The 8 Biggest Myths Of Obamacare

Tyler Durden's picture

Submitted by John Graham via The National Center for Policy Analysis,

Four years after its passage, Obamacare has now been largely implemented, and millions have had their coverage disrupted. For years, the administration has propagated a number of myths about Obamacare. Some have already crumbled, and others will fall as Obamacare continues to change the American health system.

Myth No. 1: If you like your health plan, you can keep it. Despite President Obama’s promise that “If you like your plan, you can keep it,” about 6 million people have already been notified by insurance companies that their policies are being canceled. That number will grow. Currently, about 19 million people have health coverage that they purchased in the individual market. Most of those plans do not comply with the requirements of the Affordable Care Act. One expert estimates that the law will cause more than 15 million people to lose their individual insurance by the end of 2014. Most of these people have to get coverage from the deeply troubled Obamacare exchanges.

Businesses were supposed to be allowed to keep their employee coverage.The term the government uses for this is “grandfathered.” The truth is that few small business health plans will be “grandfathered.” For example, even small changes in deductibles and copayments or switching to another plan offered by the same carrier means losing this protection. Small firms keep premiums down primarily by changing insurers, but doing so will likely cause them to lose grandfathered status. The employer will have to find insurance that complies with dozens of costly new mandates, such as paying for so-called “preventive care” with no out-of-pocket cost to the employees.

Under a mid-range estimate, two-thirds of small business employees will not be able to keep the plan they now have.

Under the worst-case scenario, as many as 80 percent will lose their plans.

By contrast, a self-insured, large company plan or union plan is free to change its third-party administrator (the firm hired to administer the benefits on behalf of the employer) as often as it likes and still keep its grandfathered status.

However, a government memorandum predicts that more than half of all employees — and up to as many as two-thirds — with employer-provided health insurance will have to switch to more expensive, more regulated plans.  A survey of employers by a leading benefits consultant found that 90 percent of employers expect to lose their grandfathered status. A majority expect to do so before the employer mandate takes effect. The memorandum suggests that eventually all plans will lose grandfathered status.

Myth No. 2: If you like your doctor, you can keep your doctor. Many health plans sold in the exchanges offer very narrow networks with a limited choice of doctors. For example, 70 percent of California physicians are not in CoveredCalifornia exchange plan networks If government estimates are correct, about 26 million uninsured people will eventually acquire health insurance. If economic studies are correct, the newly insured will try to double their consumption of health care. Yet, with no increase in the number of physicians, there is no realistic way to meet this demand.

The Association of American Medical Colleges predicts a shortfall of 21,000 primary care physicians by 2015. Before health care reform passed, the Health Resources and Services Administration estimated a shortage of 55,000 to 150,000 physicians by 2020. That number is undoubtedly higher today.12 Texas alone is predicting a shortage of 18,000 nurses by 2015.13

Myth No. 3: There is an “employer mandate” to offer affordable coverage. If an employer has fewer than 50 full-time workers, she is not required to offer health benefits. There is a mandate for larger employers to offer health benefits. However, they do not have to cover spouses or pay for dependents. Most importantly, they have an incentive to offer benefits that will be unaffordable to many workers.

One option is to refuse to provide health insurance and pay a $2,000 fine per employee. Because this is much less than what most companies spend on employee health benefits, many employers will stop offering health insurance and send their employees to the exchanges.

Furthermore, half of all employees work for an employer who is self-insured (meaning the company pays the medical bills and hires a third-party administrator to administer the plan). A self-insured company can avoid the fine with a health plan that only covers the cost of preventive care, with no annual or lifetime limit. However, because this insurance will not satisfy the full requirements of the law, employees may go to the exchange and get subsidized insurance. If they do, the employer will be liable for a $3,000 fine per employee. An employer could avoid the fine by offering to “top up” the limited benefits and requiring employees to pay up to 9.5 percent of their annual wages in premiums and the full cost for their spouses and children.

The table shows an example of a $50,000-a-year employee who is asked to pay 9.5 percent of his or her annual gross wage for individual coverage ($4,720) and the full cost of family coverage ($10,000). Under the law, this is deemed “affordable” and satisfies the employer mandate, even though few workers would willingly spend nearly one-third of their take-home pay on health insurance — unless they expect some whopping medical bills. If an employee turns down this offer, he will not be entitled to subsidies if he buys coverage in an Obamacare exchange.

Myth No. 4: Health reform will lower the cost of health insurance by $2,500 a year for the average family. Because of Obamacare’s mandates and regulations, coverage will be more expensive for everyone outside a small portion of older, low-income adults who can obtain highly subsidized coverage in the exchanges.

A new tax on health insurance is likely to cost the families of employees of small businesses more than $500 a year in higher premiums.

A 40 percent tax on the extra coverage provided by expensive “Cadillac” plans will apply to about one-third of all private health insurance plans by 2019, but, because the tax threshold is not indexed to medical inflation, it will eventually reach every health plan.

Scores of other items will be taxed, ranging from tanning salons to the sale of appreciated capital assets (including homes), in extreme cases.

Some benefits have hidden costs:

Health insurers are raising premiums for everyone in order to charge people with pre-existing conditions less than the expected cost of their care. Some young people, for example, have seen a doubling or tripling of their premiums.

Insurers are also trying to cover the higher costs of sicker enrollees with higher deductibles and narrow networks that cover only some of the doctors and hospitals in areas where people live.

In order for employers to provide health insurance (or more generous insurance) to their employees, they will have to reduce what they pay in wages and in other benefits.

The Congressional Budget Office estimates that 2 million fewer workers will be employed in 2017 and 2.5 million fewer in 2024 than would have been employed in the absence of Obamacare. Also, total compensation will be 1 percent lower.

Myth No. 5: There is an “individual mandate” that ensures everyone has health coverage. As originally written, the Affordable Care Act required most legal residents of the United States to have qualifying coverage or pay a fine. There were narrowly defined exemptions for some religious groups,prisoners, those whose incomes were so low that they did not have to file a tax return and those who would have to pay over 8 percent of household income to buy health insurance. For 2014, the fine was only supposed to be $95 per adult or $285 per family, or 1 percent of household income, whichever is greater. By 2016, the fine is scheduled to go up to $695 per adult or $2,085 per family, or 2.5 percent of income.

However, the individual mandate was effectively deferred until at least 2016 when the Obama administration’s Department of Health & Human Servicesallowed people to decide for themselves if they qualify for a “hardship exemption.” An individual can claim a hardship exemption if she attests that “you received a notice that your current health plan is being cancelled, and you consider the other options available unaffordable.”

Because this exemption was created to reduce the political liability of fining people before the November 2016 election, the individual mandate is highly unlikely ever to be imposed. After all, there is an election every two years. Thus, fewer healthy people and more sick people will continue to sign up for coverage, and premiums will continue to rise.

Myth No. 6: Individuals cannot be denied individual coverage due to pre-existing conditions. This was only true if they applied for Obamacare coverage before March 31, 2014. If they missed that deadline, they cannot get coverage at all until November 15, 2014, unless they experience a life-qualifying event, such as getting married or having a child. In the individual market, prior to Obamacare, people could apply whenever they wanted to.

Myth No. 7: Health insurers no longer can cancel a policy after an insured individual gets sick. This has been illegal for decades. If an insurer canceled a policy, it had to offer coverage under another policy without underwriting. Before Obamacare, a health insurer could only rescind a policy if the insured had misrepresented her health status on her application. If the insurer did so illegally, it was called “post-claims underwriting,” and insurers that did it were punished severely under state law. In 2008, for example, HealthNet announced an agreement with the California Insurance Commissioner to reinstate 926 policies, pay $3.6 million in penalties and reimburse $14 million in outstanding medical claims.

On the contrary, Obamacare has caused many cancellations. For example, as a contractual condition of selling health plans in the CoveredCalifornia exchange, insurers were required to cancel existing policies and force those already covered into the exchange.

On November 14, 2013, the U.S. Department of Health and Human Services sent a letter to state insurance commissioners giving them the discretion to allow individuals to keep their prior coverage for one more year. Nearly three-fourths of states agreed to allow insurers to reinstate canceled health plans. However, it appears that most insurers were not able to do so. Indeed, the practice has been specifically barred in a handful of states, including Washington, Indiana and the District of Columbia.

Myth No. 8: Medicare has been strengthened. Reduced Medicare spending, amounting to $715 billion over the next 10 years, will pay for more than half the cost of health reform:

Cuts to hospital services total $260 billion.

Cuts to Medicare Advantage Plans total $156 billion.

Cuts to skilled nursing, hospice, home health and other services add up to $155 billion.

Hospitals that treat a disproportionate share of indigent patients will lose $56 billion.

The elderly and disabled will incur significantly higher costs:

In general, the Medicare spending cuts exceed the new benefits by a factor of more than 10 to 1.

As a result, one of every two people expected to participate in Medicare Advantage over the next 10 years (7.5 million of 14 million) will lose their coverage entirely. According to Medicare’s chief actuary, they will be tossed back into Medicare, with the option to buy another Advantage plan or a supplement. Those who retain their Advantage coverage will face steep benefit cuts or hefty premium increases, or both.

Additionally, indirect costs, including new taxes on drugs and medical devices, will apply to items that are disproportionately used by seniors and the disabled.

To make matters worse, Medicare’s chief actuary believes the planned cuts in fees may cause some doctors to retire and force some hospitals out of business.   

Conclusion. Favorable media coverage of the 8 million people who have enrolled in health insurance via exchanges has allowed the administration and its allies to revive discredited claims about Obamacare’s benefits. The numbers touted by the administration disguise the fact that many of these people lost previous coverage in the period prior to open enrollment, and people are no longer free to acquire the health insurance they want. The real costs of Obamacare will continue to burden Americans, despite the apparent success of the first open enrollment. We need an alternative.

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LetThemEatRand's picture

Oh no!  It's weekend Tyler!  Okay, Obamacare is a total disaster.  But health insurance in the U.S. was a total disaster before Obamacare.   Let's talk about that, and why Obamacare came into existence (spolier alert -- insurance companies were involved).

Charles Nelson Reilly's picture

What isn't a fucking disaster in the US these days? Besides the IPA microbrews I can get at the owner run beer store a mile from my house. It's honestly the little bit of freedom left that I really love.

economics9698's picture
Why does medicine cost so much? 

Simple, government creates shortages and transfers wealth from producers to the medical industry. 

Drugs. The FDA serves as the cartel enforcer and gatekeeper. Drugs take years and millions of dollars to get approved. Classic cartel behavior. Mafia with a smile.

This is very similar to making street drugs illegal, it drives up profits. When marijuana was legalized in California and Colorado cost plummeted and so did violence here and in mexico. The legal dug industry is based on the same economics, high demand, people are dying, limited supply. My only comment is America is a truly sick society to have this system. Legalize pharmaceutical drug manufacturing and cost would plummet. Start by killing the FDA.

A much cheaper alternative would be for the drug industry to test and approve all drugs. Information peer reviewed, and most importantly, information available to lawyers who could sue for damages if there was fraud. Get some greedy lawyers involved and drugs would be much cheaper and safer than today. Never underestimate what a few good lawyers can do.

Doctors. Limited medical schools create shortages and drive up salaries.

Hospitals. Limit the supply, same result.

Government transfer payments. The feds, state, and local government spend $1.1 trillion, about 7% of the GDP on the medical industry. They claim to be helping but heath care cost were 15% of what they are today from 1929 to 1970. That is no accident. 

When government takes money from you and gives it to a group, any group, education, medical, hot dogs, those in the industry can demand higher prices, production is marginally affected. Higher prices, maybe some more production. When the government tells you that its "free" they simply take your money and giving it to the industry, they take their cut, and send you the bill in the form of taxes or more commonly for the poor, inflation. Bread in Venezuela is $11 a loaf. It will happen here. Nothing is free and there is not a bunch of millionaires waiting to pay your bills.

Third party payer. FDR started employers in the insurance business, and that is when historic medical care cost started rising. In simple terms if you pay 12 cents on the dollar for a new car what car are you going to buy? An Aveo or Cadillac?

Third party payer insulates the consumer from the real cost of medicine and creates a incentive for doctors and patents to overuse the product. Medical savings accounts would eliminate this problem. The problem is the disconnect between price and the patent.

EVERYTHING the government does is designed to help increase profitability for the industry and pretend to help the consumer. Some politicians, Schumer, Cantor, understand full well what is happening, and some are dumb as a box of rocks, Pelosi.


LetThemEatRand's picture

FDR's fault.  Did you forget the role of private drug companies and health care corporations in this?  I give you that big government is evil.  Will you admit that big corp USA is evil?

nmewn's picture

Why can't you accept the fact that corporations and government are the ugly twins in this dance we do?

Its called fascism.

LetThemEatRand's picture

I fully accept it and preach it.  But a lot of people here blame the cops for taking the mob bribery, and suggest the solution is just getting rid of cops.

nmewn's picture

Until the cops start arresting those who attempt to bribe them (let alone accept it) I would say they are part of the problem.

Wouldn't you? There is law or there is not.

How about this for a law? Government employees are forbidden to unionize as no one is at the table to speak for the employer, which is us.

Don't even attempt to say "we elect those who negotiate on our behalf" as an excuse to forbid it.

Those "elected/selected" are government employees too and have a vested interest in the protection of the central state and its growth.

LetThemEatRand's picture

Um, of course cops on the take are not going to arrest those who bribe them.   My point -- which I think you're missing -- is that the bribees AND the bribers are the problem.  It's not an either/or.

nmewn's picture

Had to dash through the rain to pick up squire, some play at school, something about revenge, oddly enough.

So, the answer is vigilantism? ;-)

wee-weed up's picture



Just eight?...  For the whole massive monstrosity that is ObozoCare?

Ha! Someone obviously has his head up his arse!

LetThemEatRand's picture

Ideology, guys.  It's a step below being an idiot.  A step below because idiiots are happy.  The matrix wants you to blame politicians and not those who own them.  Blame them both.

BlindMonkey's picture

Done and done. I blame them both.

Now tell me again how I can vote out the c-level execs and the board of, say, Astra Zeneca?

NidStyles's picture

Says the absolutist. A smart person blames no one and understands that it's just human nature to be a dipshit asshole. 

LetThemEatRand's picture

So you've got human nature down, then.

NidStyles's picture

Well enough to know it's a folly to blame them for acting in their own best insterests. 

ebworthen's picture

Problem with Obamacare?

No care involved.

RazvanM's picture

There is a big difference between Gov and Corp: the Gov cannot (1) produce goods (2) efficiently (3) for a long time. This affirmation was proven in practice in all communist countries.

It is necessary to have private Corporations for that (associations of individuals). From time to time these become too big and must be split by the state. It is hard to do that when the Corporations have a say into regulation through lobby or when you cannot say where the Gov ends and where the Corp starts.


sessinpo's picture

 LetThemEatRand    I fully accept it and preach it.  But a lot of people here blame the cops for taking the mob bribery, and suggest the solution is just getting rid of cops.


They are only cops because we are forced to accept them as cops because they have the legal monopoly on force, regardless of law. Otherwise theyare nothing but fascist government vigilantes that are ungoverned in many cases..


LetThemEatRand    My point -- which I think you're missing -- is that the bribees AND the bribers are the problem.

---Your point is false, which is the problem with your argument. One cannot exist without the other. Thus if one is gone, so is the other. And unfortunately, we no longer have a system of accountability that goes after the bribe takers in a meanful way. AS government employees, they have taken an oath and are supposed to be dependable and a person of trust. A briber, which is a criminal, has taken no oath and is not bound to the public like a government employee.


LetThemEatRand     Ideology, guys.  It's a step below being an idiot.  A step below because idiiots are happy.


Everything is ideologically driven, even for those that claim to have no ideology. It's about one's ideas of what makes a better society and how to run it., even if you are not left, right, or independent. If you don't understand that, you have a lot to learn.

FreedomGuy's picture

Because you get the lead mixed up in the dance. Contrary to most all the nodding heads here I still place the blame at the feet of the government beast. Here is my generally contrarian view:

The reason GE is not lobbying your neighborhood architectual committee for favors is because there are none to buy, at least none of interest. There is no power.

I suggest that the U.S. and most legislative bodies worldwide are a sort of legal mafia protection racket. You pay up or a regulatory brick comes through your window. The flip side is that you may occasionally be able to buy a favor, too. However, every once in awhile the mafia boss still has to make an example out of someone. That is when you see the big JP Morgan fines or your least favorite pharma company, etc. They need to make the point about who has the power and even what happens if you cross them. They also need a bit of theater for the serfs, subjects, ruled. When you see companies inexplicably lining up for the "Please beat me more rules." this is what is probably happening.

The rest is simple churn and incompetence in the legislative process.

BandGap's picture

You are ALL right. What we have witnessed os the morphing of industry and government. Government feeds industry.

FDR and the Truman administrations froze wages. Employers looking for an edge to get the best employees had to offer incentives outside of salaries. helath benefits were born.

If you boil down any and all that the current administration is doing and it amounts to one thing - control, and controlling the money flow.

BraveSirRobin's picture

E-9698: Excellent comment - spot on.

Ms. Erable's picture

"...and some are dumb as a box of rocks, Pelosi."

I'm pretty sure that small earthquake I just felt was the entire Sierra Nevada range's way of stating its displeasure at being compared to that walking mental corpse.


donsluck's picture

You must not live in New Mexico, where even grey haired old geezers have to show a photo ID, which the establishment scans and the government, of course, saves.

nmewn's picture

Seems like I read somewhere (some real brainiac-types, a Harvard study probably) that FORTY MILLION PEOPLE WERE CLAMORING & DYING BECAUSE THEY LACKED HEALTH INSURANCE.

Where are they?

AGuy's picture


Veterans getting mal-medical services or put on One year plus waiting lists? Probably not 40 Million but probably near 1 million.


Probably the only group of Americans this is really eligibel for entitlements for putting their lives on the line get shafted. Usually Gov't take good care of thier soldiers as they are the only means gov't have to stay in power. Only in America does it gov't treat its military so poorly.



roadhazard's picture

Right wing FEAR mongering does fool Some people.

The Koch Bros took over a million$ from ACA. Money beats conviction every time. ACA, good for the Koch Bros but amazingly not good for you. Wingers crack me up.

nmewn's picture

You gonna answer the forty million question FOR RAND or not?

I don't give a flying fuck about the Koch's or Buffet or Gates or Soros...take that back to your boy Reid and blow it up his ass.

roadhazard's picture

I love watching wingers go into orbit.

nmewn's picture

How else can one find the source of the lefts unicorns? ;-)

NidStyles's picture

So that is how rainbows get up there...

Chuck Walla's picture

Gee, roadhassard, things slow over at OFA with the man child failing? Or hasn't that sick old nazi, Soros, issued his new orders?


Uncle Remus's picture

I find it pathetic when idiots drool and assume they are communicating.

sessinpo's picture

roadhazard    I love watching wingers go into orbit.


You probably love it as much as seeing vets die under government care.

Pickleton's picture

You're responding to someone talking about the 40 million clamboring for insurance (which was left wingnut fear mongering) that have utterly FAILED to materialize and somehow that led you to right wing fear mongering and the Kochs?

Sounds to me like you've been sucking too many large Kochs and it's affected your reading ability.

fishmonger's picture

Jay Carney, is that you boy? That was a quick transition...

Pure Evil's picture

They just haven't amnestied them yet.

Pickleton's picture

Add that one to the end of the Myths list.

GernB's picture

Because progressives by one name or another have been trying to swindle the public into giving up their freedom of choice in the name of universal health care for decades. Then finally, the deck was stacked so much in thier favor that if they told bold faced lies about it to the public and made every dirty deal they could make behind closed doors they could barely get enough votes to pass it as a budget deal where they only needed a simple majority.

What we needed was more freedom of choice, but that would mean getting government out of the way and letting people choose what insurance they want independent of their employment. But, how could progressives plan other peoples lives for them if they are free. So a few foisted Obamacare on us as a stepping stone to what they really want: servitude to the state.

detached.amusement's picture

so in other words, the same way the did the 16th amendment

Winston Churchill's picture

Healthcare ,not just insurance, is a disaster in the US.

It is exceptionally expensive , exceptionally wasteful, and exptionally crony capitalist.

Apart from that 'its the best in the world', words spoken by people who have never left US shores

no doubt.Obozocare makes all of those problems worse, not better.Your defence of it

is juvenile.

Tear the entire system down, and start agaain.Its not fixable, and do healthcare as well

whilst your at it..

Pickleton's picture

"It is exceptionally expensive , exceptionally wasteful, and exptionally crony capitalist."

True, but you forgot, it's exceptionally innovative and American medicine has been the recipient of more Nobel Prizes than any other 2-3 nations put together. 

Oh BTW, I've lived in Europe and traveled all of it. I've been to Africa, Asia, South America, Central America, the Middle East and a few other odd places.  So you can imply that those that claim it's the best in the world dont know shit, but it's still the best in the world and you can eat shit.

Unless of course, you're implying that your homeland that allows patients to starve to death and drink water out of potted plants in your hospitals is somehow better there Winny.

Winston Churchill's picture

Unwrap that flag before it chokes you.

Nobel prizes mean little in relation to healthcare, or much else eg Obozo.

Having suffered under both systems, the NHS beats the US hands down.Cheap mediocraty beats,

very expensive mediocraty.Both are best avoided in fact.

Neither  are even on the same playing field as the Swiss system, which I am lucky enough to qualify for.

Trouble is when I need that care, I would probably be too ill to travel to it.

Pickleton's picture

"Nobel prizes mean little in relation to healthcare"

I know I know.  Nobel Prizes in medicine for, you know, inventing stuff, curing stuff and all that.  Nah, you're right it means nothing when we can go over the NHS and drink out of potted plants.  THAT'S true innovation.

STFU half wit.

A Nanny Moose's picture

No. Governent was involved. Insurance companies are a strawman. As corporations, they only exist because of the monopoly on violence over a geographic region, known as Government.

We've had over 100 years of government "solving" the healthcare crisis. Before the insurance companies, it was pharmaceutical companies, before that it was doctors.

Perhaps we should stop with the insanity of government?

drendebe10's picture

Phoenix VA hospital bureaucratic care coming to u soon courtesy the liar un chief obamascare...   u all aint seen nuthin yet til you need it...  if u like ur doctor then u will be taken care of by a midlevelbprovider...

sun tzu's picture

Spoiler alert -- insurance companies are still involved and wrote obamacare and if they lose money will be bailed out by the taxpayers 

Another victory for obamacare lol

sun tzu's picture

Are insurance companies responsible for the VA distater too?

LetThemEatRand's picture

No, that would be the corrupt government that gets 100% credit for that.  Though I would add that bankers started the wars.