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Over the next six months Republicans will have to do much more than just show that Obamacare won’t work.
The news on healthcare reform this week is that right off the bat, the major corporations are discovering they will be losing stunning amounts to taxes as a result of Obamacare.
Caterpillar, the first to speak out, reported it will take a one-time write-down of $100 million in order to account for the elimination of a federal tax refund it has been receiving for providing drug benefits to its retired employees. In the following days, AT&T, Verizon, 3M, Deer & Co., and AK Steel Holdings announced they would take similar write downs. AT&T’s new tax bill will come to over $1 billion. The news is a body blow to major companies hoping to recover profitability and add jobs.
If all this sounds familiar, it should. It is exactly what Republicans predicted would happen if Obamacare became law. If existing employee benefits were taxed or made more expensive, the GOP argued, employers would either have to absorb the loss or start pushing their employees into whatever “government option” became available. When the Bush Administration adopted Medicare Part D in 2003, companies threatened to do just that, dropping their coverage and letting retirees buy into the federal program. The government offered a tax refund of about $650 per retiree in order to keep Part D costs down. Now the Obama Administration has decided to eliminate the tax refund in order to pay for the larger entitlements in the new bill.
All this, however, was too much for Henry Waxman, chairman of the House Energy and Commerce Committee. He demanded that CEOs from the major companies appear before him on April 21 to explain just what’s going on. “These assertions appear to conflict with independent analyses,” said the chairman, “which show that the new law will expand coverage and bring down costs.”
“When I use a word, it means exactly what I want it to mean, no more, no less,” says Humpty-Dumpty in Alice and Wonderland. “When we pass a law, it will do exactly what we want it to do,” say the Democrats in Congress. Never mind economics, never mind common sense.
This is typical of Washington — too many lawyers, too few people who understand business or energy or insurance or medicine or whatever the government has decided to regulate. The laws of a society are supposed to administer justice and make things run smoothly. Instead, the law in America has become a tool for forcing other people to do what you want. That’s why everybody wants to become a lawyer and nobody wants to become an engineer, scientist, doctor or — god forbid — an insurance company executive. Now that the results of Obamacare are emerging, the demonization of insurance companies that greased its passage will soon extend to American business as a whole.
Republicans are taking heart in this, and well they should — up to a point. The battle over the next six months will be to convince the public whether or not Obamacare is working as planned. CNN got the ball rolling the first day by discovering two people who will benefit from the new legislation:
Erica Mohamed, 31, of Houston, Texas, is separated, and has a 6-year-old son, Jeremiah, with a rare congenital heart disease called Tetralogy of Fallot. He has had three open-heart surgeries already, and will need to have another procedure to remove a stent in early adolescence. Mohamed’s job, through which she gets insurance, is not secure.…
Ira Bennett, 47 and self-employed without insurance, is HIV-positive, and had a heart attack in his early 40s. He estimates his income is about $500 a month from doing yard work and watching a friend’s house. Since he couldn’t pay for the $70,000 bill for his heart attack treatment, the costs fell to the state and federal government. Paying for his AIDS medications, costing around $2,000 a month, also falls to federal funding through the Ryan White Care Act.
Whether such heart-tuggers will resonate with the public is an open question. What is interesting to note is that in each of these instances, the unfortunate individuals did receive medical care — and very expensive care at that. Obamacare’s only apparent improvement will be to transfer these costs to commercial insurers.
The result is easy to predict — although you’d never convince Rep. Waxman of it. Insurance company costs will soar from taking on hordes of people with pre-existing conditions. They will try to raise premiums — at which point Rep. Waxman will proclaim, “Our analysis said premiums should go down, not up!” That will bring a call for federal price controls. This melodrama is already being played out in Massachusetts, where an identical reform has produced the highest insurance rates in the country. At some point here, the voice of Rep. Dennis Kucinich will begin to echo through the land: “Why not just turn the whole thing over to the federal government?”
That’s one scenario. The other is that the American public will not be fooled by any of this. They will recognize that it the evil insurance companies and businesses are not to blame, but that it is Congress that has created a flawed system. In a restrained and dignified manner, they will express their verdict by voting the Democrats out of office next November and replacing them with knowledgeable legislators — preferably non-lawyers and non-career-politicians — who can understand the situation.
THIS IS WHAT MOST of us would prefer. But I would add one caveat to all this. Take another look at those Caterpillar/AT&T/3M numbers. Caterpillar’s $100 million represents only one small portion of the health benefits the company is now conveying to its retired employees. Imagine the value of all the health benefits passing to all its employees, working and retired. It obviously exceeds $1 billion. And that’s just one company.
What the Caterpillar/AT&T/3M numbers reveal is that employee healthcare benefits have become a huge underground economy operating outside the conventional system. Remember, all these benefits are tax-free. Because the government doesn’t take a share, both employers and employees have come to prefer expanded health and retirement benefits to ordinary compensation. (How many people are holding jobs “just for the benefits”?) This distortion is what is ailing the healthcare economy.
Intelligent observers have noted this all along. Writing in the Wall Street Journal, Holman Jenkins concludes:
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?