Obamacare: Bad for Low-Income Households
Millions of Jobs at Risk. The health care takeover creates a new tax on jobs by forcing employers who do not provide “acceptable” coverage to pay a “fair share” tax of $2,000 per full-time employee—nearly triple the $750 tax initially proposed.[i] Harvard Professor Kate Baicker’s analysis demonstrates that at least 5.5 million low-wage workers will be “at substantial risk of unemployment” due to new mandates on employers.[ii] Her analysis also found that minority workers were particularly at risk.
Lower Wages. A Congressional Budget Office report, while noting that “a pay-or-play provision could reduce the hiring of low-wage workers,” also found that the cost of such new mandates and taxes will be passed on to workers in the form of lower wages.[iii] In other words, a pay-or-play tax on jobs will drain the paychecks of those low-income workers most in need of additional purchasing power.
Medicaid Not “Real Insurance.” The health care takeover includes significant expansions of Medicaid, which pays physicians 40 percent below private insurance plans, and which in most states suffers from reimbursement delays and other bureaucratic hassles.[iv] These systemic problems in Medicaid keep provider participation low—creating a situation where many beneficiaries have an insurance card but no access to care.
No Choice of Plans. The health care takeover forces individuals with incomes under 133 percent of the federal poverty level ($29,327 for a family of four) onto government-run Medicaid, rather than giving these individuals a choice of private plans on the new health insurance exchange. Some may question the logic behind provisions that allow a family of four with $30,000 in annual income a choice of health insurance options, while denying the same choice to a family with $1,000 less in income.
Will States Provide Medicaid Coverage? The health care takeover prohibits states from reforming their Medicaid programs at any point in the future. Moreover, the law requires all states to pay 10 percent of the proposed Medicaid expansion beginning in 2019—tens of billions in new state spending imposed by federal requirements. Governors in both parties have already voiced significant concerns about what Tennessee Democratic Gov. Phil Bredesen termed “the mother of all unfunded mandates” being imposed upon states.[v] As a result of the added restrictions in Democrats’ proposals, the head of Washington state’s Medicaid program believes that states facing severe financial distress may say, “I have to get out of the Medicaid program altogether”—potentially jeopardizing coverage for millions of low-income Americans.[vi]
[i] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.
[ii] Kate Baicker and Helen Levy, “Employer Health Insurance Mandates and the Risk of Unemployment,” NBER Working Paper 13528, October 2007, http://www.nber.org/papers/w13528.pdf.
[iii] Congressional Budget Office, “Effects of Changes to the Health Insurance System on Labor Markets,” July 13, 2009, http://www.cbo.gov/ftpdocs/104xx/doc10435/07-13-HealthCareAndLaborMarkets.pdf
[iv] Testimony of Congressional Budget Office Director Doug Elmendorf before Senate Finance Committee, February 25, 2009, http://www.cbo.gov/ftpdocs/99xx/doc9911/02-25-Health_Insurance.pdf.
[v] Kevin Sack and Robert Pear, “Governors Fear Medicaid Costs in Health Plan,” New York Times July 19, 2009, http://www.nytimes.com/2009/07/20/health/policy/20health.html.
[vi] Clifford Krauss, “Governors Fear Added Costs in Health Care Overhaul,” New York Times August 6, 2009, http://www.nytimes.com/2009/08/07/business/07medicaid.html.