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  • Another Obamacare 'Glitch' Will Add Billions to the Deficit

    A new report from Cornell economist Richard Burkhauser and his colleagues has once again called into question the claims of the Congressional Budget Office (CBO) and White House that Obamacare would have only a minimal impact on employers’ decisions to offer their employees health care. The report warns that Obamacare could cost at least $50 billion more per year than originally thought.

    The controversy centers on the “firewall” provision in the health law, which applies to employer plans with premiums equaling more than 9.5 percent of a worker’s income. If a worker would have to pay more than this amount to buy qualified health coverage from his employer, then that coverage is deemed “unaffordable,” which makes him eligible to obtain subsidized health insurance in the newly established health exchanges starting in 2014.

    Obamacare proponents argued that the premium for a family plan—higher than an individual plan—could be used in determining whether employer-sponsored insurance is “affordable,” but the Joint Committee on Taxation (JCT) scored the bill using individual premiums only. If a worker was offered an “affordable” individual policy (regardless of how “affordable” the family policy was), JCT figured, he would buy insurance from the employer, because he would still have to comply with the individual mandate and wouldn’t have access to the generous premium subsidies in the health insurance exchanges.

    To avoid a situation where middle-class families will be forced to take on high insurance costs or suffer penalties for failing to purchase health insurance, the Department of Health and Human Services (HHS) will likely interpret the law to include the price of family coverage in its application of the firewall provision. That means a family policy costing more than 9.5 percent of a worker’s income would trigger eligibility for his entire family to get subsidized coverage in Obamacare’s exchanges.

    If HHS does this, the cost projections for Obamacare will be completely thrown off, as many more people would be eligible for tax subsidies in the health insurance exchanges. Burkhauser and his colleagues estimated that this change could cost taxpayers an additional $50 billion per year. Under this best-case scenario, Obamacare would no longer be deficit-neutral by 2017.

    Of course, it is possible that employers will stop offering their employees health coverage altogether to avoid the “firewall” provision—due to the uncertainties surrounding its administration, the potential compliance costs, and the potential limits it places on employers’ hiring decisions. This gives further credence to the argument that the generosity of the federal tax subsidies would incentivize employers to maximize their cost savings by shifting their employees into the exchanges. If this happens, the costs of Obamacare would add more than a trillion dollars to the national debt by the end of the decade.

    Daniel Graulich is a member of the Young Leaders Program at the Heritage Foundation. Click here to learn more about interning at Heritage.

    Posted in Obamacare [slideshow_deploy]

    12 Responses to Another Obamacare 'Glitch' Will Add Billions to the Deficit

    1. Pingback: Another ObamaCare Glitch Found That Will Add Billions To The National Deficit | Politicons

    2. Bobbie says:

      Obama and his so-called care is nothing but trap setting. No benefit but to Obama's agenda. It has to be repealed for the good of America and simply on the basis it doesn't live up to ANY of it's beneficial claims. The American people have been misled, deceived, coerced, manipulated into this senseless COSTLY TRAP!

      • patricia says:

        Just saw this comment. I agree with it wholeheartedly and will add one thing-unless it is totally repealed
        it will get worse….!

    3. Stirling says:

      "Have to pass it to know whats in it." – Pelosi

      Well we don't like what we have found.. please can we repeal this piece of garbage for something that already works.. Thanks..

    4. @RCMillsJr says:

      Lets just charge everyone a 9.5% tax on their entire income and provide everyone with single payer health care. .

      A $10.00 an hour worker paying a $50.00 a week HC premium is already paying a 8% Health care "tax" for crappy private HC ins. Of course some one making a million dollars a year would be only paying a 1/4 of 1% HC "tax". But guess it is my fault not being rich.

      Some day I hope my class starts to win some of the battles in this class war. It sucks losing all the time.

      • rph1945 says:

        So I guess you think some one else should have to pay for you. It also sucks if you work hard and make it and then the gov. takes it away from you and gives it to someone else. I think you free loaders need to realize life is hard and you reap what you sow.

    5. wayne says:

      Who knew-lol-WT

    6. vladdy says:

      Hard to believe we live in a time when lobbyists write 2,000 page bills that congress votes on without reading while the president lies to the country about what's in the bill (nobody knows yet). .

      Completely unrelated, but just mentioning — several leftist sites are painting a recent public debate in a partk between moveon and tea party members as "Tea Party Thugs Disrupt Peaceful Meeting" (and supposedly followed them, shouting, to their home.) Funny how the Tea Party comes off completey heinous and moveon as peaceful "grandmotherly types.." Another case of them accusing us of doing what they do.

      As I was saying, I can't believe I live in a time when people stand there and bold-faced lie in public about vital issues.[

      • patricia says:

        There is no such animal as a Tea Party Thug. No person either. But again….after being called racists, terrorists (homegrown or otherwise), zombies ……..if being called a thief is the first original thought they have had in the past three years……….hmmmmm!

    7. Curtis D Bryant says:

      The new breed of liberal (progressive ?) Democrats have taught us one thing. They like to spend other people's money. They like to sin. They do not know how or care to live under a budget. Please pray that the rest of us are given the strength to overcome this blight on our Nation.

    8. Retired_CSI says:

      It's the Liberal way……"Social Justice" and an Utopian world! It will NEVER work and has NEVER worked…..get over it!

    9. Sandy Adams says:

      And we're surprised by this???

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