Coming Soon From Obamacare: A Single-Payer Nightmare For Delaware

Government provided and controlled health care and punitive taxation on people earning any amount more than the average Congressional representative are obsessions of many modern American liberals, and the Supreme Court’s decision upholding Obamacare seems likely only to push them toward even more extreme measures.  For those who were wondering what liberals might do now that Obamacare is the law, they only need to look at my home, the small state of Delaware.

Like much of America, Delaware has been battered by the long recession.  The state’s unemployment rate is twice that of the early 2000’s.  Family income has declined since 2008, while the value of household assets has plummeted over the same period.  What Delaware needs more than anything else is new, high-paying, private sector jobs.  What a group of liberal Democrats is trying to foist on the state, by contrast, is a complete state takeover of healthcare that will be financed by back-breaking new taxes—taxes that will kill economic growth and drive employers out.
 

On June 14, this group filed Delaware House Bill 392, The Delaware Health Security Act, which would require the State to assume control of all health care spending in Delaware. The creation of this so-called “single-payer” (i.e. government-controlled) system has been a long-time dream of the political left.  The bill’s details, though, make it clear that their dream would become Delaware’s nightmare:

·          Health insurance will be banned. Most people like their health insurance, but liberals know better. Under HB 392, a new state agency with the Orwellian name of the “Authority” will be handling all healthcare spending, and insurers will beforbidden from providing insurance for anything covered by the Authority.  Healthcare will be run by the government, just like the IRS, our state’s department of motor vehicles, and the TSA.  The sponsors apparently look at those and other agencies as unalloyed success stories.

·          The Authority will be a monopoly. Healthcare providers are out of luck, too.  The Authority will pay providers only what it wants to pay them, no competition will be allowed, and if a doctor accepts payment from the Authority, he won’t be allowed to receive payment by any other means.  The Authority must approve all capital expenditures made by healthcare providers that exceed $500,000. Expect hospitals to close and doctors and nurses to leave Delaware in droves.

·          The payroll tax on business will be staggering.Supersized government takes supersized taxes.  Under the bill, employers with fewer than ten employees will pay an additional payroll tax of 4 percent, while those with more than 50 will pay 9 percent.  I run a global service business, and this tax alone will double our company’s healthcare costs.  Delaware is a small state, and few regions are more than 25 miles from the state’s borders.  My own company’s headquarters is located two miles from Pennsylvania.  How many companies are going to put up with healthcare costs doubling when they can simply move a few miles and avoid the whole problem?  Apparently, though, the fog of liberal obsession has rendered the sponsors unable to even ask such obvious questions.

·          The individual taxes are worse. As hefty as those taxes are, they aren’t nearly punitive enough for die-hard liberals, and so tax-paying Delawareans will be hit with eye-popping tax increases on all their taxable income, including capital gains, dividends and interest. People who earn less than $60,000 per year will see their state income taxes increase from between 45 percent and 100 percent, while those earning from $60,000-$250,000 will face a 36 percent increase.  Those who earn over $250,000 per year (the figure at which American liberals seem convinced that people are “millionaires”) will have their Delaware tax rates almost double to close to 12 percent of marginal income—one of the highest rates in the nation.

·          Small businesses will be hammered. Most small businesses are organized as limited liability companies, partnerships and subchapter S corporations.  That means their owners get taxed on “income” that they never see because it has to be reinvested in the business.  With the Authority’s new taxes, many small business owners will find that their taxes come close to or exceed their actual cash income—in other words, they will get to take home nothing for themselves.  Once that starts, we will see a wave of businesses closing up shop and moving elsewhere.

·          But worst of all, our healthcare will no longer be in our control. The Orwellian and non-elected “Authority” will dictate what kind of care Delawareans can and cannot have. Supplemental insurance, which we provide to our employees in other single-payer jurisdictions (i.e. Sweden and the UK), is outlawed by the bill. My employees, mostly medical scientists, will not settle for single-payer care. They will move or commute to a neighboring state to get the best healthcare for their families. Further, employers like me who must compete for the best employees will be forced to move our operations out of the state just to provide healthcare choice for those employees.

·          Supporters will be rewarded. One group will be rewarded, though.  HB 392 specifically pays-off left-wing activists by reserving 1/3 of the seats on the board that runs the Authority to members of “groups . . . that have endorsed a single-payer healthcare system. . .”  Other seats are filled by the Democratic governor and the Democrats in control of the General Assembly. Thus, those who think that the law will be a disaster will be in the distinct minority in the Authority.

This bill is so bad for Delaware that it reads like a parody. The few large corporations that make Delaware their home will be forced out as their employees insist on real insurance. Why would anyone support HB 392 when it would kill job creation in Delaware, penalize all those who work or pay taxes, and take away existing health insurance from most Delawareans?

The answer seems to be that many American liberals are so committed to their dogma that they are unable to see that Delaware’s economic success depends not on big government and punitive taxation but on the energy and creativity of its private sector, or that people in the private sector can and will move to other states if huge new taxes and a colossal state-run health-care system are jammed down their throats. Delaware, like our nation, needs policies that will help jump-start a free economy, not sky-high taxes and government-controlled health-care.

The sponsors withdrew the bill at the end of the session and plan to reintroduce it in January 2013. Representative Jaques stated “a piece of complex legislation dealing with such a complex issue deserves to be thoroughly scrutinized and examined by the public, our colleagues and all with a vested interest in controlling medical costs in an efficient way…so that in January we will be prepared to move forward responsibly and rapidly.” Perhaps we would be forgiven for thinking that the sponsors preferred to run the bill after the election.

But why is single-payer healthcare premiering in Delaware? Delaware’s demographics, voting patterns, and electoral composition are nearly identical to other Northeastern blue states. Given these similarities and its small size, Delaware is the perfect laboratory for liberal projects. A successful pilot program for the government takeover of healthcare in Delaware offers a replicable model for use in New Jersey, New York, and other liberal strongholds in the Northeast. If HB 392 passes in Delaware, look for a similar bill to come to a state near you.

Ellen Barrosse is on the board of American Principles Project and CEO of Synchrogenix, a global group of regulatory services firms.