There are unresolved issues, following last week’s ruling in King v. Burwell, regarding the law’s impact going forward. One of the most troublesome issues revolves around the fact that the Affordable Care Act is simply not affordable for many. A lot of consumers have complained of several thousand dollar deductibles that have to be paid before they can receive medical care. But, that’s not all–consumers have potential rate increases to look forward to in 2016. Several insurers have sought increases of 15 percent to 25 percent and the cost of claims has significantly exceeded what was expected when premiums were initially set. Then, according to the New York Times, the merger situation is potentially problematic:
“But the law has also unleashed a ‘merger frenzy,’ said Prof. Leemore S. Dafny, a health economist at Northwestern University who used to work at the Federal Trade Commission. Hospitals are buying up other hospitals and physician groups. Commercial insurers like UnitedHealth Group, Cigna, Aetna, Humana and Anthem are chasing one another in a wave of possible mergers and acquisitions.
Such consolidation has the potential to improve care, but it could also increase the ability of individual health care providers and insurers to demand higher prices. And it could leave consumers with fewer options.”
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Craig Hodges, CEO of patient financing firm CarePayment, points out that tax credits alone can’t close the widening healthcare affordability gap due to high deductibles and other rising out-of-pocket medical costs. Hodges notes that healthcare costs, in particular, are squeezing the working-class and middle-class.
Dr. Elaina George, an MD who hosts her own show, Medicine On Call on America’s web Radio and Liberty Express Radio, and is a well-known patient advocate, has some thoughts on the recent ruling. On her blog she explains that, “the ruling does nothing to change the reality that having health insurance in the age of Obamacare does not equal access to quality healthcare.” Dr. George warns that insurance companies will be empowered to further limit their physician panels while continuing to decrease the medications and services that will be covered.
Presidential candidate Sen. Bernie Sanders aptly reminds us that while Obama has said the ACA made healthcare “a right for all,” the law doesn’t actually achieve universal coverage.
And, for the nation as a whole? What does the future with Obamacare look like? According to Larry Kudlow:
- Across-the-board Obamacare tax increases are inflicting heavy punishment on investment — right when the U.S. economy desperately needs more capital as a way of solving a steep productivity decline.
- Because of Obamacare, there’s an additional 0.9 percent Medicare tax on salaries and self-employment income.
- Additionally, there’s a 3.8 percent tax increase on capital gains and dividends.
- And, there is a cap on health-care flexible spending accounts, a higher threshold for itemized medical-expense deductions and a stiff penalty on employer reimbursements for individual employee health-policy premiums.
- Lower employment and fewer hours worked are a double death knell for growth.
Kudlow indicates the the low labor-force participation rate and the reduction in the employment-to-population rate essentially means that Obamacare is paying people not to work. Kudlow cites University of Chicago economist Casey Mulligan who, “argues that Obamacare disincentives will reduce full-time equivalent workers by about 4 million principally because it phases out health-insurance subsidies as worker income increases. In other words, Obamacare is a tax on full-time work. After-tax, people working part time yield more disposable income than working full time.”
Add to that the fact that healthy Millennials are still not signing up for Obamacare in large enough numbers to finance older consumers, the less healthy and those with preexisting conditions. “So if the sign-ups are lower and the risk pool is shorter and the hoped-for redistribution from young to old isn’t happening, insurance companies are forced to jack up premium rates” Kudlow writes. “Again, not surprising. But the crisis is coming earlier than expected.”
Rep. Paul Ryan (R-WI) goes a little further than Kudlow in his estimate of Obamacare’s potential damage to the nation, predicting that the law will “collapse under its own weight,” adding that he is “as motivated as ever before to repeal and replace this law, and that’s what we’re working on.” Ryan also said that, despite media reports to the contrary, the GOP actually does have numerous ideas for legitimate replacements of Obamacare. Ryan said that this is something that he intends to move forward on in 2017 if a Republican wins the 2016 presidential election.
Similarly, presidential candidate Jeb Bush has promised to repeal the law if elected, while at the same time requesting an “emergency contribution of $50, $25 or $10″ to ensure that Democratic front-runner Hillary Clinton won’t be elected.
Rep. Brian Babin (R-TX) wants the Supreme Court justices to suffer the consequences of the ruling by requiring that each of them enroll in Obamacare and has introduced legislation in the house that would do just that. “As the Supreme Court continues to ignore the letter of the law, it’s important that these six individuals understand the full impact of their decisions on the American people,” Babin said in a statement.
On the other hand, The Senate Majority Fund, a group whose goal is the Democratic takeover of the U.S. Senate, has beseeched supporters to “give every dollar you can spare this second” to prevent the GOP from controlling both the Senate and White House in 2017 and consequently risking repeal of Obamacare.
The GOP has attempted to dismantle Obamacare twice at the Supreme Court, has initiated more than 50 repeal votes and has tried to defund the law through the spending process–none of which delivered the desired result. Now, following the Supreme Court ruling, Republican lawmakers are divided over whether they should move on from repealing Obamacare or continue to fight it. Plans by various GOP lawmakers include the following:
- Wait until 2017 when, what they hope will be, a GOP president will kill it.
- Sen. Ted Cruz believes Congress should use “every single tool at our disposal” now to stop the law. Cruz advocates holding spending bills hostage to try to force President Obama to throw in the towel.
- Sen. John Cornyn (R-TX), however, opposes Cruz’s idea, saying they had already, “tried that before, and it didn’t work very well.”
- Rep. Ed Whitfield (R-KY) argues the focus should be on fixing aspects of the existing law, rather than continuing repeal efforts that ultimately end in vain.
- Some Republicans hold that more repeal votes will keep the issue front-and-center in the 2016 election, making next November a referendum on the law.
- Rep. Chris Stewart (R-UT) calls for Obamacare to be replaced with a plan that “empowers patients by taking the government out of their healthcare choices and lowers costs by enabling the free market.” He has introduced legislation he says will accomplish that, entitled the Empowering Patients First Act.
Attempts to weaken any aspects of Obamacare can be expected to be met with Obama’s veto pen. Trying to gut the law via budget reconciliation is another option, but budget rules would probably prevent Republicans from performing a full-scale repeal through reconciliation legislation. “There are very strict rules,” cautions Sen. Chuck Grassley (R-IA), a senior member of the Senate Budget Committee.
Realistically, however, it will be very difficult for Republicans to change the law, even with a GOP sweep of the 2016 elections, because the vast majority of Obamacare will already be in place and relied upon by millions of people.
Either way, there are five challenges Obamacare will face over the course of the next few years:
1) Reining in healthcare costs. As many enrollees are discovering, the “Affordable” Care Act is a misnomer. “Healthcare costs continue to rise faster than wages or overall inflation, putting a financial burden even on people who have healthcare. A recent study by the Commonwealth Fund found that 23% of Americans who have healthcare coverage are “underinsured,” meaning their out-of-pocket spending on healthcare is more than 10% of their income in a given year. Deductibles and other out-of-pocket costs have been rising because consumers and businesses have been opting for plans with lower premiums—which usually require the patient to bear more of the cost before 100% coverage kicks in. The irony is that insurance has gotten more affordable, but actual healthcare hasn’t.”
2) Repeal of the medical-device tax. This tax helps raise about $3 billion per year to contribute to subsidies and other aspects of Obamacare. Both Republicans and Democrats, however, favor its repeal, and even Obama has said he would consider it.
3) The individual mandate penalty gets tougher. “The penalty for not having healthcare coverage in 2015 will double from last year’s levels for a typical individual, and it will go up another 25% in 2016. Several million Americans will be able to claim an exemption, but many won’t, and the rising price of failing to comply with the individual mandate could provoke fresh unhappiness with the law, which is already unpopular.”
4) The “Cadillac tax” could force benefit cutbacks. “This tax, due to take effect in 2018, would force companies to pay extra for generous health plans with annual premiums well above the norm. Some companies might agree to pay the tax — which would be on health plans that cost more than $10,200 for an individual — because the generous health plans are a way to reward employees. But many others are likely to prune their health plans to make sure they fall below the tax threshold. Workers affected by such cutbacks would still have good insurance, but with fewer perks and more out-of-pocket expenditures.”
And, there are at least four more important cases, making their way through the courts, that challenge various aspects of Obamacare, although none of them would likely pose a threat to the entire law.
Given all of this, Larry Kudlow asks “the big-picture question” which is: “Can the U.S. not become Greece?”
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