Patterico's Pontifications

3/26/2010

A First Look at ObamaCare’s Impact

Filed under: Health Care,Obama — DRJ @ 5:29 pm

[Guest post by DRJ]

More businesses are reporting adverse economic and tax consequences in the wake of the passage of ObamaCare:

AT&T said Friday that it is preparing for President Obama’s health care overhaul to cost the telecommunications giant an additional $1 billion in expenses in the first quarter, possibly forcing the company to cut benefits it offers to current and retired workers.

AT&T is the latest and biggest company to account for the financial impact that the health care overhaul will have on its bottom line. It said the tax ramifications related to the legislation that Obama signed Tuesday will force it to take a non-cash charge — an expense that does not require cash to be paid out but has to be charged against the company’s earnings.

Earlier this week, AK Steel Corp., Caterpillar, Deere and Valero Energy announced similar accounting charges, saying the health care law will raise their expenses. On Friday, 3M said it will also take a charge of $85 million to $90 million.”

Meanwhile, the AMA notices there will be problems accessing care:

“In plain English: Insuring a bunch of people in a few years is no guarantee they will actually get access to medical care. Why? Because Texas, along with the rest of the country, has a shortage of doctors. It’s especially acute in primary care. And it is expected to worsen as more uninsured people get coverage.

How did this shortage happen?

A lot of studies, including some cited in this space, list various reasons: Primary care doctors don’t get paid as much as other doctors, and they don’t get reimbursed for talking to their patients about how to stay healthy. The average doctor graduates from medical school with $150,000 in debts, according to Dr. James Rohack, president of the American Medical Association. With that kind of debt, many of them can’t afford to get into primary care.

Still, I was stunned by a statistic Rohack shared when I heard him speak at a conference in Austin on Monday: 67 percent of U.S. doctors are specialists; just 33 percent are in primary care. If current trends continue, he said, we will be short 124,000 doctors of all stripes by 2025.

Few Texas doctors want to take care of patients on Medicaid because the payments are so low. And most of the newly insured people from the new health care law in 2014 will be on Medicaid. What will it be like for them when they become insured? And as they clamor for care, what will it be like for the rest of us?”

ObamaCare’s new slogan: Tax and Ration.

— DRJ

44 Responses to “A First Look at ObamaCare’s Impact”

  1. More businesses are reporting adverse economic and tax consequences in the wake of the passage of ObamaCare:

    But, of course, without such new burdensome legislation, government mandates and tax burdens in general already have been making things happy and fluffy for business builders throughout America.

    When people like the following also happen to be registered Democrats or certainly liberal, I want them — I expect them — to nicely dole out their money, to hire, hire, hire with a big smile!

    Then again, they’ll probably be stereotypical limousine liberals — which most people of the left are, regardless of their income level — so talking out of both sides of their mouth has to be taken as a given.

    money.cnn.com, March 26

    Hilda Kernc has been running a Lebanese food production company out of her home kitchen near Chicago for a bit more than a year. Her vegetarian cooking is so popular that she works as many as 20 hours a day keeping up with demand for her hummus and other Middle Eastern fare.

    Kernc is applying for a Illinois state business license and is about to start renting out a commercial kitchen part-time. Previously distributed under the name Hilda’s Homemade Appetizers, Kernc’s snacks will now be branded “Deleez Appetizers,” a combination of the word “delicious” and the Arabic word that means the same.

    Kernc thinks it might be time to bring on her first employee. “My husband is helping me, and we were thinking we need to hire somebody,” she said. “It will kill me if I am going to work like this.”

    To prepare, Kernc began researching the costs.

    State income taxes vary significantly, but federal taxes are standard: Social Security tax is 12.4% on the first $106,800 of earnings, and Medicare taxes run another 2.9% of all wages. The employer and employee each pay half. (The self-employed pay the full cost of both taxes themselves.)

    Employers also have to pay a federal unemployment insurance tax of 6.2% on the first $7,000 of each employee’s wages. Illinois adds on a state unemployment tax that’s currently 3.9% for new companies on the first $12,520 of wages. (Existing companies have their rates adjusted up or down depending on how many former workers file unemployment claims.) Part of the state unemployment tax is deductible from the federal, but that still leaves employers on the hook for a tax bite.

    “I can’t afford it,” Kernc concluded. “When I saw the price to hire somebody, at this point I can’t do it.”

    “All of a sudden, by hiring a new employee, adding up all the fringe benefits, it can be costly,” said Tom Ochsenschlager, a senior manager at the American Institute of Certified Public Accountants.

    With people like Obama running things, we should all quit our current jobs — if we’re in the private sector — and go work for government, certainly at the federal level.

    Mark (411533)

  2. Billions of dollars of charges to large and medium-sized businesses… more jobs lost (without even considering those to be lost in the health-care industry), fewer doctors, millions of additional patients… the list of negative impacts go on and on.

    The American people just got rolled. The. Democrats. Will. Pay.

    GeneralMalaise (cbc4cc)

  3. The AMA went to bed with dogs and has arisen with fleas. How dare that organization and its president (whom I know personally) start bellyaching now about what Obamacare will truly mean for our nation’s physicians and patients. Hollow warnings from a group of traitors to their profession.

    Beth in Texas (d69635)

  4. Why should those greedy capitalists be allowed to keep their ill-gotten gains?

    JD (533be4)

  5. Tax and Ration…and Import from Pakistan (doctors, that is).

    The Part D subsidies will stop too, which I think accounts for the huge costs to corporations. What no one is talking about is that public pension systems like Calpers get the subsidy too and demand that their retirees choose it because they make so much money off of it.

    So this is another hit that the states, like CA, will have to make up somehow.

    Patricia (e1047e)

  6. Obamacare, and the entangled web of negative economic, social, medical and political implications that come with it, are just cogs in the globalist machine that are chugging its way into every part of America. The world that Obamacare is creating is about so much more than simply healthcare. More concerning than even higher taxes and a shortage of doctors is that Obamacare is moving America further and further away from its foundation of freedom and democracy toward a new world of global socialism. And if we continue along this path, concerns about higher taxes and a dearth of medical care will pale in comparison to concerns over freedom of religion, speech, and press, the right to own property, and the Constitutional foundations of a free society.

    Rebecca Capuano (2779b2)

  7. JD!

    Enoch_Root (174a66)

  8. The “unintended consequences” to this bill will be immense and the Democrats foolishly will own them all because of the way they passed the bill.

    SPQR (26be8b)

  9. I would like to also explain a few things regarding the “union” fix: companies like AT&T are union (CWA) but the employee health care plan is not provided by the union, it is provided by the company (AT&T) therefore, it is not included in the union fix.

    AT&T estimates that the cost of providing health insurance to each employee is $10,083/year, not counting dependents. Add a spouse and three children, and the cost of AT&T company sponsored health insurance (which is free to the employee) is well over the amount exempt from the Cadillac plan.

    This means that AT&T will have to provide the government with the value of health insurance provided to each employee (tons of paper work) because of the 40% surcharge on Cadillac plans.
    When AT&T’s profit margin is just barely over 10%, it is not going to absorb those kinds of taxes/fees levied by the federal government, and it will have no other option that to a)pass those costs on to the employee b) charge employees for what is now free health insurance or c) eliminate the employee health insurance plan altogether and simply pay the fine to the government for not providing their employees with health care insurance.

    Considering the fine is $2,000 or 2% of an employees annual income (approx $1,100) you be the judge what you would do if you were AT&T.

    AT&T also allows retirees and spouses to remain on their perscription drug plan. This prevents retirees from having to use the Medicaid plan and saves retirees money. This will end and retirees will be forced on the government drug plan.

    The Houston’s Physician’s Journal recently reported that 52% of all Texas doctors refuse to take Medicare/Medicaid due to low reinbursements and slow pay on the part of the government. That number is only going to increase.

    Now, I wonder if anyone of those D.C. Democrats, who felt this plan was wonderful for Americans, but exempted themselves and their senior staffers, gave a thought to what happens when doctors, labs, hospitals and clinics start refusing to take insurance assignments of any kind. Instead of dealing with the uninsured (which really boils down to about 2% of our population) they have now managed to mess it up for everyone else.

    Are they going to force doctors to treat people? How do they intend to do that? At the point of the IRS gun?

    retire05 (1e885c)

  10. retire05 – Obviously these corporations announcing these charges because they have to book the anticipated changes in retiree medical costs (now that the bill has become law and the cost can be estimated) and threatening to change health benefits for retirees are merely engaging in right-wing extremist fear mongering. The academics and professional bureaucrats in the Obama Administration who have never had to meet a payroll or answer to investors will ignore their blatant political posturing in an attempt yo cast a shadow over this monumental achievement for all Americans.

    daleyrocks (718861)

  11. I read that public utilities are dealing with this by raising their rates.

    Although technically this is not a tax…. everyone with an electric meter is paying for Obamacare
    annual income $20,000 or $1,000,000,000

    Steve G (7d4c78)

  12. retire05:

    Are they going to force doctors to treat people? How do they intend to do that?

    A doctor mandate?

    DRJ (daa62a)

  13. How many of the people who voted for this in either house of congress do you think honestly had any clue what they were doing or to date still have any idea about the horrific consequences of their actions to our country?

    elissa (04724f)

  14. Here’s another interesting fly in the ointment, per below.

    I can imagine a variety of people, regardless of their politics but certainly if they’re rather young, being not too thrilled about the part of ObamaCare that mandates — via the IRS — the purchase of health insurance. But if such a mandate actually is more bark than bite, than that makes both the politics and workability of healthcare “reform” more complicated.

    If that “reform” is dependent in part on forcing more people — particularly younger Americans who’ve been forgoing getting health insurance until now — to add their share of dollars to the pot, then what happens when those monies don’t flow in?

    I know some health-insurance companies do like the idea of tapping into a pool of new customers even if those customers won’t be buying happily and voluntarily.

    OTOH, if Obamacare allows a variety of Americans to be sort of like illegal immigrants, in that they’ll be able to glom onto a part of the healthcare industry without paying for it, it ends up being another entitlement to take advantage of, and which requires no more personal responsibility than before.

    biggovernment.com, Morgen Richmond, March 26:

    However, it turns out that the Democrats who crafted this bill significantly – and I mean significantly – hamstrung the ability of the IRS or any other federal agency to enforce or collect on this mandate. Here is what the federal Joint Committee on Taxation had to say about this issue in a report released earlier this week:

    Individuals who fail to maintain minimum essential coverage in 2016 are subject to a penalty equal to the greater of: (1) 2.5 percent of household income in excess of the taxpayer’s household income for the taxable year over the threshold amount of income required for income tax return filing for that taxpayer under section 6012(a)(1);67 or (2) $695 per uninsured adult in the household. The fee for an uninsured individual under age 18 is one-half of the adult fee for an adult. The total household penalty may not exceed 300 percent of the per adult penalty ($2,085). The total annual household payment may not exceed the national average annual premium for bronze level health plan offered through the Exchange that year for the household size…

    The penalty applies to any period the individual does not maintain minimum essential coverage and is determined monthly. The penalty is assessed through the Code and accounted for as an additional amount of Federal tax owed. However, it is not subject to the enforcement provisions of subtitle F of the Code. The use of liens and seizures otherwise authorized for collection of taxes does not apply to the collection of this penalty. Non-compliance with the personal responsibility requirement to have health coverage is not subject to criminal or civil penalties under the Code and interest does not accrue for failure to pay such assessments in a timely manner.

    Mark (411533)

  15. Surprised?

    Only an idiot would be.

    HeavenSent (a9126d)

  16. And yes, they will eventually force all MDs who accept Medicare to accept Medicaid.

    Just. A. Matter. Of. Time.

    And in the long run if will drive more people out of medicine.

    HeavenSent (a9126d)

  17. Not to worry. Since the government will own all that student loan debt — thanks to the health care bill, mind you — the suckers won’t have a choice but work where the government tells them to.

    Banzel (b4a91b)

  18. Banzel, you are 100% correct.

    Beth in Texas (d69635)

  19. “Not to worry. Since the government will own all that student loan debt — thanks to the health care bill, mind you — the suckers won’t have a choice but work where the government tells them to.”

    It really is unbelievable: A federal takeover of the federal student loan program.

    imdw (cd4b7a)

  20. It really is unbelievable: A federal takeover of the federal student loan program.

    You are aware that there are many other places to go besides the Federal Government to get student loans, right?

    That’s what they want to take over – they already have the Sallie, now they want the loans business from Chase and all others.

    Scott Jacobs (d027b8)

  21. It really is unbelievable: A federal takeover of the federal student loan program.

    The feds will give no-bid contracts to preferred nonprofit groups (/Obama buds). No taxes paid, favored status, kickbacks. It’s all part of the ponzi scheme.

    Vermont Neighbor (0e568c)

  22. WSJ, yesterday.

    Vermont Neighbor (0e568c)

  23. For my next door neighbor, a staunch Democrat who was already concerned about the new taxes and other negative effects of Obamacare on his business, their sticking the student loans into an alleged health insurance bill was the absolute last straw. He is furious about the chicanery and sleight of hand of the congressional dems and already has our Republican senate candidate’s sign planted in his front yard. The WH and congressional Dems have pissed of so many people. They really have no idea how much they are despised out here in the real world.

    elissa (04724f)

  24. The anger will only get worse as companies pick through the massive bill and discover how badly companies and individuals are getting screwed.

    This is good news for repeal.

    Patricia (e1047e)

  25. “That’s what they want to take over – they already have the Sallie, now they want the loans business from Chase and all others.”

    Like I said: a federal takeover of the federal loan program. Crazy sounding, huh?

    imdw (603c39)

  26. “For my next door neighbor, a staunch Democrat who was already concerned about the new taxes and other negative effects of Obamacare on his business, their sticking the student loans into an alleged health insurance bill was the absolute last straw.”

    Was he not in the majority that favored student loan reform? Has he ever paid attention to how legislation gets done?

    [note: fished from spam filter. –Stashiu]

    imdw (32010a)

  27. It’s early, go get your federal coffee, imadoubledeedoo… with federal cream or federal sugar?

    GeneralMalaise (2bc526)

  28. Nurse Practitioners will become the new Primary care “doctors”. Mark my words. They are cheaper, focused on prevention and a holistic view of the patient. A model for this exists. Certified Registered Nurse Anesthesists who are supervised by one Physician. The extention of the physician anethesiologist is, in some states, four to one. If medicare/medicaid rule changes were intitiated this could happen tomorrow.
    Considering the High volume yet uncomplicated character of most Primary Care visits, it makes a tremendous amount of sense.

    pitchforksntorches (888cb1)

  29. I read Atlas Shrugged about 35 years ago so I am a little foggy about this but I remember a phrase that would come up when the government’s great ideas failed:

    Business isn’t cooperating.

    I expect to start hearing this be said as the thumb screws are put to business.

    Alta Bob (e8af2b)

  30. Henry “Nostrils” Waxman is now planning to haul AT&T, Verizon, John Deere, Caterpillar, Valero, etc., before his committee because their disclosures fail to play along with our Leftist rulers’ script that Obamacare “will expand coverage and bring down costs.”

    “Black-letter financial accounting rules require that corporations immediately restate their earnings to reflect the present value of their long-term health liabilities, including a higher tax burden. Should these companies have played chicken with the Securities and Exchange Commission to avoid this politically inconvenient reality? Democrats don’t like what their bill is doing in the real world, so they now want to intimidate CEOs into keeping quiet.”

    http://online.wsj.com/article/SB10001424052748704100604575146002445136066.html

    GeneralMalaise (2bc526)

  31. I just saw that news last night, GM – and I immediately thought back to the bank chiefs being dragged into a day – long harangue by their alleged betters in Congress. It had no effect on anything, and no one expects this charade to be any different. Idiots.

    Dmac (ca1d8c)

  32. Was he not in the majority that favored student loan reform? Has he ever paid attention to how legislation gets done?

    Are you not a paid lackey suckling on the taxpayer’s teats? Are you not amazingly ignorant of how a capitalistic system operates? Have you never read Adam Smith’s The Wealth of Nations? So many questions, so little intelligence.

    Dmac (ca1d8c)

  33. Bottled Ignorance, DMac.

    GeneralMalaise (2bc526)

  34. For my next door neighbor, a staunch Democrat who was already concerned about the new taxes and other negative effects of Obamacare on his business

    He’s the exact type of person I was thinking of in my original post. Why anyone with a bit of common sense and an interest in starting a business — and certainly with the capacity to run a business (at least a successful one) — would be a registered Democrat, much less a staunch one, is puzzling to me. It’s like a person into health and fitness always running over to the local fast-food place and buying tons of fries, colas and cheery pies.

    Mark (411533)

  35. The NY Fed wanted AIG to hide what it was doing in its SEC filings, so there’s some consistency here.

    daleyrocks (718861)

  36. Why anyone with a bit of common sense and an interest in starting a business — and certainly with the capacity to run a business (at least a successful one) — would be a registered Democrat, much less a staunch one

    I couldn’t understand Silicon Valley’s kool-aid mania.

    Vermont Neighbor (0e568c)

  37. I had commented previously some time ago that allowing malpractice insurance to climb was a backhand way to force more doctors into working for the feds, if not directly then in a community non-profit run with fed money under fed rules.

    The feds holding student debt brings another angle into this.

    Meanwhile, forcing those who take Medicare to take Medicaid also or get out sounds perfectly reasonable (to expect them to do). And as employers prepare to stop providing health insurance and more go into the feds ObamaDon’tCare (TM/copyright that for me, will you, gang?), not only will insurance companies be subsidiaries of ObamDon’tCare or cease to exist, but doctors themselves will be indentured servants , employees , indentured servants of the feds as well- at least that is what the one wants, and then it shall come to pass that indeed, no one gets healed in America unless he says so.

    Quite clever, isn’t he, and I thought he was just a pompous deluded fool.

    I do have a question, though. What happens to litigation attorneys when they have no doctors to litigate against, do they settle for jobs in a government agency harassing doctors over seeing 3.9 patients per hour instead of 4.3??

    Will the big guns in business and unions catch on in time that they are simply agreeing to dig their own graves prior to execution?

    67 percent of U.S. doctors are specialists; just 33 percent are in primary care

    once upon a time there were doctors,
    then there were internists,pediatricians, and family docs
    then there cardiologists (just to choose one specialty)
    then there were also pediatric cardiologiosts
    then both adult and pediatric cardiologists came in two kinds, interventional and clinical/non-interventional
    then interventional of all types became vessels vs. EPS (arrythmias)
    then clinical became Ultrasound, nuclear, preventive, and who knows what…

    I think you get the picture.

    I just thought of this analogy-
    Asking one person to do all of today’s medicine is like asking the Wright brothers to build a F-22 Raptor. To ask them to build a F-22 with the same budget as their “cutting age avionics” is like asking the health care system of today to provide today’s care at 1960 prices.

    But, Myron DNA the premises of these dire predictions.

    MD in Philly (59a3ad)

  38. Like I said: a federal takeover of the federal loan program. Crazy sounding, huh?

    Jesus you’re an idiot.

    Student loans from Chase and other lending institutions ARE NOT FEDERAL. Only loans from Sallie Mae are federal, you great and thundering buffoon.

    Scott Jacobs (d027b8)

  39. MD in Philly – Insurance companies have choices with respect to which lines to write assuming they have the appropriate licenses. I would expect to see insurers withdrawing from the plain vanilla health insurance lines as opposed to going belly up, assuming regulators and Obama allow them to withdraw. In many instances, regulators have placed restrictions on companies withdrawing from markets where there is a shortage of capacity, forcing them to offer renewals to customers for a period of time. Since Obama’s admitted goal is single payor insurance I do not know whether he would obstruct the withdrawal of private insurance capacity from the market.

    daleyrocks (718861)

  40. “Student loans from Chase and other lending institutions ARE NOT FEDERAL.”

    You know this reform is about restructuring the stafford federal loan program, right?

    imdw (223a39)

  41. You know that I have the comprehension skills of plankton?

    Comment by imadouchebag

    I couldn’t understand Silicon Valley’s kool-aid mania.

    Unfortunately I could all too well, having worked in teh Valley for a few years during the last dot – com bubble. Too many tech entrepeneurs come to think of themselves as doing something more than just running a successful business and enriching their employees and shareholders in the process. They start to believe that what they’re doing is somehow transformative, that their new and amazing technology is going to change the entire way that humanity’s behaved over the last two thousand years. Over – the – top narcissistic arrogance, cloaked in a Messiah Complex. Sounds a lot like our current POTUS, does it not?

    Dmac (ca1d8c)

  42. Daleyrocks, thank you for clarifying comments. As you are well aware, details of business and law are not my strength.

    MD in Philly (59a3ad)

  43. MD in Philly – No problemo. I spent a number of years in the insurance business.

    daleyrocks (718861)

  44. does anyone know if civil service retirees are exempt from obamacare?

    steve (996c34)


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