Nine Danger Signs in Obamacare

Nine Danger Signs in Obamacare


Not a single one of its major programs has gotten started, and already the wheels are starting to come off of Obamacare. The administration’s own chief actuary has reported millions of people could lose their health insurance, health-care costs will rise faster than they would have if the law hadn’t passed, and the overhaul will mean people will have an increasingly tough time finding physicians to see them.

The White House is trying to spin this April report from Medicare’s chief actuary Richard Foster as only half bad because it concludes that although costs will increase, only 23 million people will remain uninsured (instead of 24 million as previously estimated). But looking at the details of Foster’s report shows the many, many danger signs for Obamacare and how many of its promises will be broken.

Here are nine big problems which stand out:

Nine Danger Signs

1. People losing coverage: About 14 million people will lose their employer coverage by 2019, as smaller employers terminate their plans and workers who currently have employer coverage enroll in Medicaid. Half of all seniors on Medicare Advantage could lose their coverage and the extra benefits the plans offer.

2. Huge fines for companies: Businesses will pay $87 billion in penalties in the first five years after the fines trigger in 2014, partly because they can’t afford to offer expensive, government-mandated coverage and partly because some of their employees will apply for taxpayer-subsidized insurance.

3. Higher costs for consumers: Tens of billions of dollars in new fees and excise taxes will be “passed through to health consumers in the form of higher drug and devices prices and higher premiums,” according to Foster. A separate report from the Joint Economic Committee shows small businesses will be hit hardest.

4. A program created to fail: The new “CLASS Act” long-term-care insurance program will face “a significant risk of failure,” according to Foster. Indeed, he finds, “there is a very serious risk that the problem of adverse selection will make the CLASS program unsustainable.”

5. Spending increases: Under the new law, national health spending will increase by $311 billion over the coming decade. And instead of bending the federal spending curve down, it will move it upward “by a net total of $251 billion” over the next decade.

6. “Free-riders”: An estimated 23 million people will remain uninsured in 2019, roughly 5 million of whom would be undocumented aliens. The remainder will be the 18 million who decline to get coverage and choose instead to pay the penalty.

7. Spending reductions are fiction
: Estimated reductions in the growth rate of health spending “may not be fully achievable” because “Medicare productivity adjustments could become unsustainable even within the next ten years, and over time the reductions in the scope of employer-sponsored health insurance could also become an issue.”

8. You can’t keep your doctor
: Fifteen percent of all hospitals, nursing homes, and other providers treating Medicare patients could be operating at a loss by 2019, which will “possibly jeopardize access to care for beneficiaries.” Doctors are threatening to drop out of Medicare because cuts in Medicare reimbursement rates mean they can’t even cover their costs.

9. Coverage but no care: A significant portion of those newly eligible for Medicaid will have trouble finding physicians who will see them, and the increased demand for Medicaid services could be difficult to meet.

Small Businesses, Families Suffer

This is an objective report by administration actuaries that shows this sweeping legislation has serious problems. They are not alone. As the congressional Joint Economic Committee, led by Kansas Republican Sen. Sam Brownback (R), explains in a new report, a rarely mentioned $14.3 billion per year tax on health insurance, effective in 2014, will be mostly passed through to consumers in the form of higher premiums for private coverage.

It will cost the typical family of four with job-based coverage an additional $1,000 a year in higher premiums and will fall largely, and inequitably, on small businesses and their employees.

States Resisting

States are fighting back. The Florida legislature voted in April to place a state constitutional amendment on the ballot that would ban any laws that compel someone to “participate in any health care system.” It requires a 60 percent vote to succeed.

The legislation is modeled after the American Legislative Exchange Council’s Freedom of Choice in Health Care Act, which has been introduced or announced in 42 states and serves as a model for how states can respond.

Obamacare is far from settled policy. There are two more federal elections before the major provisions of the law take effect in 2014. Doctors are fighting mad, patients are scared, and companies are starting to realize the promises of health-care-reform legislation could turn into a huge and costly burden.

Grace-Marie Turner (galen@galen.org) is president of the Galen Institute. This column is adapted from an article on the institute’s website at http://www.galen.org.

Internet Info

Sen. Sam Brownback (R-KS), Joint Economic Committee Report on “Unwinding Obamacare”: http://www.heartland.org/healthpolicy-news.org/article/27697/JEC_Report_on_Obamacare.html

CMS Actuary Richard Foster, “Estimated Financial Effects of the Patient Protection and Affordable Care Act as Amended”: http://www.heartland.org/healthpolicy-news.org/article/27696/CMS_Actuary_Report_on_Obamacare.html