It’s remarkable to me that a law intended to help people who seem to need it the most has turned into such a political football.
It turns out that Jane and I are covered by insurance, we chip in a bit, our employer a bit, and there’s a convoluted system of deductibles and copays. We then struggle to do the math and put some pretax money into a flexible spending account to make our co-pays tax free.
I know that not everyone is so fortunate, I know a gal who is not able to work, and spends more than half her monthly worker’s comp payment towards insurance. But someone living on such a low income would not be expected to pay more than about 6% toward their insurance premium, so when the Affordable Care Act kicks in, she will see an upside to her spendable money of most of her current premium.
So far, the focus has been on the penalty aspect of Obamacare, instead of the benefit the needy will receive. As I read the numbers that would apply to low income families with 2 kids, they will be able to purchase insurance that would now cost $12000 per year for $2200. When you read the Summary of New Health Reform Law, you find that for the 90%, the plan looks to be a positive thing. I arbitrarily choose 90% because I know that this is a zero-sum game, someone needs to pay the supplement for those who are currently uninsured but will receive a discounted rate. For all of the money government wastes, the pork barrel spending, the bridges to nowhere, I’d be happy to pay a bit more knowing my money will keep a lower income family’s child from getting the care she needs.
The document isn’t that long, 13 pages compared to the near 100 pages of the recent supreme court ruling. As Kay Bell who writes at Don’t Mess With Taxes has discovered, it’s Congress who want to kill this plan because Killing Obamacare means better health benefits for members of Congress. You realize, our Congressfolk are above and beyond any of the laws they make for us common folk. They are not part of the social security system, and have medical coverage you or I would really envy.
Our Healthcare System is broken, and I can’t say that Obamacare will fix every aspect of it, but I think it’s a step in the right direction. Those who are uninsured won’t be turned away for emergency care, nor should they be, and a system to include them in the process is a good step in the right direction, in my opinion.
Last, a website, ObamaCare, The Truth, The Lies, offered an infographic on What Obamacare Means to New Yorkers. It focused on the added cost, the penalty for people of different incomes and showed their total tax burden. Unfortunately, the accounting firm that offered the numbers didn’t calculate the taxes correctly. They published number that showed a tax on one’s gross income, skipping the forms, and all potential adjustments. A single gal making $80,000 does not have a taxable income of $80,000. I guess they never read my article on marginal rates.
In January last year, I posted an article “What’s wrong with the health care system?” in which I discussed how a friend has a procedure which the hospital charged $1200, but the insurance deemed it worth $200, so they paid $180 and the friend paid $20 as a co-pay.
I recently received a reply from reader Ken I’d like to share:
One does not realize that 1) Employers pay health care costs directly but indirectly; and have insurance companies fight and account for those health care expenses for those companies. My employer uses a Blue Cross plan to minimize its health care costs then pays Blue Cross a fee for that service and a fee for reducing that very same cost. 2) An employer or pool of employers, pays a hospital or health care group or doctors, a predetermined annual amount to preform a guaranteed amount of services for an agreed amount of patients. e.g. The example above. The test may very well have cost $1200, but it may have been part of the agreed upon service that was to be provided by that provider for $1000 as part of the annual fee. The remaining $200 was treated as normal expense and required a co pay. The interesting part to all of this is when a couple both have same but separate health insurance plans to different employers, and because of the birthday rule, the same service is paid different amounts because who covers it first.
Ultimately it all boils down to this: There are always going haves and have-nots; and the haves are always going to be overcharged so they can pay for the have-nots. Doesn’t matter if it’s the present system or Obamacare or Hillarycare. What does matter is the ultimate cost in 1) dollars, 2) cuts in services,3) choice of doctors, 4) choice of care or treatment and 5) use of personal or public money.
In response, regular reader and deep financial thinker, Elle, offered a detailed, well thought response which seemed a shame to leave buried as a comment;
1. Employers use health insurers so that employees may benefit from the cost discount attributable to having an enormous number of clients, thus spreading risk. Your use of epithets like Hillarycare and Obamacare are reckless disregard for the clear mathematics of the single payer system. Single payer would do the same as Blue Cross, but given the much larger number of clients and the fact that hospitals and doctors have to work with only one administrator, for less money.
2. When you talk about cuts in services, you seem oblivious to the fact that many health facilities overprescribe services, with no improvement in health outcomes. Why do they overprescribe? Because the doctors at such facilities are not on a straight salary but instead have a financial stake in everything they prescribe. In other words, they work on commission. The models to use are the Mayo Clinics and others, where such a conflict of interest is prohibited, and the docs are paid a straight salary. Before commenting further, you should read Atul Gawande’s June 1 article in the New Yorker on this.
3. Joe, the New York Times for a few years now has been running articles on how not only are doctors’ and hospitals bills’ to the uninsured and under-insured negotiable, but the billing departments actually expect people to call and haggle over the bills. The nominal fee on a bill is monopoly dollars. Plus consumers need to understand that the rate of errors on medical bills is on the order of 50% and typically sizable. It has become such a problem that there is now a profession called “Patient Advocate,” where someone (often a retired nurse or other health care professional) who knows how to decipher what is on the bill. See the article After a Diagnosis, Someone to Help Point the Way, also in the Times. .
People talk about letting the consumer “choose” and so let free market forces work, but the health care system has so much in it that is arcane that the typical patient could not possibly make an informed choice. So it is not a free market when buyers do not have access to needed information.
4. But more of those on the left need to acknowledge that there most certainly are preventive health measures that the “have nots” can implement, at enormous savings to us all. People just need a simple financial incentive structure to practice this preventive medicine. Such preventive medicine translates to national health savings on the order of 30%, from my reading. Google on what the President of Safeway (Steven Burd) did when he gave Safeway employees a health insurance rate structure that resulted in higher premiums for those showing poor habits in the areas of tobacco usage, weight, cholesterol and blood pressure. Safeway health costs went down as its employees started practicing more preventive medicine, more than justifying the financial incentives. See for example Safeway CEO on free-market health care solutions.
5. Never forget that a healthy blue collar and middle class are essential to the success of companies and so your stocks.
Thank you both for your comments, and Elle, you ever feel the urge to send me a guest post, my blog welcomes you.