Middle Class Will Suffer Drastically if Obamacare is to Prevail

According to James C. Capretta and Tom Miller over at Economic Policies for the 21st Century, the tax raises due to Obamacare will be astronomical for middle class families over the next few years in order to help a marginal number of people.  Evidently, in return for paying these taxes, the middle class families themselves will actually be receiving worse Medicare benefits than their parents.  Does anyone else see something wrong with this?

Perhaps the candidates have reached a consensus in order to completely eradicate health care for the middle class over the next decade.  Even if that wasn't a mutual agreement between them, they are both definitely paving the path towards achieving that goal.

[Updated] Obamacare and Congressional Health Plans

Attack Ads Hit Republicans for Taxpayer-Funded Insurance

Traditionally, U.S. Representatives and Senators have been provided health insurance through the Federal Employees Health Benefits Program, which is open to all federal workers.  However, this perk is about to end thanks to a provision in Obamacare that requires legislators to be insured through the state health insurance exchanges set up under that law.  This requirement was inserted as an amendment to Obamacare by a Republican Senator, Charles Grassley (Iowa), to force legislators to "live under the same laws [they] pass[] for the rest of the country."  If Obamacare is overturned, as many Republicans favor, Congressional health insurance would revert back to the federally funded system covering all federal employees.

Now, according to the New York Times, Democratic challengers in some Congressional races are accusing the Republican incumbents of hypocritically voting themselves "taxpayer-funded healthcare for life."  The charge stems from criticism of Republican efforts to repeal Obamacare, which would also repeal Senator Grassley's requirement that legislators be insured through the state-based exchanges.

Whether or not the Republicans are acting hypocritically in this situation, the article's discussion of the possible effects of Obamacare on Congressional health insurance helps to illuminate a major problem that haunts the implementation of Obamacare:  uncertainty over what the law actually does.  Here are two possibilities:

1. Legislators lose their federal healthcare benefits and instead must purchase insurance from an exchange with their own money, or
2. Legislators retain federally funded health insurance, but the plan changes from the Federal Employees Health Benefits Program to some private insurance purchased (by the taxpayers) in a state-based exchange.

As to the attack ads arguing that the Republicans are hypocrites, no one can tell yet whether the charges are accurate since the law has yet to be implemented.  Thus, Democrats seem to be premature in calling out Republicans as hypocrites.

As to the wider matter of uncertainty over the effects of Obamacare, this article illustrates the problems that many private companies (large and small*) will be facing in the near future.  Not only is there uncertainty over whether Obamacare will be repealed (in the event of a Romney win), there is also uncertainty over the legal requirements that will come into force in regards to employer-sponsored health plans even if Obamacare remains.

[UPDATE]:  Commenter dpmckay asks what the exact effect of Obamacare will be on small businesses.    According to The Wall Street Journal, the smallest businesses (2-49 employees) will have no requirements and instead will qualify for subsidies if they offer their employees health insurance.  Starting in 2014, businesses with over 50 employees must either provide a health insurance plan to their "full-time" employees (30 hours or more) or pay a penalty (it is unclear whether the penalty is $750 or $2,000).  There is still uncertainty over the exact rules for determining just who counts as a "full-time" employee, as shown by this U.S. Department of Labor FAQ for employers (e.g. regulations are pending).

There are few businesses who employ 50 or more employees and do not offer insurance:  0.2 percent of all firms according to the Healthcare.gov website.  Healthcare.gov also mentions that these firms may be able to find cheaper plans on the state insurance exchanges due to Obamacare, which may offset some of the costs of offering insurance.

*A Personal Note:  Just a few days ago, I was talking with one of the managers of the small company I work for about health insurance.  He made it clear that the company could not make any promises at this time because they still had no idea what would be required under Obamacare.

Increasing Premiums and Medicare Fraud? Oh My!

Both candidates mentioned plenty of outstanding sums and fees during the Presidential Debate last week.  Seeing as how all of these numbers being thrown around are terribly confusing, Jen Christensen puts a number of issues into perspective over at CNN.

Evidently, even though health care recipients are paying more in co-pays, deductibles and other various billing issues, which have been steadily increasing since 2001, the majority of the problem is due to the increase in cost of health care and is not actually due to the current President or even the previous one.  Who would have thought?  Technology is advancing and the cost to process tests and order scans is subsequently increasing, and by a very large percentage at that.  Of course, even though the medicinal field keeps undergoing new scientific discoveries that are being incorporated into new methods of diagnosing patient conditions and furthermore treating said conditions, people just take it for granted that their insurance premiums will not go up.

One of the issues that Obama brought up, which Christensen so thoughtfully mentioned, was the fact that Medicare and Medicaid fraud eat up an enormous portion of the budget and that more should be done to stop it.  Looking deeper into the issue over at The New York Times, we can actually see that more is finally being done.  "Ninety-one people including doctors, nurses and other medical professionals were charged criminally after an investigation of Medicare fraud that involved $430 million in false billing in seven cities, officials said on Thursday."  This astonishing find happened just last week.  Reading further, it becomes apparent that another such incident occurred earlier in the year.  With everyone so casually taking advantage of the system, the charges on Medicare and Medicaid are practically compounded, adding up to billions.

Hopefully these busts continue and perhaps if they do and fraud becomes less easy to commit, Medicare may be able to decrease its costs in the coming years.

The [$716 billion] Phantom Menace

$716 billion "cut" from Medicare?

Currently, one of the most popular campaign-trail topics is a scary $716 billion cut from the Medicare budget that will go to help fund Obamacare.  As a New York resident nowhere near the retirement age, I can only imagine the creepy, black-and-white attack ads being run in Florida on this issue.  I can also only hope [in vain, I suspect] that those ads explain the claim better than the candidates are doing in their debates.

Fortunately, Politifact has come to our rescue with some answers on where this $716 billion figure comes from:

1. Obamacare includes cost-saving measures designed to lower the cost of Medicare.  Some of the savings comes from reducing payments to hospitals with high re-admission rates, while some savings comes from cuts in the Medicare Advantage program (supplemental, private insurance).
2. The CBO's analysis of Obamacare found that those measures should lower future costs to Medicare by about $716 billion over the next ten years.

Thus, Medicare's future budget requirements should be lower due to these cost-savings measures.  

Further confusion comes from the fact that these cost-saving measures were included in the Obamacare law. This was done so that the cost of Obamacare would seem lower when the CBO scored the law prior to passage.  In effect, this makes the Medicare cost-savings measures serve as a funding mechanism for the Obamacare programs, which in turn fuels claims that Obama is robbing Medicare to pay for Obamacare.

Healthcare Administrative Costs: Medicare vs. private insurance under Obamacare

A major piece of Obamacare, President Obama’s signature achievement of his first term, was a new requirement that private insurers spend at least 80% of their premium dollars on care, leaving the remaining 20% to cover administrative costs and profit. This requirement was a response to a common criticism of the private health insurance industry: Too many premium dollars going to administrative costs and profit, and not enough going to actual healthcare. Indeed, much has been made recently of the rebate checks that Obamacare forced some private insurance companies to issue to their customers in order to comply with the new requirement. There is, however, one familiar health insurance system that is reported to have extremely low administrative costs: Medicare. This article will compare administrative cost levels among private health insurers and Medicare.

First Presidential Debate Overview: the Healthcare.

The first Presidential debate took place on October 3rd at the University of Denver in Denver, CO.  One of the main issues discussed was the issue of healthcare reform. Although a great amount of time was devoted to this problem, in my opinion, neither of the candidates was able to shed light on the concerns of the American people.

The main topic being the project Obamacare, President Obama started his argument with three main points. The first was that the Affordable Care Act does not concern the people who already have insurance and moreover, it regulates its cost. He also mentions  that under his new program, people with existing policies will be getting rebates if their insurance company spends more than 20% of its profit on infrastructure and CEO bonuses rather than on customers’ benefits. Second, he emphasized that for people who don’t have coverage, the cost to get it would be 18% less than before. Lastly, he notes that this model worked really well in Massachusetts, referring to his opponent’s notion of rejecting something that he himself supported in his own state. Governor Mitt Romney in response agrees that the major task of the reform is to lower the cost of health care, but not through Obamacare. He addresses statistics and finds that ¾ of small business owners will reduce their hiring potential if they will be obligated to provide insurance, which can potentially lead to a job loss in a private sector. “I like the way we did it in Massachusetts," Romney says, but proposes to leave this decision up to the State government. Nevertheless, Governor does not explain why if it works on a State level, it cannot be exercised on a Federal level.

Governor Romney also addresses the problem of Medicare, precisely the $716 billion dollar cut under Affordable Care Act reform. In his opinion, making Medicare a voucher system will give people a choice of insurance, which will create competition, and that will automatically regulate the cost. In response to that President Obama mentions that the goal of any private insurance is to make a profit, which is why Medicare will always cost less. Obama does not give any comment on the $716 billion cut and tries to avoid this subject. It is also necessary to note that the main reason for cuts is a huge federal deficit. Although Governor Romney actively criticized Obamacare, he does not specify how his program will deal with this deficit. Moreover, Congressional Budget Office reports that repealing the health care law would increase the federal deficit by $109 billion over ten years.

Obamacare's Insurance Exchanges: Mixed Feelings from States

WaPo:  Many States Not Willing to Operate Exchanges

According to The Washington Post, many states have fallen behind on planning their health insurance exchanges.  Furthermore, some states are declining to operate exchanges altogether, instead opting for the federal government to run their exchanges for them.  Although the exchanges are legally required to be operating by October 2013, only 13 states and the District of Columbia have formally expressed their intention to operate their own exchanges.  

Health insurance exchanges are a major part of Obamacare (Affordable Care Act).  The exchanges are supposed to include a "one-stop-shop" website for health insurance (akin to Orbitz).  Furthermore, individuals and families will be required to shop on the exchanges if they wish to take advantage of government subsidies for health insurance.