Senator Rob Portman Weekly Column:

August 02, 2013

Weekly Column: The Obamacare Train Wreck Is Upon Us

Earlier this year, a senior Democrat in the U.S. Senate said he was concerned Obamacare was headed for “a huge train wreck.” Every day it seems that we are getting a better idea of just what that train wreck looks like—fewer full-time jobs, more difficulties for small businesses, higher insurance premiums, and fewer healthcare choices. Just yesterday, the Ohio Insurance Department announced that health insurance premiums in the individual market are expected to increase an average of 41 percent in our state next year. That’s money that could be going toward Ohioans’ retirement, groceries, and their children’s higher education; instead it’s going to cover President Obama’s costly mandates. And higher costs are only the beginning of Obamacare’s impact.

Recently, the Obama administration surprised everyone by announcing that it was delaying by a year a core pillar of Obamacare—a provision requiring employers with more than 50 “full-time” employees to offer “affordable health insurance” or face a fine. That requirement has had a number of negative—and entirely predictable—unintended consequences.

First, more and more small businesses are becoming “49ers” and “29ers.” Some employers have felt they have no choice but to freeze growth and hiring at 49 employees rather than coming under the onerous requirements of Obamacare when they cross the 50 employee threshold. Other employers have reduced the hours their employees can work from 40 to the less than 30 hours a week required by Obamacare to keep them from counting as full-time for the purposes of the legislation. It’s no surprise that the “underemployment” figure—those working part-time but wanting to work full time—has been on the rise, spiking by a dramatic 300,000 in June’s jobs report.

President Obama decided to postpone the employer mandate that causes these and other problems until the beginning of 2015. Some have said this was just an effort to avoid the political fall-out until after the 2014 midterm election. The decision may make good political sense for the President and his party, but for the millions of Americans who are either without a job or underemployed, it merely prolongs the economic pain. Employers know the mandate is coming, and it will continue to encourage them to downsize and reduce hours.

More Americans will either lose their jobs or find it harder to get one, and, as happened last month, more of the jobs that will be available are likely to be part-time jobs that make it harder if not impossible to make ends meet.

To make matters worse, the parts of Obamacare that were supposed to alleviate some of these problems are failing. Earlier this summer, Health and Human Services announced that key components of the Small Business Health Options Program—or SHOP Exchange—will also be delayed until 2015. These provisions were supposed to allow employers to provide workers with a set amount of money to purchase insurance in an online marketplace. HHS pointed to “operational challenges” in their decision to delay the program. They have given no indication of how they intend to meet these challenges and get the SHOP exchange up and running.

The individual insurance exchanges represent yet another coming challenge. These exchanges are supposed to come online in October. But not unlike the SHOP Exchange, there is no indication that the technology is in place to make that happen. To make matters worse, state-run exchanges that are in place—currently in sixteen states and the District of Columbia—are not able to verify employer insurance or income eligibility for substantial federal subsidies during the first year of operation. This means that there is no way to verify that someone who claims a government subsidy actually qualifies, opening the program to unintended risks of fraud and waste of taxpayer dollars.

President Obama sold his healthcare reform law by promising it would spur job growth, allow all of us to keep the healthcare we have, and reduce the costs of healthcare insurance. Unfortunately, every one of those promises has proven false. The legislation is instead becoming the train wreck many of us feared.

I believe our healthcare system as a whole needs reform, but it needs reform that works. It needs patient-centered reform that actually reduces the escalating cost of health care coverage and focuses on rewarding quality. The recent actions by the Administration only confirm the problems with Obamacare, and pushing the problems off for another year isn’t going to make it better. Obamacare should be repealed and replaced with bipartisan solutions that address the high cost and uneven quality of healthcare. That’s the way to avoid the train wreck and get our healthcare system on track.