September 29, 2010

September 29, 2010 | Commentary on Health Care, Obamacare

On Health Care, Hold the Applause

Last March, House Speaker Nancy Pelosi said the Obama administration's health-care bill had to become law "so you can find out what is in it." Six months later, we're finding out, all right. And its popularity is flat-lining.

Public opinion - fueled by daily revelations of higher costs, heftier premiums and disruptions in current and future health insurance coverage - is quickly hardening in favor of full-scale repeal. A closer look at how specific groups will be affected shows why:

Businesses: The White House heralds the small-business health-care tax credits, and the taxpayer bailout for retiree coverage, as business boosters. This might impress anyone who doesn't run a business. But business leaders know that disruptive employer mandates; a raft of new taxes on insurance, drugs, medical devices and investment; plus mounds of regulation and IRS paperwork, will hike costs considerably.

Meanwhile, the New York-based Mercer consulting firm reports that 47 percent of employers expect to lose the "grandfathered status" of their health plan next year under new federal rules. So much for that repeated presidential promise of "keeping" the plan you like.

Seniors: The White House team thinks that Andy Griffith can sell their Medicare changes to gullible seniors through television ads. But Medicare's Office of the Actuary projects that the record-breaking payment reductions due to hit hospitals, home health agencies, and nursing homes will make 15 percent of these providers unprofitable and possibly "jeopardize" seniors' access to care.

Payment cuts to Medicare Advantage plans will hit especially hard. These plans' projected 10-year senior enrollment is expected to drop from 14.8 to 7.4 million. By 2017, the average annual per capita cuts for Medicare Advantage enrollees will be about $3,700 - a 27 percent reduction from today's levels. Perhaps Griffith could cut another ad explaining to seniors why this is good news.

Doctors: They lose big time. The law doesn't fix the Medicare physician payment formula, meaning that doctors again face draconian payment cut of 23 percent this December. And with an estimated 18 million more persons enrolled in Medicaid, which pays doctors on average 56 percent of what they'd make in private practice, physicians will see their pay being set even more through government formulas.

Doctors will have to comply with new federal quality and reporting standards or face mandatory reductions in Medicare payments. They can expect more bureaucracy, more rules and regulations, more compliance and reporting requirements. Top it off with more emergency room overcrowding and a shortage of colleagues, and still no relief through medical liability reform. Doctors should sue their lobbyists for malpractice.

States: Washington's micro-management of health care is very unpopular in state capitols. Twenty states have filed suit against the imposition of an unconstitutional individual mandate to buy federally approved insurance, and 13 are suing over the mandatory Medicaid expansion. Already 44 states report that they have exceeded projected Medicaid enrollment and spending targets for this year, but Washington is ordering even higher state spending.

Under Section 1311, the cash-strapped states "shall" set up federally designed health insurance exchanges, and, in so doing, comply with numerous federal rules on their establishment and management. While the Congressional Budget office says the 10-year federal costs for "start up" and related expenses to establish these exchanges is $7 billion, additional costs to the states is unknown. Expect more court challenges.

Taxpayers: President Obama promised he wouldn't raise taxes on middle-class Americans. Supposedly, no family making less than $250,000 annually would be touched. Not so. Most of the new taxes, estimated to generate more than $500 billion in the coming decade, will fall on middle-class Americans.

The president now admits that the new law doesn't lower health-care costs. With more than $1 trillion in additional federal spending, plus the creation of two new entitlements - a program of taxpayer subsidies for insurance and a federal long-term care program - government spending will skyrocket in 2014, driving up costs for taxpayers.

With such strong economic incentives to drop workers' coverage, former Congressional Budget Office Director Doug Holtz-Eakin predicts 35 million people or more could be dumped out of their employer's plan. That would mean bigger taxpayer subsidies for the displaced workers to get their coverage through the state exchanges, much higher federal spending that would raise the deficit by an additional $554 billion in the first 10 years, and as much as $1.4 trillion over the next 10 years.

Some "reform" bill. No wonder so many Americans want to pull the plug.

Nina Owcharenko is director of the Center for Health Policy Studies at The Heritage Foundation and Robert E. Moffit is a senior fellow in the center.

About the Author

Robert E. Moffit, Ph.D. Senior Fellow
Center for Health Policy Studies

Nina Owcharenko Director, Center for Health Policy Studies and Preston A. Wells, Jr. Fellow
Center for Health Policy Studies

First moved on The McClatchy News Wire service