Obama Health Care Will Destroy the Job Market and Private Insurance

The proposed health care plan will destroy the job market leading to higher unemployment and higher prices for goods and services. Without question, this is not the direction we need to go to the correct current health care system. This plan fails to address some of the most fundamental issues at hand.

Dick Morris stated the Obama Health Care Plan would…

• Force employers either to offer health insurance to their employees or pay a tax of 8% of their payrolls. This would apply to all with payrolls of $250,000 a year or more (basically every business)

• Reduce medical fees to the Medicare Schedule Plus 5%, driving doctors out of the profession and increasing the need for rationing.

• Raise taxes on all making more than $250,000 a year ($350,000 for a couple) with a surcharge. Rates will go as high as 45%.

• Set up a government owned health care plan to compete with private plans. Getting a subsidy, it will soon put the private plans out of business and we will have a single payer Canadian style system.

I agree with Mr. Morris for the most part, but there is much more to consider. He states that this would affect every business, but that is not completely true. Since the 1990’s sixty-eight percent of new jobs created are in small businesses of which many employ less than nine employees.

Many of these businesses fall below the $250,000 a year payroll threshold and would not be required to participate in a mandated health care plan.

Some businesses would align themselves to avoid participating in this plan because it is too costly for them. If this plan becomes law, it will have a dramatic affect on how businesses operate. The following would happen.

1. Many small businesses would reduce their payroll below the $250,000 a year benchmark by cutting wages, reducing the number of employees, and shifting more of their workforce into part-time positions or using more contract workers. Keep in mind - This plan does not cover part time or contract workers.

2. New businesses expecting payrolls of $250,000 a year may find opening too cost prohibited, which destroys job growth.

3. Large businesses would cut the number of full time workers and use more part time positions and contract workers to reduce their employee costs.

4. Businesses will evaluate whether the 8% tax is less expensive than actually providing health care coverage and would choose the cheaper option. This will mean that many employers will drop health care coverage and force them into the government plan.

5. Declining health care enrollment through private insurance plans will drive the cost of those plans higher causing more companies to shift workers into a government plan.

6. The additional cost would suppress wages or raise the cost of goods and services.

7. Businesses planning to expand their businesses will choose not to because the cost of doing so would be prohibitive.

This plan would prohibit job growth and start us down a path of a complete take over of the health care system by the government. Through regulation and increasing health care premiums, companies will have no choice but to shift their workforces into a government plan. Of course, the administration will trumpet how health care costs are going down in the interim. Reality is as people are shifted into the governmental plan the costs will begin to skyrocket, but do not take my word for it. Read what the Congressional Budget Office and others have said about this plan.

Heritage Foundation blogger Conn Carroll explains further about this situation…

“All health insurance plans must confirm to a slew of new regulations, including community rating and guaranteed issue. These will all drive up the cost of health insurance. Furthermore, all these new regs would not apply just to individual insurance plans, but to all insurance plans. So the House bill will also drive up the cost of your existing employer coverage. Until, of course, it becomes too expensive and they just dump you into the government plan.”

The Washington Post’s Ezra Klein writes: “The slow start is a way of holding down costs in the 10-year budget window.” Of course, Ezra does not mean that the House bill actually holds down health care costs in any real way. No, what he means is that by waiting till year 4 of a 10 year year forecast, the Democrats are gaming the Congressional Budget Office’s scoring system to hide the true cost of their bill from the American people. At $1.3 trillion dollars over ten years, most Americans will think the House plan will cost about $130 billion a year. They have been mislead. In real ity, by 2019 the House health plan will cost $245 billion a year.

As CBO Director Doug Elmendorf has told Congress just last month, expanding coverage without more fundamental reform of Medicare “puts an additional long-term burden on top of an already unsustainable path.”

Those who propose this major shift have been saying that we need to get everyone to pay their fair share into a health care plan to reduce the overall cost. The problem is we will never have 100% participation. No matter how low an unemployment rate you have, you always have 5% of the population not working. You will also have the problem of illegal immigration (estimated at greater than 20 million) of which many are working for cash and not paying any taxes.

Furthermore, you have those who are collecting unemployment and welfare.

There would be millions of people not paying to the health care system and we would continue subsidizing the uninsured in the same manner as we do today.

What this plan would create is higher operation costs for business, fewer jobs, and lower wages. A low paying job with no benefits is better than no job at all, which is what this plan will foster. To make matters worse, fewer jobs will reduce the amount of tax dollars going to the federal and state governments, which are already facing massive debt.

Up to this point, I have only touched on the affect of the health care plan. Another hidden aspect of this plan is the higher income taxes of people earning more than $250,000 a year. In this country, there has been an attack on those earning high wages because of unethical business practices. I would agree that does exist.

However, there are many ethical business people, many who run the majority of small businesses. When you tax the job providers, it will discourage job creation. The total cost of having an employee may end up creating a negative return. Simply this means the total cost of having this employee costs more than they will earn for the business.

Many companies raise money for expansion through stocks and bonds. Not allowing these people to keep more of their income will reduce the amount of money available for investing and have a negative affect on the job market. Furthermore, this will affect the banking industry by reducing the amount of available funds for loaning.

Companies will not be able to go to banks for money because of the lack of capital and they are risk adverse. Not to put down or single out hard working Americans, but low-income earners will not create very many jobs.

Speaking of unethical business practices this health care plan will encourage more businesses to hire workers off the books. Our system relies on businesses operate honestly. This measure will encourage more businesses to do the opposite. We do not have the means to go after businesses that fail to operate legally. It would be cost prohibitive to police the system, which is no different from enforcing illegal immigration.

The only way to fix the health care system is to keep the government out of it.

To fix this system we have to have true accountability. Those seeking medical treatment have to be a held accountable for their bills. As long as we allow people to receive “free” medical care, the system will always be under-funded. Allowing one group to subsidize another creates higher medical costs for everyone.

The uninsured currently have the ability to negotiate with medical providers and can set-up re-payment plans. The under-insured do not have that ability. Insurance companies prohibit it and this causes many families into bankruptcy, which not only drives health care costs up, but also has unintended costs to society, because they end up discharging all of their debts. The government must stop this practice. Many hard working families would gladly pay their medical bills if they could.

Unfortunately, when faced with tens of thousands of dollars in medical bills due within a short period of time, which leaves them with no options. I can speak from personal experience that hospitals expect payment with in 90 days and sometimes will let you extent it to 180 days. After that, they often will turn it over to a collection agency. At that point, if the collection agency cannot collect the hospital or collection agency may sue for you the money. If you owe a large sum of money, bankruptcy ends up your only solution. I never had to declare bankruptcy.

Fortunately, I was able to pay down enough of the charges and borrow the balance.
We must have tort reform, because lawsuits drive health care cost up due to the high cost of malpractice insurance. In addition, doctors order unnecessary medical tests to protect themselves from lawsuits. All of which means high medical costs.

Small businesses need to be able to join groups to get better discounts on health insurance. Currently, if you have few employees your health insurance costs are extremely high.
Competition between health care insurance providers across state lines would help decrease premiums. Market forces are the most effective way to reduce costs.

Medicare fraud is another major issue that has to be addressed. The cost of this program continues to grow because there is no accountability and no effective way of monitoring it.

Unless we actually solve some of these root issues, the problem will continue to get worse no matter what type of plan we implement. The Obama plan will accelerate the decline even more.

Obama’s health care plan will create a cycle that will destroy private insurance, create job losses and lower wages. There would be a growing class of low-income earners and unemployed without health care coverage. If the government includes these people in the system, the rest of us will pay for it. This would lead to health care rationing, a shrinking tax base, and an even bigger deficit. When combining a shrinking tax base, high unemployment, and massive government debt you have a prescription for an economy that would make depression era look like a walk in the park. There would be no middle-class; there would be the poor and the wealthy.

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