First 3 parts of a 5-Part Series in Human Events
Part 1: Repealing Obamacare: Politically Feasible, Morally Urgent
Missourians took a bold stand last Tuesday against Obamacare. Fully 71% of voters supported a ballot measure forbidding the government from requiring state residents to have health insurance. This so-called "individual mandate" is a crucial component of the new federal health law.
The Show-Me State's vote comes on the heels of a federal judge's decision to allow a Virginia lawsuit challenging the constitutionality of Obamacare to move forward.
The tide is turning against the President's health-reform plan. Indeed, a recent Rasmussen poll found that nearly 60% of likely voters favor repealing Obamacare.
Americans can strike the death knell for this unpopular piece of legislation by kicking the Democrats out of Congress this fall and giving President Obama the boot in 2012. The next class of lawmakers must take immediate action to completely repeal Obamacare.
Incremental revisions just won't do. This 2,400-page law is the biggest entitlement since the Great Society. A wide-ranging program that puts one-sixth of our economy in the hands of politicians and bureaucrats can't be fixed through a little tinkering. Lawmakers need to scrap the measure in its entirety.
Time is of the essence. Obamacare works like a one-way ratchet. Dismantling the huge new bureaucracies established by the measure will be effectively impossible once they've taken root.
Within just a couple years, the law creates an astonishing 159 new boards and commissions. Among them? An Elder Justice Coordinating Council, an Office of Indian Men's Health, and a Pregnancy Assistance Fund. There's also a Patient-Centered Outcomes Research Institute, the Private Purchasing Council, and the Medicaid Emergency Psychiatric Demonstration Project. The list goes on and on.
Obamacare even increases the size of agencies not typically associated with health care. About 16,000 new IRS agents will be hired to enforce the individual mandate, file the reams of new paperwork required of small businesses, and collect new taxes.
And what a load of taxes there is. The law in 2012 whacks individuals with incomes above $200,000 and families with incomes above $250,000 with a new 3.8% Medicare tax on "unearned" income from interest, rent, capital gains, and dividends. Next year, Obamacare extracts billions in new tax revenue from drug companies and medical device firms. And it lowers the tax deduction people can take for catastrophic healthcare expenses.
That's just the start. The law halves the amount of money Americans can put into tax-advantaged Flexible Spending Accounts for routine medical expenses. And folks with Health Savings Accounts are barred from spending the money in their tax-free accounts on over-the-counter medicines-even the sorts of allergy and antacid meds that are many times more expensive by prescription.
Once all these taxes and government agencies are in full force, thousands of government employees will be dependent on the continued expansion of Obamacare for their livelihood. They'll fight tooth-and-nail against any legislation that compromises their paycheck. If lawmakers don't eradicate these taxes before they're fully in place, all those bureaucrats will be here to stay.
Obamacare is also designed to make Americans dependent on government for insurance. The law will require policies to contain a number of gold-plated benefits, like coverage for adult children and mandatory preventive care with no co-pays. These new mandates, of course, will make many existing insurance plans illegal.
As a result, many people will be forced off their existing coverage and will have to sign up through new government-run insurance exchanges. The plans sold on these exchanges will technically be provided by private providers but will be heavily regulated and subsidized. And Lynn Woolsey (D.-Calif.) has introduced an amendment to the Affordable Care Act that would, if passed, put the "public option," the government insurance plan, back into play. Each state-run insurance exchange, starting in 2014, would have to include this option.
As the cost of insurance rises, Congress will face pressure to raise subsidies. Many Americans will get used to having other taxpayers foot the bill for ever-greater amounts of ever-more generous coverage.
This fall, Republicans will attempt to persuade the American people that they deserve to be put back in power. Exhibit A in their case should be a pledge to immediately repeal Obamacare. Scrapping the health-reform package in its entirety is the only way to prevent Obamacare from doing irreparable damage to the country.
Part 2: CLASS Is Dismissed
August 10, 2010
Critics of Obamacare's mammoth price tag have directed much of their ire at the billions of dollars earmarked for the expansion of Medicaid and for government subsidies to help people who make as much as $88,200 purchase private insurance.
Both issues are important, but budget hawks should save some of their venom for a third money sink: the Community Living Assistance Services and Supports Act, or CLASS Act. This component of the health reform bill represents a huge new entitlement that could add tens of billions to the national deficit. The CLASS Act should be among the next Congress's first targets for repeal.
CLASS charters a federal long-term-care insurance program open to all Americans. Benefits of between $50 and $100 per day will go to disabled folks and seniors who have trouble performing basic activities like getting dressed or bathing. The beneficiaries could use the cash to help pay for an in-home caretaker or adult day care.
Where's all that money going to come from? Congress intends for CLASS to sustain itself with monthly premiums deducted from Americans' paychecks. Workers will be automatically enrolled in the program but could opt out.
To further encourage people to sign up for CLASS, the government will require that a person pay premiums for five years before receiving benefits.
Defenders of this new entitlement claim that it will actually improve the federal budget. They cite a report from the Congressional Budget Office that estimates that the CLASS Act would cut the deficit by $72.5 billion over its first ten years.
But it takes some charitable math to come up with that figure. The CLASS program will begin collecting premiums in 2011. But it won't start paying out benefits until five years later. So the $72.5 billion in savings includes 10 years of premiums-and only five years of benefits.
Once people start claiming benefit checks, the program's finances will deteriorate rapidly. Indeed, the CBO admits that "in the decade following 2029, the CLASS program would begin to increase budget deficits ... by amounts on the order of tens of billions of dollars for each ten-year period."
In other words, the CLASS Act will put the federal government into an even deeper budgetary hole. How? The answer lies in the way the program is structured.
Because the CLASS program is open to all Americans-and because all participants will pay the same premium, regardless of whether they're likely to claim benefits-only those who foresee needing CLASS's assistance will enroll. The government estimates that just 2% to 6% of eligible Americans will sign up.
As needy individuals require greater and greater payouts, premiums will edge higher to compensate. And as premiums increase, healthier people will leave the insurance pool.
This process will repeat until no premium-paying customers are left. At that point, the government will have to decide whether to fund CLASS benefits from general tax revenue or scrap the program altogether. The feds won't kill benefits for those who have paid into the system, so the only available option in the end is a taxpayer bailout.
Indeed, the Centers for Medicare and Medicaid Services concluded that the CLASS program faces "a significant risk of failure."
Rather than launching an expensive new entitlement, Congress should've done more to bolster the marketplace for private long-term-insurance, perhaps through tax credits and other incentives.
Some eight million Americans currently have private long-term-care policies, the vast majority of which offer benefits that far exceed $50 a day. The fifty bucks promised by the CLASS Act are not nearly enough to put a dent in the cost of nursing home care, as a shared room in a typical facility runs $198 a day. Home care generally costs $21 an hour. Cognizant of these high costs, only 15% of private plans reimburse less than $100 a day.
Sen. Kent Conrad (D.-N.D.), chairman of the Senate Budget Committee, dubbed the CLASS Act a "Ponzi scheme of the first order." And Senate Finance Committee Chairman Max Baucus (D.-Mont.) once declared on the Senate floor, "Frankly, I am no fan of the CLASS Act myself."
Too bad both senators voted in favor of it. Rep. Charles Boustany (R.-La.) has introduced a bill that would repeal the CLASS Act. Conrad, Baucus, and any other lawmaker concerned about America's fiscal future would be wise to join Boustany's effort.
Part 3: Repeal Obamacare: Small-Business Killer
August 11, 2010
The average small-business owner spends about 12 hours filing his taxes each year. Thanks to one of Obamacare's oft-overlooked provisions, that figure will soon increase exponentially.
The new law requires all businesses to submit 1099 tax forms to the Internal Revenue Service (IRS) for each vendor from which they purchase more than $600 in goods in a year. Business owners will now have to keep receipts and file forms for every trip to the coffee shop, the local lunch spot, and the office supply store. After all, those $3 lattes each day add up.
Lawmakers must repeal this nightmarish new rule. Many American businesses-particularly small ones-simply can't afford to devote scarce resources to bureaucratic minutiae like this.
Businesses already must file 1099 forms whenever they spend $600 on services in a year. Jacking up the reporting requirements further to include goods will increase the amount of time and money that firms have to spend complying with federal rules-and thereby decrease the amount they can devote to more productive pursuits, like creating jobs and growing their businesses.
Over the last 15 years, small businesses have created 65% of new jobs in this country. And while the small-business sector has revved up in recent months, it's nowhere near full strength. Indeed, small-business employment grew by just 0.2% in July-a drop from the growth rate posted in June.
The new 1099 rules promise to slow those growth rates even further. Instead of bolstering their sales forces or expanding their production capacity, business owners will have to deal with mounds of costly new paperwork.
The IRS's independent Taxpayer Advocate estimates that the 1099 provision will affect about 40 million businesses, including 26 million sole proprietorships. That's 10 times the number of companies the White House claims will benefit from Obamacare's small-business tax credits.
Most small-business owners can't afford the army of accountants needed to comply with these new mandates. The National Association for the Self-Employed (NASE) reports that fully 40% of its members prepare their taxes on their own. The new reporting requirements may force these folks to shell out for tax-preparation help that they cannot afford.
At a recent press conference, Pat Felder, the owner of a small car parts store in Baton Rouge, La., estimated that she "will go from filling out four 1099 forms to several hundred because of this law."
Felder isn't alone. NASE estimates that businesses with fewer than ten employees currently file an average of two to three 1099s a year. This new provision would push that figure up to 27-a 1,250% increase.
Now is the worst possible time to burden businesses with needless and costly paperwork. The Bureau of Labor Statistics recently announced that total nonfarm employment declined by over 130,000 last month. And the unemployment rate is stuck at 9.5%, with 14.6 million people still out of work.
It's not even clear that the IRS can shoulder the new 1099 burden. The Taxpayer Advocate has publicly expressed concern that the avalanche of paperwork triggered by the new rules could strain the agency to its breaking point.
Fortunately, many Republicans and Democrats agree that these new 1099 rules have to go. Rep. Dan Lungren (R.-Calif.) has introduced a bill that would scrap the new provision. Sen. Mike Johanns (R.-Neb.) has done the same in the Senate. And many Democrats have signaled their willingness to repeal the filing requirements.
Obamacare is a clunky, job-killing monstrosity. And we're just beginning to appreciate the damage it will do to the economy. For the sake of our nation's 30 million small businesses, it's crucial that lawmakers repeal the law's 1099 requirement. Doing so will allow entrepreneurs to create the jobs and wealth our economy needs to fully recover.
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Sally C. Pipes is president and CEO of the Pacific Research Institute and author of "The Truth About Obamacare".
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