Health and Human Services Secretary Kathleen Sebelius hopes you will believe her and not your own eyes, as she pens an op-ed in the Washington Post deceptively entitled, “The Affordable Care Act, helping Americans curb health-care costs.”

Health costs are rising, as we all can see, and independent analysts confirm they will accelerate under Obamacare.

Nonetheless, Sebelius claims that if we will just be patient, Obamacare will help lower health costs “in three ways: by increasing insurance-market competition, assisting those who can’t afford coverage, and tackling the underlying cost of medical care.”

The law is doing exactly the opposite, of course. The Congressional Budget Office projects that a family purchasing its own insurance will pay $2,100 more a year for a policy under Obamacare than they would have paid if the law had not passed. The president repeatedly promised the American people that he would cut a typical family’s premium $2,500 a year before the end of his first term. That misses the mark by $4,600 a year.

Costs already are rising faster than they did before the law was enacted in March 2010. A Kaiser Family Foundation survey found that premiums for a family policy topped $15,000 a year in 2011, increasing an average of $1,300 in the last year — three times faster than the year before.

A number of factors contribute to rising health-care costs, but the mandates, taxes, and regulations in the health-care law are accelerating the trend. The premium increases reflect the law’s early provisions, such as “free” preventive care and adding “children” up to age 26 to their parents’ policies. Consumers may like these features, but they come at a cost.

The many Obamacare mandates to come will raise premiums even further. The $500 billion in new taxes in the law will further fuel premium increases, including a new tax on health insurance that took effect January 1.

Analysts at the Congressional Budget Office estimate that the average policy for those who get health insurance through the workplace will cost $20,000 a year for a family of four by the year 2016. And obtaining health insurance will not be optional, since everyone will be required to have coverage or pay a fine. Yes, there would be subsidies, but they would be financed by higher taxes, cuts to Medicare, and, most likely, more deficit spending.

Facts are stubborn things. Health insurance is consuming a bigger share of employer budgets, preempting pay raises and pushing higher costs onto employees.

The American people know their health costs are rising, despite Secretary Sebelius’s claims to the contrary, and Obamacare is making it worse.

Oregon Democratic senator Ron Wyden is getting hammered by the White House for his courageous move to join House Budget Committee chairman Paul Ryan in co-sponsoring the best Medicare-modernization proposal yet.

The Ryan-Wyden plan would move Medicare to a more modern defined-benefit program and give seniors a choice of competing plans — plans that would have an incentive to innovate and produce the best care at the best prices. Seniors would be guaranteed coverage, including traditional Medicare, and lower-income seniors would get extra help, including a funded account for out-of-pocket expenses. Prices would be determined by the marketplace, not Washington’s price controls. It also creates a path to a more seamless transition from job-based private insurance to Medicare.

Importantly, Ryan-Wyden plan builds on the structure that has had bipartisan support for more than a decade and which virtually everyone who has studied Medicare reform agrees is the platform to save the program from bankruptcy and from bankrupting the federal government.

This shows, once again, that Senator Wyden is a serious legislator concerned about good policy, and it also shows that legislative proposals are improved when Republicans and Democrats work together. This is the platform for reform moving forward.

The White House has been cutting in its attacks on Senator Wyden for daring to talk policy when the president is fully focused on politics. The voters are tired of the political games. That time is over. We need to get serious about reform, and this is the most serious proposal yet.

President Obama himself has acknowledged that “if you look at the numbers, then Medicare in particular will run out of money and we will not be able to sustain that program no matter how much taxes go up. I mean, it’s not an option for us to just sit by and do nothing.”

Yet the president proposes we do nothing. If we stick with the Medicare cuts already in law, seniors will see Medicare payments to doctors cut to Medicaid rates, making it extremely difficult to find a doctor to see them, and 15 unelected bureaucrats at the Independent Payment Advisory Board will be put in charge of rationing care through deeper payment cuts. The president does not have a serious or credible solution.

Democrats seem most distressed that, while the Ryan-Wyden plan gets the policy right, it weakens their attacks against Republicans. The New York Times reports: “Democrats expressed concerns about the proposal based on policy and politics. A senior Democratic Congressional aide said, ‘This plan gives bipartisan political cover to Ryan and other Republicans against whom we have been waging a very successful political offensive.’”

White House communications director Dan Pfeiffer piled on:

The Wyden-Ryan scheme could, over time, cause the traditional Medicare program to ‘wither on the vine’ . . . At the end of the day, this plan would end Medicare as we know it for millions of seniors. Wyden-Ryan is the wrong way to reform Medicare.

Ryan’s office responded:

The President’s failure to offer credible solutions to the challenges facing Medicare is a disservice to seniors, a disservice to hardworking families, and a disservice to the next generation. A more glaring disappointment is the President’s failure to recognize a sincere effort by a Democrat and a Republican to come together and offer solutions, betraying his own rhetoric and his own commitment to those we have the privilege to serve. America deserves better.

You can see more details here. Watch for support to build on this serious and credible plan.

It was supposed to be the centerpiece of his presidency. It was the heart of his legislative agenda. When he signed the Affordable Care Act (a.k.a. Obamacare) into law, the president proudly proclaimed that “this legislation will also lower [health-care] costs for families and for businesses and for the federal government, reducing our deficit by over $1 trillion in the next two decades. It is paid for. It is fiscally responsible. And it will help lift a decades-long drag on our economy.”

Nineteen months later, the president’s crowning achievement is falling apart.

Federal judges have ruled that Obamacare’s individual mandate is unconstitutional, as it “would invite unbridled exercise of federal police powers.”

In April, Congress repealed the job-killing 1099 provision that would have saddled small businesses with unprecedented costly and time-consuming tax requirements.

Last month, the Department of Health and Human Services (HHS), after spending months defending the bill’s Community Living Assistance Services and Supports (CLASS) Program, realized that it wasn’t the cost-saving program they said it was — determining that it would actually cost taxpayers money — and suspended its implementation.

As it turns out, one of the law’s supposed benefits — tax subsidies to assist certain households with the purchase of health insurance — introduces a substantial marriage tax penalty, expands welfare through the tax code, discriminates against people with workplace health insurance, and will likely further explode the nation’s deficit.

The Congressional Budget Office (CBO) has projected that Obamacare’s refundable health-insurance tax credits and Medicaid expansion will increase the nation’s debt burden by $1.36 trillion in the first seven years that these provisions are fully implemented.

The CBO estimates that about three-quarters of the cost of the Obamacare tax credits will be new spending, since many of the filers who claim the health-insurance tax credit will lack positive income tax to offset.

In fact, the CBO is estimating that, over time, Obamacare’s health-insurance tax credits will grow significantly more expensive. The tax credits are projected to increase the deficit by $55 billion in 2015, $87 billion in 2016, $104 billion in 2017, $115 billion in 2018, $123 billion in 2019, $130 billion in 2020, and $137 billion in 2021 — the last year of the ten-year budget window.

The House Committee on Oversight and Government Reform has released a report detailing new data provided by the Joint Committee on Taxation (JCT) that reveals new estimates that in 2020 about 14 million tax filers will claim Obamacare’s health-insurance credit, but only about 2 million of these households will have positive income-tax liability after benefiting from the credit.

The JCT estimates also reveal that Obamacare created a massive new marriage penalty. They estimate that only 14 percent of tax filers who claim the subsidy will be married. About half of the beneficiaries will be single individuals without dependent children. The reason for the marriage penalty is two-fold.

First, the subsidy is linked to 400 percent of the federal poverty level (FPL), which is estimated to be $45,600 for a one-person household and $61,600 for a two-person household in 2014. The result of linking the tax credit to the FPL is that two individuals who make between $61,600 and $91,200 in 2014 will not benefit from the tax credit if they decide to marry, but both individuals can qualify for the tax credit if they remain unmarried or if they decide to divorce.

Second, a recent HHS rule prevents families from accessing the subsidy if either parent has an offer of coverage at work — but in cases where only self-only coverage is offered, the rest of the family cannot claim a subsidy. Essentially, Obamacare treats otherwise identical individuals very differently, depending on the source of their health insurance rather than the quality of it.

The president often talks about the need for tax reform, but his signature legislative accomplishment made the tax code more complex and less fair. A massive expansion of government meant to increase the quality of care and decrease health-care costs has turned into a public-policy nightmare that is falling short of the litany of promises made in order to get it enacted.

It turns out that House Democratic Leader Nancy Pelosi’s (D., Calif.) prophetic words were more accurate than anyone at the time realized — we had to “pass the bill so that you can find out what is in it.”

— Rep. Darrell Issa (R., Calif.) is the chairman of the House Committee on Oversight and Government Reform and represents the 49th Congressional District of California.

Congress made a serious drafting error in the health-overhaul law when it said that subsidies could be delivered through state exchanges but not through any federal fallback exchanges. (Michael Cannon of the Cato Institute wrote about this in the Wall Street Journal recently.) The Obama administration has been trying an end-run around the problem by ordering the IRS to simply say in its proposed regulations that the subsidies can be delivered through either type of exchange. This is a big issue because a growing number of states are refusing to create exchanges. If they don’t, the feds can come in and set one up, but these will be relatively useless if they can’t deliver subsidies.

Sen. Orrin Hatch, the ranking Republican on the Senate Finance Committee, this week blew the whistle on the proposed IRS rule. In a letter to Treasury Secretary Tim Geithner and IRS Commissioner Doug Shulman, Hatch says the law is clear that only state exchanges can offer the subsidies, emphasizing that the administration doesn’t have the authority to go beyond the language of the law.

“Contrary to the clear wording of the statute, your proposed regulations suggest otherwise, extending the availability of premium credits to those participating in federal exchanges,” Hatch wrote. “I am concerned that if finalized, these rules would exceed your regulatory authority, violating the Constitution’s separation of powers.”

One more reason to throw the law overboard.


SICKER EMPLOYEES COULD BE SHOVED OUT
Two University of Minnesota law professors write that Obamacare actually provides incentives for “targeted employer dumping” of sicker workers into taxpayer-subsidized health exchanges. The article — “Will employers undermine health care reform by dumping sick employees?” by Amy Monahan and Daniel Schwarcz — explains how companies could redesign their health benefit programs to make it more costly for sicker employees to stay with the company health plan and encourage them to opt instead for the exchanges.

Monahan and Schwarcz write that this “would expose these exchanges to adverse selection caused by the entrance of a disproportionately high-risk segment of the population into the insured pool.” They conclude, “Not only would this undermine the spirit of health care reform, but it would jeopardize the sustainability of the insurance exchanges.” (NPR had a good story about the threat yesterday.)

In spite of this, senior HHS officials have said it would be a good thing for employers to “dump [their] people into the exchange.” Speaker Pelosi talked favorably about Obamacare as a way “for businesses to be emancipated from health care costs because they have a way out or whatever works for them.”

The only problem is that it would not be good for sicker employees, who would have greater difficulty finding physicians to see them under what surely will be lower payment rates in the exchanges, and it would be bad for taxpayers, who will have a much bigger bill to pay for exchange subsidies.

A second reason to jettison the law.


MORE LOST JOBS
A Michigan-based medical device company, Stryker, announced that it would be shedding “five percent of its workforce over concerns about the impending 2.3 percent medical device tax prescribed by” Obamacare.

A press release from the Kalamazoo company noted that “the targeted reductions [i.e., layoffs] … are being initiated … in advance of the new medical device excise tax scheduled to begin in 2013” under Obamacare.

With jobs creation the top priority of the American people, this is definitely not good news.

And the list of reasons to dump Obamacare goes on and on.

The House Energy and Commerce Committee has approved a bill to repeal the controversial long-term entitlement program — the CLASS Act — in Obamacare, following the administration’s admission that the Ponzi scheme program is unworkable. This vote paves the way for the full House of Representatives to vote on repealing the entitlement program.

“We must erase a program that we know will not work; a program that was never structured to work, and that we could never afford,” committee chairman Rep. Fred Upton said. “I believe we have to start over on long-term-care reform — an issue that will affect millions of Americans as they or a loved one need care.”

Three Democrats joined 30 Republicans on the committee to vote for repeal. But even though CLASS has been deemed unworkable by his own administration, and HHS Secretary Sebelius has pulled the plug on implementing it, the president still has vowed to veto any repeal legislation.

But if CLASS were left on the books, Secretary Sebelius might be required to find a way to implement it next year. The Congressional Research Service has concluded as follows: “Assuming that the Secretary takes no further action to comply with the CLASS Act’s statutory mandate to designate a benefit plan by October 1, 2012, the Secretary would appear to be committing a facial violation of the statutory requirement to designate such a plan.”

The report continues: “The Secretary does not appear to have discretion to decide whether or not to designate a plan by October 1, 2012.”

Given this, you might assume that Secretary Sebelius would encourage the president to sign the repeal legislation, lest she and her department face legal action for violating the law they worked so hard to enact.

Earlier this week I interviewed Rep. Paul Ryan on Obamacare’s impact on health-care innovation, and he explained how Washington’s addiction to health-care price controls breeds Stockholm syndrome among the myriad hospitals, physicians, and drug companies who pay millions to D.C. lobbyists to try and stave off execution via reimbursement formula one more day (or, in this case, one more budget cycle):

For providers in an [Independent Payment Advisory Board] price-controlled system, they’re really just trying to pay their hostage takers to shoot them last, and that simply won’t work. Providers are beginning to realize this. They’re beginning to realize that hard-core price controls don’t pay them based on quality. Even if they innovate, even if they work hard, even if they increase productivity, they’re paid the same as anybody else who doesn’t do that. They’re not being rewarded in the way the market would reward them for [innovation].

If Obamacare has improved the prospects for true market-based health-care reforms, it is only because it has made it starkly clear that the status quo is unsustainable. Innovative companies and physicians know that if we go forward, they will find themselves squabbling over an ever shrinking pool of reimbursements, with no ability to appeal to the market (i.e., consumers) for the rewards commensurate with their investment in health-improving innovations. 

Lobbying Congress to shift cuts to your competitors is no longer a viable option when IPAB will cap Medicare spending at GDP+1 (or, in the case of President Obama’s latest proposal, GDP+.5), and the cuts have to fall annually. Providers’ only solution is to stop seeing Medicare patients entirely, or to treat them as widgets and pump them into and out of the system as fast as you can — hardly a recipe for quality health care. The only real alternative is to embrace something like Chairman Ryan’s proposal for a defined-contribution structure for Medicare, and for the health-care sector as a whole (via tax reform).

And then there’s the “size” problem. In an age when the Internet, electronic health records, and personalized medicine should enable more individualized care, Obamacare ratchets up the costs for small physicians’ groups and insurers and then drowns them in red tape. The end result is a monopsonist federal government negotiating with handful of oligopolies, as Walter Russell Meade writes in a recent blog post:

Health care reform needs to encourage innovation and flexibility. The rise of enormous, super-empowered HMOs closely tied to government regulations suggests we are headed further in the direction of building a corporatist, medico-industrial complex whose powerful lobbies will fight reforms, abuse monopoly powers and further congeal the American health care system into an unmanageable and unaffordable form that will undermine living standards while providing ever-less-satisfactory care.

This leaves us with Yuval Levin’s observation that “the core case against Obamacare must be a sustained political case made on policy grounds,” not the outcome of any Supreme Court case.  Whether or not the nation’s health care policies change course — no matter what SCOTUS rules in June — will largely depend on the articulation and defense of a superior vision for health-care reform that captures the hearts and minds of voters who’ve been told that they can’t trust markets to provide quality health care.

Paul Ryan has articulated much of that vision. Whether it will be adequately defended will not be known until next November.

The Supreme Court’s decision to hear arguments in the 26-state challenge to Obamacare sets the stage for the most important constitutional test of freedom and individual liberty in at least a generation.

The court will hear arguments next spring in the case brought by Florida, 25 other states, and the National Federation of Independent Business — the highest-profile challenge to the health-overhaul law.

The justices will allow a remarkable five and a half hours of oral argument to discuss at least four issues: the individual mandate, the law’s requirement that states expand Medicaid coverage, whether federal tax law, under the Anti-Injunction Act, keeps the court from reviewing of the mandate until someone has paid a penalty in 2015, and severability, i.e., and what provisions of the law should be struck if the mandate is found to be unconstitutional.

The core of the case is the constitutionality of the “individual mandate” — the federal requirement that all citizens must have government-prescribed health insurance. The Eleventh Circuit Court of Appeals ruled against the mandate in the Florida case in August, saying that if Congress can require “that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die,” then there will be “no limiting principles in which to confine Congress’s enumerated power.”

The Obama administration has insisted in its arguments that the mandate is the heart and soul of the health-overhaul law, its lawyers saying at least 14 times in lower court arguments last year that the mandate was an “essential” part of the act and its reforms cannot survive without it. The act itself says, “If there were no [individual mandate], many individuals would wait to purchase health insurance until they needed care … The [individual mandate] is essential to creating effective insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.”

“Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void,” U.S. District Judge Roger Vinson concluded. The Eleventh Circuit Court of Appeals, unwilling to go as far as Vinson, struck the mandate down but let the rest of the law stand.

The Obama administration decided to build in a protection and, in its appeal to the Supreme Court, asked that if it strikes the mandate, it also strike the guaranteed-issue and community-rating provisions in the law.

But the mandate is crumbling and will fall either to the courts, to Congress, or functionally as the American people reject it. It is emblematic of the inevitable collapse of the whole law.

There is a consistent theme among those who have concluded that the individual mandate is constitutional. In his Eleventh Circuit dissent, Judge Stanley Marcus repeatedly says that health care is uniquely important, that everyone will need it, and that it is therefore within the purview of Congress to regulate this form of commerce. That was the basic argument in the disappointing D.C. Circuit Court of Appeals decision last week, led by Judge Laurence Silberman. But the majority in the Eleventh Circuit disagreed, saying, “It simply will not suffice to say that, because Congress has regulated broadly in a field, it may regulate in any fashion it pleases.”

The Eleventh Circuit said it could find no precedent for a mandate on individuals to purchase government-approved health insurance:

Few powers, if any, could be more attractive to Congress than compelling the purchase of certain products . . . [But even] in the face of a Great Depression, a World War, a Cold War, recessions, oil shocks, inflation, and unemployment, Congress never sought to require the purchase of wheat or war bonds, force a higher savings rate or greater consumption of American goods, or require every American to purchase a more fuel efficient vehicle.

The government’s position amounts to an argument that the mere fact of an individual’s existence substantially affects interstate commerce, and therefore Congress may regulate them at every point of their life. This theory affords no limiting principles in which to confine Congress’s enumerated power.

The real question in all of these decisions is whether or not the U.S. Supreme Court will use this case to finally put the brakes on the expansive use of the Commerce Clause to regulate all forms of commerce and our behavior as we engage in that commerce.

As with so many other issues in this historic debate, it ultimately all comes down to freedom — and whether it will be lost or preserved by the Supreme Court and the voters next year.

— Grace-Marie Turner is president of the Galen Institute and a co-author of Why ObamaCare Is Wrong for America, Broadside/HarperCollins, 2011.