The White House claims ObamaCare will make health care more affordable for all Americans, but a closer look at the costs of the mandates shows just the opposite to be the case.
The law’s numerous mandates, ranging from the employer and individual mandates to the minimum coverage mandate. are driving up health insurance costs.
And health insurance industry leaders say the law has done next to nothing to stem the cost increases.
“We have a health care cost crisis facing this country,” said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, a national trade association representing the health insurance industry. “The health care reform virtually ignored the health care cost crisis facing this country and instead imposes billions of dollars in new mandates and taxes that will increase the costs of coverage for individuals and for employers.”
ObamaCare instead increased the health insurance costs to the states and employers alike.
States are being forced to confront burgeoning costs associated with the health care law’s mandate that their Medicaid plans cover all those earning 133% above the federal poverty level starting in 2014. This increased Medicaid caseload will be 100% subsidized by the federal government until 2016.
They also will be responsible for covering those who are currently eligible for, but not currently served by, Medicaid during the same time period. “Given the fiscal damage of the recession on state budgets, these additional costs may be difficult to absorb even a few years from now when implementation of the reform measures begin,” top credit-rating company Moody’s (http://tinyurl.com/6xan4mw) wrote in an April 2010 brief on ObamaCare’s impact on the states.
Mississippi Gov. Haley Barbour warned Congress in March (http://therossomandoreport.com/2011/03/03/governors-say-obamacare-will-cause-a-very-big-tax-increase/) that these added Medicaid burdens would necessitate drastic tax increases unless the federal government gives the states waivers to manage their programs more effectively.
“It is going to take a very big tax increase,” Barbour told members of the House Energy and Commerce Committee. “The federal act would require us to increase the [Medicaid] rolls by about two-thirds, or about 600,000 people to a million, a third of our population. Because the costs are back-loaded, it would be $1.3 billion to $1.7 billion over 10 years.
“We are going to have to raise taxes or cut spending, and more likely, we will have to do both.”
Moody’s also found that administrative costs associated with setting up the state-based health insurance exchanges will place an added burden on already tight state budgets starting Jan. 1, 2015.
A March 2011 Congressional Budget Office (CBO) (http://www.cbo.gov/ftpdocs/121xx/doc12119/03-30-HealthCareLegislation.pdf) analysis of the health care law’s impacts on the nation found that the law’s requirement that private insurers provide a set list of coverages that employers are mandated to carry has meant that “premiums for health insurance in the individual market will be somewhat higher than they would otherwise be.”
“The bottom line is that we are talking about one-size-fits-all health insurance,” said Ryan Ellis, tax policy director with Americans for Tax Reform (ATR). “You have the Left’s idea—the limousine liberal idea—of what health insurance should look like.
“They want to force people to buy that sort of health insurance to the exclusion of other health insurance that might make better sense.”
The impact of many of the minimum-mandated health insurance coverages is already being felt in the health insurance market, which will increase employer costs by 8.9% this year, according to Kiplinger (http://www.kiplinger.com/columns/ask/archive/healthinsurance-changes-for-2011.html), compared with 7% for the past year.
The CBO report indicates that consumers could end up paying less directly to their insurers once the health insurance exchanges come into being in 2014, but it will be at the cost of more than $500 billion in new taxes, according to an ATR analysis (http://www.atr.org/obamacare-taxes-final-tab-a4744).
These taxes include:
- A $60.1 billion tax on health insurers that will begin in 2014.
- A $20 billion tax on medical device manufacturers starting in January 2013.
- An $86 billion hike in the Medicare payroll tax starting in January 2013.
- A $123 billion surtax on investment income targeted at those earning more than $250,000 starting in January 2013, among others.
“The sales tax on health insurance will do nothing but drive up the cost of coverage,” Zirkelbach said.
Lower-income workers will be particularly harmed by these increased costs, according to a May 2010 report written by former CBO chief Douglas Holtz-Eakin [http://tinyurl.com/6fdmrjr].
“Since debate over health care reform began, it was clear the President’s health care overhaul would be expensive, but now we know that fees on insurance companies will leave families with an additional and crushing $5,000 bill over the next decade,” Holtz-Eakin also wrote, according to a report in TheHill.com last March [http://thehill.com/blogs/healthwatch/taxes-and-fees/148485-debate-over-health-reforms-insurance-tax-heats-up]. “Contrary to some arguments, insurance companies will be unable to eat these costs, as they would inhibit hiring and research and development, ultimately rendering these companies less competitive.”
“Instead, this cost will be passed along to families and small businesses struggling through a sluggish economy.”