WASHINGTON, June 4, 2014 — Even as Sylvia Mathews’ confirmation as Health and Human Services Secretary is before the Senate, the Affordable Care Act — Obamacare — is once again in trouble.
On May 17, 2014, The Fiscal Times reported that the government is:
“paying incorrect subsidies to more than 1 million Americans for their health plans in the new federal insurance marketplace and has been unable so far to fix the errors, according to internal documents and three people familiar with the situation.”
Reports are that some two million people’s health care coverage may be at risk. Out of some 8.8 million persons who have signed up for coverage, about 5.5 million are in the federal insurance exchange receiving reduced rates, or benefits, to pay for their health insurance policies.
The sliding scale subsidized policies are priced based on income, family size, and geographical location of the individual. Under the law, only citizens and legal immigrants are entitled to subsidized coverage.
The presentation shows that the data errors involve information concerning details on income, citizenship and immigration status.
Julie Bataille, Director of Center for Medicare and Medicaid’s Office of Communications, says that the discrepancies can be resolved over the summer, however there is a system in place to “turn off” benefits for anyone receiving benefits but who are ineligible.
“The fact that a consumer has an inconsistency on their application does not mean there is a problem on their enrollment,” said Bataille. “Most of the time what that means is that there is more up-to-date information that they need to provide to us.”
Illegal immigrants are not eligible for health care coverage via the exchanges and the current cost of treating uninsured immigrants who entered this country illegally is estimated by The Center for Immigration Studies to be $4.3 billion a year, primarily at emergency rooms and free clinics.
American taxpayers are still paying for those costs, as well as the cost of subsidies offered through the federal exchanges.
The insurance exchanges involved have been offering subsidized private coverage to lower-income and middle-class people who are not able to access private health care via their work or who do not have work. Some consumers will be asked to repay if they have received “too generous” of a subsidy.
Because the program has been structured around tax credits, the IRS can deduct an overpayment from a taxpayer’s following-year refund. But those deductions can only be made if the individual has a job and pays taxes.
Of those affected, discrepancies are said to be:
- 1.2 million related to income
- 505,000 related to immigration
- 461,000 related to citizenship information
Correcting the issues will require a “laborious effort requiring hands-on work from a legion of workers employed by government contractor Serco, Inc.”
The administration says it will be triple-check consumer information to ensure that subsidy benefits are only being awarded to persons who are eligible due to income, immigration and citizenship status, among other factors.
In the meantime, the cost of fixing the shoddy rollout and administration of Obamacare continues to crush the middle class.
From The Heritage Foundation, following are the five most prevalent and harmful burdens the middle class will be forced to bear under Obamacare:
1. More taxes. Obamacare imposes $502 billion of new or increased taxes and fees. Heritage expert Curtis Dubay explains that several of the taxes “will ultimately be passed on to [middle-income families] through higher prices. These include the fees on medical device manufacturers, pharmaceutical companies, and health insurance companies and the new tax on tanning services.”
The middle class will also be burdened by the individual mandate to purchase insurance, new restrictions and limits on their tax-free health and flex savings accounts, and a new tax on high-cost (Cadillac) health plans.
Starting next year, Obamacare increases the Medicare payroll tax from 2.9 percent to 3.8 percent for individuals earning above $200,000 and couples earning more than $250,000 and for the first time extends the tax to income earned from investment. But the threshold for the higher rate isn’t indexed to inflation and will impact more middle-class families each year.
The 2012 Medicare trustees report states, “By the end of the long-range projection period, an estimated 80 percent of workers would pay the higher tax rate.”
2. Loss of existing coverage. As many as 35 million people could lose their existing coverage because of Obamacare. This is because Obamacare creates financial incentives for employers to drop coverage for their employees.
One report that examined the health insurance costs of 71 fortune 100 companies estimated savings of $422.4 billion between 2014 and 2023 if they dropped their employee coverage and paid the employer mandate penalty. Another study predicts that 30 percent of employers will definitely or probably drop coverage under Obamacare.
3. Higher premiums. Americans who purchase coverage in the new Obamacare exchanges will find that health insurance is still very expensive. American Enterprise Institute resident scholar Scott Gottlieb, MD, explains, “For a family of four, premiums on even one of the lower priced ‘silver’ options could still cost more than $15,000 annually on the exchanges.”
A family’s income might exclude them from subsidies but not be high enough to pay $15,000 for Obamacare’s government-approved insurance. “A family of four earning $90,000 annually takes home about $60,000 after local, state, and federal taxes. If they lose workplace coverage, and move onto the exchanges, they could find themselves spending as much as 25 percent of the family’s take home pay for an average policy ($15,000 for the ‘silver’ plan).”
4. Rising health care costs. As premiums and overall health care costs continue to rise, middle-class families, including those receiving a subsidy, will be left paying more. Beginning in 2019, Obamacare’s cost-containment strategy for the exchanges is to hold the total cost of the subsidies to 0.504 percent of GDP.
Charles Blahous, a Medicare trustee, concludes that “this limitation would likely cause the federal subsidies to grow less rapidly over the long term than the cost of health care and thus require low-income individuals in the exchanges to shoulder a steadily increasing percentage of their health costs.
5. More government control of health care. Obamacare transfers massive authority over to the Secretary of Health and Human Services and expands the role of government in delivering care and coverage.
This huge expansion of government’s role in health care delivery means that, by 2020, more than half of all Americans will be dependent on the federal government for health care and government bureaucrats will be in charge of deciding what you can and cannot buy and the level of health care you will receive.
With Americans paying for insurance via the exchanges, a repeal of the law becomes increasingly impossible. Meaning that the program will continue to be funded via higher premiums for those who are not eligible (i.e., working) for subsidized coverage and increased consumer taxes.
GOP pollster David Winston, who advises House Republicans, says that “Obamacare” has remained unpopular”.
“The challenge for Republicans is to make this a policy fight, not a political fight. It’s incumbent upon Republicans to come up with an alternative. For most people, going back to where we were is not an option.”
Winston does not expect the laws popularity among Republicans to change much before the November midterm elections, saying, “the challenge, and opportunity, for Republicans is to come up with solutions to new issues voters are experiencing, such as unexpectedly high deductibles.”
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“This plan has created a whole new raft of problems, and what they want to see is those problems resolved, and so the idea of shifting back to the previous set of problems versus the existing set of problems is not necessarily where they’re focused.”
“While health care is a very important issue, Republicans must focus on what is the overwhelmingly top issue — jobs and the economy, just like they did in 2010 with the question ‘Where are the Jobs?’ ” said David Winston.
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