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AMERICANS SKEPTICAL OVER OBAMA'S HEALTH CARE

 

By NWV News writer Jim Kouri
Posted 1:00 AM Eastern
July 21, 2009
2009 NewsWithViews.com

[The following is a continuation of NewsWithViews.com investigative series on President Barack Obama's proposed Health Care Plan.]

With the US economy continuing in its tailspin, President Barack Obama appears to be obsessing over taking over US medical care, according to critics of what they're calling ObamaCare.

Last week while President Obama pushed for a government takeover of US medical care, the Congressional Budget Office released a report that analyzed the effects of changes in the health insurance system on the US labor market. Their report contradicted many of the statements made by Obama, his administration and liberal members of both houses of the US Congress.

With the American public beginning to question the sensibility and the cost of a huge government-run overhaul of the health care system, Congressional liberals released their incomplete plan Tuesday with a distinct sense of panic in the air.

In 2009, about three out of every five non-elderly American are expected to have health insurance that is provided through an employer or other job-related arrangement, such as a plan offered through a labor union, according to the CBO.

Changes to the health insurance system could affect labor markets by changing the cost of insurance offered through the workplace and by providing new options for obtaining coverage outside the workplace. Those new options for obtaining coverage outside the workplace are government controlled medical insurance that experts believe will cause rationing, lack of treatment options and other shortcomings.

"The CBO basically warned Congress that government health care or socialized medicine will actually hurt the economy while restricting access to medical care," warns political strategist Mike Baker.

"The President and members of Congress -- mostly Democrats, but some Republicans, as well -- appear to be obsessed with controlling life and death, health and sickness in the USA. This is a dangerous combination: Politicians making decisions on who lives and dies, who's healthy and who's sickly," explained Baker.

According to the CBO, in the current system, employment-based plans are popular largely due to three reasons:

They are subsidized through the tax code: Nearly all payments for employment-based insurance are excluded from taxable compensation and thus are not subject to income and payroll taxes.

Employers offering coverage usually pay a large share of the premium – partly to encourage broad participation among their employees, so as to limit the potential for “adverse selection.”

Larger group purchasers can spread administrative costs over a larger number of people, using these economies of scale to reduce costs imbedded in premiums.

Although employers directly pay most of the costs of their workers’ health insurance, the available evidence indicates that active workers—as a group—ultimately bear those costs.

Congress is currently considering proposals that would expand health insurance coverage. Those proposals would affect the labor market because of the close linkage between health insurance and employment.

For example, requiring employers to offer health insurance -- or pay a fee if they do not -- is likely to reduce employment. Those who would most likely be affected are currently paid close to or at the minimum wage. They would be more vulnerable to job loss because their wages could not be lowered sufficiently to absorb the cost of health insurance (if their firm decides to offer) or the fee (if their firm does not) without bumping into the minimum wage.

Proposals that imposed surcharges on employers whose workers received subsidies directly from the government could have a larger impact on employment. (Such provisions are sometimes known as free-rider surcharges.) Many of the affected workers would be paid low wages that could not easily adjust to absorb the full cost, said the CBO report.

In addition, providing new subsidies for health insurance that decline in value as a person’s income rises could discourage some people from working more hours.

"This is what we see in Third-World countries where incentives to work are limited by government intrusion into the workplace," said Professor Tim Hines of New York's Baruch College.

"Instead of encouraging hard work and ambition, the Obama Administration may stifle individual growth in the same manner as welfare recipients are deterred from getting married and controlling their families' size. What such a program does is encourage laziness and laxity," said Hines.

The CBO report appears to confirm the professor's fears. Subsidies could be targeted to small businesses, but employers or their workers might respond by taking action to qualify for the subsidies. For example, some firms might reorganize into smaller subsidiaries, and workers might move to smaller firms to take advantage of the new subsidies.

Increasing the availability of health insurance that is not related to employment could lead more people to retire before age 65 or choose not to work at younger ages.The overall impact on labor markets, however, is difficult to predict. Although economic theory and experience provide some guidance as to the effect of specific provisions, large-scale changes to the health insurance system could have more extensive repercussions than had previously been observed and also may contain numerous pieces that would interact -- affecting labor markets in significant but potentially offsetting ways.

"In other words those pesky unintentional consequences might rear their ugly heads. Quite simply, if Universal Health Care is admittedly a disaster in Massachusetts, why would it work on a much larger scale? Why duplicate a failure? Also, proponents claim Canada and Europe have successful government-run health care programs, but rationing is not an indicator of success," said Baker.

"In Holland, they have a lottery for transplant surgery. In Japan, the elderly are turned away from hospitals. Why would Americans wish to duplicate that?" he asks.

In response to several requests, CBO has considered the likely effects on federal spending and health insurance coverage of adding a substantial expansion of eligibility for Medicaid to the Affordable Health Choices Act, a draft of which was recently released by the Senate Committee on Health, Education, Labor, and Pensions.

The precise effects such a Medicaid expansion would depend importantly on the specific features of that expansion. For example, the effects would depend on how eligibility for the program was determined and on whether the expansion started immediately or only as the proposed insurance exchanges went into operation.

The effects would also depend what share of the costs for newly eligible people was borne by the federal government and what share was borne by the states (which would be determined by the average FMAP, or Federal Medical Assistance Percentage). In addition, the effects would depend on whether states faced a maintenance-of-effort requirement regarding their current Medicaid programs.

The CBO's preliminary analysis indicates that such an expansion could increase federal spending for Medicaid by an amount that could vary in a broad range around $500 billion over 10 years.

Along with that increase in federal spending would come a substantial increase in Medicaid enrollment, amounting to perhaps 15 million to 20 million people. Such an expansion of Medicaid would also have some impact on the number of people who obtain coverage from other sources (including employers).

All told, the number of non-elderly people who would remain uninsured would probably decline to somewhere between 15 million and 20 million.

Such an expansion of Medicaid would have some impact on other aspects of the federal budget beyond Medicaid itself (including tax revenues and the proposed payments to the government by employers who do not offer coverage to their workers, which the legislation labels “equity assessments”).

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Those additional effects might increase or decrease the effect of the proposal on the federal deficit by as much as $100 billion.

"To put it another way, the people with health insurance would be taxed to pay for the government to figure out what medical care would no longer be available to them. Wary of the cost, the leader of centrist Democrats, Congressman Mike Ross (D-AR), says Blue Dog Democrats have enough votes to block the health care bill in the Energy and Commerce Committee," according to the group Conservatives for Patients' Rights.

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With the American public beginning to question the sensibility and the cost of a huge government-run overhaul of the health care system, Congressional liberals released their incomplete plan Tuesday with a distinct sense of panic in the air.