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Obromneycare, Part One: What is it, exactly?

Uploaded: Mar 22, 2012
The Affordable Care Act is (choose only one):

a. Socialized medicine

b. The moral equivalent of strapping grandma to an ice floe

c. The moral imperative of a civilized nation

d. Compromise legislation mandating universal coverage by private health insurers

e. Okay, none of the above is a complete description

The answer, of course, is "e", although "d" isn't a bad start. Over the next two weeks, we'll take a look at this hallmark legislation of the last four years. It is President Obama's version of universal health care legislation – about which there has been so much controversy, and so little actual description. This week's blog will cover its major provisions – if I miss any, I am certain to receive assistance from the readership. Next week's edition will cover costs and the legal arguments over its Constitutionality, mostly under the Commerce Clause. The Supreme Court has set aside an unusual six hours for oral argument on the subject.

The so-called Patient Protection and Affordable Care Act (hereinafter the ACA, or the Act) has ten major titles, and seeks to do many things. It will be phased-in over several years, with a few parts already in effect, but most others to-come. First and foremost, it will mandate that everyone secure coverage, eventually adding some 32 million presently uninsured Americans to the rolls of private insurers. Those who have coverage, mostly through employers, need see no change in their direct circumstances. Some 16 million uncovered Americans who are also ineligible for Medicaid assistance will need to buy-in, via web-based "exchanges" or otherwise. These are primarily healthy younger persons who don't choose coverage now because they believe they are immortal – err, no, they generally perceive it as a bad deal they will likely not need until age and stress take their inevitable tolls.

In return for delivering those millions of customers to the insurance market, the Act requires certain decencies of health insurers, to wit: that pre-existing conditions not disqualify applicants, that young adults (boomer-ang-ers?) may remain on their parents' policies up to age 26, and that 80-85% of premiums must go to provide benefits.

Controversy deepens, for some, in Title II, where the other 16 million uncovered Americans are treated. Medicaid coverage currently does not extend to many among the poor and working poor, including childless adults. They will be brought within the Medicaid umbrella in 2014, under a criterion of household incomes less than 133% of the so-called federal poverty line (about $30,000/year). Although Medicaid is state-administered, the feds will reimburse 100% of new costs, at least through 2019. It is anticipated, though, that others who are now eligible, but have been excluded by dint of state program shenanigans or their own inattention, will also now obtain such coverage.

Titles III and IV deal with systemic improvements and strategic direction, focusing on improving Medicare's efficiency and developing a national disease prevention strategy. These were relatively uncontroversial elements of the Act, albeit they fueled the hysterical "death panels" claims. In an environment in which our diets have changed more in the last 50 years than in the previous 10,000 years (to quote Michael Pollan), my expanding girth and I eagerly await their report.

Titles V through VII cover miscellaneous topics like improving primary care availability in under-served areas, support for research into clinical effectiveness of treatments and therapies, and facilitating FDA focus on bio-similar products. The latter is a catch-up provision, as most other industrialized countries already have such programs in their regulatory regimes. Title VIII, the CLASS Act, has been scrapped as not fiscally sustainable.

Title IX, then, tells us how this will be paid-for, at least in-part. It includes surcharges on Medicare taxes for high-earners ($200K individuals, $250K families), assessments on insurance, drug and device manufacturers, and restrictions on Health Savings Accounts. It projects revenue of about $40 billion/year ($439B over ten years). Title X is a basket category of miscellaneous amendments to the earlier Titles.

So there you have it – there's a lot to chew-on, philosophically. It is certainly communitarian in that it throws us all-in together, and progressive in terms of its fiscal impact. It is also both more and less than many people believe. Next week: cost estimates (which, contrary to some reports, have actually declined, of late), and a few words to frame the legal arguments over its Constitutionality (which has much to do, oddly, with home-grown wheat). Stay tuned!
What is it worth to you?


Posted by spcwt, a resident of Danville,
on Mar 30, 2012 at 7:50 am

Some additional points to consider:

Provides a tax credit to help people buy health insurance. The amount of the credit depends on your income, but should range between $5,000 to $10,000 per year. People earning up to $89,000 are eligible for the credit.

Imposes 21 new taxes. Some are immaterial, like the tax on tanning beds, black liquor, excise tax on charitable hospitals, etc. But here are the main new taxes:

A tax (penalty) is imposed on people who do not buy insurance. In 2016, the amount of this tax will equal 2.5% of a person?s adjusted gross income, capped at $695 for a single person, $2,085 per family.

If a company employing 50 people or more does not offer health insurance, it will be fined a $2,000 penalty per employee.

Imposes a new 3.8% surtax on investment income over $250,000 and a new 0.9% payroll tax on wages over $250,000. These taxes are not indexed for inflation, so eventually a lot more people will pay these taxes once inflation eats away at the value of the dollar.

Creates 159 new government agencies.

Prohibits people from purchasing low-cost catastrophic health insurance. Must buy government approved policies.

Expands federal power. Previously, Congress regulated existing interstate commerce only. Now it seeks to compel people to enter into commerce.

Despite the mandate, there will still be 27 million uninsured a decade from now, according to the Congressional Budget Office.

Finally, there is the cost...$1.76 trillion over ten years according to the CBO. Like most government entitlements, that likely underestimates the true cost, of course. We currently have to borrow around $1.3 trillion per year to pay our bills. And that?s before baby boomers start retiring en masse. We need to dramatically cut spending and raise taxes just to make Medicare and Medicaid solvent. We could confiscate all of the income from the top 10%, cut the military budget to $0 and it still would not be enough to balance our budget. Where will we get the money to pay for it all?

Posted by TL Nelson, a resident of Danville,
on Apr 29, 2012 at 12:36 am

I am hoping that the Supreme Court will save us from the devastating impacts of this legislation. It is not necessary to hurt 95% of Americans in order to help 5%. There are simplier ways to accomplish the same objectives without all of the downsides of this law ... alteratives that do not put the goverment in control of the heath care industry, that are fiscally transparent and responsible, and that do not violate our most basic rights under the Constitution. The 2010 Heath Care Reform law must be repealed.

Posted by spcwt, a resident of Danville,
on May 12, 2012 at 4:03 am

The ?savings? from Medicare you cite are largely supposed to come from cuts to the amount of reimbursements doctors receive for treating Medicare patients. At the time Democrats passed Obamacare, they knew they would never make these cuts, as these reimbursements generally do not cover doctors? costs as it is. If they?re cut further, doctors have said they would be forced to drop Medicare patients in droves. Sure enough, when it came time to make the cuts, Congress and Obama passed temporary measures to avoid the cuts, the most recent being H.R. 3630, which avoids the cuts until (surprise) after the Nov. elections. They will do this again and again as they?ve always done.

Even if they made the Medicare cuts, how can we justify cutting benefits to the poor and elderly in order to give a $10,000 per year healthcare credits to people making up to $89,000? That?s what Obamacare does.

Similarly, the increased $1 trillion of new taxes Obamacare imposes over the next decade are taxes that cannot be used to make Medicare and Social Security solvent.

We need to prioritize where our government spends money. We have a moral obligation to take care of our poor and elderly. We shouldn?t shirk that duty in order to give $10,000 a year free money to the middle class.

Posted by Tom Cushing, a resident of Alamo,
on May 12, 2012 at 1:01 pm

Most of this really responds to material in the Estimation sequel to this description of ObromneyCare, but your objections seem fairly faint -- esp. assuming that you see the advantages of many of the other features. In another era, you might even vote for it.

1 -- you complain about a subsidy on incomes "up to $89K," which includes all those poor and elderly. Okay, pick a lower threshold with fewer voters in it;

2 -- you complain that taxes (and penalties) used for one purpose cannot be used for deficit reduction. While true, that's the case with every expenditure for anything, including that south Asian sinkhole of Afghanistan. You believe deficit reduction is more important than Gramma. Okay, but lots of other people don't.

3 -- you know that ad about Prop 29 with the charletan doctor complaining about beside-the-point possibilities, and hardly mentioning the central anti-smoking theme? Ultimately, your laser focus on that lousy $10k suggests a similarly diversionary tactic.

As you know, in politics, perfect is the sworn enemy of good. I think ObromneyCare is good enough.

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