09.26.13

Sessions Catalogs Destructive Impacts Of Obamacare

“The President’s health care law will worsen, not improve, our fiscal outlook. It’s hurting our economy, it’s harming millions of Americans, and it’s growing the size and scope of government. Congress must permanently repeal this unworkable law.” 

WASHINGTON—U.S. Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee, delivered the following speech on the Senate floor today to highlight some of the many pervasive problems with President Obama’s health law:

“Mr. President, I rise today to speak about the President’s health care law, the so-called Affordable Care Act. Although the law hasn’t been fully implemented yet, this massive overhaul of our health care system is already proving to be anything but affordable.

The President has repeatedly said that we have a “health spending problem,” but what he hasn’t told you is that this law makes that problem worse.

Last week, actuaries from the Centers for Medicare and Medicaid Services (CMS) issued a report, and its findings were unequivocal. This law will lead to higher health care costs:

  • By 2022, the law is projected to increase cumulative health spending by $621 billion.
  • Next year, growth in private health insurance premiums is expected to accelerate to 6.0 percent, up from 3.2 percent in 2013.

The Congressional Budget Office (CBO) also released its annual Long-Term Budget Outlook last week. CBO concluded:

  • Federal health care spending will “grow considerably in 2014 because of changes made by the Affordable Care Act...”
  • The health care law is by far the single biggest factor driving the growth in federal health care spending over the next decade, accounting for 53 percent of the projected growth.

Democrats repeatedly claimed the law would “bend the cost curve.” The President said it would “slow the growth of health care costs for our families, our businesses, and our government.”

Democrats, pushing the law against the wishes of the American people, also claimed the law would not add to our deficit, and would improve our federal balance sheet. The President promised he would not sign a plan that “adds one dime to our deficits, now or any time in the future, period.”

Surely a colossal misrepresentation of the debt impact of a gargantuan government takeover of healthcare is a serious matter.

The non-partisan actuaries at CMS project the law will increase health care spending as a share of our total economy—in other words, the law bends the cost curve in the wrong direction.

We need to understand how the Democrats were able to assert that their plan was financially sound. This is how:

Democrats’ claims about the fiscal impact of the health care law were based on a monumental accounting trick and other gimmicks.

Before the law passed, CBO warned that the law would “maintain and put into effect a number of policies that might be difficult to sustain over a long period of time.”

CBO (and the CMS Actuary) also highlighted that hundreds of billions of dollars in Medicare savings were double-counted.

In a response to my inquiry, they stated:

“The key point is that savings to the HI trust fund under PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on the other parts of the legislation or on other program. To describe the full amount of HI trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government’s fiscal position.”

– CBO, December 23, 2009

The next spring, in March 2010, CBO estimated that without this double counting the health law increases the deficit over its first 10 years and the subsequent decade.

Want to know the gimmicks that were used and the real fiscal impact of this law? Look no further than the CLASS program, which Democrats were counting on to produce $70 billion in premium revenue. The program was so actuarially unsound that the Secretary of HHS notified Congress there was “no viable path forward” to implement it. With that decision, nearly 60 percent of the Democrats’ claimed deficit reduction in the first ten years had disappeared. Those “savings” were not real—and should have never been counted in the first place. The Wall Street Journal called the CLASS program “a special act of fiscal corruption.” Eventually, Congress had no choice but to repeal this bankrupt entitlement program as part of the fiscal cliff bill at the end of last year.

But the case of the CLASS program is but a sign of what is to come under the rest of the President’s health care law.

While the American people always knew that this health care bill would never pay for itself, they did not fully understand how the President and his OMB accountants could insist otherwise. I wish I had been better able to explain how they were advancing their scheme. Maybe we could have stopped the legislation from being rammed through Congress. But, the facts are crystal clear now.

A report issued in February at my request by the Government Accountability Office revealed that under a realistic set of assumptions the health care law is projected to increase the federal deficit by 0.7% of GDP over the next 75 years, an amount that is equivalent to $6.2 trillion in today’s dollars. This estimate excludes debt service costs. This is an enormous sum.

Let’s put this into context. We all know Social Security is financially unsound. We all know that it must be fixed and that it is a difficult challenge to fix it. At the time the health care law was enacted the 75-year unfunded liability for Social Security was $7.7 trillion. Instead of putting Social Security on a sound path, Obamacare added another $6.2 trillion in unfunded liabilities to our debt—almost as large as Social Security.

This finding seems to strike a nerve with some supporters of the law, so much so that they opted to attack me and argue with the GAO. But attacking the messenger doesn’t change the facts. This report is crucial. It clearly answered the question. It sank any validity to the President’s claim that his plan would not add “one dime to our deficits, now or anytime in the future, period.”

Health economist Christopher J. Conover of Duke University has explained that GAO did not “cook the books” or use “whacky assumptions.”

  • According to Professor Conover, GAO’s assumptions in this more plausible scenario are a “carbon copy of those used by CBO, the Medicare Trustees, the Treasury Department, and the Medicare Actuary in their own, independently derived long-term budget projections.”

So, despite what we were told by proponents of this law, the truth is the President’s health care law will further increase the cost of health care, add to our already unsustainable deficits and debt, and—if fully implemented—would forever alter the relationship not only between patients and their doctors but between the American people and their government. Period.

It’s been three-and-a-half years since its passage and every day we learn more about how the law is harming average Americans. Here are some important facts.

Part-time is the new normal under Obamacare.

  • Seventy-seven percent of the jobs that have been created over the last year have been part-time.
  • Investor’s Business Daily has kept a running list of employers who are cutting hours and staff levels because of Obamacare. Currently, the IBD tally of businesses (including large firms) affected by Obamacare is at 313. This list includes the University of Alabama, which announced that it was capping the number of hours students could work for the university because of Obamacare.
  • The President of the United Food and Commercial Workers Union (Joseph Hansen), an original supporter of the law, recently said that Obamacare will have a “tremendous impact as workers have their hours reduced and their incomes reduced.”

Obamacare penalizes hard work.

  • According to a new paper by Dr. Casey Mulligan (an economics professor at the University of Chicago), the marginal tax hikes included in Obamacare add up to a 17 percent reduction in the reward for working for median income families.
  • This Obamacare penalty that American families will take will essentially erase all gains in labor productivity made over the last decade.

Obamacare has led to the loss of health insurance coverage.

  • On Wednesday, the Wall Street Journal reported that the largest security guard provider in the U.S. (Securitas) will stop offering health insurance because of Obamacare.
  • This report is in addition to other major companies that employ millions of Americans who will no longer offer insurance coverage because of Obamacare. These companies include Darden Restaurants (owner of Oliver Garden and Red Lobster), Home Depot, and Trader Joe’s.

Small businesses and their workers will be penalized.

  • Democrats have claimed that most firms are not subject to Obamacare tax penalties because they have less than 50 workers (and are therefore not subject to the employer mandate penalty).
  • This claim is not true. Obamacare includes a non-deductible fee on insurance providers that the CBO has warned will get passed back to small businesses owners who pay for the health insurance of their employees.
  • I recently received a letter from a small business owner in Wetumpka, Alabama (Leesa Williams of Lee’s Auto Repair) to let me know that she is already being subjected to this tax even though her business has only 11 employees. She wrote to warn me that if the fee continues, she will be forced to re-evaluate the offer of insurance to her employees.

Costs are increasing, premiums are rising, and millions of Americans will lose the coverage that they have today. Workers are having their hours—and their pay checks—reduced. Its countless regulations are stifling job creation and adding uncertainty to an already fragile economy. The state director of NFIB/Alabama recently said publicly that Washington is doing a “lousy job” of keeping small businesses informed about the law.

Where will it end? When will we save ordinary Americans and the American economy from this on-coming “train wreck”?

The Administration has taken 5 steps already to delay implementation of this law on its own. The list includes a one-year delay of employer mandate penalties and insurer reporting requirements, income verification for exchange coverage applicants, the Basic Health Plan, Small Business Exchanges, and limitations on cost-sharing in group health plans.

This administration has, unilaterally, given Big Business a break from the law for at least one year. It’s considering handing over a special carve-out to Big Labor. Well, what about John Q. Citizen? When does he get relief from this failed law?

The President’s health care law will worsen, not improve, our fiscal outlook. It’s hurting our economy, it’s harming millions of Americans, and it’s growing the size and scope of government. Congress must permanently repeal this unworkable law and start over with health care reform that will actually reduce costs and will not hurt every day Americans, and that is in the classical American tradition of responsibility and limited government.”