On March 23, 2010, President Barack Obama signed into law the Patient Protection & Affordable Care Act (ACA)—commonly referred to "Obamacare"—by far the most revolutionary overhaul of the American healthcare system ever enacted. This section of Discover The Networks is divided into 4 major parts:
The first examines the healthcare system that was in place in the U.S. prior to Obamacare.
The second explores free-market solutions that could have addressed, in a very different way, the problems that Obamacare was ostensibly created to solve. These same solutions could serve as cornerstones of any effort to repeal Obamacare in the future.
The third explains the major provisions contained in the Obamacare legislation itself, and their significance to all Americans.
The fourth examines the politics of Obamacare—not only the politics that played a central role in the legislation's passage, but also the unspoken yet transformative political agendas that sit at the very heart of this law.
The major works upon which this overview of Obamacare is founded are listed in the column on the right side of this page, along with the acronyms by which the books in particular are referenced throughout the text below. The writings of Betsy McCaughey and Sally Pipes were especially indispensable to this project.
* During the months and years just prior to the March 23, 2010 passage of the ACA, claims about the “skyrocketing costs” of American healthcare were ubiquitous in the media.
* But in fact, from a historical perspective, healthcare spending in the U.S. was increasing more slowly than it had at any time in half a century.
* During the years 2000 through 2010—the decade just prior to the beginning of the ACA's implementation—Americans' total expenditures on physicians and related clinical services grew at the following rates: 7.0% in 2000; 8.6% in 2001; 8.0% in 2002; 8.0% in 2003; 6.9% in 2004; 6.0% in 2005; 5.2% in 2006; 5.2% in 2007; 5.4% in 2008; 3.3% in 2009; and 2.5% in 2010.
* By way of comparison, total healthcare spending in the U.S. grew by 10.3% in the year 1970, and by 13% in 1980.
* Critics of health insurance companies have routinely accused these firms of greed and price-gouging:
* In a July 2009 press conference, President Barack Obamasaid: "There have been reports just over the last couple of days of insurance companies making record profits, right now. At a time when everybody's getting hammered, they're making record profits, and premiums are going up."
* A few days later, House Speaker Nancy Pelosi accused insuerers of being "immoral," and called them "the villains" in the healthcare reform battle.
* In reality, each dollar of revenue that health insurance companies take in, includes just 2.2 cents of profit. [TAO: Loc. 2079-80]
* Notwithstanding the fact that pre-Obamacare medical expenditures nationwide were rising more slowly than in earlier times, the costs of healthcare obviously had risen sharply since decades past—both in real terms and as a share of America's Gross Domestic Product (GDP).
* By 2012, per capita health spending had risen to $8,953 (in 2012 dollars).
* According to the New England Journal of Medicine: “Between 1950 and 2011, real GDP per capita grew at an average of 2.0% per year, while real national health care expenditures per capita grew at 4.4% per year. The gap between the two rates of growth—2.4% per year—resulted in the share of the GDP related to health care spending increasing from 4.4% in 1950 to 17.9% in 2011.”
* A 2008 report by the Congressional Budget Office (CBO) states that new technology has accounted for more healthcare-spending increases than any other single factor—even more than the aging of the American population. [DOHL: Loc. 1247-54]
* Cutting-edge medicines and technologies tend to be high-priced when first introduced to the market, and gradually get less expensive as they become more widely available and widely used—or, in the case of drugs, when their patents expire.
* New pharmaceuticals are particularly expensive because, before reaching the marketplace, they must go through a rigorous and costly research-and-development process. The average cost of the 10-to-15-year process of bringing a single new drug to the market is about $1.3 billion. [TTM: pp. 15-16, 27, 47, 73-74]
* The United States has led the world in medical research-and-development spending by a very wide margin, and has typically produced more than half of the $175 billion of healthcare-technology products that are purchased globally each year. In other words, there have been very large, beneficial returns on many of America's healthcare-related expenditures. [TTM: pp. 135-136]
2) The Third-Party Payment System Has Insulated Many Americans from the True Cost of Health Care
* On the eve of the ACA's enactment, more than 60% of people younger than 65 were covered by health insurance policies whose premiums were fully or partially paid by an employer (rather than out-of-pocket).
* The practice of employers covering their workers' health insurance premiums began during World War II, when wage controls barred companies from rewarding their workers with salary hikes or attracting new workers with the prospect of high pay. To circumvent this legal obstacle, employers started offering healthcare benefits—paid for with pre-tax dollars—as an alternate form of compensation. Because this practice effectively institutionalized a system of third-party payments, Canadian physician and healthcare policy expert David Gratzer has called it “the biggest event [ever] to shape American health insurance.” Over time, employer-financed healthcare became widespread. [TTM: p. 140; TAO: Loc. 461-466]
* While employers today commonly cover the cost of people's health insurance policies, yet another third party—the government—similarly foots the insurance bill for many other people via programs like Medicaid, Medicare, the State Children’s Health Insurance Program (SCHIP), and the Veterans' Administration.
* As of 2008, government was paying for more than half of all the healthcare provided in the United States. [TTM: pp. 7, 138]
* Between 1975 and 2010, the share of healthcare costs that Americans paid for on their own, rather than through insurance or with the help of government programs, steadily declined. [DOHL: Loc. 1221-22; TAO: Loc. 1557-60]
* By 2011, Americans were paying only 11 cents of every healthcare dollar directly-out-of-pocket.
* When people do not pay directly for their own healthcare, they are psychologically and materially insulated from the true cost of that care. And whenever people are insulated from the true cost of any product or service, they tend to consume more of it, thereby causing total expenditures (on the product or service) to skyrocket. [TTM: pp. 74, 78-79, 140]
* Duke University scholar and Forbes magazine contributor Chris Conover posits the following mental experiment: “If I promised to pay 89 percent of the cost of your groceries, would what you buy be different? Most students I ask freely concede that they would buy things they would not otherwise buy and might well pay higher prices even for things they would have bought anyway.”
* Pacific Research Institute president Sally Pipes also addresses this phenomenon: "If health care were free and available with no regard to cost, people could go to the doctor as often as they pleased.... Free restaurants would be nice, too. Why would anyone go to the trouble of dragging home groceries and wasting time cooking? Why would anyone not go for the best? The only thing is, someone would have to pay. Consumption would rise, and so would [food] costs. It’s the basics of economics. There has to be some mechanism for matching limited supply with potentially unlimited demand." [TTM: pp. 123-124]
*The fact that health insurance, in many cases, covers small and routine matters—rather than confining itself to covering only large or potentially “catastrophic” matters—makes people much more likely to take advantage of the opportunity to get as much "health care" for themselves as possible. This overuse makes healthcare more expensive than it otherwise would have been—thereby compounding the inflationary effects of a system where third parties such as insurance companies and the government cover most of the people's healthcare costs.
* "In this system," writes Pipes, "the insurance company [and the government], not the patient, is the doctor's customer. As a result, even dedicated providers have an incentive to ... over-bill for their work. If doctors had to compete for customers, they would face pressure to lower prices. But no such competition exists. Customers don't shop around because their coverage is provided through a third party. Patients have no idea—and no incentive to care—what services actually cost." [TAO: Loc. 1360-64]
* Pipes notes that because “we don’t usually pay for our health care directly,” “we tend to think that medicine isn’t subject to the same laws of economics as other things we buy, like cars. We’re perfectly happy to pay $20,000 for a new Honda. But when it comes to paying for medicine—which is arguably of greater value—we say it’s too expensive.” [TTM: pp. 26-27; TAO: Loc. 1024-28]
3) Insurance Mandates
* Politicians have commonly sought to win public favor by passing laws mandating that insurance companies offer one-size-fits-all plans that include an ever-expanding range of benefits—covering an ever-growing list of specified treatments or types of providers that only a small segment of the population actually needs. [TTM: pp. 13, 74, 75]
* For example, many insurance plans are mandated to include coverage for: acupuncture, alcoholism treatment, athletic trainers, breast reduction surgery, chiropractor visits, contraceptives, dieticians, drug abuse treatment, hair prosthesis, hearing aids, home health care, hormone replacement therapy, in-vitro fertilization, marriage therapy, massage therapy, naturopathic therapies, obesity treatments, pastoral counseling, psychotherapy, reimbursement for clinical trial participation, smoking cessation therapy, speech therapy, and varicose vein removal. [TTM: p. 75; TAO: Loc. 1460-94]
* These benefit mandates drive up the cost of insurance policies, making it difficult for insurers to offer inexpensive plans that meet the needs of young, healthy people seeking only coverage for a limited range of occurrences. [TTM: pp. 13, 74, 75, 76]
* Another reason why many benefit mandates exist is because special-interest groups have lobbied state lawmakers to require all insurance policies to cover their respective services. [TTM: p. 75]
* In 1979 there were 252 benefit-mandate laws on the books nationwide. By 2009, that number had grown to 2,133, with the average U.S. state imposing 42 benefit mandates on its individual health insurance policies. [TTM: pp. 13, 75; DOHL: Loc. 1224-28; TAO: Loc. 1485-86]
* A 2004 study by three economists from the Council of Economic Advisors found that each benefit mandate added approximately 0.4% to the cost of an individual insurance policy, and 0.5% to the cost of a family plan. [DOHL: Loc. 1224-28; TAO: Loc. 1496-1500]
* A 2010 study by Pacific Research Institute scholar Benjamin Zycher found that benefit mandates, overall, caused premiums to rise by 10% in the average state. [TAO: Loc. 1506]
* Other estimates say that nationwide, state benefit mandates in the pre-Obamacare era were already increasing the price of basic insurance by as much as 50% in some places. [TTM: pp. 13, 75, 142; TAO: Loc. 1509-10, 1684]
* As the costs of health insurance premiums rise (due, in part, to benefit mandates), more citizens are likely to avoid purchasing any coverage at all, thereby increasing the number of uninsured Americans—precisely the antithesis of what healthcare reform advocates profess to desire. Yet, as discussed later in this section of DiscoverTheNetworks, those reformers actually seek to use Obamacare to further increase—and fully nationalize—the number of benefit mandates required by law. [TTM: p. 76]
* Rising healthcare premiums—again, created in part by benefit mandates—also cause employers who provide health insurance for their workers, to restrict wages and hiring. [TTM: p. 76]
4) “Guaranteed-Issue” and Pre-Existing Conditions
* “Guaranteed-issue” was a state-level regulation that, prior to the ACA, affected all health policies sold in the small-group market (i.e., companies that employ between 2 and 50 workers). It required insurers to cover anyone and everyone who desired a policy, even if they had a pre-existing condition that was every expensive to treat, and thus were virtually certain to cause the insurance company a financial loss.
* As will be discussed below, the ACA makes “guaranteed issue” mandatory for all insurance policies, including those sold directly to individuals. [TTM: p. 76]
5) “Community Rating” and Pre-Existing Conditions
* Because young people are, on average, healthier than older people, they tend to consume fewer healthcare services and thus, under normal free-market conditions, should be much cheaper to insure than older people. The average 18-year-old, for instance—based on typical healthcare consumption patterns—should be able to purchase insurance for one-sixth of what it costs to insure the average 64-year-old.
* But over the years, a handful of states instituted a practice called “community rating,” which essentially turned this logic on its head by requiring insurance companies to set equivalent premiums for everyone in a given geographic area without regard to their medical conditions. In other words, even very sick or disabled people, who were likely to cause significant financial losses to an insurance company, could not be charged more for insurance than anyone else.
* Meanwhile, numerous other states practiced a modified version of community rating that limited the degree to which a person's age or illness could cause the cost of a given policy to rise. The ACA, as will be discussed below, takes this latter form of community rating and applies it to health insurance plans in all 50 states. [TTM: p. 76]
6) Prohibiting the Purchase of Insurance Plans Across State Lines
* Consumers have long been permitted to purchase health insurance policies only in their states of residence. This has dramatically reduced competition among insurers, and has kept the cost of premiums much higher than they would have been in a truly free marketplace. Indeed, a standard insurance policy in one state can be more than five times as expensive than a standard policy in another state. [TTM: pp. 13, 143]
7) Doctors & Hospitals Charge Privately Insured Patients More, in Order to Compensate for Being Shortchanged by Medicare and Medicaid
* Government healthcare programs like Medicare and Medicaid impose price controls, which are federally mandated restrictions on the fees that can be charged for goods and services in a given market. As a result, both of these programs dramatically shortchange doctors and hospitals when reimbursing them.
* By keeping costs artificially low, price controls invariably cause demand for the affected goods or services to increase to the point where supply can not keep pace, which in turn leads to shortages of the goods or services in question.
* As Nobel Prize winner Milton Friedman once explained: “We economists don't know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can't sell tomatoes for more than two cents per pound. Instantly you'll have a tomato shortage. It's the same with oil or gas.”
* In response to such shortages, lucrative black markets commonly emerge for the goods and services that are in short supply. Pacific Research Institute president Sally Pipes summarizes: “If economic history has taught us anything, it’s that government price controls have been a disaster every time they have been applied.” [TTM: p. 15]
* Because of price controls, Medicare, on average, pays a physician only 81% of what a private insurer pays for the same care. For Medicaid the figure is just 56%.
* Because of this, many doctors have been limiting the number of Medicare and Medicaid patients they see. By some estimates, half of all doctors do not accept any Medicaid or Medicare patients. [TTM: p. 96; DOHL: Loc. 889-90; TAO: Loc. 1025-28]
* Whereas doctors are typically paid up to $260 for an hour-long consultation with a privately insured patient, they often ean less than $25 for an identical session with a Medicaid patient. [TAO: Loc.1134-38]
* Meanwhile, doctors who do accept Medicare and Medicaid patients are forced—simply to make ends meet financially—to charge their privately insured patients higher rates than would otherwise be necessary. That is, the privately insured must subsidize those who are insured by the government. This practice, in turn, raises the cost of premiums in private healthcare plans by 10% or more. [TTM: pp. 14, 17, 18; DOHL: Loc. 446-47; TAO: Loc. 1164-74, 1178]
* A New America Foundation study concluded that people with private insurance paid 22% more than would otherwise have been necessary, to compensate for the public sector's underpayments. [TAO: Loc. 1174]
* The independent consulting group Milliman found that Medicaid alone shifted $16.2 billion in hospital costs (in 2006) and $23.7 billion in physician costs (in 2007) directly onto private insurance holders. [TAO: Loc. 1182]
* Prior to Obamacare (which is designed to massively expand Medicaid), the healthcare consultancy Milliman & Robertson estimated that this type of shortchanging (of doctors and hospitals) by government programs forced families with private insurance to pay an extra $1,500 to $1,800 for their premiums each year. [DOHL: Loc. 447-49, 546-47; TAO: Loc. 1185-87]
* In short, taxpayers pay twice for both Medicare and Medicaid—first when they pay their federal and state taxes, and again when they pay their own health insurance bill (whether they pay it directly or through their employers, who factor the cost of the insurance into their overall compensation package). [DOHL: Loc. 451-52]
8) Americans' Increased Wealth and Disposable Incomes
* The growth of overall U.S. healthcare expenditures must be considered against the backdrop of the huge increases in income and purchasing power that Americans have enjoyed since the 1950s. According to historian, healthcare expert, and former New York State Lieutenant Governor Betsy McCaughey: “90% of the difference in per capital health care spending [between the United States and other countries] is due to higher incomes in the U.S. Wealth, not waste, is the cause.” [TTM: p. 28; DOHL: Loc. 1278-80]
* In 1958, per capita health expenditures in the U.S. equaled $134 (or $1,012 in inflation-adjusted 2010 dollars) annually. The average hourly wage of employees in 1958 was $1.98, which means that the typical individual had to work 118 hours—nearly 15 days—to cover his or her medical expenses for the year.
* By 2010, per capita health spending had risen to $8,402 (in 2010 dollars). At an average wage of $19.07 per hour, a typical worker needed to work 467 hours—or about 58 days—to cover his or her medical expenses for the year.
* But in 2010, very little of this money was coming directly out of people's pockets. Once employer-financed and government-financed health insurance are taken into account, the typical American family, prior to Obamacare, was spending about 5.9% of its total income on health insurance premiums and treatments, as opposed to 33.9% on housing, 17% on transportation, 12.8% on food, and 4.5% on clothing. [TTM: pp. 27-28; TAO: Loc.1031-35]
* As a percentage of the average household's total expenditures, spending on healthcare has scarcely increased since the late 1980s. In 1989 Americans spent 5.1% of household expenditures on healthcare. In 1999, the figure was 5.3% percent, and in 2008 it was 5.9%. [TAO: Loc. 1037-42]
* In 2009 the average American spent $2,853 on healthcare, the same amount he spent on eating out. [TAO: Loc. 904-906]
* There is a huge difference between cost and value. Claims that healthcare in the U.S. costs “too much” are meaningless if they fail to take account of the dramatic increase in value that Americans have derived from that care in recent decades. [TTM: pp. 22, 135]
* In decades past, people spent comparatively little money on healthcare simply because there was, in many cases, little on which to spend it. The medical advances that increased American life expectancy by more than 10 years between 1950 and 2010 (and by approximately 30 years during the entire course of the 20th century) gave us great value in exchange for the money that made them possible. [TTM: pp. 23-25; TAO: Loc. 980-87]
* Before Jonas Salk created a life-saving polio vaccine in 1955, there existed no effective medicines or therapies to prevent polio, thus virtually no money was spent for that purpose at that time. But few would argue that society would be better off if we returned to spending nothing on life-saving vaccines against deadly diseases. [TTM: pp. 23-25; TAO: Loc. 973-975]
* Similar advances have been made in the field of cardiac care, where the clot-busting drug tPA costs thousands of dollars per use, bypass surgery costs tens of thousands of dollars, and a pacemaker costs roughly $25,000. While costly, these procedures have contributed enormously to the health and longevity of Americans.
* Between 1950 and 2000, the death rate from heart disease—America’s leading killer—was reduced by 59%, from 307 to 126 deaths per 100,000. From 1993 to 2003, heart-disease-related deaths declined by 22%.
* In the 1980s a heart-attack victim who made it to the hospital alive had only a 60% chance of surviving until the end of that calendar year. Today the corresponding figure is over 90%. [TTM: pp. 23-25; DOHL: Loc. 1257-59; TAO: Loc. 973-975]
* Pacific Research Institute president Sally Pipes draws an analogy between trends in healthcare spending and the history of societal expenditures on electricity:
“Think about the history of artificial light. Until Thomas Edison invented the incandescent light bulb in the late nineteenth century, people spent money on wood, oil, and candles to light their homes. One could safely say that electricity accounted for zero percent of their artificial-light expenditures. Suddenly, with the advent of the light bulb in the 1880s, electricity started to take over and eventually accounted for nearly 100 percent of all artificial-light expenditures.” [TTM: pp. 49-50]
*New York Times columnist Paul Krugman once wrote: “America’s health care system spends more, for worse results, than that of any other advanced country.” [TTM: p. 121]
* In a famous 2000 report, the World Health Organization (WHO) ranked the U.S. 37th out of 191 countries in terms of the quality of its healthcare system. But the WHO study's methodology was seriously flawed. [TTM: pp. 122, 133-134]
* For one thing, it used only life-expectancy to assess the general health of each nation's population, and that factor alone accounted for fully 25% of each nation's overall score. [TTM: pp. 133-134]
* The U.S., with an average life-expectancy of approximately 78 years, ranked only 29th in terms of that variable on the WHO list. But life-expectancy alone is an inadequate indicator of a healthcare system's overall quality. Indeed, cultural and behavioral factors—such as a nation’s ethnic makeup, homicide rate, number of accidents, diet trends, and prenatal habits—influence life expectancy tremendously.
* For example, America’s homicide rate in 2004 was 5.9 per 100,000 inhabitants, while the corresponding rates in Canada, France, and Germany—all of which received higher overall rankings by the WHO—were 1.95, 1.64, and 0.98.
* Similarly, in 2006 the United States experienced 14.24 fatalities per 100,000 people from auto accidents, while the corresponding figures for Canada, France, and Germany were just 9.25, 7.40, and 6.19. According to Robert Ohsfeldt of Texas A&M University and John Schneider of the University of Iowa, Americans who do not die from homicides or in car accidents outlive people in every other Western country. [TTM: pp. 122, 132-133; TAO: Loc. 377-387]
* Infant mortality, which is defined as the number of infant deaths per 1,000 live births, is yet another statistic that tends to depress U.S. life-expectancy figures. According to the 2008 CIA World Factbook, 41 other nations had lower infant-mortality rates than the United States. But the definition of a “live birth” varies significantly from country to country. The U.S., for instance, counts the births of all babies that show any sign of life (heart, pulsation of the umbilical cord, or movement of voluntary muscles), regardless of low birth weight or prematurity—as live births. In Switzerland, by contrast, “an infant must be at least 30 centimeters long at birth in order to be counted as living.” In France and Belgium, babies born before 26 weeks of gestation are automatically registered as dead. So, America's definition of a “live birth,” being far more inclusive of high-risk infants than the definitions of these other countries, increase the likelihood of a higher infant-mortality rate. [TTM: pp. 121, 133; TAO: Loc. 389-403]
* Also accounting for 25% of each nation’s score in the WHO study was “distribution of health,” or “financial fairness,” which was given twice as much weight as “responsiveness to the needs of the patient” (where the U.S. was rated #1). By this logic, treating everyone exactly the same—as in a government-run, single-payer system—is more important than treating people well. As Betsy McCaughey puts it, “What mattered to the WHO rankers was socialism and other ideological priorities, not whether a patient gets needed treatment to survive cancer.” [TTM: p. 133-134, DOHL: Loc. 1324-27; TAO: Loc. 413-415]
* A 2011 Commonwealth Fund report stated that in a recent survey, “the United States placed last among 16 high-income, industrialized nations when it comes to deaths that could potentially have been prevented by timely access to effective health care.”
* But the study did not take into account the fact that for about five decades prior to the 1980s, Americans had been the world's heaviest smokers.
* Nor did it take into account that Americans are now among the most obese populations on earth.
* In short, unhealthy behaviors and lifestyles—not inferior medicine or lack of access to care—are to blame for many American deaths related to such variables. [DOHL: Loc. 1295-1301]
* In August 2008, the British medical journal Lancet Oncology published the results of a study which found that cancer is treated much more effectively in the United States than in either Europe or Canada.
* For example, Americans overall had a better survival rate for 13 of the 16 most common cancers.
* American men had nearly a 20% better chance of living for five years after a cancer diagnosis than European men.
* American women had a 7.2% better chance of living five years after a cancer diagnosis than European women. [TTM: pp. 9, 48; TAO: Loc. 365-367]
* American men and women alike are more than 35% more likely to survive colon cancer than their British counterparts. [TTM: pp. 134-135]
* Breast cancer is diagnosed earlier and treated more effectively in the United States than anywhere else in the world. According to a 2012 report by the American Cancer Society, a woman diagnosed with breast cancer in the U.S. has a greater than 90% chance of surviving the disease. [DOHL: Loc. 1305-7]
* (Survival rates decrease, of course, if the disease is not diagnosed early. For example, for women diagnosed with Stage 1 breast cancer the 5-year survival rate is 100%; for Stage 2 the figure id 93%; for Stage 3 the figure is 72%; and for Stage 4 the figure is 22%.
* An American man diagnosed with malignant prostate cancer has a 99.3% chance of survival, far higher than in any Western European country.
* In Scotland, the corresponding figure is 71%, and in Germany it is 85%.
* In Europe overall, nearly one-fourth of men who are diagnosed with this disease die from it. [DOHL: Loc. 1303-4, 1333-35]
* A series of 2007 reports published in Lancet Oncology affirm that cancer survival in Europe lags significantly behind that in the United States.
* In Europe, the age-adjusted 5-year survival rates for all cancers combined was 47.3% for men and 55.8% for women, as compared to 66.3% for men and 62.9% for women in the U.S.
* The largest differences were seen in the major cancer sites: colon and rectum (56.2% in Europe vs. 65.5% in the United States), breast (79.0% vs 90.1%), and prostate (77.5% vs 99.3%).
* A notable testament to the superior quality of American healthcare is the fact that every year, tens of thousands of foreigners come to the U.S. for medical treatments that are either unavailable or severely rationed in their home countries. [TTM: p. 9; TAO: Loc. 252-264]
* Since 1950, Americans have won more Nobel Prizes in medicine and physiology than people from the entire rest of the world combined. [DOHL: Loc. 1336-37]
* From the moment President Obama and the Democrats began pushing for healthcare reform, they repeatedly emphasized the notion that approximately 45.7 million Americans—roughly 15% of the country's population—lacked insurance.
* Said the Obama website during the 2008 presidential campaign: “Forty-six million Americans—including nearly eight million children—lack health insurance with no signs of this trend slowing down.” [TTM: pp. 31-32]
* The implication was that the existing system, based on private insurance companies, was failing, and that the government could do a much better job of regulating and administering healthcare. [TTM: pp. 32]
* The 45.7 million figure was derived from a Census Bureau questionnaire known as the Current Population Survey (CPS), which has substantial margins of error.
* But even if we assume that the data are entirely accurate, it is vital to note that the Census Bureau itself states: “The CPS estimate of the number of people without health insurance more closely approximates the number of people who are uninsured at a specific point in time during the year than the number of people uninsured for the entire year.”
* In other words, it would be inaccurate to conclude that 45.7 million Americans were unable to afford health insurance and and to access healthcare for extended time periods. The figure is simply a “snapshot” of a particular moment in time. [TTM: pp. 32-34; TAO: Loc. 815-822]
* Below is an overview of who these 45.7 million uninsured people prior to Obamacare were. There is, of course, some overlap among the various categories:
* (A) Almost 18 million (39%) of the uninsured earned more than $50,000 annually, and thus, in many cases, could probably have afforded to purchase private insurance but chose not to.
* Of these 18 million, some 8 million earned between $50,000 and $75,000 per year, and the other 9.7 to 10 million earned more than $75,000. These $75,000+ earners comprised the fastest-growing segment of the uninsured population.
* By contrast, the number of households with annual incomes of less than $25,000 who lacked health insurance had been declining steadily since 1998. [TTM: pp. 35, 38-40; DOHL: Loc. 1514-17, 1526-30; TAO: Loc. 796-98, 839-42, 1277]
* (B) Approximately 14 million of the uninsured were low-income Americans who were fully eligible for government assistance programs like Medicaid, and SCHIP, but simply had never taken the time to enroll in these programs.
* With regard to children in particular, some 70% of uninsured youngsters were eligible for either Medicaid, SCHIP, or both programs, but their parents had never fill out the necessary paperwork.
* It is not legitimate to argue that such people had no access to health insurance. Indeed, Medicaid and children’s health programs allow patients literally to enroll in the emergency room. [TTM: pp. 37-39, 67, 93-94; DOHL: Loc. 1514-17, 1526-30; TAO: Loc. 798-800, 859-861, 865-870]
* (C) About 6 million people—or 13% of the uninsured—were eligible for employer-sponsored insurance but chose not to take advantage of it. [TAO: Loc. 801-802]
* (D) More than 10 million uninsured were not U.S. citizens. According to Census data, these included 5 million recently-arrived legal immigrants, and 5.2 million illegal immigrants. [TTM: p. 36; TAO: Loc. 802-805]
* (E) Many of the uninsured were unmarried 18-to-29-year-olds who were not covered by their employers and chose not to buy health insurance. Known by healthcare professionals as the “invincibles” because they are so confident that they will not require medical attention of any kind, these young people preferred to pocket the money that otherwise might have gone toward monthly insurance premiums. They comprised one of the largest and fastest-growing segments of the uninsured population. [TTM: pp. 35, 67-68; TAO: Loc. 845-51]
* Many of these “invincibles” would actually have been insured if they had had the option of purchasing a low-premium, high-deductible “catastrophic” policy to protect them from the most serious medical problems that might arise. But such policies were unavailable in many U.S. markets because of state-level laws and regulations barring insurers from tailoring policies for the young and healthy. [TTM: pp. 67-68]
* According to Pacific Research Institute president Sally Pipes: “Most of those who do not purchase health insurance make that choice not because they don’t have the resources or because they’re lazy, but because they’ve done the math and don’t want to spend their money on expensive insurance policies that don’t fit their individual or family needs.” In short, they “have chosen not to buy insurance for entirely rational reasons.” [TTM: pp. 66, 67]
* Even without any type of insurance, a person could walk into any hospital in America and be treated for an injury or illness. Not permitted to deny treatment to uninsured patients, hospitals have routinely absorbed the costs of such care into their operating budgets. [TTM: p. 94]
* Under the Emergency Medical Treatment and Active Labor Act of 1986, virtually all hospitals are required to provide emergency care to anyone needing treatment, regardless of their citizenship status or their ability to pay. [TAO: Loc. 907-808]
* After accounting for the various categories of uninsured people enumerated in points A, B, C, D, and E above, there remained somewhere between 8 and 18 million American citizens who fell through the proverbial cracks. These individuals earned less than $50,000 per year but too much to qualify for government assistance, and remained chronically uninsured because they could not afford to purchase a policy.
* Any attempt to solve the problem of the uninsured should have focused specifically and chiefly on these people, who needed affordable policies that would cover catastrophes—which in fact has been the traditional purpose of insurance. [TTM: pp. 39, 67; DOHL: Loc. 1514-17, 1526-30]
* It is unlikely that these individuals numbered more than 10 million. [TAO: Loc.805-807]
* To address the problem of the uninsured, politicians have proposed solutions that fall broadly into two ideological camps:
* One camp contends that because the problem of the uninsured is massive and complex, only the government—by allocating taxpayer resources in a coordinated and fiscally prudent manner—is capable of delivering a solution on a national scale. Adherents of this approach often cite the “cost of the middleman,” reasoning that the greater the number of profit-seeking intermediaries who stand between the provider of a product or service and the ultimate consumer, the costlier that product or service will be. This perspective maintains that it would be more rational—and cheaper—to have a single party (the federal government) move services directly to consumers, eliminating the middlemen. [TTM: pp. 6, 9, 11-12]
* The opposing camp claims that government is actually part of the problem; that excessive regulation has caused the American healthcare system to become overpriced and unresponsive to consumer demands; that rather than expand the government’s role, we should reduce it—and instead promote free-market competition to empower individual consumers rather than career politicians and unelected government bureaucrats. By this line of reasoning, the same economic forces that have improved quality and lowered costs in almost every other industry—from automobiles to computers to cell phones—should be permitted to flourish also in healthcare. [TTM: p. 6]
* Much as the IRS does not simplify the process of paying taxes, and that government-run public schools fail to provide the best or most cost-effective K–12 education for children, government-run healthcare has a very distinct track record of poor quality and inefficiency. Indeed, even the state and federal regulations that existed in the U.S. prior to Obamacare served only to make healthcare more expensive, complicated, and inefficient. As Pacific Research Institute president Sally Pipes puts it, “Government itself is the middleman.” [TTM: p. 12]
* The evidence from government-run healthcare systems around the world is exceedingly clear. As the Cato Institute puts it, “In countries weighted heavily toward government control, people are most likely to face waiting lists, rationing, restrictions on physician choice, and other obstacles to care.”
* By contrast, says Cato, “[T]hose countries with national health care systems that work better, such as France, the Netherlands, and Switzerland, are successful to the degree that they incorporate market mechanisms such as competition, cost-consciousness, market prices, and consumer choice, and eschew centralized government control. In other words, socialized medicine works—as long as it isn’t socialized medicine.”
* For an in-depth look at the massive problems besetting socialized healthcare systems in a number of different countries, click here.
* Medicare, which is geared specifically for people aged 65 and older, has four parts:
* Part A provides insurance for hospital care.
* Part B covers doctors’ visits, home health care, and hospice care.
* Part C, also called Medicare Advantage, allows seniors to participate in private health plans instead of being restricted to the government run system.
* Part D, which was added by Congress in 2006, provides coverage for medications. [DOHL: Loc. 1449-51]
* Proponents of government involvement in healthcare commonly claim that Medicare and other government-run health insurance programs have lower administrative costs (and thus are more efficient) than private health insurance.
* One Medicare Trustees Report, for instance, asserted that Medicare's administrative costs were only 1.5% of the program's total expenditures, whereas the corresponding figure for private healthcare was as high as 25%. [TTM: pp. 13-14]
* But those figures were wildly inaccurate. A study by the Council for Affordable Health Insurance found that Medicare's administrative costs were actually about 5.2%, while the administrative costs of private-sector healthcare were approximately 8.9%. [TTM: pp. 13-14]
* A similar study by Price Waterhouse-Coopers found that only 6 percent of private healthcare premiums went to administrative costs. [TTM: pp. 13-14]
* The Medicare Trustees Report was so inaccurate because it did not account for Medicare's hidden costs, such as the salaries of managers and administrators, or marketing/advertising costs associated with promoting new policies. Private healthcare providers, by contrast, included all of these expenses in their estimates of administrative costs. [TTM: p. 14]
* Medicare dumps many of its administrative costs onto the private sector, much as the IRS forces taxpayers to do all the expensive, time-consuming calculations and paperwork related to taxes.
* Doctors and other healthcare providers spend enormous amounts of time and money filling out government forms and complying with thousands of pages of government regulations. While these costs are not reflected in Medicare's financial books, healthcare providers feel them acutely, and healthcare prices rise as a result. [TTM: pp. 102-103]
* A study by the Council for Affordable Health Insurance found that when all of the hidden costs and certain related unfunded liabilities were included in the calculus, the administrative costs of Medicare and Medicaid were much higher (26.9%) than those in the private sector (16.2%). [TTM: p. 103]
* Moreover, government-run insurance programs are notoriously wasteful. It is estimated that Medicare officials waste as much as one out of every three dollars the program spends. [TTM: p. 17]
* Originally established in 1965 as a safety-net for Americans facing financial difficulties, Medicaid grew into an enormous welfare program that, on the eve of Obamacare, was serving 53 million people nationwide. [TTM: p. 95]
* The percentage of Medicaid funding that is covered by state revenues varies from state to state. On average, U.S. states supply 36.3% of Medicaid's funding, while the federal government supplies 63.7%.
* Because of these high levels of federal subsidies, most states have actively sought to expand their Medicaid programs as a source of revenue. Indeed, many states have misused Medicaid money by mingling it with their general operating funds. [TTM: pp. 99-100]
* Outlays for Medicaid comprise some 22% of state spending—the largest single item in state budgets across the United States. In places where large numbers of Medicaid patients reside, such as Florida, it is projected that the program will consume almost 60% of the state’s budget by 2015. [TTM: p. 99]
* Because states have limited budgets, Medicaid's reimbursement rates are extremely low. In New York, for instance, a doctor earns, on average, just $20 for an hour-long consultation with a Medicaid patient (whereas a similar appointment with a privately insured patient can generate as much as $260). Thus many doctors are opting out of the program, making it much more difficult for Medicaid patients to find doctors willing to treat them.
* Exacerbating the problem of underpayments is the fact that doctors and their staffs must spend an enormous number of hours filling out government forms in order to comply with Medicaid's thousands of pages of regulations. This drives up the doctors' costs even more. [TAO: Loc. 1148-51]
* Because of doctors' reluctance to take on Medicaid patients, these individuals commonly end up going to hospital emergency rooms, where they cannot be turned away and where treatment is far more expensive than care in a doctor’s office or a clinic. And this places a financial burden on the hospitals. [TTM: pp. 96-97; TAO: Loc. 1135-38, 1148-49, 1154-64]
* Total underpayments to hospitals rose from $3.8 billion in 2000, to $32 billion in 2008. [TAO: Loc. 1164]
* The American Academy of Family Physicians (AAFP) has reported, inaccurately, that Medicaid’s administrative costs comprise just 4% to 6% of the program's overall costs, compared to approximately 15-20% for private-sector insurance companies. Journalists and politicians echo such claims repeatedly.
* But the AAFP report ignores the fact that Medicaid dumps many of its administrative costs onto the private sector, much as the IRS forces taxpayers to do all the expensive, time-consuming calculations and paperwork associated with taxes.
* Doctors and other healthcare providers spend enormous amounts of time and money filling out government forms and complying with thousands of pages of government regulations.
* While these costs are not reflected in Medicaid’s financial books, healthcare providers feel them acutely, and healthcare prices rise as a result. [TTM: pp. 102-103]
* A study by the Council for Affordable Health Insurance found that when all of the hidden costs and certain related unfunded liabilities were included in the calculus, the administrative costs of Medicare and Medicaid were much higher (26.9%) than those in the private sector (16.2%) [TTM: p. 103]
* The Medicaid program is plagued by an enormous amount of fraud. In New York State alone, some 40% of all Medicaid claims are fraudulent. [TTM: pp. 17, 100; [TAO: Loc. 1203-1213]
* Perpetrators of Medicaid fraud can include not only patients, but also healthcare practitioners who submit claims for services never rendered, or large institutions that exaggerate the level of care provided to their patients and then alter patient records to conceal the resulting lack of care. For a closer look at different types of Medicaid fraud, click here.
* One area where Medicaid fraud has been proliferating dramatically involves long-term nursing-home care and end-of-life care for the elderly. Protecting their assets with deceptive estate-planning schemes, increasing numbers of the middle-class and wealthy elderly are intentionally hiding or transferring their assets in order to qualify for long-term care at taxpayer expense. This diminishes the resources available for the truly poor, whom the program is ostensibly intended to help. [TTM: pp. 103-104; TAO: Loc. 1230-39]
* All told, Medicaid fraud costs U.S. taxpayers approximately $65 billion per year. [TAO: Loc. 1229]
* Not only is Medicaid economically inefficient; it also provides substandard benefits.
* Researchers at the University of Virginia who reviewed the experiences of 900,000 patients undergoing eight different types of surgical procedures, found that Medicaid patients were twice as likely as patients with private insurance coverage to die in the hospital after surgery.
* Heart-attack and stroke patients who are covered by Medicaid are likewise less apt to recover than their counterparts who are privately insured.
* Medicaid patients who are hospitalized under the circumstances cited above are 13% more likely to die than patients who have no insurance at all. [TTM: pp. 95-96; DOHL: Loc. 432-36]
* The State Children’s Health Insurance Program (SCHIP) was established in 1997 to provide health insurance to children in households with incomes too low to afford private insurance, but too high to qualify for Medicaid. Today, SCHIP covers more than 6 million children nationwide. [TTM: pp. 18, 95]
* SCHIP's funding formula gives states an incentive to add middle-income children and even adults to the rolls of beneficiaries. This has caused the program to expand exponentially.
* As of 2007, some 600,000 adults in 14 states were enrolled in SCHIP.
* In six of those states, more SCHIP money was being spent on adults than on children.
* Meanwhile, the program had failed to enroll nearly 2 million children who qualified for benefits.
* But instead of focusing on enrolling those youngsters, legislators attempted to expand the program further by offering SCHIP to families earning up to three times the federal poverty level. President George W. Bush vetoed that bill.
* In 2009, however, the Democratic Congress and President Obama were successful in adding $32.8 billion to SCHIP funding. [TTM: pp. 18-19; TAO: Loc. 503-510]
* The government healthcare program run by the Department of Veterans' Affairs (VA) has proven to be a model of inefficiency, taking 127 to 177 days to process claims—much longer than the private industry average of 89.5 days. An appeal to the VA takes an average of 657 days to resolve. [TTM: pp. 19-20]F
* In 2007, Americans spent $286.5 billion on prescription drugs—an average of nearly $2,600 per household. That same year, Pfizer, the world’s largest drug manufacturing company, earned nearly $50 billion in revenues. Critics of the pharmaceutical industry cite such statistics as evidence of greed and price-gouging that unnecessarily drives up the total cost of healthcare in the U.S. [TTM: pp. 41-42, 46]
* But in fact, prescription drugs greatly reduce medical spending overall—by reducing or, in many cases, eliminating the need for prolonged hospital stays, surgery, anesthesia, and other costly procedures. [TTM: pp. 42, 48; TAO: Loc. 1867-70]
* Chronic diseases such as diabetes, heart disease, HIV, hypertension, obesity, arthritis, and cancer impose, far and away, the heaviest financial burdens on America’s healthcare system.
* Approximately 60% of Americans suffer from at least one chronic disease, and caring for such people accounts for some 85% of all U.S. healthcare spending, 82% of all hospital admissions, and 79% of all physician visits.
* People with two or more chronic diseases cost the healthcare system about five times more than those with no conditions, and they are four times likelier to be hospitalized. [TTM: pp. 43-45]
* Drugs have shown a great ability to curtail the costs—both physical and financial—of these conditions.
* For example, Lipitor is much cheaper than heart surgery: Research conducted in 14 countries between 1999 and 2006 found that the rate of death from heart attacks dropped by nearly half during that time, mainly due to increased use of cholesterol-lowering drugs, blood thinners, stents, and angioplasties.
* The same study found that from 1999–2005, the proportion of patients who developed congestive heart failure after a heart attack dropped from 19.5% to 11%. [TTM: p. 45]
* Such developments have helped keep healthcare expenditures significantly lower than they otherwise would have been.
* It is estimated that every additional dollar spent on drugs for blood pressure, cholesterol, and diabetes cuts approximately $4.00 to $7.00 off of spending on other medical treatments. [TTM: pp. 46, 52; TAO: Loc. 1879]
* Research shows that switching from older, less-expensive medicines to newer, pricier, but more-effective alternatives reduces non-drug healthcare expenses by more than seven times as much as it raises drug spending. [TTM: pp. 46, 52; TAO: Loc. 1879]
* A National Bureau of Economic Research study found that Medicare saves $2.06 for each dollar it spends on medicines. [TAO: Loc. 1882]
* Columbia Professor Frank Lichtenberg states that each dollar spent on newer pharmaceuticals saves $7.17 in hospital costs. [TAO: Loc. 1883]
* Contrary to popular mythology, drug prices themselves have not increased in any significant way over time.
* According to a 2007 U.S. Department of Labor report, the annual inflation rate for drug prices at that time was just 1%, the lowest level in three decades and well below the rate of overall inflation.
* This trend was largely a result of the increased use of generic drugs (copies of brand-name drugs that are no longer under patent protection), which accounted for about 65% of all prescriptions filled nationwide. [TTM: pp. 50, 51, 57]
* Another free-market breakthrough occurred in 2006, when Wal-Mart began offering a host of generic prescriptions for a mere $4 per month. Almost immediately, other retailers—including Wegman’s, BJ’s, and Target—announced their intent to institute similar programs. [TTM: p. 51]
* Most drugs never make it to the pharmacy shelves, either because harmful side effects are identified during clinical trials or by the FDA, which tests for safety and efficacy.
* As noted earlier, the average cost of bringing a single new drug successfully to the market is $1.3 billion, and the time investment ranges between 10 and 15 years.
* For every 5,000 to 10,000 compounds tested, only 5 actually make it to clinical trials, and only 1 will successfully make it through FDA review and to the marketplace.
* Moreover, just 20% of all approved drugs earn enough money to cover the cost of the research and development that went into their creation.
* Thus, when a pharmaceutical company finally develops a successful drug, it needs to recoup not only the money it spent developing that winner, but also the massive funds that were spent developing the many losers. [TTM: p. 47, 48, 52, 62]
* The false notion that drug prices are driving up healthcare costs has led many poorly informed (or ideologically driven) politicians to seek to punish—via price controls, taxes, and innovation-stifling regulations—the very industry (pharmaceuticals) that has been applying downward pressure on overall healthcare spending for many years. [TTM: pp. 51-52, 60]
* On the eve of Obamacare, venture capitalists were investing fully 15 times more money in American biotechnology companies than in their European counterparts. Price controls against U.S. companies would change this equation swiftly and dramatically. [TTM: p. 47, 48, 52, 62]
* The United States has traditionally produced about 90% of the world’s cutting-edge drugs, precisely because of the free market's role in the pharmaceutical industry. [TTM: pp. 57-58, 63]
* Similarly, from 1999-2005 the U.S. was responsible for 71% of all sales of new pharmaceuticals. The next two largest pharmaceutical markets—Japan and Germany—accounted for a mere 4% apiece. [TTM: p. 136]
* During the 2008 presidential campaign, both John McCain and Barack Obama asserted that—contrary to existing federal law—Americans should be permitted to fill their prescriptions through foreign pharmacies, where brand-name drugs are often considerably cheaper than in the U.S.
* In Europe and Canada, for instance, these medications cost about 50% less—and sometimes as much as 70% less—than they cost in the United States. [TTM: pp. 53-57]
* It is important to understand why brand-name drugs manufactured by American companies are so much cheaper in Europe and Canada. In most countries with single-payer healthcare systems, the governments have imposed price controls to limit the cost of prescription drugs.
* In Canada, for example, the Patented Medicine Prices Review Board performs this function. For cost considerations, Canadian health officials commonly delay the approval of new and more expensive medicines; sometimes these officials never permit the drugs to reach the pharmacy shelves. [TTM: pp. 54-55, 57]
* America, by contrast, has long led the world in the innovation and launch of new drugs. [TTM: p. 55]
* In virtually every country that has imposed price controls on drugs—e.g., Canada, Britain, France, Italy—there has been rationing of those medications. For years, many desperate Canadian and European patients have been coming to the United States to obtain critical medicines that they could not access in their own countries. [TTM: p. 56]
* Though brand-name drugs are usually cheaper abroad than in the U.S., the majority of drugs are actually more expensive abroad. This is because most (65%) of the drugs consumed in the U.S. are generics, which historically have been much less costly in America than anywhere else in the world. [TTM: p. 57]
* Generics have been cheaper in the U.S. because, unlike in Europe and Canada, there has been a flourishing free market and competition to drive prices down. Whereas anyone could go to a Wal-Mart or a Target and purchase $4 generics, no one could do the equivalent of this in France, Britain, or Canada. [TTM: p. 57]
* As Pacific Research Institute president Sally Pipes wrote in 2008: “[W]hen people say, 'drugs are cheaper in other countries,' they’re making an enormous generalization. What they really should say is that certain brand-name drugs are cheaper. They’re not referring to generics. And they’re not referring to all the cutting-edge drugs that aren’t available in other countries. Instead, they’re referring to a very narrow category—brand-name drugs that have been approved and price-controlled by foreign governments.” [TTM: p. 57]
* American drug companies actually make it possible for Canadian and European governments to sell brand-name (non-generic) drugs at cheaper prices than the U.S., by selling them drugs at below-market prices. They do this because of the very real threat of patent theft. The Canadian Government, for instance, has vowed that if U.S. companies refuse to sell drugs cheaply to Canada, it will retaliate by allowing generic companies to steal American patents and reproduce the drugs at a lower price. Sally Pipes calls it “theft—plain and simple.” [TTM: pp. 58-59]
* Meanwhile, American drug companies have no choice but to try to recoup their research-and-development expenditures from domestic consumers, who effectively subsidize consumers abroad by paying much more than the latter for brand-name drugs.
* Sally Pipes draws the following analogy: “Think of an airline that has a plane that’s not fully booked. Once enough passengers have bought tickets to cover the cost of the flight, the airline can then sell the extra seats at below-market prices and still make money. American drug consumers are like the airline passengers who pay full freight so the flight can actually take off. To put it bluntly, the rest of the world is free-riding.” [TTM: pp. 59-60]
* Almost unanimously, Members of Congress who seek to promote American importation of drugs from abroad favor a “forced sale” provision that would require U.S. companies to sell drugs to foreign exporters at discounted rates set by foreign governments. Such legislation would essentially impose foreign price-controls on American drug companies, inflicting enormous financial damage on the latter. This inevitably would cause drug companies and their financial backers to stop investing in the development of new drugs. [TTM: pp. 61-62, 64]
* It should be noted that “forced-sale” arrangements would not, in the end, save much money for U.S. consumers. A 2003 London School of Economics study found that “forced-sale” policies in the European Union did not lead to lower retail prices at the drug store. Rather, only the middlemen—those foreign pharmacies that purchased the drugs in bulk and resold them—benefited financially. [TTM: pp. 63-64]
* The Congressional Budget Office concurs that foreign drug importation would reduce national drug expenditures in the U.S. by a mere 1% over a ten-year period. [TTM: pp. 63, 64]
* There is actually a substantial track record of drug-importation programs that a number of U.S. states—Illinois, Wisconsin, Missouri, Kansas, Vermont, Maine—have instituted in the past, in violation of federal policy. Across the board, these programs failed to lower drug prices for consumers. [TTM: pp. 63-64]
* The most effective way to lower healthcare costs and achieve quality universal coverage would be to promote the same free-market forces that have improved quality and lowered costs in almost every other industry—from automobiles to computers to cell phones. [TTM: p. 139]
* Free-market principles succeed not only in expanding the range of options available to people choosing health insurance plans, but also with regard to specific medical procedures.
* Consider Lasik corrective eye surgery. Because most insurance providers—private and public alike—do not cover this procedure, the market is not distorted by excessive regulations. Providers of Lasik operate in a free market where technology is constantly advancing, price competition is significant, and the consumer can choose from a wide range of options.
* Between 1998 and 2008, more than 3 million Lasik procedures were performed in the United States. During that same period, the average price of Lasik eye surgery dropped by almost 40%, from $2,200 to $1,350 per eye. [TTM: p. 139]
* But Lasik is a rare exception to the general rule; in virtually every other area of healthcare, the government is heavily involved. As Sally Pipes summarizes: “[T]he key to lowering costs and expanding coverage is to expand the Lasik model. That means encouraging competition by decreasing government’s role in the health care marketplace.” [TTM: p. 140]
1) Eliminate Benefit Mandates
* Benefit mandates are laws that compel insurance companies to offer one-size-fits-all plans which cover an ever-growing list of specified treatments; in many cases only a small segment of the population wants or needs these benefits.
* As noted earlier, benefit mandates drive up the cost of the insurance policies, making it difficult for insurers to offer inexpensive plans that meet the needs of young, healthy people seeking high-deductible policies that cover only a limited range of occurrences other than major illnesses or injuries. [DOHL: Loc. 1230-32]
2) Promote Private Ownership of Health Insurance Policies
* No one expects his or her employer to provide them directly with food, housing, clothing, life insurance, or automobile insurance. Yet because of what started as a historical accident—when WWII-era employers tried to circumvent wage controls by covering their workers' health insurance premiums—many people have come to expect their employers to provide them with access to healthcare. This has many ramifications:
* It has caused many employees to become insulated from the real cost of going to a doctor and receiving treatment. They lack a clear understanding of the actual costs involved, and tend to view healthcare as something they are getting for free—when in fact they are paying for it indirectly in the form of smaller paychecks. Rather than shopping around for the best or most suitable deal for themselves, they generally accept whatever plan their employers offer. [TTM: p. 141]
* It has been difficult for many people to leave their jobs—for fear of losing their insurance in addition to their paychecks. This, in turn, has reduced competition among employers seeking to attract talented workers, thus exerting downward pressure on the wages of those workers. [TTM: pp. 140-141]
* It has stifled new business creation because many people—especially those with a chronic or pre-existing medical condition—have been unwilling to forego health insurance in order to pursue entrepreneurial ventures. [TTM: p. 141]
* It has caused insurance providers to become insulated from normal market pressures to keep customers satisfied and prices low. [TTM: p. 141]
* It has penalized individuals, who, unlike employers, have not had the option of purchasing health insurance for themselves with pre-tax dollars. [TTM: p. 141; TAO: Loc. 472-476, 822-825]
* Americans should be free to purchase their own policies and make them their private property, just like their other insurance policies or investment portfolios. [TAO: Loc. 2748-54]
3) Allow Consumers to Purchase Insurance Across State Lines
* Consumers in the U.S. have long been barred from purchasing healthcare policies from insurers in other states. This has dramatically reduced competition among insurers, and has kept the cost of premiums much higher than they would have been in a truly free marketplace. [TAO: Loc. 2797-98]
* A standard insurance policy in one state could be several times more expensive than a standard policy in another state. For example, a 25-year-old male in California was traditionally able to buy an HMO plan for just one-fifth of what his counterpart in New York would pay for the same coverage. - [DOHL: Loc. 1547-52]
4) Make Health Coverage Portable
* Workers should be able to take their healthcare plans with them from job to job, or city to city. This would free people from circumstances where they feel compelled to stay in an unsatisfactory job because they do not want to lose their health insurance. [TAO: Loc. 2761-63]
5) Change the Tax Code
* Give individuals the same tax break that employers already receive when purchasing health coverage for their workers. This would empower individuals to be in charge of their own healthcare, rather than being beholden to the policies and preferences of their employers. Either of the following two changes could achieve this:
* Provide refundable tax credits—$2,500 for individuals and $5,000 for families—for people who purchase their own health insurance. [TTM: p. 141]
* Allow income-tax deductions for healthcare expenditures—$7,500 for individuals and $15,000 for families. [TTM: p. 142]
6) Expand Health Savings Accounts
* A Health Savings Account (HSA) is a tax-free, interest-accruing savings account that can be used to pay for routine medical expenses. It is purchased in tandem with an inexpensive, high-deductible insurance policy designed to cover major healthcare expenses associated with so-called “catastrophic” medical occurrences. [TTM: p. 144; TAO: Loc. 2208, 2774-85]
* HSA holders, who numbered more than 6 million as of 2008, can spend their money tax-free on healthcare as they see fit, without needing permission from their insurance providers. If someone is generally healthy, the HSA funds build up over time—and can eventually function just like a retirement savings plan. (When an HSA holder reaches 65 or is disabled, the money can be withdrawn without a penalty for non-healthcare expenses, and it is taxed as ordinary income.) [TTM: p. 144; TAO: Loc. 2211-13]
* HSAs, which were created in 2003 and first implemented in 2004, do not vanish when a person is between jobs. And when a person faces an extremely costly health emergency, the high-deductible insurance policy covers his expenses—while the HSA covers the deductible. [TTM: p. 144]
* As of 2010, individuals were allowed to contribute up to $3,050 each year to their HSAs, and families were permitted to contribute up to $6,150. By raising these limits, Congress could make HSAs even more appealing. [TTM: p. 144; TAO: Loc. 2210]
7) Support Retail Health Clinics
* In the early 2000s, retail health clinics began sprouting up all over the United States in large stores like Wal-Mart and Target, and in pharmacies like CVS. By the end of 2008, there were approximately 2,000 of these facilities nationwide. Patients generally need no appointment to visit these clinics, and they rarely have to wait more than a few minutes to receive treatment. [TTM: pp. 144-145]
* Retail health clinics typically charge about $50 per visit (total price transparency), and most are open 24 hours per day. [TTM: p. 145]
* A 2007 Harris Interactive poll found that 22% of all visitors to these clinics were uninsured. Around that same time, Wal-Mart claimed that about half its clinic customers were uninsured. [TTM: p. 145]
8) Implement Tort Reform
* Each year, one out of eight physicians in the U.S. gets hit with a medical malpractice lawsuit. Specialty physicians must sometimes pay as much as $240,000 annually for malpractice insurance, and this is driving many doctors out of specialties like obstetrics and neurosurgery. [TTM: p. 146]
* Liability concerns tend to make physicians practice defensive medicine, ordering more procedures and tests than they otherwise would. This has added to the overall cost of healthcare in the United States, thereby adding some 3.4 million Americans to the rolls of the uninsured. [TTM: p. 146]
* Though doctors win about 90% of their cases in court when they are sued, their legal bills typically approach $100,000 per case. [TAO: Loc. 2809-10]
* Some sensible reforms would include capping non-economic damage awards, allowing defendants to pay large awards in periodic installments, moving to a system of binding arbitration, and placing limits on attorneys’ fees. [TTM: p. 146]
* Another worthy reform would be to provide federal incentives for states to establish medical courts where the judges are experienced in medical issues, can distinguish true expert witnesses from hired charlatans, and can help juries arrive at fair and informed verdicts. [DOHL: Loc. 1547-52]
9) Provide Vouchers for the Working Poor and Chronically Uninsured
* To address the needs of those who fall through the proverbial “cracks”—i.e., individuals who earn too little to afford private insurance but too much to qualify for Medicaid—lawmakers could create a system of health-insurance vouchers, or electronically loaded debit cards, that allow people to purchase insurance from a private company, or through an already-established website like ehealthinsurance.com, or through a high-risk state pool. Such an innovation would allow society to address the problem of the uninsured, without entirely restructuring the most successful and innovative healthcare system in the history of mankind. [TTM: p. 147; DOHL: Loc. 1531-34; TAO: Loc. 2846-49]
10) Raise the Eligibility Age for Medicare Benefits
* Medicare is going bankrupt because the payroll taxes of American workers are being used to fund the healthcare costs of an ever-growing number of older people. To remedy this problem, the Congressional Budget Office has suggested gradually raising the Medicare eligibility age by a month or two each year, until it reaches age 70 in 2043. Such a measure would be nearly imperceptible to anyone nearing retirement age, and could guide the system back toward financial solvency. [DOHL: Loc. 721-24, 1266-70]
11) Establish High-Risk Pools
* States could create or improve high-risk pools to help consumers with pre-existing conditions and poor health.[DOHL: Loc. 1553-57]
* The Patient Protection and Affordable Care Act of 2010—known colloquially as "Obamacare"—is a 2,572-page statute. To comprehend it in its entirety, one would need to consult dozens of other pieces of legislation and laboriously patch the meaning together. Not a single member of the Congress that passed the bill read it in its entirety before voting on it. President Obama did not read it either. [DOHL: Loc. 51-52, 64-66]
* A central feature of the ACA is a provision known as the "individual mandate," which goes into effect in 2014. Through this mandate, the federal government, for the first time in history, is requiring most Americans to purchase a particular product—in this case, health insurance. Specifically, Section 1501 of the ACA requires nearly everyone to enroll in a one-size-fits-all, government-designed, “qualified” health-insurance plan which can be sold by private insurance companies, regional insurers, or nonprofit organizations. Alternatively, people can enroll in a plan provided by a large employer that self-insures. [DOHL: Loc. 126-132; TAO: Loc. 672-674]]
* When individuals file their taxes, they will be required to attach proof of their enrollment in a “qualified plan.” [DOHL: Loc. 145]
* Those who fail to enroll in a qualified plan will be subject to a financial penalty. [DOHL: Loc. 132; TAO: Loc. 672-674]
* Critics of the mandate contend that Congress has no authority to force Americans to buy health insurance, or any product for that matter. This matter has been addressed by a number of different courts, including the U.S. Supreme Court. The rulings of these courts are discussed in the section titled THE POLITICS OF OBAMACARE. [DOHL: Loc. 968-69]
* Americans under age 65 (i.e, those not covered by Medicare) who earn too much to qualify for Medicaid and do not get healthcare coverage through an employer, will be required to purchase insurance plans on Obamacare “exchanges.” These exchanges consist of government-run websites, toll-free telephone numbers, and, in some cases, offices similar to the Department of Motor Vehicles. [DOHL: Loc. 136-38, 343-44]
* Section 1311 of the ACA law says that each state “shall establish an American Health Benefit Exchange.” In any state that failed to do so by 2013, the federal government would come into the state and set up an exchange there. [DOHL: Loc. 344-48]
* Technically, in 2014 people in the individual and small-group markets will still be permitted to buy insurance outside the exchanges, but the insurers who sell these plans will be required to charge the same rates as the exchanges charge. In other words, competition will wither away and the cost of insurance will rise. [TAO: Loc. 1691-94]
* This was precisely the intent of those who crafted the ACA. As Judy Solomon of the Obama-supporting Center on Budget and Policy Priorities explains, "the exchanges should limit the number and variety of plans." [TAO: Loc. 1694-96]
* Even people whose employers offer healthcare coverage are eligible to shop for an insurance plan on the Obamacare exchanges, if those employer plans require them to contribute, from their paychecks, more than 9.5% of their household income. In such cases, the employer may be required to pay a $3,000 penalty for failing to offer the worker “affordable” coverage. [DOHL: Loc. 379-82]
* Starting in January 2014, anyone who is not enrolled in a “qualified” healthcare plan for at least ten months of the calendar year will be required to pay either a flat fee of $95 or 1% of their gross income (up to a $285 fine), whichever is higher. [DOHL: Loc. 148-53]
* After 2014, the penalty becomes higher. By 2016, people without insurance will have to pay either a flat fee of $695 or 2.5% of their gross income (to a maximum of $2,085), whichever is higher. [DOHL: Loc. 148-53; TAO: Loc. 675-76, 1256-57]
* The highest penalty as of 2016 will be the equivalent of $173 per month, and for most people it will be considerably less. Purchasing insurance would cost a great deal more, thus many people will undoubtedly opt to pay the fine instead. [TAO: Loc. 1259-60]
* This is why the individual mandate cannot succeed in achieving universal insurance coverage. Many people will decide, rationally, that it makes no econmic sense to purchase plans that cost more than they can justify spending.
* The IRS will be legally empowered to seize tax refunds as payment toward any unpaid penalty. [DOHL: Loc. 148-53; TAO: Loc. 1261-62]
* It is projected that the IRS will hire 16,000 to 17,000 new agents to monitor and enforce compliance with the mandate. [TAO: Loc. 678-79, 1262]
* The following categories of people are exempt from the ACA's individual mandate:
* people who are already enrolled in government programs such as Medicare or Medicaid
* people who do not qualify for Medicaid but can prove financial hardship
* American Indians, who receive health insurance via a separate program
* prison inmates
* members of the armed services and their families
* members of certain religious groups (Christian Scientists, who are uncomfortable with modern medicine; Scientologists, whose objections are more nebulous; and Muslims, who may oppose the notion of insurance altogether) [TAO: Loc. 685-87]
* illegal immigrants
* Young adults (under age 30) are not technically exempt from the individual mandate, but they can meet the qualified-plan requirement by purchasing a “catastrophic” insurance policy. covering major medical events as well as three visits annually to a primary care doctor. Such policies are not available to people 30 and older. [DOHL: Loc. 382-383, 153-61]
* Obamacare stipulates that every business with 50 or more “full-time equivalent workers”—with "full-time" defined as 30 or more hours per week—must provide what the federal government considers to be adequate, affordable insurance coverage for all of those workers.
* When calculating compliance with the law, two 15-hours-per-week employees equal one 30-hour worker.
* Any large business that fails to do this will be required to pay a $2,000 annual penalty for each uncovered worker beyond 30 employees. In other words, to calculate the fine, the federal government counts the number of full-time workers, subtracts 30 from that number, and multiplies the remainder by $2,000 per worker.
* So, to take an example of a company with 50 workers, an employer who chose not to insure his workforce would pay a $40,000 fine (50-30 = 20; 20 X $2,000 = $40,000). [DOHL: Loc. 222-26, 234-36; TAO: Loc. 689-93]
* The implications of this employer mandate are obvious: Business owners now have an incentive to limit their “full-time equivalent” work forces to 49 people or fewer, and relying more on independent contractors. “By hiring the 50th worker,” the Wall Street Journalpoints out, “the firm pays a penalty on the previous 20 as well.” [TAO: Loc. 1598-1600]
* An International Franchise Association study predicts that because of the employer mandate and some of the law's other provisions, the ACA will place as many as 3.2 million jobs at risk.
* The ACA legislation, as written, called for the employer mandate to take effect on January 1, 2014. But after an outcry from employers nationwide, President Obama in July 2013 issued an executive order delaying the mandate for one year, until January 1, 2015—i.e., after the crucial 2014 midterm elections.
* Because of the “essential health benefits” required by the ACA, so-called “mini-med” plans were made illegal as of September 2010. Common among low-wage workers in the fast-food, restaurant, retail, and resort industries, these plans provided limited coverage with low annual and lifetime limits on what insurers would pay out for claims. [DOHL: Loc. 213-20, 265-67]
* Under Obamacare, employers can no longer reward top managers or most-valued employees with superior health insurance. All employees must be offered the same plan, for purposes of equality. [DOHL: Loc. 220-21]
* Because Obamacare requires companies with 50+ workers to provide insurance that is “affordable” for those workers, employers will have to collect much personal information about every person on the payroll. This includes information about whom each employee lives with, and how much money each member of his or her household earns annually. This information will then be turned over to the IRS.
* The rationale for this practice rests on the fact that under the ACA, employers are permitted to ask workers to contribute something toward the cost of their own healthcare, but the worker contribution cannot exceed 9.5% of household income—meaning the total income of the worker, his or her spouse or domestic partner, and any resident children who are employed. [DOHL: Loc. 227-34]
* If the employee contribution exceeds 9.5% of the employee's household income, the federal government considers the insurance policy “unaffordable,” and the employee then goes to an insurance exchange to select a subsidized plan instead. The employer, meanwhile, gets hit with a $3,000 fine for failing to provide “affordable” insurance for the worker. [DOHL: Loc. 227-34]
* The Obamacare employer mandate will add another $1.79 per hour (i.e., about $350 per month) to the cost of keeping a single person on the payroll full-time. Consequently, many young, unskilled workers who could otherwise have gotten starter jobs (with “mini-med” coverage) will now be priced out of the employment market. [DOHL: Loc. 252-54, 275-76, 286-88]
* The outlook for family health insurance plans is just as grim. The ACA's employer mandate adds an extra $5.51 per hour (about $900 per month) to the cost of employing a full-time worker with dependents. [DOHL: Loc. 275-76]
* Apart from the obvious financial considerations, many employers may choose not to cover their workers' healthcare because they (the employers) are unwilling to deal with reams of new insurance rules and pry into the private lives of every worker. [DOHL: Loc. 241-44]
* According to a 2012 analysis by the global management and consulting firm McKinsey & Co., more than half of employers who understood the facts about the ACA health law were already planning to stop covering employees and their families upon the implementation of the employer mandate.[DOHL: Loc. 207-8; 247-48]
* In testimony before Congress, Andrew Puzder, who employs 21,000 people in the numerous Carl’s Jr. and Hardee’s restaurants that he owns, told lawmakers that compliance with the ACA would cause his health-insurance expenses to increase by more than 100%, to $18 million per year. “To offset higher health-care expenditures, we will have to cut spending on new restaurants,” he lamented. “... But building new restaurants is how we create jobs.” [DOHL: Loc. 290-96]
* The Congressional Budget Office (CBO) estimates that family coverage meeting the ACA's new federal standards will cost an average of $12,200 in 2014, and $15,200 in 2016.
* Employers will not mind providing such benefits for highly paid, highly skilled employees. But if an employer wishes to fill an $18,000-per-year sales-clerk position, he will find it difficult to justify paying an additional $12,200-to-$15,200 to cover the health benefits of that employee and his family. [DOHL: Loc. 241-44, 268-72; TAO: Loc. 1587-90]
* In short, the employer mandate has a particularly negative effect on low-wage and entry-level workers, because employers may deem the extra costs excessive when compared to whatever value the employees may bring to the business. [DOHL: Loc. 213-20]
* Similarly, the CBO estimates that by 2016, the cost of an employer-sponsored, mid-level family plan will cost $15,200. [TAO: Loc. 1587]
* For many employers, it will make more financial sense to stop providing healthcare coverage and pay the fines instead. Indeed, a $2,000 per-worker penalty (per each worker after the first 30), is much more palatable than paying several times that amount for an insurance plan stacked with all of Obamacare's “essential health benefits,” which are enumerated and discussed in the section immediately below. [DOHL: Loc. 241-44, 268-72]
* To be “qualified” in the eyes of the ACA, a healthcare plan (beginning on January 1, 2014) must include everything that the federal government classifies as “essential health benefits.” Each one of these benefits comes at a cost and thereby adds to the price of a premium. Even people who do not want, or need, some of these benefits, will be required to purchase all of them.
* This enables the government to ostensibly “justify” Obamacare's higher premiums by pointing to the fact that its insurance policies cover so many treatments and procedures.
* As historian, healthcare expert, and former New York State Lieutenant Governor Betsy McCaughey puts it, “It’s like passing a law that the only car you can buy is a fully loaded Cadillac,” regardless of whether one would prefer to drive a Honda or a Ford. [DOHL: Loc. 130-31, 528-32, 1219-1220]
* Clearly, automobile prices would rise if the government required every vehicle to come equipped with a GPS system, seat warmers, and a sun roof. [TAO: Loc. 2801-03]
* The power to identify and define specifically what “essential health benefits” are, rests with the Secretary of Health and Human Services, who, since the beginning of the Obama administration, has been Kathleen Sebelius. [DOHL: Loc. 130-31, 528-32]
* Ambulatory patient services (outpatient care that one gets without being admitted to a hospital)
* Emergency services
* Maternity and newborn care
* Mental health and substance-use-disorder services (including behavioral health treatment, counseling, psychotherapy, and smoking cessation programs)
* Prescription drugs
* Rehabilitative and habilitative services and devices (to help people with injuries, disabilities, or chronic conditions)
* Laboratory services
* Pediatric services
* Preventative and wellness services and chronic disease management
* Preventative procedures such as annual checkups, mammograms, pap smears, prenatal care, and colonoscopies are fully paid for—in advance—in the ACA policy premiums, and thus drive up the cost of all premiums. There are no copays or deductibles collected when these procedures are administered.
* Though President Obama has repeatedly claimed that the new health law provides “free” preventative care for all, Betsy McCaughey points out: “'Free' means prepaid. The law forces you to pay for a mammogram and a colonoscopy up front, when you pay your premium, whether you intend to get the tests or not. If you do get the test, there will be no deductible or co-pay. But clearly the test isn’t free.” [DOHL: Loc. 213-20, 488-93; TAO: Loc. 1515-19, 1268-71, 1289-90]
* Sally Pipes puts it this way: "[Obamacare plans] are all designed to cover routine health care expenses. So owners of these plans will end up pre-paying their regular health expenses through a monthly premium." [TAO: Loc.2155-56]
* The bottom line: Full coverage for preventative care causes medical spending to rise, not fall. [TAO: Loc. 2253-66]
* In some ACA plans, contraception also falls under the category of "preventative" coverage.
* Under Obamacare, single and/or elderly men and women are required to pay for “maternity and newborn care” coverage; people without children are required to pay for pediatric service coverage; and individuals with no history of psychological disorders or substance abuse are required to pay for mental-health and drug-addiction-treatment services.
* The above list of Obamacare's federal "essential health benefit" mandates will undoubtedly grow over time, just as the number of state mandates grew from 252 to 2,133 during a 30-year period. [TAO: Loc. 1526-26]
* By dictating the aforementioned “essential health benefits,” the ACA empowers the federal government, for the first time in American history, to exert a degree of control over how doctors treat privately insured patients.
* As Betsy McCaughey writes: “The new law says that the Secretary of Health and Human Services—appointed by the president—can impose any regulation to improve health care 'quality.' That’s everything in medicine—whether your cardiologist recommends a stent v. a bypass, or when your ob/gyn does a Cesarean.” [DOHL: Loc. 163-69]
* Moreover, as will be discussed below, every doctor must now enter a record of each patient's treatments into an electronic database, and the doctor’s decisions will be monitored for compliance with federal guidelines. Because “the new federal oversight will standardize medical practice with an eye to reducing consumption,” writes Pacific Research Institute president Sally Pipes, “ultimately your doctor may have to choose between doing what’s right for you and avoiding a government penalty.” [DOHL: Loc. 169-72]
* On the ACA insurance exchanges, each enrollee can choose either a Bronze, Silver, Gold, or Platinum plan. Different insurers—such as Blue Cross, WellCare, Kaiser, Aetna, and United Health—make the plans available. All the plans, as noted above, provide the same “essential benefits”; only the co-pays and deductibles differ. Gold and Platinum plans require patients to pay higher premiums up front, but allow lower co-pays and deductibles.
* Bronze plans cover 60% of a patient's medical costs.
* From the moment the ACA was passed in 2010, private insurance companies began revamping their policies to conform to the government's specifications for Bronze, Silver, Gold, and Platinum. [DOHL: Loc. 142-44]
* Since September 2010, the ACA has required health insurance plans to cover the unmarried children of policy holders until age 26, so long as they have no employer-provided coverage. This provision has been a major cause of premium hikes under the new law. [DOHL: Loc. 521-24, 1474-75; TAO: Loc. 714-16]
* Prior to Obamacare, insurers in many states gave young people a significant price break because they tend to be much healthier, and thus use fewer healthcare resources, than older people. For example, the average 25-year-old man uses only about a quarter as much healthcare as a 55-year-old man. But the ACA requires insurers to stay within certain "rating bands" that limit the discounts available to young people. The purpose is to compel young people (after age 26, when they are no longer eligible to stay on their parents' plan) to subsidize the cost of care for the middle-agers. [DOHL: Loc. 1482-86]
* An early Obamacare provision, which went into effect in September 2010, barred health plans from placing a limit lower than $750,000 on how much an insurer could be required to pay for any patient's healthcare in a single calendar year. The cap was raised to $1.25 million in September 2011, then to $2 million in September 2012, and then outlawed entirely beginning in January 2014. [DOHL: Loc. 322-327, 503-506, 1359-1360]
* Prior to Obamacare, many employers in industries like retail sales and restaurants provided their low-wage workers with basic, inexpensive policies called mini-med plans, which covered doctor’s visits, prescription drugs, and some hospital care, but had annual caps as low as $250,000. These plans are outlawed by the ACA. [DOHL: Loc. 322-327, 503-506, 1359-1360]
* the ACA also oulaws lifetime caps on the benefits paid out by insurance policies. [TAO: Loc. 712-14]
* Since September 2010, Obamacare's guaranteed-issue provision has required insurers to sell policies covering children, regardless of any pre-existing medical conditions they may have had. On January 1, 2014 , this mandate expands to include adults as well.
* Such a policy incentivizes people to avoid purchasing an insurance plan—so as to avoid making monthly premium payments—until they become ill or injured and suddenly need medical coverage. It is the logical equivalent of not purchasing fire insurance until one's house is actually burning, or not purchasing automobile insurance until after being involved in a traffic accident. [TTM: p. 76; DOHL: Loc. 535-39; TAO: Loc. 719-22]
* As Sally Pipes puts it: "If customers know that insurance could cost more once they contract an illness, there's an incentive for them to buy it while they're still healthy. But if they know it will cost the same even after they get sick, there's no downside to waiting to subscribe." [TAO: Loc. 1355-56]
* The inevitable result of guaranteed issue is that a disproportionate percentage of the insured are people who are sick and/or disabled. [TAO: Loc. 1357]
* Community rating is a regulation requiring insurance companies to set relatively equal healthcare-policy premiums for customers within a given geographic area—i.e., community—regardless of their age or medical conditions. [TTM: p. 76]
* To achieve community rating's desired effect, insurance companies typically charge high-risk individuals lower rates than they otherwise would, while charging the much larger number of low-risk patients a higher amount than they otherwise would.
* This compounds the effect of guaranteed issue—making it even more likely that healthy people (who are overcharged under community rating) will not purchase insurance until they are sick. Individuals who game the system in this way tend to stay insured only for the short term—i.e., while they are sick—and they commonly run up medical bills far in excess of the insurance premiums that they pay during the period for which they are insured. [TAO: Loc. 1363-65, 1375-85]
* Because young people are, on average, healthier than older people, they consume fewer healthcare services, and thus, under normal free-market conditions, should be much cheaper to insure than older people. The average 18-year-old, for instance—based on typical healthcare consumption patterns—should be able to purchase insurance for one-sixth of what it costs to insure the average 64-year-old.
* But Obamacare, as a sop to the AARP, does not permit young people to purchase insurance for any less than one-third of what it costs for a 64-year-old. In other words, the “youth discount” is greatly watered down. This ultimately increases the cost of insurance for young, healthy people by about 75%, as they effectively subsidize the healthcare of older people up to age 64. [TAO: Loc. 722-25]
* Under the ACA, insurers are permitted to use only 4 variables as a basis for setting different premium rates for different population subsections: age (but only to a limited extent, as noted above), geographic area, number of family members, and tobacco use. [TAO: Loc.722-25; TAO: Loc. 2215]
* Sally Pipes points out the implications of this: "So two 35-year-old single men occupying the same block in Phoenix would be charged the same price for health insurance, even if one is a trim, teetotaling tennis instructor, and the other is an obese, alcoholic couch potato." [TAO: Loc.722-25, 2216-17]
* In the 1990s, eight states—Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont, and Washington—implemented both community rating and guaranteed issue. In all eight of these states, insurance premiums skyrocketed and the share of the population covered by individual health insurance declined precipitously. [TAO: Loc. 1423-37]
* This provision of the ACA is nothing more than a public-relations gimmick. It has been illegal since 1997 for a health insurance company to cancel anyone's coverage because they are sick or they are seeking payment on claims. [TAO: Loc. 711-12, 1535-40]
* The ACA stipulates that while federally subsidized healthcare plans can offer abortion coverage, they must maintain separate accounts to keep whatever money is used for abortions separate from federal funds (which technically cannot be used for that purpose).
* Before the law was enacted, Congressmen Joe Pitts (R-Pennsylvania) and Bart Stupak (D-Michigan) characterized this ACA provision as “an accounting gimmick” and proposed an amendment that would have explicitly banned abortion coverage from all federally subsidized plans.
* But when the Democrat-controlled Senate resisted the amendment, President Obama succeeded in getting the law passed by offering instead an Executive Order reaffirming the Hyde Amendment, a 1976 law banning the use of federal funds for abortions except in cases of rape, incest, or protecting the life of the mother.
* But Executive Orders depend on the whim of whoever happens to be President, and can be changed at any time. Thus, in the final analysis, whether abortions are funded through ACA health plans will always depend on the discretion of the President and the Secretary of Health and Human Services. The ACA itself does not address it. [DOHL: Loc. 1341-51]
* The Obama health law issued a sweeping mandate requiring all employers to offer plans that cover the cost of contraception, sterilization, and a “morning-after” abortifacient drug.
* This mandate gave no exemption to religious institutions—such as Catholic schools, charities, and hospitals—whose moral principles might oppose such practices or products.
* The only exemptions were given to Catholic organizations that served Catholics exclusively, meaning churches. [DOHL: Loc. 53%]
* In January 2012, the Obama administration reaffirmed that religious hospitals, schools, charities and other health and social-service providers would be required to provide "free" abortifacient pills, sterilizations and contraception on demand in their insurance plans—even if it doing so violated their moral codes and the teachings of their churches.
* Critics pointed out that it would be a violation of the Free Exercise Clause of the First Amendment if, for example, a Catholic institution were required by law to provide (and pay for) such “health care services” for people.
* Health and Human Services Secretary Kathleen Sebelius countered by declaring that there would be no such Free Exercise violation if the institutions in question were deemed, by regulatory fiat, to be not religious. Sebelius then decreed that a “religious institution” must have “the inculcation of religious values as its purpose.”
* But as political columnist Charles Krauthammer pointed out, “[T]hat’s not the purpose of Catholic charities; it’s to give succor to the poor. That’s not the purpose of Catholic hospitals; it’s to give succor to the sick. Therefore [according to the Obama administration], they don’t qualify as 'religious'—and therefore can be required, among other things, to provide free morning-after abortifacients.... [Similarly], Catholic soup kitchens do not demand religious IDs from either the hungry they feed or the custodians they employ. Catholic charities and hospitals—even Catholic schools—do not turn away Hindu or Jew.”
* On February 10, 2012, the Obama administration, reacting to harsh public criticism, unilaterally altered the statute and announced that the ACA, instead of forcing religious employers to pay for birth control, would instead require insurance companies to offer the drugs free of charge to all women, regardless of where they worked: “If a woman works for religious employers with objections to providing contraceptive services as part of its health plan, the religious employer will not be required to provide contraception coverage but her insurance company will be required to offer contraceptive care free of charge.”
* According to pro-life Rep. Chris Smith: “The so-called new policy is the discredited old policy, dressed up to look like something else. It remains a serious violation of religious freedom. Only the most naïve or gullible would accept this as a change in policy.... The White House Fact Sheet is riddled with doublespeak and contradiction. It states, for example, that religious employers ‘will not’ have to pay for abortion pills, sterilization and contraception, but their ‘insurance companies’ will. Who pays for the insurance policy? The religious employer.”
* Eric Scheidler of the Pro-Life Action League stated that the new rule amounted to a “shell game.” “At the end of the day, religious employers are still required to provide insurance plans that offer free contraceptives, sterilizations and abortifacients in violation of their moral tenets,” he said.
* In 2012, the Roman Catholic Archdiocese of New York and numerous other Catholic groups filed religious-freedom lawsuits in 12 federal courts, challenging, on behalf of so-called "non-exempt" religious health and educational organizations, the ACA mandate requiring that such groups provide their employees with health insurance plans covering the cost of birth control options. On December 16, 2013, Brooklyn Federal Court Judge Brian Cogan ruled that these "non-exempt" organizations should not be bound by the ACA requirement.
* In the fall and winter of 2010, millions of Americans received notices in the mail that their healthcare premiums were rising in order to pay for the changes required under Obamacare. Section 2713 of the law, which went into effect in September 2010, requires that those premiums reflect the “essential health benefits” listed above.
* During his first presidential campaign in 2008, and throughout the period during which the ACA was being debated in 2009-10, President Obama promised that his health reform plan would “bring down premiums by $2,500 for the typical family” by the end of his first term. [TAO: Loc. 192-198, 268-277]
* The $2,500 figure was derived from a 2007 memo written by three Harvard economists who claimed that then-Senator Obama had devised a plan to reduce healthcare spending nationwide by $200 billion. Then, explained the New York Times, the authors “divided [$200 billion] by the country’s population, multiplied for a family of four, and rounded down slightly to a number that was easy to grasp: $2,500.”
* This did not occur. As insurance companies revamped their policies to be compliant with the law's mandates, premiums actually rose by an average of $3,065 per policy by the end of Obama's first term. And, as more provisions of the law were enacted in 2013 and beyond, they rose still further.
* An October 2013 study by the Heritage Foundation reported that insurance premiums available on the Obamacare exchanges were higher than pre-ACA rates in 45 of the 50 U.S. states.
* For middle-aged policy holders in 32 states, the premium increases ranged from 26% to more than 100%.
* Young people above age 26 were hit hardest of all. In 27 states, the ACA premiums for 27-year-olds were between 51% and 252.5% higher than pre-Obamacare levels.
* A November 2013 report by Forbes magazine concurred with the Heritage Foundation findings. Said Forbes: “[T]he average state will face underlying premium increases of 41 percent. Men will face the steepest increases: 77, 37, and 47 percent for 27-year-olds, 40-year-olds, and 64-year-olds, respectively. Women will also face increases, but to a lesser degree: 18%, 28%, and 37% for 27-, 40-, and 64-year-olds.”
* Forbes said that premiums in 41 of the 50 states would be higher than they had been prior to Obamacare.
* In 2013, Medicare actuaries reported that in its first 10 years, the ACA would cause healthcare expenditures in the U.S. to rise by “roughly $621 billion” above the amounts Americans would have spent without the new law. This translates to an annual increase of $7,450 per family of four.
* A December 9, 2013 Wall Street Journalreport stated that the minimal-coverage Bronze plans that were available to individuals through Obamacare's federal exchanges had average deductibles of $5,081 per year—42% higher than the $3,589 average deductible for plans that individuals had purchased for themselves in 2013 (before much of the federal law took effect), and about 450% higher than the $1,135 average deductible for individual plans provided by employers that same year. For couples and families, meanwhile, the Obamacare deductibles ran as high as $12,700 annually.
* The ACA creates two massive, new entitlement programs designed to insulate consumers from the onerous costs associated with the law's individual mandate and “essential health benefits.” These two entitlements alone will cost American taxpayers an estimated $1.8 trillion from 2014 to 2023, and Obamacare overall is expected to add at least $1.5 trillion to the national debt during its first 10 years. [DOHL: Loc. 746-51]
1. Medicaid Expansion
* The ACA vastly expands the pool of people who are eligible for Medicaid. Ever since Medicaid was created in 1965, individual states, based upon their own budgetary capacities, have set their own eligibility requirements for the program, and have stipulated what benefits those people can receive. Under Obamacare, the federal government takes full control over those decisions. [DOHL: Loc. 180-82, 402-408]
* Prior to Obamacare, the following groups were eligible for Medicaid in all 50 states:
* Children under age six with family incomes up to 133% of the federal poverty level
* Children ages 6-19 with family incomes up to 100% of the federal poverty level
* Pregnant women with family incomes up to 133% of the federal poverty level
* States had the option to increase those federal income limits if they wished.
* Obamacare expands eligibility to include also all childless adults with incomes up to 133% of poverty. As of January 2013, that threshold equalled $15,282 for an individual, $20,628 for a two-person household, and $31,322 for a family of four. [TTM: p. 180-182; DOHL: Loc. 402-14; TAO: Loc. 215-16, 1082-83]
* Moreover, under the ACA an applicant’s assets are no longer factored in to the process of determining who is, or is not, eligible for Medicaid. People with limited incomes are now eligible for the program, regardless of how much money they have in the bank or what other assets they may own. [TTM: p. 180-182; DOHL: Loc. 402-14]
* Once the ACA is fully implemented, nearly one-third of all Americans will be on Medicaid, a program that heretofore has been considered health welfare reserved only for the truly needy.
* In short, Obamacare transforms Medicaid from a temporary safety-net program to a permanent entitlement that takes the place of private insurance for tens of millions of Americans. [DOHL: Loc. 196-97, 399-402]
* This will inevitably promote in Americans a mindset of entitlement and dependency on government.
* The ACA's massive expansion of Medicaid will harm truly poor Americans, who already have difficulty finding primary-care physicians and specialists willing to treat Medicaid patients. By adding tens of millions of additional Medicaid patients to the pool, the doctor shortage faced by such individuals will be worse than ever. [DOHL: Loc. 425-26, 430-32, 441-43]
* Supporters of the ACA maintain that expanding the Medicaid rolls will help reduce the overall cost of healthcare in the U.S., on the theory that people with some type of medical insurance tend to rely on emergency-room care less frequently than the uninsured. But a study of Oregon Medicaid recipients contradicts this notion. Researchers compared Medicaid recipients with uninsured individuals and found that the former group used the ER 40% more often than the latter.
* Actuaries from the Centers for Medicare and Medicaid Services estimate that Medicaid spending, which amounted to $343 billion in 2008, will reach $900 billion by 2020. [DOHL: Loc. 462-63, 777-78.]
* Under Obamacare, for three years the federal government will pay the Medicaid costs for those people who are newly eligible for the program under its loosened eligibility requirements. After three years, the states will be required to shoulder an ever-increasing share of the tab. [DOHL: Loc. 458-61]
* The federal government will not, however, at any time pay the Medicaid costs of people who were eligible for the program under its pre-Obamacare guidelines but had never enrolled. State taxpayers will be responsible for those expenses beginning in January 2014. [DOHL: Loc. 458-61]
2. Subsidies For Plans Purchased On The Exchanges
* Beginning in 2014, federal healthcare subsidies will be given to individuals and households earning between 133% and 400% of the federal poverty line—i.e., between about $31,000 and $94,000 for a family of four—to help them pay the cost of the health-insurance premiums that they purchase on the Obamacare exchanges.
* The lower the income, the greater the subsidy.
* Even people who were not previously uninsured are eligible for these subsidies, which will be paid by the government directly to the insurers.
* By 2019, households earning up to $100,000 will be eligible for these taxpayer handouts.
* There will be no asset tests in determining eligibility for such subsidies. As historian, healthcare expert, and former New York State Lieutenant Governor Betsy McCaughey puts it: “You can own new cars, a home, even a castle and still qualify.”
* In short, subsidies will be made available to millions of people who were wholly self-sufficient, in terms of purchasing their own insurance, prior to Obamacare. This will inevitably promote in Americans a mindset of entitlement and dependency on government. [TTM: pp. 240-241; DOHL: Loc. 187-91, 370-71, 470-74, 477-81, 766-69]
* The ACA cuts funding for Medicare by $716 billion over the law's first ten years, by lowering the program's payouts to doctors, hospitals, home care agencies, hospice care facilities, dialysis centers, etc. [DOHL: 783-90; TAO: Loc. 779-80]
* Medicare disbursements to hospice care, hospitals, nursing homes, and labs will be less than half of what they would have been without the ACAcuts—less, even, than Medicaid. [DOHL: Loc. 577-79]
* Because of Obamacare, since July 1, 2011, hospitals have been evaluated based on their “spending per Medicare beneficiary.”
* Since October 2012, hospitals that spend more than average on a patient with a particular diagnosis have been hit with demerits—and financial penalties—from the federal government.
* By contrast, hospitals that spend less per Medicare beneficiary earn points, or credits, regardless of how the patient fares medically. [DOHL: Loc. 554-58, 623-27; [TAO, Loc. 211]
* The Obama administration's own actuaries project that, as a result of these funding cuts and penalties, Medicare will spend $1,431 less per senior in 2019, than it would have spent if the ACA had not become law. [DOHL: Loc. 559-62, 783-90]
* These cuts are being made just when Medicare's rolls are expected to swell by some 30%, as the leading edge of the “baby-boom” generation turns 65. [DOHL: Loc. 559-62]
* HMOs tried this same strategy—rewarding the lowest-cost healthcare providers—in the early 1990s. Specifically, the HMOs set targets for limiting access to tests and specialists, and then “withheld” payments from hospitals and doctors who allowed patients to get care whose costs exceeded the targets. Betsy McCaughey writes:
“It set up a conflict of interest between medical professionals and their patients. As the medical tragedies accumulated, state lawmakers deemed the 'withhold' too dangerous to patients and outlawed it. Now the Obama administration is reviving this tool and using it against the most vulnerable patients, the elderly. Patients won’t know what they might have gotten or how much less they might have suffered. Withholding care is an invisible process. Only the consequences are felt.” [DOHL: Loc. 627-33]
* The Medicare cuts mandated by Obamacare will cause approximately 15% of hospitals to operate at a loss. An environment of scarcity will be evident in these and many other hospitals as well—e.g., fewer nurses on the floor, fewer cleaning staffers, longer waits for high-tech diagnostic tests, etc. All patients will be affected. [DOHL: Loc. 581-83]
* Section 4104(a) of the ACA expressly authorizes the Secretary of Health and Human Services—currently Kathleen Sebelius—to scale back preventative services for seniors based on the recommendations of the U.S. Preventative Services Task Force. A half-page later, the law authorizes the Secretary to “increase” preventative services for Medicaid patients.
* That is, money is being siphoned out of Medicare and transferred to Medicaid. [DOHL: Loc. 634-38]
* Medicare Advantage, which was established in 2003, is a type of HMO health plan offered by a private company that contracts with Medicare to provide seniors with all of their Part A and Part B benefits—including vision and dental care, and sometimes even gym memberships. As of 2009, about 22% of all seniors (or 10.2 million people) had Medicare Advantage plans rather than traditional Medicare. [TAO: Loc. 1986-96]
* But the ACA will slash Medicare Advantage funding by 27%—meaning $3,700 less per year for each senior enrolled by 2017.
* As a result of these cuts, Medicare Advantage plans will offer fewer benefits, and many plans are expected to be cancelled entirely.
* Medicare actuaries predict that enrollment in Medicare Advantage will fall to half what it otherwise would have been. All told, 7.4 million seniors are expected to lose their Medicare Advantage plans—a direct contradiction to President Obama's pledge that “if you like your health care plan, you’ll be able to keep your health care plan, period.” [DOHL: Loc. 645-55; TAO: Loc.]
* Efforts to reduce per-patient Medicare spending are based on a number of very serious misconceptions, most notably the notion that the longer senior citizens live, the more they tend to burden society with their medical costs. Medicare data actually disprove that assumption.
* A patient who dies before age 75 spends, on average, three times as much on healthcare in the last year of life as a patient who lives to age 90 spends in his (or her) final year.
* Once patients reach age 75, the cumulative amount of money they spend from that point until the end of their lives tends to be about the same, whether they live another year or another 20 years. That is, patients who live to a very old age are seldom ill, and thus spend very little on healthcare per year. They do not reach their advanced age by surviving one costly illness after another. [DOHL: Loc. 681-86]
* When the ACA was being debated, the President repeatedly issued a “firm pledge” that “under my plan, no family making less than $250,000 a year will see any form of tax increase—not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”
* But this pledge turned out to be entirely untrue. Indeed, the ACA features at least 18 new taxes, tax hikes, or official policies designed to collect hundreds of billions of dollars in revenues to help pay for the law and its mandates. A number of these will affect people at all income levels, including middle- and lower-income households:
* Medicare Part A Payroll Tax: Prior to Obamacare, this tax amounted to 2.90% of each worker's gross pay, with the employer and employee each contributing 1.45%. Under Obamacare, the employee portion of the tax goes up to 2.35% for individuals who earn more than $200,000 per year, and for couples earning more than $250,000 annually; the employer contribution does not increase, so the new total is 3.8%. Notwithstanding the name of this tax, the revenues derived from it do not go to Medicare. [DOHL: Loc. 794-97, 1452-54; TAO: Loc. 231-234, 2400-02]
* Medicare Tax of 3.8% on “Unearned Income”: Above and beyond existing capital gains taxes, this is a tax on financial gains from stocks, bonds, dividends, rents, and, under some circumstances, the sale of one's home. Again, the name is misleading because the revenue does not go to Medicare.[DOHL: Loc. 800-803, 1454-58; TAO: Loc. 2403]
* Excise Tax on “Cadillac” Health Insurance Plans: Beginning in 2018, a 40% tax on so-called “Cadillac” health plans—i.e., high-end plans that cost more than $10,200 for an individual or $27,500 for a family—is scheduled to go into effect. Designed (for purposes of equality) to prevent some Americans from being able to purchase more generous health insurance than others, this tax was originally scheduled to take effect much sooner, but powerful unions—many of whose workers have these plans—pressured Congress to both delay its implementation and to exempt union workers in “high risk” occupations. After the law was passed, longshoremen—dock workers who load and unload ships—were able to get their occupation listed as “high risk” and thus immune from the tax. [DOHL: Loc. 838-851; TAO: Loc. 765-766, 2453-55]
This tax incentivizes employers and other institutions that provide health insurance for individuals, to scale back their coverage in order to avoid the massive 40% tax—thereby contradicting the Obama administration's repeated claims that the new healthcare law would result in improved coverage for the American people. In December 2013, for instance, the University of Minnesota announced that its insurance plans would soon be adding a deductible and increasing co-pays for both primary and specialty care, lest the school incur a $48 million excise-tax liability in 2018.
* Tax Penalties on Small Businesses: Because small business owners often classify their business income as personal in order to avoid America's high corporate-tax rates, they will be hit hard by the ACA. As Sally Pipes explains: "It's not hard for a small business owner's income to inch up into that $200,000-and-above income tax bracket—even though he or she is using most of the income as operating capital and taking home a much smaller amount. Also, because many small business owners are both an employer and an employee, they get dinged twice on some taxes—like the payroll taxes that cover Social Security and Medicare." [TAO: Loc. 2411-18]
* Penalty on Large Employers That Do Not Offer “Qualified” Insurance Plans to Their Workers: See the EMPLOYER MANDATE section above.
* Penalty on Individuals Who Do Not Purchase Health Insurance from Obamacare Exchanges: See the INDIVIDUAL MANDATE section above.
* Tax on All Health Insurers: Obamacare levies a special tax all insurance companies, based on the number of premiums they collect in a given year, and on what share of the overall insurance market they comprise. The Congressional Budget Office and the Joint Committee on Taxation confirm that this tax, which is passed on to consumers, will cost the average family $300 to $400 annually in added premium expenditures. [DOHL: Loc. 812-16]
* Tax on Manufacturers of Brand-Name Pharmaceuticals: This tax (of approximately $2.8 billion per year) on drug companies is based on each firm's share of the total pharmaceuticals market. It is estimated that for the period 2012-19, government revenues from this tax will total approximately $16.7 billion [DOHL: Loc. 818-20; TAO: Loc. 1044-47]
* Excise Tax On Medical Devices: This 2.3% tax on the manufacture and importation of medical devices will raise the cost of a multitude of items such as pacemakers, prosthetics, oxygenators, CT Scan and MRI machines, shunts, stents, catheters, dialysis machines, and many others. Moreover, this tax will raise the cost of procedures involving any of these medical devices. [DOHL: Loc. 818-20; TAO: Loc. 1849-53]
* Restrictions on Health Savings Accounts: The ACA puts Health Savings Accounts (HSAs) at a disadvantage by requiring policy holders to pay for all preventative care upfront in their premiums (rather than from their HSAs when they are actually treated). The new law also caps deductibles at $2,000, whereas most HSAs traditionally have been paired with low-cost insurance plans with deductibles as high as $6,000. Moreover, the ACA doubles—from 10% to 20%—the IRS penalty for “non-allowable purchases” made with funds from Health Savings Accounts or Flexible Savings Accounts. [DOHL: Loc. 822-26, 1434-41]
* New Limits For Flexible Savings Accounts: Under Obamacare, employers' tax-free (not subject to payroll tax) contributions to Flexible Savings Accounts (FSAs) are limited to $2,500 per year, whereas in the past the limit was $5,000. An FSA allows an employee to set aside a portion of his or her earnings to pay for medical expenses as well as some other items like dependent care. [DOHL: Loc. 827-30; TAO: Loc. 234-236, 2436]
* Reduction in the Number of Medical Products That Can Be Purchased with HSA and FSA Funds: Starting in 2011, funds in HSA and FSA accounts could no longer be used to purchase over-the-counter drugs, but only prescription drugs. In other words, if a patient now wishes to buy Tylenol, Advil, a cold remedy, or an allergy medicine with HSA funds, he or she must first get a prescription from a doctor. [DOHL: Loc. 822-26, 1434-41; TAO: Loc. 2221-23]
* This new rule often penalizes HSA holders for buying the less costly version of a particular drug. For example, as of 2010, daily doses of the prescription drugs Claritin and Prilosec cost about $2.50 and $4.00, respectively, while the over-the-counter versions of each cost only about 50 cents per day. [TAO: Loc. 2226-29]
* The Heritage Foundation notes: “Restricting how much taxpayers can set aside in HSAs and FSAs will increase the income taxes paid by middle- and low-income families, because income that they now set aside tax-free in these accounts above the new threshold will now be subject to income tax. Limiting the types of products that taxpayers can buy with the funds in these accounts will cause middle- and low-income taxpayers to put aside less money in their HSAs and FSAs, increasing their income tax liability.”
* Higher Medical Expenses Deduction Threshold: Prior to Obamacare, taxpayers could deduct all medical expenses that exceeded 7.5% of their adjusted gross income. But under the ACA, that threshold is raised to 10% of their adjusted gross income. This change took effect in 2013 for most people, but will not take effect until 2017 for senior citizens.[DOHL: Loc. 831-34]
* Exclusion of Unprocessed Fuels from the Existing Cellulosic Biofuel Producer Credit: Thismeasureuses revenues from a non-healthcare-related industry (biofuel) as a means of raising money to pay for Obamacare.
* Elimination of the Corporate Deduction for Prescription Expenses for Retirees: This provision has caused many large companies to announce reductions in their projected future earnings.
* Tax on Tanning Salons: The ACA imposes a new 10% excise tax on indoor tanning services. [DOHL: Loc. 805-10, 1508-9]
* New Limits to Insurance Company Tax Deductions: The ACA lowers the amount of compensation (paid to officers, employees, directors, and service providers) that health insurance companies are permitted to deduct from their taxes.
* All of the taxes and fees enumerated above will be passed on to consumers, in the form of higher premiums and co-pays.
Obamacare Taxes Are Not Indexed to Inflation
* This means that as people's incomes rise over time as a result of inflation, an ever-increasing number of them will be subjected to the ACA's taxes on the so-called "wealthy" who earn $200,000 or more. For example, assuming a 4% annual inflation rate, a $200,000 income in the year 2042 will be the equivalent of a $62,000 income for 2012. [TAO: Loc. 2426-31]
* According to Treasury Inspector General Russell George, the ACA institutes “the largest set of tax law changes in twenty years.” [DOHL: Loc. 783-90]
* FutureOfCapitalism.com editor Ira Stoll—using figures supplied by the nonpartisan Congressional Budget Office—calls Obamacare the largest tax hike in American history.
* A Forbes magazine analysis puts it this way: “[I]f both the premium and the penalty are considered a tax, the [Obamacare] mandate becomes the largest tax increase in U.S. history. And that doesn’t include all of the other taxes imposed by the legislation.”
* Because funding for Medicare will obviously be very strained, Obamacare has established a cost-cutting panel known as the Independent Payment Advisory Board (IPAB). It is composed of 15 unelected bureaucrats (all appointed by the President) who are empowered to reduce per-capita spending on Medicare whenever they deem it necessary, and to thereby reduce what doctors and other caregivers are paid for treating seniors. [TAO: Loc. 2026-27]
* This is a way for Congress to avoid openly making unpopular cuts to benefits for seniors and then having to be accountable to those same constituents on Election Day. [DOHL: Loc. 563-65, 701-705, 709-12]
* Technically, the IPAB is not authorized to actually “cut” benefits. But when it “recommends” that the reimbursement rates to doctors and medical institutions be cut for certain treatments, those recommendations will automatically become law unless Congress enacts—with a three-fifth’s super majority in the Senate—a different medical spending plan achieving equal “savings” in Medicare expenditures.
Rationing of Care
* It is quite possible that as a result of IPAB decisions, reimbursement rates for certain treatments could reach a point where they are so low that medical professionals can no longer afford to provide those treatments. Or, in many cases, Medicare patients could be forced to wait longer for services—because many doctors will be unwilling to treat Medicare patients for unreasonably low fees. This would amount to de facto rationing. [DOHL: Loc. 705-12, 1185-90; TAO: Loc. 2028-29]
* Donald Berwick, who in 2010 was appointed by President Obama to serve as Administrator of the Centers for Medicare & Medicaid Services, is on record as a supporter of rationing: “It’s not a question of whether we will ration care. It is whether we will ration with our eyes open. And right now, we [Americans] are doing it blindly.”
* Because of the IPAB's power to cut Medicare costs and thereby ration seniors' care accordingly, some critics have characterized the Board as a “death panel” that holds ultimate authority over whether certain older patients will be relegated to the category of hopeless cases for whom death is the only financially practical option. Former Alaska Governor Sarah Palin, for one, drew much ire from Obamacare supporters when she denounced the IPAB as “a panel of faceless bureaucrats who have the power to make life-and-death decisions about healthcare funding.”
* But in fact, liberal and leftist supporters of the ACA subsequently acknowledged that in fact Palin was correct:
* In an April 2011 Atlanta Journal-Constitution piece titled, “Why 'Death Panels' Are a Necessary Evil,” columnist Jay Bookman bluntly explained what he called an “uncomfortable truth”: “Death panels exist, they will exist in any conceivable system of health-care delivery, and we all know they are necessary but prefer to ignore it. Somebody has to say no to the terminal patient who refuses to acknowledge that he or she is terminal and demands hopeless if expensive treatment.… Somebody has to have the power to rule that Procedure A or Drug A is more cost-effective than Procedure B or Drug B.… Even Heaven has a gatekeeper.”
* In August 2013, former Vermont governor Howard Dean published an op-ed in The Wall Street Journal stating: “The IPAB will be able to stop certain treatments its members do not favor by simply setting rates to levels where no doctor or hospital will perform them.... Getting rid of the IPAB is something Democrats and Republicans ought to agree on.”
* In November 2013, TIME political analyst Mark Halperin was asked by radio interviewer Steve Malzberg whether he believed that Obamacare would include “rationing, a.k.a. 'death panels.'” Halperin replied: “It's built into the plan. It's not like a guess or like a judgment. That's going to be part of how costs are controlled.”
An Unconstitutional Board
* Some critics contend that the very existence of the IPAB is unconstitutional. According to Betsy McCaughey: “The Constitution does not permit Congress to delegate its responsibilities to untethered boards and councils.” [DOHL: Loc. 1192-93]
* The ACA law states that the IPAB will be a permanent fixture on the landscape of American healthcare unless a future Congress chooses to repeal it. But the law stipulates that any such repeal will be permitted to take place only during a very narrow window of time. Specifically, says Obamacare, the repeal must be submitted to Congress between January 1 and February 1, 2017—not sooner or later—and enacted by August 15 of that year.
* But this provision is unconstitutional, because no Congress is permitted to bind any future Congress from acting as it deems necessary. [DOHL: Loc. 715-18, 1195-98]
* The Obamacare law has established a number of so-called Accountable Care Organizations (ACOs), of which the first 32 were formally introduced by Secretary of Health and Human Services Kathleen Sebelius on December 19, 2011. ACOs are groups of doctors and other healthcare providers (usually including a hospital) that will each treat 5,000 or more Medicare patients. In so doing, they agree to coordinate their treatment of each patient with an eye toward keeping costs to a minimum.
* One strategy, for example, might be to shorten a particular patient's hospital stay if significant resources have already been sunk into caring for that individual.
* If the ACO is successful in reducing costs, each caregiver affiliated with that ACO gets a bonus from the federal government. In short, doctors and hospitals will earn more if they are able to reduce expenditures on the patients in their care. [DOHL: Loc. 1351-56]
* In the American Recovery and Reinvestment Act (better known as the Stimulus Bill) that was enacted in 2009, Congress approved $1.1 billion in expenditures to create a new government agency called the Federal Coordinating Council for Comparative Effectiveness Research (CER), consisting of 15 government officials (appointed by the President) whose task is to analyze research findings vis a vis which medications and treatments work best for which medical conditions. [TAO: Loc.1738-46]
* While research into such matters is of course valuable, many doctors and analysts fear that Obamacare will cause CER to be used primarily for cost-cutting rather than medical considerations, thereby promoting government micromanagement of personal medical decision-making. This has particularly large implications for Medicare patients, who may be deemed too old or too sick to be worthy of the costs associated with certain treatments. [DOHL: Loc. 1381-86; TAO: Loc. 218-222, 1738-41, 1747-54]
* The United Kingdom's government-run National Health Service (which administers that nation's healthcare system) relies heavily on CER to suppress medical costs—which, because of high demand, long waiting lists, and limited funds—must be carefully rationed.
* An NHS board called the National Institute for Health & Clinical Effectiveness (NICE) uses a "Quality Adjusted Life Year" metric that places a numeric value on one year of each person's life (based on the person's existing and projected "quality of life"). NICE then uses CER research to determine whether or not certain treatments would constitute a justifiable use of the limited funds available for healthcare.
* In effect, NICE places a dollar-value on each life. This practice tends to favor younger patients (who stand to gain the most additional years of "quality" life from various medical treatments) over older patients. [TAO: Loc. 1755-70]
* If the U.S. government uses CER to determine whether it will pay for any given treatment, medical research is likely to focus more heavily on cures that benefit younger people rather than older people. [TAO: Loc. 1807-16]
* The ACAe establishes the Patient-Centered Outcomes Research Institute (PCORI), whose purpose is to conduct CER and inform the government of its findings.
* It should be noted that while the PCORI is publicly funded, it is not technically a government entity.
* Moreover, the Affordable Care Act explicitly bars the use of "Quality Adjusted Life Year" considerations from the process of determining which treatments will be covered by insurance. But future legislation could easily change this, turning the PCORI into an American equivalent of Britain's NICE. [TAO: Loc. 1820-30]
* Americans got a preview of CER in 2009, when the U.S. Preventive Services Task Force—an advisory panel n the Department of Health & Human Services which now runs Obamacare—suddenly recommended that women in their 40s no longer get mammograms, and that women aged 50-74 get them every other year (rather than annually).
* This was chiefly a financial decision. The Task Force calculated that for each instance where a mammogram saves the life of a woman in her 40s, some 1,900 women need to be screened—whereas only 1,300 screenings of women in their 50s, and 377 screenings of women in their 60s, are required to achieve the same result in those older populations. In other words, it becomes increasingly cost-effective to screen women for breast cancer as they get older. But this does not mean that younger women do not need mammograms. [TAO: Loc. 1791-1800]
* One of the most widely publicized provisions of the ACA is the one that closes the so-called “donut hole” in Medicare Part D drug coverage.
* Prior to Obamacare, Medicare Part D paid for most medication expenses up to $2,800 in a calendar year, but then required seniors who needed additional drugs to pay 100% of the cost until their purchases for the year reached $6,400 a year, at which point Medicare would again cover medication expenses incurred by the patient. This gap, or “donut hole,” between $2,800 and $6,400 presented a problem for the small number of seniors with costly, chronic illnesses. [DOHL: Loc. 566-72]
* The so-called "Doctor Fix" is an enormously expensive provision designed to give some $208 billion over ten years to doctors who participate in Medicare, as a way to partially compensate them for the low reimbursement they normally receive from the program.
* But while the Doctor Fix was originally part of the ACA legislation, it was later stripped from the bill and passed as a separate, stand-alone measure. This was done to conceal the true extent to which Obamacare would inflate the U.S. annual budget deficit. [TAO: Loc. 2555-65]
* When the American Recovery and Reinvestment Act (i.e., the Stimulus Bill) was passed in February 2009—13 months prior to the passage of the ACA—it included a provision calling for doctors and hospitals to install and use electronic Health Information Technology (HIT), which permits physicians anywhere in the U.S. to access a patient's medical records whenever necessary.
* Beginning in 2014, Medicare and other federal programs will impose financial penalties on doctors and hospitals that are not “meaningful users” of the technology.
* A 2005 study by the RAND Corporation concluded that HIT could save the U.S. healthcare system about $77 billion annually (3.3% of total medical spending), if properly implemented and widely adopted. [TTM: p.113]
* But there are enormous upfront costs associated with implementing a good HIT system—particularly for hospitals. For instance, George Washington University Hospital's HIT system, which saves the institution about $1 million per year, cost nearly $300 million to implement. [TTM: p.113]
* Some hospitals, depending upon their particular circumstances, might feel that such large sums of money would be better spent on improving patient care more directly by upgrading outdated medical equipment, buying a dialysis machine, hiring more doctors, or opening up more beds in crowded wards. [TTM: p. 114]
* Transitioning from paper to computerized records is expensive for individual doctors as well, costing roughly $40,000 to $60,000 for an individual doctor or small practice to make the switch. [TTM: p. 114]
* According to Pacific Research Institute president Sally Pipes: “Switching from manila folders to an electronic record-keeping system is one thing. But networking thousands of hospitals, doctors’ offices, and laboratories will be a monumental task. Putting the government in charge of such a massive and complex endeavor is to guarantee a regulatory mess. Private IT companies … should be free to create products that doctors and patients actually want, as opposed to what the government wants.” [TTM: pp. 114-118]
Compromising Physician Autonomy
* A key consideration regarding HIT is the issue of physician autonomy in the treatment of patients. Dr. David Blumenthal, the first appointee to head President Obama’s Office of Health Information Technology, said (shortly after his appointment in 2009) that doctors should make extensive use of “clinical decision support,” meaning electronically delivered treatment protocols from government overseers—a practice that Blumenthal predicted might cause “many physicians and hospitals [to] rebel.”
* As Betsy McCaughey writes: “Doctors already see the signs that the technology will diminish their autonomy and professionalism, and [will] put 'Washington knows best' bureaucrats in charge at bedside.” [DOHL: Loc. 906-21]
Compromising Patient Privacy
* Another important consideration is the fact that HIT compromises patient privacy by creating a “tell-all” relationship with every doctor a patient sees. For example, if a particular patient is being treated by a psychiatrist, his podiatrist and dermatologist will now also know about it—as will many non-physicians who have access to the patient's records. [DOHL: Loc. 52%]
Potential for Abuse
* Some critics have noted that if the political authorities who oversee Obamacare are able to access people's private medical records, the information therein could be exploited to intimidate, defame, or otherwise harm those individuals.
* For an explanation of how Barack Obama himself, in 2004, twice used private information that was leaked from the sealed divorce records of his political opponents to win his U.S. Senate seat in Illinois, click here.
* A number of confirmed Obama administration scandals serve only to compound the presumption that Obamacare medical records could be exploited for political reasons. Consider, for instance:
* In an effort to “reduce differences in the amount and quality of healthcare that different groups receive,” the ACA requires the Secretary of Health and Human Services (HHS) to support grants and demonstration projects that promote cultural competence training—especially with regard to race and ethnicity—for all health professionals. [DOHL: Loc. 1392-99]
* This is to be achieved by such means as training healthcare interpreters, and developing technologies designed to help people with limited English proficiency enroll in Medicaid. [DOHL: Loc. 1395-99]
* Section 4302 of the ACA law requires HHS to ensure that all federally supported health programs collect and report data on race, ethnicity, sex, primary language, and disability status—always with an eye toward reducing inter-group disparities in health and healthcare. [DOHL: Loc. 1432-34]
* The Obama administration has created a National Steering Committee to train “promotores”—whom HHS defines as “trusted local people who serve as community health workers”—to actively help so-called "underserved groups" gain access to healthcare. [DOHL: Loc. 1479-81]
* Section 4207 of the ACA law requires employers to allow a "reasonable break time" for female workers to express breast milk for their nursing children throughout their first year of life. Employers must also make a private space, other than a bathroom, available for this purpose. [DOHL: Loc. 1486-89]
* Because of Obamacare's effort to limit medical expenditures, Americans who purchase insurance plans via the new law's online exchanges have only limited access to some of the nation’s leading hospitals. For example, the majority of insurance plans available on the exchanges in New York and Texas do not offer patients access to Memorial Sloan Kettering in Manhattan or MD Anderson Cancer Center in Houston, two world-renowned cancer-treatment centers. Similarly, insurance plans available on the exchanges in California bar access to Cedars-Sinai in Los Angeles, one of America's top research and teaching hospitals.
* In December 2013, it was reported that approximately 70% of California’s 104,000 doctors were planning to stay out of the state’s Obamacare health-insurance exchange, a decision that would likely have a major impact on implementation of the law.
* The doctors made this decision mainly because of California's low Medicare/Medicaid reimbursement rates (to physicians), which are typically 30% below those in other parts of the country. (Under Obamacare, the reimbursement rates are tied to those of each state’s Medicare and Medicaid programs.)
* In most parts of the U.S., Medicare typically pays doctors $76 for return-office visits, but in California the figure is only $24. Likewise, Medicare in most states pays out between $500 and $700 for a tonsillectomy, but in California the figure is just $160.
* A similar trend was evident in New York State, where Medicare and Medicaid reimbursement rates are signficantly below the national average.
* An October 2013 survey of 409 doctors by the New York State Medical Society found that 44% of the state’s physicians did not plan to participate as ACA providers, while an additional 33% were undecided.
* “This is so poorly designed that a lot of doctors are afraid to participate,” said Dr. Sam Unterricht, president of the 29,000-member New York State Medical Society. “There’s a lot of resistance. Doctors don’t know what they’re going to get paid.”
* The architects of the ACA knew it was possible that the Obamacare exchanges might end up consisting of too few people, or of people who were, as a whole, older and sicker than insurance companies had initially expected when they were setting their policy premium rates. If this were to occur, insurers inevitably would be paying out much more money in benefits than they had initially predicted, and the premiums that they had set would not adequately cover those expenditures.
* To address this possibility—i.e., that insurance company revenues might fall short of expectations, or that their outlays might exceed expectations—the ACA contains a three-year "risk corridor program" designed to bail out insurers if their costs prove to be higher than originally anticipated.
* As journalist Byron York wrote in December 2013, insurance company bailouts are "written into the law":
"There’s something called 'risk corridors,' which basically ensure that if an insurance company ends up paying a lot more in benefits than it takes in in premiums, then the federal government will bail it out — it will make it good. And it looks like we are entering a situation — certainly in the first month of January — where the insurance companies will be in that situation. And they’e not going to take the losses. It will be the taxpayer who makes up for those losses."
* On February 4, 2014, the Congressional Budget Office (CBO) released a report stating that by 2021 the U.S. economy would have the equivalent of 2.3 million fewer full-time workers as a result of the ACA—a figure nearly 3 times higher than previous estimates. The Washington Post explained:
After obtaining coverage under the health-care law, some workers will choose to forgo employment, the [CBO] report said, while others will voluntarily reduce their hours. That is because insurance subsidies under the law become less generous as income rises, so workers will have less incentive to work more or at all.
The design of the subsidies—like many programs in the social safety net—represents “an implicit tax on additional work,” CBO Director Douglas Elmendorf said.
The CBO attributed the decline in workforce participation primarily to this effect. But there were other, less important causes, too, including the likelihood that some employers will cut people’s hours, hire fewer workers or offer lower wages to new workers to avoid or compensate for a new fine on employers that do not offer insurance to employees who work more than 30 hours a week.
* The ACA does not permit illegal immigrants to purchase health insurance policies through its exchanges. But in March 2014, the Daily Callerreported: "The Obama administration is assuring immigrants that applications for Obamacare will not be used to enforce immigration law." Specifically, a U.S. Immigration and Customs Enforcement [ICE] memo read:
“[ICE] does not use information about such individuals or members of their household that is obtained for purposes of determining eligibility for such coverage as the basis for pursuing a civil immigration enforcement action against such individuals or members of their household.... Under the laws and implementing regulations, information provided by individuals for such coverage may not be used for purposes other than ensuring the efficient operation of the Marketplace or administering the program, or making or verifying certain eligibility determinations, including verifying the immigration status of such individuals.”
* In a joint town hall with Telemundo and Univision on March 6, 2014, President Obama was asked: “Will we hear from you a pledge, a personal promise, that the information provided in the registration process will not be used for deportation purposes in this country?” “Absolutely,” Obama replied, adding:
"[N]one of the information that is provided [in the application process] in order for you to obtain health insurance, is, in any way, transferred to Immigration services.... If you live in a mixed-status [some members legal, others illegal] family," the president elaborated, then the son, who could potentially be eligible for the Children's Health Insurance Program, or some other mechanism to get health insurance -- he needs to be signed up. And the mother should not be fearful that in any way that's going to affect [her ability to remain in America]."
* Nothing in the ACA law expressly empowers the Executive Branch of government to selectively exempt any person or group from any provision in the statute. Nevertheless, President Obama (through Secretary of Health and Human Services Kathleen Sebelius) unilaterally altered the law by granting almost 1,400 waivers permitting—for one year—certain companies and labor unions to set low caps on benefit payouts of their employee healthcare plans, even though the law mandates an end to annual caps.
* Some of these plans capped benefits at $2,000; one capped benefits at just $300.
* These waivers affected almost 3.1 million workers nationwide, of whom more than half (1.55 million) were union members. Given that only a small percentage of American workers are unionized, this was a grossly disproportionate figure.
* Unions have consistently been extremely strong, partisan supporters of President Obama and the Democratic Party. [DOHL: Loc. 319-21, 329-34, 510-14]
* Professing not to favor any particular group over others, the ACA, as it was originally written and passed, required Members of Congress and thousands of their aides to purchase, at full price, healthcare coverage through new, state-based insurance exchanges, without the federal government continuing to subsidize their share of the premiums—i.e., $5,000 in annual subsidies for individuals, and $11,000 for families. Staffers earning less than 400% of poverty-level income, however, would be eligible for subsidies, like all other Americans.
* After the law was enacted, however, members of both parties in Congress balked at this provision.
* Responding to those complaints, President Obama, on August 1, 2013, usurped the legislative powers of Congress and unilaterally waived the provision. As a result, American taxpayers would continue to subsidize the healthcare of all U.S. senators, congressional representatives, and their staffers.
* In late 2009, 60 of the 100 members of the U.S. Senate were Democrats. The rules governing the passage of legislation in the Senate normally required at least 60 votes to block a filibuster by the opposition party (in this case, Republicans). Thus, to ensure that he could avert such a filibuster and keep the healthcare-reform bill alive, Senate Majority Leader Harry Reid needed all 60 of those Democrat votes. But there were still two significant Democratic holdouts—Senators Mary Landrieu of Louisiana and Ben Nelson of Nebraska.
* To win Landrieu's support, Reid and Obama offered $100 million in extra federal funds for her home state. In a deal that became known, by critics, as "The Louisiana Purchase," Landrieu negotiated that sum up to $300 million and then voted in favor of the bill.
* To gain the backing of Nelson—who threatened to filibuster the bill because of its provision to fund abortion services and its call for increased Medicaid spending by the states—the Nebraska senator was promised special treatment that would shield his state from having to pay for the “newly eligible” Medicaid enrollees that Obamacare would produce.
* News of this agreement—dubbed "The Cornhusker Kickback" by critics—subsequently sparked widespread public outrage. The most vocal protester was Arnold Schwarzenegger, the only Republican governor to support the ACA, who demanded that every other state in the country get the same deal given to Nebraska. And that, in the end, is precisely what happened. [DOHL: Loc. 1388-91; TAO: Loc. 591-93] , 
* The Democrats' filibuster-proof majority of 60 senators was now in place.
* On the near political horizon, however, was a special election scheduled for January 19, 2010 in the state of Massachusetts, where voters would go to the polls and choose a replacement for the late Democratic Senator Ted Kennedy, who, after his death in August 2009, had been succeeded by interim Senator Paul Kirk (a Democrat appointed by Democratic Governor Deval Patrick).
* Senate Democrats were desperate to pass their healthcare-reform bill prior to that special election in Massachusetts—given that a Republican victory there would erase the Democrats' slim, filibuster-proof majority in the Senate. Thus they passed their bill on the morning of December 24, 2009, without a single Republican vote.
The Election of Scott Brown in Massachusetts
* On January 19, 2010—in a remarkable vote that was almost entirely a referendum on the state's views regarding Obamacare—Republican Scott Brown was elected to the same Senate seat that Ted Kennedy, a longtime proponent of government-run healthcare, had held for almost half a century. [TAO: Loc. 601-608]
* Brown's election as the Senate Republicans' 41st vote against Obamacare had enormous significance. He could not stop the bill's passage in the Senate, of course, since the Senate had already passed it on Christmas Eve of 2009. But his election meant that the Republicans now had enough Senate votes to reject any modifications that Nancy Pelosi and the House Democrats might seek to make to the bill. In other words, the House would have to either accept or reject the Senate bill as it was.
* This presented a major problem for the Democrats, since the House—though Democrat-controlled—still did not have enough members willing to vote in favor of the Senate version of the bill. In other words, House approval was contingent upon incorporating a number of changes, or "fixes," into that bill. But, as noted above, Senate Republicans now had enough leverage to block the House from making any such changes.
Harry Reid's Procedural Maneuver
* To address this situation, Reid—having lost his filibuster-proof 60-vote majority in the Senate—needed to find a way to empower the Senate to make the fixes that the House Democrats wanted, and get enough senators to vote in favor of those changes before sending the bill over to the House.
* Knowing that he could no longer count on the 60 votes he would need to block a Republican filibuster, Reid resorted to a parliamentary procedural gimmick: He put the necessary fixes up for vote in the Senate, under the rules of the so-called reconciliation process.
* Reconciliation is a process that was originally created by the Congressional Budget Act of 1974 to affect only permanent spending and revenue programs intended to promote deficit reduction and a balanced budget. Reconciliation bills cannot be filibustered and require only a simple (not three-fifths) majority to pass. [TAO: Loc. 632-645]
* But as the Heritage Foundation explained, the ACA did not in any way meet the criteria necessary to qualify legitimately as a reconciliation matter:
“According to the Congressional Budget Office (CBO), 'federal outlays for health care would increase during the 2010–2019 period, as would the federal budgetary commitment to health care' in the Senate and House bills. The bills both commit the federal government to over $2 trillion in spending. Clearly, adding the ACA to a reconciliation process would be quite contrary to the spirit of reconciliation (to reduce the deficit).... Reconciliation was not intended to be the procedure of last resort when other means fail, and to do so would be a complete abuse of reconciliation rules.”
* In the final analysis, Reid and the Senate Democrats passed the ACA as a spending/budget bill, so as to exploit the reconciliation process and avoid the traditional requirement of 60 Senate votes to block a filibuster.
* They did this even though the Constitution explicitly states that all spending and budget bills must originate in the House of Representatives—and not in the Senate.
* The Democrat-majority Senate passed the bill (with no Republican support whatsoever) and sent it to the Democrat-controlled House.
* The House also also passed the bill—without any changes, by a 219-212 margin, and likewise without a single Republican vote—on March 21, 2010.
* President Obama then signed it into law on March 23, 2010.
* Obamacare empowers the Secretary (Kathleen Sebelius) of Health and Human Services (HHS) to make virtually every important decision about the American healthcare system and its administration. There are more than a thousand places in the ACA law that read: “The Secretary shall…” In other words, HHS, which serves the will of the President, can essentially mold and reshape the law however it pleases, whenever it pleases. [DOHL: Loc. 1490-94]
* During the six months that immediately followed the ACA's passage, some 4,105 pages of new regulations were issued, mostly from HHS and the new commissions, boards, and panels reporting to Secretary Sebelius. [DOHL: Loc. 1490-94]
* The first legal challenge to Obamacare was issued on March 23, 2010 by Virginia Attorney General Ken Cuccinelli, who sued the federal government over the law, which he said had been “cobbled together in secret, passed by the Senate largely or totally unread, on a party line vote literally in the dead of night on Christmas Eve.”
* The Obama administration characterized the Virginia lawsuit—and those of 26 additional states that followed—as political posturing and filed motions in court to have them dismissed. [DOHL: Loc. 984-87]
* Judges Henry Hudson of Virginia and Roger Vinson of Florida ruled against the administration's request to dismiss the lawsuits, and allowed the legal challenges to go forward. They told Obama administration lawyers that they (the attorneys) would have to demonstrate why Congress had the authority to compel Americans to buy insurance, as Obamacare's individual mandate stipulated. [DOHL: Loc. 45%]
The Commerce Clause and the Severability Clause
* The Obama health law claimed that the Interstate Commerce Clause of the Constitution authorized Congress to force, if it wished, all Americans to purchase health insurance—even though the states, and not the federal government, had been regulating health insurance for more than 50 years. [DOHL: Loc. 46%]
* The illogic of this claim was compounded by the fact that individuals had long been barred from buying health plans from insurers in any state except their own state of residence—the very antithesis of interstate commerce. [DOHL: Loc. 46%]
* Georgetown constitutional law professor Randy E. Barnett wrote: "The [Supreme] Court has never upheld a requirement that individuals who are doing nothing must engage in economic activity by entering into a contractual relationship with a peivate company." [TAO: Loc. 1312]
* When 26 states made their case against the Obama administration in a Florida federal court in 2010, the Obama lawyers argued before Judge Vinson that Congress not only had the authority to impose the insurance mandates, but also the authority to prohibit an individual from not doing something—in this case, not purchasing insurance. [DOHL: Loc. 46% - 47%]
* But Judge Vinson, asserting that Congress did not have the power to force people into commerce that they otherwise would not choose participate in, stated: “The government has never required people to buy any good or service as a condition of lawful residence in the United States. That's a bridge too far.” [DOHL: Loc. 46% - 47%]
* On January 31, 2011, Judge Vinson ruled that the individual mandate was unconstitutional. [DOHL: Loc. 46% - 47%]
* Typically, complex legislation contains what is known as a “severability clause” saying that if a court strikes down one part of the law, other parts will remain enforceable. But the authors of the ACA insisted that without the individual mandate, the law's other provisions would not work properly; thus they removed the severability clause from the legislation. Judge Vinson, accepting Congress's assertion that the law could not work without the mandate, thus declared the entire ACA law null and void. [DOHL: Loc. 46% - 47%, 50%]
* After Vinson's ruling, the case was brought before the 11th Circuit Court of Appeals in Atlanta, where, on August 12, 2011, Judges Frank Hull (a Clinton appointee) and Joel Dubina (a George H.W. Bush appointee) struck down the individual mandate, just as Judge Vinson had done.
* Specifically, Hull and Dubina rejected the Obama administration's claim that healthcare commerce is a “universal” and “inevitable” reality in which all Americans participate, and that Congress can therefore use its Commerce Clause power to compel them to purchase insurance.
* The judges took into account the fact that in any given year—as shown by the federal Agency for Health Care Research and Quality (AHRQ)—fully half of the American population consumed virtually no healthcare (i.e., they seldom visited a doctor); that half of Americans had used so little healthcare in 2009 that they accounted for only 2.9% of all healthcare spending nationwide; and that if people over age 65 were excluded from the equation, the proportion of Americans who consumed virtually no healthcare resources was even higher.
* The judges reasoned that the Obama health law had no justification for subjecting these non-consumers to the same mandate as people who used a great deal of healthcare year after year. As Betsy McCaughey puts it, “It's like forcing everyone to buy flood insurance, including people who live on hilltops.” [DOHL: Loc. 47% - 48%]
* Hull and Dubina also rejected the Obama lawyers' assertion that the individual mandate was intended to eliminate “free riders”—i.e., people who use healthcare services (e.g., emergency rooms) without paying for them:
* The judges drew on mountains of statistical evidence to conclude that such people were predominantly illegal immigrants (who were exempt from the Obamacare individual mandate) and low-income Americans (who would mostly be eligible for Medicaid under Obamacare's newly loosened eligibility criteria). In short, said the judges, the individual mandate would scarcely address the problem of the free riders. [DOHL: Loc. 47% - 48%]
* Hull and Dubina concluded that the true purpose of the individual mandate was to force healthy people to purchase expensive insurance plans to subsidize insurance companies—which in turn would be required to provide unlimited coverage to people with chronic illnesses and pre-existing conditions. Forcing people to enter the insurance market, said the judges, was not the same as regulating people once they were in it, and was not constitutional. [DOHL: Loc. 47% - 48%]
* While Hull and Dubina ruled, like Judge Vinson, that the individual mandate was unconstitutional, they also held—unlike Vinson—that the rest of the law could still stand. This set the stage for the U.S. Supreme Court to consider the ACA. [DOHL: Loc. . 51%]
The Supreme Court Decision
* Hundreds and thousands of times during the Obamacare debates of 2009-10, the President and Democratic lawmakers adamantly maintained that the monetary penalty imposed on those who failed to pay the individual mandate was a fine, not a tax. This was a key point, because it allowed Mr. Obama to technically remain true to his oft-repeated campaign pledge not to raise taxes on the middle class.
* Indeed, in an ABC News interview with George Stephanopoulos, the President himself objected indignantly to a suggestion that perhaps the individual-mandate penalty could be classified as a tax.
* The Democratic majority in Congress, likewise comprehending how vital it was to avoid conveying even the slightest appearance that they were imposing a tax, actually rejected an earlier version of the bill that ultimately became the ACA precisely because it explicitly imposed a tax. In place of that tax, they were careful to substitute a purchasing mandate with a penalty—not a tax—for failure to comply.
* When the case went to the Supreme Court in March 2012, this question of whether the individual mandate penalty was a fine or a tax was the very first matter which the Justices resolved to address. Indeed, the entire case would hinge on this determination.
* At issue was a longstanding law known as the Anti-Injunction Act, which stipulated that a tax could not be challenged in court until some individual had actually been forced to pay it. And since the ACA mandate was not slated to take effect until 2014, a determination that the mandate was a tax (rather than a fine) would have preclude the Supreme Court from hearing the case prior to that time.
* Eager to move the case forward right away, the Obama administration dispatched Solicitor General Donald Verrilli to argue before the Supreme Court that the mandate was not a tax, and that therefore the case was not subject to Anti-Injunction Act restrictions.
“At the same time, everyone knew that the next day, when Verrilli planned to argue that the mandate was justified under the Constitution's Commerce Clause, he had as a backup the argument that it was also justified by Congress' power to levy taxes—in other words, that it was a tax. Justice Samuel Alito saw the conflict right away. 'General Verrilli, today you are arguing that the penalty is not a tax,' Alito said. 'Tomorrow you are going to be back, and you will be arguing that the penalty is a tax. Has the court ever held that something that is a tax for the purposes of the taxing power under the Constitution is not a tax under the Anti-Injunction Act?'” To this, Verrilli replied “No.”
* On June 28, 2012, the Supreme Court issued its ruling in the Obamacare case. In a 5-4 decision, the Court, led by Chief Justice John Roberts, rejected the Commerce Clause argument but agreed with Solicitor General Verrilli that the mandate simultaneously was, and was not, a tax—and that the ACA therefore could proceed as the law of the land.
* “The government and those who support its position on this point make the remarkable argument that [the mandate] is not a tax for purposes of the Anti-Injunction Act, but is a tax for constitutional purposes,” wrote the dissenting Justices (Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito). “That carries verbal wizardry too far, deep into the forbidden land of the sophists.”
* Former U.S. Attorney Andrew C. McCarthy condemned the Supreme Court's decision as follows:
“Just as an appeals court may not legitimately rewrite an indictment and revise what happened at a trial, neither may it legitimately rewrite a statute and fabricate an imaginary congressional record. But today, the Supreme Court rewrote a law—which it has no constitutional authority to do—and treated it as if it were forthrightly, legitimately enacted. Further, it shielded the political branches from accountability for raising taxes, knowing full well that, had Obama and the Democrats leveled with the public that ObamaCare entailed a huge tax hike, it would never have had the votes to pass. The ObamaCare mandate was enacted as a penalty flowing from Congress’s Commerce Clause power. It has been upheld as a tax flowing from Congress’s power to tax-and-spend under the General Welfare Clause.”
* Throughout the process of debating Obamacare, and for more than three years subsequent to its passage, President Obama and the Democrats consistently and uniformly asserted that all Americans who were happy with their existing healthcare plans and their existing doctors could keep them and would not be forced to purchase new plans from the healthcare exchanges.
* On at least 29 occasions that were captured on video, Obama himself categorically, passionately, and unambiguously repeated this solemn promise in a number of different ways:
* “We will keep this promise to the American people. If you like your doctor, you will be able to keep your doctor. Period. If you like your healthcare plan, you will be able to keep your healthcare plan. Period.”
* “Nobody is talking about taking that away from you.”
* “No matter what you've heard, if you like your doctor, if you like your healthcare plan, you can keep it.”
* “If you are among the hundreds of millions of Americans who already have health insurance through your job, or Medicare, or Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have.”
* “Let me repeat this: Nothing in our plan requires you to change what you have.”
* “Our approach would preserve the right of Americans who have insurance, to keep their doctor and their plan.”
* “If you like your healthcare plan, you can keep it. Period.”
* “If you like your hospital, you can keep your hospital. Period.”
* “[I]f you like your current health insurance, nothing changes, except your costs will go down.” [TAO: Loc.194-195]
* “If you like your insurance plan, you will keep it. No one will be able to take that away from you. It hasn’t happened yet. It won’t happen in the future.” (Obama made this pledge to voters on April Fool’s Day, 2010, just a few days after the law had been signed.)
* Obama's assurances were presumably based on Section 1251 of the Affordable Care Act, titled "Preservation of Right to Maintain Existing Coverage," which contained what is known as a “grandfather” provision that, in theory, was supposed to allow people to keep their existing plans if they wished to do so.
* Says Section 1251: "Nothing in the Act (or an amendment made by this Act) shall be construed to require that an individual terminate coverage under a group health plan or health insurance coverage in which such individual was enrolled on the date of enactment of this Act."
* But the ACA was silent on how a given insurance plan might lose its "grandfathered" status.
* Critics noted that the "grandfather" provision offered no definitive protection against the possibility that if certain existing plans were to undergo changes in cost or coverage, they might be viewed by authorities as newly created plans—rather than as already-existing plans—and thus might not be protected by the "grandfather" clause.
* During a February 2010 "healthcare summit" where Obama met with Congressional Republicans and Democrats alike, the President made it explicitly clear that he already knew this; that he understood quite well that the "grandfather" provision was essentially toothless, and that millions of Americans were likely to lose their existing healthcare plans as a result of the ACA's new coverage standards:
* At that summit, Rep. Eric Cantor (R-Virginia) told Obama that the Congressional Budget Office (CBO) had sent a letter to Senator Harry Reid indicating that "between 8 million and 9 million people may very well lose the coverage that they have because of ... the construct of this bill."
* Obama replied: "The 8 to 9 million people that your referred to that might have to change their coverage—keep in mind, out of the 300 million Americans that we're talking about—would be folks who the CBO ... estimates would find the deal in the exchange better. [It] would be a better deal. So yes, they would change coverage because they've got more choice and competition. So let's just be clear about that."
* Then, just three months after the March 23, 2010 enactment of the ACA, Kathleen Sebelius's HHS wrote new regulations that interpreted the “grandfather” provision so narrowly as to immediately preclude most plans from qualifying for its protection. This regulation was published in an obscure but monumentally significant report buried on page 34,552 of the June 17, 2010 edition of the Federal Register, which is the official daily publication of federal agencies and organizations, as well as executve orders and other presidential documents.
* By mandate of this regulation, even the smallest changes to an existing insurance plan—e.g., raising co-pays by as little as $5.20 or increasing an employee's share of premiums by more than 5%—would now negate the grandfather-clause protection, and those plans would have to be cancelled. [TAO: Loc. 2247-49]
* The Obama administration's own officials explicitly predicted that as a result of this regulation, millions of Americans would in fact lose their existing healthcare plans and would be forced to purchase new ones on the exchanges, because without "grandfathered status," most plans would fail to meet Obamacare's non-negotiable “health benefit mandates.”
* By the administration's own calculations, the “mid-range estimate is that 66 percent of small employer plans and 45 percent of large employer plans will relinquish their grandfather status by the end of 2013,” said the Federal Register report. (That date, of course, eventually became inoperative for large-employer-based plans because President Obama granted a waiver permitting such businesses to delay, for one year, full compliance with the ACA's employer mandate.)
* The Obama administration expected that once the employer mandate took effect, more than half of employer-sponsored plans—which affected 156 million Americans (more than half the U.S. population), would lose their “grandfather status” and become illegal very quickly.
* In an October 17, 2013 court brief filed by the Obama Justice Department—which was representing the Obama Department of Health and Human Services in a case where the group Priests for Life was fighting Obamacare's mandate that religious organizations provide their employees with coverage for the use of abortifacients and contraceptives—the Justice Department candidly acknowledged:
"Even under the grandfathering provision, it is projected that more group health plans will transition to the requirements under the regulations as time goes on. Defendants have estimated that a majority of group health plans will have lost their grandfather status by the end of 2013."
* According to the CBO, another 25 million people were covered by “nongroup and other” forms of insurance, meaning that they held individually-purchased insurance policies. Regarding these people, the Obama administration projected that “40 to 67 percent” of individually-purchased plans would lose their Obamacare-sanctioned “grandfather status” and become illegal.
* All told, the administration fully, but silently, expected at least 93 million Americans to lose their healthcare coverage right away and be forced onto the Obamacare exchanges.
* Throughout the Obamacare debates of 2009-10, and for 3+ years following the law's passage, the Obama administration made a conscious decision not to tell the public any of these facts. According to a November 2, 2013 Wall Street Journal report, when President Obama was promoting his healthcare plan, his "policy advisers" and "political aides" were having an internal debate as to whether the President's unqualified and unconditional assurance that people could keep their insurance plans "was a promise they could keep."
* The "policy advisers" were uncomfortable with the pledge, but the "political aides" prevailed, reasoning that Obama's promise should remain dishonestly unconditional because "salability," "simplification," and "ease of explanation" were more "practical" and more vital than the truth.
* On November 14, 2013—by which time it was obvious that the President's (and Congressional Democrats') repeated assurances that Americans could "keep their healthcare plans" were untrue—Mr. Obama had the following exchange with CBS News reporter Major Garrett:
Garrett: “You said while the law was being debated, ‘If you like your plan, you can keep it.’ You said after the law was signed, ‘If you like your plan, you can keep it’ Americans believed that when you said that over and over. Do you not believe the American people deserve a deeper, transparent accountability from you as to why you said that over and over when your own statistics published in the Federal Register alerted your policy staff, I presume you, the fact that millions of Americans would in fact probably fall into the very gap you’re trying to administratively fix now?”
Obama: “There is no doubt that the way I put that forward unequivocally ended up not being accurate. It was not because of my intention not to deliver on that commitment and that promise.”
Garrett: “Did you decide, sir, that the simple declaration was something the American people could handle? [That] the nuance you gave now was something [they] couldn’t handle and [you] didn’t trust the American people with the fuller truth?”
Senate Democrats Vote Unanimously Against a Bill Designed to Prevent People from Losing Their Insurance Plans
* In September 2010, an agitated Senator Mike Enzi (R- Wyoming) sounded the alarm to warn his fellow legislators that millions of Americans would undoubtedly lose their healthcare coverage because of the new HHS regulations, and he introduced legislation to protect existing plans from losing their grandfathered status.
* In late October 2013, news reports began to surface that thousands of people in various states were receiving letters from their insurers informing them that their healthcare policies were being cancelled due to ACA regulations and the absence of any meaningful “grandfather” protections. These were people in the individual and small-business insurance markets, which, unlike the large employer-based market, had not received a one-year waiver from President Obama.
* The individual market alone constituted 8% of the total health-insurance market, or approximately 25 million people.
* By the second week of November, the number of cancelled policies nationwide exceeded 5 million. When these people looked, in desperation, to the Obamacare exchanges for replacement policies, a large percentage of them found that they had no alternative but to purchase plans that were much more expensive, had much higher deductibles, and covered numerous "essential health benefits" that they did not need or want.
* These people were, by and large, young and healthy individuals who did not use healthcare services very much at all.
President Obama Changes His Narrative
* On November 4, 2013, President Obama spoke to a gathering of some 200 Organizing For Action supporters in Washington, and he told them: “What we said was you could keep it if it hasn’t changed since the law was passed.”
* But that was not at all what he and the Democrats had said. There is no written or videotaped record of Obama having ever verbalized this qualifier. Nor is there any record of any of his fellow Democrats in Congress having articulated such a qualifier.
President Obama's Fraud
* Former U.S. Attorney Andrew C. McCarthy characterizes President Obama's oft-repeated promise that Americans with health insurance would be able to keep their own plans if they wished, as “fraud,” which is “a serious federal felony, usually punishable by up to 20 years’ imprisonment—with every repetition of a fraudulent communication chargeable as a separate crime.” McCarthy's powerful analysis is worthy of attention. Below are some key excerpts:
Justice Department guidelines, set forth in the U.S. Attorneys Manual, recommend prosecution for fraud in situations involving “any scheme which in its nature is directed to defrauding a class of persons, or the general public, with a substantial pattern of conduct.” So, for example, if a schemer were intentionally to deceive all Americans, or a class of Americans (e.g., people who had health insurance purchased on the individual market), by repeating numerous times—over the airwaves, in mailings, and in electronic announcements—an assertion the schemer knew to be false and misleading, that would constitute an actionable fraud—particularly if the statements induced the victims to take action to their detriment, or lulled the victims into a false sense of security....
To be more illustrative, let’s say our schemer is the president of a health-insurance company, and that it was clearly foreseeable to him that his company’s clients would lose their current insurance plans if the company adopted his proposal of a complex new health-insurance framework. In fact, let’s assume that the schemer not only had analyses showing that clients would lose their plans but that he also had a history of openly favoring a “single-payer” insurance system—i.e., an unconcealed desire to move everyone from private to government-managed insurance arrangements.
Now, suppose the schemer nevertheless vowed to the company’s clients, to whom he bore fiduciary obligations, that they needn’t fear his proposed new insurance framework; under it, he promised time after time after time, if they liked their current plans, they would be able to keep those plans. And let’s say that, on the basis of that repeated vow, the clients supported the schemer’s reappointment as president and his proposed new framework. On these facts, the clients’ subsequent loss of their current insurance plans helps prove the schemer’s fraudulent intent. The schemer has committed not just a fraud but a carefully thought-out, fully successful fraud, replete with suffering victims.
The concept of fraudulent deception, like the concept of perjury and other forms of actionable false statement, often entails not only affirmative lies … [but also] the omission of material facts.... Recall that President Obama knew three years ago, based on internal analyses, that because of his administration’s own regulation-writing, millions of Americans would lose the health plans he nonetheless continued to promise they could keep. The president hid the data … [He] was not lying merely to prevent a company from losing value. His fraud was, first, to induce passage of a plan designed gradually to destroy the private health-insurance market—a plan that barely passed and never would have been enacted if he’d been honest. And later, his fraud was to procure his reelection and the guaranteed implementation of the ACA; had he been honest, he would have been defeated and the ACA forestalled.
Barack Obama is guilty of fraud—serial fraud—that is orders of magnitude more serious than frauds the Justice Department routinely prosecutes, and that courts punish harshly. The victims will be out billions of dollars, quite apart from other anxiety and disruption that will befall them.
The president will not be prosecuted, of course, but that is immaterial.... [T]he remedy for profound presidential corruption is political, not legal. It is impeachment and removal. “High crimes and misdemeanors”—the Constitution’s predicate for impeachment—need not be indictable offenses under the criminal code. “They relate chiefly,” Hamilton explained in Federalist No. 65, “to injuries done immediately to the society itself.” They involve scandalous breaches of the public trust by officials in whom solemn fiduciary duties are reposed—like a president who looks Americans in the eye and declares, repeatedly, that they can keep their health insurance plans ... even as he studiously orchestrates the regulatory termination of those plans.
President Obama Suggests a "Fix" for the Problem of Cancelled Insurance Policies
* On November 14, 2013, President Obama, amid growing public outrage over the cancellation of millions of health insurance policies (due to Obamacare regulations), held a press conference where he unilaterally declared that he would allow insurance companies to reinstate the cancelled plans and sell them, after all, to their customers for 2014. "The bottom line is insurers can extend current plans that would otherwise be canceled into 2014," he said, "and Americans whose plans have been canceled can choose to re-enroll in the same kind of plan." The president gave no indication as to how long this reprieve from the mandates of Obamacare would last.
* But insurance companies had already crafted plans for 2014, had received the necessary approval from their respective states, and had begun to sell policies. “Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” said Karen Ignagni, the president and CEO of America’s Health Insurance Plans, which represents the industry.
* According to McClatchy DC News: "Companies based their rates for 2014 on certain assumptions, including that consumers who bought plans after 2010 [when the ACA was signed into law] or had their prior plans substantially change wouldn’t be able to keep them. If more customers are allowed to keep their plans, companies probably will have to raise premiums and offer fewer choices."
* Former Assistant U.S. Attorney Andrew C. McCarthy referred to Obama's press-conference announcement as a "lawless and transparently political" act, given that "a president has no legal authority to waive statutory mandates." Added McCarthy:
"Even if he had such power, moreover, he knows that there is no practical possibility of undoing—within the next few weeks, as the ACA [Affordable Care Act] would require—the new arrangements that insurance companies and state regulators spent the last three years structuring to comply with Obamacare mandates. In sum, Obama is well aware that his proposed 'fix' is frivolous. His hope is that the country overwhelmingly consists of dolts who are too uninformed to realize that this is the case, and who, with a little help from his media courtiers, can be convinced to blame the insurance companies, rather than the president, for the fact that millions of Americans are losing their coverage under his 'reform."
Insurance Company Bailouts Are Baked into the Law
* If some people from the individual and small-group markets were to find that they ultimately were able to keep their pre-Obamacare health plans into 2014—as per the President's declaration of November 14, 2013—they would not, then, be enrolling in the Obamacare exchanges.
* As noted above, these people were, by and large, relatively young and healthy individuals who tended to make very little use of healthcare services.
* Without these people, the exchanges were likely to consist of people who were older and sicker, as a whole, than insurers had previously expected when they were setting their policy premium rates. As a result, insurers inevitably would be paying out much more money in benefits than they had initially predicted, and the premiums that they had set would not adequately cover those expenditures.
* To address this possibility—i.e., that insurance company revenues fall short of expectations, for whatever reasons—the ACA contains a three-year "risk corridor program"—known as section 1342 of the law—designed to bail out insurers if their costs prove to be higher than originally anticipated.
* As Betsy McCaughey observes, "The bailout is meant to hide the full failure of the president's signature health law until after the next presidential election."
* The ACA stipulated that most of its provisions would not begin to be implemented until 2013—i.e., after the crucial 2012 elections. Thus, any problems associated with the law's initial rollout—which had the potential to greatly affect public opinion about Obamacare—would not affect the re-election chances of the President or Congressional Democrats.
Administrative Actions and Unliateral Changes & Delays by the Obama Administration, Circumventing Congress
In February 2010, the Galen Institute published a list of 35 changes that already had been made to the ACA since its passage -- 18 as a result of administrative actions taken by President Obama, 15 as a result of Congressional legislation that was signed by the President, and 2 as a result of Supreme Court decisions. This section focuses specifically on the 18 administrative actions by President Obama, given that they exemplify his circumvention and usurpation of the role that Congress -- and only Congress -- is authorized to play in creating and altering legislation. There are also some additional items in this section, besides those listed in the Galien Institute report:
1. Medicare Advantage patch(April 19, 2011): The administration ordered an advance draw on funds from a Medicare bonus program in order to provide extra payments to Medicare Advantage plans, in an effort to temporarily forestall cuts in benefits and therefore delay early exodus of MA plans from the program.
2. Employee reporting (January 1, 2012): The administration, contrary to the Obamacare legislation, instituted a one-year delay of the requirement that employers must report to their employees, on their W-2 forms, the full cost of their employer-provided health insurance.
3. Subsidies may flow through federal exchanges(May 23, 2012): The IRS issued a rule that allows premium assistance tax credits to be available in federal exchanges although the law only specified that they would be available “through an Exchange established by the State under Section 1311.”
4. Closing the high-risk pool(February 15, 2013): The administration decided to halt enrollment in transitional federal high-risk pools created by the law, blocking coverage for an estimated 40,000 new applicants, citing a lack of funds. The administration had money from a fund under Secretary Sebelius’s control to extend the pools, but instead used the money to pay for advertising for Obamacare enrollment and other purposes.
5. Doubling allowed deductibles(February 20, 2013): Because some group health plans use more than one benefits administrator, plans are allowed to apply separate patient cost-sharing limits to different services, such as doctor/hospital and prescription drugs, allowing maximum out-of-pocket costs to be twice as high as the law intended.
6. Small businesses on hold (March 11, 2013): The administration has said that the federal exchanges for small businesses will not be ready by the 2014 statutory deadline, and instead delayed until 2015 the provision of SHOP (Small-Employer Health Option Program) that requires the exchanges to offer a choice of qualified health plans.
7. Delaying a low-income plan (March 22, 2013): The administration delayed implementation of the Basic Health Program until 2015. It would have provided more-affordable health coverage for certain low-income individuals not eligible for Medicaid.
8. Employer-mandate delay(July 2, 2013): By an administrative action that’s contrary to statutory language in the ACA, the reporting requirements for employers were delayed by one year (i.e., until January 1, 2015).
*The Hill called this a "stunning announcement."
* As noted earlier, the Obama administration fully expected scores of millions of Americans to lose their employer-provided healthcare plans as a result of the employer mandate, and those people would then be required to go to the Obamacare exchanges to shop for new plans—plans that were generally much more expensive (higher premiums and higher deductibles) and much more restrictive (in terms of which doctors a patient could see). Delaying the employer mandate until 2015 meant that the full impact of these realities could be hidden from voters until after the crucial midterm elections of November 2014.
9. Self-attestation(July 15, 2013): Because of the difficulty of verifying income after the employer-reporting requirement was delayed, the administration decided it would allow “self-attestation” of income by applicants for health insurance in the exchanges. This was later partially retracted after congressional and public outcry over the likelihood of fraud.
10. Delaying the online SHOP exchange(September 26, 2013; November 27, 2013): The administration first delayed for a month and later for a year, until November 2014, the launch of the online insurance marketplace for small businesses. The exchange was originally scheduled to launch on October 1, 2013.
11. Congressional opt-out(September 30, 2013): The administration decided to offer employer contributions to members of Congress and their staffs when they purchase insurance on the exchanges created by the ACA, a subsidy the law doesn’t provide.
12. Delaying the individual mandate (October 23, 2013): The administration changed the deadline for the individual mandate, by declaring that customers who have purchased insurance by March 31, 2014 will avoid the tax penalty. Previously, they would have had to purchase a plan by mid-February.
14. Delayingthe start of the 2014 Obamacare enrollment period (November 22, 2013): The Obama administration announced that it would delay the start of the 2014 Obamacare enrollment period—originally scheduled to begin on October 15 of that year—until November 15, after the midterm elections. Among those enrolling during this period would be the aforementioned scores of millions of people who were expected to lose their employer-provided healthcare plans as a result of the ACA's employer mandate.
* A Fox News report noted that this move "pushes off the possibility of any Obamacare hiccups until after the midterm elections," and that "some of the biggest critics of the current rollout have been Democrats up for reelection next year." Most notably, Obama's action set the stage for the American people to have no idea of what their health insurance premiums would be, until after Election Day.
15. Exempting unions from reinsurance fee (December 2, 2013): The administration gave unions an exemption from the reinsurance fee (one of ObamaCare’s many new taxes). To make up for this exemption, non-exempt plans will have to pay a higher fee, which will likely be passed onto consumers in the form of higher premiums and deductibles.
16. Extending Preexisting Condition Insurance Plan (December 12, 2013; January 14, 2014): The administration extended the federal high risk pool until January 31, 2014, and again until March 15, 2014, to prevent a coverage gap for the most vulnerable. The plans were scheduled to expire on December 31, but were extended because it has been impossible for some to sign up for new coverage on healthcare.gov.
17. Expanding catastrophic hardship waiver to those with canceled plans(December 19, 2013): The administration expanded the hardship waiver, which allows some people to purchase catastrophic health insurance, to people who have had their plans canceled because of ObamaCare regulations. This is only a temporary fix so these plans will again be illegal in 2015, conveniently after the November 2014 elections.
18. Equal employer coverage delayed (January 18, 2013): Tax officials will not be enforcing in 2014 the mandate requiring employers to offer equal coverage to all their employees. This provision of the law was supposed to go into effect in 2010, but IRS officials have “yet to issue regulations for employers to follow.”
19. Employer-mandate delayed again(February 10, 2014): The administration delayed for an additional year provisions of the employer mandate, postponing enforcement of the requirement for medium-size employers until 2016 and relaxing some requirements for larger employers. Businesses with 100 or more employees must offer coverage to 70% of their full-time employees in 2015 and 95% in 2016 and beyond.
* This delay was clearly implemented in an effort to avoid the dire political consequences that Democrats would face if the employer mandate—which the Obama administration itself expected would cause at least 93 million Americans to lose their existing healthcare coverage and be forced onto the Obamacare exchanges—were to take effect prior to the crucial 2014 mideterm elections.
20. Prolonging the “Keep Your Plan” Fix (March 3, 2014): The Hill reported that the Obama administration was prepared to announce a new directive allowing insurers to continue offering (perhaps until the end of Obama's second term) health plans that did not meet Obamacare’s minimum coverage requirements. Prolonging the “keep your plan” fix would avoid another wave of health policy cancellations otherwise expected to occur in the fall of 2014, just weeks before the crucial midterm elections. As one consultant in the health insurance industry said:
“I don’t see how they could have a bunch of these announcements going out in September. Not when they’re trying to defend the Senate and keep their losses at a minimum in the House. This is not something to have out there right before the election.”
* While the ACA obviously seeks to radically restructure the American healthcare system, the law also has a number of highly significant political agendas that are unrelated to the issue of healthcare and medicine.
1. Government-Run, Single Payer Healthcare
* During the early stages of the healthcare debates of 2009-10, President Obama and the Democrats called for the creation of a "public option"—a government-run insurance plan to "compete" with private insurers. Because there was little public support for this provision, the Democrats eventually abandoned the idea, lest the success of the entire Obamacare project be jeopardized. [TAO: Loc. 1724-25]
* But a public option remains, to this day, the Democrats' ultimate objective. Democratic Congressman Harry Waxman of California noted in April 2010, for instance, that if the Obamacare exchanges failed to promote competition and lower insurance prices, he himself would resurrect the quest for the public option. [TAO: Loc.1726-28]
* Sally Pipes explains the significance of this:
"By drawing on taxpayer dollars, this public option would be able to out-price almost every private insurer in the country. Unable to compete, private insurers would be 'crowded out,' leaving Americans with just one choice: a government-operated [single-payer] health care plan that brings the entire health sector under government control." [TAO: Loc. 1731-33]
* Viewed in this context, the unspoken long-term strategy of the ACA is to purposefully set up a system designed to collapse, and thereby give Democrats a pretext upon which they could push for a public option as a necessary alternative.Former Assistant U.S. Attorney Andrew C. McCarthy offers insight into this theory:
"... [T]he Obamacare scheme ... is a Fabian plan to move an unwilling nation, rooted in free enterprise, into Washington-controlled, fully socialized medicine. As its tentacles spread over time, the scheme (a) pushes all Americans into government markets (a metastasizing blend of Medicare, Medicaid, and 'exchanges' run by state and federal agencies); (b) dictates the content of the 'private' insurance product; (c) sets the price; (d) micromanages the patient access, business practices, and fees of doctors; and (e) rations medical care. Concurrently, the scheme purposely sows a financing crisis into the system, designed to explode after [the] Leviathan has so enveloped health care, and so decimated the private medical sector, that a British- or Canadian-style 'free' system—formerly unthinkable for the United States—becomes the inexorable solution. Once you grasp that this is the scheme, the imperative to lull the public with lies makes sense. Like all swindles, Obamacare cannot work if its targeted victims figure out the endgame before it is a fait accompli."
* Noting that the individual mandate is "unenforceable," McCarthy specifically identifies it as "the scheme's manufactured crisis." He elaborates:
* "Yes, there is a penalty for failing to purchase insurance—starting at $95 or 1 percent of income the first year and rising sharply thereafter. But the designers of Obamacare went out of their way to prohibit the IRS from using their usual array of civil and criminal processes (fines, liens, etc.) to confiscate it. The government may only collect the penalty by deducting it from tax refunds—meaning [that] people who prudently structure their tax withholdings so that no refund accumulates can avoid paying with impunity.
"Obviously, it would be far less expensive for young people ... to opt for a penalty they are not actually required to pay than to purchase prohibitively costly coverage. After all, under Obamacare, they can wait until they are sick to buy 'insurance.' That is, Obamacare's architects consciously created the incentive to destroy the program's own insurance exchanges.
"By the time that problem erupts, private insurance will already be gutted. Coverage requirements will already be dictated by the government, as will pricing, with a subsidy structure that builds in progressive wealth redistribution. And doctors will already be beholden to government for patient access, treatment options, record-keeping requirements, and payment. That is, much of the single-payer infrastructure will be in place.
"The manufactured financial crisis will be portrayed as a demonstration that exchanges based on the assumption that individuals will take responsibility for their own 'private' insurance arrangements do not work. It will be time to solve the crisis by a seamless transition ... to a fully socialized health-care system, now overtly controlled by the government.... That's the scheme."
* The Congressional Budget Office estimates that as of 2022, at least 26 million Americans will still be uninsured. A majority of these will be working people eligible for some government subsidies but still unable or unwilling to purchase coverage via the exchanges.
* It is a matter of public record that President Obama and many of America's leading Democrats view Obamacare not as a final solution to the nation's healthcare problems, but rather as a stepping stone toward the ultimate goal of a single-payer system administered entirely by the federal government. Indeed, they have been quite clear about their intentions over the years:
* At an AFL-CIO conference in 2003, Barack Obama said: “I happen to be a proponent of a single-payer health care plan…. ‘Everybody in. Nobody out.’ … That’s what I’d like to see, but as all of you know, we may not get there immediately.”
* At an SEIU Health Care Forum on March 24, 2007, Obama declared: “My commitment is to make sure that we’ve got universal healthcare for all Americans by the end of my first term as President…. But I don’t think we’re going to be able to eliminate employer coverage immediately. There’s going to be, potentially, some transition process. I can envision a decade out, or 15 years out, or 20 years out …”
* On August 4, 2007, Obama announced that he planned to pass healthcare reform legislation and then “build off that system to … make it more rational.” “By the way,” he added, “Canada did not start off immediately with a single payer system. They had a similar transition step.”
* In the summer of 2008, Obama said: “If I were designing a system from scratch, I would probably go ahead with a single-payer system.”
* In early August 2013, Senator Harry Reid was asked whether his goal was to eventually use the ACA as a springboard to a single-payer system. “Yes, yes. Absolutely, yes,” he replied. “What we’ve done with Obamacare is have a step in the right direction, but we’re far from having something that’s going to work forever.”
* In late October 2013, Rep. John Conyersstated that the ACA was just “a very small and modest bill,” and that Congressional Democrats were already contemplating ways to pass “universal healthcare for everybody, single payer.” “That’s what the new direction is,” Conyers affirmed.
* Nancy Pelosi, too, is on record stating: “I have supported single payer for longer than many of you have been—since you’ve been born, than you’ve lived on the face of the earth. So I think, I have always thought, that was the way to go.”
* Kathleen Sebelius, the chief architect of the ACA’s 2013 rollout, has candidly declared herself to be “all for a single-payer [healthcare] system eventually.” On October 7, 2013, she told interviewer Jon Stewart, “if we could have perhaps figured out a pathway [to single-payer], that may have been a reasonable solution.”
2. Redistributing Wealth
* One of the leading objectives of Obamacare is the redistribution of wealth, mostly (through taxes, fees, and insurance rate hikes) from middle- and high-income households to: (a) tens of millions of low-income people who will be funneled, en masse, into Medicaid, and (b) moderate-income households that will be newly eligible for federal (taxpayer-funded) subsidies.
* By eliminating "gender rating"—the practice by which insurance companies charge higher premium fees to women because of their higher healthcare costs—the ACA raises the relative financial burden borne by men.
* By limiting the degree to which insurers can charge extra for premiums covering the elderly, the ACA places an extra burden on young people.
* By requiring insurers to cover people with pre-existing conditions, the ACA lowers costs for the unhealthy and raises costs for the healthy.
* For the most part, the only people who will pay less for health insurance under Obamacare are those getting free (Medicaid) or subsidized coverage. Most everyone else will pay much more than they have ever paid before.
* The use of healthcare reform as a vehicle for income redistribution has been candidly articulated by Donald Berwick, who in 2010 was appointed by President Obama to serve as Administrator of the Centers for Medicare & Medicaid Services (CMS), the overseer of those two government programs:
* Hostile to free-market healthcare systems, Berwick favors a government-run, single-payer model. He is particularly fond of Great Britain's National Health Services (NHS) and its accompanying National Institute for Health and Clinical Excellence (NICE), a body of bureaucrats who evaluate the relative costs and benefits of various medical therapies in order to determine what procedures the NHS will cover.
* Berwick has long impugned the American healthcare system for having “protected the wealthy and the well, instead of recognizing that sick people tend to be poorer, and that poor people tend to be sicker, and that any healthcare funding plan that is just, equitable, civilized, and humane must—must—redistribute wealth from the richer among us to the poorer and less fortunate.” “Excellent health care,” he emphasized, “is by definition redistributional.” (Click here for a video of Berwick's speech.)
* Jonathan Gruber, an MIT health economist who advised the designers of the ACA, says: "Americans want a fair and fixed insurance market. You cannot have that without some redistribution away from a small number of people."
3. Promoting Greater Dependence on Government
* By funneling tens of millions of additional people into taxpayer-funded Medicaid, and providing subsidies for countless millions who were self-sufficiently purchasing their own health insurance prior to Obamacare, the new law will inevitably promote in Americans a mindset of entitlement and dependence on government.
* The Obamacare provisions that threaten to thwart job-creation and increase the cost of health insurance dovetail perfectly with this objective. That is, people who are without steady jobs or without expendable cash are much likelier to adopt a dependency mindset.
4. Funding and Empowering Radical Leftist Organizations
* The ACA has designated some $67 million in taxpayer funds for nearly 50,000 so-called “navigators” who, in the words of the Department of Health and Human Services, “will serve as an in-person resource for Americans who want additional assistance in shopping for and enrolling in plans” on the Obamacare exchanges.
* These navigators, who are mostly affiliated with more than 100 leftist organizations that have strongly supported President Obama and helped him to twice win election to the White House, will each be paid up to $48 per hour.
* The navigator funds represent, in essence, a taxpayer-financed slush fund designed to enrich the president's friends as a form of political payback.
* Additional taxpayer funds have been earmarked for yet another set of leftist organizations, designated as “Champions for Coverage,” whose task will be to help promote new enrollments as well as public enthusiasm for the many benefits of the ACA.
* Among the recipients of these "navigator" and "Champions for Coverage" funds are:
United Labor Unions Local 100 in New Orleans—a group run by Wade Rathke, the founder of the notoriously corrupt, now-defunct community organization ACORN
* In November 2013, investigative reporter James O'Keefe of Project Veritas went public with evidence of systemic corruption among the Obamacare navigators. Specifically, he released a video—captured by undercover investigators posing as health care applicants—of navigators advising them to lie about their smoking habits and their household incomes when completing the documentation needed to apply for insurance on the Obamacare exchanges.
* “You lie because [if you don't] your premiums will be higher,” one navigator tells the undercover journalist in the video. “Don’t tell them that [you smoke]. Don’t tell ’em.”
* When the investigator pretends to be a low-wage university employee with unreported cash income that, if declared, could jeopardize his eligibility for federal premium subsidies, the navigators advise: “Don’t get yourself in trouble by declaring it now.” A second navigator agrees, “Yeah, it didn’t happen,” while a third adds, “Never report it.”
* In a second video released by O'Keefe a few days later, an Obamacare navigator tells a potential applicant not to report cash income that he earns in addition to his salary, so as to be eligible for higher federal subsidies. “Stuff like that to get a lower premium, I wouldn’t include it,” the navigator said. “If I was cutting grass on the weekend and they were just giving me money—that’s my money.”
* “We have so much footage, so many offices,” O’Keefe wrote of his Obamacare navigator sting operation. “So many employees. So much fraud caught on tape. We’re going to release them all one by one.”
* On November 6, 2013, HHS Secretary Kathleen Sebelius testified before the Senate Finance Committee, where Texas Republican Senator John Cornyn got her to admit that there were no safeguards in place to ensure that the Obamacare navigators did not have a history of corruption or even criminality:
Cornyn: "Isn't it true that there is no federal requirement for [Obamacare] navigators to undergo a criminal background check, even though they will receive personal—sensitive personal information from the individuals they help sign up for the Affordable Care Act?"
Sebelius: "That is true. States could add an additional—um—background checks and other features, but it is not part of the federal requirement."
Cornyn: "So a convicted felon could be a navigator and could acquire sensitive personal information from an individual, unbeknownst to them?"
Sebelius: "Uh, that is possible. We have contracts with the organizations, and they have taken the responsibility to screen their individual navigators, and make sure that they are sufficiently trained for the job."
5. Promoting Democratic Voter Registration
* The online application form that individuals must complete when seeking an insurance policy via the Obamacare exchanges, asks applicants if they would like to register to vote. If they answer "yes," the website facilitates that process.
* In September 2013, the Washington Post observed that Democrats "stand to benefit the most from a surge in voter registration among those who currently lack insurance," because "by more than a 2 to 1 ratio, uninsured Americans supported Barack Obama over Republican Mitt Romney in a Washington Post-Kaiser Family Foundation poll last summer (62 to 27 percent)."
6. Harming Small Business As a Means of Diminishing Political Donations to Republicans
* Former Libertarian Party vice-presidential nominee Wayne Allyn Root offers this perspective:
"Obamacare is intended to bankrupt small business, and therefore starve donations to the GOP.... [Small business health insurance] rates are being doubled, tripled and quadrupled by Obamacare. Guess who writes 75% of the checks to Republican candidates and conservative causes? Small Business. Even if a small business owner manages to survive, he or she certainly can’t write a big check to the GOP anymore.... Obama is bankrupting his political opposition and drying up donations to the GOP."
7. Increasing the Size and Power of the Federal Government
* As noted earlier, the IRS will be legally empowered to seize tax refunds as payment toward any unpaid penalty. It is projected that the agency will hire 16,000 to 17,000 new agents to monitor and enforce compliance with the ACA's financial mandates. [DOHL: Loc. 148-53; TAO: Loc. 678-79]
* The ACA will be administered by at least 159 newly created boards, commissions, and agencies—with the assistance of dozens of existing federal bureaus. [TAO: Loc. 742-44]
 Nelson retired from the Senate in January 2013 to become CEO of the National Association of Insurance Commissioners, a trade group that lobbies Congress and the White House for favorable laws and policies for its members. His starting salary in this post was nearly $1 million. And though Nelson was technically banned from lobbying Congress for two years after leaving government, he was free to lobby the executive branch whenever he wished. He did precisely this in November 2013, when he met with President Obama to discuss ways to fix the many problems that the ACA was facing in its early stages.
 Yet another deal was cut with Senator Bill Nelson of Florida. According to Congressional Budget Office projections, the ACA was slated to cut Medicare Advantage benefits by $214 billion during its first ten years—an average of $21,000 per senior. In a behind-closed-doors arrangement that critics dubbed the “Gator Aid,” Senator Harry Reid exempted approximately 800,000 seniors in South Florida from those costs. Nelson went against the wishes of his constituents and voted for the bill.
Special benefits were also secured by Senator Christopher Dodd of Connecticut, in the form of 100 million taxpayer dollars to finance the construction of a medical center in that state. Critics referred to this deal as the "U Con."