Obama misrepresents the state of U.S. health care

In his recent State of the Union speech, the president didn’t spend much time defending his controversial health reform law. But he did relate the stories of two individuals who have supposedly benefited from his overhaul of American health care.

They might be the only ones, as both profited from programs that have otherwise proved dismal failures.

The president first highlighted the case of James Howard, a 28-year-old uninsured cancer patient who was able to secure coverage through a government-chartered high-risk insurance pool created by the law. “What I’m not willing to do,” President Obama said, “is go back to the days when insurance companies could deny someone coverage because of a pre-existing condition.”

The president neglected to mention that Howard was one of only a handful of folks who have enrolled in the vaunted program.

To make their case for the health care overhaul, Obamacare’s advocates cited supposedly large numbers of Americans with pre-existing conditions like Howard who had been denied coverage.

The law empowered the Department of Health and Human Services to create an insurance program for those who were unable to get policies on the private market — and provided funding to states who wanted to set up their own high-risk pools.

These temporary pools will expire in 2014, when the state-sponsored health insurance exchanges launch. In that year, insurers will also be barred from denying coverage to individuals with pre-existing conditions.

HHS predicted that 375,000 Americans would apply for coverage in the pools in 2010. But applications from just 8,000 people trickled in. That’s 2 percent of the projected enrollment.

Indeed, the Wall Street Journal noted that just a single person from North Dakota applied for health insurance under the new program.

President Obama crowed about how his health reform law would guarantee that everyone with a pre-existing condition — some half of all Americans, according to his administration’s latest report — could find coverage. Apparently, only 8,000 people were experiencing such problems.

Despite the low enrollment numbers, states are plowing through the cash Obamacare gave them to run their pools. New Hampshire’s pool, for instance, has just 80 members, but the state has spent nearly twice as much as the feds earmarked for them.

The president also used an anecdote to trumpet himself as a friend to small business. He pointed out Jim Houser, the owner of an auto shop in Portland, Ore., as a beneficiary of the new law’s tax credits for small businesses looking to provide health insurance to their employees.

“I’m not willing to tell Jim Houser, a small business man from Oregon, that he has to go back to paying $5,000 more to cover his employees,” the president said. Houser is certainly a lucky man, as he’s one of a handful of small-business owners who is actually eligible for Obamacare’s tax credits.

Only companies with fewer than 10 employees who make an average of less than $25,000 annually will be eligible for the full tax credit. The credit’s value decreases once a company’s work force increases beyond 10 employees. Companies with more than 25 workers — or with an average salary of $50,000 or more — are ineligible.

Countless small firms are thus excluded. Indeed, the Congressional Budget Office estimates that the credits will help just 12 percent of people in the small-group market. The National Federation of Independent Business projects that one-third of small businesses will qualify for the credit.

Worse, the credits effectively penalize businesses for creating jobs. At some point, many businesses will have to decide whether to hire more workers or continue to offer health insurance.

Fortunately, U.S. District Judge Roger Vinson just ruled that the individual mandate — as well as the entire health reform law — are unconstitutional in a suit brought by 26 states and the NFIB. If his ruling stands, the next president’s first State of the Union address may not be punctuated with health care horror stories after all.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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