Obamacare Part II

So prior to the election I posed a few of my thoughts about the Affordable Care Act (Obamacare).  I kind of expected to catch a little flack about it, but received a lot of positive comments instead.  Most of the people that have talked to me about it have admitted they really don't know that much about what it includes.   

I did a fair amount of research prior to writing that post.  I too was unclear of what it meant from the individual or family perspective.  So much of the info I came across was focused on how it affects businesses or what it was going to cost the country.  With all the election rhetoric there were all kinds of articles that were conflicting or just difficult to understand.  Most failed to spell things out for the individual.

So I figured since I had done some leg work and since it appears due to the election Obamacare is here to stay, I figured I'd relay what I learned.  This may be one of the articles that I update or author additional posts as I learn more.  I'm not trying to make a case for or against Obamacare.  Time will tell if the program will improve our health care system or if it will become too costly.  The law has it complexities, but my goal with this post is to relay the facts of the law as it relates to the individual or family.  

Remember from my prior post, if you have insurance through your employer this law really won't affect you much.  The laws which was passed in 2010 has all kinds of provisions that phase in parts of the law all the way through 2020.  2014 will be when the most significant changes happen, but I'll get there.

First let's get caught up.  This is what has happened so far (the items affecting the most people, there are more):

• Expanded coverage to young adults by letting them stay on their parents insurance until they turn 26
• Eliminated lifetime limits on insurance coverage (Yeah for me)
• Lowered cost of drugs for seniors on Medicare
• Specified that insurance companies must spend 80% of premiums on health care and the remaining 20% for administration and profit.  This lead to $1.1 billion in rebates to consumers. 
• Expanded free preventive care for all ages (Ex: mammograms, colonoscopies, wellness visits, immunizations)

In 2013 (High income earners start paying for some of this):

• Individuals with an income over $200,000 or married couples over $250,000 have to pay an extra .9% extra tax on income above the threshold.  Ex:  someone that makes $210K pays an extra $90.
• 3.8% tax on investment income but only if your adjusted gross income is $200K (individual) or $250K (couple).  This is only on investment (i.e unearned) income.  So someone that makes $50,000 per year on investment income where their total income is $250K would pay and extra $1900. 
• There is also some goofy 3.8% tax hike when you sell your home but only if you make a profit of $250,000 (individual) or $500,000 (married couple).  This is only on the profit, not the sales price.  The 3.8%  is only paid on the amount of profit over $250K/$500K.  most "middle income" Americans would not run into this.  
• We'll start seeing the total cost of our health care plans (not just what we pay) on our W2's.  It's just informational. Only companies with over 250 employees need to do this. 
•  Flexible spending accounts will be capped at $2500

2014 (The new system really begins) - Remember though, this really only affects those that are uninsured or who purchase insurance on their own.  These are the major points:

• Heath plans must be available for everyone.  Premiums can not differ based on health or gender. Individuals cannot be denied because of pre-existing conditions.
• Each state must setup an insurance exchange.  Essentially this would be a marketplace where consumers could easily compare and purchase plans.  States can elect to do this themselves or let the federal government operate them.  Now, I think that it would be best for states to manage these exchanges for their own people.  States have until Nov 16th to tell the federal government which direction they will chose to go.  I feel somewhat uncomfortable that a state is going to turn this over to the federal government...in most cases, just because the governor of that state is Republican.  Wouldn't we be best served if this single most important provision was managed as close to home as possible.  Our governor has already stated that South Dakota will not be managing the exchange for South Dakotans. 
• "The Penalty".  People without insurance will pay  $95 per individual or $285 per family, or 1% of income, whichever is greater.  By 2016 it rises $695 per individual, $2,085 per family, or 2.5% of income, whichever is greater. 
• Individual subsidies will be offered to help people pay for insurance.  This will be based on income and what the current federal poverty level is.  For example, in 2012 a family of four with an income of $46,000 would pay no more then $235 for health insurance.  Additional subsidies will be available for lower income families to assist with deductibles and coinsurance.  The specific options someone would qualify for would be presented when shopping the exchanges. 
• Medicaid expansion... This is another tricky one. This expansion is intended to cover millions Americans that have incomes up to 133% of the poverty line ($14856/individual or $30657/family of four) Many of these people don't currently qualify for Medicaid.  However the Supreme Court have ruled that a state can opt out of this.  The federal government is sending a significant amount of funding to the states that take the expansion, but states will have to pony up a bit more.  Once again states (predominately Republican states) are threatening to opt out of the Medicare expansion.  The problem is that the law was written so that these lower income people would qualify for Medicaid, but not subsidies.  So if a state opts out, these people with incomes between 100% to 133% of the poverty line will be stuck with no affordable healthcare option. 

2015 on....

• There are a few other provisions that take effect but here is an interesting one. In 2017 a state can apply to opt out of many of the Obamacare reforms provided the state can come up with a better solution for managing the healthcare of consumers in the state.  The state would still receive the same federal funding, but a state can "innovate" and come up with a better solution if they can.  I actually think states can apply as early as 2014 to do this so they can come up with their own solution rather then implementing the exchanges just to change things 3 years later.  I really wish those that are calling for a repeal of Obamacare would just promote and pursue this option.  The law actually has the provision that essentially lets the states to come up with something better if they can.  Isn't that the goal anyway?

Just so people know I'm not making this stuff up, my source for much of this info has been Wikipedia and various news articles, especially a really good article in the November issue of Consumer Reports.

I realize that this whole thing is going to be expensive.  I don't have a lot of details on funding or things like that.  My intent here was to illustrate how the individual and families would be most directly affected. 

Consider, Social Security programs were quite unpopular then they were enacted, but they have served us for over 75 years.  And most people look back at FDR and consider him a great president and leader.  However at the time, many of his New Deal policies (including Social Security) were quite unpopular. As far as the economy went, things didn't really improve that much during his 3 terms in office.  Republicans love to talk about Regan, but tend to leave out he basically invented deficit spending and let that go out of control while he oversaw the largest and most expensive arms race in history.  I'd love to know if the generations then thought the system was as broken as most of us think it is now. 

I am a registered Republican.  I feel government should be smaller.  I think the recent Dodd-Frank Act which is a response to the Wall Street\Financial crisis is a gross overstepping of government powers.  Our current leaders have recklessly spent money and racked up debt that is unsustainable.  Running a country without a balanced budget should not be allowed.  I like my guns, the free market and I feel the private sector (or local governments) are better at spending money then the federal government.  Our current patent laws are dumb.

On the other hand... I am pro-life but I believe in a woman's right to chose.  Stem cell research should be allowed and research encouraged.  There should be more government funded research with all results, treatments, drugs and tech being public domain but allowed to foster private innovation.  Gay people should not be regarded differently in any way in the eyes of the government and that includes the right to marry. 

I hope I've been able to provide some useful information and insight to the world as I see it.  The interesting thing is I would have never looked this deep into Obamacare had I not been going through this fight with Cancer. 

Perhaps part of the problem may be that we're content to just say the system is broken but not educate ourselves about why.