By Thomas Martin Salazar (Originally Published on Cafe Con Leche republicans blog)
The Affordable Care Act (Obamacare) is Obama’s crowning achievement. While the Affordable Care Act claims to lower costs, it runs into several problematic realities – realities that may cause the United States to be worse off than it would be without this bill. Consider this, you are watching TV or listening to the radio and hear a commercial boasting a new breakthrough prescription drug. But like clockwork, you inevitably hear a long list of side effects – symptoms which seem worse than the potential disease itself. The potential side effects of prescription drugs make us pause before proceeding. Likewise, we should consider the side effects of the laws and legislations passed by our congress, especially in regards to healthcare. Health care is a major issue that affects every person and every business. And while the Affordable Care Act seems to come with many new perks and benefits, a deeper inspection of the proverbial fine print reveals that the side effects of Obamacare greatly outweigh its assumed benefits.
A major negative side effect of Obamacare is the potential for Americans to lose their current doctors. For instance, his plan gives no incentives for businesses to keep their employees on their current health care plans. This of course will result in many people losing the ability to see their own doctor that they have possibly seen for years, unless they pay out of pocket. The Democrats actually passed and the President signed this bill that is more cost effective for large companies to pay the $2,000 penalty built into the Affordable Care Act, rather than paying for each individual employee’s health insurance. This is exposed, in a report prepared by the Ways and Means Committee. It states,
“In total, the 71 Fortune 100 companies that responded to this inquiry could save an estimated $28.6 billion in 2014 alone by eliminating health insurance coverage for their more than 5.9 million U.S. employees (impacting more than 10.2 million employees and dependents covered by those plans) and instead paying the $2,000 per full-time employee fine created in the Democrats’ health care law. From 2014 through 2023, these employers could save an astounding $422.4 billion if they took this action.”
“Individually, these employers could save, on average, $402.3 million ($4,821 per full-time and part-time U.S. employee) – on an after tax basis – in 2014 alone by eliminating their health insurance coverage and instead paying the employer mandates $2,000 per full-time employee fine. From 2014 through 2023, the average employer responding to the survey could save $5.9 billion if they dropped coverage in favor of paying the mandate penalty.”
Furthermore, the CBO (Congressional Budget Office) projects – in a worst case scenario – that 20 million Americans could lose their coverage. Therefore close to 20 million Americans could lose their current doctors because of this.
A second negative side effect is that this new tax will not just impact the fortune 100 companies and their employees, but it will also negatively impact hiring practices of small business. According to the Manhattan Institute’s senior fellow Diana Furchtgott-Roth:
“The mandated $2,000 tax per worker in the new health care law, effective 2014 and levied on employers who do not provide the right kind of health insurance, is discouraging hiring. The Patient Protection and Affordable Care Act of 2010 will raise the cost of employment when fully implemented in 2014. Companies with 50 or more workers will be required to offer a generous health insurance package, with no lifetime caps and no copayments for routine visits, or pay an annual penalty of $2,000 for each full-time worker. Moving from 49 to 50 workers will cost a firm $40,000 a year.”
This is another example of a job destroying policy that will negatively affect real people. Just like you and me, businesses run on incentives, and incentives like these will hinder our economy from growing. Diana Furchotgott-Roths’s study also reveals that this law disproportionately will affect minorities and high school dropouts when it comes to employment opportunities. This is all a result of an ill-advised penalty to punish small business by making the cost of employing new people more expensive. Moreover, the effect this would have on economic growth and job creation would be significantly counterproductive towards the goal of emerging from this recession.
A third negative side effect is the 500-700 billion dollars in spending reductions to Medicare. This is problematic since the United States has a large ageing population and with our advances in medical technology (thank God) we now are able to live longer than ever before. With this reality, cuts to Medicare could not come at a worse time. In fact, these cuts to Medicare will cause 15% of hospitals to run potentially at a loss. This means that close to 15% of hospitals that help Medicare patients who are elderly could go out of business because of the loss in revenue due to reduced Medicare spending. For instance, Avick Roy of Forbs states,
“The Obama administration’s own Medicare actuary, Richard Foster, has explained that the Obamacare Medicare cuts could make unprofitable 15 percent of hospitals serving Medicare patients. “It is doubtful that many [hospitals and other health care providers] will be able to improve their own productivity to the degree” necessary to accommodate the cuts, Foster has written. “Thus, providers for whom Medicare constitutes a substantial portion of their business could find it difficult to remain profitable, and, absent legislative intervention, might end their participation in the program (possibly jeopardizing care for beneficiaries. [Our] simulations…suggest that roughly 15 percent of [hospitalization] providers would become unprofitable within the 10-year projection as a result of the [spending cuts].” (hyperlink original to Avik’s quote)
In the end it comes down to basic economics – you cannot have an increasing demand without equivalent growth in supply and actually believe that costs will go down. If these hospitals close their doors, it will reduce supply and cause health care costs to increase even more. This proves to be increasingly problematic, since the Affordable Care Act also increases demand by mandating all the uninsured to be insured (or pay a penalty). This law hypothetically was intended to lower health care costs; yet it does nothing to increase the supply of care, while simultaneously increasing the demand for that care. It is simply economically flawed to think this will lower health care costs. Currently, the health care industry accounts for about 18% of the United States’ GDP. This sector is too large for us to ignore.
Finally, the fourth negative side effect exacerbates the problem that the Affordable Care Act was intended to fix through lowering costs. The problem is that it does nothing for increasing the supply of doctors or care providers. This law actually incentivizes the opposite. For example, a recent Investors Business Daily editorial looked into a poll taken by the Doctor Patient Medical Association. It states, “A stunning 83% of physicians, answering by fax and online from April 18 to May 22, are thinking about quitting their profession, and 65% say government involvement is most to blame for current health care problems.”(bold added). Thus, if doctors decide they no longer wish to practice medicine, this results in one thing – a reduction in supply. Thus the Affordable Care Act inadvertently, while it may have been well intentioned, will surely increase the overall cost of health care.
Therefore, this law does little to nothing to lower the costs of healthcare in America. This should not be surprising. Remember President Obama promised he would bring insurance premiums down for American families by $2,500. Sadly this was another broken promise, because premiums have increased by $3,000 on American families. In fact Investors Business daily explains that “premiums climbed faster in Obama’s four years than they did in the previous four under President Bush, the survey data show.” In theory, President Obama’s and the Democrats’ health care policies were intended to lower cost, but in reality they failed to do so; for in order for healthcare costs to go down, there needs to be an increase in the number of healthcare providers and suppliers to meet the new and enlarged demand. Americans must think beyond the benefits of today and look at the realities of tomorrow. Hence, we need to repeal the Affordable Care Act!
Editors note: as with all blog postings that appear with a by-line, the opinions presented are the author’s and not necessarily the positions of Cafe Con Leche Republicans.
Thomas Martin Salazar is an Arizona leader of the Café con Leche Republicans. He holds a Bachelor’s degree in History from Grand Canyon University and is currently working on obtaining a MDiv in Biblical Communication from Phoenix Seminary. Thomas has also served as the Grand Canyon University College Republicans Vice President and interim President (February 2007-April 2008) and as a Maricopa County Republican Precinct committeeman (August 2009 – August 2012).
Other post by Thomas Salazar:
Gary Johnson, the Wasted Vote