The Lie Of The Century

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President Obama’s statement “If you like your health care plan, you can keep it” was given the nonpartisan PolitiFact project’s 2013 lie of the year . Oft repeated, he left no room for doubt saying, “If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.”

My wife and I were some of the few who were able to keep our health plan. Our grandfathered plan has continued, with steep premium increases, for the past decade. That is, until this year. Now, Anthem, my insurance provider, in conjunction with the Virginia State Insurance Commission is cancelling my insurance and only offering plans on the exchange.

I have been very critical of the ObamaCare legislation, calling it the worst legislation in 75 years. Liberals have long believed that we can legislate our way into Utopia and despite over a decade of disastrous consequences they still bristle when critics choose not to call the legislation by its given name, “the Affordable Care Act.”

Perhaps a more fundamental and pernicious lie was President Obama’s lie about the long-term consequences of the legislation.

In his 2007 speech “A Politics of Conscience ” he promised, “I will sign a universal health care bill into law by the end of my first term as president that will cover every American and cut the cost of a typical family’s premium by up to $2,500 a year.” (emphasis added)

Rather than cutting the cost of a typical family’s premium, my wife and I have had our health insurance premium rise from $322 per month in 2011 to $1,199 in 2023. During that time we considered ourselves some of the lucky ones as our health care coverage was grandfathered and we were not subject to having to purchase health care coverage on the exchange. While some of that increase is due to my wife and me getting older, most is because the so-called Affordable Care Act has made health insurance less affordable.

On the exchange, 2023 health insurance of the same coverage level from the same provider for my wife and me would cost $1,577 per month or 31.53% more than our current costs and 397% up since 2011. At the same time, the deductible would increase from $3,500 to $5,900 and the out-of-pocket maximum would increase from $5,000 to $7,450.

The fact that the so-called Affordable Care Act is still being defended as a beneficial program shows a refusal to use the outcome-based science of economics to evaluate government programs. Now, proponents will only talk about all the people getting their health insurance subsidized. They ignore the increased cost to participants from both the premiums and the deductibles.

We have previously written about how the wealthy can take advantage of health insurance subsidies. After retirement and before enrolling in Medicare at age 65, retirees can often suppress their household income and receive large subsidies through the premium tax credit. We regularly find this or similar savings for our Comprehensive service level clients as part of our Tax Planning service.

What is more difficult to understand is how the business owner, many of whom are employers subsidizing employee health insurance, is supposed to endure these increased costs. With no government support to aid them, employers either eat the additional cost through decreased wages or by denying that benefit from employees entirely.  As we explained in “Is Obamacare Responsible for a Jobless Recovery?“:

Businesses with at least 50 full-time equivalent (FTE) employees are required to provide health care for their full-time workers or pay a total yearly fine of $2,000 per each employee they have in excess of 30.

Full time is defined as working 30 or more hours per week. Part-time workers are also counted toward the 50-employee cap by taking the number of hours they work per month divided by 120 hours.

Although part-time workers are counted to determine size, they are not counted when determining the penalty to the firm. As a result, firms have an incentive to keep part-time workers, thus avoiding paying a fine for them, even if they have over 50 FTE employees.

Companies with fewer than 50 FTE employees are exempt from these fines as well as many other burdensome federal employment regulations. Economically, this is fortunate. Most hiring happens in smaller firms, whereas larger firms often consolidate their workforce to reduce expenses. Burdening small firms would have extended unemployment even longer.

These smaller companies have a great incentive to keep their employees under this magic number. We heard that one local firm told the business manager that if he allowed the hiring of a 50th employee, he would be fired to bring the number back under the limit.

Most liberal reactions to stories like this are to rant about high corporate profits. Or they suggest the legislation is really doing businesses a favor by trying to keep their employees healthy and happy. I wish they would spare helping any more with such employment advice.

Only the government can create legislation designed to increase health care coverage whose effect has been to reduce the likelihood that people will be covered. So much for trying to meet the health care needs of the people.

If you want to read more about this topic, you may enjoy “Even Obamacare’s Pros Turned Out to be Cons.”

Photo courtesy of Barack Obama Presidential Library. Image has been cropped.

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David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.