The 12 Worst Features Of ObamaCare
By David Hogberg
Tue., March 22, 2011 12:04 AM ET
Tags: ObamaCare - Health Care - Waivers - Hospitals - Medicare
http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2532-the-12-worst-features-of-obamacare?src=HPLNewsOn the eve of the one-year anniversary of President Obama signing his health care bill into law, it's a good time to examine ObamaCare’s worst features.
Of course, any law is going to cause difficulties, but problems seem to be attracted to ObamaCare the way worms are to an apple orchard. And the bulk of the law has yet to come into force, including the individual mandate, health exchanges and massive taxpayer subsidies. This is a list of the ObamaCare’s 12 worst features, although it is hardly definitive. Feel free to suggest your own in the comments section.
1. 1099. Under ObamaCare, businesses have to send a 1099 tax form to every other business, contractor and so forth that they do $600 worth of commerce with, resulting in a huge amount of costly new paperwork. Previously, businesses only had to send a 1099 to an independent contractor for services rendered. This provision has proven so unpopular that President Obama said he’d sign a repeal. The House and Senate have passed bills repealing the measure but remain at odds over the details.
2. Surprises, Surprises. There doesn’t seem to be an end to the discoveries of provisions that almost no one knew were in ObamaCare until after it passed. The 1099 may have been the first. The most recent is the “Basic Health Plan,” what Greg Scandlen called “sort of a ‘public option’ in sheep’s clothing.” According to Scandlen, a BHP is a plan “states may implement to provide coverage for people between 133% and 200% of poverty and noncitizen legal immigrants who are not eligible for Medicaid ... . If a state opts for a BHP, those people will no longer be eligible for coverage under the Exchange.” One of the surprises first broken by IBD was that health plans that were supposed to be “grandfathered” under ObamaCare were only grandfathered if they didn’t make any big changes in the future. An administration document estimated that under the rules, about 51% of employers would have to relinquish their coverage by 2014. Unless of course, your plan is run by a union.
3. Waivers. Section 2711 waivers enable the health plans of businesses, labor unions and other groups to avoid having to comply with ObamaCare’s regulations, lest their members lose “the insurance they like.” The Department of Health and Human Services has granted 1,040 waivers in about six months. Naturally, a disproportionate share of those receiving waivers are unions, some of Obama’s biggest political allies.
And the waivers are a temporary reprieve as by 2014 all business, unions, etc., must comply with ObamaCare rules, something that will very likely result in lost jobs.
4. More Waivers? State governments are now asking for waivers from ObamaCare’s medical-loss-ratio regulations. At present, Maine has received a waiver, Kentucky, Nevada and New Hampshire have applied, and 11 other states are preparing applications. An MLR is the share of health premiums spent on medical costs. A 75% ratio means that 75% of premiums are spent on medical care, leaving 25% for things like salaries, advertising, fraud prevention and profits. Starting in 2011, insurers serving the individual or small-group market — i.e., companies with 100 employees or less — must have MLRs of at least 80%. It seems that states are worried that the difficulty of complying with these regulations might drive insurance companies out of their individual and small markets. Maine applied for a waiver because officials there worried that MEGA Life and Health Insurance, which has 37% of the state’s individual market, “would withdraw from the market altogether if the federal requirement remained in place.”
5. Insurers Have Left The Child-Only Market. In June 2010, HHS informed insurers that they would have to sell a policy to anyone under age 19, regardless of pre-existing conditions. Insurers figured this would incentivize more and more parents to purchase insurance after their children fell ill. This would almost surely make child-only policies a losing business. Thus, insurers started abandoning the child-only market in droves. According to a survey conducted by the Republican staff on the Senate Committee on Health, Education, Labor and Pensions, 34 states have lost at least one insurer in the child-only market and 20 no longer have any insurers offering child-only policies.
6. Medicaid — Ouch! ObamaCare requires all states to expand their Medicaid program to 133% of the federal poverty level. Presently only eight states and Washington, D.C. make eligibility limits that generous. That expansion is expected to cost states at least an additional $118 billion through 2023. States are already reeling from budget shortfalls, with Medicaid usually being the biggest budget item. But the stimulus package passed in early 2009 added a new twist to Medicaid. It gave states money to shore up their Medicaid shortfalls, but in exchange the states could not cut back on Medicaid by reducing the eligibility level. That has left only two options: cutting back on benefits and reducing provider reimbursement rates. So far, states seem to be taking the former approach, with Arizona ending support for some organ transplants being the most notorious example.
7. Life After Death Panels. While Sarah Palin’s remark about a “death panel” was not technically accurate, it did highlight the fact that the original version of ObamaCare contained a provision allowing Medicare to pay for end-of-life counseling. In the ensuing media storm, the provision was removed. But that wasn’t the end of it. If reformers with a good idea can’t get it through the front door, they’ll eagerly try the back. Late last year the issue again erupted when HHS tried to slip the provision into 692 pages of new Medicare regulations. The provision was removed again, but controversy remains. HHS Secretary Kathleen Sebelius recently admitted she was the one that decided to exclude the provision for the “proposed” regulations and later slip them into the final rules. The House GOP is calling for an investigation.
8. Medicare’s Advantage Over Cuts. ObamaCare was supposed to cut about $200 billion from Medicare Advantage, the Medicare program that pays private insurers to provide Medicare benefits. There was just one little problem: the 11 million seniors with Medicare Advantage plans who could lose them if the cuts were enforced. As a result, the Obama administration suspended the cuts for 2011 and will actually increase the amount given to Medicare Advantage by 1.6% in 2012 (election year, anyone?). Which means that for the budget math to work, even deeper Medicare Advantage cuts will have to be made in the future. Assuming the budget math actually works to begin with.
9. Cost Estimates Not Correct. An analysis by Medicare chief actuary Richard Foster showed that ObamaCare would not reduce overall health care costs, but would increase them by about $311 billion through 2019. An analysis by former Congressional Budget Office head Douglas Holtz-Eakin found that if one takes into account factors that the CBO could not in its analysis (CBO is limited to analyzing just what is a bill), then ObamaCare could increase the deficit by $190 billion.
10. Who Needs Evidence? Two of the new health care financing “models” pushed by ObamaCare are medical homes and Accountable Care Organizations. Yet there is very little research showing the medical homes are a cost-effective way of delivering care (and some research that they aren’t.) As for ACOs, there doesn’t appear to be much research on them at all. So much for policymakers only enacting sweeping reforms backed up by evidence.
11. CLASS-less. ObamaCare included Community Living Assistance Services and Support Act, a measure that is supposed to help seniors pay for long-term care. On paper, the CLASS Act looks fiscally sustainable because it takes in premiums for a number of years before it starts paying out benefits. Which means it is not sustainable. Even Sebelius has admitted as much. But on short-term measures, the CBO has to score CLASS as reducing the deficit.
12. Physician-Owned Specialty Hospitals. A major source of innovation in health care, physician-owned specialty hospitals had long been a target of the Big Hospital Lobby — the American Hospital Association and the Federation of American Hospitals — which doesn’t like competition. ObamaCare effectively prevents new physician-owned specialty hospitals from opening and makes it near impossible for existing ones to expand.
