Tuesday, March 30, 2010

ObamaCare - Passover Edition

Pelsoi said: "Pass The Bill to Find Out What's In It"

The horrors are just beginning:

Damn the Evidence, Full Speed Ahead? [Victor Davis Hanson]

The strangest thing about Obama's gargantuan, trillion-dollar-plus new health-care entitlement is the timing.

Not only are we running $1.7 trillion annual deficits and scheduled to nearly double the $11 trillion debt in only eight years — and watching the logical end to an entitlement state in Greece's implosion — but we are witnessing the meltdown of almost every government-run program imaginable: Medicare is broke; the Postal Service is insolvent and cutting back Saturday service (but probably not a commensurate one-sixth of their budget); and now Social Security spends more than it takes in.

So is this frenzied effort to expand government, widen entitlements, raise taxes, and borrow more money some sort of nihilistic urge to achieve a universal, cradle-to-grave, redistributionist entitlement state at about the same time the entire system goes bankrupt?

Constant campaigning, photo-ops, fluff interviews, adulatory essays in the corrupt media — all this can give a one or two point plus in the polls. But the reasons the bumps are transitory and followed by net losses after a week or two is that the public now realizes we are broke. When Obama announces yet another give-away or entitlement, the public equates that with spending more money we have just borrowed, and suspects that this can no more go on than can the spree of the giddy shopper who maxes out a dozen credit cards, oozing wealth and confidence, before the tab comes in and financial destruction follows.


Poll: 2/3 Find Affordable Care Act too Costly [Daniel Foster]

A new USA Today/Gallup Poll finds that nearly two in three Americans say health-care reform costs too much and expands government too far. A majority also believe that the bill will worsen deficits, and a plurality believe it will increase premiums and reduce coverage.

Overall, 50 percent of respondents called passage of the Affordable Care Act "a bad thing" while 47 percent called it "a good thing." Those numbers mirror Obama's approval/disapproval split of 47/50 — which also marks the first time Obama's disapproval has climbed to 50 percent.

The survey also found a lingering distaste for "process" issues that Democrats tried to play down as the bill neared passage. 53 percent of respondents called Democratic methods "an abuse of power."

More here.


Obamacare: Not Thinking Things Through? [Andrew Stuttaford]

This makes little sense (well, apart from the vitamins bit):
Starting in January, you will no longer be able to tap your {Flexible Spending] account to cover aspirin, vitamins and other over-the-counter medications, unless they are prescribed by a doctor. Come 2013, the total amount you can contribute annually will be limited to $2,500.
Getting a prescription is an expensive, time-consuming business. People should be encouraged to go OTC, not the opposite.


On Flex Spending Accounts: A Hidden Tax Increase on Employees [Shannen Coffin]

Andrew's post highlights one of the many tax increases hidden in Obamacare. Prior to the Act, there was no statutory limit on the amount an employee could set aside to pay for out-of-pocket medical expenses on a pre-tax basis. Many employers limited the amount to $5,000 or so (since it's use or lose). By capping the pre-tax set aside at $2,500, the Act subjects to income taxes those wages above the $2,500 threshold that an employee might have set aside previously. So for a family with taxable income of $100,000, this provision alone could lead to a tax bill as much as $625 higher than before the Act, if they were maxing out on their Flex Spending account. Because these are voluntary set asides, the hike isn't going to affect everyone, but it surely will have an impact on the bottom line of a number of less-than-millionaires, even by the Democratic definition (meaning earning $250k).

UPDATE: An email illustrating the problem:

My wife and I have four children, all teenagers, and for the past few years have maxed out our contribution to our FSA account. We are under the 250K income limits our President promised not to impose new taxes on and we will feel the impact of this change. With our oldest entering college in another year the extra $625 would have come in handy, but I guess we’ll just make do. I actually think more impact for this “change I can believe in” will flow from decreased spending on discretionary medical items. As an example, three years ago I had Lasik eye surgery and paid the lion’s share out of our FSA account; were that account not available to me I would still be wearing glasses.

I’m sure the economic impact of several thousand people making a decision of this type in the future will have a negative ripple effect on the economy. The commercial landlord who owned the building where my surgery took place loses out; the guy doing the landscaping loses out; the people cleaning the clinic lose out; the power company loses out; the advertising agency loses out; the radio station that was running the ads loses out, etc. etc. etc., all because someone who has never created a job has a better understanding of the world than I do.


Principled Lawmaking [Kathryn Jean Lopez]

FNC:

The 11 House Democrats led by Rep. Bart Stupak who dropped their opposition to health care reform legislation mere hours before the final vote have requested $3.4 billion in earmarks — and one watchdog group wants to know whether the money represents business as usual or political payoffs.

In their defense, Bart Stupak's office casts it as the former:

"The congressman's vote for health care has no connection to annual appropriations requests," spokeswoman Michelle Benoche said. "Appropriations requests were submitted on Monday, March 22, because that is the deadline of the Appropriations Committee."


Insurers Cave on Kid Coverage [Daniel Foster]

Insurers are signaling that they will not challenge a vaguely-worded provision in the Affordable Care Act that makes it unclear whether coverage has to be provided to children with pre-existing conditions.

In a letter to Health and Human Services Secretary Kathleen Sebelius, the industry's top lobbyist said insurers will accept new regulations to dispel uncertainty over a much-publicized guarantee that children with medical problems can get coverage starting this year.

Quick resolution of the doubts was a win for Obama — and a sign that the industry has no stomach for another war of words with a president who deftly used double-digit rate hikes by the companies to revive his sweeping health care legislation from near collapse in Congress.

"Health plans recognize the significant hardship that a family faces when they are unable to obtain coverage for a child with a pre-existing condition," Karen Ignagni, president of America's Health Insurance Plans, said in a letter to Sebelius. Ignagni said that the industry will "fully comply" with the regulations, expected within weeks.

HHS Secretary Sebelius had earlier sent insurers a strong letter warming them that "Now is not the time to search for nonexistent loopholes that preserve a broken system."


Over-educated and Over-indebted [Richard Vedder]

President Obama’s signing of the education bill is triply disastrous. First, he violated basic tenets of representative democracy by tying otherwise politically unattainable education changes to the health-care bill.

Second, the bill’s student loan provisions will not save the $68 billion promised, and will move the country closer to a European-style socialism that has brought that continent stagnation. Going to a Soviet/U.S. Postal Service model of student-loan services goes against the sound maxim that competition is always better than monopoly. Moreover, the bill’s repayment terms will lead to increasing student-loan defaults, adding to the crushing fiscal burden on a government whose IOUs are now trusted less than those of some private corporations.

Third, the bill proceeds from a false premise. President Obama asserted Saturday that “by the end of this decade, we will once again have the highest proportion of college graduates in the world.” Putting aside the nasty reality of a 45 percent six year college drop-out rate, the Labor Department forecasts that, over the next decade, there will be fewer new jobs requiring college degrees than there will be new college graduates. This bill aggravates a costly and inefficient system, likely will raise tuition charges, and lead to more over-educated and over-indebted young Americans.

Richard Vedder is a professor of economics at Ohio University and an adjunct scholar at the American Enterprise Institute.


Alexander: Obama's 'Soviet-Style' Takeover of Student Loans [Robert Costa]

Sen. Lamar Alexander (R., Tenn.), the U.S. secretary of education from 1991 to 1993, tellsNational Review Online that President Obama’s revamping of the federal student-loan program is “truly brazen” and the “most underreported big-Washington takeover in history.”

“As Americans find out what it really does, they’ll be really unhappy,” Alexander predicts. “The first really unhappy people will be the 19 million students who, after July 1, will have no choice but to go to federal call centers to get their student loans. They’ll become even unhappier when they find out that the government is charging 2.8 percent to borrow the money and 6.8 percent to lend it to the students, and spending the difference on the new health-care bill and other programs. In other words, the government will be overcharging 19 million students.” The overcharge is “significant,” Alexander adds, because “on a $25,000 student loan, which is an average loan, the amount the government will overcharge will average between $1,700 and $1,800.”

“Up to now, 15 out of 19 million student loans were private loans, backed by the government,” Alexander says. “Now we’re going to borrow half-a-trillion from China to pay for billions in new loans. Not only will this add to the debt, but in the middle of a recession, this will throw 31,000 Americans working at community banks and non-profit lenders out of work.”

Alexander, a former University of Tennessee president, says the effects of Obama’s policy could be felt for decades. “When I was education secretary, one of my major objections to turning it all over to the government was that I didn’t think the government could manage it,” he says. “This is going to be too big and too congested, and makes getting your student loan about as attractive as lining up to get your driver’s license in some states.”

“It changes the kind of country we live in more than it changes American education,” Alexander concludes. “The American system of higher education has become the best in the world because of choice and competition. Unlike K-12, we give money to students and let them choose among schools, having the choice of private lenders or government lenders. That’s been the case for 20 years. Having no choice, and the government running it all, looks more like a Soviet-style, European, and even Asian higher-education model where the government manages everything. In most of those countries, they’ve been falling over themselves to reject their state-controlled authoritarian universities, which are much worse than ours, and move toward the American model which emphasizes choice, competition, and peer-reviewed research. In that sense, we’re now stepping back from our choice-competition culture, which has given us not just some of the best universities in the world, but almost all of them.”

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