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  • What's the Worst That Could Happen With The New Health Law?

    The Patient Protection and Affordable Care Act is one of the largest and most complicated overhauls ever enacted. Policy experts continue to debate the impact it will have.

    Among the issues that has raised concerns is its cost. Supporters point to an estimate by the Congressional Budget Office that the law will reduce the nation’s budget deficit by about $140 billion over the next 10 years.

    But according to an analysis by The Heritage Foundation, the health overhaul could end up costing American taxpayers millions of dollars in higher health insurance premiums or put a tremendous amount of pressure on an already soaring national debt. The foundation offers an interactive Web calculator where readers can test their own judgments about the effect of the law, too.

    We investigated what would happen to the estimates from the Congressional Budget Office, the official scorekeeping arm of Congress charged with analyzing the budget implications of legislative proposals, if different assumptions were made about how the health overhaul will work. This is important because, during the health reform legislative debates, CBO provided Congress with cost estimates and impact reports about the bill. But CBO scores can be gamed. One rule Congress has repeatedly abused is that the CBO must score legislation as if all the provisions in a bill end up being enacted exactly as intended. But that rarely ever happens, especially with a law that calls for a massive change to one-sixth of the U.S. economy.

    For instance, the agency’s baseline assumed that the alternative minimum tax will never be patched or another Medicare “Doc Fix” to prevent a big cut in doctors’ reimbursements will never happen. Yet both of these short-term fixes have occurred every year since the issues arose more than a decade ago. Recognizing how political realities often are at odds with projected outcomes, CBO director Douglas Elmendorf recently acknowledged that certain parts of the estimates are unrealistic because public outcry and political maneuvering likely won’t allow some of the legislation’s key provisions to take effect.

    Since CBO is confined in its estimates, Heritage decided to draw from a larger crowd of outside experts to determine what happens if certain overhaul provisions don’t deliver, or the results are better than expected. We looked at seven factors that came up repeatedly during the health reform debate, and then analyzed how various changes to each one could alter the CBO’s final scorecard.

    Those factors include the individual mandate which, beginning in 2014, will require almost everyone to buy health insurance; planned Medicare cuts; expected losses in employer coverage; a new “Cadillac” tax on rich benefit plans as well as other new health care taxes; more adoption of health information technology; and a reduction in health insurers’ administrative costs.

    The calculator draws on estimates from sources such as Harvard economist David Cutler, The Lewin Group and includes estimates from former CBO Director Douglas Holtz-Eakin, who has suggested that the number of individuals covered by employer-sponsored insurance will undergo a larger change than what the official CBO score approximated.

    Our findings demonstrate just how sensitive the CBO’s scorecard can be when slight differences are applied to the agency’s underlying assumptions. For instance, if only 40 percent of the scheduled Medicare cuts actually occur, the law will push up the federal deficit by more than $132 billion in the first 10 years.

    In addition, if 14 million Americans (rather than the 8 million predicted by the CBO) end up leaving their employer-sponsored health plans, the federal deficit would jump by more than $300 billion. This could happen because more are enrolled in Medicaid or qualify for subsidies to purchase coverage in national health insurance exchanges.

    And, because the health law imposes a 2.3 percent excise tax on medical devices (such as powered wheelchairs, hearing aids, breast-milk pumps, prosthetics, replacement joints, and diagnostic tools like MRI and CT scanners), that tax will likely be passed down to consumers (patients) in the form of higher premiums. Common economic theory explains that the burden of any tax is likely to be shared between the supplier and consumer.

    The bottom line is that no one knows what the exact impact of health law will be once all of its provisions go into effect, which will take many years to occur and analyze. Americans need to be prepared for what they could face if it fails to meet up to CBO expectations.

    Co-authored by Paul Winfreee.

    Cross-posted at Kaiser Health News.

    Posted in Obamacare [slideshow_deploy]

    10 Responses to What's the Worst That Could Happen With The New Health Law?

    1. Jeanne Stotler says:

      I've been hearing the argument from the left, "Everyone is entitled to health care" here is the falacy. Health care IS available for everyone, Hospital ER's, by law, cannot turn you away regardless of ability to pay. There has been Medicaid for the truely poor, then the Gov't. came up wuth health care for kids not covered under their parents Ins. this gave reason for many not to put their kids on the policy. There are many FREE clinics throughout the land, and there are many doctors who donate their time and services for free. Now if you don't fall in this their is private insurance YOU CAN BUY, some have low rates and high co-pays, YOU have to decide what you want, and you should think ahead and be prepared for the worse scenerio. This is YOUR FREE WILL, if you chose not to buy Ins. then you should NOT expect me and the hundreds that have bought Ins. to pay your bill, or make ins. available to you at the rate it would have been if you foresaw the future. If you buy Life Ins. it's based on your age and health, auto Ins rates are figures on your age and driving record, health Ins. should be no different. I do agree rates are out of control, I do not agree with golden parachutes, expensive conventions etc. companies need to be responsible, yet give their backers a fair return and their users a fare rate and coverage. Most of all be the one RESPONSIBLE for YOUR life and health, keep the gov't out of it.

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    3. Rick says:

      But according to an analysis by The Heritage Foundation, the health overhaul could end up costing American taxpayers millions of dollars in higher health insurance premiums or put a tremendous amount of pressure on an already soaring national debt.

      So?

      The budget deficit would be reduced by increasing costs to the public.

      Sounds fair to me. Not.

    4. R Holland, Chandler, says:

      This healthcare bill is a prelude to force insurance companies out of business and there by allowing the government to become the single payer provider. This is the original intent of Obama and the socialist that support him.

    5. Cathy, New Freedom, says:

      The higher premiums are already starting and will continue to rise. The insurance companies cannot absorb the cost of the government mandates that are being forced on them. MA, which is the poster child for what is ahead for all of us, has much higher rates, 67-day average to see your doctor, and one of the largest insurers dropping their Medicare Advantage plans. Weyerhauser is dropping coverage for their retirees due to cost. Connecticut is facing an average of 45% increase in costs. Boeing told 90,000 employees their costs would go up. Many of the large companies may end up dropping coverage for all their employees and just paying fines. If people thought health insurance was bad before, wait until we get the government involved in every facet of it. And, God forbid, you are a senior citizen. We are dispensable according to Obama as we don't contribute anymore. I hope the Supreme Court will rule this monstrosity unconstitutional when it arrives in their court.

    6. Spiritof76, NH says:

      Look at Massachusetts. It has a medical care insurance scheme similar to the Obamacare. The recent report out of there says: More people have insurance but more physicians and specialists are not taking any new patients, causing longer delays. Premiums have gone up as well due to the state mandated coverage. It is descending into a failed medical care. Regardless of all the BS by the proponents on the universal care, it will be a failure. Insure 30 million more, no cost increase, no rationing, no sudden inflow of doctors and hospitals to cope with added insured and balance it with cuts in Medicare and pass "doc-fix"- pure fantasy. The trouble is that so many Americans believe in the scam.

    7. Jill, Cali says:

      How about NO

    8. lynn, mansfield,Tx says:

      As usual the insurance companies continue to be positioned to make billions mainly on the backs of physicians who are enslaved by anti-trust, antibargaining laws. There is no way that the physicians can "pass the costs" on to the consumers, but the health insurance industry sure will.

    9. Sam, WI says:

      One interesting fact is that Health Care is a right guarenteed by the consitution. The Soviet Union's consititution to be specific.

    10. Pingback: FRC Blog » The Social Conservative Review: The Insider’s Guide to Pro-Family News–October 21, 2010

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