Alexander: Obamacare Delivers Unwelcome Christmas Present, Unhappy New Year For Many Tennesseans

Thursday, December 19, 2013

In a speech on the floor of the U.S. Senate on Wednesday, Senator Lamar Alexander highlighted the ways Obamacare has increased costs and reduced choices for Tennesseans in 2013, and warned of more widespread consequences in the New Year.

“The fact that at least 82,000 Tennesseans will begin to lose their individual health insurance policies starting Jan. 1 is an unwelcome Christmas present,” Senator Alexander said. “And it’ll be an unhappy New Year for many more Tennesseans who get their insurance on the job when Obamacare’s burdensome mandates on employers kick in.”

The senator discussed how Obamacare’s mandates have outlawed many insurance plans – despite the president’s promise that “If you like your health insurance, you can keep it” – will increase costs for individuals and businesses and is even burdening school districts.

Senator Alexander’s remarks as prepared are below:

For the last couple months, we’ve heard countless stories from constituents who are losing the health plans they purchased on the individual market.  

According to America’s Health Insurance Plans, there are 19 million Americans in the individual market. The Obama administration knew in 2010 that the rules it wrote for health plans would mean at least 47 percent to 60 percent of those policies could not be legally offered under Obamacare by 2014.  Yet the President still said to people: “If you like your health insurance, you can keep it.”

By now we all know what the president said wasn’t true. According to news reports collected by my staff, at least 5 million Americans, including 82,000 Tennesseans, will lose their individual plans starting Jan. 1. That’s an unwelcome Christmas present for at least 82,000 Tennesseans (16,000 Tennesseans are losing their CoverTN plan; 66,000 Tennesseans will also lose their BlueCross Blue Shield of Tennessee coverage).

My constituent Emily from Middle Tennessee told me in a recent letter: “I cannot keep my current plan because it does not meet the standards of coverage. This alone is a travesty. CoverTN has been a lifeline ….With the discontinuation of CoverTN, I am being forced to purchase a plan though the Exchange…My insurance premiums alone will increase a staggering 410 percent. My out-of-pocket expense will increase by more than $6,000 a year – that includes subsidies. Please help me understand how this is ‘affordable.’”

Unfortunately, Emily is not the only one experiencing “rate shock.”  Millions of Americans are losing their insurance plans and then being forced to buy new plans with higher premiums, deductibles, and co-insurance.

According to data from the Department of Health and Human Services, Tennesseans can expect to pay up to three times more on the exchanges being set up under Obamacare for the health insurance they now have.

·         In 2013, a 27-year-old man in Memphis could buy a private insurance plan for as low as $41 a month. On the exchange for insurance coverage in 2014, the lowest state average is $119 a month—a 190 percent increase. 

·         Today, a 27-year-old woman in Nashville can also buy a plan for as low as $58 a month.  On the exchange, the lowest-priced plan in Nashville is $114 a month—a 97 percent increase.  Even with a tax subsidy if she made $25,000 a year, that plan is $104 a month, almost twice what she could pay today if the $58 plan was all she felt she needed.

·         Today, women in Nashville can choose from 30 insurance plans that cost less than the administration says insurance plans on the exchange will cost, even with the new tax subsidy.

·         In Nashville, 105 insurance plans offered today will not be available in the exchange.

According to HealthPocket, Inc., a consumer-oriented health research firm, the average individual deductible for a bronze plan on the federally run exchange is $5,081 a year.

That is 42 percent more than the average deductible of $3,589 for an individually purchased plan in 2013.

And according to Deloitte, that is 348 percent more than the $1,135 average deductible for an employer health plan in 2013.

According to Avalere Health, 90 percent of bronze plans require patients to pay 40 percent of the cost of their Tier 3 and 4 drugs out of their own pockets, compared with 29 percent of employer-sponsored plans that most Americans currently use. Most silver plans also require patients to pay 40 percent. For cancer patients and those with chronic illnesses, this kind of cost-sharing could mean they will pay thousands of dollars out of pocket or go without the drugs they need to stay healthy.

Americans had to wait until the exchanges opened on October 1st to find out just how much they were going to have to pay for insurance in 2014.

With such dramatic hikes in premiums and out-of-pocket expenses, it’s no wonder Americans are outraged.

And then, just before Thanksgiving, we learned that the Obama administration is delaying open enrollment for 2015 until after the mid-term elections in November.

The only American consumers this change will help are Democratic politicians who voted for Obamacare, because it delays disclosure of some of the law's most insidious effects until after the election.

Senators Barrasso, Enzi, and I today introduced a bill called the “Premium Disclosure Act” to change the open enrollment date back to October and to provide Americans notice of their premiums and cost-sharing requirements 30 days in advance so that they can plan for the future knowing their health care costs for the next year.

This is a common-sense proposal that I hope my colleagues across the aisle will join me in passing.

As my colleague Senator Barrasso likes to say, what we now know about Obamacare is just the tip of the iceberg.

Much of the media attention has focused upon the disastrous rollout of the website and the19 million Americans in the individual market. But just below the tip of the iceberg are nearly 160 million Americans who the Congressional Budget Office says have insurance through their employers and who will also soon start to feel the effects of Obamacare. 

Think about issues like restrictive grandfathered plan rules, limits on the number of hours employees can work and be considered part-time, the mandate that employers provide government-approved insurance or pay a fine, and the millions of dollars in new taxes on health plans. All of these issues will have an impact on employer-sponsored health insurance in both the public and private sectors.

We’re already starting to see the effects of the law and it hasn’t even gone fully into effect. Employers such as Sea World, Trader Joe’s, The Home Depot, and other companies have publicly said they are reducing worker hours or dropping part-time employee health benefits.

The CEO of Ruby Tuesday told me that the cost to implement Obamacare is equal to the profit his company earned last year.

In case you think these are isolated examples, the National Association of Manufacturers says more than three-fourths of manufacturers cited rising health care and insurance costs as their most important business challenge. 

The U.S. Chamber of commerce also has a membership survey which says 74 percent of businesses are reporting that the health care law makes it harder for their firms to hire new workers.

Many of these businesses self-insure, meaning they design and pay directly for the health plans they offer to their employees.

According to the Kaiser Family Foundation, more than 100 million Americans currently have an employer-sponsored health plan that is self-insured.

Self-insurance is a method of providing health insurance that has worked well since its inception in 1974 and should be preserved.

Last month, Senators Rubio, Risch, McConnell and I introduced a bill to ensure the Obama administration does not change the rules that allow companies to insure themselves against a medical claim that could bankrupt them.  

Any effort by the Obama administration to change the rules on companies that self-insure will break the president’s promise to millions more hardworking Americans. It won’t matter if they like their employer’s health care plans; many won’t be able to keep them.

It’s not just the private sector facing fiscal challenges because of Obamacare. Our nation’s schools, colleges, and universities are also being hit hard.

There’s no shortage of examples in Tennessee of local leaders dealing with the burdens of Obamacare:

·         Franklin Special School District has begun limiting substitute teachers to working four days a week, in order to avoid paying between $1 million to 4.5 million more per year in health care costs.

·         Maury County Schools is also limiting its substitute teachers to no more than 28 hours a week for the same reason. As one school board member told the local news, “Students struggle enough having one substitute teacher, but then now we’re going to have to possibly split the substitute time between two substitute teachers. It just makes it hard on the students to learn.”

·         Wilson County Board of Education wrote to tell me that Obamacare’s “reinsurance fee” will cost the district an additional $165,000 in 2014 alone.

·         At least nine other Tennessee school districts are reportedly limiting employee work hours or entire jobs, including:

o   Clarksville County Schools

o   Rutherford County Schools

o   Johnson City Schools

o   Carter County Schools

o   Washington County School District

o   Oneida Special School District

o   Scott County School System

o   Stewart County School System

·         Cumberland University in Lebanon, Tennessee, has adopted a new policy to limit adjunct faculty to no more than three courses each term – meaning that they will not be allowed to offer a course even if they are the most qualified instructor available.

The impact of Obamacare on education is by no means limited to Tennessee.  Investor’s Business Daily has identified well over 100 school districts and institutions of higher education nationwide that have made cuts and/or limited employee work hours because of Obamacare.  That number is climbing daily, again suggesting that this is just the tip of the iceberg.

Who pays the price for this? Our children. Cash-strapped schools simply do not have the resources to absorb these costs, so they’re forced to make difficult choices that will impact our nation’s education system.

For these reasons – broken promises, higher costs, fewer choices – Obamacare was an historic mistake. It expanded a health care delivery system we already knew cost too much, and left Americans with fewer choices.

Now, what would we do differently, as Republicans, if we could elect a Republican Senate in 2014, and a Republican president in 2016? We would repeal and replace Obamacare. We would replace it with step-by-step reforms reduce health care costs and put patients in charge by giving them more choices.

Here are some of the steps we would take to transform health care so Americans could afford it:

1.      Make Medicare solvent so seniors can depend on it to be there for them and their grandchildren.

2.      Give Governors more flexibility with their state Medicaid programs so they can lower costs, improve health outcomes, and have more money for other programs like education and roads.

3.      Strengthen innovative workplace wellness programs that empower employees with more incentives to make healthy lifestyle choices.

4.      Let small businesses pool their resources and offer lower cost insurance plans for their employees.

5.      Provide families the opportunity to purchase insurance across state lines, creating greater competition between insurance companies and lowering premiums for everyone. 

6.      Expand access to Health Savings Accounts and catastrophic health insurance plans, giving people more affordable insurance options that fit their lifestyles.

7.      Incentivize the growth of private health insurance exchanges to give consumers expanded health insurance choices and allow them to keep insurance between jobs.

8.      Make it easier for patients to compare prices and quality of doctors and medical services.

9.      Incentivize states to reform junk lawsuits that drive up health care costs for everyone and are driving medical professionals out of their profession.

When Irving Kristol died not long ago, James Q. Wilson wrote a tribute in the Wall Street Journal that struck me. He said that when they began their association as neoconservatives they were “policy skeptics.” He said that was their common view. And by that I think he must have meant that they did not believe that Washington could through a comprehensive piece of legislation fix our entire health care system, that what Washington should do – particularly in this iPhone age – is go step by step in a direction that allows for more personal freedom to Americans so they can live longer, live healthier, live safer, and be happier.

That’s what Republicans would like to do.

But unfortunately, at least 82,000 Tennesseans are losing their health policies this year, and that’s an unwelcome Christmas present. Even more unfortunately, an Unhappy New Year is coming in which hundreds of thousands of Tennesseans could lose the employer-sponsored policies they have and like when Obamacare’s burdensome mandates on employers kick in.

We’re ready to go in a different direction. We want to create a way for Americans to have more choices, more competition, and insurance they can purchase at a lower cost.

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