Study: 83 Mln Would Lose Private Health Coverage Under House Dem Plan
By Philip Klein on 7.20.09 @ 12:16PM
Democrats and President Obama have denied that the creation of a new government-run health care plan would be a Trojan Horse for single-payer health care, but a new report by the Lewin Group (comissioned by the Heritage Foundation) finds that the House Democrats' health care bill would shift more 83.4 million Americans from private health care coverage to the government plan. To put that in perspective, that would mean that nearly half (48.4 percent) would lose their private health coverage. In all, the government plan would have 103.4 million members once implemented, according to the Lewin analysis. President Obama has repeated the mantra that anybody who likes their health insurance plan can keep it, but in reality about 63 percent of covered Americans get their health care through their employers, and if employers decide to drop their current health plans in favor of the government plan, workers won't have any choice but to sign up.
Here's a Lewin chart titled, "Changes in Sources of Coverage under the American Affordable Health Choices Act Assuming Full Implementation in 2011 (millions)":
The reason for the dramatic shift is that the Lewin Group has anticipated that with government setting lower reimbursement rates for doctors, hospitals and other health care providers, the government plan will offer lower premiums than private plans. However, the flip side is that the Congressional Budget Office estimates providers will lose $361.9 billion in revenue over the next decade if the House bill is passed. That will mean lower quality of care, shortages in doctors and hospitals, and/or increased shifting of costs on to those with private health care. Should further cost-shifting occur, it will then in turn erode private health care coverage even more dramatically.
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Healthcare 'fix' hurts small business
OUR OPINION: House Democrats' reform places undue burden on entrepreneurs
Lawmakers are racing to complete a bill that improves the nation's healthcare system before the momentum for reform runs out. The need for this legislation is clear, as is the need to move quickly.
But reform should not place an unfair burden on one of the most vital and endangered sectors of our economy -- small business.
The bill unveiled by House Democrats last week is a sweeping, 1,000-page blueprint containing scores of provisions that will change the way we pay for medicines and medical treatment. Some have more merit than others.
The proposal to impose a penalty of 8 percent of payroll on all but the smallest businesses is particularly onerous and unworkable -- especially in South Florida where small businesses are the backbone of the area's economy.
In the first place, it's a job killer. To understand why, it is necessary to understand both the nature of small businesses and the essential role they play in the American economy.
According to the Small Business Administration, the nation's 6 million small employers represent 99.7 percent of the total number of businesses that provide jobs, and 50.2 percent of private-sector employment. Small businesses create about 70 percent of new jobs.
Although this includes all businesses with fewer than 500 employees, the typical operation is far smaller. According to SBA figures, 89 percent have fewer than 20 employees, and 98 percent fewer than 100.
Lose-lose proposal
The bill's ''pay or play'' option offers owners with payrolls exceeding $400,000 two unpalatable choices: Either pay the 8 percent penalty, or pay part of the premium for all full-time employees.
For many, this is a lose-lose proposition. A survey by the National Federation of Independent Business (NFIB) found that 20 percent of its respondents would simply shut down if they were faced with this choice. They couldn't afford it. One out of four said they would replace full-time workers with part-time workers in order to avoid having to pay anything.
The level of the proposed penalty is a second problem.
Small employers, like everyone else in America, will have to do their part to support healthcare reform, but the 8 percent figure is too burdensome.
According to NFIB, a typical member employs five people and reports median gross sales of $350,000.
For many of these employers, the option of paying for insurance instead of paying the government penalty would result in paying more in health premiums for each worker than for the employer's portion of the Social Security tax.
Many employers earn relatively little from their businesses, not only making the proposed new fee a problem, but the difference between breaking even or going under.
Built-in unfairness
According to NFIB, 14 percent of small employers have household incomes of $50,000 or less. And 34 percent have a household income of $75,000 or less. For these businesses in particular there is a built-in unfairness in asking owners to subsidize employees who earn close to the same amount as the owner.
And for households that earn $350,000 or more, there is a double whammy in the legislation if they own a small business. The House Democratic bill proposes a surtax on their personal earnings, in addition to payments to cover health insurance that would have to come all or in part from profits.
The best part of the Obama administration's reform efforts involves the drive to improve the effectiveness and delivery of services and save costs. A significant number of healthcare providers has signed on.
Containing costs
Cost containment is essential to success.
Employers who have conscientiously tried to provide insurance for their workers have had to pay more in return for less. They're getting killed by skyrocketing premiums. They will welcome reform that brings costs down to earth.
It's not fair for some employers to pay for workplace insurance while others don't. A mandate that does not address rising costs and forces employers to provide a benefit they can't afford is not the answer.
Lawmakers need to come up with a reform blueprint that offers a solution, not a penalty
Reformers' Claims Just Don't Add Up
By INVESTOR'S BUSINESS DAILY | Posted Friday, July 17, 2009 4:20 PM PT
Health Reform: Many extravagant claims have been made on behalf of the various health care "reforms" now emerging from Congress and the White House. But on closer inspection, virtually all prove to be false.
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IBD Exclusive Series: Government-Run Healthcare: A Prescription For Failure
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Yet even as many Americans start to have second thoughts about our government's possible takeover of the health care system, Congress is rushing to make it happen.
On Friday, the House Ways and Means Committee approved a bill that would radically change our current system and expand coverage for the uninsured. The action came a day after the head of the Congressional Budget Office said none of the plans under review would slow health care spending. None of them.
Still, lawmakers and the White House press on, relying on GOP weakness in the House and a new veto-proof majority in the Senate. They're also relying on a lack of awareness that claims made on behalf of national health care may be mostly false. Among them:
• America has a health care crisis.
No, we don't. Forty-seven million people lack insurance. Of the remaining 85% of the population, or 258 million people, polls show high satisfaction with the current coverage. Indeed, a 2006 poll by ABC News, the Kaiser Family Foundation and USA Today found 89% of Americans were happy with their own health care.
As for the estimated 47 million not covered by health insurance, 20 million can afford to buy it, according to a study by former CBO Director June O'Neill. Most of the other 27 million are single and under 35, with as many as a third illegal aliens.
When it's all whittled down, as few as 12 million are unable to buy insurance — less than 4% of a population of 305 million. For this we need to nationalize 17% of our nation's $14 trillion economy and change the current care that 89% like?
• Health care reform will save money.
Few of the plans now coming out of Congress will save anything, says the CBO's current chief, Douglas Elmendorf. In fact, he says, they'll lead to substantially higher costs in the future — costs that will be "unsustainable."
As it is, estimates for reforming health care range from $1 trillion to $3.6 trillion. Much will be spent on subsidies to make a so-called public option more attractive to consumers than private plans.
To pay for it, the president has suggested about $600 billion in new taxes, meaning that $500 billion to $2.1 trillion in new health care spending over the next decade will be unfunded. This could push up the nation's already soaring deficit, expected to reach $10 trillion through 2019 without health care reform. Massive new tax hikes will probably be needed to close the gap.
• Only the rich will pay for reform.
The 5.4% surtax on millionaires the president is pushing gets all the attention, but everyone down to $280,000 in income will pay more. Doesn't that still leave out the middle class and poor? Sorry. Workers who decline to take part will pay a tax of up to 2% of earnings. And small-businesses must pony up 8% of their payrolls.
The poor and middle class must pay in other ways, without knowing it. The biggest hit will be on small businesses, which, due to new payroll taxes, will be less likely to hire workers. Today's 9.5% jobless rate may become a permanent feature of our economy — just as it is in Europe, where nationalized health care is common.
• Government-run health care produces better results.
The biggest potential lie of all. America has the best health care in the world, and most Americans know it. Yet we hear that many "go without care" while in nationalized systems it is "guaranteed."
U.S. life expectancy in 2006 was 78.1 years, ranking behind 30 other countries. So if our health care is so good, why don't we live as long as everyone else?
Three reasons. One, our homicide rate is two to three times higher than other countries. Two, because we drive so much, we have a higher fatality rate on our roads — 14.24 fatalities per 100,000 people vs. 6.19 in Germany, 7.4 in France and 9.25 in Canada. Three, Americans eat far more than those in other nations, contributing to higher levels of heart disease, diabetes and some cancers.
These are diseases of wealth, not the fault of the health care system. A study by Robert Ohsfeldt of Texas A&M and John Schneider of the University of Iowa found that if you subtract our higher death rates from accidents and homicide, Americans actually live longer than people in other countries.
In countries with nationalized care, medical outcomes are often catastrophically worse. Take breast cancer. According to the Heritage Foundation, breast cancer mortality in Germany is 52% higher than in the U.S.; the U.K.'s rate is 88% higher. For prostate cancer, mortality is 604% higher in the U.K. and 457% higher in Norway. Colorectal cancer? Forty percent higher in the U.K.
But what about the health care paradise to our north? Americans have almost uniformly better outcomes and lower mortality rates than Canada, where breast cancer mortality is 9% higher, prostate cancer 184% higher and colon cancer 10% higher.
Then there are the waiting lists. With a population just under that of California, 830,000 Canadians are waiting to be admitted to a hospital or to get treatment. In England, the list is 1.8 million deep.
Universal health care, wrote Sally Pipes, president of the Pacific Research Institute in her excellent book, "Top Ten Myths Of American Health Care," will inevitably result in "higher taxes, forced premium payments, one-size-fits-all policies, long waiting lists, rationed care and limited access to cutting-edge medicine."
Before you sign up, you might want to check with people in countries that have the kind of system the White House and Congress have in mind. Recent polls show that more than 70% of Germans, Australians, Britons, Canadians and New Zealanders think their systems need "complete rebuilding" or "fundamental change."
• The poor lack care.
Many may lack insurance, but that doesn't mean they lack care. The law says anyone who walks into a hospital emergency room must be treated. America has 37 million people in poverty, but Medicaid covers 55 million — at a cost of $350 billion a year.
Moreover, as many as 11 million of the uninsured qualify for programs for the indigent, including Medicaid and SCHIP. But for some reason, they don't sign up. Are they likely to sign up for the "public option" when it's made available?