IMPACTS of OBAMACARE

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http://www.heritage.org/research/projects/obamacare/obamacare-in-pictures
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Budget Committee Chairman Paul

Ryan: Hiding Spending Doesn't Reduce Spending :
http://www.youtube.com/watch?v=zPxMZ1WdINs&NR=1&feature=fvwp

Paul Ryan: Health care law is a fiscal house of cards:
http://www.youtube.com/watch?feature=player_embedded&v=eyjpzvtkz70

Paul Ryan raises a point of order: "OBAMACARE is the mother of all Unfunded Mandates"
http://www.youtube.com/watch?v=4WOLkfnIlXI http://www.youtube.com/user/AmericanRoadmap#p/a/f/1/4WOLkfnIlX I

This is three and three-quarter minutes’ worth of Rep. Ryan ripping apart last year’s useless CBO report on Obamacare costs, with some additional commentary added in on how you can reconcile said CBO report claiming that Obamacare will reduce the deficit while the CBO is saying elsewhere that Obamacare will increase the debt. Short version: when looking at the deficit the CBO was forced by the then-majority party to make assumptions that they couldn’t make while looking at the debt.
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The Impact of Obamacare: From the Frontlines of Our Health Care Crisis
Posted January 10th, 2011

The fight against Obamacare has begun on a new front as the House of Representatives prepares to consider H.R. 2, a measure to repeal the health care overhaul in its entirety. New Members of Congress campaigned on a promise to fight the unpopular new law, and this is the first step to making good on that promise.

Meanwhile, proponents of Obamacare continue to claim that repeal would hurt Americans and increase the federal deficit. In fact, the reverse is true. The negative impact of the health law will be felt by every American citizen. For example:
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Obamacare creates trillions in new spending and will add to the federal deficit, putting future taxpayers on the hook. 16 million more Americans will be added to the 58 million receiving Medicaid, a program for low-income citizens that incoming New York Governor Andrew Cuomo called “dysfunctional on many levels” and in need of “a desperate overhaul.” Millions more will remain uninsured. Expanding Medicaid will put already-suffering state budgets further in the red, while the overreach of the federal government threatens state autonomy under our federalist system. Increased enrollment in government health programs, new regulations, and less reimbursement all mean that physicians face more obstacles to the practice of medicine. Cuts to Medicare mean that seniors face reduced access to services, fewer benefits, and higher premiums. New taxes and penalties will make it harder for businesses to create jobs and continue offering health benefits. Government intrusion into family life reaches new heights, as federally funded projects aimed at reducing teen pregnancy deny families any knowledge about the services their children receive.

Our contribution to the debate has not been limited to researching the facts. Heritage has also highlighted the stories of ordinary citizens already dealing with the consequences of “reform” or awaiting worse to come. Our new brochure, “The Impact of Obamacare: From the Frontlines of Our Health Care Crisis,” provides a glimpse into the lives of affected individuals and highlights why the best way forward for all Americans is to fully repeal Obamacare and then start over to get health care reform right. To learn more about how everyday citizens will be affected by Obamacare and the need for repeal, we invite you to check out our new brochure and the research papers, charts, graphs, and impact calculator that accompany it.

Author: Kathryn Nix

http://blog.heritage.org/2011/01/10/the-impact-of-obamacare-from-thefrontlines-of-our-health-care-crisis/

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Obamacare: Impact on Seniors
Published on May 20, 2010 by Robert Moffit, Ph.D. WebMemo #2908

According to surveys, no group of Americans is more skeptical of Obamacare than senior citizens[1]—and with good reason. While bits and pieces of the massive law are designed to appeal to seniors—more taxpayer subsidies for the Medicare drug benefit,

for example—much of the financing over the initial 10 years is siphoned off from an estimated $575 billion in projected savings to the Medicare program. Unless Medicare savings are captured and plowed right back into the Medicare program, however, the solvency of the Medicare program will continue to weaken. The law does not provide for that. Medicare is already burdened by an unfunded liability of $38 trillion. Medicare Advantage plans,[2] which currently attract almost one in four seniors, will see enrollment cut roughly in half over the next 10 years. Senior citizens will thus be more dependent on traditional Medicare than they are today and will have fewer health care choices. Initial Provisions Under the Medicare Modernization Act of 2003, Congress deliberately created a gap in Medicare drug coverage (the socalled “donut hole”) in which seniors would be required to pay 100 percent of drug costs up to a specified amount. Obamacare provides a $250 rebate for seniors who fall into the “donut hole” and requires drug companies to provide a 50 percent discount on brand name prescriptions filled in the hole. In 2011, Obamacare will also impose a new tax (a “fee”) on the sale of these brand name drugs in Medicare and other government health programs, ranging from $2.5 billion in 2011 to $4.1 billion in 2018. Meanwhile, the law will freeze payments to Medicare Advantage plans and restrict physicians from

referring seniors in Medicare to specialty hospitals where physicians have an ownership interest. In 2013, the law eliminates the tax deductibility of the generous federal subsidy for employers who provide drug coverage for retirees. This could further undercut provision of employment-based prescription drug coverage for seniors. Fewer Plan Choices With the freezing of Medicare Advantage payments in 2011, Congress has set the stage for a progressive reduction in seniors’ access to, and choice of, the popular Medicare Advantage health plans. In 2012, the law will begin reducing the federal benchmark payment for these plans. In 2014, these health plans must maintain a medical loss ratio of 85 percent, and the Secretary of Health and Human Services is to suspend and even terminate enrollment in plans that miss this target. Enrollment in Medicare Advantage by 2017 is estimated to be cut roughly in half, from a projected 14.8 million (under current law) to 7.4 million.[3] Since there are serious gaps in Medicare coverage, including the absence of catastrophic protection, roughly nine out of 10 seniors on traditional Medicare already need to purchase supplemental insurance, such as Medigap. Without Medicare Advantage, millions more seniors will have to go through the cumbersome process of paying two separate premiums for two health plans.

Less Access to Physicians In 2011, the new law provides a 10 percent Medicare bonus payment for primary care physicians and general surgeons in “shortage” areas. This is a tepid response to a growing problem. With the retirement of 77 million baby boomers beginning in 2011, the Medicare program will have to absorb an unprecedented demand for medical services. For the next generation of senior citizens, finding a doctor will be more difficult and waiting times for doctor appointments are likely to be longer. The American Association of Medical Colleges projects a shortage of 124,000 doctors by 2025.[4] Obamacare has not ameliorated the growing problem of projected physician shortages and has surely made it worse. Under the new law, physicians will be even more dependent on flawed government payment systems for their reimbursement. Moreover, the congressionally designed Medicare physician payment update formula, the Sustainable Growth Rate (SGR), initiates cuts that are so draconian that Congress goes through annual parliamentary gyrations to make sure its own handiwork does not go into effect.[5] The new law also dramatically expands Medicaid, a poorly performing welfare program with low physician reimbursement rates, and this expansion will account for roughly half of the 34 million newly insured Americans.[6] Furthermore, the law creates an Independent Payment Advisory Board, which will

recommend measures to reduce Medicare spending. Formally, the board is forbidden to make recommendations that ration care, increase revenues, or change Medicare beneficiaries’ benefits, cost-sharing, eligibility, or subsidies. For the board, reimbursement for doctors and other medical professionals seems the only target left. But payment cuts can effectively ration care. More Medicare Payment Cuts According to the Centers for Medicare and Medicaid Services (CMS): Over time, a sustained reduction in payment updates, based on productivity expectations that are difficult to attain, would cause Medicare payment rates to grow more slowly than, and in a way that was unrelated to, the providers cost of furnishing services to beneficiaries. Thus, providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).[7] Indeed, creating a real problem for seniors, the CMS Actuary estimates that roughly 15 percent of Medicare Part A providers —the part of the Medicare program that pays hospital costs— would become unprofitable within 10 years.[8] Higher Taxes

Under the new law, seniors are going to pay higher taxes. The higher taxes on drugs (effective in 2011) and medical devices (effective in 2013) will affect seniors especially, as they are more heavily dependent on those very products. Older people, of course, have higher health costs than younger people. But the existing tax deduction for medical expenses will be raised from 7.5 to 10 percent of adjusted gross income in 2013. The reduced tax deductibility of medical expenses is waived for seniors only from 2013 to 2016. Likewise, older people have larger investments than younger people, and thus high income older persons will be more heavily impacted by the new 3.8 percent Medicare tax imposed on unearned or investment income (effective 2013). New federal health insurance taxes—both the premium taxes and the excise taxes—will also impact older workers and retirees. The federal premium tax (effective 2014) will be applicable to Medicare Advantage plans and health plans offered to federal retirees in the Federal Employees Health Benefit Program (FEHBP). Likewise, starting in 2018, there is a new 40 percent federal excise tax on “Cadillac” health plans (defined as $10,220 for individual coverage and $27,500 for family coverage). This will also apply to FEHBP plans, which enroll federal retirees. A Better Policy Forcing doctors and hospitals to comply with new rules and shaving reimbursement for treating senior citizens is not real reform. If Congress is going to reduce Medicare and impose a

hard cap on Medicare payment to restrain per capita cost growth, at the very least it ought to channel those savings right back into the program to enhance Medicare’s solvency and lay the fiscal foundation for real reform. Seniors deserve better than what Obamacare gives them.
Robert E. Moffit, Ph.D., is Director of the Center for Health Policy Studies at The Heritage Foundation.

About the Author

Robert Moffit, Ph.D. Senior Fellow http://www.heritage.org/Research/Reports/2010/05/ObamaCareImpact-on-Seniors =============================================

Obamacare: Impact on Taxpayers
Abstract: The hodgepodge of new taxes that have already or will soon take effect as a result of the Patient Protection and Affordable

Care Act may not all show up in the income tax tables, but their huge cost is still very real. This cost will become most apparent in lost wages and international competitiveness, and it reduces middle- and low-income families' wages just as surely as an income tax hike would. These taxes break President Barack Obama's promise not to raise taxes on families making less than $250,000 per year. Now that the Patient Protection and Affordable Care Act (PPACA) of 2010 has been passed by Congress and signed into law by President Barack Obama, substantial tax increases can be expected in the near future. Combined, all of these tax increases (including those on employers that do not provide health insurance for their employees and on individuals who do not buy health insurance) will cost taxpayers $503 billion between 2010 and 2019.[1] These tax hikes will slow economic growth, reduce employment, and suppress wages. Further, in an act reminiscent of George H. W. Bush breaking his "no new taxes" pledge in 1991, the tax hikes in the PPACA will raise taxes on middle-income families in direct violation of President Obama's oft-stated pledge not to do so. And by delaying the effective date for most of these new taxes, the President and Congress have shown themselves unwilling to implement these taxes on their own watch, raising doubts as to whether future Presidents and Congresses will be willing to do so. This increases even further the likelihood that this bill will

substantially increase the deficit, which would break another Obama promise. Major New Tax Increases in the PPACA Three major tax increases make up a majority of new revenue in the PPACA.
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A new 40 percent excise tax on health insurance plans. This will apply to plans valued in excess of $10,200 for individuals and $27,500 for families. It will take effect in 2018 and is projected to raise $32 billion by 2019. The PPACA could have fixed one of the health care system's most serious flaws: the inefficient tax treatment of employersponsored health insurance. Done rightly, a serious reform of the federal tax treatment of health insurance could have expanded opportunities for Americans to own and control their own health insurance, created true portability of coverage, stimulated intense competition within the health insurance market, and reduced overspending on health care by making workers more attuned to their health care costs. [2] Instead, the new excise tax will make health insurance more costly and complex, while leaving the perverse incentives and inequities of the existing system in place. In addition, this hidden tax will do nothing to make costs more transparent. Many families that make far less than $250,000 a year have high-end health plans and will be subject to the excise tax

when it goes into effect in 2018, breaking President Obama's pledge not to tax these families. The threshold above which an insurance plan will be hit by the tax is indexed to increase at inflation plus 1 percent, which is below the rate of medical cost inflation. This means that more and more health insurance plans that Congress never intended to tax will fall above the threshold in future years. Many of these plans will also belong to families making less than $250,000 a year, further shattering President Obama's pledge.[3]
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An increase in the Hospital Insurance (HI) portion of the payroll tax. This will increase the employee's portion from 1.45 percent to 2.35 percent for families making more than $250,000 a year ($200,000 for singles). Combined with the employer's portion, the total rate will be 3.8 percent when the tax hike takes effect in 2013. There is a long-standing tradition that the payroll tax should be used exclusively to fund Social Security and Medicare. The increased HI rate not only breaks this principle, but also, and for the first time, will fund a new, separate entitlement. With this precedent broken, future Congresses will be tempted to use payroll tax increases to pay for other new programs that the tax was never intended to fund. The $250,000 threshold is not indexed for inflation, so in inflation-adjusted terms, families making less than $250,000 a year today will pay the tax when it takes effect in 2013. As inflation increases, more and more middle-income families

will be hit by the tax. This tax hike also breaks President Obama's pledge not to raise taxes on these families.
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Payroll taxes on investment. The PPACA applies the new higher 3.8 percent HI tax to investment income, including capital gains, dividends, rents, and royalties, effective in 2013. For the first time, a portion of the payroll tax will apply to investment income--a sharp departure from the nature and history of social insurance programs and another dangerous precedent for future policy. This will discourage investment and lead to slower economic growth, fewer jobs, and lower wages.[4] Tax policy should work to reduce the growthdepleting tax on capital income, not to increase that burden.

Together, these payroll tax hikes will raise $210 billion between 2013 and 2019. Mandates on Individuals and Businesses Raise Taxes In essence, the mandates on individuals to purchase health insurance will raise taxes on families. When fully implemented in 2016, the individual penalty for not complying will reach up to $695 per person (for up to three people or $2,085 per household) or 2.5 percent of taxable income.[5] Many healthy but uninsured individuals will now be forced to buy insurance plans under the PPACA. This added cost--whether as new premiums or as a penalty for not purchasing insurance--is a de facto tax increase for these individuals.

Employers also have a new mandate to provide health insurance for their employees. Employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit will pay a fine of $2,000 per employee (excluding the first 30) or $3,000 per employee receiving the premium tax subsidy. As with the individual mandate, families will feel the bite of these tax increases in two ways: 1. If an employer begins to offer insurance, the wages of those employees to be covered will drop by the amount that the newly provided health insurance plan costs the employer. 2. If the employer fails to offer coverage, it will pay the tax, and the employee's compensation will fall by that amount. Either way, workers' total compensation does not change; only its composition changes. But because workers will be forced to take more of their compensation in the form of health insurance, their cash wages will fall, and they will have less flexibility to use their earnings as they wish. Even though their total compensation will not change, lower cash income will negatively affect middle- and low-income families.

Other PPACA Tax Increases The health legislation includes a myriad of smaller tax hikes, many of which will also fall on middle- and lower-income Americans. Many of them will not take effect until after Obama's potential second term. These hikes include:
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A reduction in the number of medical products that taxpayers can purchase using health savings accounts (HSAs) and flexible spending accounts (FSAs). An increase in the penalty for purchasing disallowed products with HSAs to 20 percent. A limit on the amount that taxpayers can deposit in FSAs to $2,500 a year after 2013. A requirement that corporations report more information on their business activities, the theory being that if corporations must report more about their activities, they will be less likely to try to avoid taxation. An annual fee on manufacturers and importers of branded drugs based on each individual company's share of the total market. The tax starts at $2.5 billion in 2011 and goes to $2.8 billion in 2012-2013, $3.0 billion in 2014-2016, $4.0 billion in 2017, $4.1 billion in 2018, and $2.8 billion per year thereafter. A 2.3 percent excise tax on manufacturers and importers of certain medical devices. An annual fee on health insurance providers based on each company's share of the total market. Since health insurance

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companies stand to get more customers because of the individual and employer mandates, Congress forced them to share some of the revenue increase with the federal government. The tax raises $8 billion in 2014, $11.3 billion in 2015-2016, $13.9 billion in 2017, and $14.3 billion in 2018. After 2018, it will raise $14.3 billion, indexed to medical cost growth. Elimination of the corporate deduction for prescription expenses for retirees. This provision has caused many large companies to announce write-downs of their future earnings. An increase in the floor on the deduction for medical expenses from 7.5 percent of adjusted gross income to 10 percent. A limit on the amount that health insurance companies can deduct from their taxes to $500,000 of compensation paid to officers, employees, directors, and service providers. Repeal of the special deduction for expenses related to claims adjustments and administrative expenses specifically for Blue Cross/Blue Shield organizations. A 10 percent excise tax on indoor tanning services. Exclusion of unprocessed fuels from the existing cellulosic biofuel producer credit. Some industries that do not make biofuels were able to claim the credit because of byproducts produced during their manufacturing process. This credit is an unjustified use of the tax code that encourages certain kinds of energy production at the cost of others. Congress might better have scrapped the credit altogether.

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A change in the definition of which business activities are for economic purposes and which are strictly to avoid taxation-many of which were perfectly legal--along with penalties for underpayments due to the latter.

Broken Promises to the Middle Class President Obama repeated again and again during the campaign that he would not raise taxes on any family making less than $250,000 a year. He broke that promise early in his presidency when he increased cigarette taxes, and he has done so in a far grander way with this health care legislation. Not only will the higher HI taxes cost middle-income families jobs and suppress their wages, but the excise tax on high-cost plans will hit them directly. Several of the taxes listed above, while not targeting middleincome families, will ultimately be passed on to them through higher prices. These include the fees on medical device manufacturers, pharmaceutical companies, and health insurance companies and the new tax on tanning services.

Restricting how much taxpayers can set aside in HSAs and FSAs will increase the income taxes paid by middle- and low-income families, because income that they now set aside tax-free in these accounts above the new threshold will now be subject to income tax. Limiting the types of products that taxpayers can buy with the funds in these accounts will cause middle- and low-income taxpayers to put aside less money in their HSAs and FSAs, increasing their income tax liability. The mandates on individuals to purchase health insurance will also function as a tax on middle- and low-income families that are currently not covered. Even those who do have coverage will be forced to buy more expensive insurance because of mandates that require certain levels of coverage. As a result of the employer mandate, middle- and low-income families will see their wage income fall even as their total compensation remains the same. A Steep Price to Pay Over time, the hodgepodge of new taxes in effect now or in the future will substantially slow economic growth and affect taxpayers from all walks of life. This will become most apparent in lost wages and international competitiveness. These lost wages, largely out of the pockets of low- and middleincome families, represent a huge cost of this legislation that does not show up in any official tables, but this cost is every bit as real. It reduces families' incomes just as surely as an income tax hike

would and breaks the promise that President Obama made when he said he would not raise their taxes.
Curtis S. Dubay is a Senior Analyst in Tax Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. Vivek Rajasekhar, an intern in the Center for Health Policy Studies, contributed to this paper.

About the Author

Curtis Dubay Senior Policy Analyst, Tax Policy Read More >> Request an interview >> http://www.heritage.org/Research/Reports/2010/04/ObamaCareImpact-on-Taxpayers

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Obamacare and its Impact on Doctors
Published on June 14, 2010 by Robert Moffit, Ph.D.

Don’t expect doctors to give the Patient Protection and Affordable Care Act a clean bill of health. The act will reinforce the worst features of existing third-party payment arrangements in both the private and public sectors — arrangements that already compromise the professional independence and integrity of the medical profession.

Doctors will find themselves subject to more, not less, government regulation and oversight. Moreover, they will become increasingly dependent on unreliable government reimbursement for medical services. Medicare and Medicaid payment, including irrational government payment updates, are preserved (though shaved) and expanded to larger portions of the population. The Act creates even more bureaucracies with authority over the kinds of health benefits, medical treatments and procedures that Americans get through public and private health insurance. The new law provides no serious relief for tort liability. Not surprisingly, various surveys reveal deep dissatisfaction and demoralization among medical professionals. Under the new law, an estimated 18 million of the 34 million who would gain coverage over the next 10 years would be enrolled in Medicaid, a welfare program jointly administered and funded by the federal government and the states. Such a massive Medicaid expansion will displace private health coverage, and expand government control over health care financing and delivery. Physician payments in the major entitlement programs, Medicare and Medicaid, are well below the prevailing rates in the private sector. On average, doctors in Medicare are paid 81 percent of private payment; physicians in Medicaid are paid 56 percent of private payment. Needless to say, today there are sporadic access issues for patients in Medicare, and major access problems for patients in Medicaid.

The new law does not substantially change the general pattern of the government’s systems of physician payment. Indeed, it only expands their reach and adds new regulatory restrictions. For example, beginning this year, the new law will prohibit physicians from referring patients to hospitals in which they have ownership, with the exception of hospitals that treat a large number of county patients enrolled in Medicaid. In 2011, Medicare primary care physicians and general surgeons will receive a 10 percent bonus payment. In 2013, the law prescribes that primary care physicians participating in Medicaid will get Medicaid payment no less than 100 percent of the Medicare payment rates for their services for two years, 2013 and 2014. For the incremental costs to the states of these required increases, the new law authorizes 100 percent of additional federal taxpayer funding. There is no provision for continued federal taxpayer funding beyond these two years. Medicare authorizes a set of administrative payment systems for doctors and hospitals. For physicians, the basic Medicare fee schedule is based on a formula called the Resource Based Relative Value Scale (RBRVS), which pays physicians based on the estimated “inputs” to provide a medical service, such as the time, energy and effort required to provide a medical service. Medicare physician payment is annually updated on the basis of the Sustainable Growth Rate (SGR) formula, which ties annual physician payment increases to the performance of the general economy. Under the SGR, without congressional intervention,

the initial Medicare pay cut would amount to 21.3 percent. The impact is not hard to fathom. For example, the Fairfield County Medical Association in Connecticut reported that, if such cuts were to take effect, 41 percent of county doctors would stop taking new Medicare patients, and nearly one out of four doctors would drop Medicare altogether. Congress has shown no inclination to fix this problem without adding to the federal deficit, and thus can be expected to continue resorting to stop-gap measures to stop its own Medicare payment formula from actually going into effect. On top of existing payment rules, regulations and guidelines, the new law creates numerous new federal agencies, boards and commissions. There are three that have direct relevance to physicians and the practice of medicine, and the nature and scope of the regulatory regime will be decisive. Under section 6301, the new law creates a “non-profit” PatientCentered Outcomes Research Institute. It will be financed through a Patient Centered Outcomes Research Trust Fund, with initial funding starting at $10 million this year, and reaching $150 million annually in Fiscal Year 2013, with additional revenues from insurance fees. In effect, the Institute will be examining clinical effectiveness of medical treatments, procedures, drugs and medical devices. Much will depend upon how the findings and recommendations are implemented, and whether the recommendations are

accompanied by financial incentives or penalties or regulatory requirements. Under section 3403, there will be an Independent Payment Advisory Board, with 15 members appointed by the president. The goal of the board is to reduce the per capita growth rate in Medicare spending, and make recommendations for slowing growth in non-federal health programs. It’s hard to imagine any other outcome other than continued payment cuts. Under section 3002, the law extends the Physician Quality Reporting Initiative. Focused on the quality of care delivered to Medicare beneficiaries, it is elemental to the time-consuming compliance with Medicare pay for performance rules and incentive payments. Much depends upon federal rules of implementation and enforcement. In any case, this is not a prescription for medical innovation. Notwithstanding the American Medical Association’s highprofile endorsement of the massive Senate health bill bill (now the law of the land), recent polling underscores deep discontent among doctors. For example, according to a recent survey of physicians conducted by Athena Health and Sermo, 79 percent of physicians are less optimistic about the future of medicine; 66 percent indicated that they would consider dropping out of government health programs; and 53 percent would consider opting out of insurance altogether. More ominously, with America already facing a shortage of physicians, particularly in

geriatrics and primary care, many physicians also say they would leave the profession. But, based on earlier polling and surveys of physician sentiment, none of this should be surprising. The new law doesn’t address doctors’ most pressing concerns, such as tort reform. And it worsens the already painful problems with third-party payment and government red tape. A key goal of health care reform should be to restore the traditional doctor-patient relationship. In such a relationship, doctors would be the key decision-makers in the delivery of care, and patients would be the key decision-makers in the financing of care. This cannot be achieved unless and until patients control health care dollars and decisions, and third party insurance executives are directly accountable to those who pay the health care bills. Obviously, Congress needs to start over and get it right.
Robert E. Moffit is director of the Center for Health Policy Studies at The Heritage Foundation.

About the Author

Robert Moffit, Ph.D. Senior Fellow

http://www.heritage.org/Research/Commentary/2010/06/Oba maCare-and-its-Impact-on-Doctors =============================================

Obamacare: Impact on the Family
Published on April 12, 2010 by Chuck Donovan WebMemo #2857

Families have good reason to be concerned about how the Patient Protection and Affordable Care Act (PPACA) of 2010[1] will

affect them. While the law will deliver a health insurance entitlement to millions of individuals and families, many of its provisions weaken family choice of coverage, undermine parental participation in minor children’s health care decisions, penalize the decision to marry, and undercut family values in health care. More Families Covered but Less Family Choice Millions of families gain an entitlement to health insurance under the mandates on individuals and employers in PPACA. The law’s creation of new affordability tax credits will ease the purchase of health insurance for middle-income Americans. But the new credits go hand in hand with increased regulation of private health plans. Moreover, families gained nothing from PPACA that will permit them to purchase better or cheaper plans across state lines.[2] The new law also does nothing to increase the variety of insurance available in the market, which could include family-friendly options like health plans managed by professional associations, unions, and faith-based groups. Nor will families be able to purchase health plans that exclude coverage for services to which they ethically object or which they do not need. Undermining the Role of Parents PPACA expands several funding streams that undermine parental responsibility and authority to direct the upbringing of their children. The law lavishes federal dollars on programs like school-based health centers and a new “Personal Responsibility

Education” (PRE)[3] program that deny parents knowledge of sensitive services their children receive in federally funded projects. First, PPACA creates a new $50 million per year appropriation for school-based health centers, many of which either offer contraception on site or refer for contraception and even abortion. The law states that the recipient clinics must honor “parental consent and notification laws that are not inconsistent with Federal law.”[4] However, the federal Medicaid and Title X (Public Health Service Act) laws stipulate that the confidentiality of teens obtaining services must be respected, nullifying any state or local parental notice or consent policies.[5] Second, the new PRE program provides $75 million per year for grants to help states reduce pregnancies and births to teenagers. Unlike the 1996 welfare reform, however, the new program does not incentivize states to reach these goals without increasing their abortion rates. Penalizing Marriage Another disturbing feature of PPACA is the fact that it imposes —across a broad range of income and age—significant financial penalties on the decision to marry. The marriage penalty imposed by the law could exceed $10,000 per year for certain couples.[6] This is because the affordability tax credit phases out rapidly as income rises.

Not only does this health insurance marriage penalty dissuade a younger, low-income couple from getting married—which is one of the most beneficial life decisions they can make for themselves and for their children—but it also provides older couples, some of the hardest hit by this law, with an incentive to obtain a “divorce of convenience.” For example, a 60-year-old couple, each with an income of $15,000 per year and purchasing insurance in the non-group market, would gain $4,212 in tax savings if they obtained a sham divorce and bought insurance separately. A similar couple, each making $30,000, per year would realize $10,425 in tax savings if they divorce and cohabit rather than remain married. Undercutting Freedom of Conscience As health care reform proceeded, strong majorities of Americans supported protecting provider and insurer rights of conscience as well as limiting the use of tax funds for abortion. In March 2009, 87 percent of respondents to a national poll supported ensuring “that healthcare professionals in America are not forced to participate in procedures and practices to which they have moral objections.”[7] A January 2010 Quinnipiac Survey found that 67 percent of Americans oppose public funding of abortion.[8] Conscience Protections. PPACA does make clear that no qualified health care plan can be required to cover abortion as an “essential” benefit. It also ensures that no health care plan that participates in the state-based exchanges may discriminate

against a health care facility or provider because of its unwillingness “to provide, pay for, provide coverage of, or refer for abortion.”[9] The law does not, however, prevent the federal and state governments from practicing this same discrimination. An effort to add such an amendment to the bill failed in a Senate committee in September 2009. While there is an annual appropriations rider to this effect on the bill funding the Department of Health and Human Services, it lacks permanent force, and regulations to implement it were suspended by President Obama in March 2009 as a step toward its likely rescission. Abortion Funding. Currently, every health care plan in the Federal Employees Health Benefits Program may not as a matter of law include coverage of elective abortion. Under PPACA, health care plans that cover elective abortion may participate in the state-based exchanges provided they require each enrollee to pay a separate premium of not less than $12 per year for elective abortion coverage.[10] The Executive Order. On March 24, President Obama signed an executive order that attempts to apply conscience protections and abortion funding limits to the full text of PPACA. Regardless of the order’s intent, judicial rulings for the past 35 years have made it clear that public funding of elective abortions in federal programs cannot be barred without the kind of direct ban that Congress failed to include in many parts of PPACA.[11]

Reason for Disappointment Advocates of family values in health care reform have reason to be deeply disappointed with the overall impact of PPACA. The passage of legislation that increases parental control and choice regarding health care insurance, avoids marriage penalties, guarantees conscience protections, and limits taxpayer support for controversial practices like abortion must await a future Congress.
Chuck Donovan is Senior Research Fellow in the Richard and Helen DeVos Center for Religion and Civil Society at The Heritage Foundation.

About the Author

Chuck Donovan Senior Research Fellow Read More >> Request an interview >> http://www.heritage.org/Research/Reports/2010/04/ObamaCareImpact-on-the-Family =============================================

Obamacare: Impact on the Uninsured
Published on April 20, 2010 by Kathryn Nix WebMemo #2873

The Administration’s health policy agenda—embodied in Congress’s two giant health care bills (H.R.3590 and H.R.4872) —is now law. The justification for the new law’s burdensome taxes, unprecedented mandates, deficit spending, and stifling government regulation is that millions of Americans will now be insured. But the real impact Obamacare will have on the uninsured is not what many Americans might have expected. The Wrong Way to Expand Coverage

The Congressional Budget Office (CBO) is reporting that the new health care law will decrease the number of uninsured in 2019 by 32 million.[1] However, this does not mean that universal coverage will be achieved—23 million Americans will remain without coverage, including illegal immigrants. Of those Americans that do become insured, 16 million will be added to Medicaid, and 24 million will obtain coverage in the newly-created exchanges. Moreover, an estimated 3 million Americans will lose their current employer-based insurance, and another 5 million will lose their current non-group or other form of coverage. Obamacare expands coverage by increasing the size of government. Rather than making health insurance markets more responsive to Americans’ personal wants and needs, lawmakers enacted a top-down approach that will impose their will on the rest of the country. This “reform” will result in less choice and competition for health care consumers and, although more Americans will be “covered,” the quality of this coverage will decrease. Moreover, certain provisions of the new laws will make obtaining health insurance less desirable by increasing costs, causing even more Americans to drop or lose coverage. Millions of Americans Dumped into Medicaid In order to cover low-income uninsured citizens, Obamacare expands eligibility for Medicaid to include all Americans that fall under 133 percent of the federal poverty level. However,

Medicaid is a low-performing, low-quality federal program that fails to meet the needs of its beneficiaries. For example, Medicaid’s failure to cover the cost to providers of seeing Medicaid patients has greatly reduced the number of doctors who will see Medicaid patients. As a result, Medicaid beneficiaries have become even more reliant on emergency care than the uninsured. According to the Centers for Disease Control’s National Center for Health Statistics, Medicaid patients comprised 25.5 percent of all emergency room visits in 2006, while the uninsured made up only 17.4 percent. What is more, the emergency room visit rate among Medicaid patients was higher than that of the uninsured: Medicaid’s emergency room visit rate was 82 per 100 Medicaid patients, while that of the uninsured was 48 per 100 uninsured patients.[2] Increasing the number of Americans reliant on Medicaid will further compound its current shortfalls. States are currently facing serious budget cuts due to decreasing revenues, a trend that is expected to continue in the years to come.[3] Though under new law, the federal government will cover the cost of expanding benefits in the initial years, states will have to pay the additional administrative costs of the expansion. And after 2017, the states will begin to pay a portion of the benefits expansion as well. This increasing financial burden will force state legislators to make budget cuts, either to other state programs or to Medicaid

itself, which would mean reduced benefits or even further reduced physician reimbursement rates. Both of these outcomes would be disastrous for Medicaid beneficiaries’ access to quality care. Under new law, the federal government will pay to increase primary care physician reimbursement rates to equal those paid by Medicare—but only for two years, leaving Medicaid in the same lurch it started in. Finally, examples of state Medicaid expansions, such as the expansion of TennCare in Tennessee, have shown that adding the uninsured to Medicaid does not increase positive health outcomes. For instance, Heritage Health Policy Fellow Brian Blase found that following TennCare expansion, health outcomes in Tennessee actually deteriorated and Tennessee’s mortality rate declined at a much slower rate than in surrounding states that did not expand their Medicaid programs.[4] Increasing Premiums Will Reduce the Number of Newly Insured Strict new insurance regulations will cause the cost of coverage to skyrocket, encouraging the currently uninsured to remain uninsured. According to Heritage analysts Rea Hederman and Paul Winfree, attempting to micromanage the insurance industry by “trying to fix one flawed policy (the rating restrictions and guaranteed issue requirements) by adding another flawed policy (the mandate and costly subsidies) only makes the policy outcome even worse.”[5] In this case, bad policy will adversely affect the new law’s ability to increase the number of insured.

A guaranteed-issue provision will allow Americans to wait until they are sick to seek out insurance, causing insurance premiums to soar. The individual mandate is intended to combat this by forcing Americans into the insurance market before they are sick. However, since the individual mandate penalty will be significantly less expensive than the cost of an insurance plan, this provision will not achieve universal coverage, and insurance risk pools will begin to consist more exclusively of only those who need insurance the most: the sick and the elderly. Younger, healthier Americans will likely choose to pay the penalty, purchasing insurance only if needed. The effects this will have on premiums will be exacerbated by the inclusion of community rating, which forbids insurers to raise premiums for older patients more than three times the amount charged to younger patients. Young and healthy Americans will be the losers in this equation: the Associated Press predicts that health premiums for young adults will increase by 17 percent, causing fewer of them to purchase insurance.[6] Removing young and healthy patients from risk pools will in turn result in further premium increases, as only sick and elderly patients will be left, creating a “death spiral” as cause and effect intertwine to result in evermore increasing premiums, causing more Americans to drop coverage. Finally, the new law requires that the Department of Health and Human Services mandate benefits and services that must be covered by all health plans. Increasing the value of all health

plans will, of course, increase their cost, further aggravating the aforementioned problems. Some Will Lose Current Coverage The ranks of the currently uninsured will not simply be reduced by the new law. Rather, as millions of Americans find themselves newly covered, a substantial number will also find that they will lose the coverage they currently carry as a result of the health care overhaul. According to the CBO, 8–9 million Americans that currently receive employer-sponsored coverage will lose it. Of these, 1–2 million would go from receiving coverage from an employer to obtaining coverage through the exchanges.[7] The source of the loss of employer-sponsored insurance is that, under the new law, businesses will pay a penalty of $2,000 for failing to offer insurance to their employees. However, as noted by Heritage analysts John Ligon and Robert Book, even if employers do offer insurance, if low-income employees are eligible to purchase insurance in the exchanges instead and opt to do so, the employer will pay a $3,000 fine. For employers who hire a high proportion of low-income workers, this creates a strong incentive to drop coverage altogether, much to the detriment of other employees who will not receive subsidies to purchase insurance in the exchanges.[8] Though the net effect of the new health care law will be to increase the number of insured, several million Americans will also lose their coverage as a direct effect of the federal overhaul.

Many Americans who would not currently be able to call themselves uninsured may be surprised when they are able to do so in the years to come as a result of the President’s health care agenda. Not What Was Promised President Obama and congressional leadership promised the American people health care reform that would increase access to health care while simultaneously creating greater choice and competition and curbing increasing health expenditures Instead, lawmakers passed into law a top-down, heavy-handed government approach that will increase coverage at the expense of the other two objectives, instead limiting choice and increasing health spending.[9] Moreover, more than half of the newly insured will find themselves subjected to the low-quality coverage offered by Medicaid, and several provisions in the bill will either discourage the uninsured from seeking coverage or cause the insured to lose the coverage they currently have.
Kathryn Nix is a Research Assistant in the Center for Health Policy Studies at The Heritage Foundation.

About the Author

Kathryn Nix Research Assistant Read More >> Request an interview >> http://www.heritage.org/Research/Reports/2010/04/ObamaCareImpact-on-the-Uninsured

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Obamacare’s Impact on the States

Posted July 2nd, 2010 at 1:00pm in Health Care

State legislators and governors will face many challenges implementing the provisions of Obamacare. In a new Heritage Foundation study, Ed Haislmaier and I analyze the components of Obamacare that detrimentally affect states and make recommendations for how states should respond to the new law. Of the many impacts on states that we analyze, there are three key ones: 1) The Massive Medicaid Expansion Over half of the newly insured will gain coverage through an expansion of state Medicaid programs. Medicaid expansion presents numerous problems for the states: additional financial obligations and taxes, issues of access for the increased demand on the state health care system, the creation of a new “doc fix” for Medicaid, reduced Disproportionate Share Hospital payments, and maintenance-of-effort requirements that limit state flexibility.

2) The Federal Usurpation of State Authority States will be forced to contend with the usurpation of their longstanding authority in regulating private insurance. The Secretary of Health and Human Services is given enormous power to regulate health insurance to his or her specifications. 3) The Disruption of Health Insurance Markets Obamacare—with its numerous coverage mandates, a prohibition on pre-existing condition exclusions and on varying premiums by health status, and limits on the age-rating of premiums—risks an adverse selection death spiral. In the paper we state, “The new federal insurance regulations, particularly the provisions setting new, uniform federal benefit requirements, will reduce coverage options for individuals and employers and drive up health insurance premiums. They are also likely to result in greater concentration in health insurance markets, leaving only a few large insurers operating as public utilities with a regulated low rate of return selling undifferentiated products to customers with no other options.” State lawmakers should act quickly to protect their constituents from these and other harmful impacts of Obamacare. We argue that “states are not mere agents of federal authority. They are not powerless. There is absolutely nothing that requires them to assist in implementing this misguided legislation. Rather, they should take every opportunity to assert their rightful authority, resist, within the confines of the law and the Constitution, any

inappropriate or unconstitutional exercise of Washington’s power and aggressively advance their own, better solutions.” To read more on Obamacare’s impact on states and our recommendations for how states can best cope with the new law, please read our paper: http://www.heritage.org/research/reports/2010/07/obamacareimpact-on-states

Author: Brian Blase

http://blog.heritage.org/2010/07/02/ObamaCare%E2%80%99simpact-on-the-states/

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Obamacare: The Impact on States
Published on July 1, 2010 by Edmund Haislmaier and Brian Blase Backgrounder #2433

Abstract: If implemented as enacted, Obamacare will impose significant new Medicaid costs on states and constitute a major federal usurpation of long-standing state authority in regulating private insurance. This will be expensive and disruptive for those Americans who rely on individual or employer-based insurance for their health insurance. While some of the most expensive and

disruptive provisions of the massive legislation do not take effect until 2014, other provisions are already going into effect and state lawmakers need to act right away if they are to implement their own Medicaid and private insurance market reforms to mitigate the harmful effects of Obamacare. State lawmakers must recognize that states are not mere agents of the federal government. They are not powerless, and there is nothing that requires them to assist in implementing this new, misguided federal health care agenda. They should assert their rightful authority, and represent and protect their citizens by resisting the disruptions entailed in Obamacare—taking actions that pressure the next Congress to scrap or redesign this harmful federal legislation. The recently enacted Patient Protection and Affordable Care Act, the federal government’s sweeping health care legislation, will impose significant new costs on state government budgets, while also constituting a significant usurpation by the federal government of long-standing state authority over health insurance regulation. The immediate task for state lawmakers is to find ways to protect their constituents—including state taxpayers, health insurance policyholders, and individuals who depend on public health care programs—from the adverse effects of Obamacare. The fact that some of the most expensive and disruptive provisions of Obamacare do not take effect until 2014 should not lull state lawmakers into thinking that they can wait for the results of the Obama Administration’s regulatory

implementation or the outcome of the renewed health care legislative battle in the next Congress before acting. Some significant provisions took effect upon enactment and a number of others will go into effect later this year or next year. Thus, governors and state legislators need to start planning their responses and start drafting any applicable legislation for consideration in their next legislative sessions—now. Failure to do so means surrendering control over a large share of their states’ current budgets to federal officials and becoming passive bystanders as—faced with an onslaught of new federal regulation —private insurers scramble to position themselves for an Obamacare market by taking steps that will likely result in less insurer competition, fewer plan choices, and higher coverage costs, all beginning next year. The wisest approach for state lawmakers is to take steps that better position their states for either of two possibilities: a new Congress that repeals Obamacare, or a protracted, multi-year political and legal battle conducted against the backdrop of an Administration attempting to implement the legislation as enacted. A Massive Expansion of Medicaid The Medicaid coverage provisions of the new federal health care legislation will result in an enormous expansion of state Medicaid rolls. This Medicaid expansion will account for over half of the

estimated reduction in the uninsured population under Obamacare.[1] Starting in 2014, the legislation requires states to extend Medicaid eligibility to all non-elderly individuals with family incomes below 133 percent of the federal poverty level (FPL). This mandatory coverage expansion will principally consist of two groups. The first group consists of parents or caregivers of children, where the children are eligible for Medicaid. While almost all children in families with incomes below 133 percent of FPL are already eligible for either Medicaid or the Children’s Health Insurance Program (CHIP),[2] only five states and the District of Columbia extend Medicaid coverage to all parents or caregivers with incomes below 133 percent of FPL.[3] An additional 15 states now provide Medicaid, or similar coverage— or in some cases more limited coverage—to some, but not all, parents with incomes below 133 percent of FPL.[4] The second, and much larger, group of new enrollees will consist of non-elderly, non-disabled adults without dependent children, who have incomes below 133 percent of FPL. Until now, Medicaid coverage could only be extended to able-bodied adults without dependent children as part of a demonstration waiver program. The new health care law not only permits states to extend Medicaid coverage to such individuals beginning immediately, but also requires states to cover them starting in 2014.

Table 1 provides Heritage Foundation state-level enrollment projections for 2014—the first year of the mandatory-coverage expansion— derived from national estimates from the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary. The CMS Actuary projects that national Medicaid enrollment in 2014 will be 30.4 percent higher as a result of the required coverage expansion than it otherwise would be absent those provisions. At the state level, Heritage estimates that the growth in Medicaid caseloads will range from an 8.7 percent increase in Massachusetts to a 65.6 percent increase in Nevada.

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What Medicaid Expansion Will Cost States Obamacare attempted to appease state lawmakers by committing federal taxpayers to paying for the entire benefit costs of the Medicaid expansion from 2014 to 2016. In 2017, state taxpayers will be on the hook for 5 percent of the benefit costs for the additional enrollees, with each state’s share then increasing to 6 percent in 2018, 7 percent in 2019, and 10 percent in 2020 and thereafter.[5] Beyond the benefits costs of the expansion, there will be additional administrative costs to both the federal and state governments. The added costs are not included in the estimates prepared by the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid Services, but they will be a significant expense for states. Administrative costs are divided between state governments and the federal government at separate, uniform match rates. The standard administrative cost match rate is 50 percent, though the federal government provides higher match rates (in most cases 75 percent) for a few, discrete administrative expense items, such as certification of nursing facilities or operation of a state Medicaid fraud control unit.[6] The most recent available data show that administrative expenses add an average of 5.5 percent in addition to total (federal and state) benefit costs, and that, on average, the federal government pays 55 percent of total administrative costs, with the other 45 percent paid by the states.[7] Thus, every $100 increase in benefit spending can be expected to generate another

$5.50 in administrative costs, of which states would pay $2.48. Because the legislation does not change the match rates for administrative costs, states will still have to pay their share of administrative costs, even during the initial three years of the expansion when the federal government is funding all of the benefit costs.

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As shown in Table 2, The Heritage Foundation’s initial estimates are that the Medicaid expansion will increase state tax obligations by just under $33.5 billion for federal fiscal years (FY) 2014 through 2020. Of that amount, $21.5 billion will be the states’ share of the benefit costs, and just under $12 billion will be the states’ share of the added administrative costs. Indeed, the state share of administrative costs for the expansions will exceed $100 million a year in each of the four biggest states—California, Florida, New York, and Texas. In fact, the complexity of the system with separate rules for three classes of individuals— those who qualify for Medicaid under prior rules, those who qualify under the new expanded Medicaid eligibility rules, and those who instead qualify for the new subsidized coverage administered by the exchanges—will likely produce actual administrative costs that are higher than these estimates. It is also important to emphasize that the total cost (federal and state) of the Medicaid expansion— which, based on CBO and CMS estimates, will likely be between $400 billion and $500 billion over the first seven years—will be shouldered by taxpayers. Although some state policymakers may think that the Medicaid expansion is a relatively good fiscal deal for their states because the federal government will pick up at least 90 percent of the cost for newly eligible individuals, taxpayers in their states will face higher tax bills as a result, not just for the state costs but for the federal costs as well. Furthermore, the additional federal taxes or borrowing needed to fund this expansion will inevitably dampen economic activity in the states.

“Crowd Out” Effects. Under the new law, Medicaid coverage will extend not only to those who are currently uninsured and whose income is below 133 percent of the FPL, but will also sweep into the program several million individuals below that income threshold who are currently covered by private employer-sponsored coverage or individual coverage. This “crowding out,” or displacement, of private coverage will most likely occur among individuals who work for businesses with fewer than 50 employees. The reason for this is that the law exempts the vast majority of such firms from the new mandate on employers to provide coverage— which will apply to larger firms starting in 2014.[8] Given that their workers will qualify either for Medicaid or for heavily subsidized coverage through the new health insurance exchanges, many small businesses that currently offer coverage will likely terminate their health insurance plans in 2014. While the employer mandate penalties may discourage larger employers from dropping their plans, it is likely that many of the large firms that are still providing coverage after 2014 will offer only the minimum level of required coverage. Thus, states can expect that even those low-income workers who still have access to a large employer plan will likely enroll in Medicaid as “wraparound” coverage. “Woodwork” Effect. States can expect their Medicaid program costs to further increase in 2014, as a result of what Medicaid officials refer to as the “woodwork” effect—meaning, that

individuals who qualify under current law for Medicaid, but who have not yet enrolled, will “come out of the woodwork” to do so. This effect will result from the interaction of other provisions in the legislation with the Medicaid expansion. Specifically, the legislation establishes a new set of generous health insurance subsidies for individuals with incomes below 400 percent of the FPL, administered through new health insurance exchanges. The health insurance exchanges also have the task of determining eligibility for those new subsidies. In cases where an exchange determines that an individual qualifies for Medicaid, instead of for the new subsidy system, the law requires the exchange to enroll that individual in the applicable state Medicaid program. State Medicaid officials are required to accept such individuals into their programs and are prohibited from conducting their own separate eligibility determination.[9] If the individual in question is eligible for Medicaid coverage under the eligibility criteria for the state’s Medicaid program that is in effect immediately before the passage of the new federal legislation, then the state’s Medicaid costs for that individual will be matched by the federal government according to the state’s standard match rate. (The higher match rates will apply only to spending for individuals considered part of the “expansion” population under the new federal law.) Thus, states will experience yet higher costs associated with the enrollment of individuals who had qualified for Medicaid under prior eligibility standards, but who had not previously enrolled in the program.

Exporting “Doc Fix” to the States Another provision in the new federal legislation requires states to increase Medicaid reimbursement rates for primary care physicians (PCPs) to the same level as the applicable Medicare payment rates for the 24-month period of January 1, 2013, to December 31, 2014.[10] The legislation specifies that the federal government will pay all of the added costs. However, this provision will trigger a Medicaid “doc fix” issue for some states starting January 1, 2015— when both the mandate, and the federal funding to compensate for its costs, will expire. Doc fix has become congressional slang for legislation to cancel automatic reductions in Medicare physician payment rates. Absent legislative overrides, the fees that Medicare pays doctors would automatically decline based on a formula included in 1997 legislation that was supposed to limit Medicare spending growth. However, since then, Congress has repeatedly bowed to political pressure and concerns that enrollees will lose access to care by passing legislation to cancel the physician payment cuts. The new legislation sets up a similar political dynamic for the Medicaid program and state lawmakers. When the mandated increase in Medicaid primary care physician rates (and the associated federal funding) ends, states could theoretically reduce Medicaid PCP payment rates to their previous levels, but both physicians and their Medicaid patients are likely to lobby against such a move. The alternative, of course, is for states to continue to reimburse PCPs at the higher rates, but with state taxpayers

covering the state’s share (based on normal match rates) of the extra costs. As Table 3 shows, increasing primary care physician payment rates will not be an issue for the six states that already pay Medicaid rates to PCPs equal to or in excess of the applicable Medicare rates. Furthermore, for the 18 additional states that pay Medicaid rates between 80 and 98 percent of Medicare rates, the state cost impact will be minimal. However, a number of states, most notably New York and California, would incur significant state costs if they continued to reimburse PCPs at the higher rates after 2014. The states that will be most affected are those that have both low Medicaid payment rates for primary care physicians and low federal match rates for their Medicaid programs. For example, New York’s Medicaid rates for PCPs are only 36 percent of Medicare rates; New Jersey’s are 41 percent; and California’s are 47 percent—while all three states have a 50 percent federal match rate for their Medicaid programs. Thus, Medicaid rates paid to PCPs in California and New Jersey will more than double from their current levels, and rates in New York will nearly triple, between 2013 and 2014. Continuing those payment levels after 2014 will require taxpayers in all three states to fund half the extra costs. This also explains why states’ costs will increase even when the federal government picks up the costs associated with the expansion. Because provider reimbursement rates are uniform

across the eligibility groups, any rate increase will apply to current enrollees as well as to the newly eligible. In some states providers have obtained federal court injunctions preventing the state from reducing Medicaid reimbursement rates. For example, in March, a federal appeals court affirmed the district court’s order of a preliminary injunction preventing implementation of Medicaid provider payment reductions enacted by the California General Assembly last year.[11]

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Other Medicaid Costs for the States Beyond the extra Medicaid costs that states are certain to incur, there are some other state Medicaid cost increases that are probable, but not definite. The two most significant items in this category are payments to so-called Disproportionate Share Hospitals (DSH) and payments to specialist physicians. DSH Payment Reduction. DSH funding consists of extra, lumpsum Medicaid payments to hospitals that treat a “disproportionate share” of Medicaid patients. Theoretically, DSH payments help defray those hospitals’ costs of providing uncompensated care to the low-income uninsured, though most states have little real accounting control over how hospitals actually use the funds. Under the new law, beginning with FY 2014 (October 1, 2013), federal DSH funding will be reduced each year. The theory is that as more of the uninsured gain coverage, hospital uncompensated care costs will decline, with the rationale for offsetting DSH payments diminishing as well. While this theory is logical, in practice, state lawmakers are likely to confront political pressure from DSH payment–dependent hospitals seeking to maintain their revenues. That is exactly what has happened in Massachusetts, which under its 2006 Medicaid waiver reallocated hospital DSH funding to pay for health insurance coverage subsidies for the low-income uninsured through the state’s new Commonwealth

Care program. While about 175,000 uninsured Massachusetts residents gained coverage as a result, and while the cost of their coverage has not exceeded the total amount of the reallocated funding, the DSH funding–dependent hospitals in that state have successfully lobbied to preserve some of their funding stream at an added cost to state taxpayers. The hospitals’ justifications are that they still incur significant uncompensated costs—though they are obviously reticent about admitting how much of those costs are attributable to treating illegal aliens who do not qualify for Medicaid or other subsidized coverage—and that the extra funding helps offset the lower payment rates they receive from Medicaid. Thus, under the new legislation, while states will theoretically spend less on their share of Medicaid DSH funding, political pressures may effectively negate any potential savings and, if state lawmakers are pressured into replacing reduced federal DSH funding with state funds, state costs may actually increase. Payments to Specialty Physicians. While the provision in the new law that requires temporary Medicaid payment rate increases for primary care doctors will not apply to the rates paid for procedures performed by specialty physicians, the reality is that state lawmakers will likely find it politically difficult to limit Medicaid payment rate increases to primary care physicians. As with the increase in primary care payment rates, the political and financial significance of the issue of specialty physician payment rates will vary among the states according to their

current Medicaid physician payment levels. The states that pay the lowest rates (relative to Medicare and private insurance) will face the greatest political pressure to also increase specialty physician rates and shoulder the largest added costs for such a move. Furthermore, this issue is likely to come to the forefront in the states’ 2012 legislative sessions, in anticipation of the scheduled January 1, 2013, federally mandated payment rate increase for primary care physicians. Offsets to Costs. Other provisions of the federal legislation will generate some offsetting Medicaid savings for states, though for most states those savings are likely to be minimal. Only one change is likely to produce state savings of any significance, and only a few states stand to benefit from the applicable provision. One provision of the federal legislation is likely to generate savings between now and 2014 for taxpayers in some states by enabling their state governments to shift some of their current costs to taxpayers in other states. The new law allows states that have health insurance programs that are funded by state tax dollars and that already cover individuals who will qualify for Medicaid in 2014, to enroll those individuals in Medicaid immediately. The costs will be shared by the federal government at normal match rates until 2014 and at the expansion match rates thereafter.[12] Connecticut has become the first state to take advantage of this provision, shifting an estimated $53 million in state costs for Connecticut’s next fiscal year onto federal taxpayers in other states.[13]

Maintenance of Effort Requirement. The provisions of Obamacare that will have the most immediate effect on state budgets are the “maintenance of effort” (MOE) requirements in the law that are applied to Medicaid and CHIP. Under those provisions a state would lose all federal funding if it takes actions that make eligibility more restrictive than the standards in effect for the state’s program at the time the new federal legislation was enacted. In fact, states are already subject to a similar MOE requirement imposed as a condition of receiving a two-year temporary increase in federal Medicaid funding (through the end of 2010) as part of the 2009 stimulus legislation. The bad news for states is that this federal mandate comes in the midst of their worst fiscal situation in decades. Because Medicaid is one of the largest items in any state budget, it is also one of the first places where governors and legislators look for savings when they need to trim spending to bring state budgets back into balance. In 2008, aggregate state Medicaid spending accounted for 20.7 percent of all state government expenditures, while spending on elementary and secondary education represented 21.6 percent, and the share of aggregate state spending devoted to transportation was 7.9 percent.[14] Traditionally, states have three main tools for reducing Medicaid expenditures: restrict eligibility, cut provider reimbursements, or reduce benefits. The MOE requirements effectively mean that states no longer have the first option of limiting eligibility.

However, they can still cut provider payments or scale back program benefits. Partly as a result of the MOE requirement in the 2009 stimulus legislation, 41 states and the District of Columbia cut provider reimbursements rates in 2009 or 2010, and 29 states and the District did so in both years. Additionally, 39 states and the District cut Medicaid pharmacy benefits, and 22 states cut Medicaid medical benefits over the past two years.[15] All of these cuts are likely to continue if state budget projections do not significantly improve. The problem is that in many states Medicaid reimbursement rates are already quite low. That makes Medicaid beneficiaries’ access to health care providers problematic, particularly in states such as New York, New Jersey, and California that pay providers exceptionally low rates. In addition, setting physician payment rates even lower will not necessarily reduce the aggregate costs of state Medicaid programs if the result is that more enrollees are forced to seek care in hospital emergency rooms because they cannot find doctors willing to accept Medicaid patients. Even though the CHIP MOE prevents states from changing eligibility, CHIP enrollment will decline somewhat after 2014, resulting in some state savings. To qualify for CHIP, a child must be uninsured. However, many children will likely become insured through family coverage in subsidized plans offered by

the new exchanges starting in 2014, for which a state contribution will no longer be required. Washington’s New Insurance Market Rules In addition to the Medicaid changes that will directly affect state budgets, state lawmakers will also need to contend with a variety of new federal health insurance market regulations. This federal usurpation of long-standing state authority in regulating private insurance will be expensive and disruptive for those who rely on individual or employer-based commercial insurance for their health care coverage. While the new law’s Medicaid provisions will present governors and state legislators with fiscal challenges, the insurance provisions will present them with policy challenges. The task for state lawmakers will be to find ways to protect their constituents from the adverse effects of the new federal health insurance regulations.

The new federal health insurance regulations will affect coverage in four major areas:
1) Benefit Requirements. The legislation gives the Department
of Health and Human Services (HHS) new authority to establish minimum benefit requirements for all health insurance plans. The law requires that, effective for plan years starting this fall, health insurers and employer self-insured plans must cover preventive services with no enrollee cost-sharing. New prohibitions that prevent health insurance carriers and employers from setting annual or lifetime coverage limits will

also be phased in starting this year and take full effect in 2014. Beginning in 2014, HHS is granted additional, sweeping, and discretionary authority to set, and periodically revise, minimum health insurance coverage requirements for virtually all medical services and health care providers. Furthermore, the Secretary of Health and Human Services is even given authority to regulate the amount and form of enrollee cost-sharing. The result will be a uniform, comprehensive health insurance minimum benefit package dictated by HHS. For individuals and employers, the result of these new federal regulations will be across-the-board increases in health insurance costs and premiums. Those resulting premium increases will be the product of three factors. First, reductions in enrollee costsharing will mean that plans must pay more of the cost for certain services that they already cover, thus shifting those costs from patients to plan premiums. Second, the elimination of enrollee cost-sharing for specific services will stimulate greater use of those services, further increasing premiums. Third, premiums will also increase to the extent that new federal regulations require plans to cover benefits or services that were previously excluded from coverage or subject to plan limitations on the scope or duration of the services eligible for reimbursement. These additional costs will likely exceed any possible savings from lower administrative costs for insurers. As state lawmakers are well aware from their own experience with insurance benefit mandates at the state level, providers and

patient groups can be expected to exert special interest pressure on HHS and Congress to constantly expand the scope of the federal minimum coverage requirements. To the extent that HHS or Congress bows to that political pressure, the cost of health insurance will escalate still further after 2014.

2) Coverage Rules. The federal legislation also establishes some
new coverage rules. Effective this fall, insurers and employers must allow young adults to retain dependent coverage on a parent’s policy until age 26, and plans are prohibited from imposing pre-existing condition exclusions on dependent children. However, the effects of those two changes are expected to be modest, as they will apply to relatively few individuals.[16] Much more significant is that, starting in 2014, Obamacare will prohibit the application of pre-existing condition exclusions under any circumstances. Current law specifies that individuals who already have employer-sponsored insurance cannot be denied new coverage, be subjected to pre-existing condition exclusions, or be charged higher premiums because of their health status when switching to different coverage.[17] Thus, in the employment-based health insurance market, pre-existing condition exclusions may only be applied to those without prior coverage, or to those who wait until they need medical care to enroll in their employer’s plan. These existing rules represent a fair and balanced approach: Those who do the right thing (getting and keeping coverage) are rewarded; those who do the wrong thing (waiting until they are

sick to buy coverage) are penalized. A modest and sensible reform would be to simply apply the same set of rules to the individual health insurance market. But by prohibiting the application of pre-existing condition exclusions under any circumstances, the new law mindlessly wrecks this careful balance and creates a recipe for disaster. Since heath plans will also be required to extend coverage to any qualified applicant, and will not be allowed to vary premiums based on individual health status, the effect will be to encourage healthier individuals to wait until they are sick before they buy health insurance. With fewer healthy individuals buying coverage, premiums will need to rise to cover the costs of the sick, which in turn will drive even more individuals in good, or even fair, health to drop coverage—knowing that if they become sick they can buy insurance later—thus driving premiums yet higher. The result could be a classic insurance plan “death spiral.” Rather than ditching this bad idea in favor of a more sensible and balanced approach, congressional leaders tried to limit its inevitable disastrous effects by adding an individual mandate to buy health insurance or pay an income tax fine. A large part of the rationale offered for the mandate was the need to prevent healthier individuals from dropping their coverage. Setting aside the merits of challenges to the individual mandate’s constitutionality, the practical reality is that the mandate will be

ineffective and unenforceable due to the way Congress wrote the specific provisions. For most individuals, the tax penalty for not buying coverage will be modest. More important, in response to strong and widespread public opposition to the mandate, Congress added provisions that explicitly bar the IRS from using its normal tax enforcement powers of property liens and criminal penalties to collect the fines imposed on individuals who do not comply. Thus, when faced with escalating health insurance premiums, individuals who do not want to pay for coverage not only can ignore the mandate, but, by making minor changes in their federal income tax withholding payments, can also avoid paying most, or even all, of the penalties for noncompliance. Because the blanket prohibition of pre-existing condition exclusions and the individual mandate provisions do not take effect until 2014, there is still time for a future Congress to prevent a health insurance market destabilization by repealing this disastrous legislation. At that point Congress can then consider making more sensible changes. However, until Congress acts, state policymakers face the looming threat of a health insurance market meltdown.

3) Rate Regulations. In addition to the indirect effects on
insurance premiums of new federal benefit mandates and coverage rules, health insurance premiums will also be directly affected by new federal rate regulation provisions. The largest effect will come from a provision that limits age-rating of premiums to a ratio of no more than three to one. This provision

will take effect in 2014 and means that plans will not be allowed to charge a 64-year-old more than three times the premium charged an 18-year-old for the same coverage. In contrast, the natural variation in coverage cost is about five to one— meaning that the oldest group of (non-Medicare) individuals normally consumes about five times as much medical care as the youngest group. This mandated “compression” in the age-rating of coverage means that insurers must charge older individuals premiums that are less than the actuarial value of their coverage, with the result that insurers will need to compensate by charging younger individuals premiums that are higher than the actuarial value of their coverage. Thus, this federally mandated under-pricing of coverage for older individuals will further increase premiums for the young— who, because of their generally good health status and lower earnings, are the group that is most sensitive to changes in the price of coverage and most likely to decline coverage. Obamacare also creates new federal rules— “minimum loss ratio” regulations—for how insurers spend premium dollars. Starting in 2011, plans must spend a minimum amount of premium income on medical care and “activities that improve health care quality,” or refund the difference to policyholders. The minimum levels will be 85 percent for large group plans and 80 percent for small group and individual plans. In addition, HHS is given new power to conduct annual reviews “of

unreasonable increases in premiums for health insurance coverage.”[18]

4) Imposing New Federal Schemes. Moreover, Congress
included four new health care coverage schemes that further compound the problems of the legislation:

a) Temporary Federal High-Risk Pools. The law instructs
HHS to establish temporary federal high-risk pools starting in 2010 to cover uninsured individuals between now and 2014, with $5 billion authorized for the program.[19] State governments are invited to contract with HHS as vendors to administer the new federal high-risk pools in their states, but are prevented from shifting into them individuals currently enrolled in other coverage, including those covered by existing state high-risk pools. The CMS Office of the Actuary projects that the available funding for the program will be exhausted by 2012.[20] That will force HHS either to set enrollment limits for the program at the outset or to subsequently terminate coverage for enrollees, unless the next Congress authorizes additional funding.

b) Health Insurance Exchanges. The legislation requires HHS
to establish operational health insurance exchanges in every state by 2014. Again, states are invited to act as vendors to administer a federal program according to a detailed set of federal rules and regulations, but are not allowed to exercise any meaningful discretion in administering the exchanges. The main purpose of the exchanges will not be to give consumers greater choice of coverage, since the coverage offered through them will be a

limited number of standardized plans. Rather, their principal purpose will be to administer a new set of federal health insurance subsidies for those with incomes up to four times the federal poverty level, and to regulate the coverage purchased with those subsidies. The exchanges are also empowered to enroll anyone in Medicaid they determine eligible for the program, with states forced to share the resulting costs but prohibited from conducting their own eligibility determinations or verifying the accuracy of the eligibility determinations made by the exchanges. Large employers will be fined if their workers receive subsidized coverage through an exchange, but firms with 50 or fewer employees are exempted from those fines. The likely result is that many small employers who currently offer coverage will dump their plans beginning in 2014, since their workers will then qualify for either Medicaid or the new subsidies. Even large employers are likely to dump their plans if most of their workers qualify for subsidized alternative coverage and the savings to the employer are greater than the fines for not offering coverage.

c) New National Health Insurance Plans. The new law
instructs the federal government’s Office of Personnel Management (OPM), which administers the Federal Employees Health Benefits Program (FEHBP), to contract with health insurers “to offer at least 2 multi-State qualified health plans through each Exchange in each State,” and further stipulates that at least one of the contracts is to be with a non-profit insurer.[21] Of particular concern to state officials is that from

the way Congress wrote these provisions the extent to which state insurance regulators will be able to require the OPM-sponsored plans to meet state insurer financial regulations, and thus ensure that the plans remain solvent, is unclear.

d) New CO-OP Plans. The legislation also instructs HHS to
promote the creation in each state of at least one non-profit, member-controlled, “consumer-operated and oriented plan” (CO-OP) health insurer. Both the CO-OP provisions and the provisions instructing OPM to sponsor “multi-state” plans were added as part of efforts by Senate Democratic leaders to bridge the sharp division within their caucus over whether the legislation should include a new government-run health insurer —the so-called public option. Thus, both sets of provisions are primarily political in nature and, from a policy perspective, poorly designed and drafted. The bad news for state officials is that Congress appropriated $6 billion for loans and grants to establish CO-OPs and instructed the Secretary of Health and Human Services to keep promoting the program until every state has one. The good news is that COOPs—unlike OPM-sponsored multi-state plans—are explicitly required by the legislation to comply with state insurance laws and regulations. As a practical matter, it is uncertain whether any CO-OP insurers will actually be created, as there is no obvious market demand. The statute imposes several restrictions that make it difficult to establish and operate one, and the legislation expressly prohibits the most likely and sensible path to

setting one up, namely, a divestiture or conversion by an existing health insurer.

How State Officials Should Respond
Obamacare creates significant fiscal and policy challenges for states. The broad effects of the legislation, if implemented as enacted, will be to impose significant new Medicaid costs on state taxpayers, disrupt state health insurance markets and the current coverage of tens of millions of Americans, and usurp state authority. The new federal insurance regulations, particularly the provisions setting new, uniform federal benefit requirements, will reduce coverage options for individuals and employers and will likely drive up health insurance premiums. They are also likely to result in greater concentration in health insurance markets, leaving only a few large insurers operating as public utilities with a regulated low rate of return selling undifferentiated products to customers with no other options. Maryland’s experience is instructive in this regard. In 1993, the state of Maryland imposed on its small-group health insurance market a minimum package of standardized benefits, annually updated by a state commission—a design similar to that in the new federal law. One result was that competition has declined to the point where the same two carriers have now covered more than 90 percent of all individuals in Maryland’s small-group market for years.

State lawmakers now face the task of finding ways to protect their constituents—including state taxpayers, health insurance policyholders, and individuals who depend on public health care programs—from the adverse effects of Obamacare. Governors and state legislators need to start planning their responses now and begin drafting any applicable legislation for consideration in their next legislative session. The wisest approach is to move reform measures that better position their states under either of two possible scenarios: a new Congress that repeals Obamacare, or a protracted, multi-year political and legal battle conducted against the backdrop of an Administration attempting to implement the legislation as enacted. Specifically, state lawmakers should immediately and aggressively pursue the following strategies:
•

Shift non-elderly Medicaid and CHIP enrollees into premium support.

The combination of recession-induced lower state tax revenues and the new law’s Medicaid MOE requirements puts state lawmakers in a fiscal bind. Because the MOE requirements prevent them from controlling Medicaid spending by reducing eligibility, many state lawmakers assume that their only options are to cut provider reimbursements or further limit program benefits. However, there is another—and better—option that states should pursue. The most effective tool for states to control their Medicaid and CHIP spending is to shift their programs from

directly paying providers to subsidizing private coverage for enrollees. Not only will this “premium support” approach help states control spending; in many states it will also increase beneficiary access to physicians.[22] States should immediately begin designing and implementing Medicaid and CHIP premium support initiatives for noninstitutionalized beneficiaries. In doing so they should take advantage of the flexibility remaining in federal law by adopting all “benchmark plan” designs, providing for maximum allowable enrollee cost-sharing, and replacing the individual costeffectiveness test with an average cost-effectiveness test. States should also pursue contracting with one or more private insurers to create supplemental policies that cover required “wraparound” benefits for Medicaid beneficiaries enrolled thorough premium support in less comprehensive private plans. Then the state can simply pay the premiums for those supplemental policies as well. The advantages of premium support for enrollees are that they will likely get better access to physicians and more appropriate medical care. In addition, subsidized private coverage is free of the “welfare stigma” associated with traditional Medicaid, or even Medicaid managed-care plans, since providers will only see the private coverage—not the subsidies behind it. Premium support will also help expand and strengthen a state’s private insurance market—particularly its small-employer

coverage market—by adding a large number of mainly healthy and younger individuals to the market. From a state budget perspective, cost savings from premium support are likely to come in four forms: (1) savings from increased enrollee cost-sharing, (2) efficiency savings from covering under a single policy all members of a family currently covered separately by different combinations of public or private plans, (3) administrative savings achieved by significantly reducing the need for the state’s Medicaid and CHIP programs to operate systems that directly reimburse providers and verify claims, and (4) likely the biggest source of savings will come from more appropriate use of medical care. While private plans pay doctors higher rates, if Medicare and CHIP beneficiaries with premium support get earlier and more coordinated physician care, their historic practice of over-using expensive hospital emergency room services should decline—thus, offsetting the increased spending on physician care while also addressing the problem of emergency room over-crowding. Finally, states should craft their “premium support” initiatives as state-plan amendments to their programs, rather than submitting waiver requests to HHS. Unlike the waiver process, over which the Secretary of Health and Human Services is granted broad discretionary authority, Medicaid and CHIP state plan amendments can only be disallowed if the Secretary finds that they would violate statutory federal requirements for how states operate their programs.

Furthermore, unlike with waiver determinations, a state has legal recourse to appeal an adverse determination by HHS about a state plan amendment in federal court. Although states have lost some flexibility in using premium assistance under both the CHIP reauthorization legislation and the Obama Administration’s newly issued regulations on benchmark plans and cost sharing, premium support is still a worthwhile strategy for states to pursue.
•

Refuse to administer the new federal high-risk pools.

To date, 18 governors have wisely refused to let their state governments administer the new federal high-risk pool.[23] There are sound reasons for their decisions, as the new high-risk pools are poorly designed. Any U.S. citizen or lawful resident with a pre-existing medical condition who has been uninsured for at least six months will be eligible for coverage. Congress gave the Secretary of Health and Human Services complete discretion in determining which preexisting medical conditions will qualify—no matter how minor. Thus, unless the Secretary decides to limit eligibility only to those individuals with expensive conditions, it is certain that demand will quickly outstrip the available funding. Furthermore, the law stipulates that an enrollee in a new highrisk pool cannot be charged a premium higher than the applicable standard rate for the same coverage in the general market. In contrast, all of the 34 states with existing state high-

risk pools follow the long-standing guidance of the National Association of Insurance Commissioners (NAIC) to charge highrisk pool enrollees premiums that are at least 125 percent of standard rates.[24] Specifying that premiums charged to enrollees in the new pools not exceed standard rates means that, relative to existing state high-risk pools, the new pools will provide more generous subsidies (at a higher cost) and will likely attract many more applicants, particularly individuals with relatively minor pre-existing medical conditions. Finally, another major concern with state governments administering the program is that when the federal funding runs out, state lawmakers will be faced with either terminating the coverage of enrollees or continuing to fund the program with state tax dollars. From the perspective of state officials, they are better off letting the Department of Health and Human Services administer the program, either directly or through private-sector contractors. That way, federal officials will be the ones who are unambiguously responsible for any adverse funding or enrollment decisions.
•

Decline federal “premium review” grants.

The provisions instructing the Department of Health and Human Services to conduct health insurance premium reviews also authorizes HHS to distribute up to $250 million in grants to states to assist HHS in implementing those provisions. In exchange, however, state insurance departments must provide HHS with insurer data and collaborate with HHS in

administering rate regulations. To preserve the integrity and independence of their own insurance departments and insurance laws, state officials would be well advised to decline this offer of federal funding. The rate review provisions are not only poorly drafted, but were politically motivated additions to the legislation. Statements by Administration officials since the enactment indicate that implementation of the provisions by the Obama Administration is likely to also be driven more by political considerations than by sound policy or genuine consumer protection. For example, both the statute and subsequent comments by Administration officials refer to “unreasonable premium increases.” What is missing is any recognition that another key aspect of proper insurance regulation is to prevent the problems that occur if insurers under-price their products. If an insurer fails to charge enough in premiums to cover its expected claims costs, then it is at risk of being unable to make good on the promises made to its customers. As any state insurance regulator understands, ensuring that carriers have sufficient premium income to cover future claims costs is an important consumer protection. Also missing from the new federal law is any recognition of the equity issues involved in setting rules for insurers that crosssubsidize different lines of coverage. For example, is it “fair” if regulators require an insurer to limit premium increases on its individual market policies, but as a result the carrier then has to

further increase rates for group policies to make up the difference, or vice-versa? Of course, there is no single “correct” set of answers to these kinds of questions, but state lawmakers and state insurance regulators at least have the benefit of decades of experience addressing such issues, while the federal government has none whatsoever. To be sure, insurance companies (including non-profit ones) are not altruistic enterprises, and state insurance regulation is no more immune to political considerations than is federal regulation. However, given the demonstrated propensity of congressional leaders and Obama Administration officials to blame insurers for the adverse consequences of their own legislation, the vast disparity between the state and federal governments in experience and expertise in insurance regulation, and the inherent conflicts that will arise between the new federal rate regulations and existing state insurer solvency regulations, it is important that state lawmakers preserve the independence of their own insurance laws and state insurance departments. That means states should not accept federal funding with strings attached that compromise their independence or make their insurance departments mere branch offices of HHS.
•

Implement state health insurance market reforms and exchanges based on state, not federal, designs.

Obamacare will drive up health insurance costs with new coverage mandates while simultaneously trying to hold down premiums with politicized rate regulation. The federal

standardization of coverage will also limit the ability of insurers to differentiate themselves in the market or offer their customers lower-cost benefit designs, while the minimum loss ratio regulations will reduce incentives for insurers to be more efficient in managing or paying for care—as insurers will be able to retain little, if any, of the savings that might result. Faced with this impending regulatory “squeeze play,” insurers are already evaluating their options and can be expected to act in some predictable ways: Insurers with other lines of business (such as property or life insurance) will likely discontinue or sell their health insurance book of business to a competitor and exit the market. Carriers that offer only health coverage will look to mergers and acquisitions as the path to becoming “too big to fail.” Their logic will be that if the federal government is going to turn private health insurance into a regulated utility with a low rate of return, then the way to survive is to be one of the remaining few large insurers that the federal government needs to keep in business in order to administer the system. Thus, absent initiatives by state governments to counter these effects by expanding choice and competition, state health insurance markets will begin to see fewer carriers and plan options—most likely starting next year. The best response for state lawmakers is to immediately move in the opposite direction of the new federal legislation by first determining their state’s needs and priorities, and then enacting their own reforms that increase health insurance choice,

competition, and coverage while also reducing costs. Lawmakers in each state can select from the following broad strategies the elements that offer the best approach for addressing their state’s particular needs and circumstances: (1) increase consumer choice by creating a “defined contribution” option for employersponsored health insurance coverage, (2) reduce coverage costs and allow more variety in plan design by repealing unnecessary state-mandated health insurance benefit requirements, (3) encourage insurer participation by lowering barriers to market entry through statewide risk adjustment mechanisms collectively designed and administered by the carriers selling health insurance in the state, (4) expand coverage options by creating a “premium aggregation” mechanism that enables individuals to buy coverage using contributions from multiple employers (such as when a family has two earners or an individual has two parttime jobs), and, in the case of low-income families, Medicaid or CHIP premium support payments from the state, and (5) provide consumers with greater price and quality transparency with respect to insurance coverage and physician and hospital services.[25] The fact that the federal legislation perverts the intent of a health insurance exchange—replacing its original purpose as a state tool for increasing consumer choice and encouraging greater variety and competition in health insurance with the new purpose of administering federal coverage uniformity, and supplanting state insurance regulators—should not dissuade state lawmakers from pursuing their own designs for exchanges (consistent with the

original intent of the concept) or other administrative mechanisms as tools for implementing their own reforms to promote consumer choice and enhanced health plan competition. For example, Utah officials and stakeholders determined in their assessment process that their state’s small businesses coverage offer rate was well below the national average and that Utah has a significant number of workers with two or more part-time jobs who do not qualify for employer group coverage offered to fulltime employees. Thus, they decided to make defined contribution and premium aggregation using a state health insurance exchange key elements of Utah’s reform strategy. They also devised an implementation strategy that relies on existing private vendors to provide the necessary administrative services at a negligible cost to the state’s budget.[26] Other states can also use private vendors to quickly design and implement similar solutions customized to their own particular needs and circumstances. By enacting their own insurance market reforms and creating their own exchanges, or similar administrative mechanisms, based on their own designs now, states can make it politically more difficult for federal officials to implement provisions of the new federal legislation (such as minimum federal benefit standards) that will drive up premiums and reduce coverage choices. State-designed exchanges can also serve as the administrative platform for implementing Medicaid and CHIP premium support initiatives and, if the legislation is not repealed

by then, for organizing alternative coverage arrangements for individuals and employers who refuse to comply with the new federal mandates that also take effect in 2014.
•

Insist that federal officials explain publicly how they will administer Obamacare.

State legislators should convene public hearings and summon the federal Secretary of Health and Human Services, members of their state’s congressional delegation, and other federal officials to explain how they intend to implement the numerous provisions of the legislation that will affect their state’s Medicaid and CHIP programs and the private health insurance plans of individuals and employers. Obviously, state lawmakers cannot override the federal regulatory process, but they can force more of it out into the open and subject it to heightened public scrutiny. They can put federal officials on notice that if they assert their new authority, then states will force them to accept responsibility for the results—and that state lawmakers will ensure that their constituents know who is to blame when state revenues have to be diverted from other priorities to fund expanded health care coverage, or individuals see their health insurance premiums increase or their employer drop their coverage. If federal officials refuse to testify before state legislatures, their refusals will themselves be public testimony.
•

Conduct and publicize “benchmark” analyses.

States should immediately conduct “benchmark” analyses to provide “baseline” projections for at least the next five years for key metrics, and then use the results to measure the effects of various provisions of Obamacare. The results can also serve as a baseline for estimating the effects of any alternative state reform proposals. Key metrics include:
•

•

•

•

Projected annual enrollment and per capita spending for Medicaid and CHIP, by eligibility category under current law; Projected growth in average premiums in the state’s individual, small, and large group health insurance markets under current law; Projected average premiums by age in the state’s individual and small group markets under current law; and Current and projected health insurance coverage status of the state’s residents by source of coverage under current law.

The utility and integrity of the results will be greatly enhanced if state lawmakers ensure that the process for conducting these benchmark analyses is open and nonpolitical, and that the resulting reports clearly explain the methodologies and assumptions used. Where appropriate, the analyses should also provide upper-bound and lower-bound estimates to account for the inherent uncertainty of key assumptions, such as underlying medical cost growth rates or changes in the states’ resident

populations. States can contract with recognized actuarial and econometric consulting firms to conduct these studies. Developing a state-specific baseline is the essential precursor to constructing state-specific estimates of the effects of the new federal law. State officials will want to construct their own estimates because, if for no other reason, national level estimates will not be sufficiently precise for state planning purposes. Variations among the states in the composition of their populations, economies, health systems, public programs and insurance rules mean that, in any given state, the actual effects of a particular provision of the new law may differ significantly from the projected national effects estimated by federal officials. Indeed, significant disparities in the effects among states are likely to arise with respect to even minor provisions of the new law. Case in point: The requirement to extend dependent coverage to age 26 is a minor provision that is projected to have modest effects on cost and coverage at the national level. However, the most recent Census data show that while 18- to 24-year-olds (the Census age breakout that most closely aligns with the group affected by the provision) account for 9.79 percent of the U.S. population, that age group as a share of resident population in the states varies from a low of 8.17 percent in Nevada to a high of 12.88 percent in North Dakota. Thus, among the states there is a 57 percent variation between the two with the lowest and highest shares of young adults in their populations. That demographic

difference alone will be a key variable in explaining any variation between those two states in the cost and coverage effects of just this one, relatively minor, provision. With their own, state-specific benchmark analyses in place, states will be able to more precisely estimate the effects of the new federal law and state lawmakers will be able to demonstrate to their constituents what portion of a particular result—such as an increase in insurance premiums—is attributable to the federal health care legislation and what portion is attributable to other factors.

Conclusion
The enactment of the massive Patient Protection and Affordable Care Act will not only alter the relationship between individuals and the federal government, it will also alter the relationship between the federal government and the states. Under the terms and conditions of the act, the states would be reduced to mere agencies of federal authority, carrying out the policy agenda of the Secretary of the U.S. Department of Health and Human Services. Some of the relevant provisions of this law that directly affect the states will not go into effect for four years, and by that time, the law may be substantially, changed, amended, or repealed. In the meantime, state officials should recognize one simple fact: States are not mere agents of federal authority. They are not powerless. There is absolutely nothing that requires them to

assist in implementing this misguided legislation. Rather, they should take every opportunity to assert their rightful authority, resist, within the confines of the law and the Constitution, any inappropriate or unconstitutional exercise of Washington’s power and aggressively advance their own, better solutions. In other words, they have a duty to represent their citizens. —Edmund F. Haislmaier is Senior Research Fellow and Brian C. Blase is Policy Analyst in the Center for Health Policy Studies at The Heritage Foundation.

Appendix Methodology
Table 1. Projected Medicaid/CHIP Enrollment, by State in 2014. National enrollment estimates by the CMS Office of the Actuary were distributed among the states according to each state’s share of total Medicaid/CHIP enrollment in June 2009 (for current eligibility) and according to each state’s share of the total uninsured population in 2007–2008 below 133 percent of FPL (for the eligibility expansion) based on Medicaid/CHIP enrollment data and census data as reported on http://www.Statehealthfacts.org. Table 2. Estimated State Costs for Medicaid Expansion, by State, Cumulative for FY 2014– 2020. National enrollment and federal spending estimates by the CMS Office of the Actuary were used to derive the average federal cost per enrollee, per year, which were then distributed among the states according to each state’s share of the total uninsured population in 2007–2008 below 133

percent of FPL. State costs were then calculated off the federal cost estimates using the applicable match rates for each state as adjusted by the provisions of the legislation. The added administrative cost load was calculated by applying current ratios for total administrative costs as a percent of total benefit spending and then apportioning those costs between the federal and state governments based on historical data that indicate an average effective Federal Medical Assistance Percentage (FMAP) of 55 percent for all administrative costs. Table 3. Estimated State Costs for Medicaid “Doc Fix,” by State. The federal cost of the mandated increase in primary care physician (PCP) rates in FY 2014 (when it is entirely paid for by the federal government) are estimated at $3 billion (CBO) to $5.5 billion (CMS). Continuing that policy in 2015 and thereafter would require states to assume their shares of the total cost of the payment rate increase. The cost to an individual state will vary based on three factors: the state’s aggregate spending on PCP services; the ratio of the state’s current Medicaid PCP payment rates relative to Medicare rates; and the state’s FMAP. Projected state costs were constructed as follows: (1) A weighting for each state’s share of total (federal and state) national Medicaid spending on all physician services was calculated. (2) Each state’s share of physician spending was then divided by the state’s Medicaid-to-Medicare reimbursement ratio to obtain a state burden index, after first removing from the equation states that already have Medicaid PCP reimbursement rates that are

equal to or greater than Medicare rates. (3) The initial state burden index was then re-weighted so that all the weights of the affected states summed to one. (4) The re-weighted state burden index was then applied to the CBO and CMS federal cost estimates to distribute the total federal costs among the affected states. (5) Finally, state costs were estimated by multiplying each state’s share of the federal funding by one minus the state’s applicable FMAP. When summed, the projected aggregate state costs are about $1.3 billion (using CBO estimates) and $2.3 billion (using CMS estimates), or approximately 43 percent of the total cost. That ratio is consistent with the national distribution between federal and state governments of total Medicaid spending. About the Author

Edmund Haislmaier Senior Research Fellow, Health Policy Studies Read More >> Request an interview >>

Brian Blase Policy Analyst Read More >> Request an interview >> http://blog.heritage.org/2010/07/02/ObamaCare%E2%80%99simpact-on-the-states/ http://www.heritage.org/Research/Reports/2010/07/ObamaCareImpact-on-States

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Revitalizing Federalism: The High Road Back to Health Care Independence
Published on June 30, 2010 by Robert Moffit, Ph.D. Backgrounder #2432

Our Country is too large to have all its affairs directed by a single government. —Thomas Jefferson, Letter to Gideon Granger, August 13, 1800
Abstract: The Patient Protection and Affordable Care Act represents more than a federal takeover of health care; it is a direct threat to federalism itself. Never before has Congress exercised its power under Article I, Section 8 of the Federal Constitution to force American citizens to purchase a private good or a service. Congress is also intruding deeply into the internal affairs of the states, commandeering their officers, specifying in minute detail how they are to arrange health insurance markets within their borders, and determining the products that will be sold to their citizens. If allowed to stand, this unprecedented concentration of political power in Washington will reduce the states to mere instruments of federal health policy. State legislatures and sympathetic Members of Congress should consider (among other actions) crafting a constitutional amendment to guarantee the personal liberty of every citizen in the area of health care. Given the trajectory of federal policy, state officials should take the lead in the next phase of the national health care debate, reclaim their

rightful authority, and change the facts on the ground for Congress and the White House. An Unprecedented Challenge Americans face a direct and historic challenge to their personal liberty and to their unique citizenship in a federal republic. Though its enactment of the massive Patient Protection and Affordable Care Act (PPACA), official Washington is not merely engineering a federal takeover of health care, but is also radically altering the relationships between individuals and the government as well as the national government and the states. In other words, the PPACA is a direct threat to federalism itself. As Jonathan Turley, professor of law at George Washington University, has argued, “Federalism was already on life support before the individual mandate. Make no mistake about it, this plan might provide a bill of good health for the public, but it could amount to a ‘do not resuscitate’ order for federalism.”[1] Never before has Congress exercised its power under Article I, Section 8 of the Federal Constitution to force American citizens to purchase a private good or a service, such as a health insurance policy.[2] Congress is also intruding deeply into the internal affairs of the states, commandeering their officers, specifying in minute detail how they are to arrange health insurance markets within their borders, and determining the products that will be sold to their citizens.

If allowed to stand, this unprecedented concentration of political power in Washington will result in the states being reduced to mere instruments of federal health policy rather than “distinct and independent sovereigns,” as James Madison described them in Federalist No. 40.[3] A Pivotal Role for State Officials The officers and citizens of the states, however, have plenty of options. These include the filing of lawsuits against the imposition of the federal mandates on individuals and the states themselves, and many are already pursuing that course of action. They can also enact legislation that can facilitate a constitutional challenge to excessive federal power, and bills have already been filed in 38 states to accomplish that objective. Legislators can also pass resolutions and memorials to be transmitted to Congress petitioning for relief for their citizens from the terms and conditions of the federal law that they determine to be onerous, damaging, or excessively burdensome to their people, their health care delivery systems, and their economic life. On the great issues that have defined crucial eras of American history, state legislators have often passed resolutions and memorials dealing with such questions as slavery, the right of women to vote, and Prohibition. State legislators can also hold public hearings and invite United States Senators, who are charged under the Constitution with representing the states, to explain their support for or opposition

to the national health care law. Senators would have an opportunity to clarify their own views on such matters as the mandatory Medicaid expansions, the implementation of health insurance exchanges, or projected premium or tax increases that will affect the citizens of their states. Likewise, in preparation for the implementation of the national health law, state legislators can invite federal officials in charge of that implementation to appear at special hearings to respond to their concerns and answer questions about the impact of their regulatory changes on the citizens of their states. Finally, as the administrative and judicial processes unfold, state officials and their congressional delegations may find it necessary to amend the Constitution itself to ensure the protection of personal liberty and the integrity of the states in the vital area of health care. The High Stakes The Founders in 1787 crafted fundamental law for a large Federal Republic, bucking the conventional wisdom of political science. In the classical sense, a republic means limited government; it underscores a sharp distinction between res publica (public affairs) and res privata (private affairs). In a republic, political authority is held as a public trust, not as a private right, and is to be exercised only over public affairs.[4] America’s Founders authorized a clear division of authority between a national government, focused on general concerns,

and the particular governments of the states, focused on particular concerns.[5] They thus recognized the astonishing unity and profound diversity of the people of the United States. In a free society, the people are sovereign, but in this instance, they are the people of the states united. National and state governments, under the Constitution, are supreme within their own spheres; neither can encroach upon the other without violating the constitutional order itself. While Article VI declares the supremacy of federal law, its supremacy is confined to those limited and enumerated powers that are granted to the national government; the Tenth Amendment unambiguously affirms that the residual powers of the American Republic are left to the people in and through their several state governments. In Federalist No. 45, James Madison writes: The powers delegated by the proposed constitution to the federal government are few and defined. Those which are to remain in the state governments, are numerous and indefinite…. The powers reserved to the several states will extend to all the objects, which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people; and the internal order, improvement and prosperity of the state.[6] The Arrogance of Power The Constitution is ultimately a political document, and the health care debate is ultimately a philosophical debate on the

scope of political authority. If one’s health care and medical treatment is a personal matter and an exercise of personal responsibility, then the new law is quintessentially un-republican; for all practical purposes, it renders these intensely personal affairs a public concern. The imposition of an individual mandate to purchase health insurance is likewise an unconstitutional restriction on personal liberty, pregnant with potential abuses far beyond a mandate for health insurance.[7] Under the new law, states are compelled to expand Medicaid.[8] Equally troublesome is the congressional mandate on the states to establish federally supervised health insurance exchanges within their borders where government-sponsored plans and coops will compete against private insurance. Under Section 1311(b)(1), “Each state shall, not later than January 1, 2014, establish an American Health Benefit Exchange [emphasis added].” The exchange is either to be a governmental agency or a nonprofit entity. Under Section 1321(c), if a state does not establish such an exchange, the Secretary of Health and Human Services will establish and operate an exchange within the state. In the “state-based” exchanges, of course, only federally approved heath plans would be allowed to compete. The states, in other words, would be vehicles of federal health policy. This is underscored by the highly prescriptive requirements imposed on the states, governing everything from the simple presentation of health plan information down to the formatting of state Web sites. The statute authorizes over a

dozen regulatory interventions by the Secretary of HHS and other federal officials. At the very least, this is a profoundly undesirable alteration in the relationship between the federal government and the officers and citizens of the states—precisely the concentration of power that the Founders feared—and it is also constitutionally suspect. It is one thing to require state officials to obey federal law; it is quite another to compel them to administer it and force their citizens to bear the expense of that administration.[9] Our constitutional tradition limits federal power and does not sanction national intrusion into citizens’ personal, private, or domestic relations. As Madison affirmed, law in these areas of domestic life is properly within the jurisdiction of the states; this latest act of Congress is a bold challenge to that jurisdiction. State Legislators as Tribunes of the People The states have emerged as the institutional centers of resistance to the new health law. Twenty-one states have filed suit against the individual mandate to purchase health insurance on the ground that it is an unconstitutional burden on their citizens.[10] Even legal specialists who have expressed sympathy for the objectives of the new law fully acknowledge the broader issues at stake in this national debate. According to Jonathan Turley: Though the federal government has the clear advantage in such litigation, these challenges should not be dismissed as baseless political maneuvering. There is a legitimate concern for many

that this mandate constitutes the greatest (and perhaps the most lethal) challenge to states’ rights in U.S. history. With this legislation, Congress has effectively defined an uninsured 18year-old man in Richmond as an interstate problem like a polluting factory. It is an assertion of federal power that is inherently at odds with the original vision of the Framers. If a citizen who fails to get health insurance is an interstate problem, it is difficult to see the limiting principle as Congress seeks to impose other requirements on citizens.[11] Likewise, 13 states have filed suits against the Medicaid mandate. [12] While these legal challenges work their way through the judicial process, state governors and legislators, allied with their aggrieved citizens, can and should pursue a broader political strategy to repeal, resist, or roll back this unjustified expansion of federal power. Because of the potential damage to the states from these costly federal mandates and regulations, the national health law should emerge as an issue in state politics. State legislators can serve as the true tribunes of the people. They can help to redefine and frame the terms of the national debate. Thus far, legislators in 38 states have already introduced “Freedom of Choice in Health Care Acts” based on model legislation proposed by the American Legislative Exchange Council (ALEC), the leading national association of conservative state legislators. The proposals would generally allow persons to pay directly for medical services if they wished to do so and block the imposition of penalties on those who did not enroll in a particular

health plan. Such measures obviously invite a constitutional challenge. Playing Offense Under the Tenth Amendment to the Constitution, the powers not granted to the national government are reserved to the states and to the people. There is a large role that states can play in making health care policy, especially over the next four years. Furthermore, inaction by the states is an invitation to the federal government to take over their legitimate power when there is a popular demand for action.[13] State legislators can and should move ahead with their own agenda for health reform, not just play a waiting game until 2014, listening for Washington to tell them what to do and how to do it.[14] State legislators should seize every inch of territory in the health policy debate within the law, such as health insurance market reform, and challenge every transgression of their legitimate authority if and when federal officials violate it. State legislators should also hold their own public hearings on the impact of the federal law on their citizens, employers, employees, insurers and medical professionals, and state agencies. U.S. Senators who voted to impose costly mandates on their states should be invited to state legislative hearings to give an account of their actions and explain why they believe that such mandates advance the true interests of the states they represent.[15]

Likewise, state legislators should invite federal officials to appear and explain how they intend to implement mandates and make them justify their proposed rules in broad daylight. State legislators, in cooperation with colleagues in sister states, should make it clear that dumping hundreds of pages of complex federal rules into the Federal Register for public notice and comment is no longer sufficient. Alexander Hamilton, writing in Federalist No. 28, anticipated such cooperation among the states in resisting unjust federal power: Projects of usurpation cannot be masked under pretences so likely to escape the penetration of select bodies of men, as of the people at large. The legislatures will have better means of information; they can discover the danger at a distance; and possessing all the organs of civil power, and the confidence of the people, they can at once adopt a regular plan of opposition, in which they can combine all the resources of the community. They can readily communicate with each other in different states; and unite their common forces, for the protection of their common liberty.[16] The Rebirth of Liberty The enactment of the massive Patient Protection and Affordable Care Act was a direct repudiation of the popular will and, equally, a bold challenge to the continued viability of the federal political order. There are no guarantees of victory either, in Con-

gress or in the courts, but the United States is still a federal republic, not a unitary state or a mass democracy. It is crucial that state officials make a compelling argument against the concentration of power on the basis of first principles: It is an argument that can succeed.[17] Anticipating a political establishment insulated from popular will and feeling on vital national issues, the Founders also provided the people of the states with a final remedy for ills besetting the Federal Republic: constitutional amendment. Given the rapid and continuing growth of the already enormous health care sector of the economy, as well as the gravity of this threat to liberty in such a vital area of personal life, state legislatures, in league with sympathetic Members of Congress, should consider crafting a constitutional amendment to guarantee the personal liberty of every citizen in the area of health care. Prudential considerations, of course, would govern the timing and content of such an action. Given the trajectory of federal policy, state officials should take the leadership role in the next phase of the national health care debate, reclaim their rightful authority, and change the facts on the ground for Congress and the White House.
—Robert E. Moffit, Ph.D., is Senior Fellow in Domestic and Economic Policy Studies at The Heritage Foundation.

About the Author

Robert Moffit, Ph.D. Senior Fellow Read More >> Request an interview >> http://www.heritage.org/research/reports/2010/06/revitalizingfederalism-the-high-road-back-to-health-care-independence =============================================

Obamacare: Impact on Businesses

Published on April 27, 2010 by John Ligon WebMemo #2883

While President Obama continues traveling the U.S. heralding the passage of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, businesses across the U.S. are growing more and more discontent —and for good reason. The new health care law will impose new compliance regulations, employer mandate taxes, taxes on business “flow-through” and investment income, and numerous indirect costs on small- and medium-size companies. Altogether, these constraints will dramatically affect companies’ per-employee costs, firm-level allocation of labor, desire to take on health coverage, and motivation to grow both in terms of income and employment. Congress should repeal this massive statute, start over, and get health care reform right. Medium-Size Business Under Fire Obamacare will dramatically impact the behavior of mediumsize firms in the U.S.—specifically, those companies with 50–199 workers.[1] Beginning in 2014, Obamacare will begin imposing taxes—to help offset the cost of individual employees receiving premium subsidies through the to-be-established state health insurance exchanges—on companies with 50 “full-time equivalents” that do not offer an “acceptable” level of health insurance coverage.[2] These mandates will force companies—

including companies below the 50-employee threshold—to react to eventual overall cost increases. These changes will likely produce upward pressure on health insurance premiums in the “fully insured market”—and this will disproportionately affect these medium-size companies as well as smaller companies.[3] Employees will likely bear most of the burden since these costs will likely be passed on to them in the form of reduced wages, discontinued hiring, or loss of employment. Instead of adding more regular full-time employees, some businesses will simply increase hours for current employees, hire low-skilled and low-income labor, or opt for more temporary or seasonal workers. Health Reform Penalizing Small Business President Obama and congressional leadership repeatedly claim that Obamacare is good health reform policy for small businesses (companies with 50 or fewer workers), but this claim is not supported by the facts.[4] Instead, Obamacare will likely exacerbate many of the concerns of small businesses— particularly small business owners—in at least four ways. 1. Higher Health Care Costs. Obamacare does nothing to “bend down the cost curve” that small businesses face relating to providing health insurance coverage. In fact, it is likely that the endless regulations, mandates, fees, and taxes will put upward pressure on premium prices—particularly in the “fully insured” market, where 88 percent of workers and dependents at small

businesses purchase health insurance.[5] Heritage analysis estimates that roughly 54.5 percent of the total “premium tax” on health insurers will be paid by workers and dependents covered by these employer group policies.[6] Additionally, the increased costs of health insurance will cause many firms with 50 or fewer employees—perhaps most—to either not offer coverage or drop coverage if they currently offer it. There is nothing currently in Obamacare that will stop them from doing so. 2. Ineffective Small Business Tax Credit. Even accounting for the “cost-reducing” tax credits—which the Congressional Budget Office estimates will impact at most 12 percent of businesses with 25 or fewer workers and expire after two years beginning in 2014 —Obamacare will not address the many uncertainties small businesses face in deciding whether to offer health insurance coverage to its workers. Essentially, after all exclusions the only eligible firms for the heralded “small business tax credit” are those with 10 or fewer workers and those with low-income workers—and most of these workers will qualify for premium subsidies in the state exchanges. These small firms are the least likely to offer coverage even with a significant price reduction. 3. Higher Regulation Compliance Costs. Small businesses do not have the capacity to easily take on additional administrative complexities. Many small companies will have to hire additional

workers—and incur higher external accounting expenses—to handle not only the enhanced compliance regulations on health insurance plans but also stricter tax compliance regulations relating to business-to-business transactions.[7] 4. Medicare Taxes on “Flow-Through” and Investment Income. Obamacare will increase the Medicare payroll tax and establish a new Medicare non-payroll (“investment”) tax. This tax will apply perversely on “flow-through income”—thus reaching a significant share of small businesses.[8] Moreover, the wage thresholds on this tax increase are not indexed to inflation and, consequently, will push more small business owners into this higher tax group.[9] The Medicare “investment” tax will also lead to greater deterrence on investment—and passive income— which will suppress economic growth. Penalizing Business Growth and Success Businesses will not take much comfort from the passage of this “historic” health care bill. The President and many lawmakers in Washington are consistently proposing and passing legislation that hurts these businesses, and Obamacare is one more example. Obamacare fails to appropriately address the concerns of smalland medium-size businesses relating to health care reform, and it will force many companies to react to new cost burdens. The intended consequences of this poorly constructed bill are harmful enough, but the many unintended consequences are even worse.

John L. Ligon is Policy Analyst in the Center for Data Analysis at The Heritage Foundation.

About the Author

John Ligon Policy Analyst Read More >> Request an interview >> http://www.heritage.org/Research/Reports/2010/04/ObamaCa re-Impact-on-Businesses =============================================

Obamacare: Impact on the Economy
Published on September 22, 2010 by Karen Campbell, Ph.D. , Guinevere Nell and Paul Winfree WebMemo #3022

The Patient Protection and Affordable Care Act (PPACA), the health care bill signed into law by President Obama in March, will overhaul the current health insurance system by enforcing mandates on individuals and businesses, expanding Medicaid, and introducing new taxes and fines to help pay for the increased “federal budgetary commitment to health care.”

Contrary to a key intention of the legislation, the combination of mandates and taxes will not help to reduce the deficit. In fact, the PPACA will likely increase the deficit by an average $75 billion per year, and as a result, the nation’s publicly held debt will be $753 billion higher at the end of 2020. Such astronomical debt crowds out other productive investments and will lead to an estimated 670,000 lost job opportunities per year. Dynamic Analysis Confirms Fears It was the goal of health care reform to be deficit neutral—as scored by the Congressional Budget Office (CBO)—within the first 10 years of enactment. In order to achieve this goal, the new law immediately imposes a combination of new taxes on highincome individuals, medical devices, and pharmaceuticals and Medicare spending cuts. In addition, the PPACA delays subsidy payments to help make insurance affordable for those with lower incomes and Medicaid expansions to cover more of the uninsured. However, the static budget analysis is limited in that it does not account for how the policy combination of spending and taxes alters the macroeconomic performance of the economy and feeds back onto the budget. A dynamic simulation shows that the higher initial costs are not an investment that pays off with a higher return in later years. Indeed, these front-loaded costs slow economic growth with higher inflation and higher interest rates, which overwhelm the benefits the proposal hoped to gain in later years.

The bill’s taxes, penalties, and fees on investors and businesses will decrease the amount of investment in the economy. This reduced investment will in turn lead to a decline in productivity, causing the economy to produce $706 billion less worth of goods and services. A smaller economic pie means that workers earn lower wages and salaries. Higher taxes on investment also put upward pressure on interest rates as investors seek to achieve their after-tax desired rate of return.[1] Lower wages reduce the amount of taxable income that could otherwise have been achieved. This will both increase the deficit and grow the total debt—which in turn puts upward pressure on interest rates and crowds out some savings that could have gone to new productive business investments. Higher interest rates mean that more American tax dollars will go toward paying the interest on the federal debt rather than paying down the principal. Simulations using dynamic analysis estimate that the government would spend an average $23 billion more per year on interest rate payments over the 2010–2020 year window than it would without the PPACA. Once the government begins paying for health insurance for individuals through subsidies and bringing people into the government insurance programs in the latter half of the decade, this growing debt will balloon. By the end of the 10 years, debt held by the public will be $753 billion higher than it otherwise would have been.

Higher Premiums In its analysis of the PPACA, the CBO estimates that health insurance premiums for the non-group market will increase significantly, primarily because of a mandate requiring plans to provide a more generous level of coverage than most do now while virtually eliminating the option of catastrophic coverage. In addition, significantly more individuals will face these higher premiums after the creation of the insurance exchanges begins crowding out the employer-sponsored market and after the individual mandate begins prodding the currently uninsured into buying coverage.[2] The result will be an overall increase in the absolute amount of health spending on premiums (that is, private and public). The premium and medical spending increases put upward pressure on prices. Thus nominal spending (i.e., the actual dollars spent) that the government anticipates in subsides and payments for increased Medicaid enrollees will actually purchase a lower level of medical care. In turn, the government will have to spend more money to provide adequate insurance to individuals or further ration payments to medical providers. This unanticipated increase in spending further widens the deficit that contributes to the federal debt. The dynamic analysis shows that the new law will result in 670,000 net job losses, many of which would be in the health services industry. These losses represent both cutbacks in jobs and jobs that are simply never created as talented individuals

choose to specialize in other industries that are not subject to the government’s payment squeezes. At the same time, newly enrolled and subsidized individuals on the government’s rolls will cause the demand for health services to increase. In turn, prices will rise even more than anticipated, and greater rationing will occur. Thus, this legislation will fail to meet its primary goal: to enable greater access to health care while “bending the cost curve downward.” Taxing the Job Creators The PPACA also increases the Medicare hospital insurance component of the payroll tax on wages and self-employment income in excess of $200,000 ($250,000 joint) by 0.9 percentage points—a provision that will raise around $18 billion per year. This “tax on the rich,” however, will actually affect small businesses as well as salary earners, because the hospital insurance tax applies to “flow-through income” of those small businesses that file taxes as individuals. In fact, almost $16 billion out the total $18 billion of revenue will come from filers with at least some flow-through income. Small businesses at all earning levels that file individually—even those already facing losses— will see a tax increase. In a time when firms are making hard decisions about layoffs, successful businesses could face tax increases of thousands of dollars. The overall average tax increase faced by small businesses filing individually would be about $600.

Repeal Is Needed Mandates add rigidities to the economy, which in turn reduce the ability of the economy to make the needed adjustments to everchanging economic conditions. These inflexibilities reduce economic growth by stifling the new innovations that a dynamic population demands, resulting in slower economic growth, longer periods of unemployment, and reduced opportunities for savings and investment used to build nest eggs for households. A combination of mandates and taxes will not reduce health care costs or ensure that all citizens have good access to health care. Instead, mandates will burden already struggling businesses with new costs and punish individuals for not having high-paying jobs. New taxes will burden small businesses as well as large ones and force many firms to make layoffs, further hurting workers. The best way to prevent further erosion of the economy is to repeal the new law.
Karen A. Campbell, Ph.D. , is Policy Analyst in Macroeconomics, Guinevere Nell is Research Programmer, and Paul L. Winfree is a Senior Policy Analyst in the Center for Data Analysis at The Heritage Foundation.

Appendix Microeconomic Simulation. Personal income tax provisions of the PPACA were simulated using the Center for Data Analysis Individual Income Tax Model in order to estimate effects on revenue and distribution of tax burden. The model simulates the effect of tax law changes on a representative sample of taxpayers.

Data for these taxpayers are extrapolated (or “aged”) to reflect detailed taxpayer characteristics through 2016. The data are aged for consistency with the CBO baseline forecast from the Global Insight model in order to produce effective and marginal tax rate estimates with which to forecast dynamic effects of the changes in tax burden. Two simulations were run for comparison: (1) current law prior to the PPACA, and (2) current law with the addition of the individual income tax provisions of the PPACA. The provisions affecting individual income that were simulated were the increase in the Medicare hospital insurance component of the payroll tax on wages and self-employment income and the increase in the adjusted gross income floor of the medical expenses deduction from 7.5 to 10 percent. These were run together in a single simulation and compared with the simulation of current law in order to determine revenue, effective tax rate, and distributional effects. For the purpose of presenting tax policy effects on small businesses, a small business is defined as a business that reported income using a Schedule C or reported income as a partnership or S-corporation. Macroeconomic Simulation. Heritage analysts used the IHS/Global Insight February 2010 short-term model of the U.S. economy to estimate the overall net economic effects of the PPACA.[3] The baseline represents the most likely path of the U.S. economy in the next 10 years. The relationships in the model

are calibrated by historical U.S. data and mainstream economic theory. The model is a tool that gives insight into the likely magnitude and direction of the policy changes in a dynamic world where many indirect effects can play out. This gives policymakers the information they need to determine which policies will lead to a stronger, more robust economy and which policies will weaken the economy and lead to fewer opportunities for citizens in the future. The simulation was conducted by estimating the direct price changes that would likely occur in the health care markets. The price changes were calculated using estimates of the aggregate changes in premiums and coverage by the CBO as well as data on insurance coverage type from the 2009 March Supplement of the Current Population Survey and the 2007 Household Component of the Medical Expenditure Panel Survey.[4] The percentage change in prices was factored into the health care price index variable and the benefits portion of employment cost index. (The former was a price increase, the latter a slight decrease.) The excise tax on high-premium plans affects prices in the health care markets and was therefore accounted for in the price index changes. The hospital insurance taxes on high income and investment income affect individual average tax rates. The CBO estimated

revenue from these taxes. These estimates were used to calculate the implied change in average effective tax rates. The implied changes were factored into the average effective personal tax rate variable. The tax changes were also simulated in the tax microsimulation model. The rates estimated from the microsimulation were used to check the macrosimulation of the overall effective rate. Both the dynamic macro- and static microsimulation estimated similar changes to average effective rates (in the range of 0.1 percentage point). Penalties and fees on businesses and taxes on medical devices and pharmaceutical drugs were assumed to affect corporate taxes. The CBO’s estimated revenues were used to calculate an implied change in the corporate tax rate. The net changes in Medicaid spending per year, estimated by the CBO, were used as a proxy for real federal grants to state and local governments for Medicaid in the model. About the Author

Karen Campbell, Ph.D. Policy Analyst, Macroeconomics Read More >> Request an interview >>

Guinevere Nell Research Programmer Read More >> Request an interview >>

Paul Winfree Senior Policy Analyst, Simulations Read More >> Request an interview >> http://www.heritage.org/Research/Reports/2010/09/ObamacareImpact-on-the-Economy

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Obamacare: Impact on Future Generations
Published on June 1, 2010 by James C. Capretta WebMemo #2921

President Obama and other proponents of the recently passed health care law argue that the legislation was desperately needed to improve the nation’s health system for both today’s citizens as well as future generations. But there are many reasons to be concerned that this new law will instead deliver both a lower quality health system and more costly and burdensome government for those paying taxes in future years.

Another Runaway Entitlement Program The centerpiece of the new legislation is a large-scale coverage expansion. The Medicaid program is expanded to cover all households with incomes up to 133 percent of the federal poverty level (FPL), and subsidized insurance is provided for families with incomes between 133 and 400 percent FPL. The Congressional Budget Office (CBO) estimates that these two expansions will bring 34 million people onto the federal entitlement rolls by 2017.[1] Moreover, by 2019, CBO says the cost of these “coverage” provisions is likely to escalate very rapidly and in line with the rising costs of existing health entitlement programs, including Medicare. Proponents claim that the tax hikes and spending reductions in the bill will be more than sufficient to pay for the added costs of another large expansion in federal spending. And, in fact, CBO’s cost estimate shows a net deficit reduction from the healthrelated provisions of the bill at $124 billion over the period 2010– 2019. But, for many reasons, the impact on future taxpayers is likely to be much more adverse than CBO’s estimates indicate. The True Cost of the Legislation Omission of the Medicare “Doc Fix.” The Obama Administration and leaders in Congress chose to use all of the tax hikes and spending cuts they could find to create another new entitlement instead of paying for a fix for Medicare physician

fees (the so-called “doc fix”). Under current law, those fees are set to get cut by 21 percent in June. The Obama Administration wants to undo the cut permanently, but it does not provide any offsetting savings. The result will be a spending increase of between $250 billion and $400 billion over a decade. Passing an unfinanced “doc fix” wipes out all of the supposed savings from the new legislation and greatly adds to the burden on future taxpayers. The CLASS Act Gimmick. The new health law creates a voluntary long-term care insurance program, called the Community Living Assistance Services and Supports (CLASS) Act. Those who sign up for it must pay premiums for five years before becoming eligible for benefit payments. Consequently, premiums paid by enrollees build a small surplus—about $70 billion over 10 years according to CBO—which the health law’s proponents claim as deficit reduction. But these premiums will be needed in short order to pay actual claims. Moreover, the Chief Actuary of the Medicare program predicts that the program will experience severe adverse selection.[2] When that happens, the program will either need to dramatically cut benefits or get a major federal bailout. Thus, not only is it inappropriate to claim the $70 billion in premiums as savings, but this program will almost certainly become a huge new unfinanced burden on future taxpayers. Medicare Cuts. CBO and the Chief Actuary for the Medicare program have both stated that Medicare spending cuts cannot be

counted twice—to pay for a new entitlement expansion and to claim that Medicare’s financial outlook has improved.[3] But that is exactly what the proponents of the new legislation do. If the Medicare cuts and tax hikes for the hospital trust fund (about $400 billion over 10 years, according to CBO[4]) are used solely to improve the capacity of the government to pay future Medicare claims, then the health law becomes a massive exercise in deficit spending. But the problems do not end there. Many of the assumptions used to build the official cost projections are likely to prove entirely too optimistic. Estimates of Employees Dropped from Job-Based Coverage. The new insurance arrangements in the state-based exchanges will provide massive new subsidies to low- and moderate-wage households. For instance, at 200 percent FPL, the subsidy for a family of four will reach nearly $11,000 in 2014. But CBO estimates that only 3 million Americans will move from jobbased insurance into the exchanges to take advantage of the subsidies, even though there are about 130 million Americans under age 65 with incomes between 100 and 400 percent FPL. Douglas Holtz-Eakin and Cameron Smith of the American Action Forum have estimated that as many as 35 million people will be moved out of job-based coverage and into subsidization. If that is the case, the 10-year cost of the coverage expansion provisions would jump by $400 billion more.[5]

Upward Pressure on Health Care Inflation. If, as CBO projects, some 30 million or more people get heavily subsidized comprehensive insurance coverage, it is certain that higher demand for services will put upward pressure on the prices charged for those services. Of course, in government-regulated insurance such as Medicaid, the fees are not as flexible. But in private plans, there is nothing to stop the added demand from pushing fees higher in coming years. Arbitrary Government Payment Rate Reductions The President has spoken often of the need to “bend the cost curve” of health care with “delivery system reform.” But the provisions in Medicare aimed at changing the way doctors and hospitals are organized and provide services are mainly small and untested pilot projects that are very unlikely to fundamentally change the cost structure of American medicine. The real cost-cutting in the law comes in the form of payment rate reductions in the Medicare program that are applied across the board and without regard to any assessment of quality of the care. The Chief Actuary of the Medicare program believes that these cuts will lead to large-scale abandonment of Medicare by hospitals that can no longer afford to take patients at the government’s below-cost rates.[6] The Opposite Effect The President and congressional leaders have argued that a primary benefit from the health law will be reduced long-term

budget pressure and thus a brighter future for coming generations of taxpayers. But when the cost estimate is adjusted for omissions, gimmicks, double-counting, and unrealistic assumptions, it is clear that the new health law will increase the burden, not lessen it. One recent estimate projects the bill will add more than $500 billion to the deficit over the next 10 years and $1.5 trillion in the decade following.[7] And any cost-cutting that does occur under the new law will come in the form of arbitrary governmental controls that will put up barriers to care in future years.
James C. Capretta is a Fellow at the Ethics and Public Policy Center.

About the Author

James C. Capretta Visiting Fellow Read More >> Request an interview >> http://www.heritage.org/Research/Reports/2010/06/ObamaCareImpact-on-Future-Generations

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Repealing Obamacare and Getting Health Care Right
Published on November 9, 2010 by Nina Owcharenko WebMemo #3053

Americans want health care reform—but not the reforms put in place under the Patient Protection and Affordable Health Care

Act (PPACA). The new law moves America’s health care system in the wrong direction, transferring vast powers to Washington bureaucrats who will control the dollars and decisions that should be in the hands of individual patients and their families. It is no surprise that most Americans continue to oppose the new law and that clear majorities want it repealed. A recent Rasmussen poll, for example, found that 53 percent of likely voters favor repeal.[1] Repeal Congress must repeal the new law. Congress cannot build sound market-based health care reform on the PPACA foundation, which is utterly incompatible with a health care system based on consumer choice and free markets. Beyond the unprecedented mandates, new taxes, massive entitlement expansion, unworkable and costly insurance provisions, and its failure to control costs,[2] the new law concentrates enormous power in the U.S. Department of Health and Human Services (HHS). It creates a giant network for the federal micromanagement of health plans, benefits, insurance markets, and unprecedented intervention into the details of health care financing and the delivery of medical care.[3] The early result is a veritable flood of controversial rules and regulations, administrative decisions, and guidelines directly affecting the lives of millions of Americans. This regulatory regime, administered by unelected bureaucrats, is even more

onerous because of the fundamental flaws of the hastily enacted legislation itself, including undefined provisions and unrealistic timeliness. Those with the knowledge, access, and influence with the Administration are more likely to obtain exemptions than those who are not so fortunate. The new law allows the HHS Secretary to apply the provisions of the law and to enforce it as she sees fit, thus granting the Secretary the right to determine winners and losers. Keeping Up the Pressure While working to achieve full repeal, Members should continue to focus on the failures and consequences of the new law, block its implementation at every opportunity, and exert strong oversight over the implementation process. Block. The most straightforward approach to blocking the new law is for Members of Congress to stop funding for key provisions. For example, they could prohibit funding from going toward the Internal Revenue Service for enforcing the individual mandate. In addition, Members should also look at triggers or other mechanisms to stop or delay key provisions from going into effect. This should include reliance on the Congressional Review Act,[4] a law enabling Congress to block or halt onerous rules and regulations before they do damage to businesses or other sectors of the health care economy.

Oversight. A new Congress should also pursue fair, open, and thorough hearings on the implementation of the new law. With its rush toward passage of the new law in March, Congress left numerous questions unanswered, and these issues have broad implications for employers, employees, states, doctors and hospitals, and other key players in the health care sector of the economy.[5] For example, the Administration’s use of waivers and exemptions from its own rules deserve scrutiny; so does the impact of the law on state budgets, the workforce, and the overall economy. In addition, Congress should conduct a robust review of the regulatory process itself, the main engine through which much of the law is being enforced and finalized. Getting Health Care Reform Back on Track There are many policy options Congress should consider, after repeal of PPACA, to begin moving the system in the right direction and put the country on the right path toward marketbased health care change that gives people better choices and allows them to take account of the price and value of health care. For example, Congress should:
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Provide individual tax relief for all persons purchasing private health insurance, regardless of where they work; Eliminate barriers to individuals purchasing health care coverage that best suits their personal needs across state lines;

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Allow employers to convert their health care compensation from a defined benefit package to a defined contribution system; Promote new group purchasing arrangements based on individual membership organizations and various associations, including union, fraternal, ethnic, and religiously based groups; Improve consumer-directed health options (such as health savings accounts, health reimbursement arrangements, and flexible spending accounts) that encourage greater transparency and consumer control over health care decisions; Extend rational pre-existing condition protections in the non-group health insurance markets for those with continuous creditable coverage, thus rewarding responsible persons who buy and maintain coverage; Set up a fair competitive bidding process to determine government payment in traditional Medicare fee-for-service and Medicare Advantage programs; Review Medicare rules and regulations and eliminate those that unduly burden doctors and patients, such as the restriction preventing doctors and patients to contract privately for medical services outside of the traditional Medicare program; Encourage the states to set up mechanisms such as high-risk pools and risk transfer models that help lessen the problems of individuals who are difficult to insure;

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Expand states’ ability to develop consumer-based reforms that enable states to customize solutions for their citizens; Strengthen premium assistance in Medicaid to enable young families to obtain private health insurance coverage; Improve patient-centered health care models for those on Medicaid; Increase federal and state efforts to combat fraud and abuse in Medicaid, including tightening eligibility loopholes in Medicaid for long-term-care services; Encourage personal savings and the development of a robust private insurance market for long-term-care needs; Make the ban on taxpayer-funded abortion permanent and government-wide and extend a similar permanent policy to ensure protection of the right of conscience among medical providers and personnel; and Stop new tax increases and promote tax cuts that would expand private insurance coverage and grow the economy.

The Right Way Forward for America After repeal of PPACA, Congress should pursue targeted policy solutions that address practical problems faced by millions of Americans in a step-by-step and fully transparent legislative process. This would move the health care system in the right direction. In the end, fundamental policy issues must be tackled to achieve lasting health care reform. These include promoting personal control through tax equity, ensuring portability of health

insurance, fixing financially troubled and underperforming government health care programs, and engaging in a federal– state partnership to address the particular challenges faced by very different states.[6] These elements are at the core of transforming today’s health care economy into one where individuals and families can control their own dollars and make their own decisions.
Nina Owcharenko is Director of the Center for Health Policy Studies at The Heritage Foundation.

About the Author

Nina Owcharenko Director, Health Policy Studies Read More >> Request an interview >>

http://www.heritage.org/Research/Reports/2010/11/RepealingObamacare-and-Getting-Health-Care-Right

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America’s health care system needs reform, but not the sort of changes enacted under the new health care law. The Patient Protection and Affordable Care Act (commonly referred to as “Obamacare”) moves our health care system in the wrong direction. This highly unpopular law asserts federal control over health care benefits and financing, establishes a complex one-size-fits-all health system, and centralizes America’s health care decisions in Washington. Instead, Congress should transform the health care system into one that empowers individuals and families—not Washington— to control more of their health care decisions.

For up-to-the-minute news on Obamacare, interactive tools to explore the fiscal impact of changing our health care system, and proposed solutions from experts at The Heritage Foundation, log on to heritage.org/healthcare The Impact on the Uninsured The Impact on States The Impact on The Impact on Families Businesses The Impact on Your The Impact on Seniors Future The Impact on Doctors Repealing Obamacare

The Impact of Obamacare on the Uninsured
The real impact Obamacare will have on the uninsured is not what many Americans might have expected. OBAMACARE FACTS AND FIGURES… - Those who gain coverage will be enrolled in Medicaid, the welfare program for the poor, or in a health plan designed by the government. - The millions who remain uninsured will still depend on overcrowded emergency rooms for routine care. THE SOLUTION… - Give tax relief or direct assistance and provide portability for those who buy their own health care coverage, allowing individual Americans to take their insurance coverage from job to job.

READ THE FULL REPORT NOW… - Obamacare: Impact on the Uninsured by Kathryn Nix RESPOND ON OUR BLOG… - Obamacare's Big Surprises for the Uninsured

The Impact of Obamacare on Families
Many provisions of the new law weaken family choice of coverage, undermine parental participation in minor children’s health care decisions, and penalize the decision to marry. OBAMACARE FACTS AND FIGURES… - Obamacare provides $125 million per year for school-based health centers and a new program to reduce teen pregnancy, with no requirement to reduce abortions. - These federally funded projects deny parents any knowledge about the services their children receive. THE SOLUTION… - Rather than bureaucrats and lobbyists prescribing health care benefits and services, respect the role of families in moral decisions involving their health care. READ THE FULL REPORT NOW… - Obamacare: Impact on the Family by Chuck Donovan RESPOND ON OUR BLOG… - Obamacare: Impact on the Family

WATCH AND SHARE THE VIDEO… - Interview with Larry Patterson, Father of Four Children

The Impact of Obamacare on Seniors
According to surveys, no group of Americans is more skeptical of Obamacare than senior citizens—and with good reason. OBAMACARE FACTS AND FIGURES… - Nearly one-quarter of all seniors rely on Medicare Advantage, the private health care option in Medicare. However, Obamacare makes such deep cuts to that program that half of those covered will no longer be able to keep the coverage they have. - New taxes on drug companies ($27 billion) and medical device makers ($20 billion), as well as new reporting requirements and regulations imposed on physicians, will make access to health care and services more costly and difficult for seniors under Obamacare. THE SOLUTION… - Give seniors greater choice of doctors, private health plans, and services under Medicare. READ THE FULL REPORTS NOW… - Obamacare: Impact on Seniors by Robert Moffit - Obamacare: Impact on Taxpayers by Curtis Dubay RESPOND ON OUR BLOG… - Seniors Will Lose Big Under Obamacare

The Impact of Obamacare on Doctors
The new health care law reinforces the worst features of existing third-party payment arrangements in both the private and public sectors. OBAMACARE FACTS AND FIGURES… - Obamacare expands government’s role as the primary payer of health care by adding 18 million people to the Medicaid program, which on average reimburses doctors only 56 percent of the market rate for medical procedures. - Due to increased regulation and less reimbursement, 66 percent of doctors are considering no longer accepting government health programs. THE SOLUTION… - To make the costs of health care more predictable and sustainable for providers, fix Medicare and Medicaid by allowing patients to choose the coverage that best suits them. READ THE FULL REPORT NOW… - Obamacare and its Impact on Doctors by Robert Moffit RESPOND ON OUR BLOG… - A Hard Pill to Swallow for Physicians WATCH AND SHARE THE VIDEO… - Interview with Dr. Martha Boone, Physician in Atlanta

The Impact of Obamacare on States
Obamacare will impose significant new Medicaid costs on states and constitute a major federal usurpation of long-standing state authority in regulating private insurance. OBAMACARE FACTS AND FIGURES… - By 2019, over 80 million people will be on the Medicaid program—requiring billions of dollars from state budgets and taxpayers. - Twenty-one State Attorneys General have filed suits to protect their citizens from being forced, in violation of the Constitution, to purchase government-approved health insurance. THE SOLUTION… - Because no two states are alike, promote federal–state partnerships to accommodate the unique and diverse health care challenges facing the states. READ THE FULL REPORTS NOW… - Obamacare: Impact on States by Edmund Haislmaier and Brian Blase - Revitalizing Federalism: The High Road Back to Health Care Independence by Robert Moffit RESPOND ON OUR BLOG… - Obamacare’s Impact on the States

WATCH AND SHARE THE VIDEOS… - Interview with Mitch Daniels, Governor of Indiana - Interview with Ken Cuccinelli, Attorney General of Virginia

The Impact of Obamacare on Businesses
The new health care law will impose new compliance regulations, employer mandate taxes, and numerous indirect costs on smalland medium-size companies. OBAMACARE FACTS AND FIGURES… - $52 billion in new taxes will be imposed on businesses by mandating that employers provide health insurance. - New IRS reporting requirements and other business-related taxes and regulations will also penalize growth and success. THE SOLUTION… - Encourage portability of health insurance so that workers own their health care plan regardless of job or job status, and allow employers to decide how much they wish to contribute toward their employees’ health care costs. READ THE FULL REPORT NOW… - Obamacare: Impact on Businesses by John Ligon - Obamacare: Impact on the Economy by Karen Campbell, Ph.D. , Guinevere Nell and Paul Winfree RESPOND ON OUR BLOG… - No Friend of Small Business

The Impact of Obamacare on Your Future
Families like yours should have complete control of their health care dollars and decisions. In addition to portability of health insurance (see previous page), policymakers should press for transparency in health care—with prices of medical goods and services clear and uncorrupted by excessive government interference. Health plans and providers should compete on a level playing field in a free, open, interstate market. Following this path, you would be able to buy the health insurance plan you want, at a price you are willing to pay, and ultimately receive better quality health care at lower cost. OBAMACARE FACTS AND FIGURES… - Obamacare adds a trillion dollars in new health care spending, creating prohibitively expensive new entitlements for long-term care and a subsidy scheme that discourages work and penalizes marriage. - Obamacare will impose about a half a trillion dollars in new taxes and will increase the deficit by $500 billion over the next 10 years, a massive burden on the next generation of taxpayers. THE SOLUTION… - Rein in runaway spending and deficits. Rather than creating new government-run health care programs, implement sound

fiscal policies to avert the crisis facing America’s existing entitlements (Medicare, Medicaid, and Social Security). READ THE FULL REPORT NOW… - Obamacare: Impact on Future Generations by James C. Capretta RESPOND ON OUR BLOG… - Kicking the Can Down the Road to Future Generations

Repealing Obamacare and Getting Health Care Right
Despite what was promised, Obamacare clearly does not establish a patient-focused health care system that saves money. But could America reform our existing system and get there? Absolutely. HOW TO REVERSE OBAMACARE… - Congress must repeal the new law. Congress cannot build sound market-based health care reform on this crumbling foundation, which is utterly incompatible with consumer choice and free markets. - While working to achieve full repeal, Congress can block implementation at every opportunity by stopping funding for key provisions. For example, Congress could prohibit funding from going toward the Internal Revenue Service for enforcing the individual mandate. - Congress has a constitutional mandate to provide oversight to the executive branch. Congress should pursue fair, open, and

thorough hearings on the implementation of the new law. For example, the Obama Administration’s use of waivers and exemptions from its own rules deserves scrutiny. THE SOLUTIONS… - As stated throughout this report, there are policy solutions Congress should consider to get health care right. We should promote personal control through tax equity, ensure portability of health insurance, fix our financially troubled government health care programs, and engage in federal–state partnerships to address the particular challenges faced by very different states. READ THE FULL REPORT NOW… - Repealing Obamacare and Getting Health Care Right by Nina Owcharenko RESPOND ON OUR BLOG… - Repealing Obamacare and Getting Health Care Right THE RIGHT WAY FORWARD FOR AMERICA After repeal of Obamacare, Congress should pursue targeted policy solutions that address practical problems faced by millions of Americans in a step-by-step and fully transparent legislative process. The elements outlined above are at the core of transforming today’s health care economy into one where individuals and families can control their own dollars and make their own decisions.

http://www.heritage.org/Research/Projects/Impact-ofObamacare#states
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Top Ten Side Effects of 2010

Posted December 31st, 2010 at 11:00am

Within days of Obamacare’s passage, The Heritage Foundation began documenting all of the ill Side Effects the new law was inflicting on our country. It has been The Foundry’s most popular feature by far. The Side Effects index page is the third highest trafficked page on the blog. Continuing our Top Ten in 2010 series, here are the Top Ten Side Effects of 2010 ranked by pageviews with the 10th most popular post on top, and the most popular post at the bottom. 10. Doctor Participation May Vary 9. Congress Regulates Themselves Out of Coverage 8. Medical Devices Tax Will Costs Jobs 7. Higher Health Insurance Taxes 6. Get Ready to Change Your Insurance 5. Young to Pay Higher Health Insurance Premiums 4. Obamacare Fueling Higher Insurance Costs 3. Obamacare Doesn’t Work on Children After All 2. Obamacare May Be Fatal for Your HSA 1. Laws No Longer Mean What They Say

Author: Conn Carroll http://blog.heritage.org/2010/12/31/top-ten-side-effect-of-2010/

.Side Effects: Ball Drop Brings Bad News for ConsumerDriven Health Plan Users
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Side Effects: Number of Waivers Grows As a Result of Obamacare Authors’ Sloppy Handiwork Side Effects: AARP Employees Face Premium Hikes As Result of New Law Side Effects: Obamacare Accelerates Hospital Job Losses Side Effects: Obamacare Encourages States to Drop Medicaid

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The Side Effects of OBAMACARE

.Side Effects: Ball Drop Brings Bad News for ConsumerDriven Health Plan Users
Posted December 31st, 2010 at 12:00pm in Health Care

This year, as the clock strikes twelve on New Year’s Eve, Americans who depend on health savings accounts (HSAs) to make medical expenditures more affordable will experience first-hand yet another adverse side effect of Obamacare. Starting in 2011, American families will no longer be able to use HSAs to purchase over-the-counter drugs, such as cough [...] More

Top Ten Side Effects of 2010
Posted December 31st, 2010 at 11:00am in Health Care

Within days of Obamacare’s passage, The Heritage Foundation began documenting all of the ill Side Effects the new law was inflicting on our country. It has been The Foundry’s most popular feature by far. The Side Effects index page is the third highest trafficked page on the blog. Continuing our Top Ten in 2010 series, [...] More Side Effects: Number of Waivers Grows As a Result of Obamacare Authors’ Sloppy Handiwork
Posted December 10th, 2010 at 2:00pm in Health Care

Jamie Dupree recently reported for the Atlanta JournalConstitution that the number of waivers granted by the Obama Administration for a certain provision in the new health care law has now reached 222. That’s double the amount of just three weeks ago. The waivers apply to a provision of Obamacare prohibiting annual limits on health plans. [...] More Side Effects: AARP Employees Face Premium Hikes As Result of New Law
Posted November 16th, 2010 at 5:00pm in Health Care

Health care reform was supposed to “bend the cost curve” in health care and reduce the amount that American families

pay in health care premiums. This was the message the nation received from proponents of the new law, which included organizations such as AARP. But now the group, whose membership includes 40 million Americans over [...] More Side Effects: Obamacare Accelerates Hospital Job Losses
Posted November 15th, 2010 at 4:00pm in Health Care

Repeatedly, reports have shown that Obamacare will increase job loss. But what happens when those who are laid off are the workers meant to enable the health care law’s expanded access of care: namely, hospital employees? According to one hospital, layoffs of workers have already begun as a result of the new law. Leaders of [...] More Side Effects: Obamacare Encourages States to Drop Medicaid
Posted November 9th, 2010 at 3:07pm in Health Care

Because of Obamacare, states are considering dropping out of Medicaid, the federal-state health program for the poor, rather than deal with the additional fiscal strain resulting from the health law. One of the main drivers behind health care reform was to reduce the nation’s number of uninsured. Under the new law, this will be partially [...] More Side Effects: Bad News for New Mexico Residents Who Like Their Current Health Plan

Posted November 3rd, 2010 at 11:00am in Health Care

Once again, the promise that Americans can keep the health coverage they like under Obamacare has been broken. National Health Insurance, Aetna, John Alden, and Principle have reported that they “need to make adjustments in their business to accommodate the nation’s new federal health care law.” The National Health Insurance Co. (NHIC), a Dallas-based insurer, [...] More Side Effects: Now Even Democrats Are Voicing Concern About Obamacare’s Consequences
Posted November 2nd, 2010 at 2:00pm in Health Care

Imagine that one day, your boss takes you out to coffee. You offer to pick up the tip as a contribution. The two of you head down the street and are faced with quite the conundrum: two coffee shops to choose from! Both offer a delicious cup of joe for the same price, but in [...] More Side Effects: Obamacare Strengthens Compliance-Based Medicine
Posted October 22nd, 2010 at 4:00pm in Health Care

Obamacare alters the practice medicine by putting a stronger emphasis on adherence to government-determined measures of quality. The Centers for Medicare and Medicaid Services (CMS) already offers hospitals financial incentives to report on their compliance with certain measures of care.

These are posted on Hospital Compare, a site where, according to Kaiser Health News, “patients [...] More Side Effects: Obamacare Hurts Low-Income Workers
Posted October 21st, 2010 at 1:00pm in Health Care

With a struggling economy and stagnant unemployment rate, the last thing the United States needs is any public policy that will hurt job growth. Unfortunately, Obamacare’s new federally mandated, essential benefits package will diminish new job opportunities, especially for low-income workers. This is expected to occur because the new law requires employers to offer health [...] More Side Effects: How Government Micromanagement Could Discourage Access to Some Preventive Services
Posted October 14th, 2010 at 2:00pm in Health Care

A recent letter from the Congressional Research Service (CRS) reveals how Obamacare will erode patients’ access to certain preventive services. The new health care law requires insurers to cover all preventive measures rated “A” or “B” by the United States Preventive Services Task Force (USPSTF) with zero cost-sharing. Otherwise, “a plan or issuer has the [...] More Side Effects: Obamacare Compels More Employers to Dump Coverage

Posted October 6th, 2010 at 11:00am in Health Care

Obamacare has struck again. Last week, 3M announced plans to drop health benefits for retirees, citing the new law’s impact as a contributor in its decision. In 2013, 3M retirees who qualify for Medicare will lose their current employersponsored health benefits, and instead receive a health reimbursement account (HRA) with which to buy a Medicare [...] More Side Effects: Obamacare Fails to Halt Rising Premiums
Posted October 4th, 2010 at 4:00pm in Health Care

President Obama and his supporters have said that one of the major benefits of the Patient Protection and Affordable Care Act would be a drop in health insurance premiums. But a new Hewitt Associates study shows that insurance costs will continue to rise for 2011. The study projects an 8.8 percent average premium increase for [...] More Side Effects: Massachusetts Seniors Will Lose Medicare Advantage Plans in 2011
Posted September 30th, 2010 at 1:00pm in Health Care

President Barack Obama’s promise that “if you like it you can keep it” may be this generation’s “read my lips—no new taxes,” claim. New Centers for Medicare and Medicaid Administrator Dr. Donald Berwick recently said “Medicare

Advantage remains strong and a robust option for millions of seniors who choose to enroll or stay in a [...] More Side Effects: Doughnut Hole Deal Not so Sweet
Posted September 28th, 2010 at 5:30pm in Health Care

Currently 3.4 million Americans seniors covered by Medicare find themselves in a giant “doughnut hole,” but despite the tasty terminology, there’s nothing sweet about it. The doughnut hole refers to a gap in prescription drug coverage under Medicare Part D. As David Hilzenrath explains, “…beneficiaries enter the coverage gap when their prescription tab hits $2,830, [...] More Side Effects: Fuzzy Math Won’t Bend the Health Care Cost Curve
Posted September 16th, 2010 at 4:00pm in Health Care

Obamacare will force health care spending to rise faster and higher over the next decade than if Congress had just left the nation’s health system unchanged. That’s according to a recent report from the Office of the Actuary at the Center for Medicare and Medicaid Services. The report projects the new law will inflate national [...] More Side Effects: More Americans Will Feel the Pain of Medicaid’s Shortcomings
Posted September 15th, 2010 at 3:00pm in Health Care

Lawmakers shoved through Obamacare on the promise that it would decrease the number of uninsured Americans. The new law does this by expanding Medicaid’s eligibility to cover an additional 16 million Americans by 2019, according to the Congressional Budget Office (CBO). However, recent analysis from former CBO director Douglas Holtz-Eakin and American Action Forum analyst [...] More Side Effects: Obamacare Widens Health Care Disparities
Posted September 14th, 2010 at 1:00pm in Health Care

In a recent op-ed in the Spanish media, President Barack Obama espoused the new health reform law would ensure that minorities like Latinos would have access to health care services through better coverage options. However, the President left out that the bulk of this “coverage” is pushing many Hispanic and African Americans into an inefficient [...] More Side Effects: Obamacare’s Small Business Tax Credits Won’t Go The Distance
Posted September 13th, 2010 at 1:00pm in Health Care

Will more small businesses be able to offer their workers health coverage under Obamacare? The legislation creates a tax credit to encourage just that. But a new report from The Commonwealth Fund says it probably won’t help much.

Though small firms eligible for some level of the tax credit employ approximately 16.6 million employees, the [...] More Side Effects: More Bad News for Those Who Like Their Current Coverage
Posted September 9th, 2010 at 2:00pm in Health Care

When House Speaker Nancy Pelosi (D-CA) said Americans would have to wait until Congress passed Obamacare to find out what was in it, she wasn’t kidding. Since the passage of the Patient Protection and Affordable Car Act nearly six months ago, Americans have been faced daily reality checks from the health care overhaul, and none [...] More http://blog.heritage.org/tag/side-effects/ Side Effects: Obamacare Raises Your Premiums
Posted September 8th, 2010 at 5:00pm in Health Care

Health Insurers Plan Hikes. That’s the headline of today’s Wall Street Journal story which reports: “Health insurers say they plan to raise premiums for some Americans as a direct result of the health overhaul in coming weeks, complicating Democrats’ efforts to trumpet their signature achievement before the midterm elections. Aetna Inc., some BlueCross BlueShield plans [...] More

Side Effects: Future of Private Insurance Rests in Secretary Sebelius’ Hands
Posted September 1st, 2010 at 11:00am in Health Care

Obamacare requires insurers to meet a federally-specified medical loss ratio. That is, they must spend a certain percentage of premiums on medical expenses. The remainder can be used to cover administrative costs and, if there’s anything left, profits. But if insurers don’t shell out enough in medical losses to meet the requirement, they’ll have to [...] More Side Effects: College Students May Lose Health Care Option Under Obamacare
Posted August 25th, 2010 at 2:00pm in Health Care

Health care isn’t something most students worry about. Government stats show about 80 percent of college students are covered under a parents’ plan. For them, Obamacare may mean they can keep the insurance they already have for a few years beyond college, but it won’t affect the coverage they carry during school. But what about [...] More Side Effects: What Obamacare and the Death Star have in Common
Posted August 20th, 2010 at 11:00am in Health Care

So far, 21 states have filed lawsuits challenging the constitutionality of Obamacare. As they move forward, it’s worth pondering what would happen to the health care overhaul if they succeed. Could one lawsuit be the proton torpedo that blows up the Obamacare Death Star? Typically, courts can deem a legislative provision unconstitutional without it spelling [...] More Side Effects: Obamacare Puts States Between a Rock and a Hard Place
Posted August 17th, 2010 at 3:00pm in Health Care

Obamacare creates a host of new federal requirements billed as consumer protections. But enacting these policies falls not on the feds, but on the states. Some of these provisions were among the more popular components of Obamacare: guaranteed issue for children; letting individuals remain on their parents’ health plan up to age 26; requiring insurers [...] More Side Effects: Obamacare Spreads the Wealth by Cutting Medicare
Posted August 6th, 2010 at 11:30am in Health Care

Is Granny “disposable”? Some seniors may get that impression once Obamacare kicks in. As noted in a recent Wall Street Journal article, the new law cuts $200 billion from Medicare Advantage, a public-private “hybrid” of

Medicare. As a result, more than 11 million seniors will likely see their Medicare Advantage premiums rise significantly or their [...] More Side Effects: Obamacare Causes Some Insurers to Stop Offering Coverage for Kids
Posted August 4th, 2010 at 11:00am in Health Care

The effects of Obamacare are getting weirder with each passing month. Now, new requirements created by the law are causing some insurers to consider no longer offering “child-only” policies to avoid having to raise rates. Most children are covered by parents’ employer-provided insurance or by government programs. But some parents buy individual health insurance coverage [...] More Side Effects: Small Businesses Won’t Find a Friend in Obamacare
Posted July 30th, 2010 at 10:00am in Health Care

One of the promises of Obamacare was that it would give folks working in small businesses access to affordable care. Unfortunately, like so much else in the law, it doesn’t look like that’s going to work very well. To solve the problems small firms have with finding affordable health coverage, Obamacare created a small-business tax credit. [...] More

Side Effects: Premium Hikes for Arizona State Employees, Courtesy of Obamacare
Posted July 29th, 2010 at 8:00pm in Health Care

Arizona v. President Obama. This time it’s not about immigration but health care. A recent letter from the Arizona Department of Administration to 135,000 state employees informed them that, depending on their type of coverage, they can expect their monthly health insurance costs to jump by as much as 37 percent. The letter cites the [...] More Side Effects: Obamacare Encouraging Insurers to Cut Corners Posted July 22nd, 2010 at 5:00pm in Health Care With or without Obamacare, health insurance costs are on the rise. And that has businesses searching for more affordable options. One increasingly popular option: health plans covering services provided by a relatively small number of participating doctors and hospitals. These plans are most attractive to small employers, but The New York Times reports, “Large employers, [...] More Side Effects: House Fix Is Just the Beginning to Plugging the Holes in Obamacare
Posted July 21st, 2010 at 3:30pm in Health Care

Though Democrats’ health care bill has already been signed into law, work on the Patient Protection and Affordable Care Act (PPACA) is anything but complete. Last Wednesday, the House passed a bill that would make several technical corrections to the health bill hastily passed last March. The authors of the PPACA never expected the version [...] More Side Effects: Obamacare Could Punish Docs for Better Quality Care
Posted July 16th, 2010 at 11:00am in Health Care

“Pay-for-performance” medicine has gained popularity in recent years, and Obamacare makes it a reality for Medicare enrollees. But that’s not necessarily a good thing. Pay-forperformance allows third parties to pay physicians based on treatment outcomes. In theory, this sounds like a great way to encourage doctors to improve outcomes. But in practice, it’s a bit [...] More Side Effects: Medicaid Reimbursement Crisis Hits Texas
Posted July 14th, 2010 at 4:00pm in Health Care

Obamacare promises that, some years down the road, every American will have health insurance. But the whole point of having health insurance is to get medical care when you need it, and that’s not part of the Obamacare promise. The new

law aims to use Medicaid to cover 16 million otherwise uninsured Americans in 2019. [...] More Side Effects: IRS and Businesses Unite Against Obamacare?
Posted July 13th, 2010 at 4:00pm in Health Care

The Internal Revenue Service (IRS) recently unearthed yet another undesirable side effect of Obamacare—one that will hit the taxman as well as business owners. The Taxpayer Advocate Service, “an independent organization within the IRS whose employees assist taxpayers,” reports that both the IRS and taxpayers will have trouble complying with the health care law’s extensive [...] More Side Effects: Obamacare’s Exploding Medicaid Costs
Posted July 7th, 2010 at 4:00pm in Health Care

The states are in Big Trouble. While Americans are fearful of record federal deficits, the states also are facing increased costs. Most of the exponential growth comes from increased Medicaid costs, and the taxpayers in the states are going to pay for it. A new Deloitte study gives predictions that by 2030 Medicaid costs could [...] More Side Effects: Obamacare Shifts Costs to the Privately Insured
Posted July 6th, 2010 at 5:15pm in Health Care

President Obama promised to address the growing costs in health care with passage of his “reform” bill. But instead of

reducing costs, Obamacare will succeed only at shifting the burden to taxpayers and the privately insured. Americans with private health insurance will indirectly subsidize care received by those reliant on Medicare and Medicaid. It is [...] More Side Effects: White House Misses Deadline for Creating High Risk Pools
Posted June 24th, 2010 at 6:30pm in Health Care

We’ve all heard it before — the age-old saying “Better late than never.” Well, get ready to hear it again, this time from Health and Human Services Secretary Kathleen Sebelius, regarding the creation of high-risk pools under Obamacare. The pools were supposed to provide coverage for individuals who cannot get health insurance due to chronic [...] More Side Effects: Bureaucracy in a Bind
Posted June 22nd, 2010 at 12:00pm in Health Care

Health care is a life-and-death matter. It’s also a huge part of our economy (one-sixth, to be exact). With so much at stake, it makes sense to “go slow,” when it comes to reforming the system. But rather than take the time to get it right, the liberal leaders of Congress rammed through a wholesale [...] More Side Effects: Obamacare Discourages Docs

Posted June 18th, 2010 at 3:00pm in Health Care

The United States faces a major physician shortage, and it will only get worse. Aging baby boomers will create a growing demand for medical services at the same time Obamacare comes on line with its new demands. Complicating matters is the fact that many physicians are also baby boomers—meaning part of the solution will increasingly [...] More Side Effects: Regulatory Pillow to Smother Grandfathered Plans
Posted June 16th, 2010 at 1:00pm in Health Care

The Department of Health and Human Services has rolled out regulations governing health plans in effect prior to the passage of Obamacare. You know, the plans that “if you like it, you can keep it?” The new regs will mostly affect the 170 million-plus Americans who carry employer-sponsored coverage. The vast majority of them (82 [...] More

 Side Effects: Donut Hole Hold-Up
Posted June 14th, 2010 at 1:00pm in Health Care

Last Thursday, the White House trumpeted Obamacare’s first step in closing the Medicare “donut hole.” Checks in the amount of $250 were sent to 80,000 seniors in the “hole”—a gap in Medicare’s coverage of prescription drug benefits for seniors.

Ultimately, Washington will cut 4 million of these checks, totaling $1 billion, to help paper over [...] More  Side Effects: Obamacare Adds to the Ranks of the Uninsured
Posted June 11th, 2010 at 6:00pm in Health Care

Imagine if Washington applied Obamacare’s regulatory approach to car sales. Forget choosing your ride based on your own needs and what you can afford. Instead, your wheels would be dictated by what Uncle Sam thought was best for you. For example, you might want—and be willing to pay for—a Mercedes, but Obamacare Motors would let [...] More  Side Effects: Like Your HSA? Enjoy it While You Can
Posted June 9th, 2010 at 3:00pm in Health Care

All presidential assurances to the contrary, you can’t keep what no longer exists—not even health coverage you like. Millions of people like Health Savings Accounts (HSAs) paired with highdeductible insurance plans. The approach is so popular, in fact, that it’s the fastest growing type of coverage in the country. But this coverage may not be [...] More  Side Effects: Obamacare Creates a Costly Drop in Employer Health Coverage
Posted June 2nd, 2010 at 2:00pm in Ongoing Priorities

The President repeatedly promised that if you liked your health plan, you would be able to keep it. Nothing would change. Fat

chance. In fact, millions of Americans of Americans will lose or be transitioned out of their existing employer based health insurance. The official Actuary at HHS- who doesn’t speak for the Administration- said [...] More  Side Effects: HSAs an Endangered Species under Obamacare
Posted June 1st, 2010 at 11:00am in Health Care

Why is there so much excessive—indeed, downright wasteful— spending in health care? One reason is the disconnection between patients’ wallets and their health care bills. Most Americans get health insurance through their employers. They neither witness nor control the flow of their dollars from employer to insurer to health care provider. Yes, those health care dollars [...] More  Side Effects: Cost Of Medicaid Expansion Going Nowhere But Up
Posted May 27th, 2010 at 3:00pm in Health Care

In passing Obamacare, Congress has put the states in quite a pickle. To sharply expand health coverage, Obamacare flung wide the gates of Medicaid eligibility. It envisions a massive expansion of the federal-state health program that, historically, delivers low-quality care to low-income Americans. Not a smart move. States were already struggling to meet their share [...] More  Side Effects: Seniors Will Lose Big Under Obamacare

Posted May 24th, 2010 at 1:00pm in Health Care

Passage of Obamacare will have negative consequences for practically all Americans. However, it is the nation’s senior citizens who will get the short end of the stick after enactment of the President’s health care agenda. In a recent paper, Heritage health policy expert Robert Moffit, Ph.D., lays out the specific provisions of Obamacare that will hurt seniors: [...] More  Side Effects: ER Overload Will Only Get Worse
Posted May 21st, 2010 at 3:00pm in Health Care

Remember how Obamacare was going to save big bucks and reduce wait time in emergency rooms? The idea was that millions of previously uninsured Americans accustomed to using ERs for basic medical treatment would snatch up Obamacare coverage and start getting primary care from regular (and cheaper) medical practices. Nice thought. But it doesn’t look [...] More  Side Effects: Small Businesses Still Left Empty-Handed
Posted May 18th, 2010 at 11:00am in Health Care

One of the great promises of Obamacare, you’ll recall, was that it would give folks working in small businesses better access to affordable care. “It works for small business owners,” Nancy Pelosi announced, “providing access to affordable group rates and creating a tax credit for them to help them insure their employees.” This sounded [...] More

 Side Effects: Fewer Flippin’ Hamburgers at White Castle
Posted May 17th, 2010 at 3:00pm in Ongoing Priorities

Yesterday we saw how Obamacare is leading large employers to contemplate dropping their coverage of employees. Today we learn it will cripple businesses’ ability to create jobs for entry level workers. Thanks to Obamacare, low-skilled job seekers will find it even harder to find work. And low-income areas will find it even more difficult to [...] More  Side Effects: What’s a Medical Expense?
Posted May 12th, 2010 at 12:00pm in Health Care

Vague statutory language can make laws hard to interpret and enforce. And that’s certainly true of the recently-passed Patient Protection and Affordable Care Act. Exhibit A: Obamacare requires insurers to spend at least 85 percent of group market premiums–and 80 percent of individual market premiums–on medical expenses. The remainder goes to administrative costs and profits. But what does–and doesn’t–count as a [...] More  Side Effects: Higher Premiums from Adult “Children” on Parents’ Health Plans
Posted May 11th, 2010 at 2:00pm in Ongoing Priorities

This week, the White House issued rules for health insurers to extend dependent coverage to “children” up to 26 years old. Beyond keeping the “Big Kids” dependent on Mommy and

Daddy, it also directly undercuts the President’s famous campaign promise that American families would see a $2,500 reduction in their annual premiums. Now, we learn [...] More  Side Effects: Get Ready to Change Your Insurance
Posted May 10th, 2010 at 5:00pm in Health Care

Remember the White House’s insistence that, under Obamacare, you keep your insurance plan if you like it? We didn’t believe it then. Turns out we were right. CNN reports that AT&T, Verizon, John Deere and others may well drop the health care coverage they now offer their employees. Obamacare makes it much cheaper for these [...] More  Side Effects: Physician-Owned Hospitals Face New Regulations, Limits on Growth
Posted May 6th, 2010 at 4:30pm in Health Care

Obamacare was going to expand access to higher-quality health care for all Americans, right? Well, though the legislation can purport to extend health insurance for millions of currently uninsured Americans, when it comes to access to high-quality care, Obamacare is more likely to have the opposite effect. One way the President’s health plan will kill [...] More  Side Effects: Let the Employer Penalties Begin
Posted May 4th, 2010 at 1:00pm in Health Care

Fans of Obamacare promised it would be good for small and large employers alike. They should’ve checked with employers first. Mercer, a human resources consultancy, did just that. Its latest annual survey of businesses finds that “[38 percent] of the nation’s employers…have at least some employees for whom coverage would be considered ‘unaffordable’ under the [...] More  Side Effects: Stay Single and Save 15 Percent or More on Health Insurance
Posted May 3rd, 2010 at 3:00pm in Education

No, this isn’t a Geico commercial. Come 2013, America’s bachelors may want to think twice before popping the question. Thanks to Obamacare, some couples can save thousands on health insurance just by opting to cohabit rather than marry. How? The subsidy system erected in the complicated new health law manages to create a brand new [...] More  Side Effects: State Reluctant to Swim in National High-Risk Pools
Posted April 30th, 2010 at 12:00pm in Health Care

Obamacare aims to insure the uninsured. To do that, the law bars insurers from denying coverage to people with pre-existing conditions—but not until 2014. In the meantime, the law calls for a national high-risk pool to offer coverage to the otherwise “uninsurable.” Under the new law, an important deadline looms. By Friday, states must declare [...] More

 Side Effects: The Beginning of the End for FSAs
Posted April 29th, 2010 at 6:00pm in Health Care

“If you like your current health coverage, you can keep it.” It was a key promise of Obamacare. But the new law gives government a say in everything from the benefits you carry to the treatment you receive. And that means very real changes to existing coverage. One of those many changes derive from new [...] More  Side Effects: Floridians Will Lose Medicare Advantage
Posted April 28th, 2010 at 12:00pm in Health Care

On the stump, Candidate Obama identified government entitlement spending on Medicare, Medicaid, and Social Security as the largest contributor to the federal deficit. If Congress doesn’t rein in the costs of these programs, he said,, these three programs will “consume all of the federal budget.” Candidate Obama was right. (Still is: just check out The [...] More  Side Effects: Special Treatment for Congress
Posted April 27th, 2010 at 12:00pm in Ongoing Priorities

As we noted last week, Congress screwed up the language of their health care bill at their own expense. But, thanks to Obama administration lawyers, members and their immediate personal staff might be able to keep their existing health insurance

coverage — for now. The problem, as Heritage and others noted, is that the bill’s [...] More  Side Effects: It’s Official- Higher Health Care Costs
Posted April 23rd, 2010 at 4:00pm in Health Care

Yesterday, the actuaries at the Centers for Medicare and Medicaid Services (CMS), the agency that runs the giant entitlement programs, released their analysis of the new health care law. The AP reports that “White House officials have repeatedly complained that such analyses have been too pessimistic and lowball the law’s potential to achieve savings,” but [...] More  Side Effects: The Catch 22 of Obamacare Risk Pools
Posted April 22nd, 2010 at 2:00pm in Health Care

It was one of the most oft-repeated promises of Obamacare: It will cover people, regardless of pre-existing conditions. But when it came time to make good on that promise, Congress came up short. Yes, in 2014, the new law prohibits insurers from discriminating against pre-existing conditions—starting in 2014. But what about the next four years? [...] More  Side Effects: Congress Regulates Themselves Out of Coverage
Posted April 21st, 2010 at 4:30pm in Health Care

In the mad dash to meet their strictly political deadline for passing Obamacare, lawmakers wound up victimizing many people. Including themselves. Members of Congress and Congressional staff currently enjoy a wide variety of excellent health insurance options, courtesy of the Federal Employees Health Benefits Program (FEHBP). One of the more commonplace campaign promises of federal [...] More  Side Effects: IRS Could Eat Your Refund
Posted April 20th, 2010 at 4:00pm in Health Care

Obamacare requires all individuals to carry health insurance for themselves and their families. Those who don’t will have to pay a penalty. And the IRS is the agency charged with making sure the uninsured pony up. Just how will the IRS do that? It’s not something lawmakers got around to actually, you know, writing down [...] More  Side Effects: The Doctor Is NOT In
Posted April 19th, 2010 at 1:00pm in Health Care

Doctors are becoming increasingly demoralized. And no wonder! They are losing control over their professional independence and the Washington lobbyists they hire to represent them are collaborators with an increasingly hostile Washington political establishment. While the President repeatedly told Americans that his health agenda would not

interfere with their relationship with their doctors, the reality [...] More  Side Effects: Get Ready to Wait for Your Health Care
Posted April 15th, 2010 at 4:00pm in Health Care

Patience will be more than a virtue, under Obamacare. It’ll be a necessity. A recent article from ABC News outlines why Americans can expect longer and longer waits before they see a doctor. One reason is that there just won’t be enough doctors to get the job done. ABC reports that 10 years from now, [...] More  Side Effects: Obamacare’s “Donut Hole” for Young Adults
Posted April 14th, 2010 at 12:00pm in Health Care

College seniors are eagerly ordering caps and gowns for May graduation ceremonies. But graduation day often brings loss as well as gain. Many graduates will lose coverage under their parents’ health plans as soon as they get their diplomas. It wasn’t supposed to be that way. Obamacare promised to let “children” remain on their parents’ [...] More  Side Effects: Pre-Existing Physician Payment Problems Persist
Posted April 12th, 2010 at 1:00pm in Health Care

No one can criticize the Obamacare legislation for being too short. But even at 2K+ pages, the new law fails to address some major problems with the health system. One of these is the

flawed formula Congress created years ago to determine how much the Medicare payment physicians receive for services rendered. Year after year, [...] More  Side Effects: Doctor Participation May Vary
Posted April 9th, 2010 at 6:00pm in Health Care

In recent years, the United States has faced a growing shortage of physicians. Under Obamacare, it will only get worse. Industry experts predict a 40,000 shortfall in doctors over the next decade There are two factors at play here. First, the existing supply of primary care physicians will not be able to keep up with [...] More  Side Effects: States Will Feel the Effects of Obamacare
Posted April 8th, 2010 at 12:00pm in Health Care

The national health reform rammed through Congress is giving state officials headaches. Writing in The Wall Street Journal, Indiana Governor Mitch Daniels outlines several problems states will have to deal with as a result of Obamacare. For example, Daniels now faces the prospect of terminating a popular insurance program for low-income Indiana residents. The “Healthy [...] More  Side Effects: New Tanning Tax Burns Business Owners
Posted April 7th, 2010 at 1:00pm in Health Care

In the days and weeks following the signing of Obamacare into law, Administration officials have attempted to promote all of the legislation’s immediate impacts. Owners of tanning salons across the country are already seeing one of those immediate impacts— a whopping 10% tax. One salon owner in Western Oregon laments in an interview with a local TV station, “10% [...] More  Side Effects: New Entitlement Compounds Debt Problems of Existing Entitlement
Posted April 7th, 2010 at 11:00am in Health Care

Obamacare was sold as a way to improve benefits and expand coverage. But it doesn’t seem to be panning out that way. Almost immediately, major companies offering excellent health coverage to both active workers and retirees said the new law would cost them a bundle. AT&T alone said they’d have to set aside an extra [...] More  Side Effects: Obamacare Fueling Higher Insurance Costs
Posted April 5th, 2010 at 12:00pm in Health Care

Despite all the talk about how Obamacare would lower health care costs, it’s already becoming clear that it just won’t be the case. The Indianapolis Star reports that companies can expect employee health insurance costs to rise even faster. “Driven by worries about the economy and possibly the effects of health-care reform, [health insurers] are [...] More  Side Effects: Laws No Longer Mean What They Say

Posted April 1st, 2010 at 4:00pm in Health Care

Major flaws in the gargantuan Obamacare bill started to emerge almost immediately after it was signed into law. One of the most embarrassing: failure to ensure immediate coverage for kids with pre-existing conditions—something Obamacare supporters had constantly promised was part of the bill. Looking to provide cover for those who wrote the bill, Secretary of [...] More  Side Effects: Obamacare May Be Fatal for Your HSA
Posted March 31st, 2010 at 3:00pm in Health Care

President Obama promised Americans that “If you like the plan you have now, you can keep it.” It was a fundamental promise of Obamacare. But if the coverage you like comes via a Health Savings Account (HSA) or a Flexible Spending Account (FSA), that promise may not hold. A recent analysis from HSA Consulting Services [...] More  Side Effects: Medical Devices Tax Will Costs Jobs
Posted March 30th, 2010 at 6:00pm in Health Care

There’s only one way to pull the economy out of the doldrums. We need more jobs. Now. As Obamacare inched its way toward passage, boosters of the radical legislation began making bold new claims about its virtues. The bill, they said, would do far more than simply fix the health care system; it would create [...] More

 Side Effects: Young to Pay Higher Health Insurance Premiums
Posted March 30th, 2010 at 4:15pm in Health Care

Remember those lower health insurance premiums Obamacare would bring us? Don’t count on it—especially if you’re young. The Associated Press reports that a new analysis by Rand Health predicts premiums for young adults could rise as much as 17 percent under the new law. The new age rating requirement is the culprit. It bars insurers [...] More  Side Effects: Obamacare the Television Ad
Posted March 30th, 2010 at 11:30am in Health Care

Facing an American public that hates their new health care law, the Obama administration and their union/corporatist allies are planning a multi-million dollar television ad campaign to sell the benefits of Obamacare. While Food and Drug Administration regulations require all advertising for prescription drug to "present side effect information in a manner similar to that used for the benefit information," the Obama administration faces no such hurdle when making their pitch. But if it did, this is what a typical pro-Obamacare ad would look like. More  Side Effects: Higher Health Insurance Taxes
Posted March 30th, 2010 at 8:01am in Health Care with 56 comments

Union bosses howled about one Obamacare tax hike: the levy on “Cadillac” health plans (expensive plans rich in benefits). The problem with this tax, as they see it, is that it hits the very plans often enjoyed by their rank-and-file. Ever eager to please the unions, Democratic leaders added a “fix” to the reconciliation bill [...] More  Side Effects: Obamacare Doesn’t Work on Children After All
Posted March 29th, 2010 at 8:39pm in Health Care

A signature achievement of Obamacare, we were told, was that it would provide immediate protection for children with preexisting conditions. In the brave new world of Obamacare, no ailing child could be denied coverage. Turns out, that just ain’t so. According to the Associated Press, “Under the new law, insurance companies still would be able [...] More http://blog.heritage.org/tag/side-effects/page/4/

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Exclusive from Cancer Journal: Concerns on the New Health Care Law:

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http://thf_media.s3.amazonaws.com/2010/pdf/CancerJournalArti cledec2010.pdf

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Health Care Voters Overwhelming Favor Repealing Obamacare
Posted November 9th, 2010 at 2:24pm in Health Care

The Kaiser Family Foundation polled 1,502 adults ages 18 and older, including 1,017 adults who say they voted, in the days after last Tuesday’s election. KFF allowed respondents to name, in their own words, the biggest factors influencing their vote for Congress. The top response was economy/jobs (29%), followed by voting for or against a specific party (25%), and then voting for a specific candidate (21%). Health care came in fourth at 17%. But among those voters who said health care was the top factor influencing their vote, repealing all or parts of Obama was extremely popular. A full 71% of health care voters either want to repeal Obamacare entirely (45%) or repeal parts of the law (26%). Only 11% of health care voters (and only 16% of all voters) want to leave the law as is. Obamacare is not very popular among the entire population either KFF reports: Just a quarter of the public (25 percent) now says they expect their own families to be better off under the health reform law, which is the lowest share since KFF began tracking this question.

About a third each continue to think their own family will be worse off under the law (31 percent) or that it won’t make much difference (34 percent). The public remains split on whether the country as a whole will be better (38 percent) or worse off (36 percent) under the law, while 16 percent say it won’t make much difference. You can read The Heritage Foundation Guide to Repealing Obamacare, here.

Author: Conn Carroll http://blog.heritage.org/2010/11/09/health-care-votersoverwhelming-favor-repealing-obamacare/

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Highlights From This Initiative
The Prospects for Ending Obamacare: Learning from Health Policy History

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Get to Work, New Congress—and Repeal Obamacare The Impact of Obamacare: Read the Papers Featured in the Pamphlet Exclusive from Cancer Journal: Concerns on the New Health Care Law Judge Rules Obamacare Individual Mandate is Unconstitutional

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Repeal It, Voters say Loud and Clear

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Interactive Tool to Evaluate Health Care Policy – Try It Today! Top 10 Health Care Blog Posts of 2010

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.  Right Repealing Obamacare and Getting Health Care

 Solutions for America: Our Forward-Looking Vision for Health Care  How Obamacare is Breaking State Budgets… and What State Lawmakers Can Do to Restore Fiscal Sanity  Do Doctors Cause Medicare’s High Costs? Answers from Texas

http://www.heritage.org/Initiatives/Health-Care

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