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10 Reasons ObamaCare Is Bad for Your Health and Your Pocketbook
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Written by Dr. Jameson Taylor
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Tuesday, 18 August 2009 16:15 |
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 The U.S. Congress is currently considering several versions of health care €œreform€ that will radically alter the landscape of American health care. The House is planning to vote on one such bill (HR 3200) after Labor Day. In the Senate, two bills are receiving the most attention: one passed in July by the Health Committee; another currently before the Senate Finance Committee. The key provisions of these bills are:
- An insurance mandate requiring all employers to provide health insurance or pay an 8 percent payroll tax penalty. Individuals who do not have insurance will be forced to pay a 2.5 percent €œhealth insurance€ tax penalty.
- Insurance subsidies for all adults earning between 133 percent and 400 percent of Federal Poverty Level (FPL).
- Expansion of Medicaid to include all adults who earn less than 133 percent FPL.
- Creation of a health insurance exchange that provides guaranteed coverage, regardless of cost.
- Creation of a Medicare-style, €œpublic option€ health insurance plan.
While there is widespread agreement that health care reform is necessary in America, the current policies being debated in Congress reflect an opinion that government-run health care is the best answer. The alternative is free-market reform that could improve health care access by making insurance more affordable for everyone, without government subsidies and price controls. Absent such reforms, expanding government-run health care will result in higher costs, lower quality care and higher taxes:
1. The majority of individuals with employer-based coverage will lose their current plan. While President Obama claims his plan will enable Americans to keep their current health insurance plan, The Lewin Group, a highly respected health care consulting firm, found otherwise. Lewin€™s analysis of HR 3200 concluded that 88 million individuals €“ 56 percent of Americans with employer-based coverage €“ will be forced to change plans.
2. Millions with private insurance will lose existing health coverage. According to Lewin, 83 million people (48 percent) with private insurance will lose coverage. In particular, ObamaCare will likely lead to the elimination of both comprehensive or €œgold-plated€ plans (owing to price controls) and more affordable plans (such as Health Savings Accounts; owing to coverage mandates). As indicated above, a majority of employers will drop coverage. Private individual health insurance polices will be banned altogether.
3. Quality of care will decline. As a recent editorial in the Washington Post noted, President Obama€™s €œall-gain-no-pain stance €¦ masks the reality that getting health costs under control will require making difficult choices about what procedures and medications to cover.€ Yet, as the Post indicates, the primary driver of health care costs is technological innovation. Without such innovation, quality of care will decline. Obama€™s proposal to pay doctors and hospitals a flat free to provide medical care will encourage rationing even more. Already, under the Massachusetts connector plan, there is a 33-55 day waiting period to see a primary care physician.
4. Medicare and Medicaid will be cut. In order to reduce health care costs, Congress is looking at slashing Medicare and Medicaid by $313 billion. Medicare Advantage plans will also be eliminated (these currently cover 1 in 5 seniors). As the number of Medicaid enrollees rises, rationing and waiting periods are also likely to increase.
5. More than 5 million lost jobs. According to the president€™s Council of Economic Advisors, as many as 5.5 million jobs could be lost owing to increased taxes on firms that do not currently provide health insurance. In fact, 56 percent of Americans believe ObamaCare will result in job losses as small businesses cut payrolls (Source: Public Opinion Strategies).
6. Millions will still lack heath insurance. Even after spending more than $1 trillion on health €œreform,€ the Lewin Group estimates 34 percent, or 17 million, of those who are currently uninsured will still not have insurance.
7. Hospitals will lose billions. Given Medicare€™s low reimbursement rates (68 percent of private payments), hospitals can expect their annual net income to fall by $62 billion. Physician reimbursement payments will also decline by $32 billion, although overall income could increase for some physicians (Source: Lewin Group/Heritage Foundation). Small and mid-size insurers will also be hurt under ObamaCare, as will specialists.
8. South Carolina€™s Medicaid costs will more than double. HR 3200 expands Medicaid coverage to low-income adults who earn 133 percent of Federal Poverty Level. The outcome will be an immediate increase of 370,000 eligibles, reaching 432,743 in 10 years. As a result, the state share of Medicaid funding will go from $450 million to $972 million by 2020 (Source: S.C. Dept. of Health & Human Services).
9. Taxes will increase. The ObamaCare plan will be funded by a cumulative 5.4 percent increase in the top tax brackets (beginning at $280,000). This increase will push South Carolina€™s combined federal and state effective marginal tax rate to 53.59 percent for top earners €“ 16th highest in the nation. This is even after accounting for relevant deductions. All in all, taxes will increase by more than $800 billion. According to the Cato Institute, 60 percent of those hit with the surtax will be small business owners.
10. ObamaCare without the €œpublic option€ = HillaryCare. Amid reports the White House is backing away from offering a government option plan, it is important to recognize that we are left with nothing less than HillaryCare, the cornerstone of which was an individual insurance mandate. Such a mandate, as in Massachusetts, will require taxpayers to provide premium subsidies to everyone who cannot afford insurance. In addition, such a plan penalizes those who are young and healthy by forcing them to share risk with those who are unhealthy. Finally, the elimination of the public option plan does not really change the debate insofar as the government can effectively force insurers to offer a less expensive (i.e., taxpayer subsidized) private option plan that would similarly undermine the real private insurance market.
Nothing in the foregoing should be construed as an attempt to aid or hinder passage of any legislation. Copyright 2009. South Carolina Policy Council Education Foundation, 1323 Pendleton Street, Columbia, South Carolina 29201. Visit the Policy Council Facebook page at www.facebook.com/scpolicycouncil or Twitter at www.twitter.com/scpolicycouncil.
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