When the 2010 healthcare law was proposed, President Obama was concerned that it not cost more than $1 trillion. He also wanted to make sure that the Congressional Budget Office (CBO) not judge it as adding one dime to the deficit. So they implemented the law in a way that it would only start spending money in 2014, but not fully kick in until 2016. So they paid for four to six years of spending, but counted 10 years of revenue, taxes, fees and penalties, and also 10 years of supposed cuts in Medicare and Medicare Advantage. The cuts in Medicare were to come from provider payments. The cuts in Medicare Advantage were to come from benefits.
You can’t "bend the cost curve" by increasing taxes on medical device manufacturers, insurance plans and hospitals. But that’s what President Obama did. That’s why the cost curve has not been bent down on healthcare.
When they put that plan together, the CBO scored his healthcare law as actually reducing the deficit, but nothing can be further from the truth. I doubt there is actually going to be a reduction of deficit for the first 10-year window.
Furthermore, look what happens as you move the budget window forward. From 2013 to 2022, the 10-year cost of Obamacare will be $1.75 trillion - not $1 trillion, but $1.7 trillion. When it fully kicks in – from 2016 to 2025 – the law will cost at a minimum $2.4 trillion. That’s somewhere around $250 billion a year at least. If you just move the taxes, fees and penalties forward to that window, we’ve got about a $1.9 trillion dollar gap, or a deficit risk. Is President Obama’s proposal to take that out of Medicare?
It could actually be worse than this, because I don’t believe it will only cost $2.4 trillion. When the CBO estimated that cost, they anticipated that only 1 million Americans will lose their employer-sponsored care and have to access coverage through the exchanges. About 170 million people currently get their healthcare - their insurance - through their employer. Without the healthcare law most employers that are providing healthcare will continue to do that. They don’t want to expose the people that work with them to financial ruin.
Under the healthcare law however, the decision totally changes. Businesses will decide whether to pay $15,000 a year for a family plan, and try and comply with 15,000 pages of law and rules and regulations. That’s what we’re up to right now, 15,000 pages. The federal government has only begun to write the rules and regulations around the healthcare law. So businesses will need to pay $15,000 in cost, plus try to comply with 15,000 pages of regulation. Or does that employer decide to save money by paying the $2000-$3,000 penalty? And by doing so, they’re not exposing employees to financial risk; they’re making them eligible for huge subsidies in the exchanges.
Video courtesy of Chippewa Valley Community Television.