Ugly Face of ObamaCare Revealed

First posted in Blogspot on Saturday, May 8, 2010

Ugly Face of ObamaCare Revealed

This is part of a memorandum published by the Office of the Actuary of the Department of Health & Human Services. The copy I took from the Internet was in PDF form that did not allow copying, so what I took verbatim I had to retype. I don’t have time to retype the whole document to try to pull out all important details, so I stuck with their own summary. I’ve also incorporated parts of a report on the subject in AllVoices by Hardy Wright from an email he’d received. Memorandum content is in italics, my comments are in regular type, those from Hardy’s report in brackets [] as are page numbers.

This memorandum summarizes the Office of the Actuary’s estimates of the financial and coverage effects through fiscal year 2019 of selected provisions of the “Patient Protection and Affordable Care Act” (P.L. 111-148) as enacted on March 23, 2010 and amended by the “Health Care and Education Reconciliation Act of 2010” (P.L. 111-152) as enacted on March 30, 2010.

Included are the estimated net Federal expenditures in support of expanded health insurance coverage, the associated numbers of people by insured status, the changes in Medicare and Medicaid expenditures and revenues, and the overall impact on total national health expenditures. Except where noted, we have not estimated the impact of the various tax and fee provisions of the impact on income and payroll taxes due to economic effects of the legislation. Similarly, the impact on Federal administrative expenses is excluded. A summary of the data, assumptions, and methodology underlying our national health reform estimates will be available in a forthcoming memorandum by the OACT Health Reform Modeling Team.

Possibly the most significant factor here is that federal administration expenses are not included. If the government intends to read, analyze, and act on the tons of reporting that will be required, we’re probably looking at many more hundreds of billions. But that’s just the direct cost of bureaucracy to the taxpayers. Add to that cost what will likely be an equivalent monstrous cost to the medical and insurance providers to fill out and file all of the mandated plans and reports – costs that will, must, be passed on to the health care consumer.

In addition, the actuary admits that the costs do not reflect the full 10-year cost for the new legislation. The strange reasons given are: …these transition effects and the fact that most of the coverage provisions would be in effect for only 6 of the 10 years of the budget period, the cost estimates shown in this memorandum do not represent a full 10-year cost for the new legislation. What I can’t understand is why they can’t make an estimate for the “transition” period and why would there be costs (hidden?) for the four years that the coverage provisions would not be in effect.

Earlier estimates of the cost of this bill ranged from over $800 billion to about $2.2 trillion. The new figures, as reported by Wright are lower:

[Health Care Costs Increase: National health expenditures under the health reform act would increase by a total of $311 billion (0.9 percent) during calendar years 2010-2019. [Page 4]]

The bulk of the reduction from the original estimates is realized by slashing medicare which could reduce senior access to healthcare. As Hardy reports:

[Over One-Half Trillion in Medicare Cuts: The Medicare actuaries found that the new health law cuts $575 billion [Page 4] from Medicare]

Seniors’ Access to Care Jeopardized: As a result of the cuts to Medicare, the actuaries found that, absent legislative intervention, [providers]m ight end their participation in the program (possibly jeopardizing access to care for beneficiaries). [Page 10]]

One of the reasons health care providers might end their participation in the program is: (iii) lower payments and payment updates for Medicare services. [Page 4]

A still more astonishing admission by the actuarials is shown below. It’s astonishing because it’s exactly what many opponents of the legislation had been arguing and for which they were called liars, extremists, kooks, partisan politicians, and even racists for opposing this plan Obama was selling for the insurance companies.

The actual future impacts of the PPACA on health expenditures, insured status, individual decisions, and employer behavior are very uncertain. The legislation would result in numerous changes in the way that health care insurance is provided and paid for in the U.S., and the scope and magnitude of these changes are such that few precedents exist for use in estimation. Consequently, the estimates presented here are subject to a substantially greater degree of uncertainty than is usually the case with more routine health care legislation.

In estimating the financial impacts of the PPACA, we assumed that the increased demand for health care services could be met without market disruptions. In practice, supply constraints might initially interfere with providing the services desired by the additional 34 million insured persons. Price reactions — that is, providers successfully negotiating higher fees in response to the greater demand – could result in higher total expenditures or in some of this demand being unsatisfied. Alternatively, providers might tend to accept more patients who have private insurance (with relatively attractive payment rates) and fewer Medicare or Medicaid patients, exacerbating existing access problems for Medicaid enrollees. Either outcome (or a combination of both) should be considered plausible and even probable initially.

The latter possibility is especially likely in the case of the substantially higher volume of Medicaid services, for which provider payment rates are well below average. Therefore, it is reasonable to expect that a significant portion of the increased demand for Medicaid would be difficult to meet, particularly over the first few years. (More amazing truth – higher costs and less service.)

As I pointed out in the Healthcare Obamanation post in this blog, nobody can say what this beast will look like when it’s grotesque skeleton is fleshed out. In some cases, the actuaries don’t even try:

We have not attempted to model that impact or other plausible supply and price effects, such as supplier entry and exit or cost-shifting towards private payers. A specific estimate of these potential outcomes is impracticable at this time, given the uncertainty associated with both the magnitude of these effects and the interrelationships among these market dynamics. We may incorporate such factors in future estimates, should we determine that they can be estimated with a reasonable degree of confidence….

The last sentence of the above paragraph is evaluated by Hardy as follows:

 

[Long Wait Lines Resulting From A Shortage of Doctors and Hospitals: …For now, we believe that consideration should be given to the potential consequences of a significant increase in demand for health care meeting a relatively fixed supply of health care providers and services. In other words, Americans should be prepared for doctor and hospital shortages under the new law. [Page 20]]

Further support of Hardy’s conclusions can be found in this paragraph: As stated in the section on Medicare estimates, reductions in payment updates to health care providers, based on economy-wide productivity gains, are unlikely to be sustainable on a permanent annual basis. If these reductions were to prove unworkable within the 10-year period 2010-2019 (as appears probable for significant numbers of hospitals, skilled nursing facilities, and home health agencies), then the actual Medicare savings from these provisions would be less than shown in this memorandum. Similarly, the further reductions in Medicare growth rates mandated for 2015 through 2019 through the Independent Payment Advisory Board may be difficult to achieve in practice.

That Seniors, all Americans for that matter, will see a considerably reduced availability of health care is no surprise to me. The more I see the government regulating and controlling all aspects of our lives “for” us, the more I’m reminded of an experience I had while hitch-hiking through Yugoslavia in 1967.

It took me three rides to get the relatively short distance from Sarajevo to the coast. The last was with a Czechoslovakian couple. You may remember that Czechoslovakia was one of the “peoples’ paradises.” Everything was well regulated and controlled. Wages and prices were fixed so that everyone could afford everything. The only catch — there was nothing! These folks had waited 11 years on a list to buy their new car.

Now it’s the American people’s turn. Our Socialist/Fascist government is going to regulate all aspects of our healthcare so that all Americans can afford all of the healthcare we need. The minor inconvenience of waiting 11 years for that heart operation is such a small price to pay.

The whole campaign by Obama’s Washington Mob was a pack of lies as I hope this is showing.

As I pointed out in “Healthcare Obamanation,” most of the people who voted for it had no understanding of how insurance works. Constant attacks on the insurance industry for not accepting “pre-existing” conditions were nothing but the lowest form of Obamagoguery. Now Hardy reveals the truth:

 

[False Promise to Those With Pre-Existing Conditions: By 2011 and 2012 the initial $5 billion in Federal funding for [high risk pools] would be exhausted, resulting in substantial premium increases to sustain the program. [Page 16]]

They also continue to make the claim that the bill will lead to a balanced budget in ten years. The bulk of the balancing act appears to be substantial new taxes and fees which, no matter who they appear to be levied on, we will eventually pay. I’d bet the farm we’ll get the taxes, but I won’t hold my breath waiting for a balanced budget.

..Federal revenues will be increased through an excise tax on high-cost insurance plans; higher Hospital Insurance payroll taxes for high-income taxpayers; a new tax on investment revenues and other unearned income, and other provisions.

Some of those paying will be the people with health benefits at work. Hardy notes: [Millions Will See Their Health Benefits Taxed for the First Time: It should be noted, however, that an estimated 12 percent of insured workers in 2019 would be in employer plans with benefit values in excess of the thresholds [before changes to reduce benefits] and that this percentage would increase rapidly thereafter. [Page 13]]

The next sentence in this passage really hit me. The effect of the excise tax on reducing health care cost growth would depend on its ongoing application to an expanding share of employer plans and on an increasing scope of benefit reductions for affected plans. If I’m interpreting this correctly, one of the purposes of the tax is to reduce money available for healthcare.

The lies and deception never stop. Hardie’s article points out:

[New “Medicare Tax” Doesn’t Go To Medicare: The Reconciliation Act amendments introduced a new 3.8-percent “unearned income Medicare contribution” on income from interest, dividends, annuities, and other non-earnings sources for individual taxpayers with incomes above $200,000 and couples filing joint returns with incomes above $250,000. Despite the title of this tax, this provision is unrelated to Medicare; in particular, the revenues generated by the tax on unearned income are not allocated to the Medicare trust funds. [Page 9]]

You can view Hardy Wright’s article to pick up anything I missed at:

http://www.allvoices.com/contributed-news/5693063-health-care-more-costly-than-anticpated

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