Obamacare was 2700 pages long. In his State of the Union speech tonight, the President spent two sentences – a mere 44 words – talking about health care. And the first reference didn’t come until 39 minutes into his speech.
The White House is previewing the State of the Union message by saying the President’s agenda will renew American values, and create a country where “everyone plays by the same rules.” But the reality is that Obamacare actually worsens inequality – by pitting similarly situated households against one other. Some families will get vast subsidies from the federal government, while other families making the same incomes will receive little or nothing. That’s not an America where “everyone plays by the same rules” – it’s the federal government picking winners and losers.
Take, for instance, two key numbers – the 63 percent and the 18 percent. The 63 percent are the number of non-elderly Americans who are theoretically eligible for taxpayer-funded insurance under Obamacare. According to the Census Bureau, there are 266.5 million individuals under age 65. Of those, 169.2 million have incomes under 400 percent of the federal poverty level – the threshold under which individuals can receive insurance subsidies. 169.2 million divided by 266.5 million people is 63.5 percent – meaning nearly two-thirds of the population under age 65 are considered “low-income” and qualify for subsidized insurance under Obamacare.*
However, according to the Congressional Budget Office, of the nearly 110 million people theoretically eligible for taxpayer-subsidized insurance on Obamacare’s Exchanges, only 20 million – or 18 percent – will actually receive those subsidies. The remaining 82 percent of the population with incomes between 135-400 percent of poverty will instead pay (through a dozen middle-class tax hikes) for the privilege of funding the health care of the other 18 percent.
On both fiscal and fairness levels, this Obamacare math raises serious questions:
- How is a legislative scheme where three in five Americans are classified as “low-income” fiscally sustainable?
- Conversely, how is a scheme where fewer than one in five Americans in eligible income brackets actually receive government benefits equitable – or even perceived as such?
- Won’t middle-class American families who DO NOT receive subsidies, yet fund the benefits of individuals with similar incomes who DO, revolt at the inequity of the government “picking winners and losers” by deciding who will and will not receive subsidies?
- Won’t public outrage force a rapid expansion of Obamacare’s subsidies, and/or encourage employers to drop coverage, either or both of which will quickly cause spending on subsidies to explode?
When it comes to equality, Obamacare strikes a “balance” as the worst of both worlds – making nearly two-thirds of the population eligible for subsidized insurance in practice, but giving it to only a fraction of this larger subset. At one stroke, a majority of Americans have been classified as “low-income,” yet most of that majority will have the “privilege” of watching their hard-earned tax dollars subsidize the insurance of others with the same, or even less, income. It’s the type of horizontal inequality – people with the same income being treated far differently – that all Americans, not just Occupy Wall Street, will view as unfair and distinctly NOT an American value. Yet this perverse version of spreading the wealth around is one of the fundamental premises on which Obamacare is based.
* Of the 169.2 million people under age 65 with incomes under four times the poverty level, 59.3 million have incomes under 135 percent of poverty. All these individuals – many of whom are already eligible for Medicaid – will become eligible for that program under Obamacare. (Technically the Medicaid eligibility threshold is 138 percent of poverty, not 135 percent, but the Census data have a slightly different cutoff point.) That means 109.9 million people under age 65 – or about 41% of the non-elderly population – is eligible to receive insurance subsidies in Obamacare Exchanges, by virtue of their income. (The 59.3 million with incomes below 135 percent of poverty will be dumped into Medicaid, and will not have a choice of private plans regardless.)
An hour ago, the White House released its prime talking points ahead of the President’s State of the Union Address tonight – and they are most noteworthy for what you will NOT find included. At no point in the document do the words “health care,” “health insurance,” or anything related to Obamacare appear. In other words, fewer than two years after signing a 2700-page law the White House dubbed “historic,” and others have called “majestic,” the White House is apparently afraid to spend even one ounce of political capital defending or promoting the measure in its prime agenda-setting opportunity for the entire year.
And with reason. Not only is the measure still widely unpopular, it’s hurting economic growth at a time when unemployment remains stubbornly high:
- Last week a survey of small businesses found 74% said that Obamacare makes it harder for their firms to hire new workers;
- Analysts at UBS have stated that Obamacare is “arguably the biggest impediment to hiring, particularly hiring of less skilled workers;” and
- The President of the Federal Reserve Bank of Atlanta has “frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’”
Speaker Pelosi famously said we had to pass the bill to find out what’s in it. Judging from their deafening silence about the matter ahead of the State of the Union, it appears the White House has finally found out what’s in the bill – or discovered that the American people don’t like what’s in it either.
As the White House is promising to release a series of graphs and visual aids during tonight’s State of the Union address, I’ll start the discussion by pointing out one chart that the White House won’t show – the Administration’s “progress” on reducing Americans’ health insurance premiums by $2,500 per family. Candidate Obama repeatedly promised during his campaign to lower health insurance premiums by $2,500 per year – yet President Obama not only signed a bill that forces Americans to buy health insurance, but also will RAISE individual health insurance premiums by an average of $2,100 per family. That the President signed a bill directly violating one of his central campaign promises illustrates the way the “Affordable Care Act” is more accurately named the UNaffordable Care Act – unaffordable for middle-class families struggling to pay their current premiums, hard-working taxpayers, and future generations of Americans who will bear the debt of trillions in new entitlement spending.
The graph follows below, and a compilation of quotes from candidate Obama promising a $2,500 premium reduction is available here.
Before the State of the Union address and an expected message from President Obama about fiscal responsibility, it’s worth examining closely what one of his closest budgetary advisors has admitted are the fiscal consequences of the health care law. First, Peter Baker’s story in this Sunday’s New York Times Magazine includes this interesting nugget about Peter Orszag, Obama’s first budget director: “One reason he left…was the sense that the Administration was trapped in a dynamic that would make it hard to reduce the deficit adequately.”
Viewed from a health care perspective, this is a startling admission: The White House’s leading fiscal hawk – the one who helped coin the mantra that “Health care reform is entitlement reform” – believes the Administration’s actions over the past two years made it HARDER to reduce the federal deficit. And the $2.6 trillion health care law was – by far – the largest fiscal measure enacted during that time frame. So while Democrats are going around claiming the health care law will reduce the deficit, one of its main architects has admitted the measure was in reality a major contributor to an environment of budgetary profligacy within the Administration.
But that’s not all. It’s also worth examining Orszag’s first op-ed column for the New York Times, in which he laid out his prescription for deficit reduction. In advocating for the Bush-era tax relief to expire for all Americans in 2013, he included this little nugget: “The health reform act included substantial savings in Medicare and Medicaid, so there aren’t further big reductions available there in our time frame.” Put differently, because the health care law re-directed Medicare savings to create new entitlements rather than reducing the deficit (or improving Medicare’s solvency), another major tax increase will soon be in order. So in reality, Orszag admits that the more than half-trillion dollars in tax increases included in the health care law itself are just the leading edge of the tax hike spear needed to fund health care entitlements – because the law used a major source of potential deficit reduction as a “honey pot” to fund yet more entitlement spending.
It’s refreshing that Orszag’s comments demonstrate his apparent awareness that the health care law will in reality prove a major contributor to future budget deficits. It’s much less encouraging to read his statements saying the way around this dilemma is another massive tax increase on all Americans.