YES: Entrepreneurs will better afford coverage and options will increase.
By Jim McDermott
As we continue to slowly climb out of the worst economic recession since the Great Depression, I am constantly taking stock of what Congress must do to bring us back to prosperity.
In 2008, we were losing more than 750,000 jobs a month, borrowing hundreds of billions for two wars, and borrowing even more to make up for the Bush tax cuts for the rich.
But since President Obama took office, we have taken major steps forward in putting the economy on the road to recovery. And while the economy is still struggling to get on its feet, what seems to have gotten lost in the headlines is how the recently passed health reform legislation will help our economy down the road.
Back in 2008, just about everyone was clamoring for meaningful health reform. The reason was simple: Health care costs were stifling American prosperity.
We answered their call, and I believe health reform will help American businesses and workers in three primary ways: ensuring small businesses can afford health care for their employees, making certain workers can take home a greater share of their wages, and promoting entrepreneurship.
You’ll never hear a politician argue about the value of small businesses — they are the backbone of our economy. But insurance companies can charge them extremely high rates because they are insuring a smaller number of people, and if even one employee gets sick, everyone faces a higher cost.
So small businesses are left with two bad choices: pay insurance companies exorbitant rates or provide little or no health insurance to employees.
This is a decision that is crippling small-business owners’ ability to be competitive, and it’s the American workers who will ultimately suffer. Health reform started to change this.
First, many small businesses will be eligible for tax credits to help pay for health insurance. Second, for those small businesses that still can’t afford health insurance, beginning in 2014 their employees will be able to buy health insurance in the state or regional exchanges, many of whom will receive financial assistance to help defray the costs of insurance.
But the health reform law won’t just help small businesses — it’s designed to help every American worker by ensuring that they’ll get to take home more of their paycheck. Because of the rise of health care costs, employers have had to reduce wage increases in order to maintain the same level of benefits for their employees.
One thing the health reform law stresses is preventive care — which can save costs down the road and will be a mandatory free benefit. Further, new regulations will require insurance companies to use more of consumer dollars toward actual health care services.
The law was also crafted to help promote entrepreneurship. A recent article in U.S. News and World Report indicated that as many as 25 percent of American workers decide against starting their own businesses because they will lose the benefits they get through their employer, will be forced to pay unaffordable premiums or denied coverage altogether. Between the tax credits and increased competition through insurance exchanges, entrepreneurs will be better able to afford health coverage. Finally, the reform law will require insurance companies to take all consumers regardless of pre-existing conditions.
I know that this law is far from perfect, and I know that we are going to have to continue to improve it over the next several years, but it’s still a major step forward. This legislation will undoubtedly help our workers and our businesses, both large and small, afford health coverage. Politicians of all stripes should recognize the opportunity the health reform law presents to propel our country forward.
U.S. Rep. Jim McDermott is a Washington state Democrat.
NO: Businesses will drop health plans and hire fewer workers because of the costs.
By Grace-Marie Turner
Americans were promised they would save money and that their jobs and health insurance would be more secure if health reform passed. But the promises already are being broken, and workers will pay the price for ObamaCare’s failures.
Health costs will rise, taxes will go up, millions will lose the health insurance they have now, wages will flatten, and businesses will find it harder to create new jobs. This is not a prescription for a more prosperous future.
Soaring costs: President Obama said that by the end of his first term in office, families’ health costs would be $2,500 lower. But the Congressional Budget Office says families who buy their own health insurance will pay $15,200 a year for a policy by 2016 under ObamaCare but only $13,100 if the law hadn’t been enacted. That means families will pay $2,100 more, not $2,500 less — a difference of $4,600 a year.
The government will, for the first time, tell Americans how much they must spend on a government-mandated health insurance policy. Some people will get subsidies, but most will not. For many, health insurance may be the first or second biggest expense in their family budget. Those who don’t comply will be fined on their taxes.
The new law did nothing to deter lawsuit abuse, so doctors will continue to practice defensive medicine, driving health costs ever higher and making it harder for firms to continue providing coverage and pay workers decent salaries.
New taxes: The new law levies $500 billion in new taxes to pay for its entitlement expansions. The administration’s own actuary, Rick Foster, said these taxes will “generally be passed through to health consumers in the form of higher drug and devices prices and higher premiums.” In other words, the middle class will pay.
Less coverage and fewer jobs: The health law will also swell the deficit. The former director of the Congressional Budget Office, Douglas Holtz-Eakin, says that the subsidies for health insurance in the health law will cost $1.4 trillion, not the $450 billion estimated by the CBO.
That’s because as many as 35 million people will lose their health insurance at work since employers will have a strong financial incentive to drop coverage and dump workers into taxpayer-subsidized plans.
Under the law, companies face only $2,000 in fines if they don’t offer coverage but would pay an average of $20,000 if they provide health insurance for workers with families.
Firms that do continue to offer insurance will have a hard time paying the high premiums and still offering pay raises.
Hiring new workers, particularly entry-level employees, will be a risk fewer employers will be willing to take. Low-income workers are most threatened: If an employer can’t justify paying their salaries plus mandatory health costs, workers may very well lose jobs.
Stymies innovation: And if health is wealth, all of us will suffer as money that medical companies would have spent on research into new treatments and cures is instead taken up in federal taxes to pay for new entitlements.
If U.S. firms cut their research spending, medical innovation will be reduced. We may never know of the new treatments for cancer or the cure for Parkinson’s disease that a key scientist would have found if her lab hadn’t closed.
Higher health costs, lost jobs, lower wages, higher taxes and less medical innovation — American workers will not be more prosperous as a result of ObamaCare. We need health sector reform, but this isn’t it.
That is why poll after poll shows a strong majority wants ObamaCare repealed and replaced with sensible reform that doesn’t wreak havoc with our health sector and economy.
Grace-Marie Turner is president and founder of the Galen Institute, which is partly funded by the drug and medical industries.
