Research Briefing

ObamaCare: A Recipe For Higher Costs, Less Access, Less Care

OBAMACARE’S TAX ON BENFITS TO HIT MAJORITY OF LARGE EMPLOYERS, PUT VALUABLE BENEFITS IN JEOPARDY

New Study From Consulting Firm Towers Watson Finds ObamaCare’s Tax On Health Insurance Benefits “Will Affect More Than 60% Of Large Employers’ Active Health Plans By The Provision’s 2018 Enactment.” “Health care reform’s so-called ‘Cadillac plan’ excise tax will affect more than 60% of large employers’ active health plans by the provision’s 2018 enactment, according to an analysis conducted by Towers Watson (NYSE, NASDAQ: TW), a global professional services company… For about half of the industries examined, more than seven out of 10 employers will have at least one plan that will exceed the excise tax threshold in 2018, including the aerospace, chemicals, energy and utilities, health services and pharmaceutical industries.” (Towers Watson, “Cadillac Health Plan Tax To Penalize Majority Of Employers By 2018,” Press Release, 5/19/10)

• Randall Abbott, Senior Consultant For Towers Watson: “Assuming Even Reasonable Annual Plan Cost Increases To Project 2018 Costs, Many Of Today’s Average Plans Will Easily Exceed The Cost Ceiling Primarily Directed At Today’s ‘Gold-Plated’ Plans.” (Towers Watson, “Cadillac Health Plan Tax To Penalize Majority Of Employers By 2018,” Press Release, 5/19/10)

Employers Could Pass The Tax To Employees “In The Form Of Higher Premiums.” “The tax is paid by the employer either through increased premiums on an insured plan or a surcharge levied by the administrator of a self-funded health plan. Employers will be forced to either absorb the additional tax or pass some, or all, of it back to employees in the form of higher premiums.” (Towers Watson, “Cadillac Health Plan Tax To Penalize Majority Of Employers By 2018,” Press Release, 5/19/10)

• “Unintended Consequences” Of The Tax Could Also Result In Employers Deciding To “Change Or Eliminate” Benefits Like Dental Coverage. “‘But reform and the excise tax may have unintended consequences,’ Abbott said. ‘As employers strive to preserve the affordability of core health coverage, there will be difficult decisions to change or eliminate ancillary benefits like dental coverage and health flexible spending accounts, which are included in the excise tax definition.’” (Towers Watson, “Cadillac Health Plan Tax To Penalize Majority Of Employers By 2018,” Press Release, 5/19/10)

ER DOCTORS EXPECT OBAMACARE WILL HURT, NOT HELP

According To A New Poll Of Emergency Physicians, Most Expect ER Visits To Increase And Expect Specialist Willingness To Respond To ER Calls To Decrease. “More than two-thirds (71 percent) of emergency physicians responding to a poll expect emergency visits to increase, and nearly half (47 percent) predict conditions will worsen for emergency patients, despite the new health care reform law. The poll was conducted by the American College of Emergency Physicians (ACEP) from April 23 to April 30, 2010. … [M]ore than half (54 percent) say the number of specialists willing to respond to calls from emergency departments, such as neurosurgeons and cardiologists, will decrease. In addition, more than half of the respondents (61 percent) don't believe the new law will effectively address uncompensated care, which has closed hundreds of emergency departments in America, most recently St. Vincent's in New York City.” (ACEP, “More Than Two-Thirds Of Emergency Physicians Expect ER Visits To Increase Despite National Health Care Reform,” Press Release, 5/17/10)

American College Of Emergency Physicians President Dr. Angela Gardner: “[H]ealth Insurance Coverage Does Not Equal Access To Medical Care, Especially With An Aging Population And Physician Shortages.” (ACEP, “More Than Two-Thirds Of Emergency Physicians Expect ER Visits To Increase Despite National Health Care Reform,” Press Release, 5/17/10)

STATES FORCED TO SPEND BILLIONS MORE ON OBAMACARE’S MANDATES

Annual Health Care Spending In Kansas Will Increase $150 Million Because Of ObamaCare. “In Kansas, federal health reform will increase total health care spending by 1.1 percent and provide insurance to nearly 200,000 Kansans, according to a report released Tuesday. … Total health care spending in Kansas from all payers -- state and federal government; employers; and individuals -- totals $13.418 billion per year. After the reforms take place, that total is expected to increase by about $150 million, or 1.1 percent, the report said. The report notes that Medicaid and the Children’s Health Insurance Program were originally designed as ‘safety-net’ programs. Under federal reform, however, these programs will become the largest source of coverage.” (Scott Rothschild, “Statehouse Live: New Report Shows Health Reform Will Cover Many In Kansas,” Lawrence Journal-World, 5/18/10)

ObamaCare Will Cost Virginia $1.5 Billion Through 2022, $400 Million More Than An Earlier Estimate. “The McDonnell administration increased its estimate for Virginia's cost of President Obama's health care overhaul to about $1.5 billion through 2022, a roughly $400 million jump from the governor's initial forecast. … The upward revision is mostly because of bad news from the federal government on how 80,000 low-income children and teens will be covered under the new law. When the Virginia Department of Medical Assistance Services made the first estimate, it assumed those youths would stay in the Children's Health Insurance Program, or CHIP, which provides the state with a generous federal match, said Virginia Secretary of Health and Human Resources Dr. Bill Hazel. … ‘In the new plan, [the youths] get converted to standard Medicaid, which means we get a lower federal match, which means it costs us more money,’ Hazel told The Washington Examiner.” (William C. Flook, “McDonnell: Obamacare Will Cost Virginia $1.5 Billion,” The Washington Examiner, 5/18/10)

AND DOCTORS HIT DEMS FOR PUSHING POLICIES TO “INTENSIFY ACCESS PROBLEMS”

American Medical Association (AMA) Opposes Rumored 5-Year Doc Fix In The House Dems’ Tax Extenders Bill. “The American Medical Association is opposing the Medicare ‘doc fix’ included in the tax extenders bill House Democrats are preparing. … The summary does not indicate the duration of the fix, but House Democrats have talked about passing a five-year fix. … ‘Based on conversations with policy makers, the American Medical Association cannot support an emerging proposal to address the flawed Medicare physician payment formula,’ Kenneth Hopson of the AMA’s Division of Federal Affairs wrote to members in an e-mail obtained by The Hill.” (Julian Pecquet, “AMA Opposes 'Doc Fix' In Tax Legislation,” The Hill, 5/19/10)

AMA Wants A “Permanent Repeal Of The Sustainable Growth Rate,” Warns That Pushing It Down The Road Will Be Expensive And “Intensify Access Problems.” “The AMA is calling for a permanent repeal of the sustainable growth rate which would cost about $250 billion - most of which would have to be paid for under House ‘pay-go’ rules. But the group estimates that repealing the SGR in five years would cost more than $500 billion, and is urging its members to press lawmakers for a permanent repeal. ‘Failure by Congress and the Obama Administration to properly solve this issue will intensify access problems for seniors and military families enrolled in the TriCare program, and severely undermine implementation of recently enacted health system reform legislation,’ Hopson wrote. ‘An existing physician shortage will be magnified and steeper cuts will prevent practice and delivery innovations.’” (Julian Pecquet, “AMA Opposes 'Doc Fix' In Tax Legislation,” The Hill, 5/19/10)