A Rx for Disaster: A Physician’s Diagnosis of the “Affordable Care Act”

By Congressman Michael C. Burgess

Dr. Burgess’ Op-Ed was published in I-Mag Magazine on July. 1 2013

It has been over three years since the Affordable Care Act was signed into law. As a physician I am the first to admit we must reform America’s health care system, but the way Congress and President Obama approached the challenge simply did not address the areas that needed improvement. Democrats were so eager to pass health care legislation—any health care legislation—that they settled for a rushed and ineffective law. Creating a system where Americans will pay more to get less.

The Affordable Care Act is simply bad policy. It is bad economic policy: it exacerbates the nation’s debt problem and represses economic growth through new taxes and regulations. It is also bad health policy: it promises universal coverage, but instead creates new barriers to access through greater bureaucratic control and increased costs for consumers. 

Increased Barriers to Access

The Affordable Care Act is touted by President Obama and his administration for its ability to provide access to health insurance coverage through state-based or federally-facilitated health insurance exchanges. Their goal is to provide an entryway to purchase health insurance for individuals who do not have employer-based coverage or receive coverage through a federal program, such as Medicare.

The problem is the administration has failed to inform the public of the incredibly complex eligibility process and of the amount of private information they are required to give the federal government to enroll in an insurance plan through the Exchanges.

Here is what the process will look like:

Once an individual submits an application to an exchange, the information is shared with the Secretary of Health and Human Services. HHS will then pass the applicant’s personal information, including name, address, and Social Security number, to the Social Security Administration to be verified. If an individual says they are an alien lawfully in the U.S., or that they are a citizen, but the information they give is not consistent with the Social Security Administration’s records, then HHS will give the individual’s personal information to the Department of Homeland Security to verify the their immigration status.

Once an applicant’s citizenship and immigration status is verified, they will be required to submit their family income and family size to determine eligibility for Medicaid, or other subsidies.  The Secretary of HHS will then verify the applicant’s family size and income information with the Department of the Treasury.

If an applicant applies for a premium tax credit or cost-sharing reduction because their employer does not provide coverage then they must also provide the employer’s name, address, and identification number and employment status.

The employment information is then verified with the Internal Revenue Service to confirm the accuracy of the information and assess whether the applicant is eligible for a subsidy or whether the applicant’s employer is eligible to participate in the SHOP exchange.

People will not only have to submit all of the necessary information upon initially applying to the Exchange, but will be required to resubmit much of this information every year to stay in the program.

Imagine the confusion and technological difficulties this convoluted process is going to create.

Increased Costs

The main tenant of The Affordable Care Act was the promise of providing better quality health coverage to more citizens at a lower cost. The law includes many provisions that are supposedly “free” to beneficiaries – these new services aren’t “free.” Instead, the government turns to many places, including health insurance companies and employers, to pay for these provisions, including five additional taxes:

·         Medical Device Tax: $20 billion tax increase

·         Flexible Spending Account Limits: $13 billion tax increase

·         Surtax on Investment Income: $123 billion tax increase

·         Medical Itemized Deductions Limits: $15.2 billion tax increase

·         Medicare Payroll Tax Hike: $86.8 billion tax increase

This $258 billion in tax increases will be passed onto beneficiaries in the form of higher premiums. As the October 1^st deadline for enrollment quickly approaches insurers are faced with no choice but to raise costs or reduce benefits.

Instead of expanding coverage and lowering costs, the president’s health care law has pushed greater costs onto the back of consumers – forcing people to bear higher costs, reduced benefits, all while having less control of their health care. As insurers have begun to submit rates for plans to be offered in 2014, the results have shown that not only are premiums going to increase in almost every state, but they will increase by as much as 100-400% in some markets.

The regulatory pressure on plans and increasing rates creates a market void of competition which threatens plan solvency, or forces people to go without coverage – further increasing insurance rates. The government is attempting to control the market, but in the end will only bring it down; we will pay more to get less.

Lack of Readiness

The President’s law states that the Exchanges will be ready to begin enrollment by October 1 of 2013. So far, the administration has created over 646 pages of rules detailing the operation of state exchanges. Yet, the hundreds of pages of proposed and final rules still fail to address the key questions states and policymakers have been asking the Obama Administration since the law first passed over 1,000 days ago.

The result of the administration’s lack of response? After spending over three billion dollars, thirty-three states have announced that they will defer the management of the exchanges to the federal government. Health insurance exchanges are the very centerpiece of the health care law and are essential for the President’s law to operate. Yet, the states and health plans still haven’t been given the necessary information to do their jobs.

The Obama administration’s failure to issue consistent policies has sent a contradictory message to the American public, the states, and the plans that are to enroll individuals. On one hand each are told by the Administration to “trust us” and yet no substitute guidance is provided. The October 1^st deadline is quickly approaching and the Administration only now realizes there is “some possibility” that states won’t be ready to launch their Exchanges.  According to Henry Chao, a CMS official overseeing the technology for the exchange their hope is that “it’s not a third-world experience.”

Effects of ACA

The implementation of the ACA has only demonstrated how the law undermines health care quality, increases costs, will likely fuel the nation’s debt problem, and worsens an already anemic economic recovery. The Affordable Care Act will have broad reaching effects in both the short term and long term on employers, health care providers, health care manufacturers and individuals.

For Employers, there are severe penalties – up to $3,000 per employee - for any business with more than 50 full time employees that does not provide health insurance. The regulations define “full-time employees” as those who work more than 30 hours a week. Therefore, to avoid the penalties for non-compliance, employers are reducing their employees to less than 30 hours per week and also reducing their total number of full-time employees to less than 50.

In the Health care industry, companies will be heavily taxed to pay for the may “free” provision of the Affordable Care Act - such as free preventive care.

The law raises a range of new taxes:

·         2.3 % excise tax on Medical Device Manufacturers 

·         Annual fee on branded drug manufacturers and importers of branded drugs

·         Additional fee on health insurance and employer plans for each beneficiary covered

·         40% tax on high-cost health plans

The new taxes on companies in the healthcare industry have devastating effects on the overall U.S. economy. The healthcare industry has historically provided substantial contributions to the economy through innovation, quality jobs, higher earnings, and sales.  However, now, with the high cost of doing business in the U.S. companies are either moving overseas or laying off employees. The increasing regulatory and cost burden the federal government imposes on companies is turning the U.S. from a birthplace of innovation to a barren marketplace void of competition.

Nancy Pelosi famously said, “We must pass the law to find out what is in it”. Now with the implementation of the law only months away, we are only left with more questions. The implementation of the ACA has demonstrated it will undermine health care quality, increase costs, will likely fuel the nation’s debt problem, and worsen an already anemic economic recovery. The continual regulatory pressure on plans and increased rates for consumers creates a market void of competition, threatens plan solvency, or forces people to go without coverage – further increasing insurance rates. The government is attempting to control the market, but in the end will only bring it down.

After spending nearly three decades practicing medicine in North Texas, Dr. Burgess has served the constituents of the 26th District since 2003 in the United States House of Representatives.  He currently serves on the prestigious House Energy and Commerce Committee, which oversees all Health Care legislation. In the 113th Congress, he is the Vice Chairman of both the Subcommittee on Health and the Oversight and Investigations Subcommittee, as well as a  member of the Energy and Power Subcommittee.  Additionally, he is a member of the Rules Committee and the Helsinki Commission. He is the founder Co-Chair of the Congressional Health Caucus.