The vision of Life Science Leader is to be an essential business tool for life science executives. Our content is designed to not only inform readers of best practices, but motivate them to implement those best practices in their own businesses.
Issue link: https://lifescienceleadermag.epubxp.com/i/267232
CAPITOL PERSPECTIVES column LIFESCIENCELEADER.COM MARCH 2014 10 By J. McManus DISTORTIONS BEDEVIL OBAMACARE IMPLEMENTATION s the "rollout" of Obamacare staggers into its fifth month, the distortions the law has inflicted on America are only beginning to ripple through the economy. The nonpartisan Congressional Budget Office (CBO) recently provided new analysis that the subsidies for Obamacare would result in the equivalent of 2.5 mil- lion fewer jobs. That's right — 2.5 mil- lion Americans now have less incentive to work because more work means higher incomes, which results in less means- tested subsidies. The worst is yet to come: CBO said, "The ACA's [Affordable Care Act's] largest impact on labor markets will probably occur after 2016, once its major provisions have taken full effect." White House spokesman Jay Carney exclaimed that this was actually a posi- tive development, because it "reduces what economists call 'job lock' or, more colloqui- ally, it gives more opportunities for entre- preneurism and moving from job to job." For Carney's contorted contention to hold water, overall employment would remain stable or possibly increase as workers switch into more desirable jobs. But that's not what CBO predicts. Keith Hennessey, former National Economic Council Chairman, observed, "If you make work less financially reward- Distortions Bedevil Obamacare Implementation J O H N M c M A N U S The McManus Group ing you'll usually get less of it. Subsidized health insurance helps the people who receive it. When those subsidies phase out as income increases, they also reduce both the number of hours worked and the num- ber of people working. The reduced labor supply hurts the economy as a whole, and is generally bad for those people receiving subsidies as well, because they are being pushed by government policies to forgo economic opportunities that could help them even more in the long run than the immediate benefits they are getting." In addition, Obamacare is layered on top of other social programs, which have simi- lar income phase-outs that disincentivize work in an already weak job market. Indeed, the labor participation rate has dropped from about 67 percent in 2000 to 62 percent today — the lowest in American history, on par with Portugal and less than Azerbaijan. Certainly, a large factor has been the anemic recovery that has not pro- duced enough jobs and discouraged mil- lions from even looking for jobs. But there is no doubt that Obamacare will exacerbate this phenomenon. Safety-net programs designed with the best intentions can turn into a hammock that traps individuals in suboptimal con- ditions. Meanwhile, millions of individuals below the poverty level who live in 25 states that have not opted to expand Medicaid have no access to coverage, while across-state families with incomes close to $100,000 can receive a $5,000 premium subsidy. How can any rational person explain this? The architects of Obamacare assumed all states would accept the generous Medicaid subsidies and expand coverage to everyone with incomes below 133 per- cent of poverty. But when the Supreme Court made this expansion optional, many states opted not to undertake the expan- sion, believing they would be on the hook for greater obligations than they could afford. At the same time, the Affordable Care Act statute expressly prohibits any- one under the poverty level from enroll- ing in the subsidized insurance policies offered on the exchanges. Despite this irrational unfolding of events, the Obama administration has refused to offer any proposals to fix these fundamental problems with the presi- A John McManus is president and founder of The McManus Group, a consulting f rm specializing in strategic policy and political counsel and advocacy for healthcare cli- ents with issues before Congress and the administration. Prior to founding his f rm, McManus served Chairman Bill Thomas as the staff director of the Ways and Means Health Subcommittee, where he led the policy develop- ment, negotiations, and drafting of the Medicare Prescrip- tion Drug, Improvement, and Modernization Act of 2003. dent's signature legislative achievement. There has been zero dialogue with the Republican leadership in Congress or committees of jurisdiction on how to address these issues — possibly because that would require recognition of a co- equal branch of government and com- promise where the administration would inevitably have to negotiate and accept some Republican priorities. For now, the Obama administration is fixated on only addressing politically damaging aspects of Obamacare, getting the president's party beyond the 2014 mid- terms, and doing so unilaterally without congressional input. The latest example was another year delay of the employer mandate to offer "qualified coverage" for midsize businesses (50 to 100 employ- ees) and softening the mandate for large employers. Why push off this statutory requirement now? The administration fears employ- er layoffs this summer as November approaches. It is the 18th time the admin- istration has unilaterally ignored clear language in the statute. It is time to fundamentally rewrite the law. That would require the Obama administration to work with Congress. How revolutionary! But coming from a man who devoted his State of the Union speech to announcing his expanded act- by-fiat administration, don't bet on it. l 0 3 1 4 _ C P 0 1 . i n d d 1 0314_CP01.indd 1 2 / 1 9 / 2 0 1 4 2 : 0 4 : 2 7 P M 2/19/2014 2:04:27 PM