What Will ‘Obamacare’ Mean for You?
THE AFFORDABLE CARE ACT IS ABOUT TO
BE A BIG PART OF YOUR WORLD
The Patient Protection and Affordable Care Act, popularly known as Obamacare, has already begun to take effect on the nation’s taxpayers and economy. Over the next year, as The Nerve reports today, South Carolina employers will be faced with serious – and unpleasant – choices.
So: What’s being done, if anything, to mitigate the effects of the federal overhaul? And what effects are at this point unavoidable?
What is South Carolina doing about Obamacare?
No state healthcare exchange…yet
Currently, neither the House nor Senate has approved legislation to create a South Carolina-run state healthcare exchange per the Affordable Care Act. Nor is there a plan in either the House or Senate budget to do so. Moreover, there is a provision in the otherwise deeply flawed “nullification” bill – which passed the House – that would prohibit the state from entering an exchange. It should be noted, however, that the bill narrowly defines “exchange” and there could be a way for the legislature to create one anyway.
No Medicaid expansion…yet
Despite some failed attempts to expand Medicaid eligibility to those 138 percent of the poverty line – one of the main planks of the Affordable Care Act – neither the House nor Senate budget provides appropriations for expansion. And despite the drastic economic costs expansion would bring, there are still proposals that would take federal expansion money, as explained further below.
While the governor and (most) of the majority party have rejected the main Obamacare provisions, they have, unfortunately, pushed for their own proposal – we’ve called it Obamacare Light – in the general appropriations bill. This $83 million proposal would put the state on the hook for that much and probably more annually for years to come by covering 100 percent reimbursement of uncompensated care (money paid to hospitals to cover the bill when patients can’t afford it) for select rural hospitals and paying hospitals millions of dollars to direct poor patients to federal clinics, among other spending provisions in the plan.
Dedicating more money to Medicaid
State Medicaid funding has grown by more than $500 million over the past ten years, and due to various federal mandates under the Affordable Care Act, costs would jump by $321 million due to the addition of thousands of newly eligible enrollees. Keep in mind that this growth is without Medicaid expansion, which would increase state spending drastically more.
Initiative to take federal Medicaid expansion money
H.4095 – ironically sponsored by many of the same lawmakers who voted in favor of the “nullification” bill – would take federal Medicaid expansion money for three years to create the Responsible Consumer Health Care Program. This program would put low-income uninsured South Carolinians into managed care programs that would have to be approved by bureaucrats in the Department of Health and Human Services.
A waiver would be needed from the federal government in order to use Medicaid expansion dollars in this manner, but if approved, it’s hard to believe this program would only last three years, as stipulated in the legislation. Since the federal government covers 100 percent of expansion costs for only the first three years, and eventually down to 90 percent within a decade, the state would be on the hook to pay for this program years down the road.
Numbers aside, it simply comes down to this: Would you rather trust federal bureaucrats, state bureaucrats and politicians, or yourself to make your own health care decisions?
What’s going to happen anyway?
Although our state government has thus far rejected the two key components of Obamacare that states have the option to opt out of, there are numerous other federal provisions that were upheld by the Supreme Court that will impact South Carolinians, regardless of any state action. Below are just some of the major effects Obamacare will have on taxes, healthcare industry, jobs, and privacy of citizens on our state, despite opting out of Medicaid expansion and the state-run exchange.
- New 3.8 percent surtax on investment income on households making at least $250,000 ($200,000 single). That will take $123 billion out of the private economy to fund Obamacare. (The tax started this year.)
- Medicare tax hike of 0.9 percent on incomes over $250,000 for married and $200,000 for single tax filers. That will take $86 billion out of private economy to fund Obamacare. (That hike, too, started this year.)
- Employer Mandate tax on employers with 50 or more employees who don’t offer qualifying health coverage: $2,000 for all full-time employees, $3,000 if employee receives coverage through the exchange. Well over 2,000 South Carolina companies would be affected by this mandate. Combined individual and employer mandate taxes will take $65 billion out of the private economy to fund Obamacare. (Individual mandate begins 2014; employer mandate has been delayed to 2015.)
- Tax on certain health insurers estimated to take $32 billion out of private economy to fund Obamacare. (Starts 2014.)
- New 2.3 percent excise tax on medical device manufacturers. According to manta.com, 814 companies are listed as Medical Equipment and Device companies in South Carolina. In total, $20 billion will be taken out of the private economy to fund Obamacare.
For more details on these taxes, as well as information on the several other the Affordable Care Act’s taxes, see this comprehensive list.
Insurance Premium Increases
According to a report put together by the U.S. House Committee on Energy and Commerce and two other Senate committees, health insurance premiums in South Carolina are estimated to increase by 61 percent due to the Affordable Care Act – compared to an average of 40 percent nationally. Further, health insurance companies are estimated to pay an average of 32 percent more on medical claims. Increased costs for insurance companies will most certainly mean higher prices passed down to consumers.
Physicians Leaving their Field
- In a poll of 699 doctors released last summer by the Doctor Patient Medical Association, 83 percent of doctors said they have considered leaving their practices because of Obamacare.
- 17 percent of 673 physicians polled last summer said they could foresee their practice closing in a year.
- In a poll released in October 2012, 43 percent of more than 5,000 doctors surveyed said that Obamacare would cause them to retire in the next five years.
Effects on Jobs
According to a Hudson Institute study referenced in the U.S. House Ways and Means testimony, 3.2 million jobs in the franchise industry are in jeopardy due to the Affordable Care Act, and 50,845 jobs in the same industry would be at risk in South Carolina.
One real-life example of Obamacare’s effects on businesses can be found in a New York Times story on one baking and distributing company that, as a consequence of the federal law, would lose 54 percent of its profits. In 2009 alone, there were 2,326 businesses with over 500 employees in South Carolina, which means far more businesses than this will be affected by the law.
Privacy and Individual Rights
Under the Affordable Care Act, all insurance companies must report to the IRS the name, address, identification number, and type of policy of every customer – along with the determination if the insurance was “government-approved.”
Along with the recent controversy over the IRS targeting conservative political groups, a class action lawsuit alleges that more than 60 million personal medical records of 10 million Americans were improperly seized by the IRS. Bear in mind that the South Carolina Department of Revenue (DOR), which was recently hacked and compromised millions of South Carolinians’ private information, will be getting much of this same private information.
Adding even more to the mess, the Attorney General of Oklahoma has filed a lawsuit challenging the IRS’s seizure of authority to spend roughly $800 billion over ten years on benefits not authorized by Congress. Obamacare provides tax credits and subsidies to purchase health insurance through state exchanges, and gives no mention of the IRS’s power to provide these subsidies through federal exchanges. Since 33 states have already refused to create exchanges, leadership at the IRS evidently simply assumed the power to provide these subsidies for federal exchange programs, even though the law doesn’t give them the authority to do so.
Other privacy issues have arisen. Recently, a New York man had his guns confiscated after being prescribed a drug for a temporary medical issue, seemingly on the authority of the NY SAFE Act, New York’s new gun law. Whether this move constituted a reasonable interpretation of the Act or not, as gun laws get stricter on both federal and state levels, and as government management of the health care industry puts more personal information into bureaucratic hands, there is reason to expect more events like this, not fewer.