All were exasperated.
“C’ mon guys, settle down.” Noble sensed the pressure mounting, but they needed to push forward.
Chase appeared the most frustrated. “We’ve been tearing into this for a week and we’ve arrived with no concrete proposals other than to repeal the mandates per se, which we granted would take time.”
“One thing we did agree on.” Noble highlighted, “is that the CBO was correct when they stated that the two-point-six-trillion dollar UHA was neither universal nor affordable. Two erroneous selling points.”
Hank looked up from his tablet. “That’s just not true,” he protested. “Look at the numbers. Forty million people have health insurance coverage who couldn’t afford it before. An additional thirty million people have been given tax breaks to help them afford the coverage. Medicaid benefits have been expanded to include those at one-hundred-thirty-three percent of the defined poverty level, basically those earning thirty thousand dollars per year for a family of four. And it reduced the overall cost of healthcare by controlling the insurance-company premiums. How can that be a bad thing?” he fulminated.
Noble pulled back on his claim a tad to reel in Hank. “I don’t believe any of us here are saying it’s not important that everyone have healthcare coverage. What we’re saying is that the Act isn’t self-supporting—and there are unintended consequences facing the workforce.”
“Taxing the wealthy an additional three-point-eight percent on their investment income, and charging fines and imposing business taxes on employers, are not motivating forces to impel economic growth.” Chase qualified, “We’ve all agreed that business is the engine necessary to spur the economy and jobs. To me, it looks like we are killing the golden goose with taxes of a thousand deaths.”
“You’re forgetting that small businesses with less than twenty-five employees have been given tax credits to offset the cost of covering their employees,” Hank stressed, as he became more intransigent. “So actually, both the middle class and small business are enjoying the benefits.”
Paolo entered the discourse. Staring down Hank, he asked, “What about firms with over fifty employees? The ones that will either be forced to insure full-time workers or pay a fine.”
“We’re talking about…”
Cutting Hank off, Paolo pressed his point further. “In many cases, jobs will never be created because of UHA. More and more, small business owners are shying away altogether from expansion, afraid of hitting the threshold for the newly defined full-time workers.”
Noble stopped the tit-for-tat before it went any further. “We have already determined that it would be too costly to repeal the entire act. Moreover, it would adversely affect millions of people unable to afford the benefits of healthcare. However, recasting selected aspects of the employer mandate provision might be a place to start. Let’s focus on the direct negative effect on the employer in terms of job growth.”
“Well, since we have been relying heavily on the CBO’s 2017 predictions,” Chase noted, “don’t overlook their estimate that due to UHA, employees would work two percent fewer hours, equivalent to two million jobs. They were correct in principal, but underestimated the number by one million. We’re actually looking at three million.”
Chase was confident with his new calculation and continued to explain that, included in that number, five hundred thousand workers were fired as a direct result. The remainder was a disproportionate number made up of low-wage workers whose hours had been reduced, or who left the workforce for many of the reasons they had cited before.
Paolo, with confidence, suggested, “The employer mandate appears to be the Achilles heel of the plan.”
Hank took immediate objection. “That’s a sophist argument. It’s the crux of the plan and it was well thought out.”
“What? You mean to say nineteen hundred and ninety pages were carefully crafted in a matter of months? Among the American people, it’s an article of faith that Congress did not read, nor do they understand it to this day. Even the simplest explanation of the plan was confusing.” Paolo rebuffed. “Ask Nancy Pelosi. Or perhaps, Jonathan Gruber. His unmasking proved the entire plan was a ruse.”
“Get it right! It was intended to force employers to cover full-time employees by offering up the government-approved healthcare insurance.”
Clearly, Paolo had managed to get under Hank’s skin, but he wouldn’t back down.
“I don’t understand your point. UHA incorporated various provisions depending on the number of employees, whether or not they offer insurance, whether one, or some of the employees are receiving insurance subsidies, and the list goes on. And sure, in every instance there is a tax or fine attached. That was to ensure widespread coverage for the uninsured and, of course, to cover the cost of the coverage.”
“Sorry, that one passed by me,” Seymour admitted, looking for some rationality.
Hank, becoming inimical by the moment, explained, “If an employee receives insurance from a federally subsidized insurance exchange, in lieu of the employer’s plan, then the employer is taxed two thousand dollars for each subsidized employee.”
“How do you rationalize the argument when the worker can’t afford the employer’s plan without the subsidies, which applies to a majority of people in the low-income brackets?” Seymour questioned.
Paolo sat back, happy to have Hank’s ire redirected.
“That’s the point—to provide coverage for those who can’t afford healthcare.”
“It all seems rather topsy-turvy. Especially for the employer,” Seymour insisted. “The imposed fines equate to roughly a fourteen percent increase in wages, which has the same effect to their bottom line as a higher minimum wage.”
“Sounds like a double whammy to the employer, especially since the increased national minimum wage was imposed,” Chase was quick to point out.
Retrieving his notes from his tablet, Noble elaborated. “During the minimum-wage debate the point was made that the employer passed off some of the cost to the consumer. Well, I discovered the same thing happened with UHA. According to a past study by the Federal Reserve Bank of New York and supported by a similar study by the Federal Reserve Bank of Philadelphia, they predicted the healthcare act would have an adverse effect on the economy. Their predictions appear to be quite accurate and are a clear indication of how companies coped with the effects of UHA. Clearly, anyone can see how it can negatively affect the job market.” Noble swiped his tablet from the left and placed his major findings on the monitor. He cited each of the bullet points at a swift pace.
HIDDEN COSTS TO THE CONSUMER
•10% of the manufacturing and service sectors firms increased healthcare costs
•55% of the firms made modifications to their healthcare plans
•70% of the firms increased employee deductibles or co-pays
•20% of the firms increased their proportion of part-time workers
•20-30% of the firms raised the prices they charged to the consumer
Chase took the opportunity to jump in with more numbers to cogitate. “Don’t forget about the Health Insurance Tax that was levied annually against the insurer. As predicted, the insurers increased their premiums between two-point-five to three percent to offset their cost. That additional cost fell to the businesses that paid the insurance for their employees, placing a further burden.”
Hank offered no rebuttal and stepped back into his shell for the moment.
With no retort in sight, Chase continued. “Jobs have taken a hit in the medical device industry as well. The Medical Device Tax, imposed on the producers of these vital medical aids, saw a reduction in their gross revenues by two-point-three percent.”
“That was a poorly conceived tax,” Paolo punctuated. “According to a report from the Advanced Medical Technology Association, an industry trade group, over thirty-three thousand jobs have been lost, with the expectation that one-hundred-thirty-two thousand jobs will be lost in total due to this tax. In
the first year of implementation, the IRS couldn’t even figure out which companies to tax!” Paolo, still reeling from the Supreme Court’s shocking decision, offered a parting shot. “I guess Chief Justice Roberts was correct when he called UHA a tax. Although, it was the one opportunity to stop the Act in its tracks. Now we are faced with the unpalatable consequences.”
Chase nodded in tacit agreement and then pointed out, “It was never presented as a tax, which was a theory wholly unbeknown to employers. Hank, wasn’t it factored into the equation all along that the government would reap around ten billion dollars in annual revenues? From whence would it come other than the taxpayers?”
“That’s my understanding. It was one of the necessary evils to insure the uninsured,” he admitted.
“And thanks to Gruber it’s now everyone’s understanding that the government covered up the fact that it was a tax—all to make it more palatable to the public,” Paolo reiterated. “Clearly, when businesses began to discover the hidden costs, they delayed business-expansion plans in a defensive move to avoid negative effects to the bottom line.”
Seymour pushed the point. “It’s evident from the number of small firms with fifty or fewer employees—even with the tax credits—found that growing their business beyond fifty employees added unacceptable new costs. Companies that wanted to expand resorted to outsourcing whenever possible to evade the added prohibitive costs. It’s what any smart businessperson would do if they wanted to stay in business.”
Noble had been listening to the conversation, although his mind kept wandering back to his phone call to Max. Most unsettling was the prospect that Simon’s fine hand may have somehow perpetuated the crimes. And why to the families of the group before him? He knew he had to tell them but feared it may take precedent over their crucial task. I have no choice, he thought.
“Noble, are you with us?” Seymour asked, noting his apparent distraction.
“I’m following. The costs are becoming prohibitive.” He quickly refocused. “A clear example was when Walmart cut healthcare insurance for thirty thousand part-time employees, forcing them into state or federal insurance exchanges. At the same time, they increased their healthcare premiums for other employees.”
“I recall Walmart’s healthcare costs in the first year alone rose over five-hundred-million dollars more than expected,” Paolo noted, and then added, “Trader Joe’s, Target, and Home Depot, to name a few, took similar steps to reduce cost to their bottom line. It’s a good bet that many of these part-timers forced into the exchanges also became eligible for other government subsidies.”
“Sounds like, thus far, UHA has backfired miserably, in particular for those whom the plan was meant to help,” Seymour declared.
Hank put the gloves back on and reproached them. “Don’t act as though you were an innocent bystander.”
“I just produced the infomercials to sell the plan. I wasn’t the architect. I could have as easily been selling lemons. It was just a product.”
“Sounds like you did sell a lemon,” Paolo chuckled. “Now it’s time to make lemonade with the lemons we’ve uncovered.”
Chase stepped in to recap. “The fact remains that the government lost tax revenue from a shortcoming in anticipated enrollments and from the continuous delays.” He went on to describe how the bungling of the enrollments on the website added to the pain. How they had to resort to a handout of waivers to select groups in an attempt to keep the healthcare plan on life support. And how government incentives and tax breaks induced some workers to reduce their hours voluntarily, to qualify for the tax breaks and other financial benefits, including Medicaid. “But in the end, the workers were affected the greatest with their loss in labor hours,” he said to bring the argument home.
“Adding to Chase’s point,” Paolo said, “we’ve already discussed how the massive expansion of Medicaid has had an adverse affect on the deficit. Enrollment continues to increase, due to loosening the eligibility requirements by lowering the federal poverty line to one-hundred-thirty-three percent to qualify.”
“You’re not attributing that entirely to the Universal Healthcare Act?” Hank asked in earnest.
“No, but according to the CBO the biggest decrease in full-time work hours was among persons earning less than forty-six thousand dollars per year. Clearly, the lower income groups.”
Seymour pulled back, and challenged, “To Hank’s question, for some individuals it made economic sense to choose the option that gave them the best result. You’re not suggesting that UHA directly and intentionally penalized low-income households, those who automatically qualify for subsidized insurance?”
“That’s how it appears on the surface, even though it may be an unintended consequence,” Chase stated. “Naturally, employers that are fined for employees receiving subsidies are discouraged from hiring from low-income areas. There are already nineteen million people receiving exchange subsidies at the cost of fifty-seven billion dollars.”
Seymour again plunged ahead. “So you’re suggesting UHA is encouraging discrimination, forcing those who need full-time work the most—to part-time jobs—or accept unemployment?”
“Precisely. The Fair Labor Standards Act defined the workweek as forty hours per week.” Chase clarified, “But by giving employers an incentive to cut hours below the thirty-hour threshold, to avoid the employee mandate to provide healthcare, counts for the rapid and continuing increase in part-time jobs.”
“So, the redefinition of the work week, in essence, flies in the face of traditional definitions,” Seymour responded.
“You said it.”
Paolo, showing his concern, interjected, “The ugly reality is that many part-time workers are desperate for full-time jobs, but the jobs are far and few between. When it comes right down to it—the very people that UHA was supposed to help are being punished.”
Seymour, equally disheartened, muttered, “It all seems rather inhumane.” Then, as though a lightbulb went on, he bolted upright in his chair and gathered their attention. “But it has given me an idea for an infomercial.”
The others listened while he explained his new vision.
“Remember The Life of Julia? It was an effective strategy to paint conservatives as anti-women. It was a foolish cartoon depiction that forced voters to look away from the facts. I admit that’s what it took at the time to appeal to the targeted audience. But I’m willing to dumb it down again.” He offered a mischievous grin, taunting them.
From their body language, the others were eager to see what bunny Seymour was going to pull out of his hat this time.
“Okay, you have our attention,” Noble urged.
“Here goes. It would be a similar takeoff of the cradle-to-grave infographic, but this time it would focus on Julia’s healthcare and how she was forced from full-time to part-time, lost her doctor, and then was forced into an exchange, all costing her more money in the end. It will provide a realistic picture of what’s in store.”
“That’s a pretty cynical view that sounds rather dire,” Hank remarked.
“Isn’t that the argument that’s been made?” Seymour challenged. “Even I recall the original intent for UHA was a means to provide healthcare coverage for thirty million uninsured citizens. But after debating the facts over this past week, it’s become evident the intent was to force all citizens into a universal national healthcare system.”
“Something you may want to take into account,” Paolo suggested, “is Julia’s economic status because the biggest losers are the least educated, least skilled, and those with the fewest options. It’s the low-wage earners that are definitely being squeezed. UHA in its current state will only increase the surplus of low-wage earners, which obviously will increase the dependence on government subsidies.”
Hank sat back and listened to the exchange, while noting the others’ expressions.
They, in turn, took note of Hank’s demeanor and his level of withdrawal, but chose to keep the discussion moving forw
ard.
“To add to Paolo’s point, when people work fewer hours, they produce less income,” Chase noted. “That reduces their spending power. Consequently, businesses will have less demand for goods and services, which directly affects the gross domestic product.”
“It’s a vicious cycle that can’t be good for the country, especially when coupled with a slow economy and a high unemployment rate,” Noble interjected.
“That about sums it up,” Paolo agreed. “If I were cynical,” he smiled, “I’d say that the entire effort to bring every citizen into a government-run healthcare system has been a monumental failure. I plead guilty; I kept writing the speeches back in the Baari days to sell it. But it seems clear to me now that the Act managed to escalate the insurance premiums, instead of reducing them as promised. After all, it was the only means by which it could pay for itself. So, I think we’re all in agreement—the plan clearly is not universal or affordable.”
“I reluctantly agree—with reservations,” Hank capitulated, forcing a hint of a smile.
All heads shot up in his direction, each with a shocked expression.
“What? You made the case, not one hundred percent, but enough to sway me.” Hank threw his arms in the air and then made a final confession. “I’d be foolish to ignore the multitude of polls that consistently show over fifty percent of small- and mediumsized businesses have found UHA to have a negative effect on their companies.” Hank, suddenly, in a less defensive tone, stated, “Even Chuck Schumer said the healthcare act was undermining the larger political project, calling the law a distraction from the middle-class-oriented program.”
The others couldn’t have agreed more with the ranking Democratic senator from New York. But winning Hank over in the final stretch was the coup d’état. Notwithstanding, the hour had arrived when the group collectively became antsy and hungry.
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