Will ObamaCare Collapse?

[James]

Large employers who spend $80 billion a year to insure millions of employees and their families say ObamaCare is headed for “collapse.” Human resource executives see the law as pushing employers to drop health coverage. A 28-page analysis by the Association of Chief Human Resource Officers (ACHRO) finds a majority believe the law must be repealed or overhauled.Medicare Supplements


ObamaCare requires employers to offer health insurance to their employees. If they don’t, Medicare Supplement Insurance  they would have to pay a penalty beginning in 2014. But when McDonald’s and some other employers warned it would be too expensive to ensure their large ranks of employees, the Secretary of Health and Human Services (HHS) issued waivers, taking dozens of companies off the hook, The New York Times and other publications reported. Preferential treatment for some companies is sure to cause resentment

The ACHRO report said its members believe “with each passing year” ObamaCare “will encourage more employers to drop employer provided care and prompt their employees to seek coverage through exchanges” to be set up in every state to sell insurance. The exchanges supposedly would allow individuals to shop to see if they are eligible for government subsidies to help pay for the health care. But Republicans may block the establishment of exchanges, according to a Nov. 10 story in Vital Signs.

When ObamaCare was being carelessly knitted together in Congress last spring, the Congressional Budget Office (CBO) projected that about 3 million people, a relatively small slice, would lose their employer-sponsored health plans as a result of the legislation. It now is clear that was a gross underestimation. Employers may well “find it more profitable to eliminate health benefits altogether,” said an Oct. 29 WSWS.org story.

Large employers “want their employees and retirees to have access to affordable, high-quality health care. However, on the whole, large employers believe PPACA (the initials for what is falsely named the Patient Protection and Affordable Care Act) broadens access while failing to make any meaningful change in the way health care is delivered,” OCHRO declared.

Many employers see “the system created by the law eventually collapsing, an event which will force Congress to draft the next version of health care reform.” As the human resources executive’s association notes, “The vast majority of Americans receive health insurance through the employer-based system,” a system that has worked well until the bureaucrats muddied the water.

Paul Keckley, executive director of the Deloitte Center for Health Solutions, was quoted as saying, “I don’t think you are going to hear anybody publicly say, ‘We’ve made a decision to drop insurance.’ What we are hearing at our meetings is, ‘We don’t want to be the first one to drop benefits, but we would be the fast second.’ We are hearing that a lot.”

Republicans in Congress are leaning on at-risk or moderate Democrats to help them strip out “the bad parts of ObamaCare,” according to a Nov. 12 story in Newser.

The analysis by the human resource executives uncovered almost unbelievable regulatory duplication, confusion, and infinitely needless paperwork sufficient to drive those forced to comply to tear out their hair in frustration. Union favoritism and pickiness as to the number of pages and print font size required for documents provided to employees, unmasked the politics and nonsense embodied in the law’s rules.

The law encourages employers “who offer very generous benefits to discontinue offering those benefits.” Businesses are concerned about the 40 percent excise tax on so-called Cadillac Plans for any health benefit in excess of $10,200 for individuals and $27,500 for family coverage—except for union plans. The $10,200 threshold does not exist for unions and the 40 percent excise tax is triggered only if coverge exceeds $27,500. “There is simply no legitimate policy reason for the distinction,” according to the association’s analysis. (Other than the fact that union money backs the Obama people).

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Not only Health and Human Service is replete with regulatory mandates, but apparently much of the federal government is getting into the act. The Labor and Treasury Departments have issued guidance with “very specific requirements that would “create significant administrative burdens…costly and difficult to implement” making it harder for “employers to offer efficient, effective, and affordable health care coverage to employees, their dependents, and retirees.”

ObamaCare also “requires all health plans to phase out annual dollar limits on essential benefits by 2014 and on lifetime dollar limits on essential benefits that may have taken effect by September 23, 2010. But the Feds have not defined “essential benefits.” Careless confusion reigns.

Employers must extend dependent coverage to children up to age 26 (a benefit much-touted by the Democrats). But it is little known that this mandate applies even if the adult child has “access to other employer-based coverage,” the analysis pointed out.

The highly praised wellness programs in the law are pleasing to the Association. But its analysis points out that final regulations prohibit employers from offering any benefit to individuals for participating in wellness programs that ask about family medical history—“something that is a critical element of any wellness program. So, regulations are “hampering employer efforts to use and expand these programs.”

The law creates utter confusion as to who is a full-time employee and a part-time employee. Employers are “very concerned” that regulations being considered by the IRS and Labor Department “may inappropriately categorize many part-time employees as full-time workers.” This would mean having to cover them with insurance even if they only worked, say, 10 hours a week most of the year, but long hours during a holiday. And maybe even their dependents and retirees.

Just to satisfy their insatiable hunger for more rules, the health law also “requires employers providing ‘minimum essential coverage’ to any individual to file IRS returns certifying the name and identification of covered individuals, dates of coverage during the calendar year, whether the coverage is through a qualified plan offered through an exchange, the amount of any advance cost-sharing or premium tax credit received by the individual, the identity of the employer maintaining the plan, and the portion of the premium paid by the employer.”

The reporting employer must then send a written statement to each individual who was included on the return, providing each individual with the information which was reported to the IRS. Much of the same information must also be reported to the relevant exchange by the offering employers.

The analysis sums it up best: “With each new administrative burden, each new direct and indirect tax, each new mandate, and with each piece of added complexity, employers are nudged in the direction of dropping coverage altogether.” No wonder collapse is inevitable.

http://frontpagemag.com/2010/11/24/will-obamacare-collapse/

[Soul Crusher]

James - it goes well beyond that.  Check this out.

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Government By Waiver: The Breakdown Of Public Administration
Nov. 23 2010 - 1:39 pm | 1,832 views | 0 recommendations | 2 comments
By RICHARD EPSTEIN


The past year has marked the passage of the two most massive legislative reforms in the history of American politics: ObamaCare for health care and Dodd-Frank for the financial sector.  Their size and complexity dwarf those of any New Deal legislation.

These new laws require a stunning acceleration of the longstanding practice of relying on delegated authority to implement statutory commands.  According to its New Deal champions, this welcome division of authority could cure the manifold defects of a market economy by combining the best of democratic politics with the best of administrative expertise.  Under the new division of labor, the political branches of government set the broad direction of legislative reform, and then trust skilled administrative agencies to turn general directives into specific commands.

The sheer magnitude of the new legislative ventures has thrown this model–which, in truth, has never worked well–into disarray. Rulemaking is no small operation.  Typically, an agency has to gather enough information to take an intelligent stab at issuing reasonable rules.  It must therefore try to bring itself up to speed by a cumbersome, multistage process for gathering and synthesizing the needed information from hundreds, if not thousands, of separate sources.

Stripped to its essentials, the relevant agency decides what it needs to know to formulate a set of intelligent rules.  It must then conduct extensive surveys of the relevant stakeholders–industry and consumer groups, for starters–to obtain needed data.  Next it formulates and publishes preliminary rules and regulations.  These in turn are bombarded by comments from literally hundreds of separate groups, each with its own agenda.  Once the agency issues its final rules, they may well be challenged in court on a variety of statutory and constitutional grounds.

This complex administrative process only has a fighting chance of generating sensible rules with a statute that embodies some workable principles in the first place.  Here is one typical instance of how the process has gotten gummed up under ObamaCare. As a matter of grand legislative policy, ObamaCare decreed that firms would be required to knock out wasteful administrative costs by attaining favorable “medical loss ratios,” which in turn require them to slash their administrative expenses for individual and group health care plans to between, say, 15% and 20% of total costs.  The numbers are often little more than half of the current expense ratios for various kinds of plans.

The statutory commands all rest on the grand assumption that these administrative costs are a form of disguised waste that mere competitive market forces could not eliminate.  But the claim is a delusion.  No one has any clear idea what counts an “administrative cost” for statutory purposes, which itself leads to all sorts of jockeying and lobbying for strategic advantage inside the administrative process–which just raises those administrative costs even more.

Since the politicos miscalculated the regulatory burdens, they have to brace for the real possibility that some health care plans will collapse under the strain.  Starting in late September, reality hit home when McDonald’s announced that it would have cut out its “mini-med” program for about 30,000 of its low-paid workers. It insisted that it could not meet the statutory requirements for the simple reason that high employee turnover raises administrative costs.

Rather than face this public relations disaster, Kathleen Sebelius, the Secretary of Health and Human Services, granted a one-year waiver from the requirements of the program.  That particular result does not stand alone.  Since that time fresh waivers have been routinely dispensed by the Department of Health and Human Services to many other organizations, including many powerful unions. At least one million workers are now out from under ObamaCare, with more to come.

The process vividly shows how unrealistic expectations can undermine the rule of law.  Waivers are by definition an exercise of administrative discretion that benefits the party who receives its special dispensation.  Yet nothing in ObamaCare explains who should receive these waivers or why.

The dangers from this uncertainty are enormous. Make no mistake about it, a waiver gives the favored organization a competitive advantage over its rivals. But it is not only one applicant that pulls out all the stops.  Its competitors often follow suit while simultaneously trying to block the waiver for the original applicant.  Administrative expertise quickly takes a back seat to old-fashioned political muscle and intrigue.

What’s more, waivers are typically only for short periods–say one year.  They are often given on condition that the firm take steps to bring itself into compliance during waiver period.  But what happens if the firm requests a renewal?  Is it issued on the ground that no amount of ingenuity could have brought the firm into compliance? Or is it denied in order to make sure that the overarching statutory command is not nullified by endless short-term compromises?

What matters systematically is not the outcome of any particular case but rather the long-term toll that extensive rulemaking exacts from the administrative process.  The safeguards of the rule of law are always undermined by fierce short-term pressures on administrative agencies.

Economically, the high fixed costs of administrative compliance drive small firms to seek takeover by powerful larger firms whose deeper purses and better political contacts help them weather the storm.  The palpable irony is that the same health care experts who once touted ObamaCare now fear that the new combinations will make health care more monopolistic, raising prices while cutting costs.  But no one can expect private firms to stand still in the face of those mortal threats.  Better a concentrated industry than a decimated one.

Squads of health care experts and political pundits envisioned a Pax Obama for heath care once the political hubbub quieted down. It won’t happen.  Without major steps to overhaul or repeal ObamaCare, government by waiver will become standard operating procedure to the detriment of us all.