Freedom Line Blog

This morning Healthcare.gov – the federal ObamaCare website serving citizens in 34 states – went down for four hours, stymieing customers from accessing or completing their applications for insurance.

NBC News reports that people unable to log onto the website were put in a “queue,” meaning they would be notified by email when they could resume the enrollment process.

But with the deadline to begin an application (supposedly) ending at midnight, what will happen to people unable to return to their computer screens after the lengthy delay? Last week’s extension to mid-April only covers people who start the process for enrolling by the end of March. If other commitments – say family or work responsibilities – don’t allow an applicant to return, what then? How will federal regulators distinguish between people who never tried to use Healthcare.gov and those that did, but for various reasons beyond their control couldn’t finish?

If history is any guide, don’t expect the feds to make a distinction. More likely, the response sometime soon will be a blanket extension for enrollment that allows anyone – without precondition – to complete the process.

Then it will be the IRS whose head will spin. When it comes to enrolling on an ObamaCare exchange, the carrots are the subsidies and the sticks are the fines. Any adult that goes without health insurance for three consecutive months is subject to a fine of $95 or 1 percent of her annual income, whichever is higher. And since that fee gets levied at next year’s tax filing, it will be the IRS’ job to sort out who is subject to the penalty.

That is, as soon as the political operatives in the Obama administration decide when enrollment really, really – no really we’re serious this time! – ends.

Megan McArdle posits three reasons why the Obama administration extended the enrollment deadline for purchasing insurance through Healthcare.gov, the federal ObamaCare exchange.

The most interesting, and to my mind most plausible, is that pushing the deadline into mid-April will make it more difficult for insurers to calculate next year’s premiums.

“Extending open enrollment, which is essentially what they’re doing, would then be a desperate play to get more young, healthy customers into the exchanges, and perhaps to make it a bit harder for insurers to raise rates,” writes McArdle. “In some states, insurers have to file preliminary rate increases in May. And thanks to this latest extension, they won’t have final data to back up any requests for a premium hike.”

Originally, the Obama administration estimated it needed 40 percent of enrollments to be from young and healthy people to avoid rate spikes the following year. With the current mix stuck at only 25 percent, insurers are signaling that prices will go up next year to cover the likely costs of insuring an older and sicker population than anticipated.

But with this extension the Obama administration is putting insurers in a bind. Do they assume the 25 percent number will hold and justify rate increases to state regulators using that assumption? Or do they wait and see if a last-ditch push to inflate the number of young and healthy enrollees reaches the magic 40 percent threshold?

The dilemma for the insurance companies is just the most recent example of how bending the law for one group punishes another. True, many people won’t mind that insurance carriers are the ones holding the bag this time, but that just underscores the growing lack of resistance to arbitrary regulation. Today, it’s unpopular insurance companies. Tomorrow, it’s you.

“Is something less true if a white person says it about black people?”

That was the question liberal comedian Bill Maher asked on his show in relation to Paul Ryan’s recent comments about the link between poverty and culture.

Just prior Maher read a quote which he attributed to Ryan “about how lazy kids are these days and how they need to aspire to be more than ‘ballers’ and ‘rappers,’” reports Mediaite. But then Maher revealed he was quoting Michelle Obama – not Ryan.

The point Maher made was that black political figures get a pass for speaking hard truths on certain issues while their white counterparts do not.

Rich Lowry gives even more examples of this double-standard by quoting then-Senator Barack Obama.

Imagine the reaction from liberals if Ryan had said the following instead of the current president: “We know that more than half of all black children live in single-parent households… We know the statistics – that children who grow up without a father are five times more likely to live in poverty and commit crime; nine times more likely to drop out of school and twenty times more likely to end up in prison.”

Anyone who follows politics knows that had Ryan said this, the statement and the (completely unmerited) backlash that would greet it would likely define and limit the rest of his career. Aside from Barack Obama’s speechwriter at the time, no one else probably remembered he ever made these remarks until Lowry unearthed them.

The irony of the identity politics double-standard is that neither Barack Obama nor Paul Ryan has been able to speak truth to power and get results. Instead, Obama is ignored while Ryan gets flayed for motives he doesn’t have. The only way to break the logjam is for the president to defend Ryan’s diagnosis, even if he doesn’t agree with the House Budget chairman’s remedy.

Certainly then America would sit up and listen.

Viewed in the most favorable light, the Obama administration’s decision this week to extend ObamaCare’s enrollment deadline into the middle of April is a measure of justice to people forced to buy health insurance but unable to complete the transaction because of lousy government websites. Simply put, it’s just wrong to penalize people for failing at a task the government makes it impossible to do.

However, for every person receiving his due there are others getting the shaft. For example, consider all the people who diligently signed up for coverage last fall, spending hours surfing through glitch-prone websites and incoherent call centers, all because the Obama administration swore up-and-down that insurance had to be purchased by mid-December if coverage was wanted on January 1st. And then the deadline was extended.

Recall that millions of people lost their individual and family plans because they didn’t comply with ObamaCare’s heightened benefits mandates. Responsible customers swallowed hard and leapt into an ObamaCare exchange because the government said so. And then the Obama administration decided not to enforce its own law.

And let’s not forget the insurance companies, business owners and tax experts who spent thousands of hours trying to comply with ObamaCare’s deadlines and mandates only to watch those who did little or nothing to prepare get rewarded with delay after delay, or as we used to say during the last Bush administration, bailout after bailout.

So while it is true that it’s unjust that people should be penalized for government’s failures, it is equally unjust to punish those who are trying valiantly to play by the rules but then get hosed by last minute changes. The takeaway here is that the implementation of ObamaCare is destroying the incentive to take the government at its word. If this becomes its legacy, the law will be far more destructive than anyone thought possible.

The road to underemployment is paved with (so-called) good intentions.

In case you missed it, the Obama Labor Department is trying to raise the compensation threshold so that managers making at least $50,000 annually will qualify for overtime pay. The current threshold is $24,000.

To the liberal mind this policy change can only benefit workers by putting more money into their pockets. But to actual business owners like Andy Puzder, the real world consequences will mean less money and less work for the very people the Obama administration is trying to help.

Writing in the Wall Street Journal, Puzder – the CEO of several quick service restaurant chains like Carl’s Jr. and Hardee’s – notes that current managers are eligible for performance bonuses of up to 28 percent of their salary. But if the new overtime rules go into effect, many of these will lose their managerial status and go back to hourly employment. Along with being demoted, they will very likely be assigned less hours to work to avoid triggering more expensive overtime pay. And for those that do qualify, their raise will translate into less money for the store’s operating budget, meaning less hours for someone else.

In a very tangible way, the Obama Labor Department’s new overtime rule seems destined to exacerbate the underemployment crisis in the American economy. How is is that the people proposing this can be so short-sighted?

First the feds, now the states.

“To be clear, the state says it’s not an extension of the open enrollment period scheduled to close March 31. Only Marylanders who made an attempt to enroll by March 31 will get more time if they call a state hotline by that day. All four insurers selling on Maryland’s exchange agreed to the special extension,” explains the Washington Post.

Oregon and Nevada are also weighing whether to grant extensions for enrollment. Like Maryland, their residents have found it extremely difficult to complete the sign-up process for subsidized ObamaCare plans due to glitch-prone public websites.

Of course, anyone who’s watched the news since last October knows that the federal exchange – Healthcare.gov – has been notoriously difficult to use. So perhaps it’s no wonder that the Obama administration is considering granting its own extension to allow enrollment to continue after the original drop-dead date.

Granted, it’s not an individual’s fault that a government’s website is impossible to use. And it’s unfair in the extreme to turn around and penalize the same person when a government-imposed deadline passes without the mandated sign-up. But perhaps news of an extension would be easier to swallow if it wasn’t grouped with more than 30 other intentional delays that further complicate the law.

The news of enrollment extensions isn’t surprising. In its most basic elements, ObamaCare doesn’t work. But for its supporters propping it up with all kinds of extra-legal maneuvers, the law would collapse under the weight of its failed promises.

The Hill is reporting that ObamaCare’s politically-motivated delays may come back to bite Democrats this fall.

“[One] insurance official, who hails from a populous state, said his company expects to triple its rates next year on the ObamaCare exchange.” And, “In Iowa, which hosts the first presidential caucus in the nation and has a competitive Senate race this year, rates are expected to rise 100 percent on the exchange and by double digits on the larger, employer-based market,” says the website. (Emphasis added)

The spikes are coming primarily for two reasons. First, the percentage of young and healthy people enrolling for coverage is too low to off-set the cost of care for older and sicker enrollees. Second, insurance companies don’t trust the Obama administration to follow the law.

Delaying parts of ObamaCare that force people to do things they don’t like – such as pay more for less generous plans – feels good politically, but it skewers carefully laid business plans that rely on the government to faithfully apply its own regulations.

After watching the Obama administration change the rules at the eleventh hour this year, insurance companies are hedging their bets by passing the costs of arbitrary regulation onto consumers, starting with next year’s premiums.

The Democrats’ midterm dilemma is really a refusal to engage in delayed gratification. Had the Obama administration stood firm and applied the law as-is, an entire year would have elapsed before the party that passed ObamaCare would be held accountable. By then, people might have grown used to the frustrating parts of the health law, much like they have with the never-ending delays. But now, fiscal reality is staring Democrats in the face. And thanks to their backstabbing of the insurance industry, they have no one to blame but themselves.

There is a lot of misreporting with ObamaCare numbers as the open enrollment period draws to a close March 31.

Consider these two examples from California.

First, Covered California – the state’s ObamaCare exchange – announced recently that more than 1 million people had applied for coverage and chosen an insurance plan. Liberal bloggers at the Daily Kos are cheering this news as a triumph. Before the enrollment period began last October, the state set as a goal 696,000 enrollments by the end of March. At 1,018,315 as of the end of last Saturday, ObamaCare supporters think they are 300,000 over their goal.

Except Covered California isn’t anywhere close. Look again at the goal and the announcement. California wants at least 696,000 people to be enrolled by the end of March. To date, they have over 1 million people who have applied to be enrolled. That’s not the same thing. In fact, in speaking recently to a source at Medi-Cal – the state’s Medicaid program – I was told that thousands of applications are in limbo across the state because computer systems at the state and county levels don’t talk to one another. This impacts Covered California’s numbers because many of the uninsured applying for insurance through the exchange qualify for the state’s expanded Medicaid program. To compensate for the technology failure, caseworkers are processing emergency requests by hand. So to recap, don’t be fooled by news about applications posing as enrollments.

The other example of misreporting is on the type of coverage most enrollees are choosing. The most popular plans also cost the least. That’s not surprising since ObamaCare requires people to purchase health insurance or pay a fine. On one hand, the increased number of policyholders does allow ObamaCare supporters to say the law is covering more people. But at what price? “[E]xperts worry plans with lower premiums could come with a different cost: Fewer doctors and hospitals could mean fewer choices and longer waits for care,” reports the San Jose Mercury-News.

Lower premiums also mean higher out-of-pocket costs. I’ve written previously about how reporting on lower-than-expected premiums ignores across-the-board spikes in deductibles. The IRS says that annual deductibles larger than $1,250 should be considered high. On California’s exchange, it’s common for the lowest priced plans to have deductibles in excess of $2,000 annually (and some as high as $4,500 or more).

When all the dust settles after March 31, it’s very likely that California won’t have hit its enrollment goal, and that of the enrollees it does have many will come to loathe the longer wait times and higher costs. Maybe then we’ll get more help from journalists in how ObamaCare insurance actually works. But probably not.

That is the interesting idea being floated by commentators looking for ways to halt Russia’s military adventurism in Ukraine.

If direct military intervention is off the table – and at this point it’s hard to imagine the Obama administration going that route – then exporting America’s vast new reservoir of liquefied natural gas to Europe could be a way to deter Russian aggression in the region while at the same time strengthening our allies.

Gazprom, a huge state-controlled gas provider in Russia, supplies much of Europe. Hesitancy on the part of some European governments to respond to Russia’s invasion of Ukraine is tied to Russia’s use of Gazprom to raise prices or restrict access when confronted with political situations it does not like. Increasing United States exports of its natural gas stock to Europe would diminish this threat substantially, allowing America’s European allies to take a more assertive stance against further Russian force.

In order to wean Europe off of Russian gas, President Barack Obama “should order the Energy Department to expedite authorization for roughly 25 liquefied natural gas export facilities. Demand all decisions within six weeks. And express major U.S. support for a southern-route pipeline to export Caspian Sea gas to Europe without traversing Russia or Ukraine,” writes Charles Krauthammer.

This solution puts an abundant natural resource to work for America’s national security interests, and also increases the number of domestic production and manufacturing jobs. The only hitch is that it requires President Obama to commit his administration to an energy policy opposed by liberal environmentalists. That alone probably dooms an otherwise win-win alternative to direct military intervention or sitting pat while Russia reconstitutes the Soviet Union. If so, it’s more confirmation that current Oval Office decisions are based more on pleasing special interest groups than helping domestic workers or our foreign allies.

The latest ObamaCare delay guarantees that the law’s arbitrary implementation will be a huge issue in the 2016 presidential campaign.

“The change was included in last week’s announcement that the government would let people keep otherwise out-of-compliance health plans for another two years,” reports Fox News. “Buried in the official memo was a line giving people whose policies were canceled a ‘hardship exemption’ through October 2016.”

That means no who qualifies for this exemption has to pay a fine under the individual mandate until President Barack Obama is leaving office.

Talk about forcing someone else to do make all the hard decisions. Because of the current president’s refusal to shoulder the burdens of implementing his own law it seems like a certainty that the campaign to succeed him will be dominated by questions he can’t bear to answer now.

In short, get used to ObamaCare being a flashpoint in our politics for a long time to come.

And it just so happens to be the most crucial.

With only 4.2 million of the original 7 million Obamacare exchange enrollees confirmed, officials at the Department of Health and Human Services were asked yesterday whether they would extend the March 31 deadline.

“We have no plans to extend the open enrollment period,” responded an HHS official, according to the Weekly Standard. “In fact, we don’t actually have the statutory authority to extend the open enrollment period in 2014.” (Emphasis added)

Of course, none of the controversial Obamacare delays are rooted in the law’s statutory text. When pressed for an explanation of how the enrollment deadline is different from the extra-legal delays of the individual mandate, employer mandate, small business exchange, Cadillac tax and thirty other extensions, the HHS spokespeople had no credible response.

The question remains, though, Why not extend the enrollment period in order to get more sign-ups? My guess is that broadening the enrollment timeline would quickly destroy the Obama administration’s ability ever to impose another deadline. As we saw last week with the second yearlong delay allowing non-compliant individual plans to continue, once an exception is made the firmness needed to impose a new drop-dead-date disintegrates. Rules become subject to whim not reason.

And make no mistake, if the Obama administration folds on this deadline the whole logic of Obamacare crashes and burns. If there is no penalty for non-enrollment then there is an incentive for each person to wait until he or she gets sick before buying health insurance. To participate on an Obamacare exchange an insurance company must accept whoever wants to buy a plan. Insuring sick people at the point of sale is no longer insurance since every purchaser needs the service immediately. For Obamacare to work as designed, however, the law and its insurance company partners need a majority of people paying for benefits only a minority will access.

That’s the real reason the Obama administration won’t delay the March 31 enrollment deadline. It can’t afford to.

With California’s tax policy, the only certainty is that consumers will lose money.

The latest example is the growing fight over whether to include fuel distributors in the Golden State’s controversial global warming regulatory scheme. Doing so would subject them to the same cap-and-trade system applied to industrial facilities, and could add between 12 – 40 cents-per-gallon to fuel purchases within the next year. The leading alternative would opt for a flat 15 cent-per-gallon carbon tax, which grows to 40 cents by 2029.

In short, California lawmakers have agreed that gas should cost an additional 40 cents-per-gallon. They’re just torn over how long to wait before imposing it on taxpayers.

This is what passes for deliberation in a state dominated by tax-and-spend liberals.

No wonder the middle class is fleeing in droves.

The Hill is reporting that the Obama administration will extend for an additional year the ability of insurance companies to offer consumers plans that do not comply with Obamacare requirements. The current one-year extension is set to expire in October of this year, about a month before the 2014 midterm elections.

It is universally acknowledged that the reason for the extended extension is so that Democrats up for reelection can avoid having to explain to voters why the cheaper insurance plans they like are being canceled and replaced with more expensive options.

As one insurance industry source told The Hill, “I don’t see how they could have a bunch of these [cancellation] announcements going out in September, [n]ot when they’re trying to defend the Senate and keep their losses at a minimum in the House. This is not something to have out there right before the election.”

When the legality of a person’s health insurance depends on the timing of a political campaign, it’s obvious that health care has become politicized.

But while subjecting millions of Americans’ insurance plans to the expediency of a political party is certainly bad, the fact that no year seems to be a good year to fully implement Obamacare offers something like a silver lining. The whole point of terminating non-compliant insurance plans between October 2013 and January 2014 was to inflict maximum damage a year before voters went to the polls. The thinking was that other issues would eventually overshadow the anger and price spikes, allowing Democrats to avoid the consequences of entrenching their favorite policy.

Going forward, it’s hard to see how the Obama administration won’t become addicted to its own avoidance behavior. Though barred from seeking a third term in office, Obama will be under enormous pressure from Hillary Clinton and other Democratic presidential candidates, as well as members of Congress, to continue delaying enforcement until after the 2016 elections. After all, letting Obamacare go into effect will provide Republicans with a perfect campaign issue. Why not keep it off the table?

However, if that’s the tack they take it paves the way for another GOP line of attack – If Obamacare is too horrid to live with before an election, it certainly can’t be tolerated after.

After years of politicizing medicine by not enforcing its own law, the Obama administration may succeed in convincing Americans that Obamacare isn’t worth the pain it will inflict.

Up to 38% of people who qualify for Obamacare exchange subsidies may have to pay some or all of the money back to the IRS. That’s because the amount of subsidy dispensed is based on a sliding scale. As income rises, the amount of subsidy decreases. In practice, many people who currently qualify for a subsidy could wind up paying back the amount if they earn just a little bit more in income.

“At biggest risk are people who annual household income put them near the thresholds where the Obamacare subsidies make steep declines,” explains AEI expert Scott Gottlieb. “These cliffs are steepest for those people who earn 150% of the federal poverty level (family of four earning $35,000 in annual household income); 250% (a family of four earning about $55,000 annually); and 400% (a family of four earning about $95,000 annually).”

The upshot of this is that people may become much more sensitive to family budgeting since their financial stability depends on which side of the subsidy wall they fall. The downside of course is that we’re likely to start seeing people decline job promotions and salary hikes to avoid becoming a net loser at tax time.

As I’ve noted before, Obamacare’s War on Work is just beginning.

“Tucked deep in the Affordable Care Act is language requiring all restaurants with at least 20 locations to list nutritional information alongside each and every item on the menu,” writes Peter Doocy at Fox News.

The purpose is to inform customers about the nutritional value of a menu item before ordering.

This regulation hits made-to-order eateries particularly hard, since in practice the restaurant would have to provide customers with things like calorie counts on-the-fly – a nearly impossible task for places like Domino’s where up to “34 million different pizza combinations [are] available at the chain, when all crusts and cheeses and toppings are factored in.”

To make matters worse, the cost of compliance will fall on franchisees; i.e., the small business owners most at risk under the new regulation.

Domino’s and other groups are pushing for a solution that would deem restaurant owners compliant if they provide the nutritional information online or through an app.

But if that fails, it’s easy to see eateries cutting back on menu options and clamping down on substitutions. “Have-it-your-way” may soon become “Talk to the FDA.”

If the proposed nutritional rule goes into effect as-is, Americans can add food to the growing number of health-related choices – including doctors, hospitals and insurance plans – that are being reduced thanks to Obamacare.

Pay now or pay later.

That’s the choice facing millions of Americans required by Obamacare’s individual mandate to select a health insurance plan through a state or federal exchange.

Insurance companies like Aetna, Humana and Blue Cross and Blue Shield who are participating on various exchanges report that the most popular choices among consumers are middle-of-the-road “silver” plans that typically offer moderate premiums but high deductibles and coinsurance.

Deductibles require policyholders to pay all of the cost for medical care up to  a certain threshold before the insurance company assumes responsibility, while coinsurance commits the policyholder to paying a certain percentage for the cost of medication. (Co-pays, on the other hand, are capped at a flat amount.)

The increased costs are likely to reduce the number of doctor and hospital visits as consumers become choosier. “When deductibles and co-payments are high, patients tend to think twice about their health care purchases, making them more likely to shop around for the best deal,” says health policy expert Bruce Japsen.

Indeed, basic economic theory teaches that knowing the price of something impacts a person’s behavior significantly. But while this may help people who would otherwise overuse health care to scale back, it can – and most likely will – have the effect of convincing people to underuse necessary treatment options for fear of the cost. Thus, we could end up with more people covered by health insurance but a more unhealthful population.

One of the key policy battles on the horizon is how to harness this new transparency in health care prices. Liberals will likely want to subsidize health care until they can socialize the entire industry. Conservatives will be predisposed to favor a market-based solution. But simply repealing Obamacare and its disastrous tax on medical devices, among others, and saying “let the market figure it out” won’t be enough – especially in a campaign context.

Some conservatives may favor working within the system to incent both consumers and health care companies to better align need and cost. Others may prefer to explore deregulating parts of the industry, such as allowing physician assistants and qualified nurses to do more of the work of a doctor while still under supervision (perhaps remotely via technology). These and other ideas need to be deliberated on intensely now so that conservatives aren’t caught off-guard when the electorate is ready for an Obamacare alternative. If not, we’ll all pay dearly for lacking a consensus at the moment we need it most.

“There is absolutely no evidence – and every economist will tell you this – that there is any job loss related to the Affordable Care Act [i.e. Obamacare],” Kathleen Sebelius said earlier this week.

The Health and Human Services Secretary was responding in part to a report by the Congressional Budget Office estimating that President Barack Obama’s signature domestic policy will result in 2.5 million job losses by 2024.

The only explanation that renders Sebelius’ statement (barely) plausible is her phrasing in the present tense: “no evidence… that there is any job loss related to” Obamacare. Sebelius is talking about the present, while the economists at the CBO are projecting into the future.

But even this generous reading won’t survive the fact that Obamacare has already killed 33,000 jobs in the medical device industry, according to the Advanced Medical Technology Association.

Thanks to a 2.3 percent excise tax on each medical device sold since January 2013, industry members report shedding 14,000 jobs, with an additional 19,000 openings left vacant.

The biggest losers were research and development branches, and manufacturing. Regarding the latter, 10 percent of companies surveyed said they moved their plants overseas.

These numbers show just how democratic is Obamacare’s impact on jobs. R&D positions are some of the highest paid in a firm, while manufacturing jobs can range from low- to middle-income.

On the bright side, to date the medical device tax has netted the federal government a cool $3.8 billion, so at least Secretary Sebelius has some extra money to funnel through Medicaid and Obamacare exchange subsidies.

Somehow though, decreasing the number of jobs and increasing the amount of tax revenue doesn’t seem like a long-term formula for success.

Maybe an economist should tell Madame Secretary.

Don’t know much about American history?

Blame the federal government.

Back in 1968, Congress and President Lyndon Johnson agreed to move Veterans Day, Memorial Day and George Washington’s birthday to designated Mondays to ensure three-day weekends throughout the year. Since the change would mean that Washington’s birthday (February 22nd) would never be celebrated on the prescribed third Monday of February, the new holiday became known as Presidents Day.

The motivation was primarily economic.

“The three-day weekend was favored by federal workers, private sector labor unions, the National Association of Manufacturers, the U.S. Chamber of Commerce, and an array of tourist-related industries and trade associations,” writes Carl Cannon. “It was even pro-family, its backers proclaimed. It was a win-win-win.”

The results were predictable. Today, many people don’t know that we celebrate the living on Veterans Day and the fallen on Memorial Day. Others don’t realize that some presidents – like George “Father of His Country” Washington and Abraham “Savior of His Country” Lincoln (born Feb. 12th) – deserve more attention and appreciation this time of year than their Oval Office brethren.

One way to overcome this misconception in the future is to acquaint one’s self with some of the best works on Washington and Lincoln. Ron Chernow and Richard Brookhiser have well regarded biographies on Washington. Harry Jaffa has two outstanding books on Lincoln.

Reading any of these ahead of next year’s edition of Presidents Day will go a long way toward reclaiming part of what makes America exceptional – Her exceptional leaders.

A new report by the non-partisan Congressional Budget Office predicts the Affordable Care Act (i.e. Obamacare) will cause up to 2 million lower-income workers to leave the labor force over the next decade because they will make more in government benefits than as a private employee.

“CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor – given the new taxes and other incentives they will face and the financial benefits some will receive,” the agency says in Appendix C, Labor Market Effects of the Affordable Care Act: Updated Estimates (pdf).

The incentive to drop out of the workforce is one’s eligibility for a government subsidy to help pay for an insurance plan bought through an Obamacare exchange. Since eligibility for a subsidy phases out as a person’s income rises, people who will receive subsidies will have to factor in whether to take a job that makes more money, but will likely reduce or eliminate eligibility. In this scenario, taking the job may actually result in a net loss of income as the person must now pay for the full cost of health insurance.

The disincentive to work also applies to those hanging between Medicaid and Obamacare subsidies. Eligibility for Medicaid means the cost to the beneficiary is nothing (at least not directly). In this scenario, qualifying for a subsidy increases one’s out-of-pocket expenses, making it financially smart (for the individual) to work less and stay on Medicaid.

It’s important to emphasize that deciding to work less to receive more in government benefits is a financially rational decision for individuals to make, and one that any economist would readily predict. My hunch is that at least some of Obamacare’s architects knew this and designed their programs accordingly.

The problem, of course, is that convincing millions of people not to work is not financially sustainable for the country as a whole.

“Health economists worry that mergers could end up increasing what you pay. Hospital systems can often negotiate higher rates with insurers for the same care,” says a report at CNN Money.

The mergers in question are the result of an incentive structure within Obamacare that gives financial rewards to doctors and hospitals that create “Accountable Care Organizations” (ACOs) that, according to the report, “coordinate treatments with the goal of delivering quality care for less.”

In order to increase their eligibility for ACO benefits, hospitals across the country are scooping up individual and small group medical practices. The reason this may be bad for patients is that mergers allow hospitals to increase their market share, giving them greater leverage to negotiate higher rates with insurance companies. Cigna, a health insurance company, has seen bills for routine procedures spike 300 percent to 500 percent after a hospital acquires a practice.

Of course, those increased costs are passed on to patients, many of whom may not realize it until they get hit with a new “facility fee” that tacks on $75 to $150 for a routine visit.

One would think that a program designed to deliver “quality care for less” would pass on the savings to the patient. Instead, it looks like patients will pay more while the federal government rewards hospitals for cornering the market.