Archive | Health Care Bill – Washington

The Whole Foods Alternative to ObamaCare

Eight things we can do to improve health care without adding to the deficit


by John Mackey

“The problem with socialism is that eventually you run out of other people’s money.”

— Margaret Thatcher

With a projected $1.8 trillion deficit for 2009, several trillions more in deficits projected over the next decade, and with both Medicare and Social Security entitlement spending about to ratchet up several notches over the next 15 years as Baby Boomers become eligible for both, we are rapidly running out of other people’s money. These deficits are simply not sustainable. They are either going to result in unprecedented new taxes and inflation, or they will bankrupt us.

While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction–toward less government control and more individual empowerment. Here are eight reforms that would greatly lower the cost of health care for everyone:

• Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees’ Personal Wellness Accounts to spend as they choose on their own health and wellness.

Money not spent in one year rolls over to the next and grows over time. Our team members therefore spend their own health-care dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Our plan’s costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction.

• Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair.

• Repeal all state laws which prevent insurance companies from competing across state lines. We should all have the legal right to purchase health insurance from any insurance company in any state and we should be able use that insurance wherever we live. Health insurance should be portable.

• Repeal government mandates regarding what insurance companies must cover. These mandates have increased the cost of health insurance by billions of dollars. What is insured and what is not insured should be determined by individual customer preferences and not through special-interest lobbying.

• Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year. These costs are passed back to us through much higher prices for health care.

• Make costs transparent so that consumers understand what health-care treatments cost. How many people know the total cost of their last doctor’s visit and how that total breaks down? What other goods or services do we buy without knowing how much they will cost us?

• Enact Medicare reform. We need to face up to the actuarial fact that Medicare is heading towards bankruptcy and enact reforms that create greater patient empowerment, choice and responsibility.

• Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren’t covered by Medicare, Medicaid or the State Children’s Health Insurance Program.

Many promoters of health-care reform believe that people have an intrinsic ethical right to health care–to equal access to doctors, medicines and hospitals. While all of us empathize with those who are sick, how can we say that all people have more of an intrinsic right to health care than they have to food or shelter?

Health care is a service that we all need, but just like food and shelter it is best provided through voluntary and mutually beneficial market exchanges. A careful reading of both the Declaration of Independence and the Constitution will not reveal any intrinsic right to health care, food or shelter. That’s because there isn’t any. This “right” has never existed in America

Even in countries like Canada and the U.K., there is no intrinsic right to health care. Rather, citizens in these countries are told by government bureaucrats what health-care treatments they are eligible to receive and when they can receive them. All countries with socialized medicine ration health care by forcing their citizens to wait in lines to receive scarce treatments.

Although Canada has a population smaller than California, 830,000 Canadians are currently waiting to be admitted to a hospital or to get treatment, according to a report last month in Investor’s Business Daily. In England, the waiting list is 1.8 million.

At Whole Foods we allow our team members to vote on what benefits they most want the company to fund. Our Canadian and British employees express their benefit preferences very clearly–they want supplemental health-care dollars that they can control and spend themselves without permission from their governments. Why would they want such additional health-care benefit dollars if they already have an “intrinsic right to health care”? The answer is clear–no such right truly exists in either Canada or the U.K.–or in any other country.

Rather than increase government spending and control, we need to address the root causes of poor health. This begins with the realization that every American adult is responsible for his or her own health.

Unfortunately many of our health-care problems are self-inflicted: two-thirds of Americans are now overweight and one-third are obese. Most of the diseases that kill us and account for about 70% of all health-care spending–heart disease, cancer, stroke, diabetes and obesity–are mostly preventable through proper diet, exercise, not smoking, minimal alcohol consumption and other healthy lifestyle choices.

Recent scientific and medical evidence shows that a diet consisting of foods that are plant-based, nutrient dense and low-fat will help prevent and often reverse most degenerative diseases that kill us and are expensive to treat. We should be able to live largely disease-free lives until we are well into our 90s and even past 100 years of age.

Health-care reform is very important. Whatever reforms are enacted it is essential that they be financially responsible, and that we have the freedom to choose doctors and the health-care services that best suit our own unique set of lifestyle choices. We are all responsible for our own lives and our own health. We should take that responsibility very seriously and use our freedom to make wise lifestyle choices that will protect our health. Doing so will enrich our lives and will help create a vibrant and sustainable American society.

Mr. Mackey is co-founder and CEO of Whole Foods Market Inc.

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Stealth-Taxing Non-Wealthy Medicare Beneficiaries

Christopher Conover, PhD

Remember how candidate Barack Obama made a “firm pledge” to Americans in families under $250,000 income that “you will not see any of your taxes increase one single dime?” This pledge was repeated again, again, and again. Tell that to elderly and disabled Medicare beneficiaries with incomes well below that amount who will be paying a total of $36 billion more into Medicare thanks to the new health law.

Starting this year, the health law made two important changes to Medicare. The first provision increases over time the number of beneficiaries subject to income-related Part B premiums, by eliminating the index on income. Part B covers doctors’ services, outpatient care, home health services, and other non-hospital medical services, including preventive care.

Although it is voluntary, 94 percent of Medicare beneficiaries opt to have it since the premiums charged to participate are set by law to cover only 25 percent of the actual cost of Part B benefits. However, higher-income beneficiaries must pay a premium that covers anywhere from 35 to 80 percent of Part B costs, depending on income. This year, beneficiaries must pay higher Part B premiums once their income reaches $85,000 for an individual or $170,000 for a couple. Since 2007, these income thresholds have been inflation-indexed so that only about 5 percent of beneficiaries are subject to higher Part B premiums. But since the new health law no longer permits these thresholds to rise with inflation, the number of beneficiaries subject to higher premiums will grow to 14 percent by 2019 (and will keep rising indefinitely thereafter).

The second change is that for the first time, beneficiaries with Part D coverage also must pay income-related premiums using the identical Part B income thresholds. Part D covers prescription drugs. Again, because premiums are set to cover only about one fourth of the actual cost of standard Part D benefits, 90 percent of beneficiaries elect some sort of prescription drug plan. This change will affect about 3 percent of Part D beneficiaries in 2011, but this will rise to 9 percent by 2019.

All told, by 2019, unless the health plan is repealed, these changes will require higher premium payments for 3.5 million Part B beneficiaries and 4.2 million Part D beneficiaries. The vast majority of these individuals have incomes far below the $200,000 (individual)/$250,000 (family) threshold that was repeatedly used by President Obama as the dividing line between those whose taxes should increase and everyone else.

Some might argue these are premiums, not taxes. But those with the highest incomes must pay premiums more than three times as large as those not classified “higher-income.” Actuarial considerations play no role in determining where such premiums are set. These individuals are paying higher premiums simply because their income is higher, not because their expected medical expenditures are higher. Indeed, the empirical evidence suggests that Medicare spending is higher among those who are poor rather than those who have high incomes. Thus, it is difficult conceptually to distinguish between an income-related premium and a tax on income.

Perhaps higher-income people should pay more for Medicare. But candidate Obama never ran on such a platform. And the higher taxes (euphemistically called “premiums”) on Medicare beneficiaries are flagrantly inconsistent with the president’s assurances about which individuals would face higher taxes under his administration.

Moreover, if income-related premiums are warranted, their justification should be to save Medicare, which currently faces unfunded liabilities that in today’s terms exceed the nation’s entire net worth. Instead, however, the $36 billion in higher taxes imposed on Medicare beneficiaries was used to mask the size of a massive new entitlement–one that we might have decided was not affordable had Democrats allowed rational discussion of the matter. These taxes were part of the now well-known “smoke and mirrors” used to make it appear as if health reform would reduce the deficit, even though any honest scoring of the plan shows quite the opposite. This is just one more example of the stealth taxes and broken promises that permeate Obamacare.

Conover is a research scholar in the Center for Health Policy and Inequalities Research at Duke University.

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Opinion: Obamacare Is Already Falling Apart

Sally C. Pipes
Special to AOL News

Last week, the House of Representatives voted by a wide margin — 245 to 189 — to repeal the president’s landmark health reform package. It’s unclear whether Senate Majority Leader Harry Reid, D-Nev., will bring the measure up in the upper body.

But even he doesn’t, the law is already showing signs of serious trouble.

In recent weeks, some Democrats who supported the law have called for scrapping portions of it.

Take the so-called 1099 provision, which will require businesses to submit a tax form to the IRS for each vendor with whom they do more than $600 in annual business starting in 2012. Following the midterm elections, President Obama signaled a willingness to repeal the rule, calling the hidden tax “burdensome for small businesses.” He went on to say that “it requires too much paperwork, too much filing. It’s probably counterproductive.”

Sen. Max Baucus, D-Mont., one of the principal authors of the health care law, and former House Speaker Nancy Pelosi, D-Calif., have also expressed support for repealing the provision.

What’s taken them so long? The rule would saddle some 40 million businesses with huge new compliance costs. Instead of devoting resources to job creation and business development, entrepreneurs would be forced to waste time and money filing new paperwork.

The Obama administration is also regularly choosing to exempt many firms from some of the health care bill’s new rules, rather than admit that the bill will negatively impact workers or cause them to lose coverage. For instance, McDonald’s received a waiver after announcing that its low-cost, bare-bones “mini-med” health plans would run afoul of the medical-loss rules, which require insurers to spend at least 80-85 percent of premium dollars on claims.

In just eight months since the legislation passed, the feds have handed out more than 200 other exemptions to employers, insurers, and labor unions that together cover more than 1.5 million people.

The Obama administration is also coming to grips with the looming failure of one of the most highly touted aspects of the law — a program to provide health insurance to those denied coverage because of preexisting conditions.

The Department of Health and Human Services estimated in July that it would now be insuring 375,000 people who had been previously shut out of the insurance market. But the administration recently admitted that only about 8,000 people with preexisting conditions had actually signed up.

That’s about 2 percent of the projected enrollment.

The next component of the bill to fail may be the most important one — the deeply detested individual mandate, which requires the uninsured to either get health coverage or pay a fine.

In both Arizona and Oklahoma, voters have approved state constitutional amendments aimed at outlawing the mandated purchase of health insurance.

Nearly three-quarters of voters in Missouri signed off on a similar ballot initiative earlier this year. Twenty-six state attorneys general and the National Federation of Independent Business are currently pursuing a lawsuit challenging the constitutionality of the mandate. Virginia’s attorney general has mounted a separate lawsuit, as has a group of citizens in Ohio.

The Congressional Budget Office (CBO) predicted the failure of the individual mandate well before the reform law passed. A July report from the nonpartisan agency predicted that by 2016, four million people would defy the mandate and pay the fine for remaining uninsured. All told, according to CBO, about 21 million people will be uninsured in 2016 — most of whom will be exempt from the fines altogether.

So despite committing more than a trillion taxpayer dollars over the next decade to health reform, Obamacare will leave tens of millions uninsured, drive the cost of care up for virtually all Americans, and put the federal government in charge of ever more of our health care decisions.

As the Obama administration grapples with implementing its signature piece of legislation, the case for repealing it is becoming self-evident. Public support for the law continues to erode. Lawmakers should follow the House’s lead and repeal this monstrosity.

Sally C. Pipes is president, CEO and Taube fellow in health care studies at the Pacific Research Institute. Her latest book, “The Truth About Obamacare,” was published in 2010.

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Medicare actuary more confident in Paul Ryan’s ‘Road Map’ cost controls than Obama’s health law

By Jon Ward – The Daily Caller

The government’s chief actuary for Medicare spending on Wednesday said he had more confidence that Republican Paul Ryan’s plan to reform entitlements would drive down health-care costs than President Obama’s recently passed overhaul.

Richard S. Foster, the chief actuary of the Centers for Medicare and Medicaid Services, made the comment in response to questions from lawmakers during House Budget Committee hearing.

Rep. Chris Van Hollen, the ranking Democrat from Maryland, went on the attack against committee chairman Paul Ryan’s “Road Map” plan, which is a long-term proposal to make entitlement spending solvent.

Van Hollen pressed Foster on whether Ryan’s plan would work, prompting Foster to point out that one of the biggest problems in health care now is that most new technology that is developed increases costs rather than decreasing it.

“If there’s a way to turn around the mindset for the people who do the research and development … to get them to focus more on cost-reducing tech and less on cost increasing technology, if you can do that then one of biggest components of [increasing costs] turns to your side,” Foster said. “If you can put that pressure on the research and development community, you might have fighting chance of changing the nature of new medical technology in a way that makes lower cost levels possible.”

Foster said: “The Road Map has that potential. There is some potential for the Affordable Care Act price reductions, though I’m a little less confident about that.”

The thinking behind Foster’s comment is that a voucher system would reduce the amount of government money available for health care over time, causing consumers to shop around and creating an incentive in the health-care sector to compete for those dollars.

In a brief interview outside the House chamber later in the day, Ryan explained it this way: “There’s only going to be so much money for health care because the economy can only support so much … So is it better spent through the person in a competitive marketplace or through the government under increasing price controls and pressure?”

“If you go through the century, these entitlements consume all money. The GAO calculation assumes Congress is going to wise up and cut back on these programs because people will decide they don’t want 100 percent of their discretionary income going to health care. They want some for food and some for shelter and some for other things. So there will be a curtailment of health care spending in the future,” Ryan said. “The question is which curtailment gets you the better results at going after the cause of health inflation: consumer pressure or government price controls.”

During the hearing, Ryan, chairing the first meeting of the full Budget Committee for the first time since Republicans took control of the House in November, followed Van Hollen’s questions by implying the ranking member was trying to change the subject from the topic of the hearing, which was the fiscal consequences of Obama’s health overhaul.

“I find it interesting that ranking member spent most of his time not talking about the health-care law we’re having the hearing on today, but about an individual member’s proposal,” Ryan said.

Much of the discussion in the hearing, especially during the question-and-answer period with Ryan and Van Hollen, involved the impact of the payment rates from the government to physicians and health-care providers for Medicare recipients.

Congress has for years passed what is known as the “Doc Fix” to avoid cutting payment rates to providers. It would cost more than $200 billion to lower payments for the next 10 years to the rates recommended under the Medicare Sustainable Growth Rate.

Ryan has charged for more than a year that the $575 billion in cuts to Medicare included in Obama’s health law cannot be counted as both going into the Medicare trust fund and helping to pay for the expansion of Medicaid – which covers health care for low-income recipients – to 20 million more Americans.

Foster’s response to Ryan’s question of whether this is double counting went deep into the weeds of how the government often lends itself money from the trust funds for Medicare and Social Security.

“My answer is a definitive yes and no,” Foster said when asked if Obama’s health law double-counted.

The funds go from the Medicare trust fund to the Treasury general fund, and then can be used to pay for Medicaid. But at some point, the trust fund will need the money it lent out, perhaps when it comes time to pay recipients out of the fund.

“[A] hundred dollars can’t be spent as $100 toward health-care reform and as $100 toward health-care expenditures. That takes $200,” Foster said. “The key thing is when you go back to pay that $100, then Treasury has to find that $100 some other place.”

Rep. Mick Mulvaney, a newly elected congressman from South Carolina, honed in on whether this loaning of money out of the trust fund adds to the national debt.

“The $100 bond does increase the total gross of the total debt,” Foster said.

Such debt does count against the federal debt ceiling.

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Looking to the Affordable Care Act For Help

By PAUL DOWNS

Now that 2010 is complete, I can see what kind of help Obamacare — sorry, the Patient Protection and Affordable Care Act — will give me with my health insurance bills. I mentioned in a previous post that my insurance rates for 2011 were a little lower than they had been in 2010 (although I expect them to resume their regular upward march next year). I own a small, struggling manufacturing company that has been providing health care to my people even though it’s a stretch. Surely the Affordable Care Act will come to my rescue! But the devil is always in the details, particularly when Congress decides to “help.” So the first thing to check: Am I eligible for the tax credit? Here’s what I found in the guidelines issued by the Internal Revenue Service:

“In order to be a qualified employer, (1) the employer must have fewer than 25 full-time equivalent employees (‘F.T.E.’s) for the tax year, (2) the average annual wages of its employees for the year must be less than $50,000 per F.T.E., and (3) the employer must pay the premiums under a ‘qualifying arrangement’ described in Q/A-7.”

Hmmm. This might not be so simple. Let’s take these one step at a time:

How many full time employees do I have? I ended the year with 12 on the payroll, including myself, but I started the year with eight. So here’s the guideline: “The number of an employer’s F.T.E.’s is determined by dividing (1) the total hours of service for which the employer pays wages to employees during the year (but not more than 2,080 hours for any employee) by (2) 2,080.” This raises a question: Do I include myself? The answer is no:

“A sole proprietor, a partner in a partnership, a shareholder owning more than 2 percent of an S corporation, and any owner of more than 5 percent of other businesses are not considered employees for purposes of the credit. Thus, the wages or hours of these business owners and partners are not counted in determining either the number of F.T.E.’s or the amount of average annual wages, and premiums paid on their behalf are not counted in determining the amount of the credit.”

O.K., that’s clear. I don’t count. And if I had any family on the payroll, they wouldn’t either. As usual, the guy who pays the bills is excluded from any tax break for health insurance.

On to the employees. They get personal days and holidays and overtime, and the guys who have been working all year have well more than 2,080 hours each. But the hours exceeding 2,080 won’t count toward the total, as we saw. What about the others? There’s a large clump of verbiage in section 16 of the I.R.S. document that  boils down to this: If the employee worked or was paid for less than 2,080 hours a year (including vacation and holidays), add the actual hours to the total. If salaried, add 40 hours for each week worked or paid for. If it’s an hourly worker, and you paid for more than 2,080 hours, just add 2,080. Then divide all of that by 2,080 to get your F.T.E.’s. And don’t forget to round down to the next whole number. That’s right: 4.99 F.T.E.’s is rounded down to 4. Which might help you if you are trying to scrape under the 25 F.T.E. limit, and might hurt you when you calculate average wages.

I paid for 21,168 hours of work in 2010, including overtime, personal days and holidays. When I subtract hours in excess of 2,080 per employee, that leaves me with a total of 19,008. Dividing by 2,080, I get 9.13 F.T.E.’s. Round that down to 9. Looks like I’m under the 25 limit. So far, so good.

On to the average wage calculation. What’s included? The I.R.S. says:

“The amount of average annual wages is determined by first dividing (1) the total wages paid by the employer during the employer’s tax year to employees who perform services for the employer during the tax year by (2) the number of the employer’s F.T.E.’s for the year, as calculated under Q/A-16.”

Uh oh. The total wages will include what I paid for all of the overtime, holidays and personal days, even if that exceeds 2,080 hours. Since many of my highest-paid shop guys work the most hours, that means the average is going to be bumped way, way up. I paid $451,662.50 in wages and salaries. Divide that by 9 F.T.E.’s and I get $50,184.72 per employee, which is just over the $50,000 per F.T.E. limit to qualify for the tax credit. I’m cooked.

The Affordable Care Act will not help me. I will have to deal with the burden of health insurance costs on my own. Some further thoughts:

  • I understand the concept of means testing for government benefits. However, the means being tested by the Act are probably the wrong ones. The ability of the employer to pay for health insurance isn’t considered at all. After going through the calculation I have to conclude that I would be a heck of a lot better off if I cut my people’s pay dramatically. Not only would I save on the wages, but also I would get some help with the costs of insurance. Was the Affordable Care Act intended to be an assault on middle class wages? It does incentivize the hiring of more lower paid workers instead of increasing the productivity and pay of a smaller work force. But how does that work if you have high pay, high skill workers? Of course, I could sidestep all of this by shipping production to China.
  • I now have every reason to dramatically increase the amount that my employees contribute to their insurance costs. The Affordable Care Act pegs the tax credits available to the amount of employee co-pays — but since I don’t qualify anyway, there’s no reason to hold back. I don’t see why I shouldn’t raise their portion from the current 33 percent contribution to 50 percent or more, with the eventual goal of getting rid of the health insurance benefit entirely. Every dollar they contribute would increase the profit of the company and by extension my own pay. After 25 years of being a generous boss, my willingness to insulate my workers from the broader shifts in the economy is almost gone. Maybe if we’d been profitable for years I would feel differently, but I’m ready to put the financial health of my company before the rewards of being Mr. Nice Guy.
  • If health insurance costs were falling, rather than rising, we wouldn’t be having this discussion. Even though the Affordable Care Act will not help me immediately, I support it. As far as I know, it has provisions that are intended to rein in the continuing growth of medical spending. The existing system, if unmodified, will put me in the same bind, probably faster. Keep in mind that my insurance costs have risen an average of 10 percent a year for every year I have offered insurance. The Act also promises to create a market for individuals and families to purchase their insurance themselves, at reasonable cost to them, so I can get out of the health insurance business entirely. I look forward to that day.

I’m curious if anyone else has done this calculation — and what you found for your own company.

Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside of Philadelphia.

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Comprehensive List of Tax Hikes in Obamacare

From Ryan Ellis on Friday, January 14, 2011 6:00 AM

Next week, the U.S. House of Representatives will be voting on an historic repeal of the Obamacare law.  While there are many reasons to oppose this flawed government health insurance law, it is important to remember that Obamacare is also one of the largest tax increases in American history.  Below is a comprehensive list of the two dozen new or higher taxes that pay for Obamcare’s expansion of government spending and interference between doctors and patients.

Individual Mandate Excise Tax(Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following

1 Adult 2 Adults 3+ Adults
2014 1% AGI/$95 1% AGI/$190 1% AGI/$285
2015 2% AGI/$325 2% AGI/$650 2% AGI/$975
2016 + 2.5% AGI/$695 2.5% AGI/$1390 2.5% AGI/$2085

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS)

Employer Mandate Tax(Jan 2014):  If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees.  This provision applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).

Combined score of individual and employer mandate tax penalty: $65 billion/10 years

Surtax on Investment Income ($123 billion/Jan. 2013):  This increase involves the creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single).  This would result in the following top tax rates on investment income

Capital Gains Dividends Other*
2010-2012 15% 15% 35%
2013+ (current law) 23.8% 43.4% 43.4%
2013+ (Obama budget) 23.8% 23.8% 43.4%
*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations.  It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income.  It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans.  The 3.8% surtax does not apply to non-resident aliens.

Excise Tax on Comprehensive Health Insurance Plans($32 bil/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). For early retirees and high-risk professions exists a higher threshold ($11,500 single/$29,450 family).  CPI +1 percentage point indexed.

Hike in Medicare Payroll Tax($86.8 bil/Jan 2013): Current law and changes:

First $200,000
($250,000 Married)
Employer/Employee
All Remaining Wages
Employer/Employee
Current Law 1.45%/1.45%
2.9% self-employed
1.45%/1.45%
2.9% self-employed
Obamacare Tax Hike 1.45%/1.45%
2.9% self-employed
1.45%/2.35%
3.8% self-employed

Medicine Cabinet Tax($5 bil/Jan 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin)

HSA Withdrawal Tax Hike($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Flexible Spending Account Cap – aka“Special Needs Kids Tax”($13 bil/Jan 2013): Imposes cap of $2500 (Indexed to inflation after 2013) on FSAs (now unlimited). . There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.

Tax on Medical Device Manufacturers($20 bil/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax.  Exemptions include items retailing for less than $100.

Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI($15.2 bil/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  The new provision imposes a threshold of 10 percent of AGI; it is waived for 65+ taxpayers in 2013-2016 only.

Tax on Indoor Tanning Services($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons

Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D($4.5 bil/Jan 2013)

Blue Cross/Blue Shield Tax Hike($0.4 bil/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services

Excise Tax on Charitable Hospitals(Min$/immediate): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS

Tax on Innovator Drug Companies($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.

Tax on Health Insurers($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. The stipulation phases in gradually until 2018, and is fully-imposed on firms with $50 million in profits.

$500,000 Annual Executive Compensation Limit for Health Insurance Executives($0.6 bil/Jan 2013)

Employer Reporting of Insurance on W-2(Min$/Jan 2011): Preamble to taxing health benefits on individual tax returns.

Corporate 1099-MISC Information Reporting($17.1 bil/Jan 2012): Requires businesses to send 1099-MISC information tax forms to corporations (currently limited to individuals), a huge compliance burden for small employers

“Black liquor” tax hike(Tax hike of $23.6 billion).  This is a tax increase on a type of bio-fuel.

Codification of the “economic substance doctrine”(Tax hike of $4.5 billion).  This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed.

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The Real Impact of the Healthcare Law

Meet Chad Baus. He is the owner of Car1, a used car dealership in Archbold, Ohio. Like most small business owners, he works hard to keep his business going and his employees happy.

But things have gotten a lot harder for Mr. Baus since the new healthcare law was enacted last year. His insurance provider stopped selling the PPO plan he offered his employees, and the new coverage – the cheapest he could find – costs 40 percent more. The increased costs and uncertainty mean that the dealership will forego hiring.

The same goes for businesses around the country, such as Cottman Corp. out of Willow Grove, Pennsylvania, and Medical Imaging Technologies in Colorado Springs. Both saw double-digit increases in the cost of their health insurance after the new healthcare proposal became law. Neither of these companies will be hiring additional employees anytime soon.

Country Insurance in Illinois and Rainbow Logistics in Alabama are also putting off hiring new employees due to uncertainty surrounding the new health care law.

And the list goes on.

The healthcare law is hindering job growth, but don’t take it from me. Take it from Chad Baus, Cottman Corp., and the thousands of other small business owners who have been impacted by the law. We have heard loud and clear from businesses around the country that they want the law repealed. In fact, more than 90 percent of our members favor repeal.

Small businesses have been clear that they would welcome reform that drives down costs. Healthcare costs are constantly increasing with no end in sight, and reform that helps contain costs and provide options for employers would be welcome relief to thousands of small businesses. But the healthcare law we have today only makes things more expensive to operate a small business.

That is why NFIB is leading the charge calling on Congress to make its first order of business to repeal this harmful and convoluted law. I commend the House of Representatives on its fast action to take up legislation to repeal the law. The Senate should follow suit. It is what’s best for the economy, and it’s what the American people want.

Small businesses aren’t just suffering under increased and new healthcare expenses, they are also being crushed by endless new taxes and fees included in the law. For example,
a new tax on the insurance plans most small businesses buy will go into effect in 2014 and ramps up to more than $14.3 billion per year.

There are other new taxes – including two new Medicare taxes, and a tax on tanning services that will hit more than 18,000 businesses nationwide. A costly new paperwork requirement requires businesses to file Form 1099s for every business transaction totaling $600 or more. With every new tax and every new paperwork burden, small businesses will be forced to spend more and more of their time and money on expensive health plans, tax compliance and accountants and less on creating jobs and growing our economy.

Increasing healthcare costs is the number one problem facing small businesses, and small businesses have been clear that they want reform that lowers costs and provides affordable coverage options. Instead, the healthcare law added new taxes, fees and mandates. This isn’t the reform small businesses asked for, and it will not help them overcome the ever-increasing cost of healthcare. It makes things even worse than before in a very difficult economy.

Something needs to be done, and repeal of this law is the best option. Small business owners like Chad Baus are already subject to a barrage of taxes and regulatory burdens as they work to be successful and grow their business. We should make it easier, not harder, for Baus and others to create jobs and grow our economy.

The first and most obvious step is to repeal the healthcare law. Congress should do the right thing and repeal the law to help our nation’s economy get back on its feet and allow small businesses to grow and thrive.

Danner is President and CEO of the National Federation of Independent Business.

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Has Massachusetts Experience Put ObamaCare On A Path To Repeal?

The new GOP majority plans to introduce a bill to repeal ObamaCare soon. What the Republicans are trying to prevent is what is already happening in Massachusetts, where a similar health care bill was enacted in April 2006. It is already imploding.

Unless ObamaCare is repealed, we’re on a path to Massachusetts’ future.

Eager politicians from former Gov. Mitt Romney to current Gov. Deval Patrick marketed Massachusetts’ health care plan, like Obama’s, with a series of distortions:

• The uninsured — especially young invincibles — were costing hospitals money that could be redirected to insurance premiums.

• They promised government efficiency.

• They focused on the assertion that primary care would replace emergency room use.

• They claimed both in Massachusetts and Washington, D.C., that we could build all this government health care bureaucracy and hand out these new benefits without new taxes while actually reducing long-term costs.

“Every uninsured citizen in Massachusetts will soon have affordable health insurance, and the cost of health care will be reduced,” then-Republican Gov. Romney wrote in the Wall Street Journal in 2006. “And we need no new taxes, no employer mandate and no government takeover to make this happen.”

Proponents of the Massachusetts plan now pretend that it never sought cost control. “The goal of the law was covering people,” says MIT economist and Massachusetts plan architect Jonathan Gruber, who also consulted on ObamaCare.

“It couldn’t have gone better,” he told the Washington Post. And the Post’s lead health-reform cheerleader, Ezra Klein, wrote, as if it’s fact, that the Massachusetts law “was not designed to control costs.”

The only measure by which Massachusetts can be judged a success is the number of people enrolled in Medicaid and other government-subsidized insurance plans. Of the 410,000 newly insured in Massachusetts, three in four are either paying nothing or very little for their insurance. They’ve also been successful in continuing to pull down massive subsidies from Washington to support the overhaul.

Spending has exploded. Medicaid, a problem in every state, is destroying Massachusetts. The health overhaul was really Medicaid expansion, and with the rolls up nearly 25% since 2006, Massachusetts is struggling to pay the bills.

The other promises turned out to be bogus as well. Despite the near-universal insurance, the state still spends $414 million on uncompensated care, an expense that Romney and his architects promised would disappear. Emergency-room use has not dropped as predicted. From 2006 to 2008, emergency room use under Mass Care increased by 9%. And private employer insurance costs, far from dropping, have continued to increase

A 2010 study published in the Forum for Health Economics & Policy found that health insurance premiums in Massachusetts, prior to its overhaul, increased at a rate 3.7% slower than the national average. Post-overhaul, they are increasing 5.8% faster.

The individual mandate, as onerous as it is, is set at a level to encourage gaming the system. A family with an income of $55,000 in 2014 will face the choice of paying $4,428 a year for health insurance or a $550 fine. Given that insurance will be available on demand, it’s rational to pay the fine until a serious illness strikes.

Indeed, there is no strong demand for insurance among the uninsured. The individual market has existed for years and is lightly subscribed. The new high-risk pools created by ObamaCare are very undersubscribed. Bureaucrats projected that 375,000 would sign up by now. The actual number is 8,000.

The lie that Massachusetts never promised to control costs is amplified by the belief that Obama’s plan would do so. Other than price controls, commissions recommending best practices and a stealth HMO program for Medicare renamed Accountable Care Organizations, there’s little to control costs in the near term.

This brings us back to the Bay State, where politicians, bureaucrats and health policy sages have embarked on what they bill as phase two of the health care overhaul. Now that nearly everyone is insured, the effort is to replace the decentralized reimbursement system with a global budget.

In other words, give hospitals and doctors a pool of money and tell them to make do. Change the incentive from providing the best possible care to the best care the bureaucrats can possibly afford.

“Clearly we are going to have less resources,” Gary Gottlieb, CEO of Partners Health Care in Massachusetts, recently told a medical conference. “The most extraordinary ICU and the most extraordinary technology, without necessarily the evidence that it extends life … is not going to be accessible to us.”

A government-run HMO. Welcome to your future.

• Pipes is president, CEO and Taube fellow in health care studies at the Pacific Research Institute. Her latest book is “The Truth About Obamacare” (Regnery 2010).

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CAN WE STOP CALLING THEM ‘CONSUMER PROTECTIONS’ NOW?

Kaiser Daily Health News –

Jan. 10: Supporters of the health law are lamenting how the nickname “ObamaCare” has achieved wider purchase than the law’s official title. More egregious, though, is how supporters have successfully misbranded ObamaCare’s health insurance regulations as “consumer protections.”

In anticipation of the (now-postponed) House vote to repeal ObamaCare, for example, three Obama cabinet officials last week warned House Speaker John Boehner, R-Ohio, about the consequences of eliminating the law’s “consumer protections.”

Major media outlets routinely play along. The New York Times reports, “Many of the law’s consumer protections take effect [January 1]. Health plans generally must allow adult children up to age 26 to stay on their parents’ policies and cannot charge co-payments for preventive services or impose a lifetime limit on benefits.

Other “consumer protections” already in place limit the percentage of revenues insurers can spend on administrative expenses and prohibit them from turning away children with pre-existing conditions. Who could object to such rules? As it happens, an awful lot of people.

These supposed consumer protections are hurting millions of Americans by increasing the cost of insurance, increasing the cost of hiring and driving insurers out of business.

At the same time Secretary of Health and Human Services Kathleen Sebelius was threatening to bankrupt insurers who claim ObamaCare is increasing premiums by more than 1 percent, her own employees estimated that one of the law’s regulations the requirement to purchase unlimited annual coverage will increase some people’s premiums by 7 percent or more when fully implemented.

A Connecticut insurer estimated that just the provisions taking effect last year would increase some premiums by 20-30 percent. Such mandates force consumers to divert income from food, housing, and education to pay for the additional coverage. That can leave consumers worse off, even threaten their health. They can also force employers to reduce hiring, leaving some Americans with neither a job nor health insurance. This reality led McDonald’s to seek a waiver from the unlimited annual coverage mandate, among other rules.

The ban on discriminating against children with pre-existing conditions has caused insurers to stop selling child-only policies in dozens of states. The dependent-coverage mandate was cited as one of the reasons spurring a Service Employees International Union local in New York City to eliminate coverage for 6,000 dependent children.

In 2008, Congress passed a similar mandate that supporters said would expand coverage for mental-health and substance-abuse services. Instead, that mandate spurred the Screen Actors Guild to eliminate mental-health coverage for 12,000 of its lower-paid members. It had the same effect on 3,500 members of the Chicago’s Plumbers Welfare Fund, and 2,200 employees of Woodman’s Food Market in Wisconsin. Other employers are curtailing access to mental-health services thanks to this mandate, and some insurers have stopped selling such coverage altogether.

The list goes on. ObamaCare now forces insurers to spend no more than 20 percent of revenues – 15 percent for large employers – on administrative expenses. Similar state laws have done nothing to slow the growth of premiums.

ObamaCare’s rule spurred Principal Financial Group to stop selling health insurance before it even took effect, leaving nearly 1 million consumers to find new coverage and threatening their continuity of care. Experts expect more consumers to suffer the same fate. This supposed consumer protection also punishes efforts to reduce fraud and improve quality by reviewing claims. Thus, in addition to increasing premiums, it may expose patients to unnecessary and even harmful services.

Consumers, insurers, employers, unions and state officials are begging for protection from these so-called protections. Sebelius has so far issued 222 waivers, which raises the question: if these were really consumer protections, why waive them?

These rules may end up helping somebody, and that should count in the law’s favor. Yet rules that were supposed to protect children have stripped sick kids of their health insurance and made it harder for parents to find coverage for kids who may soon fall ill.

Other rules have reduced wages and discouraged hiring amid high unemployment. Just as the mental-health mandate is ousting vulnerable patients from their rehab or therapy and cutting off their meds, ObamaCare’s voluminous mandates are threatening even more Americans’ access to care.

Calling these rules “consumer protections” implies that the people harmed don’t matter, or one has clairvoyance to know that the benefits outweigh the costs.

ObamaCare supporters should call these supposed consumer protections what they are: regulations that can hurt even more than they help.

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NINE WAYS THE NEW HEALTH LAW MAY AFFECT YOU IN 2011

Kaiser Health News – Jan. 3:

Opponents of the new health care overhaul law are threatening to repeal, defund and kill it in court, but that isn’t stopping Washington from implementing a number of important provisions in 2011. While many people will welcome the new benefits, some will face higher costs as a result of the law.

Seniors are affected by several of the provisions. They will get big discounts on prescription drugs and free preventive care, but some in Medicare Advantage plans may lose coveted extra benefits such as vision and dental coverage. Everyone will be able to count calories when dining at chain restaurants or sidling up to vending machines. But forget about using pre-tax income in popular flexible spending accounts to pay for over-the-counter medications, unless you get a prescription.

These changes follow a handful of early benefits that debuted in 2010. Already, adult children are allowed to remain on their parents’ policies until the age of 26, for example, and insurers can no longer cancel coverage when people get sick (except in cases of fraud).

The following are nine health law changes to take note of this year.

1. Will you get an insurance rebate?
Starting this year, health insurers must spend at least 80 percent of their premiums on medical care, or face the possibility of giving rebates to consumers. The rule applies to policies purchased by individuals who don’t get coverage through work, and for many policies offered by employers. For policies sold to large employers, insurers must hit an 85 percent spending target. Self-insured employers are exempt from the rule. The goal is to pressure insurers to restrain profits and administrative costs, such as overhead, marketing and executive salaries.

But insurers probably won’t be issuing too many rebates, which would go out in 2012. Of the 75 million people who have insurance that is covered under the rule, the government estimates that 9 million will be eligible for a rebate in 2012. That’s because many insurers reach those target levels now, and the ones that don’t may adjust so they meet the spending limits. Other insurers may drop out of the market.

Under another part of the law, regulators have proposed that beginning July 1 premium increases of 10 percent or more be subject to additional review by states and the federal government. Insurers would have to publicly disclose some of the data supporting their requests – such as how much they’re paying for medical services. The review would determine if the increase is considered unreasonable. Some state regulators have authority to deny an increase, but the law does not grant that power to the federal government.

The proposed rule would affect policies sold to individuals and small businesses.

2. Lower Rx costs for seniors
Prescription drug costs could shrink $700 for a typical Medicare beneficiary in 2011, as the law begins to close the notorious doughnut hole – the gap in prescription coverage when millions of seniors must pay full price at the pharmacy – according to the seniors group AARP. The National Council on Aging estimates the savings could reach $1,800 for some. Starting in January, drug companies will give seniors 50 percent off brand drugs while in the gap, excluding those low-income people who already get subsidies. Generics will also be cheaper. “It’s quite significant,” said AARP’s John Rother. “People stop filling prescriptions when they hit the doughnut hole.” The National Council on Aging estimates that about 4 million Medicare beneficiaries will face the gap this year.

3. It has how many calories?

How many calories are in that Outback Steakhouse’s blooming onion? (1,551) Or Pizzeria Uno’s individual-size Chicago style deep-dish pizza? (2,310).

Beginning soon after the Food and Drug Administration finalizes rules in 2011, chain restaurants with 20 or more locations, and owners of 20 or more vending machines, will have to display calorie information on menus, menu boards and drive-thru signs. Restaurants must also provide diners with a brochure that includes detailed nutritional information, like the fat content of their dishes. Consumer advocate Jeff Cronin of the nonprofit Center for Science in the Public Interest says it will put “eating into context.”

4. Higher Medicare Premiums

Medicare premiums in 2011 will take a bigger bite from wealthier beneficiaries. Since 2007, this group has paid more than the standard premium for Part B, which covers physician and outpatient services. But the income threshold was indexed to prevent inflation from moving more people into the affected group. The health law freezes the threshold at the current level: incomes of $85,000 or above for individuals and $170,000 for couples. With that step, beneficiaries paying higher premiums will rise from 2.4 million in 2011 to 7.8 million in 2019, according to an analysis by the Kaiser Family Foundation. (KHN is part of the foundation.) Their monthly premiums this year will be between $161.50 and $369.10, while the standard premium will be $115.40. Also, premiums for Medicare Part D, which covers prescription drugs, for the first time will be linked to income. The thresholds will be the same as those for Part B and will not be linked to inflation. About 1.2 million beneficiaries will pay the income-related Part D premium this year, rising to 4.2 million beneficiaries in 2019.

6. Restrictions on medical savings accounts

Consumers with flexible spending accounts (FSAs), in which pre-tax income can be used for medical purchases, can no longer spend the money on over-the-counter drugs, including ones that treat fevers or allergies and acne, unless they have a doctor’s prescription. The new restrictions, which lawmakers included in the health overhaul to raise more revenue, also apply to health reimbursement arrangements (HRAs), health savings accounts (HSAs) and Archer medical savings accounts (MSAs). Starting this year, those with HSA or MSA accounts who spend money inappropriately will not only owe taxes on it, but also face a tax penalty of 20 percent, double what it was. For all pre-tax accounts, medical devices such as eyeglasses and crutches, and co-pays and deductibles still qualify for the accounts. Insulin obtained without a prescription is also eligible.

6. Bolstering seniors’ access to primary care

Medicare is bumping up payments for primary care by 10 percent from Jan. 1 through the end of 2015. It’s an incentive for doctors and others who specialize in primary care – including nurses, nurse practitioners and physician assistants – to see the swelling numbers of seniors and disabled people covered by the program. Health practitioners will qualify for the bonus only if 60 percent or more of the services they provide are for primary care. General surgeons also will receive an increase if they’re practicing in areas where there are doctor shortages. Experts agree there’s a growing shortage of primary care providers, a big problem considering that the health law is expected to expand coverage to 32 million more Americans by 2019. The bonus won’t cure the problem, but many see it as a start. “It’s significant, but it’s not the end all,” said Dr. Roland Goertz, president of the American Academy of Family Physicians, emphasizing that the bonus will end in 2015.

7. Staying healthy
Several provisions of the law promote prevention of disease, especially for seniors. Medicare enrollees will be able to get many preventive health services – such as vaccinations and cancer screenings – for free starting in January. Specifically, the law eliminates any cost-sharing such as copayments or deductibles for Medicare-covered preventive services that are recommended (rated A or B by the U.S. Preventive Services Task Force). Also starting in January, Medicare beneficiaries can get a free annual “wellness exam” from their doctors who will set up a “personalized prevention plan” for them. The plan includes a review of the individuals’ medical history and a screening schedule for the next decade. The law also eliminates any cost sharing for the “Welcome to Medicare” physical exam, which previously included a 20 percent co-pay. And people working for small employers will get some help.

The law authorizes the federal government to issue grants totaling $200 million for companies with fewer than 100 workers that start wellness programs focused on nutrition, smoking cessation, physical fitness and stress management.

8. Trimming Medicare Advantage

The health law puts the squeeze on private health plans that provide Medicare coverage to about a quarter of beneficiaries. Payment for these Medicare Advantage plans is being restructured. Rates this year will be frozen at 2010 levels and lower rates will be phased in beginning in 2012. Medicare says the reductions are fair because the plans are paid $1,000 more per person on average than the traditional fee-for-service program spends on a typical senior. Dan Mendelson, president and CEO of Avalere Health, a consulting firm based in Washington, says some plans will respond by cutting ancillary benefits, such as vision and dental care. But he calls this “a transition year” and says more significant changes will come in 2012, when in addition to the rate reductions, the government begins offering bonuses to top-performing Advantage plans based on quality measurements.

9. Fighting hospital infections

About 1.7 million patients pick up life-threatening, but preventable, infections at hospitals, according to a study earlier this year in the Archives of Internal Medicine. In July, Medicaid will say “enough.” The federal government – which shares the cost of this program for the poor with states – will stop paying for treatment of some hospital-acquired infections. The Medicare program for the elderly and disabled and many private insurers already ban payments for treating many of these infections.

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