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Oops. The Health and Human Services, Medicare Office of Actuary has just released a report that shows that one of the major talking points for the Administration when they were selling the health care overhaul—that the bill will reduce overall health care costs—is dead wrong.
Here’s how the Associated Press sums up the findings:
… the analysis also found that the law falls short of the president’s twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, since Medicare cuts in the law may be unrealistic and unsustainable, the report warned.
It’s a worrisome assessment for Democrats.
In particular, concerns about Medicare could become a major political liability in the midterm elections. The report projected that Medicare cuts could drive about 15 percent of hospitals and other institutional providers into the red, “possibly jeopardizing access” to care for seniors….
The report acknowledged that some of the cost-control measures in the bill — Medicare cuts, a tax on high-cost insurance and a commission to seek ongoing Medicare savings — could help reduce the rate of cost increases beyond 2020. But it held out little hope for progress in the first decade.
“During 2010-2019, however, these effects would be outweighed by the increased costs associated with the expansions of health insurance coverage,” wrote Richard S. Foster, Medicare’s chief actuary. “Also, the longer-term viability of the Medicare … reductions is doubtful.” Foster’s office is responsible for long-range costs estimates.
In other words, the finding that health care spending will increase by just one percent is almost certainly a big under-estimate. Costs will most likely be higher. Much higher. And there was more bad news for Medicare:
In addition to flagging provider cuts as potentially unsustainable, the report projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular alternative. Enrollment would plummet by about 50 percent. Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.
In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces “a very serious risk” of insolvency.
Americans intuitively knew that the claim that this massive bill, which expands health care to some 34 million people, would somehow reduce health spending was bogus. My question is why did this report just come out now? Isn’t this analysis that the American people and their Representatives deserved to have before the legislation became law?
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Writing in the Phoenix Business Journal, Dr. Eric Novack warns readers about the many ways that they will end up paying for the new health care law. Fewer jobs and higher costs are just a few of the law’s unwelcome consequences. As we approach Tax Day, it’s also worth considering how the IRS gains in power as a result of the health care bill:
The new health care law makes it mandatory that every American buy health insurance. The enforcer of this provision is the Internal Revenue Service, which will add 17,000 new auditors and accountants — all the better to function as a collection agency for private insurance companies. Individuals without “adequate” health insurance — a term that will be redefined yearly — will be subject to fines that will reach 2.5 percent of income by 2016.
Fortunately for the feds, it won’t be hard to collect those fines. The new law allows the IRS to seize your tax refund as payment.
It’s not just individuals that face new mandates and potential penalties from IRS enforcers. Businesses are also underfire, and as a result many will be looking for ways to avoid exposure, including reducing the number of employees. As Dr. Novack writes:
In those companies [that employ 51 people or more], if even one employee qualifies for subsidies as a result of “inadequate” company benefits, the business will be subject to a $2,000 fine for every employee working at the company, with an exemption for the first 30.
Penalties for other violations will be predicated on factors such as employees’ income and family size. Because of this, employers will have incentives to avoid certain kinds of applicants — single mothers, for example — since those employees could put the entire business at risk for significant fines.
To be safe, businesses likely will respond by moving more employees into part-time jobs to avoid having them “in the count.” Others may find it easier to shift to a contract work force, which will require more costly advice to comply with regulations cracking down on “1099 employees.”
Yes, fellow taxpayers, keep this in mind as you finish up the mind-boggling process of filing your taxes. It is only going to get worse—much worse—as a result of this new health care law.
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The President’s still trying to convince the American people that they should be happy that the legislation remaking the health care system (which the public overwhelming opposed) was rammed through Congress and signed into law. That’s a tough job when people are also hearing doctors’ complaints and concerns about what the law will do to their practice and medicine in general.
Consider this article in Investor’s Business Daily, which tells the story of one woman, a primary care physician from New Jersey, who has decided to drop out of medicine, in part because Obamacare threatens to make existing problems with the medical system worse.
Most of the article focuses on how too low reimbursement rates threaten to make medicine simply unprofitable, forcing doctors to close up shop. But doctors are also concerned about the over-regulation of medicine and how bureaucrats will end up meddling in the patient-doctor relationship. Here are some interesting survey findings highlighted in that article:
Reimbursement issues were rated “most unsatisfying” by more than 54% of doctors surveyed in 2008 by the Physicians Foundation. Managed care issues and Medicare/gov’t regulations were not far behind, with 51.6% and 45.8%, respectively.
Seventy-nine percent of doctors said ObamaCare makes them less optimistic about the practice of medicine, according to a survey by Sermo and AthenaHealth (ATHN). Two-thirds said they would consider dropping all government insurance programs.
Two-thirds of doctors may stop serving Medicare and Medicaid patients? This is the kind of information that people are going to be getting about this new health care law, and it is only going to make them like it less.
