The Devastation That Is Obama Care, Part 3: Health Exchange Chaos, More Companies Cut Hours, Hospitals Going Under And More

This is a third in a series of posts we are doing that updates the growing disaster that is Obama Care as many of its components begin to roll out. In the previous two posts we saw how many Americans are seeing their working hours cut as a result of Obama Care defining full time workers to be those working more than 30 hours a week, how the cost of food, will likely be going up as a result of the legislation, how businesses will be forced to post nutritional information that no one will ever read, etc.

The insanity of this fiasco continues today with the following:

1) A December 1, 2012 article from the Huffington Post, Walmart, the nation’s largest private employer, will begin denying health insurance to newly hired employees who work fewer than 30 hours a week, most likely a result of the Federal government’s definition of what a full time worker is.

The policy is to take effect in January, under which Walmart also reserves the right to eliminate health care coverage for certain workers if their average workweek dips below 30 hours, something that happens often and at the discretion of company managers.

Here we see another company looking to avoid paying excessive taxes and fines associated with Obama Care, hurting some of its employees in the process by cutting them off from company health care insurance. Even worse, most of the part time employees would be eligible to receive subsidized health care insurance via the Federal government, increasing the cost burden on the Federal government and the American taxpayer.

Thus, Walmart has been able to use this ill-written piece legislation to reduce its corporate expense at the expense of the American taxpayer. Insanity.

2) Orlando Health, a not-for-profit network of community and specialty hospitals, is just one example of the massive layoffs expected in the coming year. Officials with the Central Florida-based healthcare services provider announced recently that the largest staff reduction in its nearly 100-year history will result in cutting up to 400 jobs, starting immediately.

Louisiana State University announced in October it would cut 1,495 positions and various health care programs within its seven hospitals to reduce more than $150 million from its budget in anticipation of Obama Care requirements.

Gary Bauer, president of Washington DC-based American Values, warns that this is only the beginning of an economic disaster that will haunt America for years: "The ripple effects, the negatives on our economy, are going to be playing out for not just months, but for years. And I doubt we will ever be able to totally measure the complete cost in manpower and in money, in addition to taxes, that ObamaCare will end up costing the American people, proving once again there is no such thing as a free lunch, and there is no such thing as free healthcare.”

3) One of the easiest to read yet most insightful analyses of Obama Care, and what a disaster it is and will become, was written by Greg Scandlen on November 28, 2912 for the National For Policy Analysis (http://healthblog.ncpa.org/troubles-ahead-troubles-behind/). One part of his writing was a succinct summary of what has already gone horribly wrong as a result of Obama Care:

• The CLASS Act. This feeble attempt to create long-term care insurance was thrown overboard by the administration itself after it became apparent it would be impossible to do.
• The 1099 provision. This requirement that businesses issue a 1099 to any vendor from whom they purchased $600 of goods and services in a year was repealed after business owners explained what an impossible burden it would impose.
• Federal high risk pools. These pools were created and well-funded, but hardly anyone enrolled due to the complexity and cost.
• Retiree health subsidies. This had the opposite problem. Large corporations and unions were more than happy to accept free money to do what they were doing anyway (provide health benefits to retirees), but all the money ran out in about a third of the time expected.
• CO-OPs. Once again, Congress put so many restrictions on what was supposed to be a non-profit health plan in each state that none have come into being even though billions were spent.
• Small employer tax credits. The complexity and confusion of these credits deterred all but a handful of companies from applying.
• Medical Loss Ratios. The MLR requirements have had the very predictable effect of discouraging innovation and higher-deductible or “mini-med” health plans.
• Medicaid expansions. The Supreme Court made these expansions voluntary for the states and it currently looks as though fewer than half will do it.
• Health IT. The HITECH bill was enacted separately from ObamaCare, and many billions have been spent on it, but reports from the field indicate the top-down efforts result in lower quality and less efficiency.
• Limits on FSA funding. It is cruelly ironic, but the families most disadvantaged by the new $2,500 limit on FSA funding are those with special needs children.
• Limits on the Medical Expense Deduction. Beginning in 2013, a taxpayer will be able to deduct only those medical expenses that exceed 10% of income, up from the current 7.5%. Once again it is the sickest families that will be hurt.

This is just what has gone wrong already. He also points out what is likely to fail going forward:

• As we have already reported, Mr. Scandlen points out that The Health Insurance Exchanges are supposed to be operational by October, 2013, only ten months from now, but virtually nothing has been done to create them.
• Even if the exchanges eventually get established, the exchange subsidies will vary by income and family size. But there is no government agency in existence that has the slightest idea what a family’s current income is so it is unclear, and pretty impossible, to determine what families and what individuals are entitled to what subsidies, levels that will very by state.
• The closest source of income determination is the IRS systems but that information is a year or more out of date since you have to wait until April of the following year to know what the previous year’s income was.
• Even then, you will have to have fifty state data systems operations interfacing with the Federal data systems operations. I do not have to tell you how infinitesimally small the odds of that happening accurately, quickly, and efficiently are.

Consider some common sense reasoning, a trait lost on those that wrote and approved Obama Care, relative to determining income levels and the level of subsidies: people will have to pay premiums based on what they earned over a year ago. Someone might have been unemployed last year, entitling them to hefty subsidies, but making good money and who do not need or deserve a subsidy today, or the inverse: someone with a great job last year, indicating they do not deserve a subsidy, might be unemployed this year and be in need of a subsidy. How the exchange reconcile these situations is still unknown and certainly not anywhere close to being in place.

The one optimistic note sounded by Mr. Scandlen, and other experts he cites in his writing, is that Obama Care is soooooo bad that it might collapse under its own bureaucratic weight and complexity. Unfortunately, even if that good event comes to pass, the havoc it would have already wreaked on the economy, the nation’s health care processes and operations, and taxpayer wallets will be catastrophic.

4) An LA Times article from November 30, 2012 also discussed the major problems that are arising due to the fact that many more states than expected will not be implementing Obama Care state level health insurance exchanges. On top of this chaos, the article points out that many, many other legal challenges to various aspects of the legislation will be going forward, with ramifications one way or the other on top of the already mass confusion the law is creating:

• Oklahoma's attorney general has sued the IRS to block them from coming into that state to impose penalties under Obama Care and additional state level lawsuits probably will follow.
• The Pacific Legal Foundation is challenging the individual mandate, I.e. the provision that forces Americans to buy health care insurance. This provision originated in the Senate, even though the Constitution requires that tax measures originate in the House.
• The mandate requiring a person purchase health care insurance is also vulnerable because it is not uniform across all states.
• And, finally, more than 40 lawsuits allege the law violates the 1st Amendment's protection of religious freedom.

I believe Betty Davis once said in a movie, “it’s going to be a bumpy ride.” Combine bad legislation with government and political class incompetence, overlaid with dozen of pending lawsuits, and bumpy is probably an understatement.

The ride and associated bumps continue tomorrow.

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