Obamacare hasn’t even been around for a year yet, but I think the evidence is mounting that it’s already high time to reform healthcare reform. Health insurance premiums have done nothing but rise, and tens of millions of people continue to go without coverage.
If Obamacare is to fulfill its mandate, it looks like it will crawl toward it and take a lot of years in the process.
Obamacare did three REALLY good things
Before Obamacare officially rolled out, I went on record as supporting reform. I gave credit to the President (and still do) for taking on such a complex issue. Even if reform is flawed, it’s still a step in the right direction if only because it puts the issue on the table for public analysis in a way that‘s never happened before.
In addition, Obamacare did three things to health insurance that it desperately needed to have done:
- It required that applicants must be accepted for coverage despite pre-existing conditions
- It prohibits insurers from charging higher premiums for pre-existing conditions, and
- It provides guaranteed renewability of coverage (no dropping a plan for excessive claims)
These are positive developments, but after these it all goes down hill.
Obamacare did nothing to make health insurance more affordable
According to the Henry J. Kaiser Family Foundation, at least 61% of the people without health insurance cite cost as a factor (“Insurance not affordable” or “lost job”).
Far from lowering health insurance premiums, Obamacare has actually caused premiums to increase in a space of just a few months. Gone are the more affordable catastrophic policies that could be had for a few hundred dollars per month. Now under the Bronze Plan – the cheapest plan under Obamacare – the deductible is $6,500. That means that people are having to come up with thousands in out-of-pocket costs, in addition to higher monthly premiums.
Moral of the story: the issue that kept the majority of the uninsured from getting coverage – cost – is still there, but worse than ever.
It’s hard to see how tens of millions of the uninsured will be brought into the system with premiums being even higher than they were. Sure, there are government subsidies available for people with incomes up to 400% of the federal poverty level. But those will be paid at least in part through penalties assessed on those who don’t have coverage, which will probably make those people even less likely to get coverage. Once you pay the penalty you won’t have money to pay for premiums.
The public demand for healthcare is limitless – the willingness to pay for it isn’t
The one central issue Obamacare didn’t address – not that anyone ever thought it would – is the rising cost of healthcare. That issue is fundamental to the healthcare crisis in the US, and also the topic no one wants to seriously discuss.
Healthcare expenses have been rising well ahead of the rate of inflation for decades and is eating up more of the national income and a larger percentage of household income each year. The problem is that the demand for healthcare apparently has no limit. As a nation, we feel compelled to pay what ever the bill is. Unless the healthcare price spiral is rolled back, the healthcare crisis in America will continue unabated.
Rearranging the deck chairs on the Titanic
Once again, Obamacare did nothing to address the cost side of the crisis. Most of what it did is the equivalent to rearranging the deck chairs on the Titanic, keeping us entertained and confused so that the real issue (cost) can be kicked down the road and dealt with at a later date.
Like Titanic, I expect the healthcare industry to sink through a bubble style collapse, similar to the housing/mortgage meltdown of 2007.
The next recession will be a disaster for health insurance
The last recession was a hell-raiser, “the worst economic crisis since the Great Depression“. The next recession is likely to be much worse. I believe this will be the case since virtually nothing in the structural economy has been repaired since the last downturn, and the recovery itself has been on wobbly legs from the very beginning.
Obamacare, with its costly mandates, will almost certainly cause a rapid acceleration in un-/under-employment, particularly as employees are reduced to part-time status.
Unemployed and under-employed workers will be unable to afford health insurance at nearly any price, causing the ranks of the uninsured to grow even more rapidly than it has in previous recessions.
With less money feeding into health insurance, the healthcare bubble may finally burst, forcing us to confront the difficult choices we’ve so skillfully been dodging for the past 30-40 years.
Real reform won’t come until they tell us what we have to give up
Obamacare wasn’t real reform – it was a reshuffling of the deck of cards. I don’t necessary blame the White House for this either. The Republican solution to the healthcare crisis was to put the blinders on and continue playing see no evil, hear no evil, speak no evil.
We won’t get enlightened leadership – and true reform – in healthcare until someone in a position of power is honest enough to tell us what we’ll have to give up in order to get truly affordable healthcare. As a percentage of GDP, other developed countries around the world pay about half what we do in America, so clearly cost control is doable. But to get there we’ll have to reframe the entire debate from funding to costs.
Since Obamacare is now the law of the land, there aren’t many ways to get around it. Until real reform comes around – probably as a result of a complete collapse of the economy – my recommendation is that you invest some time on Sean Parnell’s excellent website The Self Pay Patient. It’s filled with dozens of excellent suggestions and strategies that will help you navigate the even more complicated world of healthcare that we now find ourselves in.
(Please see the updated 20 Part-time Jobs With Health Insurance post for the most current list of employers who offer health coverage for their part-time staff.)
What are your thoughts about the current state of American healthcare?