Opinion: Columnists

Obamacare implementation could spell trouble for Democrats in 2014

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Opinion,Philip Klein,Columnists,Campaign 2012,Politics Digest

The good news for Democrats is that Obamacare will now be implemented. But the bad news for Democrats is also that Obamacare will now be implemented.

President Obama's re-election ensures that his signature health care law will not be repealed before its major provisions go into effect. But that also means, to borrow a phrase from House Minority Leader Nancy Pelosi, Americans will begin to find out what's in the law.

Starting Jan. 1, several key provisions of the health care law will kick in. Americans will only be allowed to contribute $2,500 to flexible spending accounts, which allow participants to pay for medical expenses on a pretax basis. Also, from then on, the accounts can only be used to pay for drugs with a prescription, excluding over-the-counter drugs, which still may be legitimate medical expenses and were previously allowed.

The new year will also ring in a wave of new tax increases. One is the Medicare tax hike on individuals earning more than $200,000 and married couples earning more than $250,000. Another is the 3.8 percent tax on interest, dividends, annuities, royalties and rents. On top of that, there will be a 2.3 percent tax increase on medical devices. These will be on top of any tax hike that comes out of current end-of-the-year negotiations between Republicans and Democrats to avoid the "fiscal cliff."

Most of the major provisions of the health care law go into effect in 2014. During that year, individuals will be forced to purchase government-approved insurance policies or pay a tax. The tax will hit 6 million uninsured Americans, most of them middle-class, according to the Congressional Budget Office.

Employers who have at least 50 workers could have to pay a $2,000-per-employee fine for not providing health insurance. As Zane Tankel, who owns 40 Applebee's locations in the New York area, recently explained on Fox Business, this provision will force him to hold off on expanding or hiring, and even to re-evaluate his current workforce. Business owners throughout the nation have echoed his thinking.

In addition, 2014 will usher in the expansion of Medicaid and the creation of new exchanges. On these exchanges, eligible individuals will receive government subsidies to purchase government-designed insurance plans administered by private companies. These two components are projected to cost $1.7 trillion over a decade.

Governors, right now, are trying to decide whether to participate in the expansion of Medicaid, a program that is already crushing state budgets, and to implement the exchanges themselves or back out and let the federal government set up the exchanges for them.

The establishment of an exchange involves a massive data compilation process in which the federal government will have to figure out Americans' income levels to determine their eligibility to receive benefits. The exchanges are supposed to be up by the fall of 2013 so that individuals can begin enrolling in them.

Each state faces its own challenges in setting up the exchanges. In Washington, D.C., officials determined that the uninsured population was too small for the exchange to function. So they have taken the step of conscripting individuals and businesses with between two and 50 employees to purchase health insurance through the exchange, making it the sole marketplace in D.C. for plans that aren't "grandfathered in."

During a meeting with The Washington Examiner, Mohammad Akhter, chairman of the D.C. Health Benefit Exchange Authority Executive Board, noted the difficulty of setting up an exchange under the federal time constraints.

With a number of Republican governors deciding that letting the Obama administration set up their state-based exchanges is the lesser of bad options, the federal government will be facing a number of logistical challenges to getting them up and running.

If it goes badly, this could spell trouble for Democrats up for re-election in 2014. But who's ever heard of a massive government database and software development program going badly?

Philip Klein (pklein@washingtonexaminer.com) is a senior editorial writer for The Washington Examiner. Follow him on Twitter at @philipaklein.

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