ObamaCare Won’t Work—Here’s Why?

The Affordable Care Act—ObamaCare—just won’t work; it was a poorly crafted piece of legislation and its unworkableness has been tacitly admitted by President Obama. To testify to this statement is the fact that there have already been 41 significant modifications to the Act—most of them via executive order of the President, himself. New objections are cropping up every day. Now, even the unions are balking at the requirements of the law. However, the basic problems of the Act are as follows:

The Medical Industry Institute, in concert with the Department of Health and Human Services (a part of the U.S. executive branch), in a study of 2014 health insurance enrollment data and its predicted trajectory until 2024 has concluded that by that latter date, premiums for an individual in the Silver health plan will find his premium increase by $1,375/year. A family of four applying for similar coverage will see a premium increase of $4,198/year. This is an increase greater than the total increase seen between 2008 and 2013. The steepest increase will occur after 2016. On 1/1/17, all the requirements of the ACA will kick in and 60% of the policies sold in 2013 will not qualify for sale! This is too much of a premium increase; and people will not be able to afford it.

Last month the government increased the money in the “risk corridors” which are meant to bail out the insurance companies if they fall short of income to cover all of the ACA’s various requirements. Even that will not be adequate to cover the costs insurance companies will incur. In 2017, health care insurers will no longer be allowed to cover losses by using the risk corridor money. Consumers will be left paying the bill by greatly increased premiums.

To make matters worse, in 2017 the reinsurance program will expire and health care insurer plans will no longer be able to bill the government for 80% of their costs when a client uses more than $45,000 of services in a single year.

The Congressional Budget Office estimates that private companies will drop employee health insurance policies for more than 7 million employees by 2020—preferring, instead, to send them to federal insurance exchanges for insurance. It will be cheaper for companies to pay the less expensive penalties after 2017 than to purchase health insurance, themselves.

This above fact will leave the newly uninsured with few options. Many will try to get Medicaid. The CBO calculates that Medicaid enrollment will increase by 2-3%/year through 2024. However, if family income is greater than 133% of the federal poverty level (That is $11,670 for an individual and $23,850 for a family of four.), they will not qualify for Medicaid. After 2016, they will have to pay $695/year as a penalty for not having health care insurance. At that income level, it is obvious that those low-income families will not be able to buy health care insurance. The only way a family like that might be covered is if the federal government supplies them with heavy-duty subsidies. For these reasons, CBO estimates that by 2024 there will be more than 40 million uninsured people in our country—that is 10% more than there are today!

How will people compensate for these difficult facts? Consumers will most likely go to qualified ACA plans with very high deductibles and very limited doctor/hospital choice.

So…what can be done? I predict that the ACA will either go down completely in a ball of fire or it will be nibbled down by repeated revisions until little remains of it—probably the latter will be the fate of this ill-gotten piece of legislation. But…that will leave he American public again at the mercy of run-away increases in health care costs. That must not happen! We need a health care insurance system that works and that will not cost us an arm and a leg. Tomorrow, I will attempt to show how a good health care insurance system might work as I will explain the system in use by France.