Research Briefing

ObamaCare’s $311 Billion Cost Explosion

CMS ACTUARIES: “[W]e Estimate That Overall National Health Expenditures Under The Health Reform Act Would Increase By A Total Of $311 Billion (0.9 Percent) During Calendar Years 2010-2019...” (Richard S. Foster, Chief Actuary, “Estimated Financial Effects Of The ‘Patient Protection And Affordable Care Act,’ As Amended,” Centers For Medicare And Medicaid Services, 4/22/10)

OBAMACARE WILL RAISE GOVERNMENT HEALTH SPENDING FASTER THAN OTHERWISE, RAISING COSTS AND DECREASING ACCESS FOR PATIENTS …

CMS Actuaries Find New Industry Taxes Will “Be Passed Through To Health Consumers In The Form Of Higher Drug And Device Prices And Higher Insurance Premiums.”  “The health reform legislation, as enacted, imposes collective annual fees on manufacturers and importers of brand-name prescription drugs and on health insurance plans. In addition, the PPACA establishes and excise tax on non-personal-use retail sales by manufacturers and importers of medical devices… We anticipate that these fees and the excise tax would generally be passed through to health consumers in the form of higher drug and device prices and higher insurance premiums, with an associated increase in overall national health expenditures ranging from $2.1 billion in 2011 to $18.2 billion in 2018 and $17.8 billion in 2019.” (Richard S. Foster, Chief Actuary, “Estimated Financial Effects Of The ‘Patient Protection And Affordable Care Act,’ As Amended,” Centers For Medicare And Medicaid Services, 4/22/10)

Increased Demand From ObamaCare Will Lead To Rising Costs For Families And Doctors Refusing Patients. “However, the report raises several warnings about the impact of healthcare reform. Foster states, ‘The additional demand for health services could be difficult to meet initially with existing health resources and could lead to price increases, cost shifting, and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.’” (Bob Cusack, “Government Report: New Healthcare Reform Law Could Lead To Higher Prices, Employers Dropping Coverage,” The Hill, 4/22/10)

ObamaCare’s Medicare Cuts Will Leave Seniors With “Higher Out-Of-Pocket Costs.” “The report’s most sober assessments concerned Medicare. In addition to flagging provider cuts as potentially unsustainable, the report projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular alternative … Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.” (Ricardo Alonso-Zaldivar, “Report Says Health Care Will Cover More, Cost More,” The Associated Press, 4/23/10)

•  And Push Hospitals Into The Red, “Jeopardizing Access” For Seniors. “The report projected that Medicare cuts could drive about 15 percent of hospitals and other institutional providers into the red, ‘possibly jeopardizing access’ to care for seniors.” (Ricardo Alonso-Zaldivar, “Report Says Health Care Will Cover More, Cost More,” The Associated Press, 4/23/10)

ObamaCare’s CLASS Act “Faces ‘A Very Serious Risk’ Of Insolvency.” “In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces ‘a very serious risk’ of insolvency.” (Ricardo Alonso-Zaldivar, “Report Says Health Care Will Cover More, Cost More,” The Associated Press, 4/23/10)

ObamaCare Will Make Employers Drop Coverage, Meaning Americans Will Be Forced Off Current Plans. “The report also suggests that some employers will stop offering their employees healthcare coverage benefits: ‘A number of workers who currently have employer coverage would likely become enrolled in the expanded Medicaid program or receive subsidized coverage through the [Health] Exchanges … some smaller employers would be inclined to terminate their existing coverage, and companies with low average salaries might find it to their -- and their employees’ -- advantage to end their plans...’” (Bob Cusack, “Government Report: New Healthcare Reform Law Could Lead To Higher Prices, Employers Dropping Coverage,” The Hill, 4/22/10)

ALL PAID FOR BY TAXES ON THE MIDDLE CLASS AND JOB CREATORS

ObamaCare’s Individual Mandate Will Hit Middle Class Americans, Breaking Obama’s Promise Not To Raise Their Taxes. “Nearly 4 million Americans — the vast majority of them middle class — will have to pay a penalty if they don’t get insurance when President Barack Obama’s health care overhaul law kicks in, according to congressional estimates released Thursday. The penalties will average a little more than $1,000 apiece in 2016, the Congressional Budget Office said in a report. Most of the people paying the fine will be middle class ... In his 2008 campaign for the White House, Obama pledged not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.” (Stephen Ohlemacher, “Nearly 4m People Could Pay Without Health Coverage,” The Associated Press, 4/22/10)

Chicago Tanning Salon Owner: “I’m Not Too Happy With It… Obama Said He’s Here To Help The Small Business Guy, And Now He’s Putting A 10 Percent Tax On Tanning. I Don’t See Any Help From The Government.’” (Mike Parker, “Taxing Times For Tan Fans,” CBS2Chicago.com, 4/22/10)

Denver Tanning Salon Owner Says ObamaCare’s Tanning Tax Might Drive Her Out Of Business. “‘Will I be here next year? I don’t know,’ said Kristi Alpers, owner of Cherry Creek Tans in Denver. The tax will add 90 cents to a few dollars for a single tanning session, depending on the machine. It’s a fee she thinks will bankrupt her.” (Kristen Wyatt & Ricardo Alonso-Zaldivar, “Tanning Bed Tax Worries Beleaguered Industry,” The Associated Press, 4/22/10)

“‘For Some Reason, They Want Us All Out Of Business,’ Said Tisha Schlochtermeier, Who Owns Three Sun Connection Tanning Salons In Manhattan, Kan. ‘They Just Want To Tax Us To Death.’” (Kristen Wyatt & Ricardo Alonso-Zaldivar, “Tanning Bed Tax Worries Beleaguered Industry,” The Associated Press, 4/22/10)

CEO Of MichBio In Ann Arbor, MI: “There’s A Tsunami Coming And You Probably Won’t Know What Hit You Until It’s Too Late… The Biggest Assault On Our Industry Is The Medical Devices Tax.” (Tom Henderson, “MichBio CEO Says Tax Is An ‘Assault’ On Medical Device Companies,” Crain’s Detroit Business, 4/22/10)

• “The Tax Is On Revenue, Not Profits, And Rapundalo Said The State’s Fledgling Medical Device Companies, Many, Or Most, Of Which Have Yet To Generate Profits, Will Be Hard Hit.” (Tom Henderson, “MichBio CEO Says Tax Is An ‘Assault’ On Medical Device Companies,” Crain’s Detroit Business, 4/22/10) 

CEO Of The Medical Device Manufacturers Association Says ObamaCare’s Medical Device Tax Will Cause Layoffs, Hurt Innovation If It Isn’t Repealed. “‘Unfortunately, the environment in Washington is inconsistent with promoting innovation…The average medical device company needs to generate $100 million in sales before it generates its first dollar of profit,’ said Leahey, who said the tax, if it isn’t repealed, will result in employee layoffs, a cut in research and development funding and, for some companies, a move offshore.” (Tom Henderson, “MichBio CEO Says Tax Is An ‘Assault’ On Medical Device Companies,” Crain’s Detroit Business, 4/22/10)