Friday, March 26, 2010

The impending healthcare budget and abortion disaster

Under ObamaCare, it is SIGNIFICANTLY better for the majority of individuals to not receive healthcare at work, because the tax subsidies from being on the healthcare exchange vastly outweigh the tax-benefits from receiving healthcare at work.

In other words, for like 90-something percent of the US population, it's better to go to their employer, tell them they'll exchange their healthcare benefits for a raise equal to the cost of their benefits minus the employer penalty, and then turn around and buy insurance on the government healthcare exchange with massive subsidies for the government.

I've praised Doug Elmendorf (the CBO director) in the past for attempting to stay unbiased in the face of massive political and personal pressure from the White House and Congress (invites to dine w the President and other social things, as well as more traditional political pressure). My praise for Elmendorf is hereby retracted. The CBO's estimate of the costs of this plan were awful. I'm not even considering the budget shenanigans (6 years of payouts funded by 10 years of costs, a 25% cut in medicare reimbursements to doctors), because the CBO isn't allowed to consider those - those are squarely in the realm of the Senate and the House.

However, to assume that the "Medicare task force will find cuts that nobody has considered yet", to assume that "GDP growth isn't altered" and to assume that "employer-based insured won't significantly switch to the exchanges" is absolutely idiotic.

We're gonna need another healthcare bill to fix this one, but I sincerely doubt it'll be able to restore the R+D destruction, and we'll be in a much worse fiscal situation when we do it. This isn't a good thing.

On another note, the fact that abortion is not permitted to be covered on insurance exchanges, and the strong financial incentives towards going onto the exchanges, combined with the fact that very few people are going to expect to need abortions for themselves (or, worse, their children), means that abortion is now going to be out of reach of the vast majority of people for whom its most important - the young, the low-income, etc.

 Take a medium-sized firm that employs a hundred people earning $40,000 each—a private security firm based in Atlanta, say—and currently offers them health-care insurance worth $10,000 a year, of which the employees pay $2,500. This employer’s annual health-care costs are $750,000 (a hundred times $7,500). In the reformed system, the firm’s workers, if they didn’t have insurance, would be eligible for generous subsidies to buy private insurance. For example, a married forty-year-old security guard whose wife stayed home to raise two kids could enroll in a non-group plan for less than $1,400 a year, according to the Kaiser Health Reform Subsidy Calculator. (The subsidy from the government would be $8,058.)

In a situation like this, the firm has a strong financial incentive to junk its group coverage and dump its workers onto the taxpayer-subsidized plan. Under the new law, firms with more than fifty workers that don’t offer coverage would have to pay an annual fine of $2,000 for every worker they employ, excepting the first thirty. In this case, the security firm would incur a fine of $140,000 (seventy times two), but it would save $610,000 a year on health-care costs. If you owned this firm, what would you do? Unless you are unusually public spirited, you would take advantage of the free money that the government is giving out. Since your employees would see their own health-care contributions fall by more than $1,100 a year, or almost half, they would be unlikely to complain. And even if they did, you would be saving so much money you afford to buy their agreement with a pay raise of, say, $2,000 a year, and still come out well ahead.

and here:
The penalty is assessed through the Code and accounted for as an additional amount of Federal tax owed. However, it is not subject to the enforcement provisions of subtitle F of the Code. The use of liens and seizures otherwise authorized for collection of taxes does not apply to the collection of this penalty. Non-compliance with the personal responsibility requirement to have health coverage is not subject to criminal or civil penalties under the Code and interest does not accrue for failure to pay such assessments in a timely manner.

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