Wednesday, June 29, 2011
Obamacare Death Star Will Strike Soon - By Senator Jim Demint
By: Sen. Jim DeMint | 06/29/11
Sen. Jim DeMint, R-SC, says the deadly economic impact of Obamacare will be felt soon.
President Obama’s healthcare takeover is poised to land a devastating blow to American families and the economy of a size and scope never seen before.
Obama’s bureaucratic Death Star becomes fully operational in 2014. When that happens, it will lay waste to the private healthcare system by imposing unanticipated costs on companies and individuals that will cause millions of Americans to lose their health insurance and be forced into the new government program.
To pass his bill, Obama assured nervous Americans “If you like your healthcare, you can keep it.” Many will soon find out that’s not the case. Budget officials said 6-7 million people who would have employer-based insurance will not have it when the law goes into effect.
But recent, independent analyses put that number anywhere from 35 million to 78 million Americans. And, Obama’s undercounting of tens of millions of Americans on government healthcare will translate to trillions of dollars in new expenses not included in previous estimates.
The debt blast will largely come from those who then receive government subsidies in place of their employer-sponsored insurance.
Many middle-class Americans who lose their employer-sponsored coverage will subsequently receive ObamaCare subsidies to buy federally-mandated insurance plans. Although the taxpayers have long paid for healthcare for the needy, the low-income and the elderly these subsidies are a new form of assistance for millions of middle-class Americans.
For example, a 45 year-old couple with two children earning $50,000 would receive more than $10,000 a year in taxpayer subsidies for their healthcare coverage through ObamaCare. Even if this same family made of four were making $93,000 a year, they would receive more than $5,400 in taxpayer subsidies.
The Congressional Budget Office (CBO) has estimated only 19 million Americans will receive subsidies at a cost of $450 billion for the first six years that the law is implemented. But, if somewhere between 35 million and 78 million working Americans lose their employer-sponsored insurance and then receive subsidies those costs will be much, much higher.
While it is impossible to know ObamaCare’s final tab, the federal government’s checkered history of health care cost projections should give us reason to fear.
In 1967, the House Ways and Means Committee said Medicare would only cost $12 billion in 1990. The actual cost turned out to be $110 billion. In 2010, total Medicare expenditures were $523 billion and now the program threatens to bankrupt the country.
Given that Obama said his healthcare law would cost $1.2 trillion over the next 10 years, being wrong by only a factor of two or three would detonate the debt and throw our economy into a tailspin.
Obama’s use of waivers also conceals the financial blowout that is coming in 2014. More than three million Americans haven’t seen any changes in their health insurance, yet because the president gave them a waiver, provided they first prove that ObamaCare would hike their premiums or slash their benefits.
But, all those waivers expire in 2014. And when the waivers are no longer available, rising costs will force businesses to push their employees off of private plans into the government system.
Caterpillar Corp. has said it could save 70 percent on health care costs by dropping coverage and paying the penalties. AT&T’s $2.4 billion in annual health care expenses would drop to just $600 million using the same strategy.
In fact, Credit Suisse has told clients that forcing employers to drop coverage is “exactly what was intended” by the law. This was the main goal of many advocates of ObamaCare—to completely replace private insurance with a single-payer government healthcare system.
Even Obama’s former budget director, Peter Orszag, is admitting the obvious. Previously used by the White House to sell ObamaCare in the media as a net cost saver, Orszag is now admitting that ObamaCare could create a “spiral effect” of employees losing their private care and the true costs quickly become “unsustainable.”
In the latest issue of Foreign Affairs magazine, Orszag says that employers “could start dropping high-risk workers by designing health plans that encourage these employees to purchase insurance on the exchanges. This is a legitimate concern. If employers altered their plans, this could create a spiral effect, in which those employees buying insurance on the exchanges would be disproportionately high-risk patients, raising premiums and defeating the purpose of risk sharing. The cost to the federal government of subsidizing coverage in the exchanges, in turn, could become unsustainable.”
Meanwhile, another central premise of the case for ObamaCare – that it would reduce health care costs immediately, even for people not in the system – is proving equally false.
The CBO reported premiums in the individual market will rise by at least 10 percent because of ObamaCare. And remember, these projections are usually too low.
No one needs to wait until 2014 to see that ObamaCare will not be successful. Since Obama was elected, more than 10 million Americans have lost their employer-sponsored coverage, largely because of the struggling economy.
Most of the negative consequences of this misguided legislation have not yet exploded in our faces, but that shouldn’t stop Americans from holding Obama accountable for it in the next election.
The president and Democrats in Congress have engineered a plan to destroy the world’s best healthcare system. Only a brave and spirited cadre of Americans can stop it now.
Sen. Jim DeMint is a Republican from South Carolina.