Remember when President Obama promised the American people that his healthcare reform law would decrease premiums, lower overall healthcare spending, and guarantee that satisfied health insurance customers could keep their current arrangements "no matter what"? I sure do. These assurances have proven false time and again ever since Democrats jammed through the unpopular legislation on a partisan vote. Over the summer, CMS actuaries confirmed that national health expenditures are increasing, not decreasing, following the passage of Obamacare. Following two major studies revealing that millions of businesses -- big and small -- will dump their employees' healthcare plans once Obamacare fully kicks in, an ebullient Howard Dean extolled that outcome:
Dean calls this "incredibly good"news for small businesses because they'll no longer have to pay for their employees' plans. Setting aside the fact that this is an obvious breach of Obama's dishonest "like your plan/keep your plan" pledge, another reality is that all of those employees will have to get their healthcare somewhere -- and that somewhere will be on the government-subsidized exchanges. This, in turn, will cost billions upon billions of additional dollars. Plus, in light of Obamacare's individual mandate and guaranteed issue rules, a lot of people will pay the relatively low non-compliance fine until they really need "insurance" (by that point, it's no longer really insurance), at which point the health insurance companies will be forced to take these patients. In order to make up for those hits to their bottom lines and stay in business, insurers will raise premiums on everyone else. As Katie notes below, that process is already afoot:
The health-insurance premiums employers pay rose sharply this year, with the average annual cost of family coverage passing the $15,000 mark for the first time, according to a major survey. The 9% average increase, reported in an annual poll of employers performed by the Kaiser Family Foundation and the Health Research and Educational Trust, comes despite a continued trend toward more limited use of medical services in the U.S. Last year, family premiums rose just 3%, the survey found. Employers' average annual family premium for 2011 was $15,073, up from $13,770 last year
Thanks, Obamacare! The reason that Dean is so cheery over this devastating news is that once enough employers drop their coverage, and anger over premium increases reaches a critical mass, he and his fellow Leftists will be poised to swoop in an push single-payer health care as the only solution. This is, and has always been, their long-term goal. And "they" includes Barack Obama. Toss in crippling doctor shortages, huge middle class tax hikes, startling coverage oversights, and ramped up bureaucratic rationing, and it becomes fairly clear why support for repeal is as stable and robust as it is. Republicans might get that shot after 2012. Until then, they may have to keep their fingers crossed that the Supremes will grease the skids substantially.
If Obamacare falls, what alternative will Republicans propose? Rep. Paul Ryan gave a major address at Stanford University this week, in which he outlined a free-market, cost-lowering healthcare reform package. The Wall Street Journal editorial board and healthcare policy expert Avik Roy applaud the tent pole of Ryan's plan, as described by CNN Money's Shawn Tully:
Ryan argues that the tax laws make it far cheaper for a corporation to purchase coverage for workers than for the worker to buy a similar policy on their own. He's correct. For example, ABK Auto Parts (a hypothetical employer) can provide a worker with a $50,000 salary with a $15,000 family policy without including that $15,000 in the worker's compensation, so the benefit is tax-free to the employee. Under the current tax regime, if the company simply increased the worker's salary by $15,000 to $65,000, he or she would have to pay tax on that extra income -- say at a 25% rate, including payroll levies. Hence, the worker would be to buy only an $11,250 policy with the extra pay. "This tilts the compensation scale toward benefits, which are tax-free, and away from wages, which are taxable," the speech says.
He also argues that the system is especially helpful to the "rich:" "It also provides ways for high-income earners to artificially reduce their tax-able income by purchasing high-cost health coverage -- which in turn can fuel the overuse of health services." So what's Ryan's solution? He proposes shifting the tax exemption that now goes only to company-provided plans to individuals instead. In our example, if ABK Auto Parts keeps providing coverage, employees will need to pay tax on the value of the policies. But the employee will be able to buy a policy on their own and get a tax credit for the entire cost of the plan.
If Ryan's plan becomes law, it's likely that most companies would drop their plans. Why provide coverage when employees now pay tax on the benefit but get a tax credit if they buy their own plans? The advantage is that employees would no longer lose their coverage if they lose their jobs. The policies would belong to them and be fully portable to the next job. It would also turn workers into consumers, giving them an incentive to shop for the lowest cost plans with their own money.
Democrats, it goes without saying, are licking their chops to demagogue this plan, as Obama successfully did in 2008. It's what they do best: Scare the hell out of people by lying about conservative solutions, then angrily insist that big government fixes are the only safe, responsible options. One wonders if the American public is wising up to this scam, especially in light of how magnificently Democrats statist "solutions" have turned out over the last three years.