The Devastation That Is Obama Care, Part 1: Pending Health Exchange Disasters, Senators Say "Just Kidding" And More

As we move through this new year, we are about to face the reality of Obama Care as its many taxes, regulations, and insanity cascade down on us and our struggling economy. We have not talked about Obama Care’s implications for a while, having been preoccupied with regular political class insanity, the fiscal cliff, the fallacy of gun conrol, and the eight part series on how stupid it is to raise taxes on any American, given how wasteful and inefficient our Federal government is today.

But before reviewing the latest approaching Obama Care fiascos, let's review the basic problems we have discussed way too many times in this blog:

1) Obama Care never identified or addressed the primary root causes of our nation's escalating health care costs:

Americans eat too much and Americans eat too much of the wrong kind of food - These two interrelated causes have many underlying drivers, not the least of which is Federal government farm subsidies. These subsidies have incented American farmers to grow way too much corn, corn that ends up as cheap but unhealthy corn fructose which ends up in just about everything Americans eat.

Americans smoke too much - This problem is exacerbated by the Federal government, with the American taxpayer paying and incenting tobacco farmers over $190 million a year in Federal subsidies to grow more tobacco which ends up killing more Americans.

Americans do not get enough exercise - Americans exercise so little that a recent article in the August 17, 2012 issue of The Week magazine discussed a global study which found that Americans "ranked among the most physically lazy countries in the world," with 40% of American adults rarely engaging in any physical activity or exercise.

Americans are getting older - Rather than mobilizing resources to aggressively go after new cures and treatments for aging diseases, e.g. cancer, dementia, etc., Obama Care instead just introduces a massive new Federal bureaucracy and taxation system without a focus on disease eradication.

Tort Reform - The legislation contains none of the previously successful medical tort reform that some states have already shown to reduce health care costs, an omission due to the fabulous lobbying efforts of the ABA.

Health Insurance Competition - The legislation does nothing to break down the state line barriers that inhibit insurance company competition across state lines.

The legislation never "followed the money." - In other words, when we go into for a simple medical test that takes only a handful of minutes to perform, e.g. a blood test, but end up paying hundreds of dollars for the simple test, Obama Care never took the time to understand where these outrageous amounts of money flow, who benefits from the outrageous fees, understand how much of these fees are reasonable and unreasonable, and how to control the flow.

2) The legislation does little to curtail current wasteful spending of existing massive Federal government health care programs, Medicare and Medicaid, which easily lose well over $100 billion a year to waste, inefficiencies, and outright criminal fraud.

3) The legislation will not contain health care costs, with the Congressional Budget Office estimating that the gross cost of the legislation is almost double what was estimated just a few years ago, the head actuary of Medicare and Medicaid recently estimating that Obama Care will add more than $300 billion to the national debt in the first ten years, and the one sub-program that was supposed to be a positive contributor to the legislation's financials, the CLASS program, has already been shut down for being ineffective.

4) The legislation is written so poorly that companies have already set plans in motion to curtail hiring, change full time employees to part time employees, and cancel existing company health care plans in order to dodge the taxes, regulations, and burdens imposed on them by the legislation. This legislation and the ensuing actions by companies are likely a primary driver to our continuing high unemployment rate.

A whole series of previous Obama Care problems can be viewed beginning with the following post:

http://www.loathemygovernment.blogspot.com/2012/08/obama-care-still-constitutional-and.html

But we will have to spent more than the next week catching up with the disaster that is Obama Care. It is coming at us quickly and it will likely increase medical costs, decrease medical care availability, and crush our struggling economy. Don’t believe this? Consider the following revelations that have come to light over the past few months from reputable, nonpartisan sources as the wave of Obama Care begins crashing upon us.

The following facts and reality, both today and the following posts, are in no particular order. All of the news is bad so we are just going to plow through all of it until we cannot take it anymore.

1) Reuters and CNBC reported on December 13, 2012 that only fifteen states have decided to set up their own, so-called health care exchanges as created under Obama Care. These exchanges are theoretically supposed to provide low cost, readily available health care insurance for those Americans who need it. Under the legislation, the states can establish and operate these exchanges or pass on the option, in which case the Federal government would step in and run a Federal health care exchange within the state.

Thus, by October 1, 2013, the Federal government will have to step up and put in place a functioning health care provisioning service in about two thirds of the country, far more than they thought it would have to do. That’s just ten months from now.

According to the article, administration officials say that is possible: "I am confident that states and the Federal government will be ready in 10 months, when consumers in all states can begin to apply," Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, testified to a House panel.

Remember, that:

• The data systems to do this are not in place or possibly not even being developed.
• The methods and procedures are not close to being in place.
• The customer service functionality and service representative training is not close to being in place.
• The payment process functionality is not close to being in place.
• Adjusting and customizing all of these factors to make sense and hang together at the individual state level will be a monster undertaking.

Given that this is the same government that after decades/centuries still cannot operate a fiscally sound postal system, cannot seal our leaky borders, loses over two hundred billion dollars a year to waste and criminal fraud in the Medicare, Medicaid, and Social Security programs, fails to collect over $380 billion a year from tax evaders, and cannot protect its foreign embassies, I find it highly doubtful that it will be able to handle this massive effort to provide any kind of decent service via health care exchanges within ten months.

No matter what you think of Obama Care, administratively it is going to be a disaster come October 1, 2013. It will be a failure from a procedure perspective and probably a financial perspective at the Federal level since I am pretty sure the original business case and plans for the exchanges did not have the majority of states saying “thanks but no thanks.

An expert in the field, Dennis Smith, who heads health services in Wisconsin, a state that has decided not to pursue its own exchange, summed up the challenge quite politely: "I don't envy them for the job that they have. At the end of the day, you're trying to connect a buyer to a seller. And the fundamental things required to do that are not yet in place."

And that is why most states opted out, it will be a disaster since nothing exists at the Federal level to do this.

2) One of the greatest ironies of the entire Obama Care fiasco is the recent news that eighteen Senate Democrats, the very people that voted to pass the legislation, recently sent a letter to Obama asking that a key revenue provision of the law be stripped out. This revenue/tax provision assessed a 2.3% tax on the gross revenue of medical device manufacturers.

It seems that many of these medical device manufacturers are in the home states of these eighteen Senators. They have been exerting pressure on their elected representatives since this tax will likely do one of four things:

• Put them out of business.
• Curtail their hiring and employing of American citizens in order to pay the additional tax.
• Curtail their research and development efforts.
• Force them to move manufacturing jobs overseas in order to stay financially viable, further hurting a bad unemployment picture.

None of these options will make for happy constituents and voters back home and thus, these politicians are scrambling to protect their jobs in the next election by asking that Obama cave on this tax, a tax they voted for in 2009.

Their position means one of two things, neither of which is very flattering:

1. These eighteen Senators never actually read the legislation they voted to approve, (ala Nancy Pelosi’s infamous quote, “we have to pass the legislation to see what is in it), making them derelict in their duties. What else does a politician do except read, understand, and vote on pending legislation?
2. Or, even more scary, they actually did read the legislation and were too ignorant to understand how badly this will impact their citizens back home, i.e. they never understood the basic reality, businesses have to make a profit and will adjust their business operations (hire fewer people, curtail expansion, go offshore) when an expense like taxes gets higher. Basic economic ignorance.

Whatever the cause, they are now scurrying like rats leaving a sinking ship, trying to get their ill thought out votes reversed. Given that Obama Care’s CLASS provision and 1099 provision have already been overturned, two provisions that were supposed to be cash flow positive to the entire legislation, if this medical device tax is actually delayed or terminated, the net cost of Obama Care would go even larger since its three main revenue producing provisions would have been ended.

Thus, our national debt would skyrocket even more and we still would not have solved the root causes of our escalating health care costs. All because eighteen politicians were derelict in their duties or just plain ignorant of what their vote would do.

3) In light of the message that has finally gotten through to these eighteen Senators, consider what is actually happening on the front lines of the medical device industry, according to recent news reports:

• In northern New Jersey, Andre DiMino operates his family’s medical device company ADM Tronics, which his father founded decades ago. The company has never had to lay anyone off but will do so by lying off three employees (out of twenty) in 2013 as a result of the Obama Care medical device tax.
• The Uresil, LLC company in Skokie, Ill. has already laid off six employees, “primarily related” of the tax. It had previously never laid off any employee: "We had never laid off anybody. We bought the company in 2004, never had a layoff. In fact, even during the recession, we added jobs. ... It wasn't until this tax hit us that we had to do it," stated President Lev Melinyshyn. He also stated that he has had to deeply cut back on research and development in order to protect the jobs of his remaining employees.
• But it is not just the small device companies that are cutting back. Michigan-based Stryker Corporation, a company with 20,000 employees, laid off 1,000 workers in anticipation of the tax in 2012 since it will see a $100 tax million bill dumped on them in the first year of Obama Care: "We would rather put this money towards jobs, innovation, clinical research and priorities that will create value-added medical technology for patients while helping us partner with hospitals to deliver cost effective solutions," CEO Kevin A. Lobo said in a statement.
• The industry’s trade association, The Advanced Medical Technology Association, estimates that the tax ultimately could cost the U.S. economy up to 43,000 jobs.

All for a piece of legislation that has virtually no chance of ever succeeding on any level for any problem for any reason.

That’s enough bad news for today. A massive Federal bureaucracy that does not exist today but needs to be up and running within ten months, eighteen gutless Senators looking to cover their ill thought out votes and protect their political careers, and small and large companies getting hammered and possibly destroyed by an Obama Care tax, resulting in less domestic manufacturing and higher unemployment.

Unfortunately, as we go through this week and next, this is not the only bad news that is about to crash down on all of us as a result of this disastrous piece of legislation.

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