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Guest Post: Obamacare's Fatal Flaw
Authored by Martin Feldstein, originally posted at Project Syndicate,
Obamacare, officially known as the Patient Protection and Affordable Care Act, is the health-insurance program enacted by US President Barack Obama and Congressional Democrats over the unanimous opposition of congressional Republicans. It was designed to cover those Americans without private or public health insurance – about 15% of the US population.
Opponents of Obamacare have failed to stop it in the courts and, more recently, in Congress. The program was therefore formally launched on October 1. Although it has been hampered by a wide range of computer problems and other technical difficulties, the program is likely to be operating by sometime in 2014.
The big question is whether it will function as intended and survive permanently. There is a serious risk that it will not.
The potentially fatal flaw in Obamacare is the very same feature that appeals most to its supporters: the ability of even those with a serious preexisting health condition to buy insurance at the standard premium.
That feature will encourage those who are not ill to become or remain uninsured until they have a potentially costly medical diagnosis. The resulting shift in enrollment away from low-cost healthy patients to those with predictably high costs will raise insurance companies’ cost per insured person, driving up the premiums that they must charge. As premiums rise, even more relatively healthy individuals will be encouraged to forego insurance until illness strikes, causing average costs and premiums to rise further.
With this in mind, Obamacare’s drafters made the purchase of insurance “mandatory.” More specifically, employers with more than 50 employees will be required after 2014 to purchase an approved insurance policy for their “full-time” employees. Individuals who do not receive insurance from their employers are required to purchase insurance on their own, with low-income buyers receiving a government subsidy.
But neither the employer mandate nor the personal requirement is likely to prove effective. Employers can avoid the mandate by reducing an employee’s workweek to less than 30 hours (which the law defines as full-time employment). But even for full-time employees, firms can opt to pay a relatively small fine rather than provide insurance. That fine is $2,000 per employee, much less than the current average premium of $16,000 for employer-provided family policies.
Not providing insurance and paying the fine is a particularly attractive option for a firm if its employees have incomes that entitle them to the government subsidies (which are now available to anyone whose income is below four times the poverty level). Rather than incur the cost of the premium for an approved policy, a smart employer can pay the fine for not providing insurance and increase employees’ pay by enough so that they have more spendable cash after purchasing the subsidized insurance policy. Even after both payments, employers can be better off financially. News reports indicate that many employers are already taking such steps.
But the biggest danger to Obamacare’s survival is that many individuals who do not receive insurance from their employer will choose not to insure themselves and will instead pay the fine of just 1% of income (rising permanently after 2015 to 2.5%). The preferred alternative for these individuals is to wait to buy insurance until they are ill and are facing large medical bills.
That wait-to-insure strategy makes sense if the medical condition is a chronic disease like diabetes or a condition requiring surgery, like cancer or a hernia. In either case, the individual would be able to purchase insurance after he or she receives the diagnosis.
But what about conditions like a heart attack or injuries sustained in an automobile accident? In those cases, the individual would not have time to purchase the health insurance that the law allows. If they are not insured in advance, they will face major hospital bills that could cause serious financial hardship or even cause them not to receive needed care. Anyone contemplating that prospect might choose to forego the wait-to-insure strategy and enroll immediately.
But private insurance companies could solve that problem by creating a new type of “emergency insurance” that would make enrolling now unnecessary and allow individuals to take advantage of the wait-to-insure option. Such insurance would cover the costs that a patient would incur after a medical event that left no time to purchase the policies offered in the Obamacare insurance exchanges. Emergency insurance might also cover the cost of care until the “open enrollment” period for purchasing insurance at the end of each year (if political pressure does not lead to the repeal of that temporary barrier to insurance).
This type of insurance is very different from existing high-deductible policies. Given the very limited scope and unpredictable nature of the conditions that it would cover, the premium for such a policy would be very low. It would not satisfy the broad coverage requirements that Obamacare mandates, forcing individuals to pay the relatively small penalty for being uninsured and to incur the subsequent cost of buying a full policy if one is needed later. But the combination of emergency insurance and the wait-to-insure strategy would still be financially preferable for many individuals, and the number would grow as premiums are driven higher.
Employers with a large number of full-time employees could encourage their existing insurance companies to create the emergency policies. They might even choose to self-insure the emergency risk for their employees.
The “wait-to-insure” option could cause the number of insured individuals to decline rapidly as premiums rise for those who remain insured. In this scenario, the unraveling of Obamacare could lead to renewed political pressure from the left for a European-style single-payer health-care system.
But it might also provide an opportunity for a better plan: eliminate the current enormously expensive tax subsidy for employer-financed insurance and use the revenue savings to subsidize everyone to buy comprehensive private insurance policies with income-related copayments. That restructuring of insurance would simultaneously protect individuals, increase labor mobility, and help to control health-care costs.
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"But for the average guy, this is the best system in the world."
Perhaps for the emergency-sick old guy, yes. The young & healthy ones are screwed OTOH.
Did the thought ever occur to you that you were anyway responsible for triple bipass surgery or was this something that just happens to people and others should just bear the cost? If a Dr had warned you years in advance that you were going to have heart trouble would you have changed your lifestyle to avoid it? I am 52 years old and in stellar health according to numerous drs. I have paid a fortune for good food and exercise regularly. I have acknowledged my mortality and realize my health will fail eventually and I will die. If I get a life threatening disease like pancreatic cancer no, I will not do extra ordinary care. I would live my remaining few months surrounded by my love ones and try to have a good pain free death as possible. I realize finding out your condition in its critical last moments meant you had no time to change. However, you appear to think all we need to do is line up in Canada to collect the free care and solve all our healthcare needs. You must see the problem with this.
Miffed;-)
***you were anyway responsible for triple bipass surgery***
Actually I wasn't. I have a long family history of heart disease. My grandfather died at sixty from a heart attack, my father at fifty-eight. As well as many other family members. I have always exercised, had a healthy diet and didn't smoke. Sometimes it's just in your genes (or your stars). I realize that when you're twenty you are going to never get sick and live forever. But as you get older you realize sickness and death waits for you. Everyone at every age should realize this and create health systems and insurance systems that deal with this reality. Time to smarten up!
So why should other people be paying for your genes?
We all have genetic challenges. Mine are emphysema and high blood pressure. All my family members who has asthma that progressed to COPD never made it past 62. All my family members with high blood pressure made it to 70. My one grandma with a high blood pressure was an outlier and made it to 92. I was the only child that had severe asthma at the youngest age as well as having moderately high blood pressure. My drs told me I would be lucky to live to fifty. I am 52. My blood pressure is 120/75 and I have no asthma. When I was 40 I was severely asthmatic, on 5 medications to keep me breathing and on several blood pressure lowering meds. I was a frequent flier in the ER. I put my full trust in modern medicine including the belief there was nothing I could do, it was genetic.
Then something changed. I was complaining to my dr I didn't want meds, I wanted answers. I wanted to be cured. He got in my face and told me to face facts, there was no cure. I had a chronic disease that would never go away and shouldn't I be damn appreciative that I lived in an age where modern medicine could keep me alive. Something in me just snapped. I screamed at him what I was was not living it was slowly dying and if he couldn't help me he could just fuck of and die! I'll never forget how hard I slammed the door on the way out.
The next five years were crazy. Yes I took a lot of wrong turns and went down a few wacko paths. I finally met some great people who helped me immensely and got me into organic, no GMO, juice fasting and alternative healing. I rejected things that didn't work for me but always kept an open mind. I was on a journey and when you make an intention to heal thy self your world gets very different. I am now the healthiest member of my family though I was originally the sickest. Research is now showing genetics basically is a hand you are dealt. It is no foregone conclusion by any means.
Henry, I am not criticizing you for your choice. I would be hypocritical if I did. What I suggest to you is consider alternatives. Gary Taubes is a great start. I believe in Good Calories Bad Calories he describes President Eisenhower's death from heart disease even though he was doing what the best drs at the time recommended. Don't give up and assume your only hope is to be a hunk of meat only modern medicine can fix. I have found it not to be so. Good luck.
Miffed;-)
Thanks. And good health to you.
As an engineer, you understand there is a cost/benefit analysis done before moving ahead with the design of a project...right?
I thought so ;-)
Well fuck me!
That's where I went wrong...
Yes....but I honestly do not know if there was? Likely on the original desire for a single-payer system, but certainly not for the final compromise you ended up with!
Yes....but I honestly do not know if there was? Likely on the original desire for a single-payer system, but certainly not for the final compromise you ended up with!
Leaving people in ambulances (as in Britain) so as to not have them admitted to a hospital and be counted, to keep the numbers down on "healthcare", is an administrative "feature"...not part of the original design.
Kinda sucks for the people in car accidents & house fires and whatnot too, that, ya know, actually need an ambulance to respond...wouldn't you say?
One of the worst parts of O'DicktatorSinglePayerCare is that you have to pay even though you do everything you can to avoid going to a doctor.
***avoid going to a doctor.***
Pretty easy avoiding a doctor in your 20s or 30s. not so much in you 50s or 60's. Soon or later you're going to need serious medical treatment. You can count on it!
Is that your rationale why gkar should be forced to subsidize your medical care, old man?
lol...he self identified as "American"...taking him at his word, Canada can have him ;-)
Yea, well enjoy your Obamacare douchbag. It's guys like you who deserve it.
I'm 56. I try to take care of myself. Avoiding doctors can actually extend your life by avoiding what they prescribe. Instead of taking the crap they give you, ride a bike, eat better and take supplements.
More hands on health care people and less Leeches.
If insurance collapsed and we doctors went all cash i could cut my rates 50 percent and make just as much money. 35 bucks for an established patient office visit. Labs and scans would be cheaper too. MRI 400 bucks. CT scan 200 bucks. Chest xray 6O bucks including radiologist fee. Hell they read 20 xrays per hour. Radiologists will do ok.
However a dork like me who gets paid to think and diagnose and manage stuff will always be paid less than people who "do" stuff like a procedure.
That 35 dollar fee doesnt include filling out your goddamn disability forms for free,unless I am really desperate to get enough patients lol.
Good to hear from someone who actually deals with this shit on a daily basis. Had to visit a doc for a physical last year (wife's request) and was amazed at the number of employees in the front office. WOW! When I was a youngun, you dealt with the doc. IF he had someone in reception, she was also his nurse. How fucked up is it that we need a half-dozen administrators for each practitioner these days?
Obamacare's Fatal Flaw = Obama
Obamacare is merely another symptom of the general psychotic breakdown of the USA, which is primarily due to its history of being controlled by legalized lies, backed by legalized violence, automatically running away with itself at an exponentially accelerating rate. True "public health care" can not be properly comprehended outside of a systematic appreciation of the overall human ecology. However, America is the greatest manifestation yet of the social pyramid system of the Neolithic style of civilization, which was primarily based upon slavery. Slavery never went away, it merely became more sophisticated, and the inability of most people to see that enabled those more sophisticated forms of slavery to run rampant, without any effective opposition. Everyone living in America is living inside of a debt slavery system, whose numbers are on exponential growth curves, to become debt insanity. Americans are generally the victims of the best brainwashing that money could buy. The most scientific psychology was applied to condition most of them to become incompetent political idiots.The real system is Wolves in sheep's clothing, making sure that enough people become Zombie Sheeple, who are kept ignorant and afraid, so that they can be controlled. Obamacare is merely more of that worm turning.
The central features of real human ecology are its death controls. The history of warfare selected for that actually be done through the maximum possible deceits. That murder system was then the platform upon which was made and maintained the monetary system, which is based on the maximum possible frauds. That is the overall context of social facts into which the psychotically dysfunctional Obamacare program enters. Since, in almost every possible way, Americans are controlled by legalized lies, backed by legalized violence, they are living in Bizarro Mirror World, where almost everything is proportionately backwards and distorted. Obamacare is merely the latest installment of that overall runaway social insanity.
Since the real world is controlled by lies, backed by violence, the real world is dominated by the best professional liars, and immaculate hypocrites, and therefore, everything they say is almost always diametrically opposite to the actual situation, since everything is manifesting in a Bizarro Mirror World Fun House. Therefore, laws like the "Patriot Act" were due to the greatest forms of treason ever yet enacted, and similarly, "Patient Protection and Affordable Care Act" is absolutely guaranteed to cause the opposite to what its title says it is supposed to do. However, since the dumbing down of most Americans has already been achieved all too well, there are no reasonable ways to fix these problems.
There can be no saner "public health policies" which do not address the deeply paradoxical problems around the death controls, which are central and absolutely crucial to understanding the actual operation of the overall human ecology systems. However, the American systems are based on hyperbolic deceits, aided and abetted by the mass media, etc.. Thus, it is impossible to have any saner public debates about any of these issues. Rather, there is already an enormous Gordian Knot of entangled legalized lies, backed by legalized violence, running almost everything, throughout American society. Therefore, this article about "Obamacare's Fatal Flaw" only tangentially touched upon the single most salient, current way in which American social systems are terminally crazy, and therefore, headed towards some series of psychotic breakdowns.
More radical truth about these problems would require going deeper and deeper, through layer after layer, of the legalized lies, backed by legalized violence, which are currently the convoluted ways that Americans are being controlled. It is NOT good enough to stop at any one layer of those lies, and then think one has gotten at "the truth," because the more one looks, the more one perceives that this situation is actually fractal, and there are practically infinite tunnels of deceits and frauds operating. Furthermore, there are good reasons WHY that is the real situation, since the paradoxes about death controls, and the debt controls that they back up, have no end, the same as fractal processes can endless repeat themselves, at different levels.
The medical system operates inside the monetary system, which operates inside the murder system. Since the American murder systems operate through the maximum possible deceits, and the American monetary systems operate through the maximum possible frauds, of course, Obamacare is going to backfire badly! However, in order understand that better requires understanding how and WHY the combined murder/money systems are based on the maximum possible deceit/fraud, and understanding that systematically requires appreciating the fractal nature of those, whereby basically simple methods of organized crime gradually generate almost infinitely complex patterns.
I suspect that the only plausible "solution" to the increasingly convoluted and entangled Gordian Knot of legalized lies, backed by legalized violence, which almost totally dominates the lives of the American people, is the Alexandrian solution, whereby some series of psychotic breakdowns simply cuts through that Knot. It reminds me about how the magnetic fields in the Sun get tangled up, more and more, until they release their tension through solar flares. Americans are getting tangled up worse and worse inside a skein of legalized lies, backed by legalized violence, controlling everything that they are doing. Just as there are different levels of possible solar flares, classified as C, M and X Flares, etc., the social storm potential building in the USA is analogous.
To push that analogy further, the colourized renditions of the Sun Spots show delta zones, were the red and blue coloured magnetic polarities get tangled up too close to each other, which is sign that the potential for a Solar Flare is building. American politics is similarly tying itself up into a Knot over Obamacare, because it is actually the single craziest thing being done at the present time. The profit from disease system, (assisted by the profit from junk food system) is the single greatest contemporary social insanity in the USA. It was built on the foundation of even greater historical insanities, which we now take for granted. But nevertheless, at the present time, none of the other almost completely crazy and corrupt systems, like the energy systems, or the military industrial complex, are as actively lobbying the government, to advance the overall ways that legalized lies, backed by legalized violence, control the lives of Americans. The FATAL FLAW is not merely some superficial aspect of "the ability of even those with a serious preexisting health condition to buy insurance at the standard premium." The deeper fatal flaw is that nearly EVERYTHING in American society is now dominated and controlled by systems of legalized lies, backed by legalized violence, into which maelstrom enters Obamacare, to exemplify that getting worse, in much more personal ways!
Hey Rad. Love your convoluted diatribes. Strangely they make sense if you read them quickly (and they are long). Seems you understand the Zeitgeist better than many...
feature, not a bug
Thats all well and good if this was about a plan that was about making everything better but this is all about government control and nothing less or more.
Kerrching! For State, read crony capitalists;corporatism which Mussolini named fascism: the marriage of Big State, Biggest Banks and Biggest Companies. All for their Party, no one else's. Makes the Queen happy, and the central banks.
How can you have car insurance policies with 10k in third party liability, What good is that. I have $5 million third party.
Gawd. I was such a fool. I'm a private payer under threat of legal penalty in MA which imposed this un-Affordable Care Act first.
My premiums far exceed the penalty that could be imposed by the State thugs whose mandatory healthcare site is Kafkaesque; a maze of bureaucratic $hite. And I had to pursue them for SIX months to get signed on, so as to avoid the penalty!!!
I won't be fooled again. CONgress, shove it up where the sun don't shine. As an active and healthy person, I'll pay the fine, and cash on delivery if and when I need a medical mechanic to deliver their mediocre aid.
Blame all this insurance crap on the GOP. Obama would have preferred to leave them out of the equation, but like most other crap that the GOP is able to force down congressional throats, their only concern was to kept the lucre flowing to the fat cats.
Single payer system - get that into place and you won't see anymore $40 aspirins and $25,000 per week hospital rooms.
You're such an idiot on so many fronts I don't know where to begin. Forget it, you're not worth the effort.
Miffed;-)
The idiot being called Geruda is only feeling angries at all the peoples who are doing the hatings of him for always doing the sucking of the cock of the president who is having the name Obama.
Hey kaka, has your wife made you change your shitstained underwear yet? AKAK!!! Look at the ugly skid tracks....!!!!!
Yes, I feel your pain. It's pretty hard to shift from meaningless emotional bullshit to have something specific to say. Don't let it bother you, you've never had anything worthwhile to say before now, so no one is expectiing anything from you.
You are so right. The pearls of wisdom you have sprinkled all over this site has paled any offerings I could dream of making. I humbly bow to your obviously superior intellect and hope someday to attain the respect you have been awarded here.
Miffed;-)
Obviously Geruda, you weren't paying attention when Obamacare was passed. Obama DID leave the GOP out of the equation entirely, since the legislation was passed only by Democrats who, at that time, controlled both houses of Congress.
The GOP leadership is certainly a bunch of incompetent, statist hacks, but trying to blame the GOP for anything in Obamacare, when they did not vote for it, is just the sort of lie that comes so automatically to Obama and his thuggish supporters.
You're a dipshit if you think because they don't vote for something they are blameless about the outcome. Enormous changes were made to the initial plan in an endless series of attempts to appease enough republicans to get them to vote for it.
Who is stupid enough to believe that the penalty will be capped at 2.5% in 2015 for eternity?? Democrats alway solve fiscal problems by raising tax rates because they say it is fair and anyone that does not want to be a state owned slave is a selfish and greedy racist.
Hay, cheer up everyone. Sure you have Obamacare and it sucks, but the Red Socks just won the World Series. All is not lost. Tomorrows a new day. BLAH, BLAH, BLAH
The fatal flaw is the mandatory nature, it makes it far too easy for a cartel of suppliers to rape the customer.
Not to mention the enforcement overhead is probably more than the premium for half the population.
Obamacare is a democrat's impression of a statist republican's faulty plan circa 1970, filled out to 2,500 pages by drunken monkeys. Criticizing the individual details is absurd, every detail is absurd individually and in n! permutations and combinations.
The potentially fatal flaw is that Obama is opposed by a seditious bunch of GOP bastards whose only goal is to see that whatever he attempts to do for the good of the people he fails.
Truly one of the sickest periods of time in the history of the nation. As Kunstler proposed a few years ago, the GOP should always be referred to as the Party that Destroyed America. The standout event in recent times, plunging us hopelessly into debt by illegally invading a sovereign nation with zero, nada, zip justification. The consequence of that are just beginning to sink in with the imbecils of the nation but strangley they seem to think it is all because of the skin color of our elected leader. although they often pretend that has nothing to do with it.
The GOP just has to sit on their bums and watch while everything Obama does fails. No action required on their part.
Maybe the socialist single-payer health system as used by the Europeans, Japanese, British, Australians and Canadians is the fairest afterall. Everybody pays in and everybody benefits when they need it. No worries if you've got a pre-existing condition either.
If you want to jump the que you can still pay for private if you can afford it for non-urgent surgery. It's not perfect but it'll never bankrupt you either!
There is no "single payer" system in Australia. Various parties pay for different aspects of healthcare. For instance, state governments pay for public hospitals, with patients having no control over who treats them, but the majority of middle class and other Australians have private health insurance that covers treatment in private hospitals with their own doctors. The Federal government provides a subsidy on most pharmaceuticals, but it is a subsidy with the user having to make a non trivial co-payment for pharmaceuticals. Similarly the Federal government provides a standard level of payment for GP treatment, but most GPs charge more, which has to be paid by either the patient or a healthfund, if the patient has healthfund coverage for that.
I suspect few other countries actually have simply a "single payer" system. Somehow I doubt that British politicians, aristocrats and the rich generally head off to the NHS for treatment, or that those Harley Street doctors are offering their services through the NHS.
The entire goal of Obamacare was to fail and be used as a stepping stone to a single-payer system. Duh. Is this really news to anyone?
Obamacare looks to be such a mess, we may all be driving to Canada or Mexcio for health care.