impacts of obamacare

8/7/2019 IMPACTS of OBAMACARE

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sick to buy coverage) are penalized. A modest and sensiblereform would be to simply apply the same set of rules to theindividual health insurance market.

But by prohibiting the application of pre-existing conditionexclusions under any circumstances, the new law mindlesslywrecks this careful balance and creates a recipe for disaster.

Since heath plans will also be required to extend coverage to anyqualified applicant, and will not be allowed to vary premiums

based on individual health status, the effect will be to encouragehealthier individuals to wait until they are sick before they buyhealth insurance. With fewer healthy individuals buyingcoverage, premiums will need to rise to cover the costs of thesick, which in turn will drive even more individuals in good, oreven fair, health to drop coverageknowing that if they becomesick they can buy insurance laterthus driving premiums yet

higher. The result could be a classic insurance plan deathspiral.

Rather than ditching this bad idea in favor of a more sensibleand balanced approach, congressional leaders tried to limit itsinevitable disastrous effects by adding an individual mandate tobuy health insurance or pay an income tax fine. A large part of

the rationale offered for the mandate was the need to preventhealthier individuals from dropping their coverage.

Setting aside the merits of challenges to the individual mandatesconstitutionality, the practical reality is that the mandate will be


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ineffective and unenforceable due to the way Congress wrote thespecific provisions. For most individuals, the tax penalty for notbuying coverage will be modest. More important, in response to

strong and widespread public opposition to the mandate,Congress added provisions that explicitly bar the IRS from usingits normal tax enforcement powers of property liens and criminalpenalties to collect the fines imposed on individuals who do notcomply. Thus, when faced with escalating health insurancepremiums, individuals who do not want to pay for coverage notonly can ignore the mandate, but, by making minor changes intheir federal income tax withholding payments, can also avoidpaying most, or even all, of the penalties for noncompliance.

Because the blanket prohibition of pre-existing conditionexclusions and the individual mandate provisions do not takeeffect until 2014, there is still time for a future Congress toprevent a health insurance market destabilization by repealingthis disastrous legislation. At that point Congress can thenconsider making more sensible changes. However, until Congressacts, state policymakers face the looming threat of a healthinsurance market meltdown.

3) Rate Regulations. In addition to the indirect effects oninsurance premiums of new federal benefit mandates andcoverage rules, health insurance premiums will also be directlyaffected by new federal rate regulation provisions. The largesteffect will come from a provision that limits age-rating of premiums to a ratio of no more than three to one. This provision


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will take effect in 2014 and means that plans will not be allowedto charge a 64-year-old more than three times the premiumcharged an 18-year-old for the same coverage. In contrast, the

natural variation in coverage cost is about five to one meaningthat the oldest group of (non-Medicare) individuals normallyconsumes about five times as much medical care as the youngestgroup.

This mandated compression in the age-rating of coveragemeans that insurers must charge older individuals premiums

that are less than the actuarial value of their coverage, with theresult that insurers will need to compensate by charging youngerindividuals premiums that are higher than the actuarial value of their coverage. Thus, this federally mandated under-pricing of coverage for older individuals will further increase premiums forthe young who, because of their generally good health statusand lower earnings, are the group that is most sensitive tochanges in the price of coverage and most likely to declinecoverage.

Obamacare also creates new federal rules minimum lossratio regulationsfor how insurers spend premium dollars.Starting in 2011, plans must spend a minimum amount of premium income on medical care and activities that improvehealth care quality, or refund the difference to policyholders.The minimum levels will be 85 percent for large group plans and80 percent for small group and individual plans. In addition,HHS is given new power to conduct annual reviews of


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unreasonable increases in premiums for health insurancecoverage. [18]

4) Imposing New Federal Schemes . Moreover, Congressincluded four new health care coverage schemes that furthercompound the problems of the legislation:

a) Temporary Federal High-Risk Pools . The law instructsHHS to establish temporary federal high-risk pools starting in2010 to cover uninsured individuals between now and 2014, with

$5 billion authorized for the program. [19] State governments areinvited to contract with HHS as vendors to administer the newfederal high-risk pools in their states, but are prevented fromshifting into them individuals currently enrolled in othercoverage, including those covered by existing state high-risk pools. The CMS Office of the Actuary projects that the availablefunding for the program will be exhausted by 2012. [20] That willforce HHS either to set enrollment limits for the program at theoutset or to subsequently terminate coverage for enrollees, unlessthe next Congress authorizes additional funding.

b) Health Insurance Exchanges . The legislation requires HHSto establish operational health insurance exchanges in every stateby 2014. Again, states are invited to act as vendors to administera federal program according to a detailed set of federal rules andregulations, but are not allowed to exercise any meaningfuldiscretion in administering the exchanges. The main purpose of the exchanges will not be to give consumers greater choice of coverage, since the coverage offered through them will be a
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limited number of standardized plans. Rather, their principalpurpose will be to administer a new set of federal healthinsurance subsidies for those with incomes up to four times the

federal poverty level, and to regulate the coverage purchasedwith those subsidies. The exchanges are also empowered to enrollanyone in Medicaid they determine eligible for the program, withstates forced to share the resulting costs but prohibited fromconducting their own eligibility determinations or verifying theaccuracy of the eligibility determinations made by the exchanges.

Large employers will be fined if their workers receive subsidizedcoverage through an exchange, but firms with 50 or feweremployees are exempted from those fines. The likely result is thatmany small employers who currently offer coverage will dumptheir plans beginning in 2014, since their workers will thenqualify for either Medicaid or the new subsidies. Even largeemployers are likely to dump their plans if most of their workersqualify for subsidized alternative coverage and the savings to theemployer are greater than the fines for not offering coverage.

c) New National Health Insurance Plans. The new lawinstructs the federal governments Office of PersonnelManagement (OPM), which administers the Federal EmployeesHealth Benefits Program (FEHBP), to contract with healthinsurers to offer at least 2 multi-State qualified health plansthrough each Exchange in each State, and further stipulatesthat at least one of the contracts is to be with a non-profitinsurer. [21] Of particular concern to state officials is that from
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the way Congress wrote these provisions the extent to which stateinsurance regulators will be able to require the OPM-sponsoredplans to meet state insurer financial regulations, and thus ensure

that the plans remain solvent, is unclear.

d) New CO-OP Plans. The legislation also instructs HHS topromote the creation in each state of at least one non-profit,member-controlled, consumer-operated and oriented plan(CO-OP) health insurer. Both the CO-OP provisions and theprovisions instructing OPM to sponsor multi-state plans wereadded as part of efforts by Senate Democratic leaders to bridgethe sharp division within their caucus over whether thelegislation should include a new government-run health insurerthe so-called public option. Thus, both sets of provisions areprimarily political in nature and, from a policy perspective,poorly designed and drafted.

The bad news for state officials is that Congress appropriated $6billion for loans and grants to establish CO-OPs and instructedthe Secretary of Health and Human Services to keep promotingthe program until every state has one. The good news is that CO-OPsunlike OPM-sponsored multi-state plansare explicitlyrequired by the legislation to comply with state insurance lawsand regulations. As a practical matter, it is uncertain whetherany CO-OP insurers will actually be created, as there is noobvious market demand. The statute imposes several restrictionsthat make it difficult to establish and operate one, and thelegislation expressly prohibits the most likely and sensible path to


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setting one up, namely, a divestiture or conversion by an existinghealth insurer.

How State Officials Should RespondObamacare creates significant fiscal and policy challenges forstates. The broad effects of the legislation, if implemented asenacted, will be to impose significant new Medicaid costs on statetaxpayers, disrupt state health insurance markets and thecurrent coverage of tens of millions of Americans, and usurp

state authority. The new federal insurance regulations,particularly the provisions setting new, uniform federal benefitrequirements, will reduce coverage options for individuals andemployers and will likely drive up health insurance premiums.They are also likely to result in greater concentration in healthinsurance markets, leaving only a few large insurers operating aspublic utilities with a regulated low rate of return selling

undifferentiated products to customers with no other options.

Marylands experience is instructive in this regard. In 1993, thestate of Maryland imposed on its small-group health insurancemarket a minimum package of standardized benefits, annuallyupdated by a state commissiona design similar to that in thenew federal law. One result was that competition has declined to

the point where the same two carriers have now covered morethan 90 percent of all individuals in Marylands small-groupmarket for years.


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State lawmakers now face the task of finding ways to protecttheir constituentsincluding state taxpayers, health insurancepolicyholders, and individuals who depend on public health care

programsfrom the adverse effects of Obamacare. Governorsand state legislators need to start planning their responses nowand begin drafting any applicable legislation for consideration intheir next legislative session. The wisest approach is to movereform measures that better position their states under either of two possible scenarios: a new Congress that repeals Obamacare,or a protracted, multi-year political and legal battle conductedagainst the backdrop of an Administration attempting toimplement the legislation as enacted. Specifically, statelawmakers should immediately and aggressively pursue thefollowing strategies:

Shift non-elderly Medicaid and CHIP enrollees intopremium support.

The combination of recession-induced lower state tax revenuesand the new laws Medicaid MOE requirements puts statelawmakers in a fiscal bind. Because the MOE requirementsprevent them from controlling Medicaid spending by reducingeligibility, many state lawmakers assume that their only optionsare to cut provider reimbursements or further limit programbenefits.

However, there is anotherand betteroption that states shouldpursue. The most effective tool for states to control theirMedicaid and CHIP spending is to shift their programs from


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directly paying providers to subsidizing private coverage forenrollees. Not only will this premium support approach helpstates control spending; in many states it will also increase

beneficiary access to physicians. [22]

States should immediately begin designing and implementingMedicaid and CHIP premium support initiatives for non-institutionalized beneficiaries. In doing so they should takeadvantage of the flexibility remaining in federal law by adoptingall benchmark plan designs, providing for maximum allowable

enrollee cost-sharing, and replacing the individual cost-effectiveness test with an average cost-effectiveness test. Statesshould also pursue contracting with one or more private insurersto create supplemental policies that cover required wrap-around benefits for Medicaid beneficiaries enrolled thoroughpremium support in less comprehensive private plans. Then thestate can simply pay the premiums for those supplementalpolicies as well.

The advantages of premium support for enrollees are that theywill likely get better access to physicians and more appropriatemedical care. In addition, subsidized private coverage is free of the welfare stigma associated with traditional Medicaid, oreven Medicaid managed-care plans, since providers will only seethe private coveragenot the subsidies behind it.

Premium support will also help expand and strengthen a statesprivate insurance marketparticularly its small-employer


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coverage marketby adding a large number of mainly healthyand younger individuals to the market.

From a state budget perspective, cost savings from premiumsupport are likely to come in four forms: (1) savings fromincreased enrollee cost-sharing, (2) efficiency savings fromcovering under a single policy all members of a family currentlycovered separately by different combinations of public or privateplans, (3) administrative savings achieved by significantlyreducing the need for the states Medicaid and CHIP programs

to operate systems that directly reimburse providers and verifyclaims, and (4) likely the biggest source of savings will come frommore appropriate use of medical care. While private plans paydoctors higher rates, if Medicare and CHIP beneficiaries withpremium support get earlier and more coordinated physiciancare, their historic practice of over-using expensive hospitalemergency room services should declinethus, offsetting theincreased spending on physician care while also addressing theproblem of emergency room over-crowding.

Finally, states should craft their premium support initiativesas state-plan amendments to their programs, rather thansubmitting waiver requests to HHS. Unlike the waiver process,over which the Secretary of Health and Human Services isgranted broad discretionary authority, Medicaid and CHIP stateplan amendments can only be disallowed if the Secretary findsthat they would violate statutory federal requirements for howstates operate their programs.


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Furthermore, unlike with waiver determinations, a state haslegal recourse to appeal an adverse determination by HHS abouta state plan amendment in federal court. Although states have

lost some flexibility in using premium assistance under both theCHIP reauthorization legislation and the ObamaAdministrations newly issued regulations on benchmark plansand cost sharing, premium support is still a worthwhile strategyfor states to pursue.

Refuse to administer the new federal high-risk pools.

To date, 18 governors have wisely refused to let their stategovernments administer the new federal high-risk pool. [23] There are sound reasons for their decisions, as the new high-risk pools are poorly designed.

Any U.S. citizen or lawful resident with a pre-existing medical

condition who has been uninsured for at least six months will beeligible for coverage. Congress gave the Secretary of Health andHuman Services complete discretion in determining which pre-existing medical conditions will qualifyno matter how minor.Thus, unless the Secretary decides to limit eligibility only to thoseindividuals with expensive conditions, it is certain that demandwill quickly outstrip the available funding.

Furthermore, the law stipulates that an enrollee in a new high-risk pool cannot be charged a premium higher than theapplicable standard rate for the same coverage in the generalmarket. In contrast, all of the 34 states with existing state high-


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risk pools follow the long-standing guidance of the NationalAssociation of Insurance Commissioners (NAIC) to charge high-risk pool enrollees premiums that are at least 125 percent of

standard rates. [24] Specifying that premiums charged toenrollees in the new pools not exceed standard rates means that,relative to existing state high-risk pools, the new pools willprovide more generous subsidies (at a higher cost) and will likelyattract many more applicants, particularly individuals withrelatively minor pre-existing medical conditions.

Finally, another major concern with state governmentsadministering the program is that when the federal funding runsout, state lawmakers will be faced with either terminating thecoverage of enrollees or continuing to fund the program withstate tax dollars. From the perspective of state officials, they arebetter off letting the Department of Health and Human Servicesadminister the program, either directly or through private-sectorcontractors. That way, federal officials will be the ones who areunambiguously responsible for any adverse funding orenrollment decisions.

Decline federal premium review grants.

The provisions instructing the Department of Health and Human

Services to conduct health insurance premium reviews alsoauthorizes HHS to distribute up to $250 million in grants tostates to assist HHS in implementing those provisions. Inexchange, however, state insurance departments must provideHHS with insurer data and collaborate with HHS in


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administering rate regulations. To preserve the integrity andindependence of their own insurance departments and insurancelaws, state officials would be well advised to decline this offer of

federal funding. The rate review provisions are not only poorlydrafted, but were politically motivated additions to thelegislation. Statements by Administration officials since theenactment indicate that implementation of the provisions by theObama Administration is likely to also be driven more bypolitical considerations than by sound policy or genuineconsumer protection.

For example, both the statute and subsequent comments byAdministration officials refer to unreasonable premiumincreases. What is missing is any recognition that another keyaspect of proper insurance regulation is to prevent the problemsthat occur if insurers under -price their products. If an insurerfails to charge enough in premiums to cover its expected claimscosts, then it is at risk of being unable to make good on thepromises made to its customers. As any state insurance regulatorunderstands, ensuring that carriers have sufficient premiumincome to cover future claims costs is an important consumerprotection.

Also missing from the new federal law is any recognition of theequity issues involved in setting rules for insurers that cross-subsidize different lines of coverage. For example, is it fair if regulators require an insurer to limit premium increases on itsindividual market policies, but as a result the carrier then has to


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further increase rates for group policies to make up thedifference, or vice-versa? Of course, there is no single correctset of answers to these kinds of questions, but state lawmakers

and state insurance regulators at least have the benefit of decadesof experience addressing such issues, while the federalgovernment has none whatsoever.

To be sure, insurance companies (including non-profit ones) arenot altruistic enterprises, and state insurance regulation is nomore immune to political considerations than is federal

regulation. However, given the demonstrated propensity of congressional leaders and Obama Administration officials toblame insurers for the adverse consequences of their ownlegislation, the vast disparity between the state and federalgovernments in experience and expertise in insurance regulation,and the inherent conflicts that will arise between the new federalrate regulations and existing state insurer solvency regulations, itis important that state lawmakers preserve the independence of their own insurance laws and state insurance departments. Thatmeans states should not accept federal funding with stringsattached that compromise their independence or make theirinsurance departments mere branch offices of HHS.

Implement state health insurance market reforms andexchanges based on state, not federal, designs.

Obamacare will drive up health insurance costs with newcoverage mandates while simultaneously trying to hold downpremiums with politicized rate regulation. The federal


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standardization of coverage will also limit the ability of insurersto differentiate themselves in the market or offer their customerslower-cost benefit designs, while the minimum loss ratio

regulations will reduce incentives for insurers to be moreefficient in managing or paying for careas insurers will be ableto retain little, if any, of the savings that might result.

Faced with this impending regulatory squeeze play, insurersare already evaluating their options and can be expected to act insome predictable ways: Insurers with other lines of business

(such as property or life insurance) will likely discontinue or selltheir health insurance book of business to a competitor and exitthe market. Carriers that offer only health coverage will look tomergers and acquisitions as the path to becoming too big tofail. Their logic will be that if the federal government is going toturn private health insurance into a regulated utility with a lowrate of return, then the way to survive is to be one of theremaining few large insurers that the federal government needsto keep in business in order to administer the system.

Thus, absent initiatives by state governments to counter theseeffects by expanding choice and competition, state healthinsurance markets will begin to see fewer carriers and planoptionsmost likely starting next year.

The best response for state lawmakers is to immediately move inthe opposite direction of the new federal legislation by firstdetermining their states needs and priorities, and then enactingtheir own reforms that increase health insurance choice,


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competition, and coverage while also reducing costs. Lawmakersin each state can select from the following broad strategies theelements that offer the best approach for addressing their states

particular needs and circumstances: (1) increase consumerchoice by creating a defined contribution option for employer-sponsored health insurance coverage, (2) reduce coverage costsand allow more variety in plan design by repealing unnecessarystate-mandated health insurance benefit requirements, (3)encourage insurer participation by lowering barriers to marketentry through statewide risk adjustment mechanisms collectivelydesigned and administered by the carriers selling healthinsurance in the state, (4) expand coverage options by creating apremium aggregation mechanism that enables individuals tobuy coverage using contributions from multiple employers (suchas when a family has two earners or an individual has two part-time jobs), and, in the case of low-income families, Medicaid or

CHIP premium support payments from the state, and (5) provideconsumers with greater price and quality transparency withrespect to insurance coverage and physician and hospitalservices. [25]

The fact that the federal legislation perverts the intent of a healthinsurance exchangereplacing its original purpose as a state tool

for increasing consumer choice and encouraging greater varietyand competition in health insurance with the new purpose of administering federal coverage uniformity, and supplanting stateinsurance regulatorsshould not dissuade state lawmakers frompursuing their own designs for exchanges (consistent with the


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by then, for organizing alternative coverage arrangements forindividuals and employers who refuse to comply with the newfederal mandates that also take effect in 2014.

Insist that federal officials explain publicly how theywill administer Obamacare.

State legislators should convene public hearings and summon thefederal Secretary of Health and Human Services, members of their states congressional delegation, and other federal officials

to explain how they intend to implement the numerousprovisions of the legislation that will affect their states Medicaidand CHIP programs and the private health insurance plans of individuals and employers. Obviously, state lawmakers cannotoverride the federal regulatory process, but they can force moreof it out into the open and subject it to heightened publicscrutiny. They can put federal officials on notice that if theyassert their new authority, then states will force them to acceptresponsibility for the resultsand that state lawmakers willensure that their constituents know who is to blame when staterevenues have to be diverted from other priorities to fundexpanded health care coverage, or individuals see their healthinsurance premiums increase or their employer drop theircoverage. If federal officials refuse to testify before statelegislatures, their refusals will themselves be public testimony.

Conduct and publicize benchmark analyses.


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States should immediately conduct benchmark analyses toprovide baseline projections for at least the next five years forkey metrics, and then use the results to measure the effects of

various provisions of Obamacare. The results can also serve as abaseline for estimating the effects of any alternative state reformproposals . Key metrics include:

Projected annual enrollment and per capita spending forMedicaid and CHIP, by eligibility category under currentlaw;

Projected growth in average premiums in the statesindividual, small, and large group health insurance marketsunder current law;

Projected average premiums by age in the states individualand small group markets under current law; and

Current and projected health insurance coverage status of the states residents by source of coverage under currentlaw.

The utility and integrity of the results will be greatly enhanced if state lawmakers ensure that the process for conducting thesebenchmark analyses is open and nonpolitical, and that theresulting reports clearly explain the methodologies andassumptions used. Where appropriate, the analyses should alsoprovide upper-bound and lower-bound estimates to account forthe inherent uncertainty of key assumptions, such as underlyingmedical cost growth rates or changes in the states resident


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populations. States can contract with recognized actuarial andeconometric consulting firms to conduct these studies.

Developing a state-specific baseline is the essential precursor toconstructing state-specific estimates of the effects of the newfederal law. State officials will want to construct their ownestimates because, if for no other reason, national level estimateswill not be sufficiently precise for state planning purposes.Variations among the states in the composition of theirpopulations, economies, health systems, public programs and

insurance rules mean that, in any given state, the actual effects of a particular provision of the new law may differ significantlyfrom the projected national effects estimated by federal officials.Indeed, significant disparities in the effects among states arelikely to arise with respect to even minor provisions of the newlaw.

Case in point: The requirement to extend dependent coverage toage 26 is a minor provision that is projected to have modesteffects on cost and coverage at the national level. However, themost recent Census data show that while 18- to 24-year-olds (theCensus age breakout that most closely aligns with the groupaffected by the provision) account for 9.79 percent of the U.S.population, that age group as a share of resident population inthe states varies from a low of 8.17 percent in Nevada to a high of 12.88 percent in North Dakota. Thus, among the states there is a57 percent variation between the two with the lowest and highestshares of young adults in their populations. That demographic


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difference alone will be a key variable in explaining any variationbetween those two states in the cost and coverage effects of justthis one, relatively minor, provision.

With their own, state-specific benchmark analyses in place, stateswill be able to more precisely estimate the effects of the newfederal law and state lawmakers will be able to demonstrate totheir constituents what portion of a particular resultsuch as anincrease in insurance premiumsis attributable to the federalhealth care legislation and what portion is attributable to other

factors.

Conclusion

The enactment of the massive Patient Protection and AffordableCare Act will not only alter the relationship between individualsand the federal government, it will also alter the relationship

between the federal government and the states. Under the termsand conditions of the act, the states would be reduced to mereagencies of federal authority, carrying out the policy agenda of the Secretary of the U.S. Department of Health and HumanServices.

Some of the relevant provisions of this law that directly affect the

states will not go into effect for four years, and by that time, thelaw may be substantially, changed, amended, or repealed.

In the meantime, state officials should recognize one simple fact:States are not mere agents of federal authority. They are notpowerless. There is absolutely nothing that requires them to


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assist in implementing this misguided legislation. Rather, theyshould take every opportunity to assert their rightful authority,resist, within the confines of the law and the Constitution, any

inappropriate or unconstitutional exercise of Washingtonspower and aggressively advance their own, better solutions. Inother words, they have a duty to represent their citizens.

Edmund F. Haislmaier is Senior Research Fellow and Brian C.Blase is Policy Analyst in the Center for Health Policy Studies at The Heritage Foundation .

Appendix Methodology

Table 1. Projected Medicaid/CHIP Enrollment, by State in 2014.National enrollment estimates by the CMS Office of the Actuarywere distributed among the states according to each states shareof total Medicaid/CHIP enrollment in June 2009 (for current

eligibility) and according to each states share of the totaluninsured population in 20072008 below 133 percent of FPL(for the eligibility expansion) based on Medicaid/CHIPenrollment data and census data as reported onhttp://www.Statehealthfacts.org.

Table 2. Estimated State Costs for Medicaid Expansion, by State,

Cumulative for FY 2014 2020. National enrollment and federalspending estimates by the CMS Office of the Actuary were usedto derive the average federal cost per enrollee, per year, whichwere then distributed among the states according to each statesshare of the total uninsured population in 20072008 below 133


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percent of FPL. State costs were then calculated off the federalcost estimates using the applicable match rates for each state asadjusted by the provisions of the legislation. The added

administrative cost load was calculated by applying currentratios for total administrative costs as a percent of total benefitspending and then apportioning those costs between the federaland state governments based on historical data that indicate anaverage effective Federal Medical Assistance Percentage (FMAP)of 55 percent for all administrative costs.

Table 3. Estimated State Costs for Medicaid Doc Fix, by State.The federal cost of the mandated increase in primary carephysician (PCP) rates in FY 2014 (when it is entirely paid for bythe federal government) are estimated at $3 billion (CBO) to $5.5billion (CMS). Continuing that policy in 2015 and thereafterwould require states to assume their shares of the total cost of thepayment rate increase. The cost to an individual state will varybased on three factors: the states aggregate spending on PCPservices; the ratio of the states current Medicaid PCP paymentrates relative to Medicare rates; and the states FMAP.

Projected state costs were constructed as follows: (1) A weightingfor each states share of total (federal and state) nationalMedicaid spending on all physician services was calculated. (2)Each states share of physician spending was then divided by thestates Medicaid-to-Medicare reimbursement ratio to obtain astate burden index, after first removing from the equation statesthat already have Medicaid PCP reimbursement rates that are


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equal to or greater than Medicare rates. (3) The initial stateburden index was then re-weighted so that all the weights of theaffected states summed to one. (4) The re-weighted state burden

index was then applied to the CBO and CMS federal costestimates to distribute the total federal costs among the affectedstates. (5) Finally, state costs were estimated by multiplying eachstates share of the federal funding by one minus the statesapplicable FMAP.

When summed, the projected aggregate state costs are about $1.3

billion (using CBO estimates) and $2.3 billion (using CMSestimates), or approximately 43 percent of the total cost. Thatratio is consistent with the national distribution between federaland state governments of total Medicaid spending.

About the Author

Edmund Haislmaier Senior Research Fellow, Health PolicyStudies

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Brian Blase Policy Analyst

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http://www.heritage.org/Research/Reports/2010/07/ObamaCare-Impact-on-States

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Revitalizing Federalism: The High Road Back to Health Care Independence

Published on June 30, 2010 by Robert Moffit, Ph.D. Backgrounder #2432Our Country is too large to have all its affairs directed by a single government.

Thomas Jefferson, Letter to Gideon Granger,August 13, 1800

Abstract: The Patient Protection and Affordable Care Act represents more than a federal takeover of health care; it is a direct threat to federalism itself. Never before has Congress exercised itspower under Article I, Section 8 of the Federal Constitution toforce American citizens to purchase a private good or a service.Congress is also intruding deeply into the internal affairs of thestates, commandeering their officers, specifying in minute detail how they are to arrange health insurance markets within their borders, and determining the products that will be sold to their citizens. If allowed to stand, this unprecedented concentration of political power in Washington will reduce the states to mereinstruments of federal health policy. State legislatures and sympathetic Members of Congress should consider (among other actions) crafting a constitutional amendment to guarantee thepersonal liberty of every citizen in the area of health care. Giventhe trajectory of federal policy, state officials should take the lead in the next phase of the national health care debate, reclaim their
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rightful authority, and change the facts on the ground for Congress and the White House.

An Unprecedented ChallengeAmericans face a direct and historic challenge to their personalliberty and to their unique citizenship in a federal republic.Though its enactment of the massive Patient Protection andAffordable Care Act (PPACA), official Washington is not merelyengineering a federal takeover of health care, but is also radically

altering the relationships between individuals and thegovernment as well as the national government and the states.

In other words, the PPACA is a direct threat to federalism itself.As Jonathan Turley, professor of law at George WashingtonUniversity, has argued, Federalism was already on life supportbefore the individual mandate. Make no mistake about it, this

plan might provide a bill of good health for the public, but itcould amount to a do not resuscitate order for federalism. [1]

Never before has Congress exercised its power under Article I,Section 8 of the Federal Constitution to force American citizensto purchase a private good or a service, such as a healthinsurance policy. [2] Congress is also intruding deeply into theinternal affairs of the states, commandeering their officers,specifying in minute detail how they are to arrange healthinsurance markets within their borders, and determining theproducts that will be sold to their citizens.
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If allowed to stand, this unprecedented concentration of politicalpower in Washington will result in the states being reduced tomere instruments of federal health policy rather than distinct

and independent sovereigns, as James Madison described themin Federalist No. 40. [3]

A Pivotal Role for State Officials

The officers and citizens of the states, however, have plenty of options. These include the filing of lawsuits against the

imposition of the federal mandates on individuals and the statesthemselves, and many are already pursuing that course of action.They can also enact legislation that can facilitate a constitutionalchallenge to excessive federal power, and bills have already beenfiled in 38 states to accomplish that objective.

Legislators can also pass resolutions and memorials to be

transmitted to Congress petitioning for relief for their citizensfrom the terms and conditions of the federal law that theydetermine to be onerous, damaging, or excessively burdensometo their people, their health care delivery systems, and theireconomic life. On the great issues that have defined crucial erasof American history, state legislators have often passedresolutions and memorials dealing with such questions as

slavery, the right of women to vote, and Prohibition.State legislators can also hold public hearings and invite UnitedStates Senators, who are charged under the Constitution withrepresenting the states, to explain their support for or opposition
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to the national health care law. Senators would have anopportunity to clarify their own views on such matters as themandatory Medicaid expansions, the implementation of health

insurance exchanges, or projected premium or tax increases thatwill affect the citizens of their states. Likewise, in preparation forthe implementation of the national health law, state legislatorscan invite federal officials in charge of that implementation toappear at special hearings to respond to their concerns andanswer questions about the impact of their regulatory changes onthe citizens of their states.

Finally, as the administrative and judicial processes unfold, stateofficials and their congressional delegations may find it necessaryto amend the Constitution itself to ensure the protection of personal liberty and the integrity of the states in the vital area of health care.

The High StakesThe Founders in 1787 crafted fundamental law for a largeFederal Republic, bucking the conventional wisdom of politicalscience. In the classical sense, a republic means limitedgovernment; it underscores a sharp distinction between respublica (public affairs) and res privata (private affairs). In a

republic, political authority is held as a public trust , not as aprivate right , and is to be exercised only over public affairs. [4]

Americas Founders authorized a clear division of authoritybetween a national government, focused on general concerns,


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and the particular governments of the states, focused onparticular concerns. [5] They thus recognized the astonishingunity and profound diversity of the people of the United States.

In a free society, the people are sovereign, but in this instance,they are the people of the states united. National and stategovernments, under the Constitution, are supreme within theirown spheres; neither can encroach upon the other withoutviolating the constitutional order itself.

While Article VI declares the supremacy of federal law, its

supremacy is confined to those limited and enumerated powersthat are granted to the national government; the TenthAmendment unambiguously affirms that the residual powers of the American Republic are left to the people in and through theirseveral state governments. In Federalist No. 45, James Madisonwrites:

The powers delegated by the proposed constitution to the federalgovernment are few and defined. Those which are to remain inthe state governments, are numerous and indefinite. Thepowers reserved to the several states will extend to all the objectswhich, in the ordinary course of affairs , concern the lives,liberties, and properties of the people ; and the internal order,improvement and prosperity of the state. [6]

The Arrogance of Power

The Constitution is ultimately a political document, and thehealth care debate is ultimately a philosophical debate on the


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scope of political authority. If ones health care and medicaltreatment is a personal matter and an exercise of personalresponsibility, then the new law is quintessentially un-republican

for all practical purposes, it renders these intensely personalaffairs a public concern. The imposition of an individualmandate to purchase health insurance is likewise an unconstitu-tional restriction on personal liberty, pregnant with potentialabuses far beyond a mandate for health insurance. [7]

Under the new law, states are compelled to expand Medicaid. [8]

Equally troublesome is the congressional mandate on the statesto establish federally supervised health insurance exchangeswithin their borders where government-sponsored plans and co-ops will compete against private insurance.

Under Section 1311(b)(1), Each state shall , not later thanJanuary 1, 2014, establish an American Health Benefit Exchange

[emphasis added]. The exchange is either to be a governmentalagency or a nonprofit entity. Under Section 1321(c), if a statedoes not establish such an exchange, the Secretary of Health andHuman Services will establish and operate an exchange withinthe state. In the state-based exchanges, of course, onlyfederally approved heath plans would be allowed to compete.

The states, in other words, would be vehicles of federal healthpolicy. This is underscored by the highly prescriptiverequirements imposed on the states, governing everything fromthe simple presentation of health plan information down to theformatting of state Web sites. The statute authorizes over a


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dozen regulatory interventions by the Secretary of HHS andother federal officials.

At the very least, this is a profoundly undesirable alteration inthe relationship between the federal government and the officersand citizens of the statesprecisely the concentration of powerthat the Founders fearedand it is also constitutionally suspect.It is one thing to require state officials to obey federal law; it isquite another to compel them to administer it and force theircitizens to bear the expense of that administration. [9] Our

constitutional tradition limits federal power and does notsanction national intrusion into citizens personal, private, ordomestic relations. As Madison affirmed, law in these areas of domestic life is properly within the jurisdiction of the states; thislatest act of Congress is a bold challenge to that jurisdiction.

State Legislators as Tribunes of the People

The states have emerged as the institutional centers of resistanceto the new health law. Twenty-one states have filed suit againstthe individual mandate to purchase health insurance on theground that it is an unconstitutional burden on their citizens. [10]Even legal specialists who have expressed sympathy for theobjectives of the new law fully acknowledge the broader issues at

stake in this national debate. According to Jonathan Turley:Though the federal government has the clear advantage in suchlitigation, these challenges should not be dismissed as baselesspolitical maneuvering. There is a legitimate concern for many


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that this mandate constitutes the greatest (and perhaps the mostlethal) challenge to states rights in U.S. history. With thislegislation, Congress has effectively defined an uninsured 18-

year-old man in Richmond as an interstate problem like apolluting factory. It is an assertion of federal power that isinherently at odds with the original vision of the Framers. If acitizen who fails to get health insurance is an interstate problem,it is difficult to see the limiting principle as Congress seeks toimpose other requirements on citizens. [11]

Likewise, 13 states have filed suits against the Medicaid mandate.[12] While these legal challenges work their way through thejudicial process, state governors and legislators, allied with theiraggrieved citizens, can and should pursue a broader politicalstrategy to repeal, resist, or roll back this unjustified expansionof federal power. Because of the potential damage to the statesfrom these costly federal mandates and regulations, the nationalhealth law should emerge as an issue in state politics.

State legislators can serve as the true tribunes of the people. Theycan help to redefine and frame the terms of the national debate.Thus far, legislators in 38 states have already introducedFreedom of Choice in Health Care Acts based on model legis-lation proposed by the American Legislative Exchange Council(ALEC), the leading national association of conservative statelegislators. The proposals would generally allow persons to paydirectly for medical services if they wished to do so and block theimposition of penalties on those who did not enroll in a particular


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health plan. Such measures obviously invite a constitutionalchallenge.

Playing OffenseUnder the Tenth Amendment to the Constitution, the powers notgranted to the national government are reserved to the states andto the people. There is a large role that states can play in makinghealth care policy, especially over the next four years.Furthermore, inaction by the states is an invitation to the federal

government to take over their legitimate power when there is apopular demand for action. [13]

State legislators can and should move ahead with their ownagenda for health reform, not just play a waiting game until2014, listening for Washington to tell them what to do and how todo it. [14] State legislators should seize every inch of territory in

the health policy debate within the law, such as health insurancemarket reform, and challenge every transgression of theirlegitimate authority if and when federal officials violate it.

State legislators should also hold their own public hearings onthe impact of the federal law on their citizens, employers,employees, insurers and medical professionals, and stateagencies. U.S. Senators who voted to impose costly mandates ontheir states should be invited to state legislative hearings to givean account of their actions and explain why they believe thatsuch mandates advance the true interests of the states theyrepresent. [15]
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Likewise, state legislators should invite federal officials to appearand explain how they intend to implement mandates and makethem justify their proposed rules in broad daylight. State

legislators, in cooperation with colleagues in sister states, shouldmake it clear that dumping hundreds of pages of complex federalrules into the Federal Register for public notice and comment isno longer sufficient.

Alexander Hamilton, writing in Federalist No. 28, anticipatedsuch cooperation among the states in resisting unjust federal

power:

Projects of usurpation cannot be masked under pretences solikely to escape the penetration of select bodies of men, as of thepeople at large. The legislatures will have better means of information; they can discover the danger at a distance; andpossessing all the organs of civil power, and the confidence of the

people, they can at once adopt a regular plan of opposition, inwhich they can combine all the resources of the community. Theycan readily communicate with each other in different states; andunite their common forces, for the protection of their commonliberty. [16]

The Rebirth of Liberty

The enactment of the massive Patient Protection and AffordableCare Act was a direct repudiation of the popular will and,equally, a bold challenge to the continued viability of the federalpolitical order. There are no guarantees of victory either, in Con-


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gress or in the courts, but the United States is still a federalrepublic, not a unitary state or a mass democracy.

It is crucial that state officials make a compelling argumentagainst the concentration of power on the basis of firstprinciples: It is an argument that can succeed. [17] Anticipating apolitical establishment insulated from popular will and feeling onvital national issues, the Founders also provided the people of thestates with a final remedy for ills besetting the Federal Republic:constitutional amendment.

Given the rapid and continuing growth of the already enormoushealth care sector of the economy, as well as the gravity of thisthreat to liberty in such a vital area of personal life, statelegislatures, in league with sympathetic Members of Congress,should consider crafting a constitutional amendment toguarantee the personal liberty of every citizen in the area of

health care. Prudential considerations, of course, would governthe timing and content of such an action.

Given the trajectory of federal policy, state officials should takethe leadership role in the next phase of the national health caredebate, reclaim their rightful authority, and change the facts onthe ground for Congress and the White House.

Robert E. Moffit, Ph.D., is Senior Fellow in Domestic and Economic PolicyStudies at The Heritage Foundation.

About the Author


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Robert Moffit, Ph.D. Senior Fellow


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Obamacare: Impact on Businesses
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Published on April 27, 2010 by John Ligon WebMemo #2883

While President Obama continues traveling the U.S. heraldingthe passage of the Patient Protection and Affordable Care Actand the Health Care and Education Reconciliation Act,businesses across the U.S. are growing more and more discontentand for good reason.

The new health care law will impose new compliance regulations,employer mandate taxes, taxes on business flow-through andinvestment income, and numerous indirect costs on small- andmedium-size companies. Altogether, these constraints willdramatically affect companies per-employee costs, firm-levelallocation of labor, desire to take on health coverage, andmotivation to grow both in terms of income and employment.

Congress should repeal this massive statute, start over, and gethealth care reform right.

Medium-Size Business Under Fire

Obamacare will dramatically impact the behavior of medium-size firms in the U.S.specifically, those companies with 50199workers. [1] Beginning in 2014, Obamacare will begin imposingtaxesto help offset the cost of individual employees receiving

premium subsidies through the to-be-established state healthinsurance exchangeson companies with 50 full-timeequivalents that do not offer an acceptable level of healthinsurance coverage. [2] These mandates will force companies
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businesses purchase health insurance. [5] Heritage analysisestimates that roughly 54.5 percent of the total premium taxon health insurers will be paid by workers and dependents

covered by these employer group policies. [6]

Additionally, the increased costs of health insurance will causemany firms with 50 or fewer employeesperhaps mosttoeither not offer coverage or drop coverage if they currently offerit. There is nothing currently in Obamacare that will stop themfrom doing so.

2. Ineffective Small Business Tax Credit . Even accounting for thecost-reducing tax creditswhich the Congressional BudgetOffice estimates will impact at most 12 percent of businesses with25 or fewer workers and expire after two years beginning in 2014Obamacare will not address the many uncertainties smallbusinesses face in deciding whether to offer health insurance

coverage to its workers.Essentially, after all exclusions the only eligible firms for theheralded small business tax credit are those with 10 or fewerworkers and those with low-income workersand most of theseworkers will qualify for premium subsidies in the stateexchanges. These small firms are the least likely to offer coverage

even with a significant price reduction.3. Higher Regulation Compliance Costs. Small businesses do nothave the capacity to easily take on additional administrativecomplexities. Many small companies will have to hire additional
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workersand incur higher external accounting expensestohandle not only the enhanced compliance regulations on healthinsurance plans but also stricter tax compliance regulations

relating to business-to-business transactions. [7]

4. Medicare Taxes on Flow-Through and Investment Income.Obamacare will increase the Medicare payroll tax and establisha new Medicare non-payroll (investment) tax. This tax willapply perversely on flow-through incomethus reaching asignificant share of small businesses. [8] Moreover, the wage

thresholds on this tax increase are not indexed to inflation and,consequently, will push more small business owners into thishigher tax group. [9] The Medicare investment tax will alsolead to greater deterrence on investmentand passive income which will suppress economic growth.

Penalizing Business Growth and Success

Businesses will not take much comfort from the passage of thishistoric health care bill. The President and many lawmakers inWashington are consistently proposing and passing legislationthat hurts these businesses, and Obamacare is one more example.

Obamacare fails to appropriately address the concerns of small-and medium-size businesses relating to health care reform, and itwill force many companies to react to new cost burdens. Theintended consequences of this poorly constructed bill are harmfulenough, but the many unintended consequences are even worse.
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John L. Ligon is Policy Analyst in the Center for Data Analysis at The HeritageFoundation.

About the Author

John Ligon Policy AnalystRead More >> Request an interview >>

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Contrary to a key intention of the legislation, the combination of mandates and taxes will not help to reduce the deficit. In fact, thePPACA will likely increase the deficit by an average $75 billion

per year, and as a result, the nations publicly held debt will be$753 billion higher at the end of 2020. Such astronomical debtcrowds out other productive investments and will lead to anestimated 670,000 lost job opportunities per year.

Dynamic Analysis Confirms Fears

It was the goal of health care reform to be deficit neutralasscored by the Congressional Budget Office (CBO)within thefirst 10 years of enactment. In order to achieve this goal, the newlaw immediately imposes a combination of new taxes on high-income individuals, medical devices, and pharmaceuticals andMedicare spending cuts. In addition, the PPACA delays subsidypayments to help make insurance affordable for those with lower

incomes and Medicaid expansions to cover more of theuninsured.

However, the static budget analysis is limited in that it does notaccount for how the policy combination of spending and taxesalters the macroeconomic performance of the economy and feedsback onto the budget. A dynamic simulation shows that the

higher initial costs are not an investment that pays off with ahigher return in later years . Indeed, these front-loaded costs sloweconomic growth with higher inflation and higher interest rates,which overwhelm the benefits the proposal hoped to gain in lateryears.


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The bills taxes, penalties, and fees on investors and businesseswill decrease the amount of investment in the economy. Thisreduced investment will in turn lead to a decline in productivity,

causing the economy to produce $706 billion less worth of goodsand services. A smaller economic pie means that workers earnlower wages and salaries. Higher taxes on investment also putupward pressure on interest rates as investors seek to achievetheir after-tax desired rate of return. [1]

Lower wages reduce the amount of taxable income that could

otherwise have been achieved. This will both increase the deficitand grow the total debtwhich in turn puts upward pressure oninterest rates and crowds out some savings that could have goneto new productive business investments.

Higher interest rates mean that more American tax dollars willgo toward paying the interest on the federal debt rather than

paying down the principal. Simulations using dynamic analysisestimate that the government would spend an average $23 billionmore per year on interest rate payments over the 20102020 yearwindow than it would without the PPACA.

Once the government begins paying for health insurance forindividuals through subsidies and bringing people into the

government insurance programs in the latter half of the decade,this growing debt will balloon. By the end of the 10 years, debtheld by the public will be $753 billion higher than it otherwisewould have been.
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Higher Premiums

In its analysis of the PPACA, the CBO estimates that health

insurance premiums for the non-group market will increasesignificantly, primarily because of a mandate requiring plans toprovide a more generous level of coverage than most do nowwhile virtually eliminating the option of catastrophic coverage.In addition, significantly more individuals will face these higherpremiums after the creation of the insurance exchanges beginscrowding out the employer-sponsored market and after the

individual mandate begins prodding the currently uninsured intobuying coverage. [2] The result will be an overall increase in theabsolute amount of health spending on premiums (that is, privateand public).

The premium and medical spending increases put upwardpressure on prices. Thus nominal spending (i.e., the actual

dollars spent) that the government anticipates in subsides andpayments for increased Medicaid enrollees will actually purchasea lower level of medical care. In turn, the government will haveto spend more money to provide adequate insurance toindividuals or further ration payments to medical providers.This unanticipated increase in spending further widens thedeficit that contributes to the federal debt.

The dynamic analysis shows that the new law will result in670,000 net job losses, many of which would be in the healthservices industry. These losses represent both cutbacks in jobsand jobs that are simply never created as talented individuals


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choose to specialize in other industries that are not subject to thegovernments payment squeezes. At the same time, newlyenrolled and subsidized individuals on the governments rolls

will cause the demand for health services to increase. In turn,prices will rise even more than anticipated, and greater rationingwill occur. Thus, this legislation will fail to meet its primary goal:to enable greater access to health care while bending the costcurve downward.

Taxing the Job Creators

The PPACA also increases the Medicare hospital insurancecomponent of the payroll tax on wages and self-employmentincome in excess of $200,000 ($250,000 joint) by 0.9 percentagepointsa provision that will raise around $18 billion per year.This tax on the rich, however, will actually affect smallbusinesses as well as salary earners, because the hospital

insurance tax applies to flow-through income of those smallbusinesses that file taxes as individuals. In fact, almost $16 billionout the total $18 billion of revenue will come from filers with atleast some flow-through income. Small businesses at all earninglevels that file individuallyeven those already facing losses will see a tax increase.

In a time when firms are making hard decisions about layoffs,successful businesses could face tax increases of thousands of dollars. The overall average tax increase faced by smallbusinesses filing individually would be about $600.


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Repeal Is Needed

Mandates add rigidities to the economy, which in turn reduce the

ability of the economy to make the needed adjustments to ever-changing economic conditions. These inflexibilities reduceeconomic growth by stifling the new innovations that a dynamicpopulation demands, resulting in slower economic growth, longerperiods of unemployment, and reduced opportunities for savingsand investment used to build nest eggs for households.

A combination of mandates and taxes will not reduce health carecosts or ensure that all citizens have good access to health care.Instead, mandates will burden already struggling businesses withnew costs and punish individuals for not having high-payingjobs. New taxes will burden small businesses as well as large onesand force many firms to make layoffs, further hurting workers.The best way to prevent further erosion of the economy is to

repeal the new law.Karen A. Campbell, Ph.D. , is Policy Analyst in Macroeconomics, Guinevere Nell isResearch Programmer, and Paul L. Winfree is a Senior Policy Analyst in the Center for Data Analysis at The Heritage Foundation.

Appendix

Microeconomic Simulation. Personal income tax provisions of the PPACA were simulated using the Center for Data AnalysisIndividual Income Tax Model in order to estimate effects onrevenue and distribution of tax burden. The model simulates theeffect of tax law changes on a representative sample of taxpayers.


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Data for these taxpayers are extrapolated (or aged) to reflectdetailed taxpayer characteristics through 2016. The data areaged for consistency with the CBO baseline forecast from the

Global Insight model in order to produce effective and marginaltax rate estimates with which to forecast dynamic effects of thechanges in tax burden.

Two simulations were run for comparison: (1) current law priorto the PPACA, and (2) current law with the addition of theindividual income tax provisions of the PPACA. The provisions

affecting individual income that were simulated were theincrease in the Medicare hospital insurance component of thepayroll tax on wages and self-employment income and theincrease in the adjusted gross income floor of the medicalexpenses deduction from 7.5 to 10 percent. These were runtogether in a single simulation and compared with the simulationof current law in order to determine revenue, effective tax rate,and distributional effects.

For the purpose of presenting tax policy effects on smallbusinesses, a small business is defined as a business that reportedincome using a Schedule C or reported income as a partnershipor S-corporation.

Macroeconomic Simulation. Heritage analysts used theIHS/Global Insight February 2010 short-term model of the U.S.economy to estimate the overall net economic effects of thePPACA. [3] The baseline represents the most likely path of theU.S. economy in the next 10 years. The relationships in the model


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are calibrated by historical U.S. data and mainstream economictheory.

The model is a tool that gives insight into the likely magnitudeand direction of the policy changes in a dynamic world wheremany indirect effects can play out. This gives policymakers theinformation they need to determine which policies will lead to astronger, more robust economy and which policies will weakenthe economy and lead to fewer opportunities for citizens in thefuture.

The simulation was conducted by estimating the direct pricechanges that would likely occur in the health care markets. Theprice changes were calculated using estimates of the aggregatechanges in premiums and coverage by the CBO as well as dataon insurance coverage type from the 2009 March Supplement of the Current Population Survey and the 2007 Household

Component of the Medical Expenditure Panel Survey. [4] Thepercentage change in prices was factored into the health careprice index variable and the benefits portion of employment costindex. (The former was a price increase, the latter a slightdecrease.)

The excise tax on high-premium plans affects prices in the health

care markets and was therefore accounted for in the price indexchanges.

The hospital insurance taxes on high income and investmentincome affect individual average tax rates. The CBO estimated


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revenue from these taxes. These estimates were used to calculatethe implied change in average effective tax rates. The impliedchanges were factored into the average effective personal tax rate

variable. The tax changes were also simulated in the taxmicrosimulation model. The rates estimated from themicrosimulation were used to check the macrosimulation of theoverall effective rate. Both the dynamic macro- and staticmicrosimulation estimated similar changes to average effectiverates (in the range of 0.1 percentage point).

Penalties and fees on businesses and taxes on medical devices andpharmaceutical drugs were assumed to affect corporate taxes.The CBOs estimated revenues were used to calculate an impliedchange in the corporate tax rate.

The net changes in Medicaid spending per year, estimated by theCBO, were used as a proxy for real federal grants to state and

local governments for Medicaid in the model.About the Author

Karen Campbell, Ph.D. Policy Analyst, Macroeconomics

http://www.heritage.org/About/Staff/C/Karen-Campbellhttp://www.heritage.org/About/Staff/C/Karen-Campbellhttp://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economyhttp://www.heritage.org/About/Staff/C/Karen-Campbellhttp://www.heritage.org/About/Staff/C/Karen-Campbellhttp://www.heritage.org/About/Staff/C/Karen-Campbellhttp://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economy


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Guinevere Nell Research Programmer


Paul Winfree Senior Policy Analyst, Simulations


http://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economy

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http://www.heritage.org/About/Staff/N/Guinevere-Nellhttp://www.heritage.org/About/Staff/N/Guinevere-Nellhttp://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economyhttp://www.heritage.org/About/Staff/W/Paul-Winfreehttp://www.heritage.org/About/Staff/W/Paul-Winfreehttp://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economyhttp://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economyhttp://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economyhttp://www.heritage.org/About/Staff/W/Paul-Winfreehttp://www.heritage.org/About/Staff/N/Guinevere-Nellhttp://www.heritage.org/About/Staff/N/Guinevere-Nellhttp://www.heritage.org/About/Staff/N/Guinevere-Nellhttp://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economyhttp://www.heritage.org/About/Staff/W/Paul-Winfreehttp://www.heritage.org/About/Staff/W/Paul-Winfreehttp://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economyhttp://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economyhttp://www.heritage.org/Research/Reports/2010/09/Obamacare-Impact-on-the-Economy


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Obamacare: Impact on Future GenerationsPublished on June 1, 2010 by James C. Capretta WebMemo #2921

President Obama and other proponents of the recently passedhealth care law argue that the legislation was desperately neededto improve the nations health system for both todays citizens aswell as future generations.

But there are many reasons to be concerned that this new lawwill instead deliver both a lower quality health system and morecostly and burdensome government for those paying taxes infuture years.
http://www.heritage.org/About/Staff/C/James-C--Caprettahttp://www.heritage.org/About/Staff/C/James-C--Capretta


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Another Runaway Entitlement Program

The centerpiece of the new legislation is a large-scale coverage

expansion. The

impacts of obamacare

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