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  • Heritage's Ernest Istook Schools Ed Schultz on How Obamacare Kills Jobs and Hurts Poor

    Ed Schultz is a leftist radio personality who recently graduated to MSNBCs barely watched opinion line up. Schultz still hosts his daily radio show and recently had Heritage Foundation fellow Ernest Istook on to discuss Obamacare. The following exchange (audio here) transpired:

    SCHULTZ: OK, give us your new information from the Heritage Foundation on health care. Tell us how screwed up the Democrats are on that.

    ISTOOK: Well, you know, I think this may be in the category of unintended consequences, although frankly it may be part of the cost control. As we’ve been going through this 2,000 pages that have been brought up for debate in the US Senate, evidently the penalties that they put upon employers if their, the people who work for them go into this public plan, this so-called insurance exchange …

    SCHULTZ: Don’t tell me they’re going to jail! Please …

    ISTOOK: No, this is not about that.


    ISTOOK: This is, the penalty if you are an employer and you hire someone who then receives the federal subsidy because of their family income, you as the employer, the penalty can be $3,000 for each worker that you hire. Here’s the difficulty, Ed. It makes it more costly for a company to hire somebody such as a single mother with small children who may need the job the most of all. It makes it more expensive for a company to hire them than it does to hire someone, for example, who is married and has multiple sources of income for their household because the subsidies are based upon household income. The unintended consequence of this could be that the people who most need work will have the biggest difficulty in finding it.

    SCHULTZ: I tell you what, you guys have really, uh, dug something up over at the Heritage Foundation on that one.

    ISTOOK: No, we didn’t write the bill.

    SCHULTZ: There is, congressman, if people break the law there’s going to be a fine, that’s basically what you’re saying.

    ISTOOK: Well, I’m not talking about that aspect …

    SCHULTZ: …. That’s if the mandate, that’s if the mandate is accepted in conference committee. I mean, we’re still, I mean, there is, there’s no guarantee that there’s going to be any fines anywhere.

    ISTOOK: Well, again, this, are you telling me that there’s no guarantee that the main parts of the bill will go through? This is what they call the provision to stop what they call free riders, people that receive their health care through this government system that would be set up there and they’re saying if you as an employer have people who work for you who receive their health care in this fashion, you as the employer are going to have to pay extra into this system to the tune of approximately $3,000 per worker per year.

    SCHULTZ: No! Ernie, that’s not true!

    ISTOOK: Well, all you have to do is read the bill.

    SCHULTZ: This is going, this is going to reduce the cost to small businesses across America.

    ISTOOK: Surprise! The small businesses don’t believe you, Ed.

    SCHULTZ: OK. Wow.

    ISTOOK: Again, I mean …

    SCHULTZ: I can’t take all this misinformation! I can’t take all this misinformation, I can’t! I don’t know what you guys do over there at the Heritage Foundation. Go to lunch!  This is, this is going to relieve small business. This is one of the attacks that the Democrats have got to come up with on the Senate floor, is that the Republicans, you’re not for small business. If someone’s under $90,000 a year and works for a company of less than 50 employees, and that’s the majority, that’s over 95 percent of employees in this country are in that category, this is going to help, you know, Ralph’s Radiator Garage. There’s no …

    ISTOOK: Ed, rather than read Democratic talking points I suggest you read the bill.

    SCHULTZ: That’s a fact! That’s a fact! That’s an absolute fact! This is going to help small businesses! For you folks over at the Heritage Foundation to come out and say, well, you’re gonna get fined! For what?!

    ISTOOK: Ed, the fines and the penalties are in the legislation. And …

    SCHULTZ: You send me the page. It is not there!

    Well, Ed, on page 350 of the Senate’s version of Obamacare it reads:

    (1) IN GENERAL.—If—
    (A) an applicable large employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and
    (B) 1 or more full-time employees of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee, then there is hereby imposed on the employer an assessable payment equal to the product of the number of full-time employees of the applicable large employer described in subparagraph (B) for such month and 400 percent of the applicable payment amount.

    Later on page 352 we learn:

    (1) APPLICABLE PAYMENT AMOUNT.—The term ‘applicable payment amount’ means, with respect to any month, 1?12 of $750.

    Some quick math reveals: 12 * $750 = $750 a year, and 400% of $750 is $3,000. Or as Heritage scholar Robert Book explained:

    Then there is the “employer responsibility” provision (Section 1511-1513, pages 346-357). Companies with more than 50 employees are required to offer qualified health plans – with a benefit package to be defined later by bureaucrats – to their full-time employees or pay a tax of $750 per full-time employee. That’s a lot cheaper than providing health insurance, and the $750 is just a tax – it doesn’t count towards the employee’s premium.

    However, an employer who does offer qualifying insurance isn’t entirely off the hook. Suppose an employer offers insurance, but has an employee from a low-income family who qualifies for a premium subsidy in the “health insurance exchange” and decides to accept it. In that case, the employer is stuck with a tax penalty of $3,000 for that employee, and every other employee who qualifies and makes that same choice – unless it’s more than a quarter of the employees, in which case the tax is capped at $750 times the total number of full-time employees. (Workers will be permitted to opt out of their employer’s plan only if they qualify for a subsidy, have insurance through another family member, or if the employer covers less than 60 percent of their premium.)

    Hurting the Poor. In other words, if a company has a lot of low-income workers, they can save money by dropping their health plan and just paying the $750 per-employee tax. (And they can make as many employees as possible part-time.) However, if they have mostly middle-income workers, they face a heavy penalty — $3,000 – every time they hire a worker from a low-income family. This goes by the employee’s family income, not the income the employee is paid by any particular company. So a company could save $3,000 by hiring, say, someone with a working spouse or a teenager with working parents, rather than a single mother with three children.

    Even worse, if at least a quarter of the employees qualify for a premium subsidy based on their income and family size, the company is going to end up paying the same $750 per-employee tax – whether they offer insurance or not! So companies with a lot of low-income employees will essentially be encouraged to drop their health plans entire, dumping the remaining higher-income employees into the federal exchange at their own expense.

    Seriously Bad Policy.
    In other words, employers will have a strong tax incentive to lay off the workers who need the jobs most – people without other sources of income.

    How will employers know who those workers are? The federal officials will tell them when they send the tax bill (Section 1412).

    Employer will be required (Section 1513) to inform the IRS of precisely who their employees are and during which months they carried insurance, to make sure the IRS knows who has to pay the “individual responsibility” penalty.

    Thanks to NewsBusters for listening to Ed Schultz.

    Posted in Obamacare [slideshow_deploy]

    15 Responses to Heritage's Ernest Istook Schools Ed Schultz on How Obamacare Kills Jobs and Hurts Poor

    1. J.C. Hughes, Texas says:

      Robert Book's statement "Seriously Bad Policy." explains all. It's sad that Americans feel forced into debating such unconstitutional boondoggle legislation in the first place. We need to take our country back. The Beltway's leftist (socialist) elite need to be shown the darned door. Let's completely clean house in 2010.

    2. Jacqueline Garrett, says:

      I would have rated this a 5 (the very best); however, I had never rated one of your articles before; so I did it wrong. When I clicked on the plus sign to move up to a 5, it voted for me at the 2 rating after I'd clicked just once on the plus sign. I still don't know how I should have done it; but my "2" should have been a "5" rating for this great informative article! Thanks, Heritage Foundation!

    3. Alicia, New Haven CT says:

      This exchange epitomizes any conversation with a liberal. No matter what facts or actual language Mr. Istook provides, Mr. Shultz fails go grasp any of it. Mr. Shultz continues with his talking points…similar to Congressman Murtha when he beat the gavel and announced "The Ayes have it"…why, because he said so! http://www.youtube.com/watch?v=qOHcyIjnaZY
      How do you debate with someone who won't research any facts?

    4. Pingback: Sarah Palin Surge; now lead in the polls, so says Washington Post « VotingFemale Speaks!

    5. Bobbie Jay says:

      NO government bill should hold punishments and offer personal interest, such as ABORTION! KILL THE BILL!

    6. Bob, Portland, OR says:

      I thought Ed was more honest than this.

      After 11 months of this administration, how can anyone believe that Obama is in any way shape or form a supporter of small business.

      His economic plan is to get rid of small business.

      The govi health plan and cap and trade will wipe out any economic incentive to have a small business. How can an increase in taxes of approximately 26% help small business?

      Ed has changed his tune since the Obama clan got in there. Someone must of talked to him.

    7. Linda Bottger Willow says:

      You guys over @ The Heritage Foundation are Patriots!! Please keep up the good work! We will win this fight! (And, hopefully, the Congressional Elections in 2010!! :-)

    8. Mike, Wichita Falls says:

      That's a good question. How do you debate with someone who won't research any facts? You don't. It's a waste of time. The drones are a lost cause.

      We need to get these and other facts in front of people who are not yet fully engaged and who will become informed voters. Knowledgable people will not make a difference, but knowledgable voters will.

      I'm surprised Ed had Heritage on his show. His small audience probably sent him hate mail for it.

      Thank God Heritage is there to research these bills. Most of us are doing good just to bring home the bacon and tend to our families.

    9. Conservatives United says:

      Alicia, New Haven CT writes:

      This exchange epitomizes any conversation with a liberal. No matter what facts or actual language Mr. Istook provides, Mr. Shultz fails go grasp any of it. Mr. Shultz continues with his talking points…similar to Congressman Murtha when he beat the gavel and announced “The Ayes have it”…why, because he said so! http://www.youtube.com/watch?v=qOHcyIjnaZY
      How do you debate with someone who won’t research any facts?

      You hit the nail on the head. You can't debate EMOTIONS, and that is all that Liberal Use.

    10. Jerry from Chicago says:

      The people who are clamoring the most for this government health plan fall into two camps. The first are those who will have no stake in this, i.e., all federal employees including the President and both houses of Congress. The second camp is made up of the poor, the illegal aliens and those who can afford but choose not to buy insurance.

      If this proposed national health care plan is so good for the rest of us, why isn't it good enough for Obama, the members of Congress and all other federal employees? Where is the Presidential and Congressional 'leadership' on this? Why aren't Obama, Harry Reid, Nancy Pelosi and the rest of the liberal Democrat sponsors of national health care declaring on national TV that they will be proud to surrender their current health care plans and be among the first to sign up for the Government's proposed health care plan? These, of course, are rhetorical questions, because we already know the answers. They aren't going to do this for the same reason they exempted themselves from the Social Security pension plan that the rest of us have – what they have for themselves is far better. Federal employees can get up to 80% of the average of their three highest years of income. Do you think for one moment they would give that up for the pittance available through Social Security? Dream on.

      Too many elected officials believe that once they are elected to office they somehow become better than the people who elected them. They believe they are beyond reproach and their actions and opinions should never be questioned. Just look at how they reacted to Townhall meeting participants. And because they are 'special' people, they deserve automatic pay increases, rich health insurance benefits and very rich pension plans. They vote themselves these salaries, increases, benefits and pensions because they can. The rest of us pay for all of this, not to mention their junkets around the world with their families. They get used to royal treatment from lobbyists, while in office. And then, upon leaving public service they, and often their relatives as well, can walk into high paying lobbying jobs with the firms that they were so reasonable with while they were in office.

    11. Tim Az says:

      If I wanted to increase the welfare roles and collapse the free market system this is exactly how I would go about it.

      Another helping of hope and change anyone?

    12. Jerry from Chicago says:

      I have some advice for Mr. Istook. Never try to teach a pig to sing. All you are doing is wasting your time and annoying the pig.

      It is quite obvious you were annoying Mr. Schultz.

    13. Bill S., Kihei, Maui says:

      Ed Schultz is either terribly misinformed, grossly exagerating or a disingenuous liar. You listen to his program for 10 minutes without throwing up and make your own decision.

    14. Linda Carlsbad, CA says:

      Animal Farm is happening right now in this country!

    15. Micki-Tamarac, FL says:

      What's new? They won't listen, they know more about what you want and need than you do. If you don't believe that try emailing or writing to them and they will tell you that. I have done both and that was the answer I got. They are doing it for our own good.

      Is it 2010 Yet?

      Get rid of all of them, we are the people that pay their wages and apparently they have forgotten that.

      I for one will not vote for a single person that is in office at this time, they are all criminals!

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