The Hits Just Keep on Comin'
ObamaCare – which was supposed to insure 30 million non-insured, reduce healthcare cost, shrink the deficit, increase choice, let you keep your doctor and health plan, increase employment, and make businesses more competitive – is proving daily to be failing in these lofty promises.
The Congressional Budget Office report released this week projects bad news for the White House and Congressional Democrats facing elections this year. At least most people attach that interpretation to it; though the White House spin machine sees a different story.
The 30 million uninsureds (about 10% of the population) over which Obama sleeplessly tossed and turned every night while selling ObamaCare to the America people in 2010 will be unchanged by ObamaCare according to CBO. Yep. We are $2 trillion poorer and the US healthcare system has been permanently changed for the worse, but the objective – 30 million uninsured – will remain uninsured.
Moreover, due to an incompetent launch of the dot-gov website, which was due to incompetent design and incompetent project management, the expected enrollment will fall two million short of expected number – about 14% less.
People who are buying ObamaCare insurance are fainting from sticker shock. Premiums paid don’t buy the coverage that their pre-ObamaCare insurance covered because of the massive out-of-pocket deductibles. Obama and the Democrats may call the product they created “insurance” but it’s really annual self-insurance with a catastrophic episode rider – horse hockey insurance. The White House and Congressional zombies may claim they’ve brought down the cost of healthcare, but they did it by making the insured pay for healthcare (mostly out of pocket) instead of the insurer. So, if you’re keeping score, you can put an “X” by the “reduce cost” promise on the list in the first paragraph of this blog.
The deficit. Ah yes, that pesky old deficit. According to the CBO report it will decline slightly through 2015 and then go up in the following years. Another “X” by that Obama promise in the list above.
Increased choice? Surely you jest. Could you spell that please? Choice went out the window when ObamaCare specified the required coverage for insurance – like maternity benefits for a elderly single woman, I don’t have the space in this blog to recite even a sampling of the horror stories from seriously and terminally-ill patients whose healthcare plan was interrupted when they switched from private insurance to whatever you want to call the obscene ObamaCare-mandated insurance coverage. One story about a California woman whose care was terminated by ObamaCare – amounting to a death sentence for her – occupied the news for almost a week. Insureds are screaming about the limited doctor and hospital choices their ObamaCare plan allows. Narrower networks keep insurer costs down because providers accept lower fees in return for higher volume. Ah! Your government at work. Another “X” by the “more choice” promise, please.
You can keep your doctor and health plan. Hmm. Need I say anything about this one? One more “X.”
Employment will increase and businesses will be more competitive. The “Xs” by these two promises were what put the CBO report on the front page this past week and sent the White House spinmeisters into science fictional mode.
CBO projections expect “a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024.” What!? ObamaCare will reduce – not increase – employment! How? Ah! Killing jobs is the one thing this administration is really good at. Check my blog last month to see how good these guys really are.
ObamaCare will cost jobs, of course, because some employers will manipulate hours to avoid the having to provide insurance to employees – the so-called employer mandate. But CBO doesn’t even address that job killer in its estimate because Obama delayed the mandate. (He didn’t bother consulting Congress to modify the law because he’s King Obama, you know.) Absent the employer mandate effect, the CBO job loss estimate is underestimated.
The basis of the CBO estimates is entirely the projection of their models (which sounds better than “guess”) for the choices that employees will make faced with either working more hours, which will reduce the subsidies they receive to buy Obamainsurance, or working fewer hours. Recall that ObamaCare provides low income and unemployed people subsidies from the government (a fancy word for transfer payments taxed from high income earners, since “government” has no money other than taxes and borrowing.) Incomes up to 138% of the federal poverty line qualify for Medicaid (which is the majority of dot gov sign-ups to date) and subsidies beyond 138% are made available in diminishing amounts for incomes up to 400% of the poverty line. That will apply to incomes of almost $47,000 for a single person income and a little more than $94,000 for a family of four. That’s poverty in Obamaworld.
As incomes increase, the subsidy decreases, so the effect is like an increase in the marginal tax rate (the tax rate on the last dollar earned.) The marginal tax rate discourages working to earn more. When CBO built models for fewer subsidy credits versus more income dollars work against it projected the effect as a disincentive to work more hours and earn more dollars. This, according to CBO, will have the effect of reducing the hours the workforce produces by the equivalent of as many as 2.5 million full-time jobs. It is one of the perversities of ObamaCare.
For example, the federal poverty line for a family of four is $23,850. A four-person family earning $35,000 – the equivalent of about $18 per hour – would get annual Obamainsurance subsidies of $8,300, giving them an effective income of $43,300. If the family income increases to $50,000 the subsidy drops to $4,925, and effective income becomes $54,925. So, making $15,000 more in wages increases effective income $11, 625 income ignoring income taxes. Income taxes make the difference even less since taxes are progressive. In this example the subsidy acts like a 23% tax on added income and that’s on top of income tax increases.
CBO notes there is an abrupt drop once people cross the 400% of the poverty line threshold. Beyond 400% there are no subsidies. So a person or family making $1 more than the 400% threshold could find themselves paying thousands of dollars more for Obamainsurance depending on their age. Young people pay much less a penalty for crossing the threshold than older people – another perversity of ObamaCare.
People aren’t as stupid as Obama and his Congressional ObamaCare architects think them, therefore, they reduce hours or leave the workforce because they figure out the consequence of added income versus lost subsidies. Representative Paul Ryan reacted to the CBO report saying, “Washington is making the poverty trap worse.” Say on, brother, say on!
Of course my analysis and the CBO report ignore the impact of higher taxes on the so-called “rich” to pay for these subsidies. Higher taxes reduce job creation too. But Obama and the Democrats don’t think the spending habits of the “rich” create jobs.
Another perversity not accounted for in an economic analysis of ObamaCare is the toll that not working takes on the human spirit. People were intended to work from the creation of the world and in modern times most work is intellectually enriching. Moreover our economy will suffer because these ObamaCare dropouts will reduce production and economic growth. And as liberal policies increase entitlements, not working become more attractive. Society’s takers will essentially vote themselves the right to invade the wallets of society’s makers with the corroboration of the government as his collection agent, of course.
Americans have a history of working harder than other industrial nation which accounts for our higher standard of living. However, as baby boomers retire and few people are left in the workforce to pay for entitlements, our concern should be increasing the labor participation rate, not decreasing it. Yet the CBO report projects the labor participation rate will continue its downhill slide at an alarming rate, compounded by the sorry economic policies of this administration. Clinton understood this and ultimately acknowledged the need to end welfare as we’ve known it. This president is committed to increase entitlements more than we’ve ever known.
Predictably, the White House rushed to put a happy face on the CBO report. Its Chief Economist said the shrinking workforce was good news because
It reflects the fact that workers have a new set of options and are making the best choices that they can choose to make for themselves given those options. Individuals will be empowered to make choices about their own lives and livelihoods … and have the opportunity to pursue their dreams.
Is this stuff written by Saturday Night Live?
“More Americans will be able to voluntarily choose to work fewer hours or not take a job because they don’t depend on that job any more for the provision of health insurance,” so said Representative Chris Van Hollen, a Maryland Democrat.
So there you have it, folks. The new American dream is to not work.