It is looking more and more like the net effect of Obamacare will be a reduction in the number of people with health insurance in the USA. For a program sold on the basis that it would all but end the phenonmenon of uninsured Americans, this is a startling failure. The lack of coverage is actually mostly the result of government action and the unintended consequences of a law that was poorly thought out.
First of all, millions of workers are going to lose the coverage that they now get from their employers. For the most part, those who will lose coverage will be folks in the lower half of the economy, in other words, those who do not make that much money. Obamacare mandates that insurance policies must be provided by companies with more than 50 workers or those companies must pay a penalty for each worker not insured. But Obamacare also mandates that the insurance to be provided must include all sorts of coverages that many workers do not currently have. For example, the policies must have no annual or lifetime maximums. Also, the health of those getting insurance cannot be considered before the policy is issued. As a result, the costs of the new Obamacare policies are much higher than the current cost of health insurance for many workers. In other words, Obamacare is giving employers the choice to pay many thousands of dollars to give each of the workers improved health care or to pay something like eight hundred dollars for the workers who are not given insurance. For companies with low profit margins, these choices are easy: the employer will take the lower cost selection and millions will lose coverage. Just look at a business like a supermarket. These companies typically operate on a margin of something like one percent. The rising health care costs mandated by Obamacare could easily wipe out their entire margin. Further, even if some stores decide to provide insurance, if others do not, those stores can use the cost advantage to price their goods below those of the ones that are giving insurance. The net effect will be to force all of the stores to drop coverage due to competition.
Second, the people without insurance are supposed to be able to buy Obamacare policies through their local "exchange". Under Obamacare, these exchanges were to be set up by the states or, if the states chose not to do so, by the federal government. The deadline for the states to decide on whether or not to open an exchange has now passed and less than half the states have opted to set up exchanges. The federal government will have to create exchanges in more than half the country.
This decision by the states is a critical one. Under the clear language of the Obamacare statute, the federal government is allowed to subsidize the purchase of insurance for those with lower incomes only if they purchase is made through an exchange set up by the states. This language was a way to give the states an incentive to set up their own exchanges. The citizens of the state would get the subsidy only if their state government undertook the effort and cost of setting up the exchange. That incentive, however, was not enough for the majority of states. That means that all those folks who lose coverage in the states with federal exchanges will not get subsidies. Millions more people will be without coverage.
Third, the IRS has stepped into the coverage debate with two rulings which will have the effect of driving children off the insurance rolls. First, the IRS ruled that subsidies for workers without insurance apply only to coverage for the worker and not for the worker's family. Non-working spouses and dependent children will have to be paid for in full with no subsidy. In other words, a worker who is married with children and who now gets insurance coverage for his family at little cost to himself will instead have to pay full price for his spouse and children and get a subsidy only for his own costs. In families where both spouses work, they each can get the subsidy, but the children will still pay full cost. Please understand what this ruling by the IRS means; a family will have to come up with something like four or five thousand dollars per year just to cover the insurance for their children. On top of that there will also be costs for the insurance for the parents. While the coverage will most likely be broader and better on the policies, that difference will not matter to the millions who will be unable to afford the additional costs. America will see millions more uninsured children.
The IRS also ruled that, contrary to the direct language of the law, the exchanges can subsidize the workers themselve even in states where there are only federal exchanges. The effect here will be for the system to be set up only to be challenged in court. After a few years, when the challenge gets to the Supreme Court, the most likely result will be that the subsidy system will be struck down and limited to just those states with state run exchanges. Again, millions will be throw off the rolls of the insured at that point.
On top of this, there are a number of states who have declined to participate in the expansion of Medicaid which was supposed to bring new people to insurance coverage. This group of states is significantly smaller than the ones declining to set up exchanges, but there is still about one-third of the country that will not see the Medicaid expansion.
So what will Obamacare accomplish? It will cost close to two trillion dollars each decade that is to be funded by much higher taxes. It will create an entirely new federal bureaucracy to manage the system. It will drive millions or perhaps tens of millions off of the rolls of the insured by raising costs extensively and by prohibiting the lower cost insurance that many now rely upon. It will force millions of children to do without coverage that they now have. In about two thirds of the country, it will bring coverage to more folks who will qualify for Medicaid assistance. Overall, however, it now appears that the net effect of the new system will be a redistribution of those who have insurance coverage. The total percentage of the population with insurance will not see much change, and it may well decline. In other words, for a mere two trillions dollars per decade, Obamacare gives America nothing much.
I gues it is an appropriate "legacy" for president Obama: high costs and no good results.
First of all, millions of workers are going to lose the coverage that they now get from their employers. For the most part, those who will lose coverage will be folks in the lower half of the economy, in other words, those who do not make that much money. Obamacare mandates that insurance policies must be provided by companies with more than 50 workers or those companies must pay a penalty for each worker not insured. But Obamacare also mandates that the insurance to be provided must include all sorts of coverages that many workers do not currently have. For example, the policies must have no annual or lifetime maximums. Also, the health of those getting insurance cannot be considered before the policy is issued. As a result, the costs of the new Obamacare policies are much higher than the current cost of health insurance for many workers. In other words, Obamacare is giving employers the choice to pay many thousands of dollars to give each of the workers improved health care or to pay something like eight hundred dollars for the workers who are not given insurance. For companies with low profit margins, these choices are easy: the employer will take the lower cost selection and millions will lose coverage. Just look at a business like a supermarket. These companies typically operate on a margin of something like one percent. The rising health care costs mandated by Obamacare could easily wipe out their entire margin. Further, even if some stores decide to provide insurance, if others do not, those stores can use the cost advantage to price their goods below those of the ones that are giving insurance. The net effect will be to force all of the stores to drop coverage due to competition.
Second, the people without insurance are supposed to be able to buy Obamacare policies through their local "exchange". Under Obamacare, these exchanges were to be set up by the states or, if the states chose not to do so, by the federal government. The deadline for the states to decide on whether or not to open an exchange has now passed and less than half the states have opted to set up exchanges. The federal government will have to create exchanges in more than half the country.
This decision by the states is a critical one. Under the clear language of the Obamacare statute, the federal government is allowed to subsidize the purchase of insurance for those with lower incomes only if they purchase is made through an exchange set up by the states. This language was a way to give the states an incentive to set up their own exchanges. The citizens of the state would get the subsidy only if their state government undertook the effort and cost of setting up the exchange. That incentive, however, was not enough for the majority of states. That means that all those folks who lose coverage in the states with federal exchanges will not get subsidies. Millions more people will be without coverage.
Third, the IRS has stepped into the coverage debate with two rulings which will have the effect of driving children off the insurance rolls. First, the IRS ruled that subsidies for workers without insurance apply only to coverage for the worker and not for the worker's family. Non-working spouses and dependent children will have to be paid for in full with no subsidy. In other words, a worker who is married with children and who now gets insurance coverage for his family at little cost to himself will instead have to pay full price for his spouse and children and get a subsidy only for his own costs. In families where both spouses work, they each can get the subsidy, but the children will still pay full cost. Please understand what this ruling by the IRS means; a family will have to come up with something like four or five thousand dollars per year just to cover the insurance for their children. On top of that there will also be costs for the insurance for the parents. While the coverage will most likely be broader and better on the policies, that difference will not matter to the millions who will be unable to afford the additional costs. America will see millions more uninsured children.
The IRS also ruled that, contrary to the direct language of the law, the exchanges can subsidize the workers themselve even in states where there are only federal exchanges. The effect here will be for the system to be set up only to be challenged in court. After a few years, when the challenge gets to the Supreme Court, the most likely result will be that the subsidy system will be struck down and limited to just those states with state run exchanges. Again, millions will be throw off the rolls of the insured at that point.
On top of this, there are a number of states who have declined to participate in the expansion of Medicaid which was supposed to bring new people to insurance coverage. This group of states is significantly smaller than the ones declining to set up exchanges, but there is still about one-third of the country that will not see the Medicaid expansion.
So what will Obamacare accomplish? It will cost close to two trillion dollars each decade that is to be funded by much higher taxes. It will create an entirely new federal bureaucracy to manage the system. It will drive millions or perhaps tens of millions off of the rolls of the insured by raising costs extensively and by prohibiting the lower cost insurance that many now rely upon. It will force millions of children to do without coverage that they now have. In about two thirds of the country, it will bring coverage to more folks who will qualify for Medicaid assistance. Overall, however, it now appears that the net effect of the new system will be a redistribution of those who have insurance coverage. The total percentage of the population with insurance will not see much change, and it may well decline. In other words, for a mere two trillions dollars per decade, Obamacare gives America nothing much.
I gues it is an appropriate "legacy" for president Obama: high costs and no good results.
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