• December 5, 2012

    The Left Makes Its Obamacare Motives Clear

    The Commonwealth Fund released a study this morning regarding the impact of Obamacare’s medical loss ratio requirements on insurance plans -- and the paper’s findings speak volumes about the Left’s move toward government-run health care.  Included on page 4 of the brief is this sentence regarding the impact of Obamacare’s changes: “In 2010, individual insurers had an operating profit mar­gin of 0.15 percent overall, but this dropped to an oper­ating loss of –1.2 percent in 2011, amounting to a $351 million reduction in operating profits overall.” In other words, in the individual insurance market, insurers lost money due to the new mandates imposed by Obamacare. Those losses may be sustainable for one year, but if continued for long periods of time, carriers will doubtless drop out of insurance markets, or go out of business altogether.

    So how did the Commonwealth paper characterize these troubling developments? As “Substantial Gains for Consumers.” Which raises an obvious follow-up: Why would Commonwealth believe that making insurers unprofitable represents a “substantial gain” for consumers?

    The obvious follow-up question has an equally obvious answer: Because the Commonwealth Fund, like the rest of the left, wants to create a government-run health system -- and deliberately making private insurers unprofitable under the aegis of “consumer benefits” represents a necessary precursor to that goal of socialized medicine. Or, to use a Shakespearean analogy, Commonwealth hopes to praise private insurance in order to bury it. That’s the true story of this morning’s report.

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  • December 3, 2012

    WaPo Front Page: AARP Lobbies Against Changes That Could Hurt Its Bottom Line

    There is a front-page story in tomorrow’s Washington Post about AARP’s financial conflicts of interest in the ongoing fiscal cliff debate.  The article references Sen. DeMint’s report into AARP’s business practices, including the report’s conclusion that Medigap reform could cost AARP $1.8 billion in “royalty fees” over the next 10 years.  The article also includes some interesting new nuggets regarding AARP’s business practices:

    1. Former AARP executives admitted to the Post that the organization’s business model -- in which AARP receives a percentage of every Medigap premium dollar paid by seniors -- presents a financial conflict-of-interest, by giving AARP an incentive to keep premiums high.  Former AARP executive Marilyn Moon said: “There is a potential conflict of interest….Any way you look at changes in Medigap that people are talking about, I think it’s good for beneficiaries, and anybody who is opposing that who claims they are looking out for beneficiaries, you have to wonder why.”  And former AARP CEO Bill Novelli made a similar admission: “It’s fair to say that AARP does have a financial interest in Medigap insurance because it’s a significant revenue-raiser for them.  If Medigap were somehow reduced, then AARP would have a financial reduction.”
       
    2. AARP executives personally profit based on how much “royalty fee” revenue the organization generates.  According to the article:

       AARP executives have a personal financial incentive to boost the group’s revenue because annual bonuses for employees are determined in part by AARP’s “gross revenues,” according to federal tax records.  They show, for example, that [CEO Barry] Rand received $140,156 in “bonus and incentive compensation” last year, about 15 percent of his total compensation of $938,553.  AARP officials said that revenue accounts for only about 5 percent of the bonus calculation and that other factors, such as serving members and promoting social change, are far more important.  A person familiar with the group’s operations said the percentage was higher in the recent past.  “Revenues are very important.  You have to make your numbers,” said the person, who spoke on the condition of anonymity to discuss internal matters.”
       
    3. AARP finally admitted publicly it lobbies on Medigap issues for which it has a financial conflict-of-interest, as noted above.  Two years after a senior AARP official told CNN the organization did not lobby on Medigap “at all,” the organization finally admitted to the Post that it HAS been lobbying against Medigap changes that could cost it financially.  Now it claims that Medigap “is not and was not a lobbying priority,” and that “there were no phone calls, e-mails, or robo-calls generated on Medigap proposals” -- not yet anyway.  Finally, as the Post article notes, in writing about Medigap to the supercommittee last year, CEO Barry Rand “did not mention AARP’s dominant role in the Medigap market,” and the financial conflicts inherent in AARP’s business arrangements.
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  • December 3, 2012

    We Told You So: Nation's Largest Employer Scales Back Health Coverage

    Over the weekend, more details emerged about how Obamacare is transforming the American workforce -- and not for the better.  The New York Times reported on many small firms not hiring new workers, or scaling back hours for existing workers, to avoid the law’s new taxes.  And the Huffington Post reported that Wal-Mart has changed its employment policy, eliminating health insurance benefits for new part-time workers -- hereby dumping them on to Obamacare’s exchanges:  

    Walmart, the nation’s largest private employer, plans to begin denying health insurance to newly hired employees who work fewer than 30 hours a week, according to a copy of the company’s policy obtained by The Huffington Post.  Under the policy, slated to take effect in January, Walmart also reserves the right to eliminate health care coverage for certain workers if their average workweek dips below 30 hours.…

    Labor and health care experts portrayed Walmart’s decision to exclude workers from its medical plans as an attempt to limit costs while taking advantage of the national health care reform known as Obamacare….“Walmart is effectively shifting the costs of paying for its employees onto the federal government with this new plan, which is one of the problems with the way the law is structured,” said Ken Jacobs, chairman of the Labor Research Center at the University of California, Berkeley.

    “Walmart likely thought it didn’t need to offer this part-time coverage anymore with Obamacare,” said Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California, Santa Barbara.  “This is another example of a tremendous government subsidy to Walmart via its workers.”

    In pursuing lower health care costs, Walmart is following the same course as many other large employers. But given its unrivaled scale, Walmart’s policies tend to influence American working conditions more broadly.  Tom Billet, a senior consultant at Towers Watson, a professional services firm that works with large companies to develop benefit plans, said other companies are also crafting policies that will exclude some part-time workers from medical coverage.  Billet portrayed the growing corporate interest in separating out part-time workers as a reaction to another aspect of Obamacare -- the new rules that require companies with at least 50 full-time workers to offer health coverage to all employees who work 30 or more hours a week or pay penalties.

    One major bottom-line question in this development relates to how many more people will be added to government health rolls by this apparent trend.  In last month’s job data, the Bureau of Labor Statistics estimated nearly 28 million Americans work part-time -- defined by the BLS as fewer than 35 hours per week.  Using Obamacare’s less stringent 30 hours per week standard would reduce that 28 million number somewhat -- nd many part-time workers do not have access to employer-provided health insurance currently.  (Of firms offering insurance to their employees, 28% extend that offer to part-time workers as well -- a fact which only indirectly illuminates the number of part-time workers receiving insurance coverage from their employer.)

    All that said, the point remains that millions -- and perhaps tens of millions -- of part-time workers who currently receive insurance from their employers could lose it due to Obamacare -- and federal taxpayers will be stuck paying the bill.  That’s not “reform,” and it’s not a change millions of American workers, to say nothing of American taxpayers, can believe in.

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  • December 3, 2012

    Ebenezer Obama's 'Scrooge Christmas'

    On Friday, President Obama said that going over the “fiscal cliff” would result in a “Scrooge Christmas” for millions of struggling middle-class families.  The President is right that raising taxes on anyone would put a “Bah, humbug!” into Americans’ holiday spirit.  But we like to think that, after calling other politicians names, President Obama received a visit by the following three spirits: 

    Ghost of Christmas Past:  President Obama signs SCHIP legislation, including his first -- but not his last -- tax increase on the middle class.  Old Fezziwig complains that Obama unfairly broke his “firm pledge” to the middle class not to raise “any of your taxes.”

    Ghost of Christmas Present:  President Obama’s latest tax increases in Obamacare take effect on January 1, raising taxes on millions of middle-class families who buy health insurance, participate in flexible spending arrangements, or use medical devices.  As a result, the Cratchits can’t afford to buyTiny Tim a new crutch, due to the medical device tax used to fund Obamacare. 

    Ghost of Christmas Future:  Obamacare’s other taxes slowly kick in, including the 40 percent tax on health benefits -- because Obamacare forces people to buy health insurance so that the government can tax it.  That doesn’t even count the new taxes that have yet to be enacted.  Both the non-partisanMedicare actuary and Congressional Budget Office agree that Obamacare is unsustainable as written -- meaning even more tax hikes are on the way.  And the grave seen at the end of our tale isn’t Ebenezer’s --it’s that of the American taxpayer, worked to death to pay for Obamacare’s crushing fiscal burdens.

    But as Dickens taught us more than a century ago, there is always time to repent, seek forgiveness, and change course.  The question now is, will Ebenezer Obama listen to the lesson these three spirits have provided, and stop raiding the middle class to pay for unsustainable new entitlements?

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  • November 26, 2012

    Obamacare's Tax on Charity

    Amidst the debate over tax policy associated with the fiscal cliff, the Washington Post ran a column yesterday calling the deduction for charitable contributions “indispensable,” because it encourages private giving, “an economic benefit we can’t afford to mess with.”

    Problem is, Obamacare already DID mess with the charitable deduction -- because for “high-income” individuals, charitable contributions will be taxed, beginning January 1.  Per Section 1402 of the reconciliation bill amending Obamacarethe law’s new 3.8% tax on “high-income” individuals is assessed on filers’ adjusted gross income -- that’s income BEFORE deductions like those for charitable contributions are taken into account.  Individuals subject to the 3.8% tax will pay the tax on all income they receive, regardless of whether or not they donate that income to charity.  For instance, a lottery winner who wanted to donate half of his $500,000 winnings to charity would pay $9,500 ($250,000 times 3.8%) for the “privilege” of doing so.

    What’s worse, this tax will hit more and more individuals over time -- because the “high-income” thresholds are not indexed for inflation.  The Medicare actuary has predicted that the tax will hit only 3 percent of filers when it goes into effect next year, but nearly 80 percent of filers in the long term.

    So rather than encouraging charitable contributions, Obamacare actively works todiscourage them -- perhaps because liberals can’t stand the thought of entities other than government engaging in service for the public good.  It’s enough to put a “Bah, humbug!” into anyone’s holiday spirit.

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