Research Briefing

Obama’s Government-Run Health Care Experiment Reduces Flexibility For Job Creators, Families And States

Obama Highlighting “Workplace Flexibility” Today, Saying “Millions Of Women And Men Across The Country Struggle To Balance The Demands Of Their Jobs And The Needs Of Their Families.” (President Barack Obama “White House Announces Forum On Workplace Flexibility,” The White House, 3/23/10)

BUT OBAMA’S GOVERNMENT TAKEOVER OF HEALTH CARE PENALIZES

BUSINESSES WITH PART-TIME, SEASONAL AND LOW-INCOME WORKERS …

Obama’s Bill Levies $2000 Per Worker Tax To Those Who Don’t Provide Health Insurance, Including Part-Time Or Seasonal Employees. “APPLICABLE PAYMENT AMOUNT... in subsection (d)(1), by striking ‘$750’ and inserting ‘$2,000...’ FULL-TIME EQUIVALENTS TREATED AS FULL-TIME EMPLOYEES.--Solely for purposes of determining whether an employer is an applicable large employer under this paragraph, an employer shall, in addition to the number of full-time employees for any month otherwise determined, include for such month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120.” (Sec. 1003, H.R. 4872, “Health Care And Education Reconciliation Act Of 2010,” As Passed By The House, 3/21/10)

• Meaning Companies With Flexible Employment Schedules Would Face Much Higher Costs. “The assessment is $2,000 per employee, which, according to SkiNH lobbyist Bruce Berke and group president Alice Pearce, could mean as much as $1 million in fines to the big ski resorts, some of which hire as many as 500 seasonal workers. Also affected would be any business that hires on a seasonal basis, and, like most nationally, do not offer health insurance.” (John DiStaso, “Granite Status: Ski Resorts Worry Health Care Reform Will Have Chilling Effect,” The New Hampshire Union Leader, 3/25/10)

New Regulations On Businesses Will Make It More Difficult For Employers To Hire Workers They Need, Especially Low-Income Workers. “[E]mployers who do not offer ‘affordable’ coverage to employees would have to help pay the cost of such benefits for their low-income workers ... The Center on Budget and Policy Priorities, a liberal research and advocacy group, said this proposal ‘could unintentionally discourage the hiring of lower-income people,’ by adding a new ‘health surcharge’ to the cost of employing them.” (Jeff Zeleny & Robert Pear, “Obama Says Government Health Coverage Plan Wou ld Not Hurt Private Insurers,” The New York Times, 6/23/09)

HURTS FAMILIES BY RESTRICTING FLEXIBLE SPENDING ACCOUNTS,

LIMITING CHOICE IN HEALTH INSURANCE …

Flexible Spending Plans, Which Lower Out Of Pocket Expenses, Restricted By Obama’s Bill. “To pay for this sweeping reform, here’s what will change: Those tax-free flexible spending accounts will be cut in half. They reimburse some medical bills not covered by insurance. The new cap: $2,500 … Starting in 2013, individuals earning more than $200,000 a year - and families earning more than $250,000 - will pay almost one percent more on their Medicare payroll tax.” (Mark Strassmann, “Already Insured? Get Ready To Pay More,” CBS News, 3/22/10)

Obama’s Government Takeover Of Health Care Will Mean Complete Elimination Of Health Savings Accounts, Meaning Families “Will No Longer Be Given That Choice.” “[T]he reform law requires that small-group plans cannot have deductibles exceeding $2,000 (self) and $4,000 (family), with an exception allowing higher deductible policies for people under age 30. That's roughly one-third the level that has been allowed for HDHPs linked to HSAs. ‘Many people today would choose a $5,950 individual deductible over a $2,000 deductible and place the premium savings in an HSA,’ but they will no longer be given that choice, writes Ron Bachman, president and CEO of Healthcare Visions Inc. and a senior fellow with the conservative National Center for Policy Analysis. Bachman adds that some health benefit plans' high deductibles are offset by sizeable employer contributions to HSAs that are intended to promote employees' cost-effective selection of medical services (because employees can keep and save unspent funds), but that option, too, will be limited by the new deductible ceiling.” (Stephen Miller, “Reform Creates Opportunities, Uncertainties For Consumer Directed Plans,” Society For Human Resource Management’s “HR News,” 3/23/10)

• Even Though HSAs Help Americans Save Money. “A consumer-directed health plan is an insurance coverage with a high deductible that is typically combined with a health-savings account, the tax-advantaged product that is either funded by the employer or by regular contributions from employees ... According to a recently released study of health care claims ... employers who offered health savings or reimbursement plans saved $21 million per 10,000 members over a five-year period. Employers who offered the plans as an option experienced savings of $7 million per 10,000 members over the five-year period, according to the company’s survey.” (Greg Bordonaro, “Consumer-Directed Health Plans Gain,” Hartford Business, 7/6/09)

AND REDUCE STATES’ ABILITY TO OPERATE WITHOUT RAISING TAXES OR REDUCING SERVICES

Arizona Medicaid Director: “Any Flexibility We Used To Have Is Gone With The New Mandate.” “Some states, like Arizona, face an immediate fiscal conundrum because of stipulations in the law that prohibit them from rolling back their existing Medicaid programs before the required expansion takes effect… ‘Any flexibility we used to have is gone with the new mandate,’ said Tom Betlach, director of the Arizona Health Care Cost Containment System, which runs Medicaid.” (Michael Luo, “Some States Find Burdens In Health Care Law,” The New York Times, 3/27/10)

NYT: “Some States Find Burdens In Health Care Law.” “Because the circumstances of the states are so varied, the challenges facing them under the legislation diverge considerably. In Louisiana, there is particular concern about what the statute will mean for the future of the state’s charity hospital system, which has a long and storied history of treating the poor in the state. The state-run hospitals are heavily dependent on special federal payments to institutions that treat large numbers of the uninsured. The new health care legislation cuts those payments significantly, though some of that could be offset by in the increase in insured patients.” (Michael Luo, “Some States Find Burdens In Health Care Law,” The New York Times, 3/27/10)

• Obama’s Health Care Bill Will Add $300 Million To New York State’s Deficit. “The federal health care overhaul President Obama signed on Tuesday adds an extra $300 million to New York state’s budget deficit. The problem involves Medicaid reimbursements that state and local governments can use to help balance their budgets, per the rules of the federal stimulus... The state is now out $300 million in its 2010-11 fiscal year, which starts April 1, and another $400 million in its 2011-12 fiscal year. ‘They took money the state was budgeting for and provided it to local governments …’ said Matt Anderson, spokesman for the state Division of the Budget.” (Adam Sichko, New Health Care Law Adds $300M To NY’s Deficit,” The [Albany] Business Review, 3/24/10)
• California Estimates Obama’s Bill Will Cost Them “$2 Billion To $3 Billion” Annually. “Figure $2 billion to $3 billion. That’s the state of California’s rough estimate of what national healthcare expansion ultimately will cost it each year.” (George Skelton, “California Could Take Big Hit From Healthcare Overhaul,” The Los Angeles Times, 3/25/10)

Former DNC Chair And Vermont Gov. Howard Dean Says States Already Bankrupt, Will Need To Raise Taxes.  “Look, the states are in a terrible, terrible bind. It really is a problem for them. Places like California are virtually, virtually bankrupt. I mean I think their bond rating is junk. You know, New York is in big trouble. So they’ve got to do something and there’s just so much you can cut. I think you got to cut, cut, cut, cut but at some point they’re going to have to raise taxes. It is true, whether you like it or not, that the biggest untapped source of taxes for states that makes any sense, is taxes on services.” (CNBC’s “Squawk Box,” 3/29/10)