Obamacare - The Middle Class Gets Hammered, and the Worst is Yet to Come

Is it a tax or is it a penalty or is it a fee?  Call it what you will, but one fact remains: the middle class, the group that pays the bills, will get hammered.  The Henry J. Kaiser Family Foundation has an excellent, informative section on their website devoted to the Affordable Care Act that describes in detail how the Act will work for companies and individuals and what it’s going to cost.

For individuals, who has to pay and who is exempt?  The answer is behind Door #1.  According to Kaiser’s site [emphasis mine]:

Several groups are exempt from the requirement to obtain coverage or pay the penalty, including: people who would have to pay more than 8% of their income for health insurance, people with incomes below the threshold required for filing taxes (in 2009, $9,350 for a single person and $26,000 for a married couple with two children), those who qualify for religious exemptions, undocumented immigrants, people who are incarcerated, and members of Indian tribes.

I especially like the “undocumented immigrants” since that’s the demographic group responsible in part for driving up our healthcare costs — ask California.

Next, we have the question of what is the penalty for an individual if he/she decides to forego the purchase of insurance [emphasis mine]:

The penalty for people who forego insurance is the greatest of two amounts: a specified percentage of income or a specified dollar amount. The percentages of income are phased in over time at 1% in 2014, 2% in 2015, and 2.5% starting in 2016. The dollar amounts are also phased in at $95 in 2014, $325 in 2015, and $695 beginning in 2016 (with annual increases after that).

To take this a step further, utilizing Kaiser’s “Subsidy Calculator“, you can complete the brief online form to find out in rough terms what the ACA mandate will cost you to enroll in a state Exchange if you don’t have insurance in 2014, or, if your employer decides to drop coverage.  Using the site’s subsidy calculator, let’s see how much this mandate is going to cost a family of four in 2014.

Let’s say we have a couple with two children.  Husband and wife both work, and their combined income is $100,000/year.  Their employers make a business decision to drop their insurance coverage.  If they want insurance, they turn to the state Exchange.  Using the Kaiser calculator, their annual premium is $12,130, (12.13% of their income) of which the government will subsidize $0, since they are 427% above the poverty level.  While Obamacare does not require you to purchase or pay a penalty if the premium is above 8% of your annual income, the family still has to pay if they want health insurance.

Second example, myself.  Currently working for a firm that offers a “Cadillac” plan.  I have major medical, dental, vision, long & short term disability, sick days, etc.  My cost: $2632/year.  Let’s say my employer drops insurance coverage as a business decision, and I’m forced into a state state health Exchange if I want insurance.  Using the Kaiser subsidy calculator, my annual cost is now $10,172; government tax credit – $0.  An increase of 286%.  Thank you Barack Obama, Nancy Pelosi, and Harry Reid.

Recent research by McKinsey and Company, “How US Health Care Reform will Affect Employee Benefits” indicates that the Obamacare subsidy will encourage companies to re-evaluate and potentially drop their employer-sponsored insurance (ESI).  The Congressional Budget Office originally estimated the number of employers dropping coverage at 7%; McKinsey’s number is at 30%  or more.

Our survey found, however, that 45 to 50 percent of employers say they will definitely or probably pursue alternatives to ESI in the years after 2014. Those alternatives include dropping coverage, offering it through a defined-contribution model, or in effect offering it only to certain employees. More than 30 percent of employers overall, and 28 percent of large ones, say they will definitely or probably drop coverage after 2014.

Obamacare will also fundamentally alter our choices in how much we are allowed to spend on healthcare for ourselves and family members.  Burke J. Balch, Director of the Robert Powell Center for Medical Ethics at National Right to Life, was recently interviewed in an article for The Washington Free Beacon where he discusses the rationing aspects of Obamacare.

The fundamental provisions in the law that give federal bureaucrats the authority to limit what Americans are allowed to choose to spend to save the lives of their family members remain intact,” Balch said.

One of the most contentious pieces of the legislation is the Independent Payment Advisory Board (IPAB), which has been termed “death panels” by many. Why?  Because Obamacare targets the senior population.

This group of regulators “is directed, starting in 2015 and every two years thereafter, to make recommendations … to limit the ability of Americans to put resources into healthcare so that they stay below certain goals set forth in the legislation.” IPAB sets a price cap, a dollar amount beyond which Americans cannot pay for care.

Balch explained under the current Medicare plan there are two ways to receive coverage under Medicare: direct government reimbursement for care and voucher payment. If citizens use the voucher payment method, they can spend their own money to receive more care, just as retired people can add their own money through 401Ks to Social Security when saving for retirement.

Under the Obama health care law,” Balch explained, “the Department of Health and Human Services is given the authority to exclude or limit your ability to add your own money.” HHS does this indirectly, by restricting access to Medicare advantage.

Insurance plans cannot participate in the voucher side of Medicare “if they allow people to spend what” the department considers “too much money.”

But if you think rationing is only for the senior population, think again.

Employers will provide vouchers, and the citizens can pay more if necessary (like the Medicare voucher plan). “The limitation on this,” Balch explained, “is that, under the law, insurers will be excluded from these exchanges if their insurance plans allow people to spend what is deemed by the bureaucrats to be ‘an excessive or unjustified amount’ on health care.”

As a result, if a regulator thinks an insurance company has a “pattern or practice” of allowing people to spend an “excessive or unjustified” amount on health care, he can exclude that company from the market. Any insurer judged “too expensive” will not be able to sell health insurance to Americans.

Having cared for an elderly mother for 10 years before her passing due to Alzheimers at age 93, I got to experience first-hand our health care system and the players involved.  Reform is definitely needed.  No one should be denied insurance because of pre-existing conditions, and no family should have to go bankrupt because of illness.  However, Obamacare is not the answer.  Its cost will help bankrupt all of us, and will force unnecessary government intrusion into our lives at times when privacy is most warranted.

While the state of the economy and jobs are on the minds of most Americans, Obamacare is contributing as a cause to the meagerness of our recovery because of its regulations and price tag.   And finally, as Justice Kennedy commented during oral arguments, it comes down to freedom and liberty and the relationship that we as citizens hold with our government:

And here the government is saying that the Federal Government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases and that changes the relationship of the Federal Government to the individual in the very fundamental way.

November 6, 2012.  The day we take America back.


Cross-posted on www.political-woman.com