Monthly Archives: November 2012

Mr. President, Where’s #My2500?

As part of its continued efforts on the fiscal cliff, Campaigner-in-Chief Obama and the White House started a new #My2K hashtag on Twitter, to promote its plan to raise taxes on small businesses. (Some may find it slightly ironic that the President thinks middle-income families’ tax cut is their money, while small businesses’ tax cut is his money to play with.)

But that got us wondering: Where’s #My2500 — Obamacare’s promised reduction in health insurance premiums?  As a reminder, candidate Obama promised repeatedly that his health plan would CUT premiums by an average of $2,500 per family within Obama’s first term.  But as the below graph shows, while candidate Obama promised premiums would fall by $2,500 on average, premiums have risen by $3,065 since Barack Obama was elected President.

So maybe, just maybe, instead of running around holding campaign-style rallies in an attempt to raise taxes on job creators, President Obama could get to work on fulfilling his campaign pledge, and bringing us #My2500.

Kaiser Premiums 2012

Obamacare’s Tax on Charity

Amidst the debate over tax policy associated with the fiscal cliff, the Washington Post ran a column yesterday calling the deduction for charitable contributions “indispensable,” because it encourages private giving, “an economic benefit we can’t afford to mess with.”

Problem is, Obamacare already DID mess with the charitable deduction — because for “high-income” individuals, charitable contributions will be taxed, beginning January 1. Per Section 1402 of the reconciliation bill amending Obamacare,the law’s new 3.8% tax on “high-income” individuals is assessed on filers’ adjusted gross income — that’s income BEFORE deductions like those for charitable contributions are taken into account. Individuals subject to the 3.8% tax will pay the tax on all income they receive, regardless of whether or not they donate that income to charity. For instance, a lottery winner who wanted to donate half of his $500,000 winnings to charity would pay $9,500 ($250,000 times 3.8%) for the “privilege” of doing so.

What’s worse, this tax will hit more and more individuals over time — because the “high-income” thresholds are not indexed for inflation. The Medicare actuary has predicted that the tax will hit only 3 percent of filers when it goes into effect next year, but nearly 80 percent of filers in the long term.

So rather than encouraging charitable contributions, Obamacare actively works to discourage them — perhaps because liberals can’t stand the thought of entities other than government engaging in service for the public good. It’s enough to put a “Bah, humbug!” into anyone’s holiday spirit.

Up Next: Obamacare’s Thanksgiving Turkey

According to online sources, on Wednesday President Obama plans to pardon the White House turkey in an annual Thanksgiving ceremony. But before that happens, later today Secretary Sebelius plans to serve the American people a turkey — more regulations implementing Obamacare. Among the possible items on “Aunt Kathy’s” Thanksgiving menu:

Reading through all these mandates and requirements is enough to give anyone a serious case of indigestion, which explains why the Administration is releasing them so close to Thanksgiving. They don’t want the American people to read the regulations implementing the bill, just like they didn’t want the American people to read the bill itself. Thus the spectacle of a Cabinet secretary who sat idly by as an “author” of Obamacare admitted he hadn’t read it (because Democrats had to “make judgments very fast“) engaging in a real-life version of “Take Out the Trash Day” by dumping out massive — and costly — regulations two weeks after the election, and two days before a major holiday. It does raise one obvious question: If Obamacare is so popular, why did these major regulations implementing Obamacare sit on a shelf until after the election? What has HHS been hiding?

Then-Speaker Pelosi spoke the truth when she famously said we had to pass the bill to find out what’s in it. That statement is just as true with the regulations implementing the bill as it is with the 2700-page measure itself. But a general clue about what’s to come will arrive in the form of the entre on many Americans’ tables this Thursday.

‘The Law of the Land’ Is One Big Mess

Last week, many press stories focused on Obamacare’s status as “the law of the land,” attempting to emphasize that the 2700-page measure is “here to stay.” But based on a sampling of recent quotes, what President Obama wants “to stay” in his second term is a jumbled-up mess of bureaucratic and regulatory chaos and confusion:

  • State exchanges are “not going to be ready;”
  • “If I could wave a magic wand and change [the start] from 2014 to 2015, I would…[Meeting the law's deadlines] is going to be really hard;”
  • “The timeline is definitely getting crunched.”

And those quotes are comments from three different supporters of the law –individuals and groups working on Obamacare’s implementation. These sample quotes come from but one article among many outlining the federal government’s many difficulties in implementing the law — illustrating perfectly its unworkable, Rube Goldberg-esque nature.

Late yesterday, HHS announced yet another implementation delay, allowing states an extra month to decide whether or not to establish a state-based Exchange. But with even supporters of the law publicly admitting that the complex, bureaucratic measure is not ready for prime time, why would states want to accept political responsibility for Washington’s chaos by creating their own Exchanges — thereby going down with a sinking ship?

The Siren Song of the Left’s ‘Competition’

As previously noted, yesterday the Center for American Progress released its platform for altering entitlements. In fairness, the paper does include some conservative ideas, most notably additional means-testing for Medicare beneficiaries. But mainly the report demonstrates the fundamental difference between conservatives and liberals: Not only do liberals not believe in markets, they don’t understand (and/or don’t want to understand) how markets actually work.

Take for instance the CAP proposals that will supposedly “enhance competition based on price and quality,” such as the idea to “require health insurance exchanges to offer tiered insurance plans.” On the face of it, the idea sounds reasonable enough –encourage plans to lower premiums by offering a variety of choices. But the catch here — as in the rest of the CAP proposals — is that “competition” is government-defined, government-mandated, and government-prescribed. For instance, if insurers want to offer, and patients want to purchase, less expensive insurance coverage that doesn’t cover all of Obamacare’s mandated benefits — and/or insurance purchased across state lines — both CAP and Obamacare would tax those who gain coverage through such means, because this “competition” is prohibited in liberals’ new health care utopia.

Then there’s the fact that the CAP report also includes numerous other proposals that involve expanding prescription drug price controls in various forms. One may find it ironic — and ever-so-slightly contradictory — that a report supposedly focused on “enhanc[ing] competition” simultaneously expands government-dictated price controls.

Finally, CAP’s proposals for “competitive bidding” seem little short of comical for their ideologically-based hypocrisy. The paper states that Congress should “use competitive bidding for Medicare Advantage” — but then just as quickly states that government-run Medicare itself should not compete. And why doesn’t CAP want government-run Medicare to compete against private plans? Because a paper co-authored by one of CAP’s own scholars released in September found that in many parts of the country, traditional Medicare can’t compete– it’s far too costly. The study, outlined in an article in the Journal of the American Medical Association, found that private plans would be 9% cheaper than traditional Medicare under a competitive bidding proposal.

Mind you, the Left has no problems forcing seniors to pay more for private Medicare Advantage coverage, or forcing them out of their plans entirely– Obamacare’s cuts to the program will ensure both outcomes. But when it comes to competitive bidding for government-run Medicare itself, CAP and others on the Left want nothing to do with such an idea, clinging instead to the shibboleth of government-run Medicare as a first step towards socialized medicine for all. And that hypocrisy — competition for thee, but not for me — explains in a nutshell why liberal ideas such as those in the CAP paper are both unrealistic and ideologically dangerous.

No Magic Bullet to Control Entitlements

Speaking at an event this morning regarding the Center for American Progress’ new health and entitlement manifesto (about which more later), former Obama Administration official Zeke Emanuel claimed that controlling health costs by itself would cure America’s fiscal woes: “I think this is the legacy for the president because if he can get healthcare costs under control, everything changes…This really is the big kahuna for his legacy going forward.”

It’s a nice assertion — but it’s also flat wrong. CBO DemographicsThe Congressional Budget Office’s long-term budget outlook includes a chart demonstrating that, over the next 25 years, demographics count for at least half — and as much as three-quarters — of projected increases in spending on Medicare, Medicaid, Social Security, and Obamacare insurance subsidies: What this analysis means is that, even if the growth of health costs does manage to slow (both CBO and the Medicare actuary think Obamacare’s cost reductions will not be sustainable in the long-term), slowing health costs alone won’t solve Medicare’s financial problems. Put another way, Medicare needs structural reform NOW –because nothing else can save the program. Emanuel’s incorrect comments notwithstanding, it’s a lesson policy-makers in both parties would be wise to heed.

News on Containing Costs Goes from Bad to Worse

The employer benefits firm Mercer released its annual survey of health plans, and for those wishing to “bend the curve” on health costs, the results were not promising. Mercer’s survey concluded that employers’ health costs will rise 4.1% this year, and even more (5.0%) next year; if firms do not take steps (e.g., raising co-payments, etc.) to control costs, cost would rise by a whopping 7.4% in 2013. Recall that four years ago, candidate Obama promised repeatedly that his health plan would CUT premiums by an average of $2,500 per family. Not only has that premium reduction not happened — premiums have risen by $3,065 since Barack Obama was elected President — but cost increases continue to grow unabated.

In fact, today’s Mercer study suggests one way Obamacare will exacerbate the growth of health costs — by limiting usage of consumer-driven health plans. The survey notes that an “enrollment shift” to consumer-driven plans — which have more than tripled in popularity since 2007 — has “helped to hold down overall cost increase[s].” Consumer-driven plans help to slow cost growth because average costs are nearly $2,200 lower per year than traditional health insurance costs. Unfortunately, several provisions in Obamacare will move health coverage in the exact opposite direction, by restricting access to HSAs and consumer-driven plans — therefore raising, not lowering, health costs. Three separate provisions in the statute, and regulations implementing the law, will reduce access to HSA plans:

  1. Obamacare’s essential health benefits package contains new restrictions on deductibles and cost-sharing, which will prevent at least some current HSA plans from being offered.
  2. Obamacare’s medical loss ratio regulations also impose new restrictions that studies show will hit HSA plans particularly hard, and could force individuals to change their current form of coverage.
  3. The Obamacare statute does not specify that cash contributions made to an HSA will be counted towards the new federal actuarial value standards. And a February bulletin released by HHS in advance of upcoming rulemaking indicates that under the Administration’s approach, not all contributions into an HSA will count towards the new minimum federal standards — meaning some HSA policies will not be considered “government-approved.”

Both individually and collectively, these provisions in Obamacare will have the effect of limiting access to new and innovative consumer-directed health plans like Health Savings Accounts. Not only will these onerous regulations prevent many Americans from keeping the plans they have and like — by limiting access to consumer-directed health plans, Obamacare will also raise, not lower, health costs for many Americans.

We Told You So: Companies Hiring Fewer Full-Time Workers

The Wall Street Journal has a must-read article this morning highlighting one of Obamacare’s effects — companies are replacing full-time workers with part-time employees to avoid the law’s soon-to-be-imposed $2,000 employer mandate penalty. Because full-time employees working more than 30 hours will incur a penalty while part-time workers will not, many firms are in the process of shifting their workforce, as the article outlines:

Some low-wage employers are moving toward hiring part-time workers instead of full-time ones to mitigate the health-care overhaul’s requirement that large companies provide health insurance for full-time workers or pay a fee. Several restaurants, hotels and retailers have started or are preparing to limit schedules of hourly workers to below 30 hours a week. That is the threshold at which large employers in 2014 would have to offer workers a minimum level of insurance or pay a penalty starting at $2,000 for each worker.

Pillar Hotels & Resorts this summer began to focus more on hiring part-time workers among its 5,500 employees, after the Supreme Court upheld the health-care overhaul, said Chief Executive Chris Russell. The company has 210 franchise hotels, under the Sheraton, Fairfield Inns, Hampton Inns and Holiday Inns brands. “The tendency is to say, ‘Let me fill this position with a 40-hour-a-week employee.’” Mr. Russell said. “I think we have to think differently.”…

CKE Restaurants Inc., parent of the Carl’s Jr. and Hardee’s burger chains,began two months ago to hire part-time workers to replace full-time employees who left, said Andy Puzder, CEO of the Carpinteria, Calif., company. CKE, which is owned by private-equity firm Apollo Management LP, offers limited-benefit plans to all restaurant employees, but the federal government won’t allow those policies to be sold starting in 2014 because of low caps on payouts. Mr. Puzder said he has advised Mr. Romney’s campaign on economic issues in an unpaid capacity.

Home retailer Anna’s Linens Inc. is considering cutting hours for some full-time employees to avoid the insurance mandate if the health-care law isn’t repealed, said CEO Alan Gladstone. Mr. Gladstone saidthe costs of providing coverage to all 1,100 sales associates who work at least 30 hours a week would be prohibitive, although he was weighing alternative options, such as raising prices

Benefits consultants said most retail and hotel clients have explored shifting toward part-time workers. Those industries are less likely to offer health coverage now, and if they do, the plans typically are too skimpy to meet the minimum-coverage requirements. “They’ve all considered it,” Matthew Stevenson, a workforce-strategy principal at Mercer. In a July survey,32% of retail and hospitality company respondents told the consulting firm that they were likely to reduce the number of employees working 30 hours a week or more.

Not only is this response predictable — it was predicted, and not just by Republicans but by non-partisan experts. Here’s what the Congressional Budget Office wrote more than two years ago about the Obamacare mandate taxes:

Those penalties… will, over time, generally be passed on to workers through reductions in wages… However, firms generally cannot reduce workers’ wages below the minimum wage, which will probably cause some employers to respond by hiring fewer low-wage workers. Alternatively, because firms are penalized only if their full-time employees receive subsidies from exchanges,some firms may instead hire more part-time or seasonal employees.

CBO also said that “the expansion of Medicaid” and the health insurance subsidies “will encourage some people to work fewer hours or to withdraw from the labor market. In addition,the phaseout of the subsidies as income rises will effectively increase marginal tax rates, which will also discourage work.”

Two years ago, Speaker Pelosi famously said we had to pass the bill to find out what’s in it. It turns out what’s in Obamacare is exactly what non-partisan experts said — revisions that will cost jobs and harm the American economy.

Obamacare’s War on Women

We noted this morning’s Wall Street Journal article outlining the many companies that are reducing the hiring of full-time workers due to Obamacare’s impending employer mandate. But while the impact of Obamacare on jobs is well-known, perhaps less known is the fact that women will be hit hardest by Obamacare’s job cuts.

Because Obamacare’s mandate hits low-wage workers hardest, studies have demonstrated that women are disproportionately likely to be affected by the mandate. For instance, in 2007 Harvard Professor Kate Baicker published an analysis examining the impact of one type of employer mandate. Her work demonstrated that, under the scenario modeled, millions of low-wage workers would be “at substantial risk of unemployment” — and that the workers at risk “tend to be disproportionately low-education, minority, and female.”

Over the past several months, Democrats have spent countless hours drumming up charges of a Republican “war on women,” based on supposed attempts to restrict access to contraception. But studies like the Baicker paper confirm that the real “war on women” is being waged by Democrats — whose policies will restrict access to jobs for hard-working females.

Joe Biden’s Obamacare Joke

The Washington Post reports that yesterday, Vice President Biden made interesting comments in Florida during a discussion about Obamacare:

After it’s all over, when your insurance rates go down, then you’ll vote for me in 2016.

The pool report from the event claimed that Biden “of course, said it in a joking manner.” Indeed he must have, because the idea that insurance premiums have gone down thanks to Obamacare is a joke of the first order. Candidate Obama promised repeatedly that his health plan would CUT premiums by an average of $2,500 per family. The Obama campaign also promised that that those reductions would occur within Obama’s first term. But while candidate Obama promised premiums would fall by $2,500 on average, premiums have risen by $3,065 since Barack Obama was elected President.

To sum up: We don’t know whether or not the Vice President was joking about a 2016 campaign in his future — but we definitely know that his comments about Obamacare lowering insurance rates are a laugher.

Kaiser Premiums 2012