Constitutionality and Good Policy are Two Different
The Patient Protection and Affordable Care Act (PPACA), more commonly known as Obamacare, was found to be constitutional under Congress’s power to tax. Indeed, it is the biggest tax increase in American history. It is not just one tax (the personal mandate "penalty"), it is many taxes. These taxes will financially affect everyone – from the wealthy to the poor. This law will affect over 300 million people and take over almost 20% of the US economy. Referring to the healthcare bill, Nancy Pelosi said "You have to pass it to find out what is in it." Okay. Let’s look at some of the things in it that make it a bad policy to pursue.
Obamacare will affect everyone. Not only does it centralize power in the federal government and create a one-size-fits all healthcare system, it also breaks President Obama’s tax promises by massively increasing taxes on middle-class Americans. No one is shielded from the effects of this massive, over-reaching legislation. Let’s start by looking at how it creates a real problem for seniors – and most of them are not even aware of this looming healthcare problem.
Our senior citizens are enrolled in Medicare – a program intended to supply their health care needs. Like so many Federal programs, it under-delivers, is full of waste and fraud and is underwater financially. (Medicare has an unfunded liability of $38 trillion already.) Over the years Medicare Advantage developed. This private program allows seniors to escape from the traditional Medicare and choose to enroll in commercial plans where they have better benefits and choice of doctors. Those applying for this insurance cannot be rejected and pay the same premiums no matter what their age, sex or pre-existing condition they might have. Currently 25% of seniors are enrolled in Medicare Advantage plans. The Federal government gives money to the Medicare Advantage programs in order to keep the premiums affordable. Obamacare makes deep cuts in this support – about $150 billion. Estimates are that half of those covered will no longer be able to keep their current coverage, forcing those seniors back into traditional Medicare with poorer benefits and less choice in doctors.
This is bad enough but it gets even worse for the seniors. Obamacare also cuts the existing Medicare by $500 billion. In addition to this cut, 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. In 2013, the law eliminates the tax deductibility of the generous federal subsidy for employers who provide drug coverage for retirees.
Taking tax deductions for medical expenses will be harder for everyone since the expenses will have to be 10% of the adjusted gross income (instead of 7.5%). Seniors, who normally have the highest medical expenses, have this change waived from 2013 to 2016 only.
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. Likewise, starting in 2018, there is a new 40% federal excise tax on "Cadillac" health plans. So, if you care enough to have really good health insurance and can afford it, you will be penalized.
According to the Centers for Medicare and Medicaid Services (CMS): - providers for whom Medicare constitutes a substantial portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (fewer doctors and healthcare providers) - 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(fewer hospitals).
Under the new law, physicians will be even more dependent on government payment systems for their reimbursement (an already severely flawed system which is why not all doctors accepted Medicare or Medicaid to start with) - the law creates an Independent Payment Advisory Board, which will recommend measures to reduce Medicare spending. (The board is forbidden from certain actions. For the board, reimbursement for doctors and other medical professionals seems to be the only target left. Payment cuts can effectively ration care.)
Older people generally have larger investments than younger people. (Retirement plans are almost always investments.) The new 3.8% Medicare tax imposed on unearned or investment income effective 2013 will disproportionately affect older persons. Both the healthcare and finances of the baby boomers reaching retirement age, and all those already retired, are going to be severely and negatively affected by this law as the various provisions take effect over the next few years.
Families also have reasons to be concerned about Obamacare. While it gives health insurance entitlements to many families, it reduces the family’s choices in coverage. Many insurance companies have dropped their child-only policies because of the huge, unexpected costs caused by Obamacare. (An estimated half million children in America have already been affected by this.) The law undermines the parents’ role and responsibility in a minor’s healthcare. It spends $125 million a year on "school based health centers" and a new "Personal Responsibility Education" (PRE) program that denies parents knowledge of sensitive services (contraception and abortion) that their children receive in federally funded projects. The health law even includes a program targeting teen pregnancy that neglects to incorporate a requirement to reduce abortions.
I have barely scratched the surface of why this law is bad policy! More in the next article.