Wednesday, July 15, 2009

Starting to Look at the Obamacare Bill

Update: Open Congress has posted the linkable version here. READ!

"We must stop talking about "health care" as if it were some kind of collective public service, like fire protection, provided equally to everyone who needs it. No government can provide the same high quality body repair services to everyone. Not all doctors are equally good physicians, and not all sick persons are equally good patients."

That quote comes from today's Wall Street Journal in an article by Dr. Thomas Szasz. We're on the fast track to nationalized health care now, and the House released its plan yesterday. Open Congress has a link to the full text (it's over 1000 pages) an also a summary. The linkable version of the text isn't up yet.

Here is the CBO analysis of the bill which I've read. From the first page of the summary (emphasis mine):

Among other things, those specifications would establish a mandate for most legal residents to obtain insurance, significantly expand eligibility for Medicaid, and set up insurance exchanges through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage.

The details begin to come on page 2:

Starting in 2013, those with income below 133% of the federal poverty line who are NOT already eligible for Medicaid, would be MADE eligible for Medicaid and the federal government pays for it.

Newborns that are not otherwise insured would automatically be enrolled in Medicaid for 60 days, paid for by the federal government.

The federal government will establish insurance exchanges and would subsidize coverage for individuals and families with income between 133% and 400% of the federal poverty line (about $88,000 for a family of four).

The proposal also requires that you obtain insurance or face a financial penalty.

Employers would be required to offer insurance programs to their employees and contribute "a substantial share toward the premiums" or else pay a fine equal to 8% of their payroll. Small employers are exempt (those with an annual payroll of less than $250,000). This one gets interesting. The summary says that "Firms with an annual employee payroll ABOVE $250,000 would be subject to a "play-or-pay" requirement. Employers could "play" by offering coverage that meets the minimum benefit standards..." or "pay" and be subject to a payroll tax. "Employers could choose to "play" for full-time employees and "pay" for part-time employees.

How much would they pay?
2% for firms with payroll between $250,000 - $300,000;
4% for payroll between $300,000 - $350,000
6% for payroll between $350,000 - $400,000
8% for payroll above $400,000.

So, as I see it, it looks like fewer employees being hired in many cases. The Foundry has looked at this aspect of the bill, explaining that you think that your employer is actually paying part of your health care bill, but it is actually you making that payment because your employer is simply writing a smaller check to you in order to pay your insurance bill.

"So if Congress makes health coverage more expensive for employers, they will simply cut their workers wages to make up the difference. Every policy Congress adopts that makes health coverage more expensive for employers will be paid for by employees.

For example, virtually every healthcare reform proposal includes an 'employer mandate' that requires employers that do not provide health coverage to pay higher taxes. The current Senate draft requires employers to pay $750 for each employee without health benefits. This is billed as a tax on employers, but as the CBO points out: If employers who did not offer insurance were required to pay a fee, employee' wages and other forms of compensation would generally decline by the amount of that fee from what they would otherwise have been."'

So think about the minimum wage workers (and it goes to $7.25 an hour on July 24); it will be too expensive to hire those people under the requirements of this mandate.

There will also be a "public plan" operated by the Secretary of Health and Human Services. It would pay Medicare reates plus 5%.

Insurers could not limit coverage for people with preexisting medical conditions.

How will the federal government pay for all of this? By soaking the wealthy. The New York Times breaks it down: "Starting in 2011, a family making $500,000 would have to pay $1,500 in additional income tax to help subsidize coverage for the uninsured. A family making $1 million would have to pay $9,000."

And remember, there's a provision that this could vary if costs aren't met. Keep in mind also, that the CBO analysis on cost does NOT represent an analysis of the entire bill. As Philip Klein points out, "it pegs the cost of the Medicaid expansion at $438 billion and of the subsidies at $773 billion." But the bill doesn't fully kick in for five years. Klein produced a graph to illustrate this:

The tax on the wealthy would be on the gross income which also applies to capital gains and dividends. This brings the tax on those earners to above 50%. As Klein points out, "not the way to get the economy moving again."

Raising taxes during a recession is always a terrible idea. The Republican suggestion toward health care has been that we reform what is already in place. Fix the mess that is Medicare and Medicaid, fix the VA; reform those programs that are in place that already offer insurance to those that don't have private insurance. It could be done at significantly lower cost that this behemoth. A look at the bureaucratic monstrosity that this will create will give you nightmares.

The danger of this is of course that once it is done, it cannot be undone under a new administration; the private health insurers will be a thing of the past. You will have inferior and rationed health care. There will be fewer doctors and less specialists. But that's another topic for another day.

Pay attention to the bill and contact your representatives and senators.

Related posts:

Starting to Look at the Obamacare Bill
John Boehner Says the Republicans Have a Better Plan
"Say Hello to My Little Friend!"
Take a Look at Obamacare
Going Galt Over Obamacare
Congressman Fleming: What's Good for the Goose...


B. Johnson said...

Given the federal Constitution's silence about public healthcare, the 10th A. automatically reserves government power to regulate and lay taxes for healthcare to the states, not the corrupt federal government. The bottom line is that constitutionally ignorant US citizens deserve all the healthcare that the big, Constitution-ignoring federal government shoves down their throats.

Red said...

@ B. Johnson: But they don't deserve it. They don't know any better and it is up to people who do to get the word out. Educate your neighbors so they aren't just looking at this like another 'freebie' (which freebies never are. Somebody always pays). And stay on the horn to the Reps who will listen. There are approx 306+ million people in the United States. There are how many people in Congress? We have got to speak up and make our points.