Saturday, July 6, 2013

Obamacare Postponed Is A Warning Signal

The Obamacare employer mandate that was due to start on January 1, 2014, has been put on hold for one year. Administration officials said enforcement of the employer mandate, which requires businesses with more than 50 employees to provide a certain level of health insurance, will be delayed to 2015. The administration says that this change reflects its desire "to implement the ACA in a careful, thoughtful manner." The announcement that came from President Barack Obama's administration to delay this crucial component of its health-care reform law, raises several immediate questions. First, can the White House protect other components of the law from renewed attack? Second, what does this say about the broader problems facing implementation?  And last, just for fun, what gives the White House such authority? My problem extends to the quality of government, and the stupidity of conjuring up complicate bills of over 2,000 pages.

"This announcement means even the Obama administration knows the 'train wreck' will only get worse," House Speaker John Boehner (R-Ohio) said in a statement. "This is a clear acknowledgment that the law is unworkable, and it underscores the need to repeal the law and replace it with effective, patient-centered reforms." The administration's move on the employer penalties follows a recent Government Accountability Office report suggesting the law's health insurance exchanges for individuals who don't get coverage at work and for small companies may not be ready for the six-month enrollment period that begins Oct. 1. Under the mandate in the Affordable Care Act, employers with 50 or more employees are required to provide government-approved health insurance to their workers or pay a $2,000 fine per employee. The individual mandate for Americans to buy health insurance or pay a penalty to the IRS will still go into effect as planned in 2014.

It is hard to believe that business groups will be satisfied with just this change, by announcing that it's willing to budge on timing, the administration weakens its ability to resist more substantial changes, such as reducing the mandate's scope. This change could make the politics worse, not better. The National Retail Federation wants the employer mandate to apply only to businesses with 100 or more full-time employees, not 50. Opponents of other elements of the law, the individual mandate, Medicare payment cuts, and exchange subsidies, will no longer buy the line that we're too far along to change now. Trade associations, whose members have started questioning the return on investment of their Obamacare lobbying campaigns, may now increase their efforts to chop at the bill. Groups like The Advanced Medical Technology Association have never liked the excise tax on medical devices. America's Health Insurance Plans oppose the law's tax on health insurers, now they may try to get that dropped.

Putting off a major element of the 2010 health care reform law less than six months before the expansion of health insurance coverage to millions is supposed to take effect nevertheless stands as a setback for the administration and gives fodder to Obamacare critics to proclaim the law isn't ready for prime time. In April, the administration also delayed part of the law intended to provide small-business workers with more health insurance choices. The scramble is on to bring the logistical framework for Obamacare into full form before its inaugural arrival in 2014. But as legislators and program architects dig down into the nitty-gritty of what the "tax" will actually entail in practicality, it is becoming abundantly clear from basic economics that the entire system will collapse before it even has a chance to get off the ground due to the extreme weight of rising premiums, which will hit young people the hardest.

A major point of contention with Obamacare has long been the individual mandate that requires all American taxpayers to purchase health insurance. The argument in defense of this mandate is that adding millions of healthy young people onto the health insurance rolls will "even out" health insurance costs within the general insurance pool, and thus decrease costs for the people that need the most care, but in reality, such a scenario may never occur. On the contrary, young people will most likely flee the system in droves once they realize that their insurance premiums are set to rise dramatically in response to Obamacare. In a recent poll by the American Action Forum, nearly half of all people between the ages of 18 and 40 who currently have health insurance said they would flat out cancel their premiums in the event that said premiums rose by 30 percent.

When provided with detailed and specific information as to what their monthly premiums would likely be once Obamacare is fully implemented, many young people have indicated that they would drop their health insurance if the costs rose beyond a certain point. Even in the event that premiums rose by only 10 percent, nearly 20 percent of those surveyed said they would stop buying health coverage. "Unfortunately, health insurance is a product, not a social vision," writes Douglas Holtz-Eakin for The Washington Times. "What we know to be true thanks to ample survey and analytic research is that in 2014, Obamacare will cause premiums to rise sharply for the healthy and young." Bottom-line, postponing implementation of part of this massive program changes little for business and the country, but is a warning signal of problems to come, this poorly crafted legislation still hangs over the economy as a very troubling cloud.

Footnote; This post dovetails with many of my recent writings, for more I might suggest reading the article below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged.

1 comment:

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