Archive for May, 2012
Obamacare’s medical loss ratio (MLR) provision began this year and requires insurers in the individual and small-group markets to spend 80 percent of premiums—85 percent for insurers in the large-group market—on medical claims or quality improvements. If the insurer doesn’t spend the required percentage, it must issue a rebate to consumers.
Earlier this month, the Department of Health and Human Services (HHS) finalized a rule that requires insurers to notify rebate recipients that their rebate is all thanks to Obamacare. In the first paragraph it must state, “This letter is to inform you that you will receive a rebate of a portion of your health insurance premiums. This rebate is required by the Affordable Care Act—the health reform law.”
The Kaiser Family Foundation estimates that the rebates to customers will range from $76 on average for those insured in the small-group market to $14 on average for those in the large-group market.
How bad is Medicare’s financial condition? What will happen to taxpayers and seniors if the program is not reformed? What solutions have been proposed in Congress? Join us on Friday June 1 from 12-1 ET for our “Lunch with Heritage” chat featuring Kate Nix. She will answer these and any other questions you may have about Medicare. Be sure to review the “Medicare at Risk” slideshow to see how bad the problem really is. If you cannot make the chat, leave a comment and we will try and answer it for you. If you want to RSVP for the chat, leave your email in the form below and we will send you a reminder email and nothing else.
Earlier this month, President Barack Obama sat down with world leaders at the G8 summit and bragged about his track record of supposed good governance — how he has worked to “bring down our deficits and debt over the longer term” and made “room to take a balanced approach to reducing our deficit and debt.” There are plenty of ways to shoot holes in the president’s pronouncement, but there is one glaring example of where he has come up far short — failing to address America’s growing Medicare crisis.
In “Medicare at Risk: Visualizing the Need for Reform,” Heritage’s Kathryn Nix and John Fleming illustrate the facts about Medicare and why Washington must come to the rescue with innovative solutions to preserve the program today and into the future.
President Lyndon Johnson signed Medicare into law in 1965, creating a program that today provides health insurance to some 48 million Americans. Now, though, that program is in desperate need of reform as the United States grapples with retiring baby boomers entering the system, increasing health care costs and a status quo that simply can’t be sustained.
A month before the Supreme Court is expected to rule on the constitutionality of Obamacare, liberal supporters are already planning an aggressive propaganda campaign to sway media coverage and public opinion.
The focus of the liberal public-relations campaign will be on “real people” — individuals who can speak about the impact of the ruling regardless of what the Supreme Court decides. A newly released memo, first published by BuzzFeed, suggests liberals should adapt their message and events to defend government-run health care.
President Obama has repeatedly claimed that he is “going to keep on fighting for what matters to middle class families.” Well, in this “fight,” the President seems to be his own worst enemy. His health care law does far more damage than good to the American middle class.
Here are the five most prevalent and harmful burdens the middle class will be forced to bear under Obamacare:
- More taxes. Obamacare imposes $502 billion of new or increased taxes and fees. Heritage expert Curtis Dubay explains that several of the taxes “will ultimately be passed on to [middle-income families] through higher prices. These include the fees on medical device manufacturers, pharmaceutical companies, and health insurance companies and the new tax on tanning services.” The middle class will also be burdened by the individual mandate to purchase insurance, new restrictions and limits on their tax-free health and flex savings accounts, and a new tax on high-cost (Cadillac) health plans. Starting next year, Obamacare increases the Medicare payroll tax from 2.9 percent to 3.8 percent for individuals earning above $200,000 and couples earning more than $250,000 and for the first time extends the tax to income earned from investment. But the threshold for the higher rate isn’t indexed to inflation and will impact more middle-class families each year. The 2012 Medicare trustees report states, “By the end of the long-range projection period, an estimated 80 percent of workers would pay the higher tax rate.”
Three years ago, the University of Notre Dame invited President Barack Obama to deliver a commencement address and conferred on him an honorary law degree. But on Monday, the university joined 42 other Catholic institutions in suing the Obama Administration over new Obamacare regulations that force religious institutions to pay for coverage of abortion-inducing drugs, contraception, and sterilization regardless of the employers’ moral or religious objections.
The mandate’s narrow exemption effectively applies only to churches and other houses of worship; religiously affiliated hospitals, colleges, charities and other non-profits don’t qualify for a religious exemption. Cardinal Donald Wuerl, Archbishop of Washington, explained the significance of the Administration’s mandate and its impact on those institutions, remarking that, “For the first time in this country’s history, the government’s new definition of religious institutions suggests that some of the very institutions that put our faith into practice–schools, hospitals, and social service organizations–are not ‘religious enough.’”
In total, 12 lawsuits were filed this week challenging the Administration’s anti-conscience mandate, and the wide range of organizations joining the legal challenge underscores the enormous opposition to the mandate. Heritage’s Sarah Torre explains that the lawsuits span from the Catholic dioceses of Washington, D.C., and Joilet, Illinois, to Catholic Charities of Jackson, Mississippi, and the Michigan Catholic Conference. “The range of the 43 institutions that have joined the dozen suits highlights the variety of Good Samaritan groups harmed by the mandate,” Torre writes.
Heritage’s new chart series, “Medicare at Risk: Visualizing the Need for Reform,” shows that, without the necessary structural reform, Medicare’s finances will have devastating consequences on the federal budget, not to mention taxpayers and seniors alike.
Medicare’s Impact on the Budget. Medicare spending is rising faster than any other part of the federal budget, and it’s a major driver of runaway deficit spending in the not-so-distant future. Retiring baby boomers and rising health care costs will cause Medicare’s shortfall to contribute to 81 percent of federal deficits by 2040. Clearly, the federal deficit cannot be contained without addressing Medicare’s structural problems.
Medicare’s Impact on Taxpayers. Medicare spending isn’t just busting the federal budget; its also consuming more of household budgets. In 1970, average Medicare spending per American household was $129. In 2021—just nine years from now—spending per household will be a whopping $7,987. Unless there is significant reform to deal with these rising costs, Americans will be faced with automatic benefit cuts or steep tax increases. The Medicare Part A payroll tax would have to increase by 84 percent just to make Part A alone solvent.
Consumer-directed health plans have become increasing popular because of their ability to save consumers money. Breaking research published by Health Affairs shows that if consumer-directed health plans increased as a share of employer-sponsored plans from 12.4 percent to 50 percent, it could save $57.1 billion annually in national health expenditures. The report states, “Savings of this magnitude would account for 7 percent of all health care spending for the population with employer-sponsored insurance and 4 percent for the nonelderly population as a whole.”
The study uses two types of consumer-directed plans to comprise the increased market share: half health reimbursement arrangements (HRAs) and half health savings accounts (HSAs). The study shows that if the ever-popular HSAs were to take up the entire 50 percent of market share, savings could reach $73.6 billion, or 9.1 percent of employee health care spending. This is because employees save more money in the high-deductible HSAs than in HRAs. HSAs are funded by both the employer and employee, while HRAs are funded solely by the employer. Thus, any money not spent in a HSA rolls over for the employee to keep, while in an HRA, it is just money the employer did not have to spend.
Yet another provision of Obamacare is expected to cost taxpayers more than they expected. The House Energy and Commerce Committee recently sent a letter to the Centers for Medicare and Medicaid Services (CMS) asking for details regarding the probable loss of $3.1 billion out of the $3.4 billion in Obamacare loans to its Consumer Operated and Oriented Plan (“CO-OP”). The estimate comes from the President’s Budget Appendix, and the committee is considering rescinding funds that haven’t already been obligated.
The Obamacare initiative gives CMS the authority to award $3.4 billion in loan subsidies to states to fund start-up costs and to help meet state solvency requirements for the health plans in the CO-OP initiative, The Committee’s letter explains that these loans are a bad investment for taxpayers: “[T]he amount of expected losses is estimated to be about $3.1 billion of the $3.4 billion appropriated (91 percent). These losses exceed the estimate HHS presented in its proposed rule.”
Health Care News
On Monday, the Obama Administration signaled that another part of its signature health care law may not be working out as planned. The Centers for Medicare and Medicaid Services (CMS) put an end to a program that offered a $100 incentive to insurance brokers and agents for recommending eligible people to Obamacare’s Pre-Existing Conditions Insurance Plan (PCIP).
Obamacare created the PCIP, commonly called a high-risk pool, as a temporary way to cover those with pre-existing or chronic conditions before 2014, when insurance companies will be prohibited from excluding people based on health conditions.
In an explanation of the Administration’s decision, Ryan Young, senior director of federal government affairs for the Independent Insurance Agents & Brokers of America, stated, “They just said enrollment’s up to where we want it to be, basically, and we don’t need your services anymore.”
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