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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




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


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.



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.


John C. Goodman: Why the Doctor Can’t See You

The demand for health care under ObamaCare will increase dramatically. The supply of physicians won’t. Get ready for a two-tier system of medical care.


Are you having trouble finding a doctor who will see you? If not, give it another year and a half. A doctor shortage is on its way.

Most provisions of the Obama health law kick in on Jan. 1, 2014. Within the decade after that, an additional 30 million people are expected to acquire health plans—and if the economic studies are correct, they will try to double their use of the health-care system. Meanwhile, the administration never seems to tire of reminding seniors that they are entitled to a free annual checkup. Its new campaign is focused on women. Thanks to health reform, they are being told, they will have access to free breast and pelvic exams and even free contraceptives. Once ObamaCare fully takes effect, all of us will be entitled to a long list of preventive services—with no deductible or copayment.

Here is the problem: The health-care system can’t possibly deliver on the huge increase in demand for primary-care services. The original ObamaCare bill actually had a line item for increased doctor training. But this provision was zeroed out before passage, probably to keep down the cost of health reform. The result will be gridlock.

Take preventive care. ObamaCare says that health insurance must cover the tests and procedures recommended by the U.S. Preventive Services Task Force. What would that involve? In the American Journal of Public Health (2003), scholars at Duke University calculated that arranging for and counseling patients about all those screenings would require 1,773 hours of the average primary-care physician’s time each year, or 7.4 hours per working day.

And all of this time is time spent searching for problems and talking about the search. If the screenings turn up a real problem, there will have to be more testing and more counseling. Bottom line: To meet the promise of free preventive care nationwide, every family doctor in America would have to work full-time delivering it, leaving no time for all the other things they need to do.

When demand exceeds supply in a normal market, the price rises until it reaches a market-clearing level. But in this country, as in other developed nations, Americans do not primarily pay for care with their own money. They pay with time.

How long does it take you on the phone to make an appointment to see a doctor? How many days do you have to wait before she can see you? How long does it take to get to the doctor’s office? Once there, how long do you have to wait before being seen? These are all non-price barriers to care, and there is substantial evidence that they are more important in deterring care than the fee the doctor charges, even for low-income patients.

For example, the average wait to see a new family doctor in this country is just under three weeks, according to a 2009 survey by medical consultancy Merritt Hawkins. But in Boston, Mass.—which enacted a law under Gov. Mitt Romney that established near-universal coverage—the wait is about two months. When people cannot find a primary-care physician who will see them in a reasonable length of time, all too often they go to hospital emergency rooms.

Yet a 2007 study of California in the Annals of Emergency Medicine showed that up to 20% of the patients who entered an emergency room left without ever seeing a doctor, because they got tired of waiting. Be prepared for that situation to get worse.

When demand exceeds supply, doctors have a great deal of flexibility about who they see and when they see them. Not surprisingly, they tend to see those patients first who pay the highest fees. A New York Times survey of dermatologists in 2008 for example, found an extensive two-tiered system. For patients in need of services covered by Medicare, the typical wait to see a doctor was two or three weeks, and the appointments were made by answering machine.

However, for Botox and other treatments not covered by Medicare (and for which patients pay the market price out of pocket), appointments to see those same doctors were often available on the same day, and they were made by live receptionists. As physicians increasingly have to allocate their time, patients in plans that pay below-market prices will likely wait longest. Those patients will be the elderly and the disabled on Medicare, low-income families on Medicaid, and (if the Massachusetts model is followed) people with subsidized insurance acquired in ObamaCare’s newly created health insurance exchanges.

Their wait will only become longer as more and more Americans turn to concierge medicine for their care. Although the model differs from region to region and doctor to doctor, concierge medicine basically means that patients pay doctors to be their agents, rather than the agents of third-party-payers such as insurance companies or government bureaucracies.

For a fee of roughly $1,500 to $2,000, for example, a Medicare patient can form a new relationship with a doctor. This usually includes same day or next-day appointments. It also usually means that patients can talk with their physicians by telephone and email. The physician helps the patient obtain tests, make appointments with specialists and in other ways negotiate an increasingly bureaucratic health-care system.

Here is the problem. A typical primary-care physician has about 2,500 patients (according to a 2009 study by the Centers for Disease Control and Prevention), but when he opens a concierge practice, he’ll typically take about 500 patients with him (according to MDVIP, the largest organization of concierge doctors): That’s about all he can handle, given the extra time and attention those patients are going to expect. But the 2,000 patients left behind now must find another physician. So in general, as concierge care grows, the strain on the rest of the system will become greater.

I predict that in the next several years concierge medicine will grow rapidly, and every senior who can afford one will have a concierge doctor. A lot of non-seniors will as well. We will quickly evolve into a two-tiered health-care system, with those who can afford it getting more care and better care.

In the meantime, the most vulnerable populations will have less access to care than they had before ObamaCare became law.

Mr. Goodman is president of the National Center for Policy Analysis and the author of “Priceless: Curing the Healthcare Crisis” (Independent Institute, 2012).

*Modified from a Wall Street Journal article


Washington Post Examines Impact of Health Reform Law on Premiums

The article noted five factors that could lead to higher insurance premiums:

1. Currently insurance companies offer lower premiums to younger Americans, since they generally have lower health costs. But starting in 2014, the law implements an age band so that the amount an older individual pays will be no more than three times what a younger individual pays. So if a state currently allows an age band of 5:1, older Americans might see a premium decrease — but younger Americans would see a premium spike.

2. A similar dynamic exists with the law’s requirement that insurers selling policies through the health exchanges will no longer be able to charge different premiums based on a person’s health status when coverage is first purchased. This is known as a community rating. So healthier individuals generally will see higher premiums.

3. The popular provision that requires insurers to accept everyone regardless of their health status (i.e., pre-existing conditions) also will transfer costs to healthier individuals.

4. Insurers must offer an “essential health benefits” package, providing coverage in 10 categories. The list includes: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

It’s a great package, but the benefits are more extensive than what most individuals and small businesses already purchase. So that will also boost premiums, especially if you currently have a less extensive plan. A report in the June edition of Health Affairs found that “more than half of Americans who had individual insurance in 2010 were enrolled in plans that would not qualify as providing essential coverage under the rules of the exchanges in 2014.”

5. The law also contains various taxes and fees, including a health insurance tax. Those costs presumably would be passed on to consumers, resulting in higher premiums.


*Modified from a Washington Post Article


Ambiguity in Health Law Could Make Family Coverage Too Costly for Many

The New York Times, By Robert Pear -August 11, 2012: The new health care law is known as the Affordable Care Act. But Democrats in Congress and advocates for low-income people say coverage may be unaffordable for millions of Americans because of a cramped reading of the law by the administration and by the Internal Revenue Service in particular.

Under rules proposed by the service, some working-class families would be unable to afford family coverage offered by their employers, and yet they would not qualify for subsidies provided by the law.

The fight revolves around how to define “affordable” under provisions of the law that are ambiguous. The definition could have huge practical consequences, affecting who gets help from the government in buying health insurance.

Under the law, most Americans will be required to have health insurance starting in 2014. Low- and middle-income people can get tax credits and other subsidies to help pay their premiums, unless they have access to affordable coverage from an employer.

The law specifies that employer-sponsored insurance is not affordable if a worker’s share of the premium is more than 9.5 percent of the worker’s household income. The I.R.S. says this calculation should be based solely on the cost of individual coverage for the employee, what the worker would pay for “self-only coverage.”

Critics say the administration should also take account of the costs of covering a spouse and children because family coverage typically costs much more.

In 2011, according to an annual survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance averaged $5,430 a year for single coverage and $15,070 for family coverage. The employee’s share of the premium averaged $920 for individual coverage and more than four times as much, $4,130, for family coverage.

Under the I.R.S. proposal, such costs would be deemed affordable for a family making $35,000 a year, even though the family would have to spend 12 percent of its income for full coverage under the employer’s plan.

The debate over the meaning of affordable pits the Obama administration against its usual allies. Many people who support the new law said the proposed rules could leave millions of people in the lower middle class uninsured and frustrate the intent of Congress, which was to expand coverage.
“The effect of this wrong interpretation of the law will be that many families remain or potentially become uninsured,” said a letter to the administration from Democrats who pushed the bill through the House in 2009-10. The lawmakers include Representatives Henry A. Waxman of California and Sander M. Levin of Michigan.

Bruce Lesley, the president of First Focus, a child advocacy group, said: “This is a serious glitch. Under the proposal, millions of children and families would be unable to obtain affordable coverage in the workplace, but ineligible for subsidies to buy private insurance in the exchanges” to be established in each state.

Businesses dislike the idea of insurance mandates and penalties, but said the I.R.S. had correctly interpreted the law.

“Employers who offer health coverage do so primarily on behalf of their employees,” said Kathryn Wilber, a lawyer at the American Benefits Council, which represents many Fortune 500 companies. “Although many employers do provide family coverage to full-time employees, many do not.”

The I.R.S. issued final rules for the health insurance premium tax credit in May, but deferred its final decision on the affordability of family coverage. Sabrina Siddiqui, a Treasury Department spokeswoman, said, “We welcome comments from stakeholders and consumer groups and look forward to continuing to work with them to implement these rules and to ensure families get the affordable care they need.”

The administration is trying to strike a balance. If the rules allow more people to qualify for subsidies, it would increase costs to the federal government. If the rules require employers to provide affordable coverage to dependents as well as workers, it would increase costs for many employers.
Wayne Goodwin, a Democrat who is the insurance commissioner of North Carolina, said the proposed federal policy would create a hardship for many state employees. North Carolina pays all or nearly all of the premium for health insurance covering state government employees, but it has never paid the cost for their dependents, Mr. Goodwin said.

“The average salary of North Carolina state employees is about $41,000,” Mr. Goodwin added, “and the cost of family coverage in the basic plan is $516 a month, which is not affordable for many state employees. Because employee-only coverage for this plan is provided at no cost to the employee, based on the proposed regulations, all family members would be prohibited from obtaining subsidies through the exchange.”

Dr. David I. Bromberg, a spokesman for the American Academy of Pediatrics, said, “The I.R.S.’s interpretation of the law could unravel much of the progress that has been made in covering children in recent years.” The Service Employees International Union said the proposal “discriminates against marriage and families.”

Some of the most important provisions of the law will be carried out by the I.R.S. Besides offering tax credits to individuals and families, it will impose tax penalties on people who go without insurance and on businesses that do not offer it.

The agency said its reading of the law was supported by the Congressional Joint Committee on Taxation. The health care rules were drafted by “our legal experts — career civil servants who are some of the best tax lawyers in the world,” said Douglas H. Shulman, the I.R.S. commissioner.

The law says an employer with 50 or more full-time employees may be subject to a tax penalty if it fails to offer coverage to “its full-time employees (and their dependents).” However, more than two years after President Obama signed the law, the employer’s obligation to dependents is unclear.
In explaining how the penalty is to be computed, the law does not mention dependents. Employers pay a penalty only if one or more full-time employees receive subsidies.

Companies are less likely to offer or pay for coverage of dependents in industries with low wages and high turnover, like restaurants.

Some employers and members of Congress have suggested a possible compromise. The government would still look at the cost of “self-only coverage” in deciding whether insurance was affordable to an employee. If family coverage under the employer’s plan was too expensive, a family could get subsidies to buy insurance for dependents in the exchange, and the employer would not be penalized.


Doctor Shortage Likely to Worsen With Health Law

RIVERSIDE, Calif. — In the Inland Empire, an economically depressed region in Southern California, President Obama’s health care law is expected to extend insurance coverage to more than 300,000 people by 2014. But coverage will not necessarily translate into care: Local health experts doubt there will be enough doctors to meet the area’s needs. There are not enough now.

Other places around the country, including the Mississippi Delta, Detroit and suburban Phoenix, face similar problems. The Association of American Medical Colleges estimates that in 2015 the country will have 62,900 fewer doctors than needed. And that number will more than double by 2025, as the expansion of insurance coverage and the aging of baby boomers drive up demand for care. Even without the health care law, the shortfall of doctors in 2025 would still exceed 100,000.

Health experts, including many who support the law, say there is little that the government or the medical profession will be able to do to close the gap by 2014, when the law begins extending coverage to about 30 million Americans. It typically takes a decade to train a doctor.

“We have a shortage of every kind of doctor, except for plastic surgeons and dermatologists,” said Dr. G. Richard Olds, the dean of the new medical school at the University of California, Riverside, founded in part to address the region’s doctor shortage. “We’ll have a 5,000-physician shortage in 10 years, no matter what anybody does.”

Experts describe a doctor shortage as an “invisible problem.” Patients still get care, but the process is often slow and difficult. In Riverside, it has left residents driving long distances to doctors, languishing on waiting lists, overusing emergency rooms and even forgoing care.

“It results in delayed care and higher levels of acuity,” said Dustin Corcoran, the chief executive of the California Medical Association, which represents 35,000 physicians. People “access the health care system through the emergency department, rather than establishing a relationship with a primary care physician who might keep them from getting sicker.”

In the Inland Empire, encompassing the counties of Riverside and San Bernardino, the shortage of doctors is already severe. The population of Riverside County swelled 42 percent in the 2000s, gaining more than 644,000 people. It has continued to grow despite the collapse of one of the country’s biggest property bubbles and a jobless rate of 11.8 percent in the Riverside-San Bernardino-Ontario metro area.

But the growth in the number of physicians has lagged, in no small part because the area has trouble attracting doctors, who might make more money and prefer living in nearby Orange County or Los Angeles.

A government council has recommended that a given region have 60 to 80 primary care doctors per 100,000 residents, and 85 to 105 specialists. The Inland Empire has about 40 primary care doctors and 70 specialists per 100,000 residents — the worst shortage in California, in both cases.

Moreover, across the country, fewer than half of primary care clinicians were accepting new Medicaid patients as of 2008, making it hard for the poor to find care even when they are eligible for Medicaid. The expansion of Medicaid accounts for more than one-third of the overall growth in coverage in President Obama’s health care law.

Providers say they are bracing for the surge of the newly insured into an already strained system. Temetry Lindsey, the chief executive of Inland Behavioral & Health Services, which provides medical care to about 12,000 area residents, many of them low income, said she was speeding patient-processing systems, packing doctors’ schedules tighter and seeking to hire more physicians.

“We know we are going to be overrun at some point,” Ms. Lindsey said, estimating that the clinics would see new demand from 10,000 to 25,000 residents by 2014. She added that hiring new doctors had proved a struggle, in part because of the “stigma” of working in this part of California.

Across the country, a factor increasing demand, along with expansion of coverage in the law and simple population growth, is the aging of the baby boom generation. Medicare officials predict that enrollment will surge to 73.2 million in 2025, up 44 percent from 50.7 million this year.

“Older Americans require significantly more health care,” said Dr. Darrell G. Kirch, the president of the Association of American Medical Colleges. “Older individuals are more likely to have multiple chronic conditions, requiring more intensive, coordinated care.”

The pool of doctors has not kept pace, and will not, health experts said. Medical school enrollment is increasing, but not as fast as the population. The number of training positions for medical school graduates is lagging. Younger doctors are on average working fewer hours than their predecessors. And about a third of the country’s doctors are 55 or older, and nearing retirement.

Physician compensation is also an issue. The proportion of medical students choosing to enter primary care has declined in the past 15 years, as average earnings for primary care doctors and specialists, like orthopedic surgeons and radiologists, have diverged. A study by the Medical Group Management Association found that in 2010, primary care doctors made about $200,000 a year. Specialists often made twice as much.

The Obama administration has sought to ease the shortage. The health care law increases Medicaid’s primary care payment rates in 2013 and 2014. It also includes money to train new primary care doctors, reward them for working in underserved communities and strengthen community health centers.

But the provisions within the law are expected to increase the number of primary care doctors by perhaps 3,000 in the coming decade. Communities around the country need about 45,000.

Many health experts in California said that while they welcomed the expansion of coverage, they expected that the state simply would not be ready for the new demand. “It’s going to be necessary to use the resources that we have smarter” in light of the doctor shortages, said Dr. Mark D. Smith, who heads the California HealthCare Foundation, a nonprofit group.

Dr. Smith said building more walk-in clinics, allowing nurses to provide more care and encouraging doctors to work in teams would all be part of the answer. Mr. Corcoran of the California Medical Association also said the state would need to stop cutting Medicaid payment rates; instead, it needed to increase them to make seeing those patients economically feasible for doctors.

More doctors might be part of the answer as well. The U.C. Riverside medical school is hoping to enroll its first students in August 2013, and is planning a number of policies to encourage its graduates to stay in the area and practice primary care.

But Dr. Olds said changing how doctors provided care would be more important than minting new doctors. “I’m only adding 22 new students to this equation,” he said. “That’s not enough to put a dent in a 5,000-doctor shortage.”

*Modified from a New York Times article



Employees Favor Employer Health Plans (Even as Some Employers May Dump Them)

Most U.S. workers are satisfied with employer-provided health coverage, according to a new survey by the Washington, D.C.-based National Business Group on Health.

The report, “Perceptions of Health Benefits in a Recovering Economy: A Survey of Employees,” was conducted from late May through early June. A total of 1,545 employees at organizations with 2,000 or more employees responded. Respondents were between the ages of 22 and 69 and receive their health care benefits through their employer or union.

  • Higher premiums and out-of-pocket costs for health care benefits rule the roost, as most covered employees realize. But the survey finds that roughly one in three employees are not confident in their ability to shop for health insurance on their own.

More than half are not confident they can purchase the same or better quality insurance on their own. Reports coming out after the U.S. Supreme Court upheld the Affordable Care Act do not bode well for employees, the reports suggesting they may be forced to buy insurance in health insurance exchanges.

About one in 10 employers in the United States say they’ll drop health coverage for employees in the next few years as the major provisions of the Patient Protection and Affordable Care Act take effect. And more indicate they may do so over time, a survey by consulting company Deloitte finds, an article in BenefitsPro reported this week.

A health insurance exchange is an online marketplace set up under the health reform law wherein individuals and small businesses can shop for health plans from private insurance companies. Each state’s exchange is set to offer coverage beginning Jan. 1, 2014. People may seek federal financial assistance when they apply.

  • There is also a third option tickling some fancies: As recapped in an article published July 19 on, an Employee Benefit Research Institute brief suggests the PPACA exchange system could lead to a return to an employer-sponsored defined contribution health benefits system.

Under this system, employers would give a set amount of cash to employees, the funds used by the employees to buy guaranteed-issue, mostly community-rated coverage through the exchanges.

Nearly two thirds of workers have experienced higher premiums and out-of-pocket costs, according to the survey. The new law mandates that, starting in 2014, any company with 50 or more full-time employees has to provide coverage or pay a penalty.

  • There have been conflicting reports over how many employers will drop coverage for employees. Deloitte’s report predicts a lesser impact than some. Last year, consulting firm McKinsey & Co. drew fire from when it stated 30% of respondents will “definitely” or “probably” stop offering employer-sponsored health insurance after 2014. According to the Deloitte survey, 9% of companies expect to stop offering insurance in the next one to three years.

But U.S. workers’ satisfaction levels with employer-provided health care coverage has risen or remained the same compared to three years ago, according to a survey of employees conducted by the NBGH, a non-profit association of nearly 350 large employers.

The survey found that nearly two in three workers (63%) are very satisfied with health coverage provided by their employer or union. Roughly one-third (35%) are more satisfied with their coverage compared to three years ago, the survey found.

The survey also found that 87% of employees rate health benefits as very important when making a decision about accepting a new job or remaining with their employer. Fewer than 8 in 10 (78%) rate retirement benefits as very important, which is up sharply from 63% in 2007. Only 12% are less satisfied; the remaining 53% say their satisfaction level has remained the same.

Thirty-nine percent of employees rank biometric screenings as a very important health benefit program, followed by exercise programs (31%) and on-site fitness centers (31%). Less healthy respondents give a higher rating to programs in stress management, weight loss, and coaching, programs; however, most employees (68%) do not believe employees should be required to participate in a wellness program to qualify for health insurance. And even more (71%) don’t think employers should charge employees more for health coverage if they don’t meet specific health goals, the report finds.

“Employers continue to make significant investments in the health of their employees, even though the slow recovery has left many employers and the economy struggling,” states NBDH President and CEO Helen Darling. “In the wake of the Supreme Court’s ruling to uphold the health care reform law and a future that will include health exchanges where individuals can shop for and buy insurance, some employers will be carefully weighing their options.

*Modified from article