Friday, November 8, 2013

Funding the "Affordable" Care Act (aka Obamacare)

When Obama was elected president, he said he wanted to spread the wealth around. The Affordable Care Act, which some people are calling the "Unaffordable Care Act," is making good on Obama's goal.

I heard the best explanation of how the redistribution of wealth is taking place on NPR in their broadcast on November 7, 2013. The title of the piece was "How the Affordable Care Act Pays for Insurance Subsidies."
People who have had very expensive health insurance or no insurance, but relatively low incomes, can now get affordable health insurance plans because the government is subsidizing the plans. The subsidies are paid for in part from a higher Medicare tax on high-income earners ($250,000+ in annual income). That's a clear redistribution of income. Funding for the system also comes from lower Medicare payments to providers and taxes on medical-device and drug companies.

Read or listen to the whole NPR piece. Everything fell into place for me when I heard it.

Unfortunately, there are a lot of unintended (but easily foreseen) consequences from Obamacare -- consequences that Obama has actually apologized for. (Hear interview with Obama on NPR.) Individuals, sole proprietors and small business owners are getting slammed with much higher insurance premiums. Virtually every small business owner I know has had their current health insurance plan cancelled. And they can only find new plans that have 40% to 100% higher premiums, and in many cases lower benefits and higher deductibles and co-pays. Small and new businesses are the engines of economic growth and job creation in this country. These new, more expensive policies are surely going to hurt that engine.

We were supposed to be able to keep the plans we had, if we liked them. Will this problem get solved? Who knows? Obama claims he'll try to get this fixed along with the glitch-filled software running the Federal exchanges.

If I were in charge, I'd expand Medicare to cover everyone. The system is already set up. Businesses would no longer have to pay for health insurance. They'd improve their bottom lines. They would be able to hire more workers and pay them more. Yes, we would have to cover the cost with new taxes. But the benefits would be enormous. And with everyone enrolled, I suspect the taxes would not be as high as the premiums we now pay. People could always buy supplemental plans, just as they do with Medicare. We are the only industrialized nation without universal health coverage. Time to catch up with the rest of the world and stop trying to jury-rig a system that is not working the way it was intended.


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