obamaSCARE

"Repeal this failure before it literally kills women, kills children, kills senior citizens..." - Michele Bachmann, Chair of the Tea Party Caucus in the House of Representatives.

For every dollar spent on explaining the benefits of the Affordable Care Act, a.k.a. "ObamaCare," there are five dollars going into destroying it with mostly false information intended to misinform and raise the passions of partisans. I wanted to write this post so the naysayers can spend more - let's get them up to 7:1.

The recent delay of the employer mandate has been used as fodder for the House to cause more confusion. It is estimated that the employer mandate, which obligates large employers to provide health insurance, affects only one percent of the American workforce. Further, the delay does not prevent those same workers from benefiting from other aspects of ObamaCare. Perhaps more clear is the irony that has unfolded: Republicans who once requested a repeal are now objecting to its delay.

It is easier to discuss the recent developments by providing context to where we were, where we are, and hopefully, where we will be. Let's begin.

Insurance

The idea of insurance is to spread risk among a number of parties. You purchase a contract with a premium, to cover you in the event of a occurrence. That occurrence could be as simple as a cold or as complex as a surgery to combat cancer. The pooled risk, held by the big insurer, pays for the treatment in either case unless the contract did not provide for it. Thus, the insurance contract transfers risk. You will always pay the premium, but you may not face the illness.

For example, you may have seen movies, like "The Rainmaker," in which the insurer was sued for denying an insurance claim because it said it was not provided for under the insurance contract. Great Benefit, the insurance company in The Rainmaker, denied a child's claim for leukemia treatment because it said that "it was an experimental procedure," excluded from the insurance. Great Benefit lost, because they denied every claim regardless of the coverage, and Rudy Baylor, the child's attorney, became a hero. Also, I do not think the jurors liked John Voight too much.

Health Care Costs Increased Much Faster than Other Goods & Services

American health insurance also involves medical providers, i.e. doctors, hospitals, and clinics. When an occurrence happens, like a routine prostate exam, someone needs to provide the professional  services. The insurer has to pay the doctors for helping the patients.

Therefore, the insurer and the providers have to enter into agreements because they have to determine the costs for their medical services. In the United States, the costs for the medical services, prior to Obamacare being passed, was increasing at an alarming rate. Compared to every other industrialized nation, we were by far spending the most. Health care spending increased to 17% of GDP, 50% higher than France, the country that spent the second most.

And despite all of our spending, we ranked 38th in overall health assessments, behind Singapore, Monaco, and Cyprus. 

The uncontrollable rise in costs was caused by a number of factors, but one of the main reasons was that the providers were charging an unusually high amount for their services. A hospital visit in the United States averages at $4,267 per day compared to $1,472 in Australia, the second most expensive. 

Each and every insurer negotiates their prices with providers. With each insurer and provider seeking the best return for their respective stakeholders, the patients end up paying more. Moreover, most hospitals are rewarded when they increase growth and profit, not when they improve the quality of the health care. These incentives are not conducive to affordable care.

More Uninsured

With the increase of health costs, more people could not afford to pay for insurance, because premiums had to keep up with the price of services. This exacerbated the problem because with less people contributing to the risk pool or buying health insurance, the premiums had to increase.

Despite not having insurance, individuals still get sick and they need to get help. The uninsured resorted to Emergency Rooms for typical medical services that they needed. The state and federal governments also had to pay, which means that every taxpayer bore the negative economic consequences. But even more sad was the fact that many people went bankrupt for the simple reason that they did not have health insurance and had to undergo expensive and necessary treatment.

Enter ObamaCare

President Obama entered into office with the rational belief that the status quo was simply unacceptable. Health care costs were rising incredibly fast and it was a drain on the entire economy. ObamaCare was based on a model that worked in Massachusetts, ironically when Mitt Romney was governor.

The main component of the Affordable Care Act is the individual mandate. On January 1, 2014, every citizen must purchase health insurance or face a small penalty. This provides an incentive to enter into the pool of risk shared among other insureds.

ObamaCare also gives help to those in need. I have blogged about income inequality ad nauseum and for good reason, but ObamaCare addresses this problem by giving tax credits to those with low income so that they can purchase health insurance. This is paid for by taxing the very wealthy.

In addition to the credits, ObamaCare has also given individuals more choice. The Health Care Exchanges will be an online marketplace for consumers, which will help them consider their options. These exchanges will act like an Expedia or Travelocity. It is likely that it will significantly help get more young people get insured.

Perhaps more important, and widely unknown, is the fact that insurance companies will now have to give money back to the insureds. Over $1.1 billion was given back in the summer of 2012. Thanks to the new 80/20 rule, insurance companies must spend 80% of premiums on medical care to the insureds. This 20% cap on administrative costs will help put quality of medical care in front of profits.

Placing Politics Before The Common Good

The opponents of ObamaCare will do anything in their power to mislead and attack. The House has attempted to repeal ObamaCare approximately 40 times, without success. Well, I should be more clear... without legislative success. Speaker John Boehner was able to raise over 30 million this year for his GOP. He intends to spend billions of dollars to retain control of his position in 2014.

The bottom line: ObamaCare will help the entire country and millions of Americans because it will help slow the growth of medical costs and increase coverage. In fact, it has already slowed down costs.

The next time you hear criticism about ObamaCare, remember that someone is paying the big bucks to have you hear it.

We've made it pretty clear and I'll make it clear one more time: If the court does not strike down the entire law, the House will move to repeal what's left of it. - See more at: http://www.politicalruminations.com/john-boehner-quotes/#sthash.97XSqWbi.dpuf

We've made it pretty clear and I'll make it clear one more time: If the court does not strike down the entire law, the House will move to repeal what's left of it. - See more at: http://www.politicalruminations.com/john-boehner-quotes/#sthash.97XSqWbi.dpuf

We've made it pretty clear and I'll make it clear one more time: If the court does not strike down the entire law, the House will move to repeal what's left of it. - See more at: http://www.politicalruminations.com/john-boehner-quotes/#sthash.97XSqWbi.dpuf