Our View: Obamacare falling short already
The unintended, convoluted and costly consequences of President Barack Obama's signature health care law are about to be realized. Obamacare was rushed through Congress in 2010 despite almost no one knowing what the 2,700-page law provided, apart from a vague promise to make health care more affordable and accessible.
This week, the Congressional Budget Office said that, because the U.S. Supreme Court, in ruling last month to validate most of the Affordable Care Act, allowed states to opt out of the law's expansion of Medicaid, about 3 million fewer people will end up insured than originally estimated. This is guesswork because the CBO admits no one knows how many states will opt out. We believe many, if not all, states controlled by Republican legislatures and governors will opt out.
That news arrived about the same time a study was released showing about one in 10 U.S. employers plan to drop health coverage for workers in the next few years as Obamacare's provisions go into effect. The consulting company Deloitte found 9 percent of companies expect to stop offering coverage, and another 10 percent are uncertain they will continue. Last year another firm, McKinsey & Co., said up to 30 percent of employers would "definitely or probably" stop offering insurance after 2014.
Obamacare's perverse disincentives make it less costly for companies to pay fines for not providing health insurance than to pay health insurance premiums.
The bottom line? The new health care law already is on the road to providing fewer Americans health insurance coverage than promised despite a vast expansion of Medicaid, the federal health insurance program for the poor, into the middle class, on top of giving employers incentives to drop coverage for their workers.
This combination is a far cry from making health care more affordable and accessible.
There is, according to the budget office, a silver lining. Federal spending may be reduced $84 billion compared with original projections as taxpayers will be paying to insure 3 million fewer people. On closer inspection, however, this seems questionable.
When states opt out of the expansion of Medicaid (called Medi-Cal in California), it is estimated that 6 million people who earn from 100 percent to 138 percent of the federal poverty level will go elsewhere for coverage. About 3 million of them are expected to enroll in Obamacare insurance exchanges operated by states to connect consumers to government-approved insurers, whose premiums also will be subsidized with tax dollars.
But exchanges' subsidies are more costly than Medicaid subsidies. When states seek to save their share of Medicaid costs by opting out of its expansion, the per-patient cost to Washington will increase for those getting insurance through an exchange instead.
There are additional land mines ahead. "The Supreme Court decided to treat the individual mandate as a tax instead of a penalty, partly on the basis the mandate would not impose an 'exceedingly heavy burden,'" according to Tax Foundation economist William McBride. "This view is not supported by the numbers."
"The tax/penalty would be at least $1,000 for most of the uninsured and more than $12,000 for high-income earners. Low-income families would be hit the hardest, as the tax would be as high as 10 percent of income."