In a big package of tax and spending legislation that Congress is likely to approve this week, Republicans have forced President Obama to swallow three changes that undermine his signature health care law, including a two-year delay of a tax on high-cost insurance plans provided by employers to workers.
In an interview on Wednesday, Mr. Obama’s first budget director, Peter R. Orszag, a leading supporter of the Cadillac tax, said, “The two-year delay is likely to be equivalent to repeal of the tax because people will expect it to be deferred again and again.”
The Cadillac tax contained in the Affordable Care Act represented an attempt to remedy a major problem with health care and tax policy – the exclusion of the cost of employer-sponsored insurance from both income and payroll taxes. Regardless of political leanings, economists generally agree that the exclusion causes employers to offer overly expansive insurance. This depresses wages and increases overall health care spending. Moreover, the exclusion provides a disproportionate benefit to the wealthy.
It goes without saying that delaying a scheduled tax increase is a tax cut. According to the Joint Committee on Taxation, a two year delay of the Cadillac tax combined with deductibility will save taxpayers $20 billion over the next decade. Conservatives are for tax relief.
Conservatives are for repealing ObamaCare, in whole or in part. The Cadillac Plan excise tax is a part of how ObamaCare’s latticework of subsidies and regulations is supported. Delaying on the road to repealing parts of the ObamaCare law is good public policy. Eventually, we want to repeal and replace all of ObamaCare.
Health insurers nabbed a victory in the $1 trillion spending bill unveiled late Tuesday night, earning a one-year freeze on the so-called premium tax. The tax has been strongly opposed by insurance companies and business groups, who argue that the cost of the tax is passed on to workers in the form of higher premiums.
There has been some interesting coverage lately about Florida Sen. Marco Rubio’s successful effort to ensure that taxpayers were not on the hook for excess losses incurred by insurers participating in Obamacare’s exchanges. Today, however, two Associated Press reporters alleged that this victory against the law was one that Rubio “didn’t deliver.” But the facts show that Rubio is right, and the AP is wrong.
The House reached a deal late Tuesday on a $1.1 trillion spending bill and a huge package of tax breaks. Throughout Tuesday, major components of the spending legislation appeared to be falling into place, including an agreement to alter major provisions of the Affordable Care Act, delaying a planned tax on high-cost health insurance plans and suspending a tax on medical devices for two years. Lawmakers also agreed to delay the Cadillac tax on high-cost employer-sponsored health plans by two years, originally scheduled to take effect in 2018.
Consumers anxious to beat the midnight Tuesday deadline to enroll on the federal insurance exchange overwhelmed call center lines Monday, federal officials said. Some people were being asked to leave their names so they could be called back after the deadline to be enrolled. The Centers for Medicare and Medicaid Services said they would still be able to have coverage effective Jan. 1 if they left their contact information before the deadline.
Three of the nation’s largest insurance companies – Aetna, Humana and UnitedHealth – have let researchers have a look at the negotiated prices they pay for services and procedures like C-sections, MRIs and hospital stays. This includes claims data for 88 million customers and $682 billion of healthcare bills. For a long time, economists like Martin Gaynor have believed the more hospitals merge, the more their monopoly power helps them drive prices up. Until now though, the evidence has been limited to single states or hospitals that have merged and it often relied on the sticker price listed by hospitals. This analysis is different because it comes from hospitals coast to coast and uses the actual amount insurers paid.
HealthSpan, the insurance arm of Catholic health system Mercy Health, is getting rid of its medical group and halting sales of ObamaCare policies just two years after acquiring Kaiser Permanente’s Ohio subsidiary. Spokesman Chuck Heald said HealthSpan will stop selling individual and small-group health plans on the ObamaCare exchanges to focus more on Medicare and employer plans. HealthSpan jacked up premium rates for 2016 individual and small-group plans anywhere from 9% to 32% to account for the sicker-than-expected exchange population.
The Obama administration created a “risk corridor” program to help prop up insurers who lost money in the first three years of ObamaCare where profitable insurers would pay some of those profits into a pool to help insurers who lost money. If the amount insurers lost exceeded what the companies paid in, the government would step in and make up the difference. Calling this “a taxpayer-funded bailout for insurance companies,” Rubio last year quietly inserted language into the omnibus government spending bill that barred the Department of Health and Human Services from dipping into general funds to pay failing insurers. “While the Obama administration can still administer the risk-corridor program, for one year at least, they won’t be able to use taxpayer funds to bail out insurance companies,” Rubio said.