Obamacare and unintended consequences

For some unfathomable reason Congress seems convinced that it can suspend the laws of human nature by simply passing a bill. The current incarnation of Obamacare pending in the House is but another example of this folly. Read more

Obamacare will kill small business

It will become abundantly clear to you after reading what follows that no one in Congress has ever either owned a small business, or, been employed by one.  And, should Obamacare pass, it is highly unlikely they ever will.

Title IV, Section 411 of the House bill (beginning at page 268) requires that all employers with gross payroll of $500,000 or more must provide insurance coverage for their employees, or pay a tax.  The tax ranges from 2% of gross payroll for payrolls in excess of $500,000, to 8% of gross payroll for payrolls in excess of $750,000.

Let’s examine this madness.

Assume you are a small business with 15 employees, and the average salary of each employee is $50,000.  You have met the $750,000 threshold for paying (in addition to your employees’ salaries) a $60,000 tax to Uncle Sam if you do not purchase “qualified” insurance for your employees, and, pay 72.5% of the premiums for that insurance.

Now what?

You don’t have $60,000 unless you take it out of your own pocket, but, if you do that, you will not be able to support your family.

You could go to your employees and remind them that, as you didn’t offer group insurance when you hired them, you paid them higher wages to offset the cost of their own insurance.  You tell them you will have to cut their salary enough to offset the cost of group insurance.  Even if all of your employees agree, Congress has made that impossible.  Section 411(b)(4) provides:

…any [premium payment] on behalf of an employee with respect to which there has been a corresponding reduction in the compensation of the employee shall not be treated as [a premium payment by the employer].

You could try to get group insurance for your employees, but, whatever that cost is, you will have to pay 72.5% of the premiums…money which you don’t have.

You are left with only one option.  To cover the cost of this totally insane provision of Obamacare (either the $60,000 tax, or your “share” of the of the group insurance premiums), you must fire at least one employee.

This should help our economy, don’t you think?

Oh, wait, I forgot…this law will not take effect until 2013, and by then Obama’s Stimulus Bill will have “created or saved” enough jobs so that our employment rate should be somewhere around 214%.

Forget everything I just said.

Our future under Obamacare

It did not take long in my review of the House version of Obamacare released on Thursday to get a picture of what our future health care will be like.  The only real surprise is that the picture was revealed so early in the 1990 page proposed legislation.

At page 16, Section 101, the legislation would create a National High-Risk Pool Program beginning January 1, 2010.  With certain exceptions, any resident (no mention of citizenship, just residency) of the 50 states and the District of Columbia (page 19) who has been denied insurance due to a pre-existing condition is eligible to apply.  The program will last through 2012 (when the public option and the insurance exchanges are set to begin), and will be funded for this period by $5 billion.

Two things are interesting about the program.  Subsection (g)(2) provides that the deductible shall be no higher than $1500 and the annual out of pocket cost sharing shall be no higher than $5000.  That is expensive coverage, and should those standards be applied in order to deem your insurance a “qualified plan”, you will see your premiums rise higher than what I explained in an earlier post.

But what follows is the real shocker.  Subsection (h)(2) at page 25 provides:

If the Secretary estimates for any fiscal year that the aggregate amounts available for payment of expenses of the high-risk pool will be less than the amount of the expenses, the Secretary shall make such adjustments as are necessary to eliminate such deficit including reducing benefits, increasing premiums or establishing wait lists.  [emphasis supplied]

What that tells me is that in the minds of those drafting Obamacare, the folks who need the most medical care due to their physical condition will be the first to be thrown under the bus.

I’m beginning to understand how Obamacare can claim that it will insure millions of more Americans while lowering costs at the same time.  It will simply reduce benefits, increase taxes, and establish wait lists.

Now, why didn’t I think of that?

The real cost of Obamacare

Whether you have your own health insurance, or, have your health insurance through your small business employer, get ready to pay a great deal more for that insurance should Obamacare become law.

For the past five months I have posted many articles about provisions of the proposed Obamacare legislation that will clearly cost you money.  But, to date, I have not been able to quantify that cost for you.  Now, thanks to a recent study released by WellPoint, I can.

WellPoint mined its own actuarial data to model ObamaCare in the 14 states where it runs Blue Cross plans. The study therefore takes into account market and demographic differences that other industry studies have not…

The results of this study are not pretty.

A healthy 25 year old male living in Columbus, Ohio currently pays about $52 per month for insurance.  Here is what Obamacare will do to his premiums.

First, add $79 per month because Obamacare requires all insurers to to cover anyone who applies regardless of their current health condition.  This is the piece of Obamacare that “ensures” that those with pre-existing conditions can obtain insurance.

Second, add $3 per month because Obamacare requires insurance companies to charge virtually the same premium to all insureds, regardless of health, age, etc.

Third, add $17 per month because Obamacare will mandate what must be included in your insurance policy (whether you want or need that coverage, or not) in order to have a “qualified” plan.  This will let you avoid paying a tax for having the audacity to have a “non-qualified” plan.

And finally, add $6 per month to cover the cost of the $80 billion in new non-deductible taxes on insurance companies that Obamacare also mandates.

So, under Obamacare, our young man from Columbus, Ohio will now pay $157 per month for his insurance, a svelte 199% increase!

Of course, this study doesn’t take into account the increased costs resulting from the $20.3 billion in new nondeductible taxes on drug manufacturers and importers, or the $40 billion in new taxes on medical device manufacturers.  But, as they say, at this point, who’s counting?

“Pelosi on Constitutional Law”

I wrote a post last week entitled “Hoyer on Constitutional Law” which dealt with the constitutionality of the power of Congress to mandate that all Americans purchase health insurance.  Rep. Steny Hoyer (D. Md.), and Sen. Patrick Leahy (D.Vt.) have opined that the power to mandate the purchase of insurance comes from that portion of Article I, Section 8 of the Constitution where Congress is granted power to “lay and collect taxes…to…provide…for the general welfare…”.   I strongly disagree with Rep. Hoyer’s and Sen. Leahy’s opinion, but, now, there is a new twist.

Last week, Speaker of the House Nancy Pelosi (D. Ca.) was asked the same question.

Pelosi dismissed the question by saying: “Are you serious?  “Are you serious? “

Deciding that “are you serious, are you serious” wasn’t a good answer, Pelosi’s staff issued the following statement:

Congress derives the authority to mandate that people purchase health insurance from its constitutional power to regulate interstate commerce.

Article I, Section 8 of the Constitution does indeed give Congress the power to “regulate commerce … among the several states”, but using that section to support a mandate that all Americans purchase insurance is equally erroneous.

Here’s an example that I’ve used before to demonstrate how the interstate commerce clause of the Constitution will not, under any circumstances, support a mandate to purchase insurance.

Under the interstate commerce clause Congress could definitely pass a law requiring that Florida allow peaches grown in Georgia to be sold in Florida.  And, under that clause, Congress could definitely pass a law requiring that Florida allow insurance companies from Georgia to sell their policies in Florida.  But, that is the extent of the power.

Just as Congress, using the above example, could not then require everyone in Florida to buy peaches, it cannot then require everyone in Florida to buy insurance.

I know it’s too much to ask that everyone in Congress read the Constitution, but, is it too much to ask that everyone in Congress get on the same page?

“Hoyer on Constitutional Law”

Luckily, that book was not required reading in my constitutional law classes.  Had it been, I strongly suspect that I would have failed the Florida bar exam “with flying colors”.

Representative Steny Hoyer (D. Md.) was recently asked a series of questions by CNSNews about the constitutionality of the proposed mandate that all Americans purchase health insurance or pay a tax.  His answers are more than a little revealing, particularly coming from a graduate of Georgetown Law School.

 House Majority Leader Steny Hoyer (D-Md.) said that the individual health insurance mandates included in every health reform bill, which require Americans to have insurance, were “like paying taxes.” He added that Congress has “broad authority” to force Americans to purchase other things as well, so long as it was trying to promote “the general welfare.”

Well, let’s see.  The only place in the Constitution where the phrase “general welfare” can be found as relates to Congressional power is Article I, Section 8.  That section provides that,

Congress shall have power to lay and collect taxes…to provide for the…general welfare.

Under this section, Congress had the power to say, lay a and collect a tax on wages to pay for Social Security or Medicare as they are taxes to provide for the general welfare.  And, besides, in theory at least, with Social Security and Medicare you are  getting your own money back when you start to collect the benefits.  But the mandatory purchase of insurance is an entirely different matter, unless we rewrite the Constitution to say,

Congress shall have power to mandate the purchase of goods and services [in this case, insurance] to provide for the general welfare.

The best example I can give here is, under Rep. Hoyer’s version of the Constitution, Congress would have the power to mandate that all Americans purchase a membership in a health club, as that will provide for the general welfare because people will become healthier.  Can anyone seriously contend that Congress has that power?

When addressing this issue in 1994, the Congressional Budget Office reported to Congress,

“the individual mandate  [is] an unprecedented form of federal action.”  This is because “the government has never required people to buy any good or service as a condition of lawful residence in the United States.”

But, Rep. Hoyer’s arrogance is even more frightening than his lack of  knowledge of the Constitution.  When asked by CNSNews, under your theory, what can’t Congress do, he responded,

“I’m sure the [Supreme] Court will find a limit”

In other words, according to Rep. Hoyer, we in Congress will do anything we want to do, and we’ll let the Supreme Court sort it out.  That attitude gives brand new meaning to the word “arrogance”.

But, Rep. Hoyer is not alone in this regard.  Sen. Patrick Leahey (D. Vt.), curiously also a Georgetown law grad, shares a similar view.  This is courtesy of HotAir.

Given the above, here is my rewrite of Article I, Section 8 of the Constitution:

Congress shall have power to set speed limits, and only speed limits.