Is Obamacare DOA?

The ACA is supposed to fully take effect on January 1. Based on the results so far, the law may be DOA. Photo: Obamacare DOA

WASHINGTON, December 21, 2013 — Although the Affordable Care Act is now the law of the land, at least 14 changes have been made without congressional approval before the law becomes fully effective on January 1. These changes have delayed many of the law’s provisions. The last delay on December 20 may signal the law’s complete failure.

In a memorandum dated September 5, 2013, the Congressional Research Service found 19 changes made to the law. Some are minor, but some changes affect the very core of the law. With the December 20 change, which delays the individual mandate, Obamacare may be dead before it officially arrives. The delay to the individual mandate only applies to those whose policies have been cancelled, but there is reason to believe that this will likely be extended to individuals whose group plans will be cancelled next year.

At this point polls indicate that the majority of Americans oppose the ACA and most want it repealed. Who benefits from this law?

The main purpose of the law was to provide affordable health care to every American and to make sure that all Americans have access to health care. So far, the law has failed on both counts. Most Americans, perhaps as many as 85 percent, have seen or will see large increases in annual premiums, increases in deductibles, and restrictions on the doctors they will be to see under the plan they choose.

There are about 15 percent of Americans who may benefit.

People who retire before reaching age 65 may be helped by Obamacare. One woman says that her annual premium was reduced by 53 percent. “Thank you Democrats. Thank you Mr. President.” Since she has retired, her income is relatively low. As a result of now being a low income earner, she is entitled to a subsidy. She owns two homes and has other assets, so she is by no means poor. But the law says that if your annual income is below a multiple of the poverty line, you are eligible for a subsidy. People who are currently employed will pay more for their insurance and will also pay part of her insurance through their taxes.

Once she reaches 65, she will be eligible for Medicare. She will also need supplemental insurance, which will be more costly than supplements obtained prior to the enactment of the (un)Affordable Care Act. So her insurance will cost more at that time.

Some people in their mid 20s are happy with Obamacare. They can now stay on their parents’ plans until they are 26. After 26 they will be forced to buy insurance that they may not want or need in order to subsidize the elderly, so they may change their view then. 

Some people who were denied insurance due to pre-existing conditions can now buy insurance thanks to Obamacare. The problem is that under this system an individual may purchase the lowest priced plan until she discovers that she has a serious illness. Then she can switch to a more comprehensive plan. That works well for her, but the rest of us will have to pay higher premiums to subsidize her decision to save money with cheaper insurance until she has a medical need for something better. If we all follower her example, then even basic insurance will have to be as expensive as comprehensive insurance.

Millions of Americans have had their health insurance cancelled; tens of millions more have seen their premiums rise, their choices reduced and their deductibles skyrocket; the individual mandate has been delayed; the employer mandate has been delayed; many 20 somethings are simply choosing to “opt-out;” and most Americans do not approve of the Obamacare. Given all this, the law may be dead before it is fully enacted.


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Michael Busler

Michael Busler, Ph.D. is a public policy analyst and an Associate professor at Richard Stockton College teaching Finance, Financial Institutions, Introduction to Financial Management, Game Theory, Graduate Managerial Economics, Graduate Financial Management. 

 

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