Tuesday, March 7, 2017

Trumpcare - Obamacare Lite?


Will the Obamacare "replacement" make things better or worse?   Depends on your point of view, I guess.


Trumpcare, as it will no doubt be called, is now out of the closet, and it looks a lot like Obamacare in slimmed-down form.  Obamacare included a number of provisions, some repealed by Trumpcare, as well as its own health insurance plans provided in the "market".   While the many provisions of Obamacare affected nearly every American, only about 10% of Americans actually purchased (or were forced to purchase) plans through the government website.

I am one of those 10%, so you can see how this keenly interests me.

As I noted before, Obamacare (as a health care plan) suffered from a number of problems:

1. It was not available to people making less the poverty line, who were forced to go on Medicaid, if  they qualified, or force to go without health insurance if not.   Since the subsidies paid for health care if you were above the poverty line, if you made a dollar more than this amount (about $22,000 for a couple) you got free health care.  If you made a dollar less, go fuck yourself.   It was a nonsensical limitation.  Since I am living on after-tax savings and my "income" is nearly nothing, this concerns me.

2.  You are forced to buy a plan or pay a penalty.  If you make more than four times the poverty line (about $63,000 a year for a couple) you get no subsidy.   Since premiums went up by a factor of four once Obamacare was enacted, many people were simply priced out of health care and paid the tax "fine" instead - banking on being able to sign up later on if they got sick.

3.  The skyrocketing premium costs are largely a mystery - one that the media is curiously uncurious about.   No one seems to know where all the money is going and who is getting it, and no one seems to care.  The insurance companies claim they are losing money.  The doctors claim they are losing money.  The hospitals claim the same.   However, since Obamacare provides "free" or nearly free coverage for a lot of things that formerly were considered elective, costs have skyrocketed.

4.  Mandating health coverage for employers has meant that many low-wage employers are putting all employees on part-time in the last few years.   Many poor people now find they have to work two or three part-time jobs and then get Obamacare, which is subsidized nearly 100% in their income bracket.  Obamacare ends up a wage subsidy for low-wage employers.

Well, the GOP counter-proposal is out.  Will it fix things or make things worse?

For employers, it fixes things, somewhat.  The employer mandate is gone, completely.  As a result, employers can now hire full-time people or not worry about people going over their hours, and still not offer them healthcare.   In a way, I am for this, as a former employer it was always a mystery to me why I was also a health care provider, tax collector, and immigration law enforcer - as well as retirement planner - for all of my employees.

If the government wants to enforce laws, placing the burden on employers is not the way to do it.   But even the GOP seems to love to do this - making employers ask you for proof of residency status before hiring.  They even want landlords to do it!   So this is a bi-partisan issue to me.  Both the GOP and the Democrats love to make employers do things to advance social issues, and neither side is serious about "reducing regulations" on employers.

When we make employment illegal, it merely drives it underground.  But I digress.

But anyway, this first part of Obamacare "reform" will surely please the real base of the GOP - industry.   The downside is, a lot of people presently receiving health insurance as part of their employment package may lose it, or may go to a higher-deductible plan.   But maybe again, this is a good thing to bring down the cost of health care.   When everything is "free" including sleeping machines and opiate drugs, costs spiral out of control.

For us schmucks who have to pay for their own health insurance (which may be a larger number, thanks to the elimination of the employer mandate) things may get better or worse.   The Obamacare subsidy, which presently can top $15,000 a year for a couple, may be cut severely - down to a few thousand dollars, which isn't enough to begin to cover the cost of medical policies under the current Obamacare regime.

As a result, if premiums remain as they are, a lot of people will simply opt-out of getting health insurance and since the tax "penalty" is also eliminated, they may simply choose not to have health insurance and then sign up for coverage if they get sick.   To prevent this, the GOP proposes a 30% premium premium to discourage people from lapses in coverage.   But frankly, 30% isn't really a lot, and if I came down with some expensive cancer or a major accident, I would gladly pay that instead of the hundreds of thousands of dollars in hospital bills.

Oh, yea, that.   The real problem with healthcare in this country is the staggering expense of it all.  None of these plans seems to address this basic problem.   The GOP argues that their "market-based" system will help drive down costs by forcing people to shop on price.  How does this help us reduce the cost of $14,000 life-flights or $100,000 hospital stays?   It is not like we can shop around while bleeding.

And part and parcel of that is Medical Savings Accounts.  Under the GOP plan, you can put more into an MSA (Obamacare allows MSA's starting in 2017).   A Medical Savings Account is a great deal for someone earning $100,000 a year who wants to hide income from the treasury department legally.   You put aside $10,000 into an MSA and you don't have to pay taxes on that.   Sweet deal - if you have thousands to put aside.

For the poor, it is a sad joke, as they don't have the money to put aside in the first place.   And even if they did, the tax savings are minimal or non-existent.   Tax deductions really only make sense if you are itemizing deductions and in the 25% bracket or higher.   People like me, in the 15% bracket taking the standard deduction, see no benefit from an MSA.

For older Americans and early retirees, putting more money into tax-deferred accounts may simply make no sense.  I already have tons of money socked away in IRAs, I don't need to put more money into tax-deferred accounts.   Indeed, at this point in my life, I basically make no contributions to my IRA as it doesn't really affect my taxes at all (even with the investment tax credit) and it makes little sense to take money I have already paid taxes on (after-tax savings) and lock it up in an IRA (pre-tax savings) for two years - such is the weird math of early retirement.

One aspect of Trumpcare that might help in this situation is the availability of "catastrophic" health insurance plans.  Before Obamacare, I had a $10,000 deductible plan and it worked well for me.   As I noted, a relative told me that such plans scared him.  "Where would you get the $10,000 if you got sick?" he asked.  "The same place you get the additional $10,000 you spend annually on premiums on your low-deductible plan!" I replied.   He paid $10,000 a year to avoid paying a possible $10,000.  People are risk-averse and really don't understand maths.

One scenario that might play out under this plan is that health insurance companies will tailor plans to the subsidies - much as they have done with Obamacare.   It is a little more than suspicious to me that the health insurance companies all offer plans that are about equal in cost to the amount of available subsidy under Obamacare.   Obamacare pays about $15,000 a year - oddly enough, Blue Cross has a plan that costs.... $15,000 a year.   Funny how that works.

So for a young person getting a tax credit of $2000 a year, the insurance companies might come up with some bare-bones catastrophic plan that costs.... $2000 a year.   A young person might sign up for this as it costs them nothing and provides them with something, even if isn't a lot of coverage.

But again, one of the problems with Obamacare was that the people who put it together thought, "Gee, wouldn't it be nice if we mandated coverage for....?" and then threw in the kitchen sink.   You can get a sex-change under Obamacare.  Mental health Care.  Dental.  Eyeglasses.   A lot of things that formerly were considered "extra" under older plans.   And sure, "it would be nice to..." do a lot of things.   Let's give everyone a free car so they can drive to the hospital and get their sex change, while we're at it.

And yes that sounds harsh, but it reflects one of the realities of Obamacare - that it tried to do too much, too quickly, and was not well thought-out.   The reaction - the push-back - by the GOP is probably too extreme in the other direction, but we'll see how it plays out.

After all, it isn't like we have much of a choice at this point.   And no, protesting isn't going to change the hearts and minds of a majority GOP Congress and President Trump.  This plan is going through, like it or notWelcome to the United States of Go Fuck Yourself.

My only unanswered question about this new plan is how it handles people whose income is below the so-called poverty line.  Because as someone living off savings, my reported income is very low.   Yet medicaid probably wouldn't apply to me because I have too many assets.   The upshot is, I would be happy with a less-expensive "catastrophic" plan the GOP is proposing.  In other words, what I used to have.

Obamacare, on the other hand, cost four times as much, and without subsidy, was unaffordable.

I guess we'll just have to wait and see.   People making decisions for us in our lives, telling us they know what is best for us, but of course, never having to use the plans they devise for us, in their own lives.

Same shit, different day!

The fundamental change needed in Obamacare or Trumpcare is that every member of Congress and every government employee from the President on down should be forced to use it.   As it is, government employees get the best health coverage in the world, and the rest of us pay for it.  These "plans" they devise for the rest of us all work nicely in theory, but not so much in practice.
Maybe if Congress had to use the same plan we have, things might be different!


No comments:

Post a Comment

Sorry, Comments have been disabled due to the large amount of SPAM and TROLLING as well as GROOMING comments. Thanks for reading, though.

NOTE: Blogger says below that "only members may comment" - however comments have been disabled and I have no idea how to make someone a "member". Sorry!

Note: Only a member of this blog may post a comment.