Understanding Obamacare – Part 2

In my previous blog, I explained, from my understanding, how the stage was set for people to be receptive to the idea of National Health Care. (See Understanding Obamacare - Part I.)

Now that it has become the law and subsequently passed muster under the inspection of the Supreme Court, what’s so bad about it? There are three effects (that I’ve learned – probably more as time goes on) that Americans will come to appreciate. Obamacare is not really affordable; Obamacare will eventually dictate the level of health care Americans can obtain; and Obamacare, by design, punishes the heart of our economy – small businesses. This entry addresses my thesis that Obamacare is not affordable to those who are uninsured.

Obamacare is Not Really Affordable

Sadly, most Americans are gullible when it comes to campaign promises. If a politician and his campaigners repeat the same promise enough times, and it “tickles the ears” of the listeners – meaning they want the promise to be true – the audience will simply accept the promise without questioning the probability or likelihood of that promise being fulfilled. This becomes doubly true when the mainstream media fails to fulfill its role of examining and investigating, and then reporting the facts. Complex issues require an unraveling and explanation in terms with which “Everyman” can grapple. If the media is not going to help us do our homework, most people are simply going to trust the promise – regardless of its inherent failings and lack of logic. In the case of Obamacare, mainstream media played the role of assisting the campaign rather than helping voters examine the facts.

Obamacare was labeled “The Affordable Health Care Act.” Affordable truly is a relative term. Implied is the notion that people who are not insured by a health care plan are in that position because they cannot afford the premiums. Contrarily, those who have health care can afford it. So really, we’re talking about people who, after paying housing, food, car insurance, utilities, and basic necessities do not have the financial ability to come up with the dollars to pay for health insurance premiums. They truly cannot afford it. So Obamacare to the rescue – his plan will be affordable. Right?

Well, let’s look at some sample premiums for obtaining health care under the Affordable Health Care Act. I live in Oregon, so I’m using the Oregon Health Authority Member Handbook, which provides premiums for both the Oregon plan in addition to the Federal plan premiums. Presently the Federal plan does not provide pricing for families – only individuals. So, I’ll use my situation as the first example to discover what Obama’s Affordable Health Care cost for me. I’m 58 and my wife is 57. We’ll go with the less expensive of the two plans offered, which is a $750 deductible (meaning, the insured pays the first $750 before the insurance starts paying). Both my wife and I are in the “Age 55-59” bracket. My son, who is 18, is still a dependent, so I need to factor him in as well. He fits into the “18-19” year-old bracket. Okay, so here goes: For me, the monthly premium would be $742, for my wife, also $742, and for my son - $295. In sum, our monthly affordable premium would be $1779.00. But remember, insurance doesn’t kick in until each of us pays, out-of-pocket, $750 to meet our deductible. So, $750 x 3 (deductibles x members of family) = $2250. If we divide that by 12, we arrive at what we’ll need to plan per month to meet that deductible: $2250 / 12 = $187.50. Now, we add in the deductible to the premium to determine what the actual monthly cost is for health care (not counting co-pays): $1779 + 187.50 = $1966.50 per month. That’s my AFFORDABLE health care.

Okay, okay, I’m an old guy. What about a younger person? One of my daughters is a single 26 year-old with no children. Her affordable health care is only $355.00 per month. Oh, before the $750 deductible. So, it’s really $417.50 per month. So, I’m sure she’ll think that is pretty cheap.

And then, I have a daughter who is a single mom with three children. She’s in the “30-34” bracket, so that’s only $396 per month. Her three children are in the “0-17” bracket, and they are just $262 per month. With four deductibles to plan on paying for, that’s 750 x 4 = 3000 / 12 = $250 per month. Thus, 396 + 262 + 262 + 262 + 250 = $1432.00 per month. Gosh, that seems really affordable for a single mom of three children.

Now, if you are wealthy, these premiums might not seem out of line. But remember, the Affordable Health Care Act was supposed to address the needs of those who could not obtain health care through traditional insurance. Going back to my example, I work, my wife works, and my son is going to college. Guess what? There is no way in the world we can afford almost $2000 per month for government health care.

My single daughter is just starting out a career as a hair stylist and esthetician. Whether she’ll have $420 available on a monthly basis just starting out, is yet to be determined.

My daughter who is a single mom of three small children? After paying for rent, food, college loans, IRS back taxes, clothing, car insurance, daycare, etc – do you honestly think she’ll have over $1400 left to pay for health care?

But wait. Some of my readers might be saying that those premiums are going to change in 2014 when the new Cost-Sharing Credits take effect. Granted, there are publications on the web that promise much lower premiums in 2014. Yep… you can find those all right. Realistically, how is that going to happen? How will premiums suddenly go down without the real cost of medical care being transferred elsewhere. I mean, why will future rates be dramatically lower? Are medical costs going up or down? Even if they were to remain stable, how would premiums for those on the government plan go down substantially? There are only three possible answers: 1) the real cost would be shifted elsewhere, meaning others would subsidize the real cost of government health care – as in a federal pool that would be shared by private insurance companies resulting in higher premiums for those who have private insurance; 2) taxes would be raised substantially to pay for government health care – just like for Social Security (which is insolvent and in danger of imminent collapse); or 3) it’s just not possible, but once again, politicians will promise the impossible, which is accepted by people who want “their ears tickled.” Once again, my dad’s lessons to me bear repeating: Money doesn’t grow on trees, and If something sounds too good to be true, it’s probably because it is too good to be true.

I’m sorry to be a “killjoy.” I’d love there to be some magic fairy dust to provide health care for all humans at a really affordable price. But there is reality with which to deal. Most Americans live on a month-to-month basis. Unlike members of Congress and the President who have a lifetime Cadillac health care plan included in their job description, the average American is trying to figure out how to pay $3 to $4 per gallon of gas to commute to work, or look for a job. Most are figuring out how to continue paying for house payments and maybe, college for their kid. It’s not that responsible people expect the government to give them health care on a platter. It’s that they are being told that health care is a mandate. Buy it or else. Or else what? Or else they’ll pay a fine. Oh wait… the Supreme Court has clarified that point. It’s not a fine, it’s a tax. A tax that Obama promised it was not.

In my next blog, I’ll address how I believe Obamacare will dictate what health care Americans will be able to access.