Ten Articles Worth Reading on Obamacare's Anniversary
On the second anniversary of President Obama's health care law, the White House is engaging in little more than token promotion or celebration of the president's signature domestic policy. They've created a promoted Twitter hashtag, #ILikeObamacare, which was supposed to be used to promote the law's attributes - and instead has already been co-opted by opponents to highlight its defects.
Obamacare has been the main topic we've focused on here at Health Care News over the past three years. So here are ten different articles and items worth reading as we mark its second year, and wonder whether it will have a third anniversary next year.
Confronted with these concerns, the Administration has echoed Nancy Pelosi when she was asked if the individual mandate was constitutional: "Are you serious?" The political class, the Administration says, would never abuse police powers to create the proverbial broccoli mandate or force people to buy a U.S.-made car.
But who could have predicted that the government would pass a health plan mandate that is opposed by two of three voters? The argument is self-refuting, and it shows why upholding the rule of law and defending the structural checks and balances of the separation of powers is more vital than ever.
The mandate is a central aspect of the law, because it’s the mechanism for bringing healthy people (and their money) into the insurance pool. The mandate is meant to offset the distortion in the marketplace caused by another part of the law, which requires insurers to cover those with pre-existing conditions at the same price as others.
In the absence of a mandate, healthy people would have an incentive to go without insurance, knowing that insurers couldn’t deny them coverage if they got sick. This would drive up the price of insurance, which would then cause more healthy people to leave the market, leading to even higher rates. Eventually, the so-called “death spiral” would ensue, and the private insurance market would fall apart.
If only the mandate is overturned, Republicans would push for legislative repeal of the rest of the law while Democrats would push for some way to “fix” Obamacare. If Americans elect a divided government in November, this will be a bruising battle that could make the debt ceiling debate look tame.
Here are Politico’s ”four hard truths”:
- Some people won’t get to keep the coverage they like;
- Costs aren’t going to go down;
- It’s just a guess that the law is going to pay for itself;
- “The more they know, the more they’ll like it” isn’t happening.
Any fair-minded look at the original congressional design shows that all of the health insurance market reforms depended on the individual mandate—not just “guaranteed issue” and the (related) prohibition on exclusions for preexisting conditions, but also “community rating”, the prohibition on annual benefit limits, comprehensive coverage requirements, limitations on co-pays and deductibles, preventive care coverage requirements, and even the reduction in subsidies to hospitals that care for the indigent. All of these provisions raise the cost of insurance; and in combination with guaranteed issue, they create relentless adverse selection pressure.
Transcripts of committee hearings, floor statements, and record votes as various proposals wound their way through the legislative process show, in abundant detail, that that proponents of health reform fully understood the mandate’s foundational importance to the whole scheme. It was for that reason that the law’s proponents rejected every effort to remove the mandate from the law in committee vote after committee vote.
The medicine cabinet tax prevents families from using their health savings accounts (HSAs) or workplace flex-savings accounts (FSAs) to purchase non-prescription, over-the-counter medicines on a pre-tax basis. There is no exemption for families making less than $250,000 per year.
The “special needs kids” or “braces” tax puts a cap of $2,500 for the first time on FSAs. Prior to Obamacare’s passage, families with very high medical bills could put an IRS-unlimited amount in their FSAs to pay for things like special needs tuition or braces on a pre-tax basis. Obamacare changed all that. There is no exemption for families making less than $250,000 per year.
Obamacare imposes a 20 percent “surtax” on non-medical, early withdrawals from HSAs. This results in a tax rate on these distributions which can easily exceed 60 percent. There is no exemption for families making less than $250,000 per year.
The number of pages of regulations being released due to ObamaCare is beginning to make the initial bill look like a pamphlet. By IBD’s count, the regulations are up to 5,931 pages.
Here’s how the panel—brainchild of progressive Sen. Jay Rockefeller, West Virginia Democrat—is supposed to work. Beginning next year, if Medicare’s growth rate is projected to exceed a “global budget” target defined in the 2010 law, then the 15 “experts” at IPAB must develop a proposal to get Medicare spending back in line. If the Secretary of Health and Human Services decides she doesn’t like the proposal, she can substitute her own. But either way, the decision, once published, goes into effect automatically—and basically can’t be reversed. This may not be a “death panel,” but it is a legal and moral monstrosity.
The size of the mandate’s penalty is puny in comparison to the cost of health insurance. According to the government’s Medical Expenditure Panel Survey (MEPS), the average premium for an individual plan in 2010 was $4,940. If we assume that premiums increase by 6 percent a year—the historical rate—the maximum $695 mandate will account for only 10 percent of average premiums.
Because the mandate is weakly enforced, small in size, and gradually put into place, whereas the pre-existing condition mandate takes effect immediately, Obamacare creates the recipe for an adverse selection death spiral. “We would anticipate significant adverse selection to occur in the existing market,” reports PwC, “increasing premiums for those who have coverage today. Higher premiums will result in more individuals being exempted from the coverage requirement…the penalties will be phased in, so that they will not reach full effectiveness for several years. This lack of coordination increases the likelihood of a premium spiral that ‘gets ahead’ of the coverage requirement which…may further reduce the incentive for those who are healthy to buy coverage. This may then cause an increase in premiums for those with coverage today.”
The law also requires states to expand their Medicaid programs to cover families earning up to $30,000 a year. Lawyers for the 26 states that are challenging the law will tell the court during oral arguments this violates the Tenth Amendment's protection of states' rights.
Medicaid, a program designed to pay medical expenses for the poor, is the largest health program in the country. Its costs already are drying up spending on education, roads and public safety. Many states warn this huge Medicaid expansion could send them into bankruptcy. The Medicaid mandate should be struck by the court as a violation of the Tenth Amendment.
The CBO's initial estimate in March 2010 of ObamaCare's budget impact showed it saving money, reducing the federal deficit by $143 billion in the first 10 years. But that positive estimate was largely the product of gimmicks inserted into the bill by Democratic leaders to hide the law's true cost.
Sure enough, the administration last October announced it would not implement one of those gimmicks, a long-term care program called the Class Act, because it was financially unworkable. The loss of the premiums that would be collected to finance the Class Act wiped out $70 billion of the supposed deficit reduction projected by CBO. And last month the administration's proposed fiscal 2013 budget included $111 billion in additional spending for the premium subsidies in the health law's insurance exchanges—further eroding any confidence in the original ObamaCare projections.
This would not be the first time a government program exceeded its projected cost. When Medicare was passed in 1965, for example, the federal government estimated it would cost $12 billion in 1990. Medicare actually cost $110 billion in 1990.