Guest Post: Obamacare Is A Catastrophe That Cannot Be Fixed

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Obamacare is a catastrophe that cannot be fixed, because it doesn't fix what's broken in American healthcare.

I just finished a detailed comparison of my current grandfathered health insurance plan from Kaiser Permanente (, a respected non-profit healthcare provider, and Kaiser's Affordable Care Act (Obamacare) options. I reviewed all the information and detailed tables of coverage and then called a Kaiser specialist to clarify a few questions.

First, the context of my analysis: we are self-employed, meaning there is no employer to pay our healthcare insurance. We pay the full market-rate cost of healthcare insurance. We have had a co-pay plan with for the past 20+ years that we pay in full because there's nobody else to pay it.

What we pay is pretty much what employers pay. In other words, if I went to work for a company that offered full healthcare coverage, that company would pay what we pay.

Kaiser Permanente ( is a non-profit. That doesn't mean it can lose money on providing healthcare; if it loses millions of dollars a year (and some years it does lose millions of dollars), eventually it goes broke. All non-profit means is that does not have to charge a premium to generate profits that flow to shareholders. But it must generate enough profit to maintain its hospitals, clinics, etc., build reserves against future losses, and have capital to reinvest in plant, equipment, training, etc.

As an employer in the 1980s, a manager in non-profit organizations in the early 1990s and self-employed for 20+ years, I have detailed knowledge of previous healthcare insurance costs and coverage. As an employer in the 1980s, I paid for standard 80/20 deductible healthcare insurance for my employees. The cost was about $50 per month per employee, who were mostly in their 20s and 30s. In today's money, that equals $108 per month.

In other words, I have 30+ years of knowledgeable experience with the full (real) costs of healthcare insurance and what is covered by that insurance.

Our grandfathered Kaiser Plan costs $1,217 per month. There is no coverage for medications, eyewear or dental. That is $14,604 per year for two 60-year old adults. We pay a $50 co-pay for any office visit and $10 for lab tests. Maximum out-of-pocket costs per person are $3,500, or $7,000 for the two of us.

We pay $500 per day for all hospital stays and related surgery; out-patient surgery has a $250 co-pay.

So if I suffered a heart attack and was hospitalized and required surgery, I would pay a maximum of $3,500 for services that would be billed out at $100,000 or more were Kaiser providing those services to Medicare.

(Yes, I know Medicare wouldn't pay the full charges, but if Medicare is billed $150,000--not uncommon for a few days in the hospital and surgery-- it will pay $80,000+ for a few days in the hospital and related charges. All of this is opaque to the patient, so it's hard to know what's actually billed and paid.)

In other words, this plan offers excellent coverage of major catastrophic expenses and relatively affordable co-pays for all services.

The closest equivalent coverage under Obamacare is Kaiser's Gold Plan. The cost to us is $1,937 per month or $23,244 a year. The Gold Plan covers medications ($50 per prescription for name-brand, $19 for generics) and free preventive-health visits and tests, but otherwise the coverage is inferior: the out-of-pocket limits are $6,350 per person or $12,700 for the two of us. Lab tests are also more expensive, as are X-rays, emergency care co-pays and a host of other typical charges. Specialty doctor's visits have a $50 co-pay.

The Obamacare Gold Plan would cost us $8,640 more per year. This is a 60% increase. It could be argued that the meds coverage is worth more, but since we don't have any meds that cost more than $8 per bottle at Costco (i.e. generics), the coverage is meaningless to us.

The real unsubsidized cost of Obamacare for two healthy adults ($23,244 annually) exceeds the cost of rent or a mortgage for the vast majority of Americans. Please ponder this for a moment: buying healthcare insurance under Obamacare costs as much or more as buying a house.

A close examination of lower-cost Obamacare options (Bronze) reveals that they are simulacra of actual healthcare insurance, facsimiles of coverage rather than meaningful insurance. The coverage requires subscribers to pay 40% of costs after the deductible, which is $9,000 per family. Total maximum out-of-pocket expenses are $12,700 per family. This coverage would cost us $1,150 per month, and considerably less for younger people.

How many families in America have $9,000 in cash to pay the deductibles, plus the $13,800 annual insurance fees? That totals $22,800 per year. If some serious health issue arose, the family would have to come up with $12,700 (out-of-pocket maximum) and $13,800 (annual cost of insurance), or $26,500 annually.

Is healthcare that costs $26,500 per year truly "insurance"? I would say it is very expensive catastrophic insurance in a system with runaway costs.

The entire Obamacare scheme depends on somebody paying stupendous fees for coverage which then subsidizes the costs for lower-income families and individuals. How many households can afford $23,244 a year for Gold coverage plus $12,700 out-of-pocket for a total of $35,944 annually? How many can afford $26,500 for Bronze coverage?

Recall that the median household income in the U.S. is around $50,000.

How many companies can afford to pay almost $2,000 a month for healthcare insurance per employee? Even if employees pay a few hundred dollars a month, the employers are still paying $20,000 a year per (older) employee.

If an employer can hire someone in a country with considerably lower social-welfare/healthcare costs to do the same work as an American costing them $2,000 per month for healthcare insurance, they'd be crazy to keep the worker in America, unless the worker was so young that the Obamacare costs were low or the worker was a contract/free-lance employee who has to pay his own healthcare costs.

Uninformed "progressives" have suggested that "Medicare for all" is the answer. Their ignorance of exactly how Medicare functions is appalling; recall that Medicare is the system in which an estimated 40% of all expenditures are fraudulent, unneccessary or counter-productive, where a few days in the hospital is billed at $120,000 (first-hand knowledge) and a one-hour out-patient operation is billed at $12,000, along with a half-hour wait in a room that's billed at several thousand more dollars for "observation." (Also first-hand knowledge.)

Medicare is the acme of an out-of-control program that invites profiteering, fraud, billing for phantom services, services that add no value to care, and services designed to game the system's guidelines for maximum profit. If an evil genius set out to design a system that provided the least effective care for the highest possible cost while incentivizing the most egregious profiteering and fraud, he would come up with Medicare.

Does Medicare look remotely sustainable to you? Strip out inventory builds and adjustments from imports/exports and the real economy is growing at about 1.5% annually. As noted yesterday in What Does It Take To Be Middle Class?, the real income of the bottom 90% hasn't changed for 40 years, and has declined by 7% since 2000 when adjusted for inflation.

Here is Medicare's twin for under-age-65 care for low-income households, Medicaid:

As I have observed for years, Obamacare and Medicare/Medicaid do not tackle the underlying problems of Sickcare costs in America. If you haven't read these analyses, please have a look:

Why "Healthcare Reform" Is Not Reform, Part I (December 28, 2009)

Why "Healthcare Reform" Is Not Reform, Part II (December 29, 2009)

Type sickcare into the custom search box at the top of the left-hand column of the main blog page and you will find dozens of essays addressing what's broken with American healthcare.

Obamacare is a catastrophe that cannot be fixed, because it doesn't fix what's broken in American healthcare. It is a phony reform that extends everything that makes the U.S. healthcare unsustainable sickcare.

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mayhem_korner's picture

Obamacare Is A Catastrophe That Cannot Be Fixed


Strike "care" and you've got yourself a winner of a bumper-sticker.

freewolf7's picture

The black swan I've been waiting for.

icanhasbailout's picture

Gosh where have I seen this before... oh yes! I know where! I wrote it:



Buckaroo Banzai's picture

I don't think there is a single person in the current administration who has the slightest interest in addressing the actual root problems of our current sick care industry.

dryam's picture

Obamacare was only designed to be a stepping stone to the Fuhrer's ultimate goal.  When someone has grand plans they don't let all the cats out of the bag at once.  History is a good guide for that. 

TeamDepends's picture

That ultimate goal being a single-payer system/gulag.  But if Barry and Val think that Americans will embrace a total government takeover of our health care system, especially after the ACA debacle, they have another thing comin'!

citizen2084's picture

Obombya sCARE is a total takeover of the healthcare system under the facistia model. Favored political allies own the means of production not the state but for the mere mundanes the end result is the same, death. 

Mr and Mrs America are not going to do any darn thing about anything.  They love thier techno/pharma/porno/circus servitude.  The only thing your fellow man will do is kill you for threatning thier massa's plantation.  

Not arguing with ya just sharing my perspective. 




Tijuana Donkey Show's picture

Don't hate on the porno man. Think of the children...

andrewp111's picture

I don't think they intend to give us any choice in the matter.

Bad Attitude's picture

Depending on how you want to count it, the FSA voters outnumber productive voters. The majority of voters will embrace total government takeover of our health care system because health care will be "free."

Dear Leader has three more years to irreparably break things. We have already passed the point where we can just "vote the bastards out" to fix things. The next step is collapse.

Forward (over the cliff)!

rbg81's picture

No problem.  Barry will just issue an executive order making it so.  All the pundits will gush that he fucked things up so badly that only HE can fix it.  And the sheeple will just bleet meekly.

therearetoomanyidiots's picture

You're right, there's no money in it for them.  

sunnyside's picture

I don't think there is a single person in the current administration who doesn't want single payer heathcare. 


The website fiasco is nothing but kickbacks to friends.  The real rotten meat is the bill/law.  I truly believe with as much conviction as I believe I would like to spend a weekend playing in Trish Regan's pants, that as the heathcare itself blows up, a public option of open Medicare to all will be made available at a monthly cost lower than any private plan.  Yellen will be printing the difference until it all collapses.

ShrNfr's picture

Or any other problem other than "When is tee time?" and "How is the re-election campaign going?"

max2205's picture

Price controls= no campaign donations....throw them all out

Headbanger's picture

I told you guys I know Fortran!   So give me say $20 million and I'll fix it right.  Trust me!

Would I lie to you??   Reminds me of a song...

That should be Obama's theme song!

rubiconsolutions's picture

"Uninformed "progressives" have suggested that "Medicare for all" is the answer."

Amen to that. Medicare is a mess. It is underfunded by $88 Trillion presently. Medicare Part D, the prescription drug program is underfunded by $22+ Trillion and that is a relatively new program (Source: Adding tens of millions of additional people into an already dying program would kill the economy. But that's where this country is heading because that was the goal the whole time.

Kobe Beef's picture

Well, as an informed progressive, I have come to the conclusion that a diamond ring, a box of chocolates and a new Ferrrari are fundamental human rights. Anything less is the denial of the basic human right to love and self-esteem, and constitutes disparate impact and social injustice. If I can get 100 million useful idiots chanting that same slogan, we can make you pay.

s/ off

Cloward-Piven on. Total Systemic Collapse Imminent. Prepare for Civil War II.

doctor10's picture

the legislation was written by and for the crooks. It was designed to open the pocketbook and bank accounts of very remaining nook and cranny of cash in the country-and empty out

Freddie's picture

Hope & Change.  It's the Democrats way.

More_sellers_than_buyers's picture

Really? just think....they tried to tackle health care and never mentioned tort reform.  Joke from the get go...these people would not know what fiduciary resposibility(with tax dollars) is, if it fucked them in the throat

mr. mirbach's picture

This chart says it all!  DOH! isn't a strong enough sentiment!

Money 4 Nothing's picture

I didn't see DHS mentioned in therre? They are mentioned in the healthcare bill tho.

ebworthen's picture

"Obamacare is a catastrophe that cannot be fixed, because it doesn't fix what's broken in American healthcare."


$1,937 per month?

Yeah right.

Middle Class killer.

And it won't help Tiffany's or the sale of Mercedes and Porsche's either.

SWRichmond's picture

Rich people still think this economic catastrophe is going to pass them by. 

Kobe Beef's picture

Let's make sure it doesn't. The Great Liquidation cometh. We must be ready to make amends.

akak's picture

I think Obama(Don't)Care needs to sign up for Obama(Don't)Care.

Or did it already?

Flakmeister's picture


So the "market driven" reform originally proposed by the the Right Wing American Heritage Institute and enacted by Romney in Massachusetts is a disaster doomed to failure...

I never would have guessed that....

csmith's picture

Not market driven at all. Phony-crony driven, more like it. The big players (pharma, hospitals, insurers) all got paid off early to help stitch together this Frankenstein mix of bad body parts (mandated benefits, fees, penalties, limits, controls, etc.) which is neither "market" nor "driven" by anything other than rent seeking. We deserve what we got - an awful mix of half-baked crap which drives costs UP and satisifies no one.

BigRedRider's picture

True dat.  Also, the Big Bang was neither big, since it started from a singularity (singularity is science jargon for "I don't know") nor did it bang, since sound doesn't travel in a vacuum.  Reference the allegory of the fabled tree falling in the woods without a sound because no one heard it.


I Obama of me.  Sometimes I just out do myself.

Sokhmate's picture

And Rhode Island is neither a road nor an island.

Flakmeister's picture

And do you think that I am disagreeing with what you said...

As for driving costs up, Americans have been getting close to a free ride for years on HC, bill is now coming due...

nickels's picture

No insurance scheme can fix "health care". It's too expensive for a dozen different reasons and can't possibly be paid for by the productive labor of an individual. Use some of the tobacco subsidy money to make it easier for more medical people to get certified. Take some of the money from equipment that the military says they don't want and buy some diagnostic gear for clinics. It's the job of government to provide for the people those things that the people can't provide for themselves. It's not just about highway paving and defense.

pods's picture

It is the job of government to follow the rules set up for it in the first place.

95% of the government's job is simply not the government's job.

Want it to legally be the government's job?  Simple. Amend the constitution.

"It's the job of the government to provide people those things that the people can't provide for themselves."

Like what, a rocket?  Boat?  Doublewide? Breast implants?  Midget masseuse?  



nickels's picture

"The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves — in their separate, and individual capacities"----- A. Lincoln. Sorry, should have provided footnotes--apparently the quotation is more obscure than I realised.

citizen2084's picture

This is what Linclon war was all about changing the federal system of goverment. He only had to kill 600k people to get his way - probably a lot less than obomb ya care will ultimtaley kill. 





artless's picture

I was going to respond to the first entry but then you followed up bu quoting of all people Lincoln.

Yes, when you're up against it whip out a quote from a mass murdering, tyranical, racist, psychopath to back you up. Not such a good idea.

Look brother, Lincoln is Obama's fav prez because when all is said and done NO ONE was/is/will be a worse POTUS than Abe.

Okay, maybe FDR but I digress.

It is not "the government's job" to do anything. Whoopdee fucking doo there's this old shred of paper with some ideas on it that establishes this thing we call "government". Says something about the government by the people or something. Yeah, that's it the people. True it goes on to make a few (VERY FEW IN FACT) suggestions and directives as to what this thing "of the people" id supposed to do. But nowhere does it say anyhting about doing what needs to done or some such. I've read the damn thing front to back uoside down and in reverse and let me tell ya, IT AIN'T THERE.

Now I'm more than willing to throw the thing out tomorrow since it's pretty much been so steeped in the piss of guys like Lincoln, FDR, Roosevelt, LBJ, Wilson ...OH HELL every fucking president that has ever occupied that ungodly ugly white blob of shit on Pennsylvania Ave. And with that this compulsive obsession with the need to be governed. But I'm pretty sure that's not on the horizon just now so I'll compromise and suggest that perhaps we just do what the old rag says in the meantime.

""The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves — in their separate, and individual capacities"

If this is indeed Lincoln then he was a bigger fool than even I knew.

Here is how an intelligent person would phrase that.

"The legitimate objective of the entrepenuer, industry, and the division of labor and specialization, is to do for a community of people, whatever they need to have done, but cannot do, at all, or cannot, as well do, for themselves — in their separate, and individual capacities"

If you believe otherwise then you are a fascist, socialist, marxist, stalinist, statist, totalitarian, maoist - take your pick.

Just notice what was left off the list.

artless's picture


Except for the amendment part. 16th? anyone? Yeah, not so good.

Of course it was supposed to be "the government's job" to coin money. They sort of bypassed the whole amendment thing there and sold it out to a cartel.

And then seemed to forget the part about silver & gold. Oooops.

That in a nutshell is the problem with the whole idea of "government" in the first place. And don't get me started on democracy! 


Blues Traveler's picture

Flake, Howard Dean would call you a low information voter.

bearish1's picture

BarryCare = Population control!!!

kw2012's picture

It wasn't meant to work. It was meant to get people to accept the idea of government provided healthcare and THEN TADA! SINGLE PAYER INSURANCE will be floated to save the day. That means MASSIVE rationing, health care shortages etc... Better get your cataract surgery NOW! not joking. My Mom's friends are already doing this. Their husbands are doctors or friends or doctors.

JustObserving's picture

Healthcare prices in the US are completely insane and the so called affordable healthcare act isn't:. The US would have saved about $600 billion a year (total US healthcare spending $2700 billion a year) with a single-payer system but then how would insurance companies, big pharma and hospitals reap massive profits?

As Hospital Prices Soar, a Stitch Tops $500


SAN FRANCISCO — With blood oozing from deep lacerations, the two patients arrived at California Pacific Medical Center’s tidy emergency room. Deepika Singh, 26, had gashed her knee at a backyard barbecue. Orla Roche, a rambunctious toddler on vacation with her family, had tumbled from a couch, splitting open her forehead on a table.

On a quiet Saturday in May, nurses in blue scrubs quickly ushered the two patients into treatment rooms. The wounds were cleaned, numbed and mended in under an hour. “It was great — they had good DVDs, the staff couldn’t have been nicer,” said Emer Duffy, Orla’s mother.

Then the bills arrived. Ms. Singh’s three stitches cost $2,229.11. Orla’s forehead was sealed with a dab of skin glue for $1,696. “When I first saw the charge, I said, ‘What could possibly have cost that much?’ ” recalled Ms. Singh. “They billed for everything, every pill.”

A day spent as an inpatient at an American hospital costs on average more than $4,000, five times the charge in many other developed countries

Yes, there is no inflation in America. Keep buying those bonds.

moneybots's picture

"Healthcare prices in the US are completely insane and the so called affordable healthcare act isn't:. The US would have saved about $600 billion a year (total US healthcare spending $2700 billion a year) with a single-payer system but then how would insurance companies, big pharma and hospitals reap massive profits?


How is single payer going to save 600 billion when more people would be in the system?  Any democrats ever call for an end to anti-trust exemptions and monopolistic protections?  What is single payer but a monopoly?

JustObserving's picture
Friedman: $1 trillion in savings in first year of single payer system

UMass Amherst Department of Economics Professor Gerald Friedman has completed a new study for thePhysicians for a National Health Program that concludes upgrading Medicare and expanding it to cover all Americans would create $1 trillion in efficiency savings in its first year of operation, enough to pay for comprehensive health benefits for all U.S. residents and lower costs to most people and businesses. The report was unveiled in Washington, D.C. on the 48th anniversary of Medicare by advocates of a single payer health insurance system ( [Calif.], 7/31/13). Download the study.

odatruf's picture

@JO - you understood that the plan to which you link requires more than $1.4 trillion in new federal taxes. That's in addition to the current taxes plus all those already added by ACA.

You did catch that, right?

Further, there is no backing of the "$1 trillion in efficiency savings" that are claimed. At most, it's the $592 billion that the report asserts will be done "by slashing the administrative waste associated with the private insurance industry ($476 billion) and reducing pharmaceutical prices to European levels ($116 billion)."

Even if those figures are true, are we to believe that there won't be any offsetting increase in the administrative costs of the massively expanded Medicare program (in case they need some website work, etc.)?

And, anyone who simply claims that we can pay the drug companies the same prices that they are forced to take from price-controlled countries has zero understanding of health care economics and I wouldn’t credit them enough to make me a sandwich.


Bah, I don't know why I bother.



Frank Grimes - Grimey to my friends.

artless's picture

Please explain why I can carry around a super computer in the palm of my hand-something that is completely unnecessary-for ever lower prices and better service / higher level of tech and PRICES (not costs)  continue to skyrocket on archaic things like sticthes.

It's okay, I'll wait. Here's a hint: one market is overwhelmed by third party money, regulation, intervention, fraud, fraud, cartelization, syndication, did I say FRAUD, waste, and inefficiencies while the other-and I'll give you a hint it's the market that dropped all the iShit on us- does not.

You are simultaneously stating the so-called "savings" that single payer would supposedly provide while demonstrating through the two emorgency room stories exactly what is wrong with the healthcare industry and completely missing it all.

Stitches DO NOT COST $2,000. I have had stiches recently. In an ER. My bill was $180. I was living in Austin, TX. However in a non competitive cartelized environment a vendor will charge WHATEVER THEY THINK THEY CAN GET. And in the case of Hosptital ERs they tend to function as they have the victim patient by the balls. Hospitals are cesspools of waste, mismanagement, and out right fraud. The enourmous amount of cash flowing through these places via the insurance industry (the biggest scam) and the federak and state governments is the problem. You say single payer is the amswer. Well 50% of ALL HEALTHCARE DOLLARS spent in the US are government. We're half way there. How's that working?

I can think of only one entity that is "single payer" here in the US. That would be NATIONAL DEFENSE. Now because of that little document that a mere fraction of the current states even had a say in adopting calls for a NAVY and SUGGESTS and army and leaves it to The Feds to deal with rather than some other entity like, say, New York or some private corporation, Washington, DC is the effective "single payer" for the defense of thid nation. They make every purchase, every allocation, AND EVERY DECISION. By your logic re: healthcare it SHOULD be the most streamlined, effective, efficient, well managed part of the government.

How's THAT working?

EVERY DECISION. Made by Washington, DC. About your healthcare. Let that sink in a bit.

Now I ask Are you fucking kidding me? Single payer will only make it worse and bankrupt this already bankrupt nation that much faster.

And yes all the Socialist Democracies in the "developed countries" are going broke due to their shitty messes of national healthcare which if you knew history is straight out of Bismark, then Marx and Lenin an is understood as THE way to gain enormous levels of control on a population.

odatruf's picture

Art - a very good post.  I agree with it all.

One thing that lets the costs of producing iCrap is technology and lowest price labor seeking. In health care, both are working in the other direction.

And, a single payer insuance system isn't inherantly worse than the system we have now, but it would inevitably become worse with the corrupt systems and rent seeking incentives in place.