Oba­macare costs sky­rocket, even pre-launch

Gov­ern­ment can’t run health sys­tem bet­ter than the mar­ket

The Washington Times Daily - - Metro - By Howard Rich

The stated ob­jec­tive of Pres­i­dent Obama’s so­cial­ized medicine law is to ex­pand ac­cess to qual­ity, af­ford­able health care in Amer­ica — hence the statute’s ti­tle, the Pa­tient Pro­tec­tion and Af­ford­able Care Act. As far as in­tended out­comes are con­cerned, greater ac­cess to lower-cost health in­sur­ance is cer­tainly a de­sir­able ob­jec­tive. Shrink­ing the ranks of the unin­sured would pro­duce a con­trac­tion of Amer­ica’s wel­fare state, thus re­duc­ing tax­payer obli­ga­tions as­so­ci­ated with de­pen­dency. Mean­while, low­er­ing health care costs would cre­ate more dis­pos­able in­come, thereby stim­u­lat­ing the na­tion’s con­sumer econ­omy.

Clearly, these out­comes will not be achieved by Oba­macare, though. In­stead, this Or­wellian nightmare will have pre­cisely the op­po­site ef­fect — dra­mat­i­cally in­creas­ing fed­eral out­lays (by an es­ti­mated $2.5 tril­lion in its first decade) while lim­it­ing dis­pos­able in­come on mul­ti­ple fronts, not the least of which is its es­ti­mated $500 bil­lion in tax in­creases.

Like most un­nec­es­sary ex­pan­sions of gov­ern­ment, Oba­macare doesn’t achieve its ob­jec­tive of “af­ford­able” cov­er­age, ei­ther. As Oba­macare’s first round of man­dates and tax hikes kicked in last year, fam­ily health care costs soared by 9 per­cent. Ac­cord­ing to pro­jec­tions re­leased by the Of­fice of the Ac­tu­ary for the Cen­ters for Medi­care & Med­i­caid Ser­vices, net health care costs for 2014 — the first full year of the law’s im­ple­men­ta­tion — will in­crease by 14 per­cent.

Why is this hap­pen­ing? Be­cause Oba­macare is based upon sev­eral fa­tally flawed as­sump­tions — most notably that gov­ern­ment can run the health care in­dus­try bet­ter than the free mar­ket.

Ac­cord­ing to the Obama ad­min­is­tra­tion, new taxes, bu­reau­cra­cies, reg­u­la­tions and en­ti­tle­ment obli­ga­tions are the keys to mak­ing health care less ex­pen­sive. Such a premise — like other big-gov­ern­ment machi­na­tions — is il­log­i­cal on its face. Hon­estly, are we to be­lieve that a coun­try that is al­ready strug­gling to af­ford these costs will be mag­i­cally able to man­age them once the weight of this Or­wellian nightmare has been placed on our health care sys­tem?

“If you think health care is ex­pen­sive now, wait un­til you see what it costs when it’s free,” P.J. O’rourke fa­mously said nearly two decades ago. Sadly, Amer­ica is about to find out that cost. Oba­macare con­tains at least 20 tax hikes — in­clud­ing the in­sid­i­ous “in­di­vid­ual-man­date ex­cise tax,” which would im­pose a sur­tax on Amer­i­cans who fail to pur­chase health in­sur­ance from a “qual­i­fy­ing” provider. There is also an em­ployer ex­cise tax, a jobkilling sur­tax on in­vest­ment, Med­i­caid pay­roll tax in­creases and nu­mer­ous other levies.

Since we know that these tax hikes (and the moun­tain of deficit spend­ing that ac­com­pa­nies them) aren’t “pur­chas­ing” lower health care costs for Amer­i­cans, what are tax­pay­ers spend­ing all of that money on?

That’s easy — vast lay­ers of new and ex­panded bu­reau­cra­cies.

Oba­macare cre­ates no fewer than 159 new pro­grams — a mam­moth ex­pan­sion of an al­ready bloated fed­eral gov­ern­ment that will re­sult in the hir­ing of thou­sands upon thou­sands of new tax­payer-funded em­ploy­ees.

This year, for ex­am­ple, the In­ter­nal Rev­enue Ser­vice re­quested nearly $400 mil­lion in ad­di­tional fund­ing to hire 1,054 new em­ploy­ees. Why? Be­cause, ac­cord­ing to the agency, Oba­macare “rep­re­sents the largest set of tax law changes in more than 20 years, with more than 40 pro­vi­sions that amend the tax laws.”

Among the items in­cluded in the IRS re­quest: $30 mil­lion to “ad­min­is­ter new fees” on in­sur­ers, $11 mil­lion to “pro­mote com­pli­ance” with Oba­macare’s new tan­ning sa­lon tax and $10 mil­lion to “strengthen over­sight” of those med­i­cal fa­cil­i­ties for­tu­nate enough to be ex­empt from the law’s most oner­ous pro­vi­sions.

In ad­di­tion to bal­loon­ing bud­gets at ex­ist­ing bu­reau­cra­cies, Oba­macare cre­ates dozens of new ones — rang­ing from the swarm of agen­cies tasked with im­ple­ment­ing its statewide health care “ex­changes” to dozens of smaller coun­cils, com­mit­tees and grant pro­grams such as the “In­dian youth life skills demon­stra­tion project” and the “demon­stra­tion projects for nurs­ing fa­cil­i­ties in­volved in the cul­ture change move­ment.”

How far the fed­eral gov­ern­ment has come since 1798, when Pres­i­dent John Adams broke the seal on gov­ern­ment-funded health care by au­tho­riz­ing tax­payer-funded med­i­cal care for mer­chant sea­men. In fact, tele­vi­sion host Glenn Beck re­cently noted that the var­i­ous new gov­ern­ment pro­grams cre­ated by Oba­macare vastly out­num­ber those cre­ated dur­ing the en­tirety of Franklin Roo­sevelt’s New Deal.

At a time when Amer­ica des­per­ately needs to re­store the pri­macy of the free mar­ket, Oba­macare marks an un­prece­dented step in the wrong di­rec­tion. If our lead­ers’ goal is truly to pro­vide “af­ford­able care,” then this mon­stros­ity must be re­pealed and gov­ern­ment’s role in health care must be dra­mat­i­cally scaled back. cov­er­age. The an­nual rate of in­crease in spend­ing by pri­vate health in­sur­ance dropped by two-thirds, to an an­nual in­crease of just 2.4 per­cent in 2010, ac­cord­ing to the fed­eral Cen­ters for Medi­care and Med­i­caid Ser­vices (CMS).

This tight­en­ing of pri­vate health spend­ing has led to an over­all re­duc­tion in the rate of in­crease for health spend­ing to 3.9 per­cent in 2010, ver­sus 7.6 per­cent in 2007. The Al­tarum In­sti­tute es­ti­mates that ag­gre­gate an­nual health spend­ing for 2011 in­creased by a still rea­son­able 4.5 per­cent from 2010.

Be­fore Oba­macare, pri­vate health in­sur­ers re­sponded to the squeeze by get­ting leaner and im­prov­ing their busi­ness pro­cesses, ac­cord­ing to Mckin-

sey and Co. Mckin­sey con­cludes that of the var­i­ous cat­e­gories of health spend­ing, ex­pen­di­tures on “health ad­min­is­tra­tion and in­sur­ance” in­creased the least — just 1.6 per­cent an­nu­ally — dur­ing the pe­riod 2006 through 2009. CMS data shows that the share of health in­sur­ance that does not pay for med­i­cal claims shrank by an av­er­age of about 2 per­cent an­nu­ally in 2008 and 2009.

But this came to a screech­ing halt, fol­lowed by a fast U-turn, when Oba­macare was signed. The share of health in­sur­ance that does not go to­ward med­i­cal claims jumped by 8.4 per­cent in 2010 as Oba­macare took ef­fect. For the first time in seven years, growth in to­tal pri­vate health in­sur­ance pre­mi­ums ex­ceeded growth in to­tal ben­e­fits in 2010 and was higher than any other com­po­nent of health spend­ing.

The Mil­li­man Med­i­cal In­dex (MMI) for 2011 re­ported to­tal health costs (in­clud­ing the ad­min­is­tra­tive load of in­sur­ance) for a fam­ily of four cov­ered by a pre­ferred-provider or­ga­ni­za­tion of $19,393, a 7.3 per­cent in­crease over 2010. The Kaiser Fam­ily Foun­da­tion’s lat­est sur­vey of em­ployer-based health ben­e­fits re­ported a sig­nif­i­cant in­crease of 9.5 per­cent from 2010 to 2011. These pre­mi­ums are in­creas­ingly un­af­ford­able for many small busi­nesses: The pro­por­tion of small firms of­fer­ing health ben­e­fits dropped from 69 per­cent to 60 per­cent just from 2010 to 2011.

There are two pri­mary rea­sons for this harm­ful con­se­quence of Oba­macare:

First, some of the law’s anti-com­pet­i­tive “con­sumer pro­tec­tions” took ef­fect in Septem­ber 2010, es­pe­cially elim­i­nat­ing pre-ex­ist­ing ex­clu­sions for chil­dren, cov­er­age of pre­ven­tive health ser­vices and ex­tend­ing de­pen­dent cov­er­age for young adults up to age 26 on their par­ents’ plans. Although there is a wide range of cost es­ti­mates for each “pro­tec­tion” that came into force in 2010, the mid­point for the ag­gre­gate ef­fect is a pre­mium in­crease of about 3 per­cent.

Sec­ond, choice and com­pe­ti­tion are dis­ap­pear­ing fast from U.S. health in­sur­ance. Re­ports abound of health in­sur­ers re­treat­ing, es­pe­cially from small­group mar­kets. For ex­am­ple, New York’s Em­pire Blue Cross Blue Shield has de­cided to shrink dra­mat­i­cally, drop­ping more than 20,000 small groups con­tain­ing more than 200,000 ben­e­fi­cia­ries.

As in­sur­ers flee, those who re­main will reap the ben­e­fits of re­duced com­pe­ti­tion. Ac­cord­ing to an anal­y­sis by Bloomberg Gov­ern­ment, av­er­age op­er­at­ing profit mar­gins for four of the largest health in­sur­ers in­creased by more than 8 per­cent in the 18 months af­ter the law was signed. Quar­terly earn­ings per share from con­tin­u­ing op­er­a­tions be­tween the third quar­ters of 2008 and 2011 jumped 29 per­cent.

If Oba­macare had not been passed, the re­ces­sion would have been some­what soft­ened by mod­er­ate pre­mium in­creases for health in­sur­ance. Oba­macare rubs salt in the wounds of the Amer­i­can peo­ple — ei­ther un­em­ployed or with­out a raise in four years — who are suf­fer­ing un­nec­es­sary pre­mium in­creases driven by that mis­guided re­form.


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