CHICAGO, Oct. 23 (UPI) -- President Obama's healthcare reform law is more than a year old but debate still is raging over whether it will benefit U.S. workers or lead to further unemployment and higher taxes to cover the costs.
In the latest wrinkle, the administration admitted earlier this month the Affordable Care Act's provisions for long-term care would be too costly and as such the administration would forgo implementation. The rest of the law is under attack too, especially the individual mandate requiring everyone to buy coverage. The issue is headed to the U.S. Supreme Court.
The latest Commonwealth Fund healthcare report card finds the United States is slipping as compared to other developed nations, despite spending twice as much on healthcare.
"The scorecard finds that the U.S. is failing to keep up with gains in health outcomes made by other countries: The U.S. ranks last out of 16 countries when it comes to deaths that could have been prevented by timely and effective medical care. If the U.S. could do as well as the leading country, as many as 91,000 fewer people would die prematurely every year," the fund said in releasing its report, "Why Not the Best? Results from the National Scorecard on U.S. Health System Performance, 2011."
The fund found 81 million Americans -- 44 percent of the population less than 65 years old -- either uninsured or underinsured in 2010 and insurance administrative costs adding $55 billion to the nation's healthcare bill.
"This year's scorecard makes it clear that changes in the Affordable Care Act designed to reduce waste, cut costs and help people afford the care they need are on target. The health and future economic security of the country depend on moving forward with these crucial reforms," Commonwealth Fund President Karen Davis said in a release.
But Richard L. Kaplan, a University of Illinois at Urbana-Champaign law professor and expert on retirement issues, said the law could discourage companies from growing, making it harder to bring down the nation's unemployment rate, currently at 9.1 percent.
"The new law … puts a big premium on staying under 50 employees because that is the threshold for the employer coverage mandate," he said. With a $2,000 per employee penalty for larger companies that don't offer health benefits to full-time employees, staying smaller makes sense. And even the $2,000 penalty could encourage companies to stop offering the benefits since annual premiums are much higher and federally mandated insurance exchanges are to be in place to pick up the slack.
"It's hard to state with any real confidence that a given percentage of employers will drop coverage. It's going to depend on a host of factors, including industry practice, location and the unemployment rate. We also don't know what these insurance exchanges will look like. In other words, this is a massive new experiment, and no one knows how this is going to play out," Kaplan said.
"A lot of employers will take a close look at it, not wanting to go first. But they may ultimately conclude that it's a good way of getting older workers off the company's insurance without having to feel guilty because these older workers will be able to join a government-sponsored insurance exchange."
Kaplan said companies could reconfigure their plans to favor healthier employees, encouraging those with problems to migrate to the exchanges.
"The possibility of selective employee dumping is a huge unintended consequence," he said.
Kaplan noted most businesses have been unhappy playing middleman for health insurance, forcing them to keep salaries in check to cover rising premiums. The result of getting out of that role could be higher salaries -- but that money (and probably more) will go toward premiums anyway.
The Congressional Budget Office estimates premiums for minimum coverage for an individual at $5,000 and for a family, $12,500.
James Sherk, a senior policy analyst in labor economics at the Center for Data Analysis at The Heritage Foundation, predicted the healthcare law will destroy full-time jobs for many unskilled workers because insurance costs for an individual would add $1.79 per hour, boosting labor costs to $10.03, and $5.51 for family coverage, increasing hourly labor costs to $13.75.
"Businesses employing less skilled workers will probably respond by dumping their employees onto the federally subsidized healthcare exchanges and replacing full-time positions with part-time jobs," Sherk predicted.
"Employers will not pay workers more than their productivity. No businesses will pay $14 per hour to employ a worker whose labor raises earnings by just $9 per hour. Businesses that pay workers more than their productivity quickly go out of business," he wrote.
The choice for employers, he said, is to give up health benefits, which would only add $1 to labor costs, or replace full-time employees with part-timers.
"Obamacare does not penalize employers for not providing health benefits to part-time employees, so part-time positions will cost much less to fill than full-time positions," he said.
"Federal law gives employers a further incentive to hire unskilled workers only part-time. The law requires employers to offer the same health benefits to all full-time employees. If employers dump their less productive full-time employees into the government exchanges, they must dump the rest of their employees as well. However, hiring less skilled workers for part-time jobs does not restrict employers' ability to offer health benefits to other workers. Many unskilled and inexperienced workers -- those who produce less than $10.03 per hour -- will find that employers will only offer them part-time jobs."
A Gallup poll last month found insurance coverage rates lowest in Texas (27.2 percent uninsured) and highest in Massachusetts (5.3 percent uninsured) where state law mandates coverage.
The Gallup-Healthways Well-Being Index surveyed 177,237 Americans in the first half of the year and found 16.8 percent of American adults uninsured, the greatest percentages in the South and West and up just 0.4 points from last year.
Republicans are gearing up for a concerted push to repeal the healthcare law with the Community Living Assistance Services and Supports section the first target. The administration admitted the provision is too costly to implement.
"I do not see a viable path forward for CLASS implementation at this time," Health and Human Services Secretary Kathleen Sebelius said in a letter to Congress.
The administration, however, told The Hill repeal efforts would be opposed.
"Repealing the CLASS Act isn't necessary or productive. What we should be doing is working together to address the long-term care challenges we face in this country," The Hill quoted an unidentified source as saying.
Howard Gleckman, a resident fellow at The Urban Institute, said no one was surprised when the administration admitted the CLASS problem.
"Most independent analysts recognize that the model most likely to succeed for long-term care insurance is a system of universal coverage," Gleckman wrote in a Kaiser Health News op-ed piece. "Every developed nation on the planet -- except for the U.S. and the U.K. -- has gone this route. And most programs have been extremely successful. But we just had a national debate about universal health insurance as Congress considered the 2010 health law and the returns are in -- people don't want it."
The way to save CLASS, he said, is a system of incentives and penalties for obtaining coverage, much like that implemented for Medicare Part D, which makes opting in more expensive the longer someone waits to obtain coverage.