The Obamacare Train Wreck

train crash 300x198 The Obamacare Train Wreck

The problem with 2,400 pages of legislation is not in what politicians promise the legislation will do, but what it does in reality, including the creation of nearly 40,000 pages of regulations affecting our health care. And the reality with the Affordable Care Act (ACA), as we’re witnessing nearly daily in financial media, is devastating. And not just for the economy and the middle class (as we discussed last week) but for our healthcare system itself. When you dramatically alter the third-party payment system and place federal mandates on available health-care insurance plans, the whole health care delivery system is adversely affected. To believe otherwise is naiveté.

The ACA (Obamacare) was sold to us on the basis that there were 40 million Americans without health insurance and that the Act would rectify the apparent inequity. That actually is the first broken promise of Obamacare. The Congressional Budget Office  (CBO) admits that after 10 years of implementation, Obamacare “will still leave 31 million uninsured.” And we’ll have spent $1.93 trillion failing to achieve the primary objective of the Act! And that new dollar figure from the CBO is still likely an underestimate since they’ve revised the figure upward three times already.

One of the byproducts of a third-party (insurance company) payment system for health care is that the consumer or patient is considerably removed from the cost of services. The ACA increases this gap by requiring “free preventive services,” restricting deductibles, and proscribing lifetime benefit limits. Currently, over 36% of health insurance plans have higher out of pocket limits than allowed by the ACA. The Act also places new restrictions on Health Savings Accounts that have allowed 24 million Americans to be more attentive to pricing since they paid for services themselves. These provisions will remove the consumer from the cost of service even more, which has an escalating effect on healthcare costs.

“We will keep this promise to the American people. If you like your health care plan, you can keep your health care plan. Period. No one will take it away,” we heard daily from the president while pitching his plan. This is the second major broken promise of the ACA. The new requirements imposed on employer sponsored insurance (ESI) plans will make the costs increase significantly for employers. Many employers will discontinue their plans altogether, forcing employees to the state exchanges to buy their insurance for themselves.

In June, McKinsey & Company released results of a study where they found, “Overall, 30 percent of employers will definitely or probably stop offering ESI in the years after 2014. Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.” This contrasts sharply with CBO estimates of 7% of employees losing their current ESI, and the president’s promise that none would.

Those who will be able to retain their current plan will see significant changes. According to the National Business Group on Health, 30% of all companies with ESIs are considering dropping coverage for retirees and over 50% are considering dropping spousal coverage. And it’s not just the private sector, as local governments are looking at the same solutions. The mayor of Chicago, Obama’s former Chief of Staff, Rahm Emanuel, is planning to drop 30,000 city retirees off of the city’s ESI and push them into the exchanges to buy their own. He projects a savings of $108 million per year.

Promoting the passage of his signature legislation, President Obama vowed, “that my plan will reduce the cost of health insurance by $2,500 for average families.”  But according to Investor’s Business Daily, since Obamacare passed, the cost of an average family policy has already increased by $3,000, mostly in anticipation of the new regulations and mandates imposed on providers and insurers.

All the new regulatory requirements are going to cause health insurance premiums to soar even more, especially for younger and healthier individuals. After all, the government subsidies will pay for the added expense of covering preexisting conditions, which was forced by the ACA. Holtz-Eakins’ American Action Forum analyzed insurance premiums in five major cities, and calculated that Obamacare mandates will cause premiums to rise additionally an average of 169%.

The National Center for Policy Analysis warns that seniors may be the most hard hit with service quality, and quantity issues. NCPA President John Goodman correctly observed that almost half of Obamacare is paid for over the next decade by draining $716 billion out of Medicare.

Confirming the fears of many who actually read the bill, Howard Dean, a doctor and former DNC Chairman, wrote recently in the Wall Street Journal, “One major problem [with Obamacare] is the so-called Independent Payment Advisory Board. The IPAB is essentially a health-care rationing body. By setting doctor reimbursement rates for Medicare and determining which procedures and drugs will be covered and at what price, the IPAB will be able to stop certain treatments its members do not favor by simply setting rates to levels where no doctor or hospital will perform them.” This obviously was what the president was referring to when he said “Give them a pill instead of the surgery.”

This barely scratches the surface of the myriad of problems created by the ACA. To my count, there are dozens of such problems. Ted Cruz was right to dominate the news cycle for 21 hours in an attempt to prevent this “train wreck” to the economy and our health care. The ACA is clearly the wrong prescription for our healthcare ailments, and won’t even accomplish what it was promised to do.

AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho and is a graduate of Idaho State University with degrees in Political Science and History and coursework completed toward a Master’s in Public Administration.  He can be reached at

Photo Credit: Standard Compliant

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  1. MuslimLuvChrist says:

    9/28 lets try to defund it, failed, 9/30 lets try to delay it, failed, lets try to make it an opt-out option for a year, failed (Americans know Republicans are trying to negotiate their best with the most stubborn NGR lovers and a Kenyan al Qaeda member).
    1) The first broken promise of Obamacare was that 40 million Americans without health insurance were going to be covered.
    2) The second major broken promise of the ACA was “We will keep this promise to the American people. If you like your health care plan, you can keep your health care plan. Period. No one will take it away,” we heard thatshit daily from Obullshiter while pitching his plan.
    This is a fail safe trap where Obarry never wanted it to succeed, he just wanted it to cause chaos on the minds of every American? Obraggart is taking sections of it to delay, defer, alter, even ignore parts of the law, while Obackstabber is setting up Republicans as obstructionists, arsonists, and terrorists for listening to Americans who hate this illegal law. Team Obuttholes embraces crises, works for collapse, welcomes chaos, because that is always the time to change things for fundamental transformation. They want to change it into a single payer, top down, government run, universal health care which was their goal all along! You are not required to purchase health insurance through an Obamacare exchange! There are cheaper, better options. REASONS OBAMACARELESSJOBKILLER OCLJK IS BAD FOR YOU:
    INEQUALITY: Signing up for OCLJK will force Millennials to pay more to cover costs for the wealthier. Rates will increase by an average of 169% for the young while older people will pay about 22% less.
    INCONSISTENCY: OCLJK is full of exceptions for those connected enough to get special favors, mostly corporate cronies, congress and their special friends. These inconsistencies contribute to businesses avoiding OCLJK by shifting to more part-time positions-hurting those looking for jobs after graduation.
    1 Don’t I have to buy into OCLJK? Isn’t it illegal to not buy OCLJK insurance? No. There is a relatively small tax (ITS NOT A TAX) associated with not buying government-approved health insurance, but you can pay that small penalty and buy a health insurance plan that meets your individual needs.
    2 Why would I turn down government assistance to buy health care? It’ll be cheaper (or free) if I get it from the government, right? No. It will be more expensive and it will certainly not be free.
    3 Isn’t healthier people covering costs for the sick how insurance works? No. Insurance is about protecting individuals against unexpected and costly events.
    4 Even if OCLJK is a generational transfer of wealth, won’t young people benefit from it in the long-run? Unfortunately, no. The Millennial generation (those of us that are currently 18-29) will not benefit from OCLJK the same way current older Americans will.
    5 I don’t like OCLJK, but I support a single payer system. What’s your position on that? We do not think that more government is the solution. But we’re glad to work with you on opposing OCLJK. This entire scheme is a huge handout to corporate interests — massive insurance companies, hospitals and drug companies. Big government propping up big business isn’t OK. Hopefully, we can convince you that a health care system based on freedom and competition will lead to more health care coverage and better quality care than a single-payer system. But let’s have that debate without lining the pockets of big business at young Americans’ expense. WORK OUT YOUR BEST HEALTH CARE SOLUTION AT OPTOUT.ORG

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