03.08.2012 0

Obamacare’s Military Benefit Means Testing Trial Balloon

ObamaCareBy John Vinci — The Obama Administration, for the first time, is proposing that veteran retirees pay different rates for the same health benefits based on how much they receive in military retirement pay.  This so-called “means-testing” of military retirement health benefits, would mean that the more our veterans receive in retirement pay, the more their health insurance would cost them.

Bill Gertz, who originally broke this story, said that it is, “as if [these benefits] were a social program, and not something earned with 20 or more years of military service.”

Americans for Limited Government President Bill Wilson echoes Gertz’s concern stating, “Obama is so disconnected from our culture that instead of respecting our veterans he treats them like another welfare constituency.”

This new policy, plus newly proposed significant rate hikes, would mean that some veterans may have to pay up to 394 percent more for their health benefits through Tricare, the military’s health benefit program.

So, whereas this year military retirees pay $520 dollars for health insurance for their families, in the year 2017, retirees who receive less than $22,589 would pay $893 — less than half of the $2,048 that retirees receiving $45,179 or more would have to pay for the same benefits.

The administration’s proposed new policy of charging different prices for the same benefits based on financial class sets a bad precedent.

Imagine if the purchase of gas, food, and homes were “means-tested.”  Then imagine that your employer wants to give you a raise, but if you take that raise it will move you up into a new payment bracket.  And, as a result of being in the new bracket, the extra pay you would receive would be reduced or eliminated by the extra money you’d have to pay for gas, food, and that new house you wanted.

Unequal costs for the same services based upon income discrimination is the exact sort of government meddling that ends up harming lower incomes in the end by making it more difficult to escape the poverty prison created by the cost of losing welfare benefits.

The government already uses means-testing for all sorts of welfare programs.  Obamacare’s new health insurance subsidies through its state Health Insurance Exchanges are also means tested for those who make up to 400 percent of the Federal Poverty Level (that means that up to $89,400 for a family of four).

And it is reported by the House of Representatives Republican Study Committee that under Obamacare new subsidies in excess of $100 billion a year have been created to buy insurance under the law’s insurance exchanges.  Families between 134 percent and 400 percent of the poverty line are eligible for these subsidies.

Daniel Kessler, a senior fellow at the Hoover Institution, points out in a recent Wall Street Journal article that Obamacare creates some startling disincentives to work.  A family of four earning $96,699 a year would be eligible for a subsidy of $14,799.  A family earning $96,700 would receive subsidies of $0.  By earning one extra dollar, the family could be made worse off by $14,798, in addition to the increased tax burdens under Obamacare.

But not even Obamacare forces beneficiaries to pay more for the same service because they make more money.  In this respect, Obama’s new proposal is more akin to the one passed by fellow-Chicago Dan Rostenkowski in 1989.

Rostenkowski, who at the time was the House Ways and Means Committee Chairman, was instrumental in the passage of the Medicare Catastrophic Coverage Act (MCCA).  Similar to Obama’s means-testing proposal for veterans, MCCA charged an extra income tax on eligible beneficiaries based on their level of income.

The resulting furor brought seniors to the streets and left Rostenkowski literally scurrying for physical cover when he left his Chicago office.

The precedent of Obama’s plan to means test military health care benefits will inevitably be used to justify means testing the health benefits of all Americans under Obamacare.  It is just a matter of time.

John Vinci is a staff attorney with Americans for Limited Government and is the editor in chief for the www.obamacarewatcher.org website.

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