The president said he would lower insurance costs for consumers, but the opposite is happening. Health insurers are projecting that Obamacare will increase the cost of coverage by 20 to 100 percent next January, when the law really starts to kick in. Yes, that's right; for some people, health care costs will double. The CEO of Aetna went so far as to say the price hikes would cause "premium rate shock."
There is no doubt the president will blame the insurance industry, but the truth is that these stunning rate increases are driven by his crushing new taxes and excessive government interference in the insurance market.
Obamacare imposes $700 billion worth of new taxes over 10 years. One stark example of this heavy tax burden is the health insurance excise tax. The National Federation of Independent Business estimates that this tax will increase the cost of coverage by $5,000 per family by 2020 and is working hard to repeal it.
In addition to the tax burden, Americans will have to pay the heavy price of government interference. One of the touted benefits of the law is it provides coverage for those with pre-existing conditions. However, it does this by guaranteeing coverage and by making healthy customers pay as much as those who are sick. This creates an incentive for people to stop paying for insurance until they get sick, which ultimately will raise the cost for everyone. Can you imagine what house insurance would cost if you could wait until your home burned before buying a policy?
The "individual mandate" was supposed to solve this problem, but the penalty was set far below the cost of actually paying for insurance. So the destructive incentive remains, and we get the worst of both worlds -- exploding cost increases and a new tax on Americans.
It's not just rising costs Americans face. Obamacare is beginning to cost jobs, too. According to the nonpartisan Congressional Budget Office, Obamacare will result in an estimated 800,000 fewer U.S. jobs.
Across the country, business owners are experiencing Obamacare's effects firsthand. The employer mandate and penalties apply to businesses with 50 or more full-time workers. Therefore, companies are figuring out ways to get by with more part-time and contract workers. The owner of Automation Systems, an Illinois company with 37 employees, says he wants to hire more people but can't because once the business crosses the 50-employee threshold, it will have to pay $40,000 in penalties, plus $2,000 for each additional employee.
This affects the area in which we can least afford to lose jobs: manufacturing. Of America's 250,000 manufacturers, about 200,000 had fewer than 20 employees in 2010. These are companies that could grow and form the core of many small towns and communities in America. But they likely won't be able to under this law. We cannot afford to let that happen. Rising costs and job loss are the last thing America needs right now.
Instead, we need policies that help Americans keep more of their hard-earned money. We need to help relieve their tax burdens by expanding child tax credits and to promote health care they can own and control by raising health savings account contribution limits. We need to increase affordability for struggling families with a refundable health care tax credit.
We must enact meaningful medical liability reform to increase access and reduce added costs and inefficiencies from defensive medicine.
In trying to help people who have uninsurable conditions, we must acknowledge that the magnitude, demographics and root causes of the uninsured problem differ from state to state. To the extent government can address the issue, the answer lies not in a one-size-fits-all federal government scheme imposed on states and citizens but in state leaders working with medical providers, employers, consumers and insurers to design state-based solutions.
We should reduce and streamline government regulations that force valuable resources to be spent on managing red tape rather than patient care. Free market innovations such as the patient-centered medical home model hold real promise. This is a collaborative approach by health care providers, insurers and patients, focused on achieving improved health outcomes, enhanced patient experience and reduced costs.
In a 2010 pilot program involving diabetic patients, 809 participants were compared with a control group of similar patients. The results were amazing. The patient-centered medical home group had 10.7 percent fewer hospital admissions, 36.3 percent fewer inpatient hospital days and 32.2 percent fewer emergency room visits. These improved health outcomes were achieved while the total medical costs for these patients were reduced by 6.5 percent.
As the economy limps along and Americans feel the pain, I hope that on this third anniversary of Obamacare, we can take a minute to look at the damage it will do and commit to do something now to reverse it.
Former Senator Rick Santorum is the author of It Takes a Family: Conservatism and the Common Good. He is writing a second book on the “Gathering Storm of the 21st Century” – the war against a radical, Islamic fascist enemy and its growing alliances around the world.
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