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Friday, Apr 18, 2014

Top 5 Signs 'Obamacare' Is in Trouble

  • (Photo: Reuters/Larry Downing)
    U.S. President Barack Obama makes a statement next to Secretary of HHS Kathleen Sebelius about contraceptive care funding in the press room of the White House in Washington, February 10, 2012.
July 12, 2013|3:47 pm

With the major portions of the Affordable Care Act, or "Obamacare," set to go into effect October 1, implementation of the massive new law has, thus far, been messy. Max Baucus (D-Mont.), one of the authors of the law, warned the Department of Health and Human Services that the implementation could be a "huge train wreck." Here are five reasons Baucus' concerns are warranted:

1. CLASS Was Abandoned

In October, 2011, Health and Human Services Secretary Kathleen Sebelius announced that the Community Living Assistance Services and Supports program was determined to be fiscally unsustainable and would not be implemented.

CLASS would have provided nursing home, home health care and rehabilitation services in the event of a serious injury. HHS determined, though, that it would not be able to convince enough young people to sign up for the program to be able to pay for it.

CLASS was supposed to be a source of revenue to help pay for the entire ACA. The ACA was sold to the public, in part, as a way to not only expand health coverage, but to also reduce federal budget deficits by $138 billion over 10 years. CLASS was calculated to be a big chunk of that deficit reduction – $86 billion worth, according to the Congressional Budget Office.

Even though CLASS has been abandoned, White House officials can still occasionally be heard touting the CBO's original estimate of $138 billion in deficit reduction.

2. Employer Mandate Delayed

The Obama administration announced July 2 that the employer mandate would be delayed for a year. Companies with more than 50 employees will not be required to provide health insurance until 2015 rather than 2014.

The employer mandate is an integral part of the ACA. Employers who do not participate will pay a fine and their employees will be able to get health insurance on the new government-subsidized insurance exchanges. Together, the employer mandate and the individual mandate were intended to offset some of the inflationary aspects of other parts of the law by getting more people to carry health insurance.

The employer mandate has some problems, though. As Ezra Klein, a liberal columnist for The Washington Post, points out, the mandate would discourage employers from hiring low income workers and full-time workers. It would also cost companies money because of the administrative requirements.

So, Obama has delayed an aspect of the law that would discourage employment for low income workers, discourage full-time employment and cost businesses more money until after the 2014 election. But, those problems will still be an issue in 2015, when the mandate is now supposed to go into effect.

3. Employers Opting Out

Employers are already making adjustments to the ACA, even before the employer mandate goes into effect. For some employers, this may mean hiring more part-time, and fewer full-time workers, to avoid the mandate. For other employers, it may mean dumping their current health care plans and paying the fines instead.

Ironically, the U.S. Supreme Court decision that saved the ACA by finding that the individual mandate is constitutional may have made this decision easier for companies. The Court decided that the mandate was constitutional, but not under the Commerce Clause, as Congress intended. Rather, the fines, Chief Justice John Roberts wrote for the majority, are a form of taxation. The individual mandate is, therefore, allowed under Congress' taxing power.

While companies may be reluctant to avoid the employer mandate if it is considered breaking the law and subject to fines, simply paying a "tax" makes avoiding the mandate more palatable.

Some companies will find it more cost-effective to pay the tax and let their employees get the government-subsidized insurance than provide the insurance itself. This will further increase the costs of the law.

4. Low Public Support

During the debate over passage of the ACA, then-Speaker of the House Nancy Pelosi remarked that the law needed to be passed so the public could find out what was in it. Her remarks were a more clumsy version of what had become a Democratic talking point – other public programs began with low public support but became more popular after they were passed.

The talking point is correct. Other government programs, such as Social Security and Medicare, were not as popular when they were passed as they are now. The ACA, though, has not become more popular since its 2010 passage.

In a recent NBC News/Wall Street Journal poll, 49 percent of Americans said the ACA was a bad idea. Only 37 percent answered it was a good idea. And, according to a June Gallup poll, only about one out of three Americans believe the ACA will make the healthcare situation in the United States better. Forty-seven percent answered that the new law will make the healthcare system worse.

5. "Computer Glitches" and "Operational Barriers"

The administration has announced a host of difficulties implementing the new law. It has used language like "computer glitch" or "operational barrier" to note where the implementation is not working.

For example, the law allows insurance companies to charge smokers with higher premiums. They were supposed to charge older, long-term smokers more than younger, occasional smokers. But, due to one of these "glitches," the computer system will not be able to make that distinction. Insurance companies will either have to charge all smokers the same, thus costing younger smokers more than they should, or not increase premiums for smokers at all, which would require higher premiums for non-smokers.

Due to another glitch, the new government-subsidized healthcare exchanges will not be able to verify eligibility for the program. This reliance upon self-reporting prompted The Wall Street Journal to call it a "liar subsidy." The fraud that will likely come with that could cost $250 billion per year, by one estimate.

Contact: napp.nazworth@christianpost.com, @NappNazworth (Twitter)
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