IBC Practitioner Briefing:The State of the U.S. Economy

Robert P. MurphyDecember 17, 2013

I. Fed and Stock MarketI. Fed and Stock Market

Artificially Low Interest Rates Artificially Low Interest Rates

II. Long-Term Budget OutlookII. Long-Term Budget Outlook

Budget Components Budget Components

III. ACA TimelineIII. ACA Timeline

• 3/23/2010 Obama signs ACA into law• 10/1/2013 Open enrollment begins• 1/1/2014 Coverage begins• 1/1/2014 Individual mandate enforced• 3/31/2014 Open enrollment closes (now

need a “major life event” to apply)

IV. Major Planks, all “Mesh”IV. Major Planks, all “Mesh”

• “Universal” coverage

• Minimum standards in plans

• Community rating (for premiums)

• Employer mandate (50 or more full-time, meaning 30+ hours/week)

• Individual mandate Jan 1st 2014,

More on the Mandate More on the Mandate

• “Individual Shared Responsibility Fee”• Based on number of months DON’T

have coverage. Exempt if below 133% of federal poverty line.

2014: $95 per person per year or 1% of income

2015: $325 / person or 2% of income2016: $695 / person / year or 2.5% income2017: Increase w/inflation, or 2.5% income

V. Undesirable ConsequencesV. Undesirable Consequences

• Premium hikes (next slide)

• Employment drop

• Quality suffers, “death panels” (rationing)

• Possible for people to lose coverage!

VI. Feds vs. Heritage FoundationVI. Feds vs. Heritage Foundation

VII. CBO ReportVII. CBO Report

A. Notes on CBO TableA. Notes on CBO Table

• The gross cost to feds of offering ACA insurance coverage (including tax credits) is $1,677 billion; table has net cost of $1,171 because of mandates penalties and tax on “Cadillac” plans.

• “Direct Spending” includes ACA’s projected cutbacks on doctor/hospital reimbursements

• Other revenues includes “Medicare” surtaxes 3.8% investment income and 0.9% payroll

B. Tax on “Cadillac” PlansB. Tax on “Cadillac” Plans

• Starting 2018, 40 percent excise tax on cost of plans in excess of $10,200 for individuals and $27,500 family.

• Ostensibly limits low-deductible and high cap plans to contain medical costs, but what about sick employees?!

• EXACT OPPOSITE of minimum standards. ACA hits both ways.