Health Care FAQ:

• The U.S. House and Senate passed two laws that contained laws aimed at reforming health care in the United States. The Patient Protection and Affordable Care Act was signed into law first, and seven days later the Health Care and Education Reconciliation Act of 2010 was signed into law. Together, these two bills are called the Affordable Care Act.

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• $2.5 trillion.The new health care laws come with an estimated price tag of $2.5 trillion over 10 years of full implementation (2014-2023), and these laws represent a restructuring of one-sixth of the American economy.
  • Misleading Statements on Deficit Reduction. Many supporters claim that this legislation will decrease the deficit between 2010 and 2019; however, that is because many of the taxes begin in the years 2010 and 2011, but most of the spending provisions in the bill do not begin until 2014. When estimating the cost of the bill, the Congressional Budget Office considered 10 years of taxes, but only six years of spending, resulting in an incomplete picture of the total cost of the bill.
• Costs Continue to Increase. Shortly after the health care laws were passed, the nonpartisan Congressional Budget Office reported that the new health care laws will reduce the deficit by $115 billion less than originally estimated, which eliminates most of the $143 billion in deficit reduction originally touted by supporters. To put this deficit reduction assertion into perspective, the United States government has a deficit of over $15 trillion. To see this recent CBO report, click here.

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The health care reform laws include nearly $500 billion in new taxes, fees, and penalties on individuals and businesses. According to the nonpartisan Congressional Budget Office these taxes will be passed along to consumers in the form of higher premiums, higher prescription drugs costs, and more expensive medical devices. Some of these taxes include:

• 40% excise tax on high-cost insurance plans. High costs plans are defined as plans where coverage exceeds $10,200 for individuals or $27,500 for families (starting in 2018).
• 2.3% tax on medical device manufacturers (starting in 2013).
• 0.9% increase in the Medicare payroll tax. Starting in 2013, 2.35% will be taken directly out of employee pay checks for those who make more than $200,000 individually, or $250,000 as a household. Because it is not indexed for inflation, more and more Americans will have to pay the tax every year as the economy grows and average wages increase. 
• 3.8% Medicare tax on investment income. This tax will apply to the sale of single family homes, townhouses, co-ops, condominiums, and even rental income (starting in 2013).
• $14.3 billion annual tax on health insurance companies (starting in 2014).
• $2.8 billion annual tax on drug manufacturers (starting in 2011).

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• Medicare Cuts Reduce Access To Care. The new health care laws will cut Medicare by $529 billion, and the cuts to hospitals, home health agencies, nursing homes, and hospice facilities started immediately. The nonpartisan Chief Actuary of the Centers for Medicare and Medicaid Services (CMS) issued a report on the effects of the new law and stated that it will jeopardize access to care for seniors because payment reductions to providers could result in doctors choosing to no longer accept Medicare patients.
• Medicare Advantage Cuts. Included in the cuts to Medicare is a $202 billion cut to Medicare Advantage (MA) plans. One in four seniors, or 11 million Americans choose Medicare Advantage for their health care insurance, largely due to the fact that MA plans often provide more comprehensive care for seniors compared with traditional Medicare. The CMS report estimates that enrollment in such plans will decrease by 50 percent as the plans reduce extra benefits that they currently offer. Seniors leaving the private plans would still have health insurance under traditional Medicare, but millions of beneficiaries will face higher out-of-pocket costs and will have fewer choices. The nonpartisan Government Accountability Office found in a 2008 study that seniors in MA plans saved an average of $804 annually.
• Higher Part D Premiums. Advocates of the new health care law claim that the measure will eventually eliminate the Part D coverage gap, or “donut hole.” The Congressional Budget Office found that closing the donut hole will result in an average increase in premiums for Part D beneficiaries of about 4 percent in 2011, rising to about 9 percent in 2019. Of more than 17 million seniors paying Part D premiums, only 2.9 million hit the donut hole each year, but all individuals paying Part D premiums will see their costs increase.
• Unelected Bureaucrats Will Make Benefit Decisions. A new federal board will be created with the power to make binding recommendations for Medicare, putting unelected Washington bureaucrats between patients and their doctor.
• Unsustainable Payments To Doctors. Despite the fact that doctors are at the center of health care, the health care reform laws excluded language providing adjustments to the Medicare formula that governs physician reimbursement levels, also known as the “doc fix.” As a result, Congress has continued to pass a series of short-term extensions, leaving doctors and seniors with uncertainty about future reimbursement levels. The lack of a long-term doc fix provision was partly by design since bill supporters feared that its inclusion would have raised the overall cost of the health care measure by hundreds of billions of dollars.

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• Expands Medicaid. States are required to expand Medicaid eligibility to all individuals earning up to 133% of the federal poverty level ($29,327 for a family of four in 2010). Prior to the law, low income, childless adults were generally ineligible. The expansion of Medicaid gives an additional 16 million people eligibility for Medicaid benefits. 
• States Will Foot The Bill. Medicaid is a financial partnership between states and the federal government. The law only provides states with the full funding needed to expand their Medicaid program though 2016, subsequently leaving state taxpayers to pay part of the cost. Many states could not afford their Medicaid program before the health care bill was signed into law, and many state budgets will be subject to intense pressure from this mandate. The mandate also prohibits states from making changes to the program in an effort to reduce costs. 
• Inability To Find a Doctor. Medicaid currently pays physicians 40 percent below rates charged to private insurance plans. Many physicians already limit how many Medicaid-eligible patients they see or simply choose not to accept them, creating a situation where beneficiaries may have a Medicaid insurance card, but no access to a physician who will see them. The influx of 16 million newly eligible Medicaid beneficiaries will only compound this problem.

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• Requirement to Provide Health Coverage.  Small businesses with more than 50 full-time employees that do not offer government-approved health insurance coverage will be required to offer approved health insurance or pay a fine beginning in 2014. The fine imposed from this new requirement is estimated to raise $52 billion off the backs of small businesses.
  • Full time is defined as working 30+ hours per week. Seasonal employees who are full time for less than 120 days of the year are exempt from the employer mandate calculation.
  • For those employers who do not provide coverage, a penalty will be assessed based on the number of employees who will receive a premium credit for their insurance in the American Health Benefit Exchanges, multiplied by $2,000. 
  • Employers who provide coverage that does not meet government-approved standards will have a penalty assessed based on the number of employees who will receive a premium credit for their insurance in the American Health Benefit Exchanges, times $3,000.

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• Limited Availability. Beginning in 2010 there is a small business health care tax credit available to qualifying employers. Those employers must cover at least 50% of the cost of health care coverage for employees, have less than the equivalent of 25 full-time workers, and must pay average annual wages below $50,000.

• Unforeseen Negative Consequences. There are several possible unforeseen effects of this tax credit, including discouraging small businesses from adding employees or paying higher salaries. If a small business hires additional employees or increases employee pay, the credit begins to decline and eventually phases out when the total number of workers reaches 25 or the average wages equals $50,000.

• Leaves Businesses On The Hook. Since the credit is only available to small businesses for a maximum of six years, when the credit is no longer available, an employer may not be able to afford the formerly government subsidized levels of compensation. This creates an incentive to let workers go or drop coverage.

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• Most Likely, Yes. The health care laws include an individual mandate that requires most individuals to maintain government-approved insurance coverage for themselves and their dependents starting in 2014. Minimum essential coverage includes coverage under public programs (e.g. Children’s Health Insurance Program, Medicaid, or Medicare) and coverage purchased in the private market that meets government standards.
• Penalties for Non-Compliance. The penalty is phased in between 2014-2016. In 2016, the penalty is 2.5 percent of applicable income or $695, whichever is greater. The $695 fine is indexed for inflation after 2016 and will be enforced by the withholding of annual IRS tax refunds. Dependants under the age of 18 are fined at a rate of 50 percent of the applicable adult fine.
• Some Exemptions. Exemptions are provided for individuals with income below the personal exemption amount for the applicable tax year, certain religious groups, illegal immigrants, incarcerated individuals, and members of Native American tribes.

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Rather than having government health care as some lawmakers advocated, the new health care laws will create “American Health Benefit Exchanges” in 2014. These exchanges will provide individuals and small businesses with information about government-approved health plans. These exchanges will be state-established government entities that are designed to provide information about plans, options, and costs.

• Premium Credits. Through the purchase of coverage through an exchange, some individuals will be eligible for premium assistance credits from the federal government. To be eligible for a premium credit, individuals must have household income of less than 400 percent of the Federal Poverty Level ($88,200 for a family of four in 2010).

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• New Caps on FSAs. The new health care law caps FSAs at $2,500 beginning in 2013. Previously, individuals could set aside up to $5,000 through their FSAs to help budget for certain health care expenses. The new health care laws will not only restrict the amount individuals can contribute to their FSA, but they also place new restrictions on qualifying medical expenses.
• New Limits on HSAs. The new health care laws will change the tax provisions on HSAs, making them less attractive. HSAs will likely be prohibited from participating in the national exchange due to the fact that it could be difficult for them to meet the “essential health benefit” criteria that all health care plans must meet.

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• Gimmicks Attempt to Hide Taxpayer Funding of Abortions. The health care laws included a so-called “compromise” on taxpayer dollars being used for abortion coverage. Since 1976, Congress has prevented the use of federal funding for abortions with the inclusion of the Hyde Amendment, which prohibits the use of Medicaid funds to perform abortions except in cases of rape, incest, or where the life of the mother is threatened. This legislation will change this longstanding policy by allowing health plans that are sold on the government exchange to offer rider polices for abortion coverage. Although the compromise allows states to opt out of providing insurance coverage for abortions, taxpayers in a state that opts out would still see their federal tax dollars subsidize plans that offer coverage for elective abortions in other states. 
• Executive Order Masks the Intention of the Bill Text. In order for pro-life Democrats to support the health care bills, President Obama agreed to issue an Executive Order that would reassert the Hyde Amendment on the health care legislation. However, not only does an Executive Order not correct any of the serious pro-abortion provisions in the bill, it cannot override or change the underlying conflict with the health care law. Additionally, the President can amend or repeal his Executive Order at any time.

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• Step By Step Reform. I believe Congress should have implemented step-by-step reforms that are proven to reduce health care costs. To see health care reform principles I support, click here.

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• Possible Shortages and Price Increases. The nonpartisan Chief Actuary of the Centers for Medicare and Medicaid Services (CMS) issued a report on the likely effects shortly after the legislation was passed. The report stated that health care shortages and price increases are “plausible and even probable.” 

• Employers Will Drop Coverage. The Chief Actuary concludes that 14 million people will lose their employer-sponsored coverage. Smaller employers will be inclined to terminate coverage so their workers can qualify for “heavily subsidized coverage” through the exchange.

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