Obamacare: a primer for 2014

A very knowledgeable person, who wishes to remain anonymous, has written the most comprehensive and exhaustive analysis to date of “Obamacare” —The Patient Protection and Affordable Care Act (ACA). You can find it on Paul Craig Roberts Institute for Political Economy website. Be forewarned, this very long and detailed explanation of the ACA might make your brain hurt. But if you want to understand the nuts and bolts of Obamacare—the reality vs. the vague promises—then pour yourself a stiff drink and click here. We’ve heard about the positive reforms of the ACA—and there are positive reforms. See Occasional Planet “related posts” for a survey of the positive aspects of the bill. Indeed, the ACA takes the edge off the most egregious health insurance industry practices in exchange for the guaranteed expansion of its market and bottom line. But will the ACA reforms make up for its deeper systemic flaws? The ACA will go into full operation in 2014, so it’s time to look under the hood of the bill, understand what’s coming, and see how it will play out in the lives of lower to middle income Americans. To get right to the point, the ACA is another “government/ business partnership” designed to make money off of the American people by feeding taxpayer money to corporations. Roberts’ characterizes it this way in his introduction to the article:

The ACA was not selflessly designed with the intent of providing affordable and equitable medical services to those in need, but rather to acquire taxpayer money for the private insurance companies under the seemingly helpful guise of health care and the ideological excuse of personal responsibility. It takes money from ordinary people and gives it to a medical insurance industry that profits handsomely from this legally-enforced corporate welfare—all while keeping Americans locked in the same broken system that puts profit before patients.

The worst outcome of this bill, according to Roberts’ anonymous author, is that it will significantly increase household debt for individuals and families who can’t afford the “affordable” high-deductible, insurance.  It will become yet another source of financial stress in a very difficult economy, undermining the whole idea of improving the heath of the many. The forced purchase of health insurance will bring increased revenue to the industry and more kickbacks to Congress, creating a bloated, entrenched system similar to the banking industry. Eventually it, too, will be “too big to fail.” At least that’s one possibility, one the industry is hoping for. The following is an outline of the article:

1)   Health insurance Exchange basics. This includes a discussion of how your Modified Adjusted Gross Income (MAGI) will affect all determinations made by an Exchange including eligibility for Medicaid. This is something you need to pay attention to now, in 2013, as your MAGI this year will determine what you pay for health insurance in 2014.

2)   Determining Eligibility for a Tax Credit. The tax credit is paid in advance for the year you are currently in based on an estimate using your last year’s tax return. The advance payment of the tax credit carries with it some potential heavy-duty consequences. (See point 4.)

3)   Tax Credits and Your Share of the Premium. The author provides Federal Poverty Level formulas and explanation of how the tax credit subsidies will work.

4)   Payback of Tax Credits to the IRS. The advance payment of the tax credit is essentially a loan from the government paid on your behalf to the insurer. When you file you tax return for the year you received your “advance tax credit,” if your income changes from your estimate, you have to settle with the IRS. Your industry friendly Congress has increased the cap on this money you might owe to $2,500, thereby putting a huge financial burden on the backs of the people ACA claims to help. If you happen to get ahead, and make more than 400 percent of the poverty line, you will have to pay back the entire subsidy.

5)   Medicaid Expansion and Estate Recovery. In a nutshell, if an Exchange determines you are eligible for Medicaid, you have no choice but to be enrolled in it. (So much for the assurances that you will have a “choice.”) When you die, the State, on behalf of the Federal Government, will go after your estate for repayment of Medicaid services. In other words, loads of taxpayer money for banks, corporations, and the Jamie Dimons of the world, but none for you! The State will go after any of your remaining assets, including your family home.

6)   Insurance Plans at the Exchanges. The author covers the four plan levels that will be offered. For each, you will pay for all your medical care until you reach the annual deductible, then you will pay a percentage of the coinsurance until you reach the out-of-pocket spending cap. The high deductibles in all but the two most expensive plans could put you into debt for routine care and may stop you from seeking necessary treatment for illness or injuries. The promise of access to affordable health care is, in reality, access to inadequate, high-deductible coverage. Most importantly, Obamacare has no cost controls. There is nothing stopping insurance companies from increasing their rates.

7)   Penalty for Being Uninsured. If you choose not to buy the ACA health insurance you can’t afford, most likely, the IRS will deduct the penalty from your refund. If you don’t qualify for a refund, you will be hit with an outstanding tax obligation.

8)   Exemptions from the Penalty. The author covers the various exemptions, including the laughable one where the purchasing of health insurance would cause you to experience “serious deprivation of food, shelter, clothing or other necessities.”  Laughable, because it may be the story for millions.

9)   Other Tidbits. The author explains the Accountable Care Organization (ACO) that will manage your care and how they are set up to encourage doctors to abuse the system at the patient’s expense.

10) Enroll America, Herndon Alliance & The Exchanges—Master’s of Spin. Enroll America is a non-profit financially backed by Aetna, Blue Cross Blue Shield, UnitedHealth, etc. to encourage people to purchase health insurance in the open market or the Exchanges. Its board of directors is made up of industry cartel—CEO’s, presidents, vice presidents, and directors of organizations like the American Hospital Association, Express Scripts, Kaiser Permanente, and so on. Never short on chutzpah, they are asking for donations on their “not-for-profit” website to help them sell insurance to you. Their goal is to fleece you for another $100 million by 2014.  Herndon Alliance is a health care spinmeister creating messaging to change public opinion about insurance products. The Obama talking points used to promote the ACA came from Herndon. Herndon and other PR firms are working with the Exchanges to promote enrollment. The author ends with this:

The ACA is most definitely a “uniquely American solution” which has little to do with reforming this country’s barbaric health care system. It merely controls peoples’ finances and choices while leaving insurance companies in charge and does virtually nothing to end their abuses. It will leave many millions of Americans uninsured and millions more underinsured at a staggering cost to taxpayers.

A generous (and seriously wrongheaded) view of Obamacare is that it was a progressive bill designed to be a steppingstone to single payer. But, in reality, it was designed to strengthen, expand, and more deeply entrench corporate control of healthcare delivery. What will happen when the ACA comes online in 2014? I think millions will decide (out of necessity) to take the IRS fine rather than go into further debt buying inadequate, high deductible insurance. The insurance companies, limited to a smaller profit margin, and not getting the numbers they want, will decide they can’t make enough money to keep their yachts afloat, and fold. Hospitals, tired of treating people in emergency rooms for free, will push for Medicare expansion, as will the general population. Slowly, in fits and starts, we will move to Medicare for all. That will be a huge improvement. But, in order for us to have humane healthcare for all, the profit taking throughout the system has to stop—the $200 a pill prescription, the $15 box of hospital tissues, the many unnecessary, but lucrative procedures that line the pockets of surgeons. The “free market” for-profit health care industry with its bloated costs is the underlying cancer of healthcare delivery in the United States. Physicians for a National Health Program sums it up:

The financing infrastructure of the Affordable Care Act is fatally flawed since it cannot ever reach our goals. In contrast, if we replaced the financing system with a single payer national health program, such as an improved Medicare that automatically covered everyone, we could eliminate the profound administrative excesses of our current fragmented financing system, and use global budgets for hospitals, negotiated rates for health care professionals, and bulk purchasing of pharmaceuticals and supplies to slow the intolerable increases in health care costs. Those economic tools are effective in a truly universal system, but really don’t work in a dysfunctional, fragmented system such as that of the Affordable Care act.