Research Briefing

ObamaCare Flunks Test For Families, Doctors And Job Creators

FOR FAMILIES, PREMIUMS WILL GO UP

ObamaCare “Deserves A C Minus Or D For Cost Control” Because Premiums Could Be “A Little Higher Than Would Otherwise Have Been The Case.” “Insurance premiums are likely to keep going up over the next few years. Experts predict that the law's early benefits — such as expanded coverage for children and young adults — could nudge rates a little higher than would otherwise have been the case. Also, insurers and medical providers could try to raise their prices ahead of big shifts set for 2014… If the law gets a B plus for expanding coverage to 95 percent of eligible Americans, it probably deserves a C minus or D for cost control.” (Ricardo Alonso-Zaldivar, “Health Care Law’s Unfinished Business: Cost Curbs,” The Associated Press, 4/26/10)

Area Director For The Small Business Development Center At The University Of North Florida Says ObamaCare’s Insurance Reforms Will “Drive Up Premiums.” “Reform contains the immediate ending of several practices health care insurance companies used to hold down costs. The law includes a requirement to cover children through age 26, ending of the rejection of people who have pre-existing medical conditions and the placement of caps on what policies pay out. ‘One of the things all this will do is drive up premiums,’ Hagan said.” (Kevin Turner, “Health Care Reform May Not Offer Enough To Small Businesses,” The Florida Times-Union, 4/25/10)

• And Acknowledges That Higher Premiums Will Be Passed To Consumers, Says “It’s A Cost Of Doing Business.” “And that has small business owners wondering if they'll have to pass those costs along to their customers, lay off employees or cut back in other ways, she said. ‘It's a cost of doing business,’ she said. ‘But we have a fairly high unemployment rate. Is this really going to help that cause?’” (Kevin Turner, “Health Care Reform May Not Offer Enough To Small Businesses,” The Florida Times-Union, 4/25/10)

FOR DOCTORS AND HOSPITALS, NEW REGULATIONS AND MORE PAPERWORK

“Significant Expansions” Of Anti-Fraud Measures Threaten Doctors With Prosecution Over “True Billing Errors Or Inadvertent Omissions.” “The new health system overhaul law includes significant expansions of the government's reach under the federal False Claims Act, and experts warn that doctors need to be ready. Although the changes largely enhance prosecutors' fraud-fighting tools, often with the help of whistle-blowers, they also put physicians in line for additional liability exposure, experts say… The danger, Thomas said, is that ‘now with the lower standard and the broader reach of the False Claims Act, you could have a situation in which investigators take a more aggressive view as to what is considered fraud,’ when the situation actually might involve true billing errors or inadvertent omissions.” (Amy Lynn Sorrel, “Health Reform Law Expands False Claims Act,” American Medical News, 4/26/10)

In Response To “Uncertain Economic And Regulatory Environments,” Harvard University-Affiliated Hospital Looks To Cut $35 Million From Its Budget And Is In A “Hiring Pause.” “Brigham and Women's Hospital is seeking to cut millions of dollars from next year's budget as part of an effort to reduce health care costs and respond to what it says are uncertain economic and regulatory environments. Department managers are being told to submit financial plans for the fiscal year starting Oct. 1 that trim spending by about 3 percent, roughly $35 million of the hospital's $1.8 billion budget. Executives at the Harvard University-affiliated teaching hospital have put in place a short-term ‘hiring pause’ as they formulate the budget, but no layoffs are planned. It implemented a similar hold on hiring for two weeks last year. … Reney said the hospital is attempting to reduce spending to put it in line with state and national efforts to control escalating health care costs.” (Robert Gavin, “Brigham And Women's Trims Costs,” The Boston Globe, 4/24/10)

• “Such Cutbacks Will Become Common Among Hospitals As The Recently Enacted Federal Health Care Overhaul Law Is Phased In Over The Next Few Years, Said Marc A. Bard, A Doctor And Needham Health Care Consultant.” (Robert Gavin, “Brigham And Women's Trims Costs,” The Boston Globe, 4/24/10)

CFO At New York Hospital Worries ObamaCare Will Lead To Problems “If The Provisions Don’t Work As Planned.” “If the provisions don't work as planned, it could cause problems for hospitals, said Beth Duffy, chief financial officer and senior vice president of finance for St. Luke's Cornwall Hospital. ‘My biggest concern is seeing how the uninsured coverage plays out,’ she said.” (Christian Livermore, “Hospitals Must Wait And See About Health-Care Reform,” Times Herald-Record, 4/26/10)

• Especially If There Aren’t Enough Doctors To Care For The Newly Insured And Medicaid Patients. “She also worries that there won't be enough primary-care physicians for all the newly insured people, or that newly eligible Medicaid patients won't be able to find doctors, a lot of whom don't take Medicaid, and that those patients will still wind up being treated in emergency rooms.” (Christian Livermore, “Hospitals Must Wait And See About Health-Care Reform,” Times Herald-Record, 4/26/10)

AND FOR JOB CREATORS, LAYOFFS AND CUTBACKS

2,200 Jobs At Allergan, An Irvine, CA Based Medical Device And Pharmaceutical Company, Are At Risk. “David Pyott, chairman and CEO of Allergan, a global pharmaceutical and medical device company based in Irvine, met with me Wednesday to discuss the hard implications of President Obama's health care bill and how it will affect Pyott's company and the broader health care industry. To put things in perspective, Allergan employs about 8,300 people worldwide, and roughly 2,200 of them work in Irvine (well over 200 are UC Irvine graduates). The company had revenue of about $4.5 billion last year.” (Brian Calle, Op-Ed, “CEO Series: Obamacare Impact,” The Orange County Register, 4/25/10)

• Allergan CEO, David Pyott, Says ObamaCare Will Bring “Huge Taxes And Fees.” “‘Huge taxes and fees are coming,’ Pyott says. The biggest tax will be on pharmaceutical manufacturers. It will cost the industry about $2.3 billion next year. In 2013 an additional excise tax on medical devices of 2.3 percent of sales will kick in. … [T]he pharmaceutical industry will also be required to pay a 50 percent rebate to the government to help close the ‘doughnut hole’ …” (Brian Calle, Op-Ed, “CEO Series: Obamacare Impact,” The Orange County Register, 4/25/10)
• Pyott: “When Huge New Taxes Are Levied, For People Like Me, Who Have A Global Perspective, Other Markets Overseas Just Became Relatively More Interesting Than The U.S. Domestic Market, Quite Clearly.” (Brian Calle, Op-Ed, “CEO Series: Obamacare Impact,” The Orange County Register, 4/25/10)
• Pyott: “We Clearly Have To Get More Efficient. For Us The Real Challenge Will Be How Do We Avoid Cutting In To An Increasing R&D Budget…” (Brian Calle, Op-Ed, “CEO Series: Obamacare Impact,” The Orange County Register, 4/25/10)

Alexandria, Louisiana’s Town Talk Says ObamaCare’s Tanning Tax “Has The Potential To Burn Small-Business Owners” And Is “Another Example Of How Not To Grow The Economy.” “This is the kind of ‘tax’ in the health-care reform law that has the potential to burn small-business owners. Raising taxes on small businesses may raise money for health-care coverage, but that predicted revenue will evaporate if Congress is wrong and the increased fees price these shop owners out of business. It's another example of how not to grow the economy.” (Editorial, “Our View: Tanning Salons Could Go Dark With New Tax,” The [Alexandria, LA] Town Talk, 4/24/10)

Florida Tanning Salon Owner May Sell Her Business Because Of ObamaCare’s Tanning Tax. “Sherry Rosenberger, owner of Sunset Tans, said the tan tax is one of many factors behind her considering selling her business. Between the bad press about health risks, a down economy and the new tax, ‘Everything is going against us,’ she said.” (Justin Pugh, “Tanning Salons Look At How New Taxes Will Affect Business,” The Florida Times-Union, 4/25/10)

Tanning Salon Owner In Jacksonville, FL Says Fighting The Tax Is Like “David Vs. Goliath” Because Tanning Is “Not An Extremely Lucrative Business.” “Nermin Dedic, owner of Sol Us, which has seven salons in Jacksonville, describes the tanning industry's battle against the lobbying efforts of other groups as a David-versus-Goliath-type fight, in which tanning salon owners can't compete. ‘It's not an extremely lucrative business,’ he said. ‘So we're not able to afford things like that where you have lobbyists in Congress so you can do things like plastic surgeons did in completely eliminating the Botox tax.’” (Justin Pugh, “Tanning Salons Look At How New Taxes Will Affect Business,” The Florida Times-Union, 4/25/10)

• Tax “Will Be The Last Nail In The Coffin” For Salons On The Brink Of Closing. “Dedic said that although the tax will damage the industry overall, some chains may actually benefit because it will cause mom-and-pop shops to close. ‘I think this going to be the final hit,’ he said. ‘The ... [number] of salons decreased substantially in the past couple years with the bad economic conditions, but I think this will be the last nail in the coffin for some of them.’” (Justin Pugh, “Tanning Salons Look At How New Taxes Will Affect Business,” The Florida Times-Union, 4/25/10)

Another Florida Tanning Salon Owner Says Business Will Suffer Because Salons Can’t Afford To Cut Prices. “Paul Abdullah, owner of Four Seasons Tan, which has two Southside locations and one in Atlantic Beach, said the tax will cause salons to suffer more than they already have in a down economy. But tanning salons are ‘not Walmart,’ he said. ‘We can't reduce our prices and make more people come in and tan. He says the tax will hurt middle-class Americans - predominantly younger, white women - who make up the majority of his clientele, he said.” (Justin Pugh, “Tanning Salons Look At How New Taxes Will Affect Business,” The Florida Times-Union, 4/25/10)

Pharmacy Owner From Jacksonville, FL Says ObamaCare’s Tax Credit To Help Small Businesses Pay For Health Insurance “Isn’t Enough To Help.” “Jacksonville small business owner Greg Carter said he favors health care reform but doesn't think the reform bill President Barack Obama signed last month is going to help him. Between his two Jacksonville pharmacies, Carter employs 15, but he doesn't provide health care insurance because he can't afford it. And he said a tax credit in the reform bill designed for businesses like his isn't enough to help.” (Kevin Turner, “Health Care Reform May Not Offer Enough To Small Businesses,” The Florida Times-Union, 4/25/10)