[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
EXAMINING OBAMACARE'S HIDDEN MARRIAGE PENALTY AND ITS IMPACT ON THE
DEFICIT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH CARE, DISTRICT OF
COLUMBIA, CENSUS AND THE NATIONAL ARCHIVES
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
OCTOBER 27, 2011
__________
Serial No. 112-86
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
_____
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Health Care, District of Columbia, Census and the
National Archives
TREY GOWDY, South Carolina, Chairman
PAUL A. GOSAR, Arizona, Vice DANNY K. DAVIS, Illinois, Ranking
Chairman Minority Member
DAN BURTON, Indiana ELEANOR HOLMES NORTON, District of
JOHN L. MICA, Florida Columbia
PATRICK T. McHENRY, North Carolina WM. LACY CLAY, Missouri
SCOTT DesJARLAIS, Tennessee CHRISTOPHER S. MURPHY, Connecticut
JOE WALSH, Illinois
C O N T E N T S
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Page
Hearing held on October 27, 2011................................. 1
Statement of:
Holtz-Eakin, Douglas, Ph.D., president, American Action
Forum, former CBO Director; Diana Furchtgott-Roth, senior
fellow, Manhattan Institute for Policy Research; Richard V.
Burkhauser, Ph.D., professor of economics, Cornell
University; and Sara R. Collins, Ph.D., vice president,
Affordable Health Insurance, the Commonwealth Fund......... 35
Burkhauser, Richard V., Ph.D............................. 60
Collins, Sara R., Ph.D................................... 76
Furchtgott-Roth, Diana................................... 54
Holtz-Eakin, Douglas, Ph.D............................... 35
Letters, statements, etc., submitted for the record by:
Burkhauser, Richard V., Ph.D., professor of economics,
Cornell University, prepared statement of.................. 62
Collins, Sara R., Ph.D., vice president, Affordable Health
Insurance, the Commonwealth Fund, prepared statement of.... 78
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, prepared statement of............... 5
Furchtgott-Roth, Diana, senior fellow, Manhattan Institute
for Policy Research, prepared statement of................. 56
Gowdy, Hon. Trey, a Representative in Congress from the State
of South Carolina, staff report............................ 13
Holtz-Eakin, Douglas, Ph.D., president, American Action
Forum, former CBO Director, prepared statement of.......... 38
EXAMINING OBAMACARE'S HIDDEN MARRIAGE PENALTY AND ITS IMPACT ON THE
DEFICIT
----------
THURSDAY, OCTOBER 27, 2011
House of Representatives,
Subcommittee on Health Care, District of Columbia,
Census and the National Archives,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:34 a.m., in
room 2154, Rayburn House Office Building, Hon. Trey Gowdy
(chairman of the subcommittee) presiding.
Present: Representatives Gowdy, Gosar, Burton, DesJarlais,
Davis, and Cummings.
Staff present: Alexia Ardolina, staff assistant; Brian
Blase, professional staff member; Robert Borden, general
counsel; Molly Boyl, parliamentarian; Gwen D'Luzansky,
assistant clerk; Linda Good, chief clerk; Christopher Hixon,
deputy chief counsel, oversight; Sery E. Kim and Christine
Martin, counsels; Mark D. Marin, director of oversight; Laura
L. Rush, deputy chief clerk; Jaron Bourke, minority director of
administration; Yvette Cravins, minority counsel; Ashley
Etienne, minority director of communications; Devon Hill,
minority staff assistant; Carla Hultberg, minority chief clerk;
Paul Kincaid, minority press secretary; and Lucinda Lessley,
minority policy director.
Mr. Gowdy. The committee will come to order.
This is a hearing entitled ``Examining Obamacare's Hidden
Marriage Penalty and Its Impact on the Deficit.''
I will recognize myself for an opening statement and then
the gentleman from Illinois, Mr. Davis.
Over the past several months, this committee has heard from
job creators regarding the negative impact the President's
health-care law is having and will continue to have on hiring
and job growth.
In addition to the impact on job creators, the new law will
also negatively impact individuals. The Affordable Care Act
contains refundable tax subsidies to assist certain people in
purchasing health insurance. The Congressional Budget Office
estimates these tax subsidies are the most expensive component
of the law. The tax subsidies begin in 2014, and by 2017 CBO
projects the tax subsidies will add $100 billion to the
national debt each year, with an escalating cost into the
future. The CBO estimates three-quarters of this cost will be
new government spending.
These tax subsidies are available to individuals who do not
receive health insurance through their place of work. Instead
of only being available for individuals not receiving employer-
sponsored health care, any individual within a certain income
range--it would be more effective if the Tax Code did not care
whether people receive their health insurance at work or
purchase it in a private market.
Two households with the same number of children, same
number of wage-earners, and same combined levels of income are
otherwise the same except for the source of health insurance.
These two households should not have tax bills that differ by
thousands of dollars because of their choice of health care.
With so many families struggling throughout the country, and
especially in my home State of South Carolina, we should be
working toward ensuring families have the tools to invest in
their health.
The Joint Committee on Tax has estimated that less than 20
percent of the beneficiaries of the tax subsidy will be married
couples and their families. This is partly due to a recent HHS
rule that prevents families from accessing the tax subsidy if
either parent has an offer of coverage at work. In other words,
if a husband is offered health insurance at work for just
himself, and his wife and children must go purchase health
insurance in the open market, the cost of covering the wife and
children would not be eligible for a subsidy.
This rule was meant to minimize the cost of the subsidy,
but the collateral damage will be that the Affordable Care Act
will exacerbate the marriage penalty already in the Tax Code.
Over time, this act will force couples to choose not to get
married because of the sizable tax benefit that will only be
available if they stay unmarried.
In addition to the penalty against marriage in the act,
several of the witnesses before us today have conducted
research that demonstrates the cost of the health-care law will
likely be much higher than the Congressional Budget Office
originally projected. From underestimating the cost of the
long-term-care program, demonstrated by the administration's
decision to eliminate the program, to the law's likely
unsustainable Medicare cuts, the tax subsidies in the law will
be the biggest reason the law will exceed the projected cost.
Because this biased tax credit will encourage employers to
discontinue health insurance and employees to decline employer-
sponsored coverage, the cost of the health-care law will
continue to increase.
In contrast to CBO's prediction, several surveys predict
the number of employers who cease to offer health insurance to
their employees will be much higher than it is now. Just last
week, it was reported the Nation's largest private employer,
Wal-Mart, will no longer offer health care to new employees
working less than 24 hours per week. Additionally, employees
working 24 to 34 hours per week will not be offered insurance
for their spouses. This is an example of how government
mandates and regulations are significantly increasing the price
of health insurance, and companies must make adjustments to
compete globally.
As more and more companies cut back on health insurance
coverage, the cost of the Affordable Care Act will increase. It
is essential we explore the unintended costs associated with
the new health-care law. We need laws that are transparent and
uniform in their impact on families. As the health-care law is
implemented, we must examine how we are using taxpayer dollars
and if government is being a good steward of those dollars.
One of the President's fiscal commission guiding values was
to reduce inefficiencies, loopholes, and the complexity in the
Tax Code in order to lower rates, simplify the Tax Code, and
bring down the deficit. As demonstrated with problems with the
tax credits, the Affordable Care Act moves in precisely the
opposite direction. The act introduces another major inequity
into the Tax Code, effectively encouraging employers and
workers to drop employer-sponsored insurance and pass these
costs to taxpayers. Additionally, the law adds a large marriage
tax penalty and discourages job growth.
I look forward to hearing from today's witnesses about what
they have learned about the health-care law and whether I am
right to be skeptical about how the law will play out.
At this point, I would recognize the ranking member of the
subcommittee, the distinguished gentleman from Illinois, Mr.
Davis.
Mr. Davis. Thank you very much, Mr. Chairman. And let me
thank you for calling this hearing.
I want to thank our witnesses for coming to participate.
For many years, I have been an avid supporter and advocate
of a national health plan. And I have been that because I have
always believed, since I learned about health, that health care
ought to be a right and not a privilege. Nor do I believe that
it can be left to chance, because it is obviously too precious.
When you think about it, without good health care, students
cannot concentrate at school, families cannot pursue work and
other activities that are needed to develop and sustain what we
call a good life.
So when the opportunity came to vote on the Patient
Protection and Affordable Care Act, I was delighted. And I was
delighted because it has provided various pathways to
accessible health care for the masses.
One such path establishes State-based health-care exchanges
that can be utilized by individuals if they cannot find
coverage through their large employer. Small businesses are the
Medicaid expansion. The subsidies vary with income and are
based upon the Federal poverty level, a similar eligibility
threshold for numerous government programs. In addition,
further tax credits will be available to those eligible for
employer coverage and public assistance coverage but only in
narrow circumstances.
The ACA will benefit families and reduce the Federal
deficit. First of all, the families and individuals impacted by
crippling medical debt--that is a significant causation of
personal bankruptcies--will become a thing of the past because
preventative care and early detection are no longer cost-
prohibitive. Second, the nonpartisan Congressional Budget
Office found the health-care legislation will reduce deficits
by $143 billion, further benefiting our Nation's finances.
As I have previously said, the ACA is progress. And while
each individual will face unique circumstances and challenges
under ACA, generally there are significant benefits that result
in good health for the American public. Every time I think of
the fact that more than 32 million additional people will have
the opportunity to purchase, maintain, and make use of health
insurance, I say that is good for me and I believe that that is
good for America.
So I thank our witnesses for coming.
Again, Mr. Chairman, I thank you for holding the hearing. I
yield back.
Mr. Gowdy. I thank the gentleman from Illinois.
Members may have 7 days to submit opening statements and
extraneous materials for the record.
[The prepared statement of Hon. Elijah E. Cummings
follows:]
Mr. Gowdy. I would now ask unanimous consent that the staff
report entitled, ``Uncovering the True Impact of the Obamacare
Tax Credits'' be included in the record.
Mr. Davis. Mr. Chairman, I have no objection, but I also
would like to make sure that the report is reflected as a
partisan staff report and has not been marked up. So, as long
as we make sure that that depiction is shown, I would have no
objection.
Mr. Gowdy. The distinguished gentleman from Illinois'
comments are obviously part of the record and can be read in
conjunction with the report. And, with that----
Mr. Cummings. Chairman.
Mr. Gowdy. Yes, sir.
Mr. Cummings. I just want to be clear. The staff, we got
the report about 10 minutes ago. And I wondered, is that a
report of the committee, or is that a report of the Republican
side of the committee, since we had no input? And I think that
is what Ranking Member Davis was trying to get to. I mean, we
haven't even read it.
Mr. Gowdy. The gentleman from Maryland is correct. It is a
report of the Republican staff. It is not the committee as a
whole. The gentleman is correct.
Mr. Cummings. Thank you, Mr. Chairman.
Mr. Gowdy. Without objection, so ordered, with the comments
of the gentleman from Illinois and the gentleman from Maryland.
[The information referred to follows:]
Mr. Gowdy. We will now welcome our first panel of
witnesses. On behalf of all of us, thank you for coming, and
welcome.
I will introduce you from my left to right, your right to
left. And that will be the order in which we would like you to
give your opening remarks.
Douglas Holtz-Eakin is president of the American Action
Forum and former director of the Congressional Budget Office.
Diana Furchtgott-Roth is a senior fellow at the Manhattan
Institute for Policy Research. Richard Burkhauser is a
professor of economics at Cornell University. Sara Collins is
vice president for affordable health insurance at The
Commonwealth Fund.
Pursuant to committee rules, all witnesses will be sworn
before they testify. So I would ask if you would please rise
and lift your right hands.
[Witnesses sworn.]
Mr. Gowdy. May the record reflect all witnesses answered in
the affirmative.
You may be seated.
The lights--and I know many of you have testified before
and you are more familiar with the process than I am. So the
lights mean what they traditionally mean in life: green, go;
yellow, speed up, try to get under the red light before it
changes; and red, kind of see if you can start bringing it to a
conclusion.
And, with that, we will recognize Mr. Holtz-Eakin.
STATEMENTS OF DOUGLAS HOLTZ-EAKIN, PH.D., PRESIDENT, AMERICAN
ACTION FORUM, FORMER CBO DIRECTOR; DIANA FURCHTGOTT-ROTH,
SENIOR FELLOW, MANHATTAN INSTITUTE FOR POLICY RESEARCH; RICHARD
V. BURKHAUSER, PH.D., PROFESSOR OF ECONOMICS, CORNELL
UNIVERSITY; AND SARA R. COLLINS, PH.D., VICE PRESIDENT,
AFFORDABLE HEALTH INSURANCE, THE COMMONWEALTH FUND
STATEMENT OF DOUGLAS HOLTZ-EAKIN, PH.D.
Mr. Holtz-Eakin. Thank you, Mr. Chairman, Ranking Member
Davis, and members of the committee. It is a privilege to be
able to be here today to discuss this important topic.
There are many perspectives on the Affordable Care Act. In
mine, I want to focus on some of the economic consequences of
this legislation.
Viewed from the perspective of economic policy, I believe
this is an unwise legislation at this point in our Nation's
history. And let me spell out a couple of reasons why.
First and foremost, as the committee is well aware, the
United States faces a daunting fiscal future in which projected
debt relative to the economy is, under current law, to spiral
ever upward and invite a sovereign debt crisis of the type that
we are watching unfold in Europe at this very moment. In such
circumstances, the laws, budgetary consequences are of extreme
importance, and it is my belief that it will exacerbate, not
improve, the fiscal outlook and, for that reason, is a dramatic
step in the wrong direction.
We knew at the time of its passage that the law contained
many budget gimmicks which disguise its true impact on future
deficits. We have already seen the unwinding of one of those,
the so-called CLASS Act, which was used in the first 10 years
to provide $80 billion worth of revenue and hid all the
spending past the budget window.
But there are others, as well. As the chairman mentioned in
his opening remarks, there are billions of dollars of cuts to
Medicare which will not be sustainable in the future. The
business model for Medicare has not changed in a way that will
allow those cuts to be implemented. A future Congress will be
faced with the choice between denying seniors access to care or
restoring those cuts. My expectation is those cuts will be
restored. The cost of the program will become larger and
larger.
And, as one of my fellow witnesses, Dr. Burkhauser, has
done extensive research on, the serious upside risk of the
insurance subsidies off of the exchanges being far more
expensive than the Congressional Budget Office originally
estimated, there is simply too much subsidy money on the table
for employers and employees not to take advantage of it. And we
will see a reworking of many employment contracts so that
employers no longer offer coverage and the workers go get their
insurance subsidies.
So I think, budgetarily, this is very dangerous.
The second perspective is, from what we know about those
countries that have huge deficit problems and poor economic
growth--and the United States is in that position--the playbook
for success is one which keeps taxes low and reforms them to be
simpler and more pro-growth and then cut spending. In
particular, government employment--not a big deal in the United
States--and transfer programs.
This legislation goes exactly in the wrong direction, from
the lessons of economic history. It has, you know, $500 billion
to $700 billion worth of tax increases, depending on how you
count it. It makes the Tax Code, as the chairman mentioned, far
more complex, not simpler and more pro-growth, and so, from a
tax perspective, goes exactly in the wrong direction.
And this is additional transfer spending in the United
States. And expansions of Medicaid, probably our least
successful entitlement program, the invention of a new
entitlement in the insurance subsidies--both of those are steps
in the wrong direction, given the needs that face the United
States.
So I think that it is broadly a step that is dangerous to
our future budgetarily and from a growth perspective.
And, finally, if you look inside the law at some of the
incentives, they have perverse anti-growth implications. The
tax credits available to small businesses, for example,
penalize those small businesses that actually grow and add
employees or increase their compensation. The insurance
subsidies themselves get phased out as people's income rises.
That is an implicit tax on the success of our low-income
workers and at odds with our desire to allow them get ahead.
And, last, I think the labor market consequences of the
higher insurance market premiums that the law will inevitably
produce by demanding more benefits get covered and applying
taxes to all parts of the health supply chain, plus the cost of
the employer mandate itself, are going to hurt low-wage workers
in particular, harm the ability of all workers at this point in
time to get jobs.
And so, taken as a whole, from the top-level macroeconomics
to the labor market incentives, I think this is dramatically
bad economic policy and will, in the end, be something that the
United States regrets.
I thank you.
[The prepared statement of Mr. Holtz-Eakin follows:]
Mr. Gowdy. Thank you, Dr. Holtz-Eakin.
Dr. Furchtgott-Roth.
STATEMENT OF DIANA FURCHTGOTT-ROTH
Ms. Furchtgott-Roth. Thank you for inviting me to testify
here today.
I am a senior fellow at the Manhattan Institute, and I am
the author of ``Women's Figures: An Illustrated Guide to the
Economic Progress of Women in America'' that looks at how women
have moved increasingly into the work force over the past half-
century.
I fully agree that everybody should have access to health
care, but the way this bill is structured, there are
disincentives for women to marry and disincentives for women to
work. And for a bill that is supposed to make Americans
healthier, these disincentives are truly startling. Beginning
in 2014 when the bill takes effect, Americans will find it more
advantageous to stay single than to marry, even more so than
under the current Tax Code.
Marriage penalties from taxes in general and from the new
health-care law in particular fall into two categories:
disincentives to marry and disincentives to work. And the way
the new health-care law is structured, health insurance premium
credits in the new law are linked not directly to income but to
the poverty line, resulting in a particularly steep marriage
penalty for low-income Americans. And this arises because with
$10,890 as the poverty line for one person and an additional
$3,820 for a spouse, marriage means less government help with
health insurance when a couple gets married.
Since the new qualified benefit plans offered in the health
insurance exchanges are going to be generous and expensive,
with no lifetime maximums, no co-payments for preventive
services, no exclusions for pre-existing conditions, and the
requirement to accept all applicants, it is going to be
especially important for low-income individuals to have help
with their health insurance premiums.
So here is how the system will work when it is implemented
in 2014: The new health-care bill will offer refundable,
advance premium credits to singles and families with incomes of
between 133 percent and 400 percent of the poverty line. The
credits can only be used to buy health insurance through the
exchanges. So if you earn up to 133 percent of the poverty
line, your premium can only be 2 percent of your income; it
cannot be more than 2 percent of your income. Moving up, if you
earn between 150 percent and 200 percent of the poverty line,
your premium can be 4 percent to 6.3 percent of your income. Up
to 400 percent of the poverty line, it can only be 9 percent.
So the more you move up, the higher premium you have to pay.
So two singles would be able to earn $43,000 and have help
from the Federal Government with their premiums. But if they
got married and combined their earnings to $86,000, they would
be far above the limit because they would be above 400 percent
of the poverty line. As a married couple, the most they could
earn and still get government help with health insurance
premiums would be $58,000, which is a difference of almost
$30,000 or 32 percent. And this is a substantial disincentive
to get married.
Such marriage penalties exist even for couples below the
poverty line when they are married. So if we look at the
example of June and Jake, for example, living alone, each one
earns, say, $21,780, putting them at 200 percent of the poverty
line. Unmarried, their premium would be about 6.3 percent of
their income or $2,744 in total. But let's say June and Jake
were to marry. Their combined income would be $43,560, about
300 percent of the poverty line for a family of two. That would
push their premium close to 9.5 percent of the bracket or
$4,138 out of their combined income. That is a marriage penalty
equal to about $1,200, which is a substantial disincentive to
getting married.
The penalty also exists for single mothers. Say Sally is a
single mother earning $44,130, putting her and her baby at the
300 percent of the poverty line. They would be eligible for the
health insurance premium assistance credit. But what if she
were to marry Sam, the father of her child, who earns $43,560
and who is at 400 percent of the poverty line? Their total
earnings at $87,000 would exceed the 400 percent poverty line
for a family of three. Married, they would no longer get help
with their premiums from the government; unmarried, they would.
So I would argue that even though health care is something
that every American should have, the way we have structured the
program provides a disincentive to marry, and when couples are
married, a disincentive for the woman to work. And this needs
to be addressed.
Thank you very much.
[The prepared statement of Ms. Furchtgott-Roth
follows:]
Mr. Gowdy. Thank you, Ms. Furchtgott-Roth.
Dr. Burkhauser.
STATEMENT OF RICHARD V. BURKHAUSER, PH.D.
Mr. Burkhauser. Thank you for the opportunity to submit a
summary of my research with Sean Lyons and Kosali Simon on the
Affordable Care Act.
In a series of proposed rules, the Obama administration
confirmed what the ACA's supporters have feared: The law's
requirement that employers must make health insurance coverage
affordable only applies to single coverage, not family
coverage.
Those familiar with all the law's moving parts know exactly
what this means. Because any offer of single employer coverage,
if it is considered affordable, blocks access to generous
subsidies via tax credits in the insurance exchanges, millions
of families will be stuck in a no man's land without affordable
coverage through either their employers or the exchanges.
The law's advocates are pushing the administration to
change this by requiring employers to make coverage affordable
for employees and their families. But our new research
demonstrates why this decision isn't so cut and dried. Using
this broader ACA definition of ``affordable'' could incent
millions of employees to willingly shift from an employee plan
to a government-subsidized insurance exchange at significant
cost to the taxpayers, even if their employers continue to
offer coverage.
How the ACA's provisions will actually impact the insurance
market depends on the answers to two questions: First, does
affordable coverage refer to coverage just for employees alone
or for the employees and their families? We suspect the
administration's proposed answer to the first question came as
a surprise to the average Congressperson, who believed, as we
did at the start of our research, that the law levies a fine if
a large employer doesn't provide affordable coverage to
employees and their families. But a close reading of the bill
shows that the employer fine is only triggered when coverage
isn't affordable for the employee, not the employee and their
family.
That brings us to the second question, which interacts in
important ways with the administration's answer to the first:
Will employers keep their current insurance plans but adjust
them to allow lower- or moderate-income families, up to $89,000
for a family of four, to qualify for entry into the subsidized
exchanges? The CBO assumed not. Yet for income-eligible
employees, subsidy dollars will make exchanges coverage more
affordable than their current employer plan, even when
purchased with after-tax dollars. It is also attractive for
employers, who would pay less in per-employee fines than by
providing affordable insurance in the first place. By
increasing pre-tax health insurance premiums, making coverage
unaffordable for some, employers will free their lower- to
moderate-income employees to actually obtain subsidized
exchange coverage and still maintain their plan for higher-
income workers.
We use Census Bureau data to model the impact of the
health-care law on the sources of insurance coverage among
private-sector workers. Assuming the three main insurance
provisions of the ACA take effect and the administration's
definition of ``affordable'' sticks and people act as the
government assumes they will, we find that employer-sponsored
coverage will rise slightly from its current levels to about 75
percent and, in response to the ACA mandates, by another 11
percent via the previously uninsured workers taking advantage
of the exchanges.
However, when we alter our model by allowing employees and
employers to work together to take advantage of exchange
subsidies, the picture changes. Employer-sponsored coverage
falls to 70 percent; the number of employees insured in the
exchanges rises by about 4 million to 16 percent. This all
occurs despite our very optimistic assumption that all large
firms actually offer coverage and no small firms drop coverage.
But if we allow the broader interpretation in the employee
mandate--that is, where employers must make coverage affordable
to workers and their families--the changes are even more
dramatic. Employer-sponsored coverage drops to 63 percent, with
nearly one-quarter of all workers, over 14.7 million or 23
percent, receiving their insurance through the exchanges.
We offer no unique insight on whether the administration's
proposed single coverage rule will hold, but we do know that
this unpopular definition and its possible revisions hold
significant implications for everyone impacted by the law's
provisions. Either millions of dependents of employees with
affordable single coverage will be stuck without an offer of
affordable coverage--we estimate between 7 million and 16
million--or taxpayers will be stuck with as much as $50 billion
more per year in gross subsidy costs than originally projected.
This is a Sophie's choice embedded in the ACA as a
consequence of the pile of open-ended taxpayer money it leaves
on the table in the form of exchange subsidies intended for the
minority 20 percent of workers without affordable coverage that
will inevitably tempt a significant number of the vast majority
of employees with affordable coverage to gain access to it.
Thank you for the opportunity to speak before you today.
[The prepared statement of Mr. Burkhauser follows:]
Mr. Gowdy. Thank you, Dr. Burkhauser.
Dr. Collins.
STATEMENT OF SARA R. COLLINS, PH.D.
Ms. Collins. Thank you, Mr. Chairman, for this invitation
to testify on the premium tax credits that are available to
families under the Affordable Care Act.
Recent trends in the numbers of people who are uninsured or
underinsured demonstrate how critical these premium tax credits
and the law's related insurance affordability programs and
reforms will be to ensure both the health and financial
security of working families.
The number of people without health insurance climbed to
nearly 50 million people in 2010, over 13 million more than
were uninsured a decade ago. Among people who do have health
insurance, The Commonwealth Fund estimates that, in 2010, 29
million working-age adults had such high out-of-pocket costs
relative to their income that they were underinsured. This is
an increase from 16 million in 2003.
Both these trends have had serious financial and health
consequences for families. An estimated 75 million adults under
age 65, both with and without health insurance, reported a time
in 2010 when they did not get needed health care because of the
cost. And 73 million adults said that they had difficulty
paying medical bills or were paying off debt over time.
With its array of affordable health insurance programs and
new consumer protections, the Affordable Care Act will
substantially reverse these trends, ensuring that all Americans
will have access to affordable and comprehensive health
insurance coverage.
Indeed, the law's new provision that allows children up to
age 26 to stay on or join their parents' insurance policies
reversed a decade-long increase in uninsured rates of young
adults, providing coverage to nearly 800,000 19 to 25-year-olds
in the past year.
The law's most significant coverage provisions will begin
in 2014 with a substantial expansion in Medicaid eligibility
for adults earning up to 133 percent of poverty, or about
$29,700 for a family of four, as well as subsidized coverage
available--private coverage available through new State
insurance exchanges for families earning up to 400 percent of
poverty, or $89,400 for a family of four.
The State insurance exchanges will create a new marketplace
that will serve as a central portal through which people can
get coverage if they do not have an affordable employer-based
health plan. People will fill out one application for all
insurance affordability programs, including Medicaid, the
Children's Health Insurance Program, the Basic Health Program,
or premium tax credits for private plans, which are known as
qualified health plans, sold in the exchanges.
Taxpayers eligible for premium credits will make
contributions to their premiums as a share of their income,
from 2 percent to 9.5 percent. Those eligible for tax credits
will have a choice of private plans that will offer an
essential benefit package. Insurers will offer these plans at
four levels of cost-sharing: bronze plans, covering an average
of 60 percent of someone's annual medical costs; silver, 70
percent of costs; gold, 80 percent of costs; and platinum, 90
percent of costs.
The average cost covered by the silver plan will be
increased for low- and moderate-income families. As an example,
a family of four with an income of $35,000 would make a premium
contribution of 4 percent of their income, or $1,400. If the
policyholder's age is 40, this family's premium for a benchmark
plan, which would be the second-lowest-cost silver plan offered
in the family's region of the country, would be about $12,130
in 2014. Their tax credit would thus be equal to the benchmark
premium minus their required contribution, or $10,700.
About 90 percent of legal residents who are currently
uninsured in the United States right now would gain premium tax
credits or Medicaid. In addition, if the reforms were
implemented today, there would be 21 million fewer underinsured
adults in the United States.
The Congressional Budget Office estimates that the
Affordable Care Act will reduce the Federal deficit by $124
billion over the period 2012 to 2021. Cutler, Davis, and
Stremikis estimate even greater savings than the Congressional
Budget Office from the law's health-care delivery system
reforms. They project an additional $406 billion in savings by
2019 and, consequently, a much greater net decrease in the
deficit of about $400 billion.
In 2009, as health reform was being debated, total national
health expenditures were projected to reach $4.9 trillion in
2020. Expenditures are now projected to reach $4.6 trillion in
2020, 5 percent below original estimates. If scorekeepers were
to redo the original estimates based on these new projections,
the deficit reduction generated by health reform would be even
greater.
The trends in uninsured and underinsured Americans over the
last decade really do underscore the need for Federal and State
policymakers to continue their work implementing the Affordable
Care Act. When the law is fully implemented, U.S. families will
have new affordable and comprehensive insurance options, both
in good economic times and in bad.
In addition, while much of the recent debate has focused on
lowering the costs of Medicare and reducing the Federal
deficit, the same forces that are driving up public program
costs are also increasing costs for working families. With this
extensive set of delivery system and insurance market reforms,
the Affordable Care Act focuses on improving quality and
affordability throughout the entire health-care system.
For the 50 million adults and children who were without
coverage in 2010 and the additional 29 million adults who are
underinsured, the 2014 reforms cannot come soon enough.
Thank you.
[The prepared statement of Ms. Collins follows:]
Mr. Gowdy. Thank you, Dr. Collins.
Dr. Holtz-Eakin, recently I was privileged to be on the
committee where you spoke or testified more globally about the
state of our fiscal health as a Nation. Can you go back into
that with specific reference to health-care costs and how the
cost of health care will impact our fiscal state in the near
and long-term future?
Mr. Holtz-Eakin. Well, certainly, if you go back to the
beginning of this year and look, for example, at the
administration's budget, it showed we are running a deficit
this year of about $1.3 trillion. And that is, in and of
itself, troubling. And our current gross debt relative to GDP
is over 90 percent. And that is the region in which the
evidence suggests you pay a growth penalty of 1 percent per
year, roughly, and have a much higher probability of
encountering international sovereign debt problems. So, that is
where we are.
If you roll the clock forward 10 years in that budget,
assume that we are not fighting any overseas military
operations, the financial crisis is in distant memory, we are
back to full employment, we are growing nicely, the deficit is
still $1.2 trillion in that budget projection, and $900 billion
of it is interest on previous borrowings.
We are spiraling out of control. This is true despite the
fact that revenues are up to 19.5 percent of GDP, above the
historic norm. The administration raises all the taxes they
want in that budget. And that tells you that we have a spending
problem. And if you look inside that spending problem, it is
driven by Medicare, Medicaid, and, soon, the Affordable Care
Act. And that has to be the focus in controlling our future
debt increase and the threats that it faces the United States
with.
Nothing that has happened since that budget really changes
that picture. The Budget Control Act in August puts
discretionary spending caps on. They will be as effective as
future Congresses are effective with living with them. We
haven't touched any of the mandatory spending programs, which
are at the heart of that problem. And so I view it as
inescapable that this committee and the Congress as a whole
will be back to look at that whole array of Federal health
programs again and again.
Mr. Gowdy. Dr. Holtz-Eakin, I know you are going to be
reluctant to do what I ask you to do because it will make you
assume that you are a Member of Congress and our public
approval rating is such----
Mr. Holtz-Eakin. I must respectfully decline, sir.
Mr. Gowdy [continuing]. That you will probably not accept
my invitation. But what should the tax treatment be for health
care? How would you reform it if you were king for a day?
Mr. Holtz-Eakin. Well, I have been on record for years as
removing the exclusion from tax of employer-sponsored health
insurance. It is a perverse subsidy that, number one,
diminishes the awareness of consumers of health insurance to
its real cost. Number two, the subsidy is bigger for higher-
income individuals, so it is at odds with the conventional
American notions of equity. And I would eliminate that.
And instead, to the extent that we wanted to support the
purchase of private health insurance in the United States, I
would provide low-income support in a fixed credit that didn't
vary by income and which didn't have this open-ended subsidy
aspect.
Mr. Gowdy. Ms. Furchtgott-Roth, I was struck, as I am sure
all of us up here were unless they had heard it before, about
the systemic penalty for marriage that is, I am sure,
inadvertently, unwittingly built into this law, but,
nonetheless, it is there.
Were there other examples you could give? I was just struck
by June and Jack, I believe it was, that their decision to get
married is going to have a deleterious impact on their bottom
line. That fact alone is going to cause their health-care costs
to go up.
Are there other examples that you would have given had you
had more than 5 minutes, or were those the most probative?
Mr. Furchtgott-Roth. Those are the most salient examples.
But what I was going to say is that it also gives an incentive,
if the couple gets married, for one of them not to work. And
usually it is the woman who decides not to go back into the
labor market. About 80 percent of women have children at some
point in their lives; they tend to go in and out of the labor
market. And if there is this big penalty on their earnings--in
other words, if the family says, ``Okay, June, you go back to
work, but then we are going to lose government help with our
health insurance,'' then the big incentive, on top of the extra
tax penalty, is for the woman to drop out of the labor force
and not work.
And with the higher taxes in Europe, we have seen that
there are lower levels of female labor force participation.
Here in the United States, we have some of the highest levels
of female labor force participation. Women have invested in
their education, they plan to have many years with productive
jobs, and this marriage penalty would basically throw them for
a loop.
Mr. Gowdy. I want to follow the same admonitions I gave
everyone else, and my time is up. So I would recognize the
distinguished gentleman from Illinois, the ranking member of
the subcommittee, Mr. Davis.
Mr. Davis. Thank you very much Mr. Chairman. You know, I
always say, you can't lead where you don't go. And so I
appreciate very much your approach to the timing.
Dr. Holtz-Eakin, I was somewhat fascinated by your
testimony. And I was wondering, as I listened to you, if people
are living longer, using emergency rooms less frequent, using
tertiary care, which is very expensive, because the state of
their health has gotten to the point where they need this kind
of care, I was trying to figure out how those factors would be
detrimental to our economy and how those would be negatives as
opposed to positives.
Could you respond to that?
Mr. Holtz-Eakin. Well, as in any policy issue, there are
benefits and costs to the legislation and in the health-care
issue in general.
It is certainly the case that we want a high-quality
health-care system and Americans living in better health and
longer. No one disagreed with that at the outset of the debate.
I think the issue is, does this legislation meet the objectives
we want in terms of delivery system reforms? My judgment would
be, no, that it will not, in fact, solve some of the problems
we see in the delivery of American medicine that leads us to
have a very low-value system. We spend a lot of money with very
substandard results. We can have a longer discussion about why
I think that.
And then the second question is the financing. And in the
process of financing that consumption of health care, do we do
it in an efficient fashion that allows us to meet other
objectives for economic growth and other policy objectives?
And, again, my judgment is, this approach, which essentially
wrote, you know, a trillion dollars' worth of checks and raised
$500 billion of taxes and pretended to cut $500 billion out of
Medicare isn't going to meet that objective.
And so I think there was, at the beginning of 2009, a
shared understanding of the need for health-care reform, a
shared understanding that the objectives should be higher-
quality care at lower cost and an efficient insurance system. I
just don't think we met those objectives.
Mr. Davis. Thank you.
Ms. Furchtgott-Roth, have you ever known anyone to not get
married because they were concerned about the cost of health
care or how it would impact them and, as a result, they would
decide, ``Well, you know, I am not going to get married because
this is going to have a negative impact on my being?'' Have you
ever known anyone to----
Mr. Furchtgott-Roth. Well, the provisions--the answer to
your question is no. But the provisions of this health-care act
have not yet kicked in. Now, say two young people who--first of
all, they don't have the mandate to have health insurance, they
are people who are uninsured for short periods of time between
jobs, you can buy a low-cost health insurance program right now
with a high deductible and a health savings account and
catastrophic health care.
So this hasn't arisen right now, but it will if the
government mandates expensive health insurance, requires people
to have it, and gives people subsidies depending on where they
are in the poverty line. Because the poverty line for one
person is $10,890, but for two people it is $14,710.
Mr. Davis. Well, let me ask you, are the marriage rates
going up or down?
Mr. Furchtgott-Roth. I would have to check those data and
get back to you. And I would be happy to do that.
Mr. Davis. Let me ask you, Dr. Collins, why do you think
overwhelmingly people feel a need to reform our approach to
health care and what we have been doing?
Ms. Collins. I think the major motivation for the
Affordable Care Act was to cover the 50 million people who are
without coverage. That number has been growing over time. And
we also know that rising health-care costs are making it
increasingly difficult for employers to offer coverage, so more
employers have dropped coverage, particularly small employers
have dropped coverage over the last few years.
In this recession, we know that high employment rates are
related to people losing their coverage through their jobs.
About 57 percent of people who lost a job with health benefits
became uninsured.
And the other major piece of this is also addressing the
underlying cost growth in the health-care system. Half of the
law is really directed at significant delivery system reforms
that will achieve the kinds of cost savings that Mr. Holtz-
Eakin mentioned that are necessary to bring our deficit under
control. And, in fact, if you see the Congressional Budget
Office estimates, it, in fact, over 10 years, does reduce our
deficit, in large part because of those reforms.
Mr. Davis. Thank you very much, Mr. Chairman.
Mr. Gowdy. I thank the gentleman from Illinois.
The chair would now recognize the gentleman from Tennessee,
Dr. DesJarlais.
Mr. DesJarlais. Thank you, Mr. Chairman.
And thank you, panel, for your testimony today.
I guess, after listening to the testimony here and prior to
coming to Congress in January being a practicing primary-care
physician for 20 years, I will maybe start with Dr. Collins and
say, what makes the Affordable Health Care Act affordable?
Ms. Collins. There are several insurance coverage
expansions that will make coverage far more affordable for
people than is the case today.
Most people who try to buy on their own, as was mentioned
earlier, don't actually end up buying a health plan through the
individual market because they are underwritten on the basis of
their health and they actually face the full premium, their
health-care conditions can be excluded from their coverage. So
the new Medicaid expansion will dramatically increase coverage
for people, as well as the premium tax credits increasing
coverage for people up to 400 percent of the poverty line.
Jonathan Gruber did an analysis that he published in May
that looked at whether health care will become more affordable
for people. And the majority of people in the United States
would find premiums and their out-of-pocket costs affordable
under the Affordable Care Act.
Mr. DesJarlais. Who is going to eat the cost? I mean, it
isn't free to provide health care. You said 50 million
uninsured, 70 million uninsured. I think the President talked
about 30 million uninsured when this came into effect, so I
guess it has grown by 20 million in the last year and a half.
Who is going to pay for that? Where is that money going to
come from? Who are they going to take it from?
Ms. Collins. Well, there are several offsetting provisions
in the law that do pay for the expansion completely and, in
fact, save money over time.
Mr. DesJarlais. So the taxpayer then? I mean, the
government doesn't have any revenue other than tax. So the
taxpayers are going to pay for it?
Ms. Collins. The provisions in the law require changes to
the delivery system, changes to Medicare Advantage plans,
bringing them more in line with regular Medicare----
Mr. DesJarlais. Do you think health care is going to
improve, or is the quality of care going to go down?
Ms. Collins. The quality of care, under the provisions of
the law, are absolutely expected--is absolutely expected to
increase. The delivery system----
Mr. DesJarlais. How so?
Ms. Collins. The delivery system reforms are actually
directed not only toward saving money but also improving the
way in which people receive their care, making the system more
patient-centered, focusing on coordinating people's care over
their lifetime and over a disease experience. So, bringing much
more rationality to the system than is the case today.
Mr. DesJarlais. Uh-huh.
Dr. Holtz-Eakin, I think you said Medicare is maybe one of
the worst examples of the management of an entitlement program.
Mr. Holtz-Eakin. I certainly think it is a clear fiscal
problem; we know that. I mean, right now the gap between
premiums and payroll taxes coming in and spending going out is
$280 billion a year. It is going to get worse, not better.
It also promotes a lot of bad medicine. We have a Part A
for hospitals, a Part B for doctors, a Part C for insurance
companies, a Part D for pharmaceuticals. It is not integrated
in any way. It is not coordinated around a beneficiary. You
know, hospitals are paid a fixed amount for a diagnosis;
doctors are paid for volume. Doctors practice in hospitals. The
conflicting incentives are enormous.
So I think reforming Medicare should have been the top
priority, not something that was left behind.
Mr. DesJarlais. Yeah. And right now, as Medicare patients
will tell you, it is getting harder and harder to find primary-
care doctors. And so I guess you are disagreeing with Dr.
Collins where she says, we can add more and more people to
Medicaid and yet we are going to maintain a quality of care and
somehow we are going to reduce costs.
Mr. Holtz-Eakin. The Medicaid expansion is the most
problematic, in my view. Medicaid beneficiaries are in ERs for
normal care at far higher rates than are the uninsured. And
they have great difficulty finding primary-care physicians. And
to expand that program, rather than fix it, I think was an
enormous mistake.
And I just want to say, on the affordability issue, there
is a fundamental problem with a country that spends nearly 20
percent of its national income on health care and defines care
to be affordable when it is under 10 percent. That can't add
up.
Mr. DesJarlais. And, you know, I don't think people in
general want to look at it like a Better Homes and Gardens,
good, better, best health care. I mean, everybody wants the
best, but the best costs money. And we are saying, this is an
affordable health care act, but yet we are trying to increase
the number of participants and we are trying to decrease the
cost. Someone is going to have to pay for it. Ultimately it is
going to be taxpayers who will bear the burden.
You know, physicians, we have an SGR problem right now for
physicians, where they are trying to cut another 29 percent
from physician pay. As a primary-care physician, I don't set my
own fees. That was set by Medicare over a decade ago. We have
not had an increase in 10 years, and they are proposing a 10-
year freeze. I don't know what the incentive is going to be to
other physicians to go into medicine to help expand this
improved quality of care that Dr. Collins spoke of.
But my time has expired, and I thank you for your input.
Mr. Gowdy. I thank the gentleman from Tennessee.
The chair would now recognize the gentleman from Maryland,
the ranking member of the full committee, Mr. Cummings.
Mr. Cummings. Thank you very much, Mr. Chairman.
Dr. Collins, it is not just a question of being affordable;
it is also a question of being available, is that right? I
mean, this is what the affordable care law is trying to make
health care available, because there are so many Americans that
don't--even if they could afford it, it is not available. I
have people in my family who could not even get an insurance
policy if they were willing to spend $50,000 a year because of
pre-existing conditions. And we talk about women and we look at
the--I think there was some research done that showed women
having far more pre-existing conditions than men.
And then we also found that if a woman has a woman-owned
firm, she is going to spend a lot more money on women in that
firm than, say, if a firm were, say, 50/50 male/female, is that
right?
Ms. Collins. That is absolutely correct. And right now, if
a woman goes to the individual insurance market to buy a health
plan, as was mentioned, if they lose their job or if they are
between jobs, those plans generally do not come with maternity
benefits. So insurers will not cover maternity because it is a
cost to them. So, under the Affordable Care Act, insurance
plans will be required to offer maternity coverage.
For small businesses, the law is very much geared toward
making it much easier for small businesses to offer coverage.
The requirement on the penalties that was mentioned earlier
only applies to companies with more than 50 employees.
Employers can come into the exchanges, have a much broader
array of health plans to offer their employees at likely lower
cost.
So these are very much geared toward both improving women
who are buying individual coverage on their own and women who
own small businesses and are trying to do the best thing for
their employees.
Mr. Cummings. In my district, in the real world, about 40
miles away from here, we often see people very sick ending up
in the emergency rooms, Mr. Holtz-Eakin. And I think one of the
aims of the Affordable Care Act was to try to zero in on
wellness as opposed to treating people after they are sick. We
need a new normal in this country. See, some people think that
the only time you go to a doctor is when you are sick--or when
you should go to a doctor is when you are sick. Sometimes you
need to go so that you can stay well.
And I think one of the major aims of all of this is to try
to keep people well. Is that right, Dr. Collins?
Ms. Collins. Absolutely. And you see that in the provisions
of the law, one of which went into effect last year. Insurers
have to cover preventive care with no cost-sharing. Very little
increase in premiums as a result of this provision, but will
affect millions of people who get coverage right now. We want
people to go to the hospital when they are sick or we want
people to get primary care before they get sick, so the law is
absolutely directed toward encouraging that.
It is very, very troubling that, over the recession, people
who have lost their jobs have gone without insurance coverage.
Seventy percent, more than 70 percent, have said they didn't
get needed health care because of cost, including filling a
prescription because of cost. So we really want to change those
incentives in the system, making it much more available to
people.
Mr. Cummings. Thank you.
Now, Dr. Holtz-Eakin, your written testimony characterizes
CBO's conclusion that the PPACA will result in budget savings
as, ``misleading''--that is page 5--and, ``dubious,'' page 4.
You were once the director of the CBO. You oversaw scoring
on many bills. Is it your testimony today that CBO did
something wrong or violated any of the principles of budgetary
scoring in coming to this conclusion, that the PPACA would
generate a budget savings? Is that what you are saying?
Mr. Holtz-Eakin. Absolutely not.
Mr. Cummings. Okay. Well, isn't it true that you would have
likely concluded a budgetary savings given the same facts and
same bill language had you been CBO director when the PPACA was
scored?
Mr. Holtz-Eakin. Had Congress directed me the way they
directed the currency bill, I would have received the same
bottom line.
Mr. Cummings. Dr. Collins, whether we like it or not, we
have to live by the rules. And the rules of budgetary scoring
led the CBO to conclude that PPACA would generate budget
savings.
Have you heard anything today to cast doubt on the validity
of the CBO's conclusion that PPACA would result in significant
budgetary savings?
Ms. Collins. I have not. And, if anything, Congressional
Budget Office is very conservative in their estimates. Other
estimates have actually shown much greater cost-savings as a
result of delivery system reforms that we talked about earlier.
David Cutler and colleagues have found an additional $400
billion in savings as a result of the delivery system reforms.
So, if anything, the Congressional Budget Office estimates are
conservative.
Mr. Cummings. I see my time has expired. Thank you, Mr.
Chairman.
Mr. Gowdy. I thank the gentleman from Maryland.
The chair would now recognize the distinguished gentleman
from Arizona, the vice chairman of the subcommittee, Dr. Gosar.
Mr. Gosar. Dr. Holtz-Eakin, what is the current state of
Medicaid, the Medicaid program? And can it handle an additional
20 million new individuals coming on to these programs?
Mr. Holtz-Eakin. At the moment, you could think of Medicaid
as essentially all deficit-financed at the Federal level, and
the States are struggling to meet their current obligations in
Medicaid, given their budgets. And to expand it I think the
Governors have said quite clearly is something they do not want
to have to do.
Mr. Gosar. So, really, when we are talking about this
health-care system, the biggest problem was the Federal
Government. Now, I mean, I was a practicing dentist out in a
very poor area of this country--actually, one of the poorest
districts in the country.
And to the ranking member, I do know people that will get a
divorce to stay together to make the rules work. I do know
that. And it is all too often. I mean, we are rewarding a bad
behavior. And I want to address that in a minute.
But part of the problem is the Federal Government. Because
I see my colleague over here, who is--all fees and all
insurance rates were based off of insurance reimbursements by
the Federal Government. They were part of the problem.
And I keep bringing up, the group of people that have been
on government health care the longest are the ones that are
rebelling the most. It happens to be our Native American
friends. They can't stand it; they want off. Because what we
have done is we have institutionalized, away from what Dr.
Collins said is--and she made reference that when you are sick
you go to the emergency room. Because what we did is we didn't
reimburse the primary-care physicians. We distorted these
numbers.
Dr. Burkhauser, I think you hit the nail on the head, that
this plan is based on unplausible applications. It doesn't fit
the normal dynamics of the way life on Main Street America
actually works. Commonsense applications were thrown at the
wall. We have a lot of cost-shifting going on that Dr. Holtz-
Eakin was talking about.
Do you believe that the government takeover of health care
will result in millions of additional workers who don't prefer
ESI and will ask their employer to either drop their ESI or
make their personal contributions unaffordable?
Mr. Burkhauser. Yes, that is exactly what will happen. What
we have is an opportunity for workers who currently have ESI to
get much cheaper coverage on the exchanges. So this bill really
is going to dramatically change the way health-care insurance
is provided in the United States.
You are going to get some very weird outcomes. Because the
affordability is based on single coverage, people who are
employed by firms who were providing them with affordable
single coverage are going to beg their employers to increase
the cost of their single coverage so that they can get their
families onto the exchange. Because, right now, if you have
affordable single coverage but unaffordable family coverage,
you are in a no man's land. You neither have affordable
coverage from your ESI, and you are barred from the exchanges.
So this is an effort by a bunch of economists, like myself,
in a little room trying to figure out the way the world works
and trying to square the circle. They are trying to provide
affordable care to people who don't have ESI coverage, which is
about 20 percent of workers, and not affect everybody else.
That can't be done. And we are going to see dramatic changes in
the way health insurance is provided because of the perverse
rules that we have in the system.
Mr. Gosar. And that would have something to do with the
recent decision--we see these dynamics playing out with the
Wal-Mart decision, wouldn't you say that?
Mr. Burkhauser. Yes, I think the Wal-Mart decision is the
beginning of a re-evaluation by all large employers on exactly
how they are going to respond to the new incentives that are
set into the ACA. So Wal-Mart now realizes that there is no
reason to provide affordable health care to their part-time
workers. Part-time workers can go and get large subsidies on
the exchanges.
They will probably change their system for all workers and
actually increase the percentage of the Wal-Mart health care
that is provided by their workers so that those workers will
also, therefore, not have affordable coverage and can go to the
exchange, while at the same time allowing their higher-income
workers to maintain Wal-Mart health-care insurance.
Mr. Gosar. Thank you.
Real quick, Dr. Furchtgott-Roth, there is a ripple effect
in broken homes and single families, the dysfunctional family.
And what we are trying to create is the benefit of a broken
family. There is higher costs associated with dysfunctional
families.
Do you think the Tax Code should punish marriage, be
neutral toward marriage, or encourage marriage?
Ms. Furchtgott-Roth. I think the Tax Code should encourage
marriage. And the marriage rate over the past decade has
actually gone down, from 8.2 per thousand in 2000 to 6.8 per
thousand in 2009, the latest data available.
So, with marriage going down, according to the Centers for
Disease Control, it is even more important to support and
encourage marriage. That makes healthier families, makes
smarter children, because it is easier for two parents to
manage children than one parent to manage children.
Mr. Gosar. Thank you.
My time is you up.
Mr. Gowdy. I thank the gentleman from Arizona.
The temptation for a second round of questioning is
enormous, given the talents and acumen of our panelists.
However, we want to be good stewards of your time, and votes
are imminent, and we are not going to make you wait on us to
vote.
So, with that, on behalf of all of us, thank you for your
collegiality toward one another, your perspective, your
expertise.
And, with that, the committee is adjourned.
[Whereupon, at 10:34 a.m., the subcommittee was adjourned.]