Research Briefing

Second In A Series On How Obama’s Government-Run Health Care Experiment Will Harm The Economy

NEW HEALTH INSURANCE MANDATES ON BUSINESSES WILL KILL JOBS …

“Punitive” Tax For Businesses Who Can’t Afford Government-Approved Health Insurance Will Kill Jobs, Reduce Wages. “An employer mandate with a punitive payroll tax: Research shows an employer mandate could cost 1.6 million jobs with more than 1 million of those jobs lost in the small business sector. The approach fails to increase affordability and, instead, devastates the economy - with the greatest impact being levied on the low-income community who will pay through depressed wages and lost jobs ...” (Susan Eckerly, Letter To Representative, National Federation Of Independent Businesses, 7/15/09)

New Regulations Will Make It More Difficult For Employers To Hire Workers They Need. “[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 and Robert Pear, “Obama Says Government Health Coverage Plan Would Not Hurt Private Insurer s,” The New York Times, 6/23/09)

NEW REGULATIONS WILL MAKE HEALTH CARE MORE EXPENSIVE FOR AMERICAN WORKERS …

Health Savings Accounts Help Americans, Businesses Save Money On Health Coverage. “A consumer-directed health plan is an insurance coverage with a high deductible ... combined with a health-savings account, the tax-advantaged product that is either funded by the employer or by regular contributions from employees ... At Aetna for example, about 60 percent of new business sales for small-group employers in Connecticut have been in consumer-directed health plans ...” (Greg Bordonaro, “Consumer-Directed Health Plans Gain,” Hartford Business, 7/6/09)

But Insurance Regulations Could Force Americans, Their Employers To Switch From HSAs To More Expensive, Less Flexible Government-Run Plan. “Hundreds of companies now offer Health Savings Accounts to about 5 million employees ... The bills seriously endanger the trend toward consumer-driven care in general. By requiring minimum packages, they would prevent patients from choosing stripped-down plans that cover only major medical expenses. ‘The government could set extremely low deductibles that would eliminate HSAs,’ says John Goodman of the National Center for Policy Analysis ...” (Shawn Tully, “5 Freedoms You’ll Lose In Health Care Reform,” Fortune, 7/24/09)

And So-Called “Community Rating” Regulations Will Make Many Americans Pay More Than What Their Health Insurance Is Worth. “[T]he Obama plan enshrines into federal law one of the worst features of state legislation: community rating ... requires that all patients pay the same rates for their level of coverage regardless of their age or medical condition ... it forces young people ... to pay far more than their actual cost ... The state laws gouging the young are a major reason so many of them have joined the ranks of uninsured ... So if a 20-year-old who costs just $800 a year to insure is forced to pay $2,500 ...” (Shawn Tully, “5 Freedoms You’ll Lose In Health Care Reform,” Fortune, 7/24/09)

AND MANDATED MEDICARE CUTS WILL RAISE THE COST OF DOING BUSINESS

Higher Health Care Costs Due To Medicare Cuts Will Be Passed Along To Individuals, Businesses. “Unless doctors and hospitals are able to respond to the government cuts by becoming more efficient, the result could be higher costs for insurers, employers, and people with private medical coverage ... ‘I think there’s definitely risk that a portion of the reduction in hospital payments from Medicare will wind up as increased payments by private insurers,’ said Paul B. Ginsburg, president of the Center for Studying Health System Change. Depending on the circumstances, hospitals may have the motive and means to ‘transfer those charges to somebody else,’ and ‘we’ll see costs increasing on the private side and not necessarily falling everywhere,’ said Harold S. Luft, director of the Palo Alto Medical Foundation Research Institute.”  (David S. Hilzenrath, “Health-Care Cuts Could Shift Costs,” The Washington Post, 6/18/09)

And Rising Costs For Businesses Will Mean Higher Prices For Consumers. “In essence, part of the tax burden is shifted to the rest of the population, and middle- and lower-income workers would indirectly bear a significant part of the burden of the surtaxes on higher-income individuals... Moreover, middle- and lower-income households additionally bear some of the tax as consumers, because output is reduced, and consumers of all income levels must make do with fewer, higher-priced goods and services.” (Michael Schuyler, “The Surtax: Worse Than the Alternative Minimum Tax,” National Center For Policy Analysis, 10/29/07)