Fix Health Care Policy

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One of Obamacare’s many failures is the temporary small business tax credit, which is intended to encourage small employers to offer health insurance to their employees by partially offsetting the cost. Thus far it has largely failed to do so.

Initially, the IRS estimated that 4.4 million taxpayers could have been eligible for the credit. As J. Russell George, Treasury Inspector General for Tax Administration, testified before Congress, “The IRS mailed approximately 4.4 million postcards at a reported cost of approximately $1 million, with basic information on the Credit to businesses that could be affected.”

But even after spending $1 million to advertise the credit, only 7 percent of potentially eligible employers claimed it. As George testified: “[T]hrough mid-October 2011, the IRS reported that 309,000 taxpayers…had claimed the Credit for a total amount of $416 million. This is substantially lower than the Congressional Budget Office estimate that taxpayers would claim up to $2 billion of Credit for Tax Year 2010.”

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Tags: congress, costs, crushing rules, employer mandate, small business tax credit, small employers, subsidies

The Medicaid expansion is touted by proponents of Obamacare as a “no-brainer.” While it is true that some states may see projected savings, it is erroneous to claim that this experience applies to every state.

Proponents predict that by expanding Medicaid states will be able to reduce payments to health care providers, such as hospitals, for uncompensated care. As a matter of fact, nationally, the opposite is true:

• 40 of 50 states are projected to see increases in costs due to the Medicaid expansion.
• The majority of states see costs exceed savings when the federal match rate is lowered after the first three years. From there, state costs continue to climb, dwarfing any projected savings.
• State savings are concentrated in large states. New York is estimated to see $33 billion in savings, while Massachusetts is estimated to save $6 billion over 10 years. Because of the design of their current programs, these states have a unique opportunity to restructure their programs and transfer significant cost to the federal ledger. (continues below chart)

Of course, even these savings are highly speculative. They assume that uncompensated care costs actually decrease under a Medicaid expansion. Analysis of other states shows that this is not always the case. In fact, in Maine, uncompensated care continued to grow.

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Tags: expansion, Medicaid, savings, speculative, States, subsidies, uncompensated care costs

Andrew Shurtleff/ZUMA Press/Newscom

Obamacare has been law for nearly three years, with its anniversary approaching on March 23. And while the major provisions (exchange subsidies and Medicaid expansion) aren’t slated to begin until 2014, Obamacare is already having devastating effects on Americans and their health care.

Recall that fateful Presidential promise, made on several occasions during the health care reform debate, “If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.”

Despite the President’s promise, Heritage warned that many provisions in Obamacare would encourage employers to drop health coverage for their workers:

Many businesses and their employees—especially lower-income employees—will find that replacing ESI [employer-sponsored insurance] plans with subsidized coverage on the exchanges is mutually beneficial. Employers would no longer offer health insurance but would offer wage increases as wages and benefits are substitutes in an employee’s net compensation. At the same time, these workers will still have access to coverage through the exchanges with the subsidies or through Medicaid.

Heritage had it right. As employers and businesses prepare for the law’s major insurance regulations and mandates to begin next year, more stories of people losing their current coverage are emerging.

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Tags: anniversary, drop health coverage, insurance regulations, Medicaid, ObamaCare, presidential promise, subsidies, three years

The Congressional Budget Office (CBO) released its Budget and Economic Outlook for 2013–2023 today. Here are five major takeaways:

1)      Health care entitlement spending is bypassing all other spending. Spending on Medicare, Medicaid, Obamacare subsidies, and the Children’s Health Insurance Program will be greater than all other spending—including Social Security and defense spending: “Spending for major health care programs will be nearly 5 percent of GDP [gross domestic product] in 2013, and such spending is projected to grow rapidly when provisions of [Obamacare] are fully implemented by middecade, reaching 6.2 percent of GDP in 2023.”

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Tags: Congressional Budget Office, entitlement spending, Medicaid, Medicare, ObamaCare, report, subsidies

Labor union leaders, who are big supporters of President Obama and were big proponents of his health care reform law, want taxpayer dollars to help pay for the increase in their health care costs due to Obamacare.

There are many provisions in Obamacare that will raise the cost of insurance in both the individual and employer markets. To name just a few of these provisions: no pre-existing condition exclusions, no cost-sharing on certain preventative benefits, children can stay on their parents’ plan until they’re 26, and no cap on medical benefits.

It should surprise no one that adding benefits and restricting cost-sharing adds considerable costs to health plans.

However, it appears the unions were too busy supporting Obamacare to do the math. Unions are now asking for a reprieve from the higher costs in the form of taxpayer subsidies for their lower income workers with employer-sponsored insurance. However, the subsidies are only intended to go to those purchasing coverage in the new exchanges, not to anyone with employer-sponsored insurance.

To be clear, they want taxpayer subsidies to offset the cost of their insurance while non-union workers in the same predicament would not receive help.

This request should insult every American taxpayer. These unions are using their political clout to ask for special treatment under the law at the expense of taxpayers.

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Tags: benefits, Cadillac tax, cost-sharing, health plans, labor unions, ObamaCare, subsidies

Not all surprises are good. When it comes to Obamacare, the original projections are turning into unfortunately different realities. For the next two days, Heritage is going to highlight one of the various changes in Obamacare projections (e.g., cost, enrollment, etc.) from when the law first passed until now.

Obamacare was passed into law under the guise that it would expand access to health coverage while simultaneously reducing the federal deficit.

In 2010, the Congressional Budget Office (CBO) estimated that Obamacare would result in deficit reduction totaling $143 billion from 2010–2019.

In 2012, the CBO estimated that Obamacare would result in deficit reduction totaling only $109 billion from 2013–2022, $34 billion less than in 2010. Among other updates, this is due to the rising costs of subsidies in the exchanges.

Surprise: The CBO lowered its deficit reduction projection by 24 percent, revealing that Obamacare will cost the American public far more than anticipated. Turns out, the best things don’t come in big, Obamacare-sized packages.

12 Days of Obamacare Surprises:

10. Unelected bureaucrats on IPAB…

9. Increased employer penalties…

8. More cuts to Medicare…

7. Loss of employer-sponsored insurance…

6. A 50/50 split on enrollment estimates…

5. More uninsured Americans…

4. Increased exchange subsidies…

3. Big tax increases…

2. The small business tax credit…

1. And the individual mandate.

Tags: "deficit reduction", CBO, Medicaid Expansion, Obamacare surprise, rising costs, subsidies

Photo: Dominique Bruneton/Altopress/Newscom

Not all surprises are good. When it comes to Obamacare, the original projections are turning into unfortunately different realities. For the next 9 days, Heritage is going to highlight one of the various changes in Obamacare projections (i.e. cost, enrollment, etc.) from when the law first passed until now.

The federal government will provide subsidies to offset the cost of coverage in Obamacare’s new exchanges for those with incomes between 100 percent and 400 percent of the federal poverty level.

In 2010, the Congressional Budget Office (CBO) projected that exchange subsidies would average $6,000 per enrollee in 2019, for a total cost of $113 billion.

In 2012, the CBO updated its projection for an average subsidy cost of $6,470 per enrollee in 2019. The total cost of subsidies and related spending is now projected to be $137 billion in 2019.

Surprise: With premiums higher than initially anticipated, the average subsidy is now projected to cost $470 more per person in 2019 alone. This increase in projections of about 8 percent is an indication that both health care premiums and the cost of Obamacare will continue to rise faster than reindeer take flight!

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Tags: exchanges, federal poverty level, ObamaCare, subsidies, surprises, uninsured

Americans who feel overtaxed already are in store for a shocker: Obamacare will add 17 new taxes or penalties for a whopping cost of $502 billion over its first 10 years.

This week’s chart illustrates the new taxes and offers a year-by-year rundown of their annual costs. These taxes will pay for generous subsidies, an expansion of Medicare and new government spending.

A notable jump in Obamacare taxes comes in 2013, a result of Medicare Hospital Insurance tax and an increase in taxes on investment income for high-income earners.

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Tags: 17 new taxes, in pictures, Medicare, new government spending, ObamaCare, subsidies

One major concern of Obamacare is its huge incentive for businesses to dump employer-sponsored coverage. Recently, the Obama Administration acknowledged that this is likely, though it did so in an attempt to portray it as a positive outcome of its signature legislation. In reality, Americans will experience severe consequences if this effect of the new law comes to fruition.

Under Obamacare, those without government-qualified employer-sponsored insurance will be able to purchase insurance in the new exchanges. The new law creates generous subsidies to make coverage more affordable for low- and middle-income Americans. To qualify for a subsidy, an individual or family must fall between 138 and 400 percent of the federal poverty level. (Read the rest at The Foundry…)

Tags: drop coverage, employers, federal health insurance exchanges, ObamaCare, subsidies

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 it would be 14 million. But a new report by former Director of the Congressional Budget Office Douglas Holtz-Eakin predicts it could be as high as 35 million. That kind of disruption comes at a high price: It’ll cost taxpayers nearly $1 trillion more than previously estimated.

Why? Because Obamacare calls for lavish subsidies to help low- and middle-income Americans buy health insurance. Indeed, households earning up to four times the federal poverty level are eligible for subsidies. According to 2008 Census data, some 127 million Americans would qualify. Yet the official CBO analysis of Obamacare estimated only 19 million would get subsidies. (more…)

Tags: Congressional Budget Office, employer mandate, firewall provision, Side Effects, subsidies, tax penalties