As the costs of Obamacare continue to become clearer to the general public, E21 asked our readers, “If it were possible to repeal just one part of Obamacare, what would you do?”
Repealing the individual mandate won by just three percentage points. It received 40 percent of the vote, compared with 37 percent for “many plans disallowed on exchanges.” As the week went on, these two options were clearly the only ones with a chance of winning. Repealing the employer mandate received just 11 percent of the vote, with the medical device tax and 3:1 age rating bands tied for last with 6 percent.
Repeal of Individual Mandate. As e21 contributor James C. Capretta wrote in December, the individual mandate is one of the most unpopular provisions in Obamacare. The reason liberals have strongly resisted calls to delay the individual mandate is that it is unclear whether the law can survive without it. For Obamacare to meet its budget targets, young healthy people need to buy generous health insurance they would not choose under other circumstances. Otherwise, premiums for all age groups will rise too high for the program to be viable.
Repeal, or even delay, of the individual mandate would be a giant leap of progress in the fight to repeal Obamacare. President Obama already waived the mandate’s tax penalty for people whose individual policies were cancelled in 2013. The president does not want to delay the mandate for everyone because few healthy people would buy the Cadillac insurance, which must include mental health coverage, drug abuse coverage, maternity coverage, unlimited lifetime coverage, and birth control. Most would go outside the exchanges and purchase less-generous insurance.
Plans Disallowed on Exchanges. One reason that the millions of Americans have received cancellation notices is that many plans that were legally offered in 2013 cannot be offered under Obamacare. The cancelled plans do not contain the generous provisions described above. This is causing true hardship as many people find that the new plans have higher premiums and deductibles than their former plans. Contrary to the president’s promise that Americans could keep their doctors and their health plans, many insurance companies have been forced to drop doctors and hospitals from their health plans in order to keep costs down.
It would be a major improvement if all plans approved by state regulators could be listed on the Obamacare health care exchanges. Specifically, relax the requirements that plans have to contain multiple elements that many people do not want to buy. Allow people to purchase catastrophic health plans, where they are insured against major medical bills yet pay for routine care out of pocket.
Repeal of Employer Mandate. The mandated $2,000 tax per worker in the new health care law, effective 2015 and levied on employers who do not provide the right kind of health insurance, will discourage hiring. Companies with 50 or more workers will be required to offer health insurance or pay an annual penalty of $2,000 for each full-time worker. Moving from 49 to 50 workers will cost a firm $40,000 a year (the first 30 are exempt).
Hardest hit will be workers with fewer job skills. The unemployment rate for adult workers with less than a high school diploma is 9.8 percent. Teens face an unemployment rate of 20 percent. The rate for African American teens is even higher, at 36 percent.
The $2,000 per worker penalty raises significantly the cost of employing full-time workers, especially low-skill workers, because the penalty is a higher proportion of their compensation than for high-skill workers, and employers cannot take the penalty out of employee compensation packages.
The new law will make it harder for small businesses with 50 or more employees to compete with those with fewer than 50 employees. When the employer mandates are effective in 2015, many businesses will be motivated to reduce the number of locations and move workers from full-time to part-time status. This will reduce employment still further and curtail the country’s economic growth.
Industries that have traditionally offered the greatest opportunities to entry-level workers—leisure and hospitality, restaurants—will be particularly hard-hit by the new law. Many of these employers do not now offer health insurance to all of their employees, and employ large percentages of entry-level workers, whose cost of hiring will increase significantly.
Repeal Age Bands. Pre-Obamacare, the typical cost of insuring an 18-year-old was one-sixth that of a 64-year-old. Because young people are generally healthier and require less health care than older people, it makes sense that elderly people have to pay more for health insurance. Obamacare allows this arrangement to continue, but cuts the age rating bands down to a 3:1 ratio. Because of Obamacare, young people, mostly on the lower-end of the income distribution, are paying more than they typically would for health insurance they do not need.
Repeal Medical Device Tax. Obamacare’s medical device tax places a 2.3 percent tax on medical device manufacturers’ gross sales. While some ordinary products are exempt, such as Band-Aids and hearing aids, most medical devices are not. As a result, pacemakers, prosthetic limbs, braces, and many medical products have seen price increases. A 2011 study found the tax will double the medical device industry’s tax burden, raising its effective tax rate to one of the highest for any industry in the world, and encouraging exporting companies to expand overseas rather than in the United States. The tax may cost 43,000 jobs and is certain to cost the economy more than the expected revenue it will generate.
These five provisions of Obamacare have already begun to damage the provision of health insurance and the American economy. As time goes on, the damage will only grow. While some parts of the law are worse than others, repealing any of these five provisions would be a step in the right direction toward helping Americans get access to affordable healthcare.