Smart Bombs: Election virus threatens health of Obamacare

Acute panderitis is attacking the Affordable Care Act, and this contagion could spread to the budget deficit and weaken efforts to control health care costs.

Republicans have picked at the law from the beginning, but now two Democratic senators running for president have joined in. Sens. Hillary Clinton and Bernie Sanders don’t want to repeal the law, but like the Republicans, they’re not above criticizing the financing without coming up with replacement dollars.

Is it any wonder Medicare Part D — the prescription drug coverage for retirees — passed Congress as a freebie? It’s so much easier to hand out goods and services and then put it on the federal credit card for future generations to pay off. Hence, the $8 trillion in accumulated debt politicians pretend to hate.

Whether you like the ACA or not, you have to give the authors credit for avoiding the easy path of deficit financing. Instead, it’s paid for in a variety of ways: savings from Medicare, a Medicare tax increase on wealthy households, a medical device tax, fees charged to health insurance providers and pharmaceutical companies, penalties for not buying coverage and an excise tax on “Cadlillac” health care plans offered by employers.

All of these have been the subject of repeal efforts, but the critics always fail to come up with alternatives. It’s like passing a massive transportation package and later repealing the taxes and fees. Everybody likes those new roads, buses and bike lanes. Nobody likes paying for them. Demagogues will exploit this. Responsible leaders should not.

Clinton and Sanders have said they would repeal the “Cadillac tax,” which is unpopular with labor unions, which are popular with Democrats. Unions are one of the beneficiaries of the long-standing tax incentive that encourages employers to increase benefits rather than salaries, because the former are tax-deductible.

But as economists note, this provides an incentive to overuse health care, which drives up costs for everyone. Under the ACA, a tax is applied to high-cost health care plans, the kind most workers don’t have. Here’s how the Kaiser Family Foundation describes it:

“Beginning in 2018, health plans that cost more than $10,200 for an individual or $27,500 for a family plan will be subject to the tax, which is 40 percent of the amount that exceeds those thresholds. For example, if a family plan costs $30,000, the employer that offers the plan would owe 40 percent of $2,500 ($30,000 minus $27,500), or $1,000 for each family it covers under that plan.”

Economists say that if the tax code didn’t favor benefits over paychecks, employers would offer less expensive plans and increase salaries. In turn, the incentive to use more health care would disappear.

The tax is expected to raise $87 billion in the first decade. If it’s repealed without a replacement, we can tack that total onto the budget deficit. After which alleged fiscal conservatives will carp: “See! We told you Obamacare would add to the debt!”

(The Congressional Budget Office has said that repealing the entire health care law would raise the deficit by up to $353 billion over the next 10 years. So the ACA more than pays for itself, a fact that fiscal scolds should trumpet. Check the books on Medicare and Social Security —two sacred-cow entitlements — and note how they fail to measure up.)

The government doesn’t offer incentives to move luxury gas guzzlers off car lots. It shouldn’t favor Cadillac health care plans either. It’s a poor prescription for curbing health care inflation and the budget deficit.

Associate Editor Gary Crooks can be reached at garyc@spokesman.com or (509) 459-5026. Follow him on Twitter @GaryCrooks.