Angel Or Devil? Budget Process Highlights Health Reform Divide

The health reform battle has a new venue beginning this week—the debates over the 2012 budget and Congressional continuing resolutions to keep the government running while the budget debate continues. And if you think the Democrats and Republicans are fighting the battle in two different universes, you are right.

Here is President Barack Obama’s 2012 budget statement on the Patient Protection and Affordable Care Act (ACA):

“The Administration is committed to implementing the ACA swiftly, efficiently, and effectively, and will work with the Congress to ensure that the resources are available to do just that.”

And here is House Speaker John Boehner (Ohio) blogging on Republican pushed continuing budget resolutions:

“We're going to do everything we can in this bill to make sure that there's no money for ObamaCare. But this is a continuing resolution. This deals with what we call discretionary spending. And within the rules of debate for a bill like this, we're going to do everything we can to make sure there's no money.

“You'll see us work all year at bringing to light just how destructive ObamaCare is going to be on our health care system, on the American people, and on our future debt. And you'll see us move systematically to do everything we can to make sure this law never, ever has a chance to be implemented.”

Mr. Obama’s budget makes the following case for the ACA:

“The ACA empowers Americans who are insured with information about the cost and quality of care and gives them the stability and security they need by ending many discriminatory and abusive insurance industry practices; expands coverage to more than 30 million Americans who lack insurance; cuts waste and reforms health care so that higher-quality care is delivered; and does it all without adding a dime to the deficit. In fact, according to CBO’s latest analysis, the ACA will cut more than $200 billion from the deficit over the next 10 years and more than $1 trillion over the second 10 years. Considering that rising health care costs are driving up our national debt and thus are a drag on future economic growth and the Nation’s overall competitiveness, the ACA puts in place much-needed deficit reduction.

“Americans already are enjoying many of the protections put in place by the ACA. For instance, in the past, if a person became ill, insurance companies could deny payments for health services by retroactively finding an error or other technical mistake on their previously accepted application; this is now illegal. Insurance companies are now prohibited from imposing lifetime dollar limits on essential benefits, such as hospital stays. And because of the ACA, insurance companies can no longer deny coverage to children under the age of 19 due to a pre-existing condition. Finally, if a consumer does have a problem with an insurance company’s coverage decisions, the ACA ensures consumers have a way to appeal coverage determinations or claims to their insurance company, and establishes an external review process.

“Beyond curbing the most egregious practices of the insurance industry, Americans have realized other benefits. Since ACA’s passage, as many as 4 million small businesses could be eligible for tax credits to help them provide insurance benefits to their workers. The first phase of this provision provides a credit worth up to 35 percent of most employers’ contributions to employees’ health in­surance. This provision also provides up to a 25 percent credit to small nonprofit organizations. For 2010, an estimated 4 million seniors who reached the gap in Medicare prescription drug coverage known as the “doughnut hole” qualified to receive a $250 rebate. For those individuals who have been uninsured for at least six months because of a pre-existing condition, there is now a Pre-Existing Condition Insurance Plan to pro­vide them with coverage options. This program serves as a bridge to 2014, when all discrimina­tion against pre-existing conditions will be pro­hibited. And all new private-market health in­surance plans now must cover critical preventive care services such as mammograms and colonos­copies without charging a deductible, co-pay, or coinsurance.

And here is a recent Republican analysis:

“ObamaCare’s cost-increasing and job-destroying regulations are an economic albatross inhibiting a return to prosperity. In addition to the well-documented cost burden of its “1099 provision” requiring excessive IRS forms from small businesses, ObamaCare discourages growth in other ways, such as the $2,000 per employee tax on businesses with more than 50 employees that fail to offer health insurance. Unfortunately, this employer mandate will disproportionately affect the most vulnerable workers in the economy. The Congressional Budget Office (CBO) noted in its August 2010 Budget and Economic Outlook:

‘Those penalties, whose amounts are based on the number of full-time workers in the firm, will, over time, generally be passed on to workers through reductions in wages or other forms of compensation. However, firms generally cannot reduce workers’ wages below the minimum wage, which will probably cause some employers to respond by hiring fewer low-wage workers.’…

“An analysis by the House Budget Committee estimates that implementation will result in $2.6 trillion of spending. The bill will cost drastically more than the original CBO estimate due to the accounting gimmickry mandated in CBO’s analysis. The House Budget Committee estimates that ObamaCare will actually increase the deficit by $701 billion over the next ten years. This sobering figure comes on top of CBO’s own admission that ObamaCare “does not substantially diminish” the pressure of rising health costs on the federal budget during the next few decades and beyond.”

Budgetary estimates typically are inaccurate, and all economists have difficulty in predicting the future under the ACA.  What is less difficult is gauging the effect of the reforms already put in place. How do you think those reforms are going so far?

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.