i]  Harvard Professor Kate Baicker’s analysis demonstrates that at least 5.5 million low-wage workers will be “at substantial risk of unemployment” due to new mandates on employers.[ii] Her analysis also found that minority workers were particularly at risk.

Lower Wages. A Congressional Budget Office report, while noting that “a pay-or-play provision could reduce the hiring of low-wage workers,” also found that the cost of such new mandates and taxes will be passed on to workers in the form of lower wages.[iii]  In other words, a pay-or-play tax on jobs will drain the paychecks of those low-income workers most in need of additional purchasing power.

Medicaid Not “Real Insurance. The health care takeover includes significant expansions of Medicaid, which pays physicians 40 percent below private insurance plans, and which in most states suffers from reimbursement delays and other bureaucratic hassles.[iv] These systemic problems in Medicaid keep provider participation low—creating a situation where many beneficiaries have an insurance card but no access to care.

No Choice of Plans. The health care takeover forces individuals with incomes under 133 percent of the federal poverty level ($29,327 for a family of four) onto government-run Medicaid, rather than giving these individuals a choice of private plans on the new health insurance exchange. Some may question the logic behind provisions that allow a family of four with $30,000 in annual income a choice of health insurance options, while denying the same choice to a family with $1,000 less in income.

Will States Provide Medicaid Coverage? The health care takeover prohibits states from reforming their Medicaid programs at any point in the future. Moreover, the law requires all states to pay 10 percent of the proposed Medicaid expansion beginning in 2019—tens of billions in new state spending imposed by federal requirements. Governors in both parties have already voiced significant concerns about what Tennessee Democratic Gov. Phil Bredesen termed “the mother of all unfunded mandates” being imposed upon states.[v]   As a result of the added restrictions in Democrats’ proposals, the head of Washington state’s Medicaid program believes that states facing severe financial distress may say, “I have to get out of the Medicaid program altogether”—potentially jeopardizing coverage for millions of low-income Americans.[vi]

 

[i] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.

[ii] Kate Baicker and Helen Levy, “Employer Health Insurance Mandates and the Risk of Unemployment,” NBER Working Paper 13528, October 2007, http://www.nber.org/papers/w13528.pdf.

[iii] Congressional Budget Office, “Effects of Changes to the Health Insurance System on Labor Markets,” July 13, 2009, http://www.cbo.gov/ftpdocs/104xx/doc10435/07-13-HealthCareAndLaborMarkets.pdf

[iv] Testimony of Congressional Budget Office Director Doug Elmendorf before Senate Finance Committee, February 25, 2009, http://www.cbo.gov/ftpdocs/99xx/doc9911/02-25-Health_Insurance.pdf.

[v] Kevin Sack and Robert Pear, “Governors Fear Medicaid Costs in Health Plan,” New York Times July 19, 2009, http://www.nytimes.com/2009/07/20/health/policy/20health.html.

[vi] Clifford Krauss, “Governors Fear Added Costs in Health Care Overhaul,” New York Times August 6, 2009, http://www.nytimes.com/2009/08/07/business/07medicaid.html.

Faces of Health “Reform:” Who Will Be Hurt by Obamacare?

Small businesses

  • According to the New York Times,[i] the President promised small business owner Patty Briguglio, that “the tax credits would more than offset any tax increases.”  Patty has 19 employees now and gives them an allowance to purchase health insurance.  If she does well and her business expands to 50 or more employees, she will have to pay a $2,000 per employee tax if even one of her employees gets a subsidy in the exchange, even if she continues to provide this allowance.
  • Other small business owners such as a trucking company that employs more 150 workers and offers affordable health insurance today may not be able to afford government-approved health insurance in 2014 and will drop coverage and be forced to pay the mandate tax.
  • This tax will raise $52 billion to help pay for this bill.[ii]
  • For two years, small businesses could receive a complicated and temporary credit to cover 50 percent of the premium costs of their workers.  This credit is no longer available after 2016, but business owners like Patty would face the fine in perpetuity.
  • CBO has said that costs associated with the employer mandate will be shifted to workers in the form of lower wages, fewer jobs, or more part-time jobs at the expense of full-time jobs.[iii]

Seniors

  • The single group that pays the most for this health care bill is America’s senior citizens, who will face $529 billion in cuts to the Medicare program.
  • These cuts are being made to finance an expansion of Medicaid and a brand new entitlement that goes directly from the federal treasury to insurance companies to help people buy mandated health insurance.
  • $120 billion in Medicare Advantage cuts will affect nearly 11 million seniors and cause enrollment to decline by 33 percent.[iv]
  • According to CBO, eliminating the Part D coverage gap, or “doughnut hole,” would cause a 50 percent spike in average Part D premiums.[v]

Wounded Warriors

  • The bill imposes a 2.3 percent tax on medical devices with a  narrow list of exceptions.
  • Wheelchairs, crutches, hospital beds, MRI machines, and a long list of other devices would be taxed, resulting in job losses for manufacturers and higher costs for all Americans who use these devices.
  • No exceptions were provided for America’s veterans, who have sacraficed honorably.  The costs of treating these wounded warriors will go up as all medical devices will be more expensive.
  • American vets are also provided no assurance that their current coverage qualifies as government-approved coverage, meaning they could be forced to give up the coverage they currently have to comply with the mandate.

Children

  • A picture of little Madeline was taken last year at a protest in Washington, D.C., when total gross debt was more than $38,000 per American.
  • If you take out the gimmicks used to hide the true cost of health reform, the bill adds another $618 billion to the deficit over its first 10 years.[vi]
  • This debt will be financed by foreign nations and paid for by future generations of Americans.
  • Madeline already owes $38,375 of the national debt, but if the President’s FY11 budget is enacted, by the time she is a teenager she will owe more than $70,000 to China and other creditors.[vii]

Americans with insurance

  • Americans who are currently insured will pay higher indirect taxes on medical devices, pharmaceuticals, and their health insurance plans.
  • The bill imposes a 40 percent excise tax on family health insurance plans that cost more than $27,500 a year.
  • CBO shows that premiums for Americans in the large group market will continue to rise $1,000 a year under the health care bill, no different than the estimate without reform.[viii]

Families

  • Because the subsidy level for a two-person family is less than twice the level for a single person, getting married will mean that two people who previously received a subsidy will lose that subsidy simply by getting married.
  • Two individuals earning $130,000 separately would face higher taxes on their income and savings if they got married because their combined income would be more than the $250,000 family threshold for the investment tax.
  • These perverse, anti-family incentives punish people for getting married.
  • This bill adds new indirect taxes on more than 73 million households earning less than $200,000 a year, raising the prices of insurance, pharmaceuticals, and medical devices.[ix]

States

  • By expanding eligibility standards for Medicaid, health reform imposes billions in new costs for states, which will be forced to expand their already over-burdened state Medicaid program.  Tennessee Democratic Governor Phil Bredesen has called this the “mother of all unfunded mandates,”[x] and Democratic Arkansas Governor Mike Beebe said he would have voted against the bill because of its effect on states.[xi]
  • The head of Washington state’s Medicaid program believes that states facing severe financial distress may say, “I have to get out of the Medicaid program altogether.”[xii]
  • California’s Governor said he believes health reform will impose $3 billion in new costs on the state.[xiii]
  • Backroom deals to benefit certain states like Connecticut will be paid for by taxpayers in other states.

Students

  • In order to finance their unpopular health care proposals, Democrats have staged a government takeover of student loans that would turn the U.S. Department of Education into one of the nation’s largest banks.
  • Approximately $9 billion in education savings from this government takeover will be diverted from students to help pay for the cost of the Obama Administration’s health care proposal.[xiv]
  • Health care reform is being financed on the backs of American students.

Young people

  • Insurance carriers will not be able to vary premiums by age by more than 3 to 1 (i.e., charge older individuals no more than three times what younger, lower-risk applicants would pay).  While this concept sounds appealing, it will push up prices for young people in order to cut premium rates for older Americans.
  • Average premiums for individuals aged 18-24 are currently nearly one-quarter the average premiums paid by individuals aged 60-64.[xv]  As a result, the very narrow age variations allowed under the new law will function as a significant transfer of wealth from younger to older Americans—and by raising premiums for young and healthy individuals, may discourage their purchase of insurance.
  • Harvard Professor Kate Baicker’s analysis demonstrates that at least 5.5 million low-wage workers would be “at substantial risk of unemployment” due to new mandates on employers—and that workers under age 35 are 50 percent more likely to be threatened with job loss than their older counterparts.[xvi]

 

[i] “Obama Meets the Businesswoman: The Story Behind the Photo,” New York Times, July 30, 2009, http://boss.blogs.nytimes.com/2009/07/30/mr-prez-meets-ms-biz-the-story-behind-the-photo/

[ii] CBO, http://cbo.gov/ftpdocs/113xx/doc11379/Manager%27sAmendmenttoReconciliationProposal.pdf

[iii] CBO, Effects of Changes to Health Insurance System to the Labor Market, http://cbo.gov/ftpdocs/104xx/doc10435/07-13-HealthCareAndLaborMarkets.pdf

[iv] “Brief Summaries of Medicare and Medicaid,” November 1, 2009, Centers for Medicare and Medicaid Services, http://www.cms.hhs.gov/MedicareProgramRatesStats/downloads/MedicareMedicaidSummaries2009.pdf

[v] CBO, Budget Health Options, http://www.cbo.gov/ftpdocs/99xx/doc9925/12-18-HealthOptions.pdf

[vi] Senate Budget Committee, http://budget.senate.gov/republican/pressarchive/2010-03-23BudgetPerspective.pdf

[vii] President’s Budget request, FY11.

[viii] CBO letter to Evan Bayh, November 30, 2009, http://cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf

[ix] Senate Finance Committee analysis of Joint Committee on Taxation distributional data.

[x] “Governors Fear Medicaid Costs in Health Plan,” New York Times, July 19, 2009, http://www.nytimes.com/2009/07/20/health/policy/20health.html?scp=2&sq=medicaid&st=cse

[xi] “Beebe: Wouldn’t have supported health reform overhaul because of cost to the state,” KFSM.com, March 22, 2010, http://www.kfsm.com/news/sns-ap-ar–healthcare-beebe,0,4226531.story

[xii] “Governor’s Fear Added Costs in Health Care Overhaul,” New York Times, August 6, 2009, http://www.nytimes.com/2009/08/07/business/07medicaid.html?scp=1&sq=krauss&st=cse

[xiii] “States Fight Medicaid Expansion,” Wall Street Journal, June 23, 2009, http://online.wsj.com/article/SB124571731912339159.html

[xiv] Congressional Budget Office, March 20, 2010, http://cbo.gov/ftpdocs/113xx/doc11379/Manager%27sAmendmenttoReconciliationProposal.pdf

[xv] America’s Health Insurance Plans, survey of individual health insurance products, December 2007, http://www.ahipresearch.org/pdfs/Individual_Market_Survey_December_2007.pdf, Table 2, p. 7.

[xvi] Kate Baicker and Helen Levy, “Employer Health Insurance Mandates and the Risk of Unemployment,” NBER Working Paper 13528, October 2007, http://www.nber.org/papers/w13528.pdf.