Health Care in the USGovernmentLacks

US Health Care System

•Traditionally (from inception until Obamacare)▫Based on free-market system▫Run by private insurance companies

US Health Care System• Health insurance is provided by many separate entities▫Most are run by private sector

Anthem Optima Cigna

▫ Some programs provided by federal government Medicare Medicaid TRICARE Children’s Health Insurance Program Veteran’s Health Administration

Basic Health Care Info

•Medicare▫covers citizens and long-term residents 65 years and

older and the disabled▫administered by federal govt

•Medicaid▫covers low income people in certain categories,

including children, pregnant women, and the disabled▫administered by the states

Basic Health Care Jargon

•Health Maintenance Organization (HMO) – means you pick your doctor and go to him/her for everything

•Preferred Provider Organization (PPO) – means you can go to any doctor, any time

Basic Health Care Jargon

•Premium: how much you pay each month

•Co-pay: what you pay when you get to the doctor’s office (insurance takes care of rest depending on visit and health care plan)

Basic Health Care Jargon

•Deductible: The amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay.

•For example, if your deductible is $1,000, your plan won’t pay anything until you’ve met your $1,000 deductible for covered health care services subject to the deductible. The deductible may not apply to all services.

US Health Care System

•You pay insurance company (monthly, bi-weekly)• Insurance company pays doctor

Sample Health Care Premiums

•2010 – 2011•2013 - 2014

US Health Care System

•About 85 percent of Americans have health insurance either through…▫Their employer or spouses (59.3%) – usually the

company pays for it, or employee pays a percentage▫Individual plans (8.9%) – pay per month, 6 month, or

yearly period (price depends on age and pre-existing conditions)

▫Federal government (27.8%) – covered if you fit into a specific category (elderly, veteran, etc.)

US Health Care System

•15 percent of Americans have no health insurance at all ▫Why?

Work for small businesses who can’t afford to provide benefits (or can provide benefits but would have to pay employees less)

Do not apply for short term or basic coverage Choose not to pay for it Can’t afford it

US Health Care System

•Emergency Medical Treatment & Active Labor Act (1986): If you don’t have health insurance, you should not be denied by a hospital/doctors office in the US; you do have to pay your bill

•About 60 percent of American debt comes from health bills

US Health Care System

•Why is it so expensive?▫People don’t pay, so rates for everyone else go up▫Medical advances (equipment, medicine) are

expensive

Basic Health Care Info

•Health care is regulated mostly by states, with the exception of the federal government programs listed above

•Doctors offices/hospitals choose which health care providers they will accept or deny (usually based on state)

History of Health Care Reform in the US on the national level•1965: Lyndon Johnson – introduced Medicare and

Medicaid•1985: Ronald Reagan▫ Idea: treat health insurance like car insurance▫ Implemented: Consolidated Omnibus Budget

Reconciliation Act of 1985 (COBRA) – allows you to keep getting insurance when employment ends

•1997: Bill Clinton - State Children's Health Insurance Program (SCHIP), helps kids below poverty line

Patient Protection & Affordable Health Care Act

Read the full bill: http://docs.house.gov/rules/hr4872/111_hr3590_engrossed.pdf

Legislative History• Introduced in the House as the "Service Members Home

Ownership Tax Act of 2009" (H.R. 3590) by Charles Rangel (D–NY) on September 17, 2009

• Committee consideration by: Ways and Means • Passed the House for vote on October 8, 2009 • Passed the Senate as the "Patient Protection and Affordable

Care Act" on December 24, 2009 (60–39; all Dems voted yes) with amendment

• House agreed to Senate amendment on March 21, 2010 (219–212; all Reps and 34 Dems voted no)

• Signed into law by President Barack Obama on March 23, 2010

ObamaCare Basics

•Goal: to take the US from a mixed health care system to a universal health care system (also called Single System Health Care – all is provided by a single entity)▫Obamacare is not completely universal, but it’s a base

for this concept

ObamaCare Basics

•Estimated to cost $848 billion over a 10 year period, •but would be fully offset by new taxes and revenues

and would actually reduce the deficit by $131 billion over the same period

Legislative History• Big concerns: ▫ how well has the government done at other things; ▫ if we’re already in dire straits, how can we afford to insure every

American?• The debate over national health care is highly partisan• Why?▫ Republicans believe that government should be small and

interfere as little as possible in the lives of its citizens.▫ Democrats believe in a strong central government that provides

for its citizens.

Legislative History

•Major issues with national healthcare:▫Should a government-sponsored health care program

cover abortions? ▫Should a government-sponsored health care program

cover illegal immigrants? ▫What about drug addiction recovery? ▫Mental health treatment?

ObamaCare: The Basics

Public Option Plan• Summary: The government will develop low-premium

insurance coverage to be offered to the public to compete with employer-sponsored plans.

• the government negotiates reimbursement rates directly with physicians

• The public option insurance plan would be required to pay for itself through premiums collected (not be funded by the US Treasury)

Individual Mandate

• requires all individuals to have "acceptable health coverage" (at least a minimal catastrophic policy)

•Anyone without coverage will be charged a penalty of up to 2.5% of their gross income (average national premium)

•Ex. A secretary making $30,000/yr has to pay $750

Other Reform Basics• In 2010:▫ Coverage for children regardless of a preexisting condition▫ Dependent care coverage for children younger than 26▫Mandatory preventive care coverage for all new, private policies▫ Removal of annual and lifetime benefit limits▫ Elimination of policy cancellations unless you’ve lied to your

insurance company

Other Reform Basics• In 2014:▫ Limit new coverage waiting period: The longest an insurance company

will be able to make you wait before your policy becomes effective is 90 days.

▫ Guarantee coverage and renewal: Health insurers won’t be able to deny you new or renewal coverage because of your past or current medical conditions, genetic testing results, or history as a domestic violence victim.

▫ End of long-standing rate rules: Insurers will no longer be able to base your premiums on your sex or salary. (Females are typically charged higher premiums than men. Also, in some cases, the more you make, the lower your premiums.)

▫ Insurers will still be able to take into account your age, geographic area, family composition (such as number of people), and tobacco use when deciding how much to charge you for your coverage.

Other Reform Basics• Reduce out-of-pocket costs for lower-income people: If your

income is at or below 400 percent of the federal poverty level (FPL is $10,830 for an individual and $22,050 for a family of four), you’re going to see a reduction in the maximum amount of money you’ll have to pay out of pocket for healthcare coverage. Here’s the breakdown:▫ 100 to 200 percent FPL: $1,983 for an individual, $3,967 for a

family▫ 200 to 300 percent FPL: $2,975 for an individual, $5,950 for a

family▫ 300 to 400 percent FPL: $3,987 for an individual, $7,973 for a

family

Other Reform Basics• Limit small group plan deductibles: If you’re an individual

covered by a small group plan, your deductible will be capped at $2,000. The cap will be $4,000 for a family. These limits will take effect in 2014.

• Mandate coverage for preventative services: If you plan to keep your current coverage for the foreseeable future, you’ll have to wait a while to take advantage of this benefit. Beginning this year, all new private insurance plans must provide coverage for preventative services and immunizations without charging you a co-pay or deductible. However, all private plans won’t be required to provide you with this coverage until 2018.

How will we pay for ObamaCare?•The following are some examples of new taxes to be

in place to pay for universal health care

ObamaCare – New Taxes • Individual Mandate Excise Tax (Jan 2014): individuals not

seeking government health care will be taxed▫ By 2016, if you don’t have it, 1 adult per household will pay an

extra $695/yr in taxes, 2 adults will pay an extra $1390/yr, and 3 adults will pay $2085

• Employer Mandate Tax (Jan 2014):If an employer doesn’t offer gov health care, employer is taxed $2000/yr per employee (the longer the employer waits to get it, the more they pay - ex. 60 days = $600 more per employee

ObamaCare – New Taxes• Surtax on Investment Income ($123 billion/Jan. 2013):

Creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). ▫means paying more taxes on stuff you buy (like house), stuff you

inherit, or additional ways you earn money – collecting rent, etc.• Excise Tax on Comprehensive Health Insurance Plans ($32

bil/Jan 2018): New 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions.

ObamaCare – New Taxes• Hike in Medicare Payroll Tax ($86.8 bil/Jan 2013): Employees

have to pay an extra percentage for paperwork (2.9% on first $200,000 earned; 3.9% on all additional wages)

• Medicine Cabinet Tax ($5 bil/Jan 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin)

ObamaCare – New Taxes

•HSA Withdrawal Tax Hike ($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

ObamaCare – New Taxes• Flexible Spending Account Cap – aka “Special Needs Kids Tax

” ($13 bil/Jan 2013): Imposes cap on FSAs of $2500 (now unlimited). According to the National Child Research Center in Washington DC, tuition rates can easily exceed $14,000 per year.

ObamaCare – New Taxes• Tax on Medical Device Manufacturers ($20 bil/Jan 2013):

Medical device manufacturers employ 360,000 people in 6,000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for <$100.

ObamaCare – New Taxes• Raise "Haircut" for Medical Itemized Deduction from 7.5% to 10% of AGI

($15.2 bil/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only.

• Tax on Indoor Tanning Services ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons

ObamaCare – New Taxes• Elimination of tax deduction for employer-provided retirement Rx drug

coverage in coordination with Medicare Part D ($4.5 bil/Jan 2013)

• Blue Cross/Blue Shield Tax Hike ($0.4 bil/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services

ObamaCare – New Taxes• Excise Tax on Charitable Hospitals (Min$/immediate): $50,000 per

hospital if they fail to meet new "community health assessment needs," "financial assistance," and "billing and collection" rules set by HHS

• Tax on Innovator Drug Companies ($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year

• Tax on Health Insurers ($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. Phases in gradually until 2018. Fully-imposed on firms with $50 million in profits

ObamaCare – New Taxes• $500,000 Annual Executive Compensation Limit for Health

Insurance Executives ($0.6 bil/Jan 2013)

• Employer Reporting of Insurance on W-2 (Min$/Jan 2011): Preamble to taxing health benefits on individual tax returns.

• Corporate 1099-MISC Information Reporting ($17.1 bil/Jan 2012): Requires businesses to send 1099-MISC information tax forms to corporations (currently limited to individuals), a huge compliance burden for small employers

ObamaCare – New Taxes•“Black liquor” tax hike (Tax hike of $23.6 billion).

This is a tax increase on bio-fuel.

•Codification of the “economic substance doctrine” (Tax hike of $4.5 billion). This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed.

Government Spending

Millions & Billions• A million seconds is 12 days.

A billion seconds is 31 years.A trillion seconds is 31,688 years.

• A million minutes ago was – 1 year, 329 days, 10 hours and 40 minutes ago.A billion minutes ago was just after the time of Christ.

• A million hours ago was in 1885.A billion hours ago man had not yet walked on earth.

• A million dollars ago was five (5) seconds ago at the U.S. Treasury.A billion dollars ago was late yesterday afternoon at the U.S. Treasury.

Trillion?• Trillion = 1,000,000,000,000.

The country has not existed for a trillion seconds. Western civilization has not been around a trillion seconds. One trillion seconds ago – 31,688 years – Neanderthals stalked the plains of Europe.

• Million: 1,000,000Billion: 1,000,000,000Trillion: 1,000,000,000,000Quintillion: 1,000,000,000,000,000,000Sextillion: 1,000,000,000,000,000,000,000Nonillion: 1,000,000,000,000,000,000,000,000,000,000Centillion: 1 followed by 303 zeros

Government Spending

Ever since Alexander Hamilton refunded the debts of the Revolutionary War with a federal debt, the United States only went into debt to pay for its wars.

But then in the 1930s the administration of President Roosevelt attempted to get the nation out of the Great Depression with federal borrowings. (New Deal)

Govt spending in relation to US dollars

US Debt Clock

•http://www.usdebtclock.org/

Who we owe… in billions (Nov 2010)

US Debt (2013)

President’s Proposed Mandatory Spending (2013)

President’s Proposed Discretionary Spending (2013)

Taxes

Government revenue in the United States has steadily increased from seven percent of GDP in 1902 to over 35 percent today.

Taxes Today

•The wealthiest 1% of Americans pay 37% of total taxes (meaning 37 percent of the money the government gets each year comes from the top 1 percent)

•The poorest 50 percent of the country pays only 3 percent of total taxes

• (does not include taxes on Social Security or Medicaid)

Taxes Today• Over 47 percent of American households don’t pay any

federal income taxes or earn money from the federal government (called negative taxes)▫Most households making less than $30,000/yr pay nothing▫ Half of households making between $30 - $40,000/yr pay

nothing▫ 22% of households making between $50 - $75,000/yr pay

nothing▫ 9% of households making between $75 - $100,000/yr pay

nothing

Constitutional or Unconstitutional?•38 states, including, were involved in a lawsuit

challenging the constitutionality of making government health care mandatory

•National Federation of Independent Business v. Sebelius

What’s happening now

•Very expensive•House voted to de-fund Obamacare for a year (Rep

controlled) + make government workers privy to Obamacare

•Senate vowing not to allow this•Government Shutdown (October 1, 2013)