Help save yourself -- join CLT today!
CLT information and membership  application	What CLT saves you in the auto excise tax alone
Join CLT online through PayPal immediately

---

CLT UPDATE
Wednesday, April 7, 2010

Obamacare's unintended consequences, or otherwise

---

---

Greetings activists and supporters:

Now that Obamacare is law, its unintended or otherwise consequences are slowly but steadily being revealed. You can bet the farm that this is just the beginning. There will be countless more shocking revelations as the multitude of details and how they affect one another start being comprehended.

Only a couple weeks after the Democrats took over a sixth of the nation's economy, already the plan they rammed through is unraveling.

We recognized long ago that public employee union benefits were going to bankrupt all of us sooner or later, that this crisis was getting close. Now we learn it has been worsened by Obamacare's “Cadillac’’ insurance tax -- since that's a description of so many public employee health-insurance-for-life plans for which we taxpayers are on the hook.

According to news reports now coming out, "Rolls Royce" plan would be more accurate when it comes to public employees. Obamacare taxes public employee "Rolls Royce" benefits; we pay their benefits and in the days ahead this additional local tax imposed by Obama and the Democrat congressional majority.

If the "Cadillac" insurance tax never happens -- as public employee unions intend and which to me seems likely -- then we're still on the hook for the additional cost this burden will shift to Obamacare. Damned if we do, damned if we don't.

Washington decrees, the states comply, its municipalities respond -- and we taxpayers must pay.  This is Obama's version of "trickle-down-economics." Hey taxpayer, how's it feel to be trickled on?

And if "thousands of consumers are gaming Massachusetts’ 2006 health insurance law by buying insurance when they need to cover pricey medical care," what do you suppose will happen when millions start "gaming" Obamacare? This was a known fact at least since last June, when Charlie Baker brought it to the Patrick administration -- even if it's the first we've heard about it, here or from Washington.

Over the past few days the Boston Globe has published a couple of in-depth reports revealing some serious flaws in Obamacare and its precursor, our state's health insurance mandate. But as one of the loudest cheerleaders for national health care for decades, an advocate for Obamacare in particular, I find the timing incredibly suspect.  I'd say "strange" -- but not when dealing with the Globe.  Where were these profound revelations before this law was foisted upon the nation?  Of course that wouldn't have been helpful for its passage.

Still we haven't seen the worst yet. That'll arrive when a national Value Added Tax (VAT) is imposed on top of the federal income tax, again rammed through into law by an arrogant Democrat congressional majority -- if there's still a Democrat congressional majority standing after November.

As is so often the case, Taylor Armerding is right on the mark. We will have little to celebrate come this year's Independence Day. The 4th of July, 2010 offers only a reflection of what we once had that has now been taken from us -- unless The Second American Revolution succeeds as well as the first did.

Chip Ford

---

The Salem News
Saturday, April 3, 2010

Rushing headlong into nanny state's smothering embrace
By Taylor Armerding

Happy Dependence Day everybody.

It was a pretty good run, I guess — more than 200 years, although the erosion of the spirit that made America the greatest, richest beacon of freedom the world has ever seen was well under way by the time of the bicentennial.

But Independence Day this July will be a joke — a sad joke — because the descent into dependency isn't even gradual anymore. It is headlong. We're embracing it — not all of us, but enough so that our elected representatives feel perfectly safe in marching us toward unlimited government.

We don't want to take care of ourselves anymore. We want government to do it, and we're willing to give anything away, including the futures of our children and grandchildren, for that to happen.

And we're nodding, smiling hypnotically, cheering and popping the corks when President Obama tells us that this is what makes our country great. We're sneering at people who value independence, telling them they're greedy and aren't willing to be part of a community.

What is most depressing is that it is my generation, the most self-indulgent, self-important generation in American history, if not all of history, that has made it happen.

We want what we want when we want it, and we don't want anyone telling us we have to work for it. "They" — those rich profiteers who have exploited the rest of us to make their money — they can pay for it.

Gee, I always suspected it was Bill Gates who had been stealing my money to get rich. Heck, those who lead the company that employs me are richer than I am, too. Instead of being thankful that I have a job, obviously I should be angry that they're stealing money that is rightfully mine.

That isn't the only absurdity here, of course. President Obama, celebrating his success in remaking America into a welfare state, told cheering sycophants that with the passage of the new health care law all citizens would have "the security of knowing that here, in this country, neither illness nor accident should endanger the dreams they've worked a lifetime to achieve."

Did you catch that? The president is promising to repeal the laws of nature. Neither illness nor accident should endanger my dreams.

So, if I get my hand crushed in an accident, President Obama promises me I'll still be able to play the mandolin. If I get terminal cancer, he'll make sure that my dream of seeing my potential grandkids grow up will never be denied.

I'm upset that he hasn't promised that death will not endanger my dreams either.

Then there was Obama's conversation with news anchor George Stephanopoulos a few weeks ago, where he insisted that the tax to be imposed on everybody who doesn't comply with the mandate to buy health insurance was not a tax. Whatever. It's what he said along with it that was stunning: "What it's (the mandate) saying is that we're not going to have other people carrying your burdens for you any more ..."

Really? The whole premise of this new law is exactly that — forcing some people to carry the burden for those who supposedly can't, or more likely, won't.

More serious is that, as plenty of others have pointed out, this is not really about compassion for those who really want health insurance but can't afford it. That problem, which might affect 5 million of the supposed 32 million without health insurance, could be solved immediately by letting them all qualify for Medicaid. You don't need a government takeover of health care to solve that.

It's already been happening. My late friend, Tom, who didn't work because he was disabled by obesity and was on public assistance for half of his life, had better health care than I did, long before Massachusetts passed universal health care.

It's not about "catching up" with the rest of the civilized world either. Those who are celebrating say that it's about time that the "richest country in the world" does what its European and Canadian neighbors have been doing for decades. Do they ever wonder if one of the major reasons this is the richest country in the world is because it hasn't been a complete welfare state?

But hey, let's become like all the other second-rate powers in the world.

No, this is not about health care. It is about power — the power of government to control not only a sixth of the economy but decisions about your own health care.

And you thought the insurance companies had been ripping you off.

As one comment circulating the Web put it: "We're being gifted with a health care plan written by a committee whose chairman says he doesn't understand it, passed by a Congress that hasn't read it but exempts itself from it, signed by a president who also hasn't read it and who smokes, with funding administered by a treasury chief who didn't pay his taxes, to be overseen by a surgeon general who is obese, and financed by a country that's broke.

"What could possibly go wrong?"

The cost of this, both financially and in lost freedoms, will not happen right away, of course. The irresistible baubles have been front-loaded. Insurers can no longer refuse you because of pre-existing conditions. And your costs will go down! People who are supposedly legal adults in every way at age 21 will still be children when it comes to health care through age 26. And your costs will go down!

You'll get more, government will spend vastly more, but the deficit will go down! Don't worry, the rich will pay for it!

And we believe this idiocy.

Happy Dependence Day.

Taylor Armerding, an Ipswich resident, is associate editorial page editor of The Eagle-Tribune in North Andover.

---

The Boston Globe
Sunday, April 4, 2010

Short-term customers boosting health costs
Lesson for US overhaul in gaming of Mass. system
By Kay Lazar

Thousands of consumers are gaming Massachusetts’ 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses.

In 2009 alone, 936 people signed up for coverage with Blue Cross and Blue Shield of Massachusetts for three months or less and ran up claims of more than $1,000 per month while in the plan. Their medical spending while insured was more than four times the average for consumers who buy coverage on their own and retain it in a normal fashion, according to data the state’s largest private insurer provided the Globe.

The typical monthly premium for these short-term members was $400, but their average claims exceeded $2,200 per month. The previous year, the company’s data show it had even more high-spending, short-term members. Over those two years, the figures suggest the price tag ran into the millions.

Other insurers could not produce such detailed information for short-term customers but said they have witnessed a similar pattern. And, they said, the phenomenon is likely to be repeated on a grander scale when the new national health care law begins requiring most people to have insurance in 2014, unless federal regulators craft regulations to avoid the pitfall.

“These consumers come in and get their service, and then they leave because current regulations allow them to do it,’’ said Todd Bailey, vice president of underwriting at Fallon Community Health Plan, the state’s fourth-largest insurer.

The problem is, it is less expensive for consumers — especially young and healthy people — to pay the monthly penalty of as much as $93 imposed under the state law for not having insurance, than to buy the coverage year-round. This is also the case under the federal health care overhaul legislation signed by the president, insurers say.

Governor Deval Patrick recently filed legislation that state regulators believe will help fix the problem, by restricting insurance enrollment to twice a year for people who buy on the open market and allowing waiting periods before coverage kicks in. But insurers say stronger action is needed. Consumer advocates caution, however, that many people who sign up for short-term coverage may merely be between jobs.

When state lawmakers overhauled the health care system in 2006, they combined into a single insurance pool consumers who buy coverage on their own with those who get insurance through their jobs at small businesses that employ 50 or fewer people. The aim was to make insurance more affordable for the individuals buying coverage on their own, who tended to be sicker and therefore had been paying very high premiums. And the hope was that having small businesses and their workers absorb some of the cost of covering this group would raise their premiums only modestly.

But insurers now say that it didn’t work as planned, and that consumers who work for small businesses have ended up shouldering a much larger burden. Part of the reason, they say, are the short-termers.

Insurers want rules that would restrict enrollment for individuals buying on the open market to a designated month each year, unless they have had a major life change, such as a divorce — similar to the practice used by most employers. They say this would curb the practice of buying coverage just before an expensive elective procedure that can be planned ahead, such as knee or hip replacements or fertility treatments. Imposing waiting periods for coverage on this group, which was effectively disallowed by the 2006 law, would also deter this practice, insurers say.

“I raised these concerns with the Patrick administration, but I didn’t make much progress. And I even sent them my data,’’ said Charles D. Baker, a Republican candidate for governor and former chief executive of the state’s second largest insurer, Harvard Pilgrim Health Care. He blogged about these issues last June, when he was still at the company.

Baker’s data showed that about 40 percent of the consumers who purchased insurance from Harvard Pilgrim on the open market kept the insurance fewer than five months, and they incurred, on average, $2,400 a month in medical expenses — about six times higher than the monthly spending of other consumers.

“They said to me, ‘This is interesting, we’ll get back to you,’’’ Baker said in an interview last week referring to conversations he had with state regulators.

Patrick administration officials said they are taking the short-term coverage issue seriously, noting that they requested data on the problem from all insurers last year and expect to release their findings this month.

“This is an issue we have been concerned about, and carriers have not been shy about bringing this to our attention,’’ said Barbara Anthony, undersecretary of the Office of Consumer Affairs and Business Regulation, which oversees insurance.

“Even though our report isn’t concluded, the proposal by the governor to limit open enrollment to two times a year seems like an obvious way to get a handle on the problem,’’ Anthony said.

In February, Patrick filed legislation that would give his administration sweeping authority to cap rates charged by insurers and medical providers. The bill included a provision that would restrict enrollment for consumers who are buying insurance on their own to two annual periods — in June and December — but includes exceptions for people facing life changes, such as loss of workplace insurance or the birth of a child.

It would also bring back the rule allowing insurers to exclude coverage for preexisting conditions for six months, or impose a similar waiting period under certain conditions for people buying coverage on their own. However, the new national legislation prohibits insurers from denying coverage based on preexisting conditions as of 2014, and will allow only a three-month waiting period.

Blue Cross-Blue Shield executives said the governor’s proposal is a step in the right direction, but the insurer favors a plan that would allow only one annual enrollment period, and that would also bar consumers from buying on the open market if they have access to coverage through work or a spouse. Larry Croes, a Blue Cross-Blue Shield vice president for small group sales, said this would stop consumers from buying insurance for procedures not covered by their employer — typically fertility treatments — then dropping the plan after treatment.

Senate President Therese Murray said in an e-mailed statement that the issue needs to be tackled.

“I support the governor’s proposal . . . and could see us going even further, with reasonable exceptions, to a single annual enrollment for individuals,’’ Murray said. “The Senate continues to work on payment reform legislation that targets this issue and others to reduce waste and inefficiency in the delivery and administration of health care.’’

Consumer advocates said they aren’t convinced that a lot of people are gaming the system, and they said that many of the individuals buying on the open market are likely those who are between jobs, new to the state, or have some other legitimate reason to buy coverage for a short period. They said that before the state makes it harder for consumers to buy coverage, there should be reliable data showing the extent of the problem.

“We would need to understand the severity of the issues,’’ said Brian Rosman, research director at Health Care for All, a Boston-based consumer group, “and whether the governor’s proposed changes would address the problem.’’

---

The Boston Globe
Monday, April 5, 2010

Health tax may wallop towns
Levies to be steep if high-end plans aren’t scaled back
By Sean P. Murphy

Massachusetts municipalities that offer employees, retirees, and elected officials the most generous and costly health insurance plans will feel the squeeze of the new national health care law’s tax on “Cadillac’’ insurance plans.

A family health plan that costs more than $27,500 would be subject to a 40 percent tax on every dollar spent above that threshold. The tax, set to take effect in 2018, would be levied on insurers, who would probably pass it on to municipalities and other employers. A few cities and towns already have family plans that exceed $27,500, and many others are on track to surpass that level before the tax kicks in.

That means taxpayers in many communities could be facing thousands of dollars in additional costs for every employee, retired worker, and elected leader they cover, unless those communities move soon to scale back coverage, a change the law is designed to encourage.

“This could be extremely expensive,’’ said Geoffrey C. Beckwith, executive director of the Massachusetts Municipal Association, a lobbying group for cities and towns that has pushed for an overhaul of the municipal health care system. “In general, municipalities would fall into this tax because health care is very expensive in Massachusetts and the municipal plans are very generous.’’

Framingham has dozens of employees enrolled in two of its family plans at annual premiums of $40,475 or $39,150, far in excess of the threshold. For individual plans, the excise tax threshold is $10,200, and Framingham has scores of employees enrolled in plans with annual premiums of $16,275 or $14,500.

If the new tax were in effect today, Framingham would probably face an additional expense of $4,660 to $5,190 for every employee in the family plans, and $1,720 to $2,430 for each employee on an individual plan.

Waltham would also be liable for the excise tax because it offers a family plan with an annual premium of $30,415, almost $3,000 over the threshold.

And Lawrence, one of the poorest cities in the state, also exceeds the tax threshold by providing a family plan that costs $30,180, though the city may join the state’s Group Insurance Commission as part of its financial restructuring.

Many other cities are already close to the family plan threshold and on pace to exceed it by 2018 because of increases in health care costs, including Everett ($27,048 in annual premiums), Brockton ($25,776), Malden ($24,360), Newton ($23,844), Revere ($23,604), and Peabody ($23,466).

Under the federal bill, however, the thresholds set for 2018 could increase if medical inflation outpaces expectations.

The state Division of Health Care Finance and Policy estimates that 8,600 state residents would be subject to the tax, based on a recent survey of employers.

“The theory behind the tax is that you are taxing excessive benefits, benefits that go beyond what a typical plan offers,’’ said Robert W. Seifert, a health overhaul specialist at the University of Massachusetts Medical School’s Center for Health Law and Economics.

The tax would apply to health insurers, such as Blue Cross and Blue Shield of Massachusetts and Harvard Pilgrim Health Care. But the insurers would probably pass the additional cost to employers, including municipalities, Seifert said.

Asked about the tax, Blue Cross-Blue Shield, which provides insurance to many cities and towns, released a statement saying, “Before the tax is implemented in 2018, we will continue to find ways to ensure our continued commitment to offer high-quality health plans at cost-effective prices.’’

Health care plans offered by cities and towns typically have very low copayments and deductibles but very high premiums. Municipalities pay as much as 85 percent of those premiums.

The country’s major unions, including those representing public employees, fought hard to block or weaken the so-called Cadillac tax, saying it would penalize workers who gave up higher wages for richer benefits.

“It was the main issue our national union was concerned about,’’ said Brad Tenney, secretary treasurer of the Professional Fire Fighters of Massachusetts. “The concern was that some of our plans that are high value would be hit by this.’’

Tenney said union pressure on Congress produced an exception for law enforcement personnel, including firefighters, because of their dangerous duties. For them, the threshold for family plans to trigger the tax would be $30,950, and the individual threshold $11,850.

Ginger Esty, chairwoman of the Framingham Board of Selectmen, said firefighters and others must be willing to accept less generous health coverage for the town to avoid significant layoffs.

“The cost of health care already is extremely expensive,’’ she said. “And if we don’t get any relief from the unions, there’s only one thing we can do, and that is lay off workers.’’

But Pete DeVito, president of the 140-member Framingham Firefighters union, said although he is open to talking with town officials, he would continue to be protective of benefits.

“Everything we got, we got at the bargaining table,’’ DeVito said. “We don’t like this Cadillac tax because it would hit us. But we have confidence our national representatives will fight it off’’ by 2018.

On the local level, firefighters and other unionized workers in Framingham have already increased the share of the premium they pay from 10 percent to 13 percent, DeVito said.

Under state law, cities and towns cannot change the mechanics of the health care plans they offer — the amount employees pay in premiums and in copayments, for example — without union approval.

---

The Washington Post
Friday, March 26, 2010

Obamacare's next trick: the VAT
By Charles Krauthammer

As the night follows the day, VAT follows health-care reform.

With the passage of Obamacare, creating a vast new middle-class entitlement, a national sales tax of the kind near-universal in Europe is inevitable.

We are now $8 trillion in debt. The Congressional Budget Office projects that $12 trillion will be added over the next decade. Obamacare, when stripped of its budgetary gimmicks -- the unfunded $200 billion-plus "doctor fix," the double counting of Medicare cuts, the 10-6 sleight-of-hand (counting 10 years of revenue and only six years of outflows) -- is at minimum a $2 trillion new entitlement.

It will vastly increase the debt. But even if it were revenue-neutral, Obamacare preempts and appropriates for itself the best and easiest means of reducing the existing deficit. Obamacare's $500 billion of cuts in Medicare and $600 billion in tax hikes are no longer available for deficit reduction. They are siphoned off for the new entitlement of insuring the uninsured.

This is fiscally disastrous because, as President Obama himself explained last year in unveiling his grand transformational policies, our unsustainable fiscal path requires control of entitlement spending, the most ruinous of which is out-of-control health-care costs.

Obamacare was sold on the premise that, as Nancy Pelosi put it, "health-care reform is entitlement reform. Our budget cannot take this upward spiral of cost." But the bill enacted on Tuesday accelerates the spiral: It radically expands Medicaid (adding 15 million recipients/dependents) and shamelessly raids Medicare by spending on a new entitlement the $500 billion in cuts and the yield from the Medicare tax hikes.

Obama knows that the debt bomb is looming, that Moody's is warning that the Treasury's AAA rating is in jeopardy, that we are headed for a run on the dollar and/or hyperinflation if nothing is done.

Hence his deficit-reduction commission. It will report (surprise!) after the November elections.

What will it recommend? What can it recommend? Sure, Social Security can be trimmed by raising the retirement age, introducing means testing and changing the indexing formula from wage growth to price inflation.

But this won't be nearly enough. As Obama has repeatedly insisted, the real money is in health-care costs -- which are locked in place by the new Obamacare mandates.

That's where the value-added tax comes in. For the politician, it has the virtue of expediency: People are used to sales taxes, and this one produces a river of revenue. Every 1 percent of VAT would yield up to $1 trillion a decade (depending on what you exclude -- if you exempt food, for example, the yield would be more like $900 billion).

It's the ultimate cash cow. Obama will need it. By introducing universal health care, he has pulled off the largest expansion of the welfare state in four decades. And the most expensive. Which is why all of the European Union has the VAT. Huge VATs. Germany: 19 percent. France and Italy: 20 percent. Most of Scandinavia: 25 percent.

American liberals have long complained that ours is the only advanced industrial country without universal health care. Well, now we shall have it. And as we approach European levels of entitlements, we will need European levels of taxation.

Obama set out to be a consequential president, on the order of Ronald Reagan. With the VAT, Obama's triumph will be complete. He will have succeeded in reversing Reaganism. Liberals have long complained that Reagan's strategy was to starve the (governmental) beast in order to shrink it: First, cut taxes -- then ultimately you have to reduce government spending.

Obama's strategy is exactly the opposite: Expand the beast and then feed it. Spend first -- which then forces taxation. Now that, with the institution of universal health care, we are becoming the full entitlement state, the beast will have to be fed.

And the VAT is the only trough in creation large enough.

As a substitute for the income tax, the VAT would be a splendid idea. Taxing consumption makes infinitely more sense than taxing work. But to feed the liberal social-democratic project, the VAT must be added on top of the income tax.

Ultimately, even that won't be enough. As the population ages and health care becomes increasingly expensive, the only way to avoid fiscal ruin (as Britain, for example, has discovered) is health-care rationing.

It will take a while to break the American populace to that idea. In the meantime, get ready for the VAT. Or start fighting it.

---

NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml

---

Citizens for Limited Taxation  ▪  PO Box 1147  ▪  Marblehead, MA 01945  ▪  508-915-3665