Archive | Health Care Bill Impact on Business

The Election’s Choice on Health Care Reform

On the issue of health care reform, your choice on Election Day comes down to Obamacare or “repeal and replace.”

President Barack Obama’s position can be “summed up” in 2,400 pages. That’s the length of his Affordable Care Act, the landmark 2010 health care overhaul informally known as Obamacare, which makes sweeping consumer-centric changes to common health insurance practices.

The law is closely modeled after the Massachusetts health insurance reform that Republican challenger Mitt Romney championed when he was governor of that state in 2006. But now, the former Massachusetts governor vows that if he’s elected president, he’ll repeal the Obama law and replace it with a more conservative alternative.

But what that might look like is one of the campaign’s big questions.

  • Obama touts health care law in his campaign

Obama is promoting the Affordable Care Act as he makes his case for a second term. Go to the health care section of his campaign website to find out where he stands, and what you’ll find are links where you can “learn how Obamacare benefits you.”

Under the law, insurers by 2014 may no longer: deny coverage to individuals with pre-existing conditions; impose lifetime or annual dollar limits on coverage; cancel coverage arbitrarily; limit doctor choice and out-of-network emergency services; or charge higher premiums based on gender or health status.

The act also allows young adults to remain on their parents’ policy until age 26, and it provides a laundry list of preventive care screenings and services to all ages at no additional cost.

To help pay for this expansion of benefits, the law’s “individual mandate” requires most Americans to obtain health insurance or pay a penalty. To help consumers find affordable coverage, new state marketplaces called exchanges will open in 2014, government tax credits will be available for low-income individuals and families, and states are encouraged to expand their Medicaid programs to millions of uninsured, lower-income Americans.

The Medicaid expansion had been a requirement under the law, but the U.S. Supreme Court made it optional for states.

  • Romney plan short on details

Romney’s campaign website says Obama’s approach to health care reform takes the country in the wrong direction, by relying on “a dense web of regulations, fees, subsidies, excise taxes, exchanges, and rule-setting boards to give the federal government extraordinary control over every corner of the health care system.”

But while the Republican has been very specific about wanting to repeal the Obama health care law, he has been vague on how a Romney administration would replace it, says Jonathan Oberlander, professor of social medicine and health policy at The University of North Carolina at Chapel Hill.

“On one hand, there is reason to think they might seek ambitious health reform. On the other hand, the base of the Republican Party is more interested in ‘repeal.’ That makes it very hard for him to talk specifics about ‘replace,'” Oberlander says.

Romney “would be part of a Republican government, and the Republican Party has shown some pretty strong preferences about health care,” according to Joe White, professor of public policy and political science at Case Western Reserve University in Cleveland.

According to the Romney website, his reforms would promote individual responsibility for health care and ease government regulation on health insurers so that free-market competition can drive down costs.

The states rather than the federal government would run the show and “have both the incentive and the flexibility to experiment, learn from one another, and craft the approaches best suited to their own citizens,” the website says. Federal standards and requirements would be limited on both private insurance and Medicaid.

“The Republican position all along has been that the problem with health care is that people are not individually responsible for their health care, so when they need it, they consume too much,” White says. “Basically, their solution is to encourage less generous or less adequate insurance.”

Romney has said he would retain some popular features of the Affordable Care Act, including allowing young adults to remain on their parents’ plan and enabling people with pre-existing conditions to obtain coverage. But while he has said, “I like everybody being insured,” it is unclear whether he would require that.

  • What do voters want?

The Obama law is already starting to transform U.S. health care into the president’s vision, to mixed reviews. In a recent tracking poll from the Kaiser Family Foundation, 43% of Americans viewed the law unfavorably, while 38% felt favorably.

What effect would a Romney overhaul of the overhaul have on U.S. health care, and would the public approve?

Judy Feder, health policy expert with the Urban Institute, a nonpartisan think tank in Washington, D.C., says stripping the market of regulation would leave consumers less empowered to find affordable health coverage.

“It would essentially undo the employer-based insurance market,” she says. “Individual shoppers are much less effective than larger purchasers, particularly in a highly concentrated health care market.”

In the Kaiser Family Foundation tracking poll, a 49% plurality said the Affordable Care Act should be kept as is or even expanded. Oberlander says whether voters would accept a Republican health insurance alternative may not be as important to a President Romney as whether he could convince his own party to act at all.

“If he wins, he’s got more freedom, but they would also face a very conservative House, and they’re certainly not going to have a 60-vote (filibuster-proof) majority in the Senate,” Oberlander says, of the challenges for a Republican White House on health care reform. “Even if they wanted to do something ambitious, how do you pass it? And from a purely political viewpoint, why in the world would anybody want to start another health reform fight?”

*Modified from a Fox Business News Article

 

 

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Health insurance options for low-income families

Tamara E. Holmes – October 18,2012

Many Americans get health insurance as a benefit through their jobs. But for those without health benefits – especially those on a very tight budget – maneuvering through the health care system can be challenging.

With the average health insurance premium at $5,615 a year for an individual, according to the Henry J. Kaiser Family Foundation, low-income people are especially hard-pressed to find coverage for themselves and their families. Fortunately, some low-income Americans can take advantage of government-backed and private insurance plans.

Medicaid is an option that some people may not realize they’d qualify for, says Stephanie Cohen, CEO of Cohen & Golden, which sells health insurance and financial products. Under Medicaid, certain people whose income is too low to be able to afford to buy health insurance may receive free or low-cost medical services.

Medicaid is federally and state funded; eligibility requirements differ from state to state, although all states must adhere to certain federal standards. For example, in New York, a family of four must have $15,208 or less in annual income to qualify for Medicaid. In Oklahoma, a family of four may qualify for Medicaid if they make $6,996 or less per year. People who are pregnant or who have disabilities typically can qualify for Medicaid at higher income levels.

Not all Medicaid programs are the same

The services covered under Medicaid also vary by state. Some benefits must be offered by all state Medicaid programs, including inpatient hospital stays, laboratory tests and X-rays. Other services are optional. For example, while all states must provide dental coverage to children, states can determine whether they’ll offer it to adults.

According to a study by the Kaiser Family Foundation, three states – Alabama, Delaware and Tennessee – do not offer dental coverage to adults, while half of the states provide only emergency dental care and do not cover routine dental visits. Most states offer expanded eligibility to pregnant women, meaning they can qualify for Medicaid even if their income is higher than the state’s requirements.

In 2014, more people will be eligible to receive Medicaid as a result of the federal health care reform law. Starting then, people who make 133 percent of the federal poverty level, which now is $29,700 for a family of four, will qualify for the service.

  • Although low-income families may qualify for Medicaid, it might be challenging to find a doctor. Some physicians refuse to accept patients covered by Medicaid because the reimbursement for services is so low, says John Barrett, founder of California-based Health Insurance Brokers, which provides health insurance solutions to individuals, small businesses and seniors. In fact, a recent study by medical staffing company Jackson Healthcare found that 66 percent of dermatologists, 64 percent of endocrinologists and 58 percent of internists said they can’t afford to take on new Medicaid patients.

Your state’s health department can connect you to a local Medicaid office, which can help you find a physician who accepts Medicaid.

For those who have children under age 19, the Children’s Health Insurance Program (CHIP) is another government-backed insurance option. It provides coverage to children in families with incomes that are too high to qualify for Medicaid. As with Medicaid, each state oversees its own CHIP.

Some states run their CHIPs as part of Medicaid while others run the two programs separately. The income requirements, again, differ from state to state. For example, in West Virginia, the income of a family of three must be no more than $55,590, while in Maine the income level for a family of three must be no more than $37,060.

Private options available

Private insurance options are available for low-income Americans, particularly those who are relatively healthy. High-deductible health insurance plans typically have low premiums because the policyholder agrees to pay more of the costs when services are delivered.

For example, if you bought a plan with a $2,500 deductible, you would pay the first $2,500 in medical expenses and the insurance plan would pick up the rest. As long as you’re healthy, you’ll save money on premiums with such a plan. If you suffer a catastrophic illness, you’ll be covered above that initial $2,500.

“Mini-med” health plans are another option people with low incomes can explore. These plans provide limited health insurance coverage for treating illnesses and certain inpatient hospital procedures. These plans also are best suited for those who are relatively healthy; the plans tend to have low annual coverage limits, meaning you’ll likely run out of benefits quickly if you’re diagnosed with a major illness.

  • Low-income people who have limited insurance plans can also visit free clinics, Barrett says. For example, Planned Parenthood offers free mammograms and breast cancer screenings, as well as colon cancer screenings, routine physical exams and men’s health services in some locations.
*Modified from an InsureMe.com article
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Illinois Democratic Sen. Dick Durbin: Cuts to workers’ hours a ‘bad result’ of Obamacare

Illinois Democratic Sen. Dick Durbin, the second-ranking Democrat in the Senate, told The Daily Caller that “several” areas of President Barack Obama’s Affordable Care Act could be “improved” and acknowledged that a “bad result” of the law is that companies are cutting workers’ hours to avoid paying for their health insurance.

For example, Darden Restaurants, which operates the Olive Garden and Red Lobster restaurants, is reportedly limiting employees’ hours due to the health care law’s regulations on businesses.

“It’s a bad result. It is a bad result, and I’d like to – I’ve worked with them [Darden] on many issues, and I’d like to sit-down with them and find out what it is,” Durbin, who voted for Obamacare, told TheDC in a video interview at Hofstra University before Tuesday night’s presidential debate.

“Like I say, the only perfect law that was ever written was carried down on stone tablets from the mountain by Senator Moses,” Durbin said. “Everything else is subject to improvement, and that’s the way I look at the health care reform bill. Let’s sit down with these businesses, large and small, and find out how we can strike a happy medium.”

The law requires businesses with more than 50 full-time employees to provide health insurance for their workers, or pay a fine to the IRS.

Describing himself as a “single-payer guy,” Durbin also told TheDC he would like to see states adopt single-payer health care systems.

“I hope states will exercise their option to create a single-payer plan,” said Durbin.

“Let’s test it against the private insurance market, and over a period of time decide if that has some value in other places.”

*Modified from a Daily Caller article

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Examiner Editorial: Companies cut hours and jobs to dodge Obamacare

If you want to know how Obamacare will affect future U.S. employment, look no further than this week’s Orlando Sentinel report on Darden Restaurants — the company that owns popular chains like the Olive Garden and Red Lobster. Currently, all 185,000 Darden employees are offered health insurance, but that’s about to change, thanks to Obamacare.

Obamacare fines large companies that fail to offer health insurance to their full-time employees. This would not be a problem for Darden, except that many of its employees have affordable health plans whose coverage is not robust enough to fulfill the requirements of Obamacare’s individual mandate. Such plans are popular with restaurants, whose profit margins tend to be small, because they let employers offer benefits at a very reasonable cost. But such plans have coverage limits and other features that Obamacare bans, so they will likely be discontinued beginning in 2014, if not sooner.

And so in order to avoid paying fines or buying massively more expensive health plans that are Obamacare-compliant, Darden is now experimenting with limiting its employees’ hours instead. By keeping workers to fewer than 30 hours per week, Darden can categorize them as “part-time.” Thus, the company avoids the Obamacare fines and leaves employees to the new government health insurance exchanges, where they may receive subsidies to purchase insurance. At least two other restaurant chains — White Castle and McDonald’s — are considering similar plans.

  • So to sum up, Obamacare is leading to fewer hours worked, less tax revenue for the government and bigger government subsidies for health insurance for people who were already insured in the first place. If enough companies do this, Obamacare will become a massive dead weight on the federal budget, even as it does little more than shuffle people from one insurance plan to another, whether they like it or not. The Congressional Budget Office estimates, at the high end, that 20 million workers could see their health plans dropped thanks to Obamacare.
  • That’s how Obamacare will affect the restaurant industry, beginning in 2014. The medical device industry, which is far more closely connected to health care, only has until this January before it is hit with a 2.3 percent industrywide excise tax. Medical device makers have been cutting back in anticipation of the tax. Cook Medical Inc., an Indiana-based manufacturer, announced this summer it was canceling plans to build five plants that would have employed about 1,500 people. Those would have all been manufacturing jobs — the kind of jobs that President Obama keeps saying he wants to create, but then keeps smothering through his grand agenda.

These are just two examples of industries where there will be less work and workers will be hurt, all because of Obamacare, should its provisions go into effect. Voters should take notice – Obamacare may soon be reaching out to disrupt your job and your health care situation as well.

*Modified from a Washington Examiner article

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The IRS Has Gone Rogue

By Michael F. Cannon & Jonathan H. Adler

Did Congress intend to offer tax credits through federal exchanges?

A president who says “I haven’t raised taxes” has authorized his Internal Revenue Service issue a “final rule” that will illegally tax some 12 million individuals, plus large employers, in as many as 40 states beginning in 2014. Oklahoma’s attorney general has asked a federal court to block this rule. Members of Congress have introduced legislation in both the House and the Senate to quash it.

At first glance, it might not seem that the IRS is up to anything nefarious. The rule in question concerns the Patient Protection and Affordable Care Act’s tax credits, not the law’s tax increases. The tax credits are intended to offset the cost of insurance premiums for low- and middle-income workers.

For many Americans, however, those tax credits are like an anchor disguised as a life vest. The mere fact that a taxpayer is eligible for a tax credit can trigger tax liabilities against both the taxpayer (under the act’s “individual mandate”) and her employer (under the “employer mandate”). In 2016, these tax credits will trigger a tax of $2,085 on many families of four earning as little as $24,000. An employer with 100 workers could face a tax of $140,000 if even one of his workers is eligible for a tax credit.

So it is significant that the PPACA explicitly and repeatedly restricts eligibility for tax credits to people who purchase health insurance “through an Exchange [i.e., government agency] established by the state” in which they live. That means that under the statute Congress enacted, a state can block those hefty taxes simply by declining to create an exchange. The PPACA directs the federal government to create an exchange in any state that declines to create one itself, and Health and Human Services secretary Kathleen Sebelius estimates she may have to do so in as many as 30 states. (Some experts put the number closer to 40.) However, because the statute withholds tax credits in federal exchanges, the creation of a federal exchange does not trigger tax liabilities. By our count, as many as 12 million low- and middle-income Americans would be exempt from those taxes, including 250,000 Oklahomans.

It is here that the IRS has gone rogue. The agency has announced that, despite the clear statutory language restricting tax credits to exchanges established by states, it will issue tax credits through federal exchanges. One can see why Oklahoma and the rest might be upset: By offering tax credits in states that opt not to create exchanges, the IRS is imposing taxes where Congress did not authorize them. This IRS rule will tax those 12 million low- and middle-income Americans, including 250,000 Oklahomans, contrary to the express language of the PPACA.

Defenders of the rule claim that Congress intended the tax credits to be available in all exchanges. But is that true?

  • It may come as a surprise to supporters of the PPACA, as it did to us, but all the evidence that has surfaced to date shows that Congress restricted and, yes, intended to restrict tax credits to state-created exchanges. What the IRS is doing is illegal.

We examine the evidence in our forthcoming Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.” Here are a few highlights, including some material that is not included in our article.

1. The text of the PPACA is unambiguous.

The Supreme Court explained in Connecticut National Bank v. Germain that when a court is trying to divine congressional intent, the most important factor is the text of the statute:

In interpreting a statute a court should always turn first to one cardinal canon before all others. We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there. . . .  When the words of a statute are unambiguous, then, this first canon is also the last: judicial inquiry is complete.

Using that canon as its guide, the Congressional Research Service writes this about the text of the PPACA’s tax-credit provisions:

A strictly textual analysis of the plain meaning of the provision would likely lead to the conclusion that the IRS’s authority to issue the premium tax credits is limited only to situations in which the taxpayer is enrolled in a state-established exchange.

Not convinced? You’re not alone. The CRS explained that courts might uphold the IRS rule if they were “willing to engage in a searching statutory interpretation involving text, context, legislative purpose, and legislative history.” So let’s look at context, legislative purpose, and legislative history.

2. Every health-care overhaul advanced by Senate Democrats denied premium assistance to residents of non-compliant states.

The PPACA’s language restricting tax credits to state-created exchanges came almost verbatim from a bill reported by the Senate Finance Committee.

Senate Democrats’ other leading health-care bill emerged from the Health, Education, Labor, and Pensions Committee. The HELP bill allowed premium assistance through federal exchanges (called “gateways”) in certain circumstances. But if a state refused to assist with implementation, the HELP bill denied premium-assistance subsidies to that state’s residents. And if a state fell out of compliance, the HELP bill explicitly revoked these subsidies from residents who were already receiving them.

Harsh? Perhaps. But this legislative history shows that denying premium assistance to residents of non-compliant states was not some beyond-the-pale idea that Congress could not possibly have intended, but was instead the dominant approach in the Senate; every bill Senate Democrats advanced contained this feature. The HELP bill also suggests a legislative purpose behind the language: to encourage states to implement the law.

3. During Senate consideration, the PPACA’s lead author admitted that the bill made tax credits conditional on state compliance.

Finance Committee chairman Max Baucus (D., Mont.) was the chief sponsor and lead author of the Finance bill. He shepherded it through committee consideration and through negotiations with Obama-administration officials and congressional leaders, and he can reasonably claim to be the man most responsible for the relevant language of the PPACA.

During a September 23, 2009, committee markup of his bill, Baucus acknowledged that restricting tax credits to policies purchased through state-created exchanges was the reason the Finance Committee had jurisdiction to direct states to establish exchanges, making this language an essential part of the bill. (Again, the Finance bill’s language restricting premium assistance to state-created exchanges was adopted without substantive change in the PPACA.) The admission came amid a debate over the committee’s jurisdiction. Baucus had ruled an amendment dealing with medical malpractice out of order on the grounds that the Finance Committee did not have jurisdiction to legislate in that area. Sensing a double standard, Senator John Ensign (R., Nev.) challenged Baucus. The Finance Committee, Ensign said, did not have jurisdiction to direct states to change their laws regarding health-insurance coverage or to establish exchanges — such matters fall within the jurisdiction of the HELP Committee — yet the Baucus bill did both. If the Finance Committee could not consider a medical-malpractice amendment, Ensign asked, then how could it direct states to create exchanges? For Baucus’s response, we go to the tape:

Baucus responded that the Finance Committee had jurisdiction because his bill offered tax credits to individuals on the condition that their states complied with the bill’s health-insurance provisions: “Taxes are in the jurisdiction of this committee”; “An exchange is essentially [where individuals can access] tax credits”: “There are conditions to participate in the exchange.” To place “conditions” on tax credits, of course, presumes a scenario in which they are not available.

It is worth mentioning that this is the only bit of context or legislative history that anyone has found that directly addresses the question of whether the PPACA authorizes tax credits in federal exchanges. And it highlights an additional legislative purpose that is important enough to count separately.

4. Restricting tax credits to state-created exchanges was an essential feature of the bill.

The conditional nature of the tax credits is what gave the Finance Committee a jurisdictional hook to legislate in this area. The need for that hook may have disappeared when the bill reached the Senate floor. But the language restricting tax credits to state-run exchanges did not.

5. House Democrats knew the Senate bill empowered states to block residents from “receiv[ing] any benefit.”

By early January 2010, Democrats were trying to iron out a compromise between the House and Senate bills that could clear both chambers. On January 11, eleven House Democrats from the Texas delegation sent a letter to President Obama, House Speaker Nancy Pelosi (D., Calif.), and House Majority Leader Steny Hoyer (D., Md.). They demanded “a single, national health insurance exchange, as adopted by the House,” rather than the Senate bill’s “weak, state-based health insurance exchanges.” The Senate bill “relies” on states to implement exchanges, they warned, even though “a number of states opposed to health reform have already expressed an interest in obstruction.”

To emphasize the dangers of the Senate bill, they noted that Texas officials had recently turned down health-care subsidies that Congress had made available under another law. As a result, they wrote, not a single Texas resident “has yet received any benefit” from that law. “The Senate approach,” they wrote, “would produce the same result — millions of people will be left no better off than before Congress acted.”

The Texas Democrats made no explicit mention of how the Senate bill restricted tax credits to states that created their own exchanges, yet they clearly saw a difference between state-created and federal exchanges under the Senate bill — a difference that would leave people in recalcitrant states without the assistance that residents of compliant states would receive.

So far, we’ve got the following context pointing to the conclusion that the IRS’s decision to offer tax credits through federal exchanges violates congressional intent: (1) the unambiguous text of the statute, (2) evidence that making tax credits conditional on state compliance was the dominant approach in the Senate, (3) an affirmation by the law’s primary author that the Finance bill’s language was deliberate and (4) essential, and (5) evidence that House Democrats understood the Senate bill would withhold benefits from non-compliant states. But even if we didn’t have items (2) through (5) . . .

6. By enacting the PPACA, supporters revealed that their true intent was to enact whatever the Senate bill contained.

On January 19, 2010 — eight days after the Texas Democrats’ letter — Massachusetts voters elected Republican Scott Brown to the Senate, in part because of his pledge to be the 41st vote Senate Republicans needed to filibuster any compromise health-care bill. On that day, Massachusetts voters killed the House bill and its approach to exchanges, leaving House Democrats with only two options: Either they could pass the Senate bill and hope to obtain limited amendments through the “reconciliation” process, or they would fail to pass a bill at all. When House Democrats approved the PPACA, they revealed that their intent was to restrict tax credits to state-created exchanges, because they preferred that option to failure. They decided that whatever the Senate bill’s approach to premium assistance, it was better than no premium assistance at all.

If federal courts do enough searching, they will surely find lots of PPACA supporters who wanted subsidies in federal exchanges, just as lots of them wanted a “public option.” But those possibilities died the day Massachusetts voters sent Scott Brown to the Senate. No matter what else PPACA supporters may have wanted to enact, their approval of the Senate language reveals they intended to restrict tax credits to state-created exchanges. If offering premium assistance through federal exchanges had been their intent, they would have put the House bill up for a vote in the Senate, rather than the other way around.

  • The text, context, legislative purpose, and legislative history of the PPACA all demonstrate that Congress did not intend to offer tax credits — nor to tax the aforementioned individuals and employers to help cover that cost — in states that declined to create exchanges.

Evidence that the IRS’s disputed final rule violates the law and congressional intent has been mounting ever since we brought attention to this issue last year. It has continued to mount even since we wrote in June, “The IRS doesn’t have a leg to stand on here.” This mounting evidence has forced supporters of the rule to change their story a number of times, yet their new and improved defenses of the rule are inadequate and even self-contradictory. The IRS has gone rogue, taxing individuals and employers without statutory authority, and it deserves a swift rebuke from the federal courts.

— Michael F. Cannon (@mfcannon) is director of health policy studies at the Cato Institute and co-editor of Replacing ObamaCare (2012). Jonathan H. Adler is a law professor and director of the Center for Business Law and Regulation at Case Western Reserve University.

 

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Tax penalty to hit nearly 6M uninsured people

WASHINGTON (AP) — Nearly 6 million Americans — significantly more than first estimated— will face a tax penalty under President Barack Obama’s health overhaul for not getting insurance, congressional analysts said Wednesday. Most would be in the middle class.

The new estimate amounts to an inconvenient fact for the administration, a reminder of what critics see as broken promises.

The numbers from the nonpartisan Congressional Budget Office are 50 percent higher than a previous projection by the same office in 2010, shortly after the law passed. The earlier estimate found 4 million people would be affected in 2016, when the penalty is fully in effect.

That’s still only a sliver of the population, given that more than 150 million people currently are covered by employer plans. Nonetheless, in his first campaign for the White House, Obama pledged not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.

And the budget office analysis found that nearly 80 percent of those who’ll face the penalty would be making up to or less than five times the federal poverty level. Currently that would work out to $55,850 or less for an individual and $115,250 or less for a family of four.

Average penalty: about $1,200 in 2016.

“The bad news and broken promises from Obamacare just keep piling up,” said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, who wants to repeal the law.

Starting in 2014, virtually every legal resident of the U.S. will be required to carry health insurance or face a tax penalty, with exemptions for financial hardship, religious objections and certain other circumstances. Most people will not have to worry about the requirement since they already have coverage through employers, government programs like Medicare or by buying their own policies.

A spokeswoman for the Obama administration said 98 percent of Americans will not be affected by the tax penalty — and suggested that those who will be should face up to their civic responsibilities.

“This (analysis) doesn’t change the basic fact that the individual responsibility policy will only affect people who can afford health care but choose not to buy it,” said Erin Shields Britt of the Health and Human Services Department. “We’re no longer going to subsidize the care of those who can afford to buy insurance but make a choice not to buy it.”

The budget office said most of the increase in its estimate is due to changes in underlying projections about the economy, incorporating the effects of new federal legislation, as well as higher unemployment and lower wages.

The Supreme Court upheld Obama’s law as constitutional in a 5-4 decision this summer, finding that the insurance mandate and the tax penalty enforcing it fall within the power of Congress to impose taxes. The penalty will be collected by the IRS, just like taxes.

The budget office said the penalty will raise $6.9 billion in 2016.

The new law will also provide government aid to help middle-class and low-income households afford coverage, the financial carrot that balances out the penalty.

Nonetheless, some people might still decide to remain uninsured because they object to government mandates or because they feel they would come out ahead financially even if they have to pay the penalty. Health insurance is expensive, with employer-provided family coverage averaging nearly $15,800 a year for a family and $4,300 for a single plan. Indeed, insurance industry experts say the federal penalty may be too low.

The Supreme Court also allowed individual states to opt out of a major Medicaid expansion under the law. The Obama administration says it will exempt low-income people in states that opt out from having to comply with the insurance requirement.

Many Republicans still regard the insurance mandate as unconstitutional and rue the day the Supreme Court upheld it.

However, the idea for an individual insurance requirement comes from Republican health care plans in the 1990s.

It’s also a central element of the 2006 Massachusetts health care law signed by then-GOP Gov. Mitt Romney, now running against Obama and promising to repeal the federal law.

Romney spokeswoman Andrea Saul said Wednesday the new report is more evidence that Obama’s law is a “costly disaster.”

“Even more of the middle-class families who President Obama promised would see no tax increase will in fact see a massive tax increase thanks to Obamacare,” she said.

Romney says insurance mandates should be up to each state. The approach seems to have worked well in Massachusetts, with virtually all residents covered and dwindling numbers opting to pay the penalty instead.

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Franchisors warn Obamacare will halve profits

The International Franchise Association held a convention in Washington this week where most of the Radio Shack, Dunkin Donuts, Curves and other franchisers were grumbling about new federal regulations, especially the impact of Obamacare.

Most, said Atlanta Taco Bell and Kentucky Fried Chicken franchiser David Barr, presumed that the reports about how hard Obamacare will hit them were overblown. “They had their head in the sand,” he told Secrets.

That is until he pulled out his powerpoint showing how funding Obamacare will cut his–and likely their–profits in half overnight. With simple math the small business folks understood, he spelled out that their only choice is to slash employee hours so they aren’t eligible for company-paid health care or stop offering insurance and pay the $2,000 per employee fine.

Barr has 23 stores with 421 employees, 109 of whom are full-time. Of those, he provides 30 with health insurance. Barr said he pays 81 percent of their Blue Cross Blue Shield policy, or $4,073 of $5,028 for individuals, more for families, for a total bill of $129,000 a year. Employees pay $995.

Under Obamacare, however, he will have to provide health insurance for all 109 full-time workers, a cost of $444,000, or two and half times more than his current costs. That $315,000 increase is equal to just over half his annual profit, after expenses, or 1.5 percent of sales. As a result, he said, “I’m not paying $444,000.”

Providing no insurance would result in a federal fine of $158,000, $29,000 more than he now spends but the lowest cost possible under the Obamacare law. So he now views that as his cap and he’ll either cut worker hours or replace them with machines to get his costs down or dump them on the public health exchange and pay the fine. “Every business has a way to eliminate jobs,” he said, “but that’s not good for them or me.”

But that’s not all. His experience tells him that most low-wage workers he would have to cover under Obamacare won’t take it because their $995 share is too high, meaning those the program was set up for won’t see any benefit. And those who do will because they have major health issues, likely resulting in higher premiums to him.

*Modified from the Washington Examiner

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Obamacare: It’s Still a Gateway to Single-Payer Health Care

By Sen. Tom Coburn
September 6, 2012

More than two years after the passage of Obamacare, the data overwhelming show the law will fail to achieve its core objectives of lowering costs and improving access. That, ironically, may have been the design. By making private insurance unaffordable for everyone, it will become available to no one. All that will be left is government-centered, government-run, single-payer health care.

Let’s look at the law’s promises that were rigged to fail.

  • First, supporters of the law said the law would bend the cost curve down and reduce health-insurance costs. Yet health-insurance premiums are increasing faster than before the law was passed and experts confirm costs will increase along with federal health spending.
  •  Second, defenders of the law said the bill would massively extend health-insurance coverage. But in June the Supreme Court threw out the forced Medicaid expansion which the Congressional Budget Office originally estimated was responsible for half of new coverage under the law. And despite claims of increasing coverage, more Americans are without health coverage today than when President Obama took office.
  •  Third, supporters claimed the law would reduce the deficit. Yet, none of the law’s gimmicks has managed to hide its true costs. One gimmick was omitting a $300 billion payment to doctors who care for seniors on Medicare. Another illusion was the promise of $70 billion in savings — half of the bill’s projected deficit reduction in the first decade — from a now-defunct long-term care program. The Congressional Budget Office’s most recent analysis shows the law is jammed with $1 trillion in tax hikes and will spend more than $1.7 trillion over the next decade.
  •  Fourth, and most important, the law’s individual mandate was rigged to fail. Unless the law is repealed, in 2014, the new individual-mandate tax will effectively force all Americans to buy insurance. Health-insurance companies will be forced to offer coverage to virtually every American, regardless of their pre-existing condition or health status. Employers will be penalized if they do not offer health coverage. The problem is this approach will never work, which the lawmakers who backed the “public option” new full well.

According to analysis by the Congressional Research Service, the IRS does not have the authority to enforce the individual-mandate tax. Moreover, because the tax penalty is far less than the price of purchasing health coverage and insurers are forced to cover Americans at any time, millions will choose to pay the tax and only sign up for coverage when they get sick.

As a result, insurers will be left paying for people who are comparably older and sicker than the general population. The result is a classic death spiral where the costs of covering the insured skyrocket, discouraging even more people from buying insurance. States that have tried similar approaches have seen their costs skyrocket.

At the same time, employers will make a similar economic decision, choosing to pay a $2,000 penalty per worker, instead of paying four to ten times that for a worker’s health coverage.  As former Democrat Governor Phil Bredesen said, when employers do the math, dropping workers’ coverage “will make good financial sense.”

Many workers who are not offered coverage through their employer will be eligible for federal subsidies to buy government-approved insurance through insurance exchanges.  If workers seek health coverage through the exchange, the costs of the subsidies to taxpayers will skyrocket – likely by hundreds of billions of dollars. Yet, if workers chose to simply pay the mandate tax and go without insurance, health insurance costs will climb still further.

The scenario outlined above is not speculation but is a forecast based on current trends described by nonpartisan experts.

Taxpayers should remember that liberal Democrats — who have made “catching up with Europe” and imposing a single-payer, government-run health system on America their life’s mission — celebrated the law’s passage for a reason. For them, it was a win-win outcome. Either the law would succeed and expand government’s role in health care, contrary to their own understanding of how market-economies work, or it would fail and pave the way for single-payer health care in a politically feasible way. If the private insurance market crumbled, government could mount a rescue operation and “save” patients.

Thankfully, that future is not yet written. Lawmakers who believe patients and doctors, not politicians, should manage our health-care system have plenty of ideas on how to repeal and replace Obamacare. What we need, however, is for the American people to see the urgency of the problem and replace not just the law but the politicians who put it in place.

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Cheesecake Factory Medicine

The liberal assault on Paul Ryan’s Medicare reform has often been ugly, but that’s not to say it hasn’t been instructive. While ripping Mr. Ryan, ObamaCare’s intellectual architects have been laying out in more detail their own vision for the future of American health care. It’s a vision that all Americans should know about before they go to the polls in November.

No one did more to sell the Affordable Care Act than Peter Orszag, the former White House budget director who claimed during 2009-2010 that as much as a third of health spending is “waste” that doesn’t improve outcomes. But now that he’s repaired to Wall Street and writes an online column, he’s deriding the idea that better incentives can reduce costs and sneering at the “health-care competition tooth fairy.”

So get a load of Mr. Orszag’s Tinker Bell alternative, which he called the “most important institutional change” after ObamaCare passed in 2010: the Independent Payment Advisory Board composed of 15 philosopher kings who will rule over U.S. health care.

Who are these Orszag 15? Well, nobody knows. The board was supposed to be up and running by the end of September, but the White House is avoiding naming names for Senate confirmation until after the election. No one knows, either, what this group of geniuses will propose, but that too is part of the grand Orszag plan.

ObamaCare included dozens of speculative pilot programs that are supposed to make health-care delivery and business models less wasteful. Mr. Orszag’s payment board is then supposed to apply the programs that “work” to all of U.S. medicine through regulation, without Congressional consent or legal appeal. Seriously.

It doesn’t take a mythical childhood metaphor to mock this theory. Mr. Orszag’s style of central planning—in what was already the heaviest regulated U.S. industry before ObamaCare—has failed over and over again in Medicare since the creation of the fiat pricing fee schedule in the 1980s.

Meanwhile, another ObamaCare godfather, the surgeon and influential New Yorker magazine writer Atul Gawande, has further instructions for the medical masses, this time from—believe it or not—the Cheesecake Factory, the chain restaurant.

Dr. Gawande’s point is that medicine would function better if care were delivered by huge health systems that can achieve economies of scale, like commercial kitchens. Care ought to be standardized like preparing a side of beef, with a “single default way” to perform each treatment supposedly based on evidence, with little room for personalization.

No doubt health care could learn a lot about efficiency from a lot of industries, but to understand the core problem with assembly-line medicine, recall that ObamaCare actively promotes medical corporatism. The reason isn’t to encourage business efficiency but for political control. Liberals believe in health-care consolidation because fewer giant corporations are easier for Mr. Orszag’s central committee to control, and more amenable to its orders.

Thanks to ObamaCare, Cheesecake Factory medicine is already becoming a reality. Irving Levin Associates, a research firm that tracks health-care mergers and acquisitions, reports that M&A hit $61.2 billion in the second quarter and the highest annual levels since the 1990s. Three of five hospitals now belong to a parent company’s network, while more than half of physicians are employed by hospitals or systems, not independent practitioners.

On the insurer side, too, incumbents are demolishing their smaller rivals. Aetna is buying Coventry Health Care, a company that administers Medicare and Medicaid benefits, for $5.6 billion. WellPoint made the same play in acquiring Amerigroup for $5 billion in July, while last October Cigna laid out $3.8 billion for HealthSpring.

This bureaucratization will amplify everything patients and businesses despise about the current system: the unintelligible $103,234.61 bill for a turned ankle, the doctor who can’t take a phone call because of how the hospital schedules shift.

Why aren’t mom’s eight specialists aware of each other’s existence? Why is health care mostly conducted via a pad and pen, and beepers and fax machines, in the iPhone era? Why are there so few geriatricians when the first wave of Baby Boomers is already turning 65? Why is it still so hard to find usable information about quality and prices?

The reason isn’t a lack of hospital administrators or technocratic experts. More often than not it’s that patients aren’t the true consumers. The government is, and medical providers inevitably serve the paymaster.

Mr. Ryan’s insight is that health care would work better if patients were controlling their own dollars. His reform accepts the fact that health, disease and treatment are usually complex, individual and unpredictable, not commodities that can and should be reduced to protocols, metrics, algorithms.

The immediate danger of the Orszag-Gawande-Obama vision is that layer on layer of new regulation will lock in less-than-best practices. This makes the status quo worse, because too-big-to-fail oligopolists have less incentive to innovate to reduce costs and improve quality.

The longer-run danger is that the cost board starts to decide what types of care “work” for society at large and thus what individual patients are allowed to receive. One way or another, health costs must come down. And if Mr. Ryan’s market proposal is rejected, then government a la Orszag will do it by brute political force.

A murderer’s row of liberal health-care gurus—Zeke Emanuel, Neera Tanden, Don Berwick, David Cutler, Uwe Reinhardt, Steve Shortell, Mr. Orszag, many others—recently acknowledged as much in the New England Journal of Medicine. They conceded that “health costs remain a major challenge” despite ObamaCare. That would have been nice to know in, oh, 2009 or 2010.

Anyhow, their big idea is the very old idea of price controls that are “binding on all payers and providers,” much as post-RomneyCare Massachusetts is already doing. When that strategy fails as it always has, and the public denies further tax increases, the Orszag payment board will then start to ration or prohibit access to medical resources that it decides aren’t worth the expense.

These political choices will be unpopular and even deadly, which is why Mr. Orszag worked so hard to insulate his payment board from oversight or accountability. Congress can only reject the board’s decisions if it substitutes something else that reduces costs by as much. More amazing still, only a minority of the board can be “directly involved” in the provision of health care.

This latter provision is supposed to prevent the alleged conflicts of interest that come from knowing something about how health care is provided in the real world. What it reveals instead is that this board isn’t about medical quality at all. It is purely a balance-sheet exercise to make sure that the Orszag-Obama agenda of top-down health care can’t be undone by something as crude as democratic consent.

And they claim that Paul Ryan’s proposal is “radical”?

What the debate over Mr. Ryan’s reform is revealing is that the real health-care choice, and the real choice this November, is about the role of government. The Orszags of the world ultimately have what President Obama would call an “ideological” preference for coercion over individual choice. They want to impose the unilateral decisions of the state over those of millions of Americans.

The larger irony is that ObamaCare’s architects claim that all of this will lead to more equity in the delivery of medical services, but in practice it will have the opposite effect. Americans of even middle-class means will not tolerate being told they cannot spend their own money to improve their own health or save the lives of their loved ones, so under price-controlled ObamaCare we will quickly see the emergence of a two- or even three-tier system outside the reach of government.

The affluent will get their own special level of service. Certainly Mr. Orszag, a vice chairman of corporate and investment banking at Citigroup, won’t be getting treatment at some municipal hospital. The Cheesecake Factory is a great place to eat but you probably wouldn’t want to be operated on there—especially if it’s run by the government.

*Modfied from a WSJ Opinion article

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The Wal-Mart Effect Comes To Health Care

Health Care: Giant discounter Wal-Mart says it will soon offer vaccinations for a wide variety of ailments. Can the “Wal-Mart Effect,” which has helped slash U.S. inflation, do the same thing for soaring health care costs?

Everyone knows Wal-Mart has been a positive influence on inflation. A few years back, the highly respected National Bureau of Economic Research even estimated that the government’s consumer inflation data were overstated by about 15%, due largely to the unrecognized impact of Wal-Mart’s everyday low prices on the economy.

A separate 2007 study by the investment advisory and forecasting firm Global Insight estimated that in 2006, Wal-Mart’s low prices saved consumers roughly $287 billion — or about $2,501 per household. The impact — especially on low-income consumers — has been enormous.

John Tierney, a New York Times columnist, even suggested that Wal-Mart receive a Nobel prize for helping to pull so many people out of poverty.  Well, the retail giant may be at it again —this time in health care. As reported last week, it’s expanding customer offerings into vaccines. That’s right, vaccines.

The Benton, Ark.-based company has been moving into health care since 2006, when it started selling generic drugs at a flat $4 fee. Now, in addition to the low-cost vaccines for influenza and pneumonia it offers at 2,700 stores, it’s expanding into 10 other common vaccines, including shingles, meningitis, hepatitis and the human papillomavirus. This will give millions of Wal-Mart customers who never see a doctor the chance to get cheap preventive care.

Quietly, Wal-Mart’s changing the face of health care. Last year, it played down the leak of a 14-page internal document that outlined its plans to “build a national, integrated, low-cost primary health care platform.”

But the fact is, Wal-Mart is rapidly expanding its presence as a primary health care provider, and it’s not alone. Other retailers are getting into the act, opening clinics and providing health services at low cost.
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Is it having any impact? Retail prescription drug outlays rose just 1.2% in 2010, down from increases of 14% a year just a few years ago. And as the chart shows, health care spending increases have slowed sharply in recent years — partly due to Wal-Mart.

Once again, markets respond to problems — while government creates more. If we’re lucky, Wal-Mart and other retailers may even help sink that other failed health care model, ObamaCare.

*Modified from an Investors Business Daily Editorial.

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