What the Election Means for Health Care in Washington State
Roger Stark, MD, FACS, Health Care Policy Analyst, November, 2012
The 2012 election has set the direction for America’s health care system. The Affordable Care Act (ACA), or ObamaCare, will continue to be implemented until it is fully in place in 2018. What will this mean for Washingtonians?
Everyone will pay more for health care in the form of either money or time. Sixty percent of the $1.76 trillion cost of ObamaCare will be funded by 22 new or expanded taxes. These taxes will be placed on health insurance premiums, insurance and drug companies and medical device manufacturers. For these businesses to remain solvent, the taxes will have to be passed on to anyone who uses health care.
The “rich” — defined as anyone earning more than $200,000 per year — will have to pay an additional 0.9 percent payroll tax and a new 3.8 percent tax on unearned income such as dividend and capital gains. The $200,000 income level is fixed and will not increase over the years with inflation. That means as wages increase, more workers will find themselves pushed into the “rich” category.
The remaining 40 percent of funding for ObamaCare will come from a $716 billion cut in Medicare. Most of these cuts will result in less pay for providers, who already have a difficult time paying for their overhead with Medicare’s low reimbursement rate. Fewer doctors will be able to treat Medicare patients. It is anticipated that one out of seven hospitals will be forced to close for financial reasons. These cuts will have a severe impact by limiting medical access for the 900,000 recipients of Medicare in our state. As the Baby Boomer generation retires, combined with fewer doctors, this access problem and longer waiting lines will become much worse.
After removing five percent for administrative costs to pay for the 160 new government agencies, the remainder of the $1.76 trillion will be spent on an expansion of Medicaid and for subsidies for individuals to purchase health insurance in the state exchanges.
An additional 350,000 to 500,000 people will be added to the 1.2 million individuals in the existing Medicaid program in our state. Medicaid is in even worse financial shape than Medicare and provider reimbursements are even lower. Consequently our existing Medicaid patients find it difficult to find a doctor and access health care services. Government officials are pleased that thousands of new patients will be put into Medicaid. It will appear to reduce the number of uninsured, but in practice access to health care will be severely limited for these new enrollees.
Washington is one of only 15 states that have already established a health insurance exchange. The exchange will duplicate the role of an insurance broker at an estimated cost to state taxpayers of at least $50 million per year. The exchange will provide taxpayer subsidies to individuals earning less than 400 percent of the federal poverty level ($92,000 for a family of four last year) to help them purchase health insurance. It is likely many middle-class families will be forced into the state exchange, as employers cancel their health coverage.
Benefits and pricing for the plans in the exchange will be determined by the government. There will be very little competition in the exchange and consumers will find very little choice in insurance plans. Premium prices will increase until government regulators set limits. Private insurance companies will at that point become public utilities, like energy companies.
Exit polls in Washington done by Edison Media Research for the Associated Press reveal that 50 percent of state voters wanted some or all of the ACA repealed with only 40 percent wanting the law to stay intact. These percents mirror national figures of 49 percent favoring repeal and 44 percent wanting the law to stay in place.
ObamaCare will soon control one-sixth of our national economy and will affect everyone’s health care. Although outright repeal is now unlikely, radical changes are needed in this complex, centrally planned and unwanted law.