Tuesday, July 30, 2013

Thanks to ObamaCare Detroit's inability to pay for yesterday's party will be forgiven by you and your next door neighbor. The same is expected in Chicago and other places

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7/29/13, "Detroit Shows How ObamaCare Will Bankrupt the Country," IBD Editorial

"Looks like Detroit might get a federal bailout after all, by offloading its retiree health costs onto federal taxpayers via ObamaCare. It's a window into why Obama-Care costs will quickly spiral out of control. 
On Sunday, the New York Times noted that Detroit hopes to push its younger retirees who aren't yet eligible for Medicare into the ObamaCare exchanges, where many will be eligible for subsidized insurance. Federal tax payers will pick up the tab, rather than those in Detroit. (IBD's Jed Grahamfirst wrote about this last month.)

One of the first to suggest this clever cost-shifting idea was Chicago Mayor Rahm Emanuel, who was in the Obama administration while it was putting ObamaCare together. In May, he revealed plans to save about $108 million a year by tossing 30,000 retirees into the ObamaCare exchanges.

If Detroit and Chicago get away with this, you can bet other cities will try, too. The U.S.' 61 largest cities have more than $118 billion in unfunded retiree health care liabilities, the Pew Charitable Trusts estimates.

And the National League of Cities is practically drooling over the opportunity to shift as much as possible onto ObamaCare.

"It offers a very high-quality, potentially very affordable way to get people into health care without the burden falling back on to the city and town," NLC's program head Neil Bomberg told the New York Times.

Cities aren't the only ones to realize this ObamaCare opportunity. The Congressional Budget Office figures that private companies will dump millions of workers into the exchanges, either by eliminating jobs, cutting hours or dropping benefits.

A recent example is Wegmans, a Northeast-based upscale grocery chain that used to offer health benefits to part-time workers who put in as few as 20 hours a week. Come next year, those workers will have to buy their coverage in the ObamaCare exchanges instead.

Brian Murphy, a partner at a Buffalo, N.Y., insurance brokerage firm, called Wegmans' move "a win-win" because "the employee gets subsidized coverage, and the employer gets to lower costs."

To be sure, these cities and companies are merely responding to the perverse incentives that were, either accidentally or by design, built into ObamaCare. But this is only a "win-win" if you ignore the fact that someone has to pay. And that someone is federal taxpayers.

ObamaCare costs are already running ahead of plan, and as more cities and businesses try to dump their health care problems into it, ObamaCare's costs will explode. That, in turn, will force additional rounds of massive tax hikes, or trillions more in federal debt.

Either way, economic growth will be stunted, making ObamaCare a lose-lose for everyone."

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Ed. note: Please excuse bright white background behind this post. It was put there by google hackers.

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