Affordable Care Act’s Forgotten Provision

American healthcare has been a disaster for a while. And for many Americans, it’s simply gotten worse. Obamacare has not rescued the majority as it promised. Although it has helped many get insured, it has also placed many in economic peril. This was the reason some voted for Trump, even if they disagreed with the majority of what he stands for. Obama’s promise that if you like your health care plan, you can keep was considered the lie of the year by Politifact in 2013. It appears many within his campaign and administration knew this would be the case. Due to the requirements of Obamacare, many families can only afford HMO insurance, which only a few doctors accept. Those lucky enough to work for large companies or for the government enjoy PPOs, which give them more freedom. However, many people, especially those in Flyover America work for small businesses and do not have the luxury of many insurance options like in Bicoastal America. In many instances, it is cheaper to pay in cash than it is to use the insurance co-pay, something unheard of before Obamacare.

But as I mentioned before, American healthcare has always been a bit of a mess. The reason stems from the Great Depression. The Government intervention promoted a “public good” of getting insurance to pay for everything related to one’s health needs. Prior to this, insurance, like car insurance, paid only for catastrophic events. But with the Great Depression, money was hard to come by, so the Government caused insurance companies to pay for routine doctor visits. Instead of paying for a few stitches out of pocket, insurance pays for this relatively cheap procedure, just as it would for brain surgery. This was not the original intent of insurance. Now doctors have a mountain of paperwork to fill out just to tell a patient they are having seasonal allergies. In one case study, a family’s co-pay was the same amount if they paid in cash for a doctor visit. In addition, their insurance penalized them for going to the doctor more than twice a month, meaning if they needed a doctor more than twice a month, it would be better if they didn’t have insurance. And this family was forced from PPO to an HMO, so they could no longer see their favorite doctor.

Perhaps the most frustrating aspect of Obamacare has been the misplaced blame. Banking and insurance are some of the most regulated sectors of the economy, but seem to have the most problems. Most likely this isn’t a coincidence. Doctors are now realizing they can give better and cheaper care if they run a cash operation while refusing insurance and government aid. One doctor in Kansas has decided to give back to his community while at the same time getting richer himself. Not a bad trade-off. He runs his clinic like a gym membership, where fees are as low as $10 per month. Dr. Josh Umbehr pointed out that the Hippocratic Oath states that doctors should do no harm, and that should include financial harm. Doctors, as well as lawyers, are not trained how to manage money because they are not supposed to consider money when helping a patient or client. The outcome is financial illiterates who end up financially harming their customers. Dr. Umbehr decided if a doctor cares about his patients, he cares about money too. With a small monthly fee, a patient/member gets unlimited visits with the doctor, free stitches, free x-rays, free EKG, free routine lab work, 95-99% off many prescription medications, and many, many more benefits. The amazing thing is Dr. Umbehr has enjoyed a spike in his income despite giving out all these benefits at a low cost. When a family of 3 pays $750+ a month for health insurance, the choice is obvious for those in Dr. Umbehr’s community: drop the costly health insurance and simply pay for catastrophic insurance.

Those in Flyover America, which is about 50% of the nation, have been hit hard by Obamacare. And they may be hit harder by a certain provision in Obamacare. Obamacare has a risk corridor that “helps” struggling insurance companies transition with the Obamacare regulations. The Obama Administration sent billions of dollars to insurance companies through this provision, but it has been ruled unconstitutional without an appropriation by Congress. The risk corridor was meant to help insurance companies meet expectations in profit as they would prior to Obamacare. This was a key selling point to insurance companies, as the Obama team essentially told insurance companies that if they are not profitable, we will make you profitable. The provision in Obamacare can easily be constitutional if Congress sets aside money for it. Right now, about $6 billion is needed. In order to save political face, Congress may in fact allow this bailout if it means premiums quit rising so sharply. The problem is that the ones likely to suffer the most are the ones the bailout is intended to help. As mentioned in a previous post, monetary policy creates a wealth transfer from Flyover America to Bicoastal America (which is the reason Flyover CPI is much worse than the Bicoastal CPI). Bailouts are ultimately funded by inflationary monetary policy.

The question now is whether Trump will alleviate the pain of insurance premiums through a bailout, take the political heat for allowing insurance premiums to keep rising, or repeal and/or replace Obamacare. It remains to be seen. However, despite Trump’s best efforts, he did sign a relatively good Executive Order (if there is such a thing). In section 2 of the Executive Order, the government is to side against the government in favor of the individual. This is promising to many families who have experienced many threatening letters for being poor due to Obamacare. I wish I had this Executive Order backing me up when I was wrestling with the government regarding my health insurance. I was still in college when I turned 27. I was forced off my parents’ insurance and needed to purchase my own. I worked 3 months as a law clerk for an attorney, so my salary for that year was almost nothing. However, I had told Marketplace that I would make more money than I actually did for that year. So I got a letter stating they would force me to pay several hundred dollars more because I made less than I said I did. That’s right, they taxed me because I was poorer than I said. In order to avoid this penalty I would need to send in paperwork demonstrating the amount of money that I actually made for the year, which I complied. I never heard back from Marketplace except for a bill stating I needed to pay several hundred dollars. Apparently they received my paperwork but they could not process it until several months later, way past the deadline for the penalty. Instead of giving my money back for the government’s mistake, they required that I go through an appeal process which may require more fees. This appeal process was in the middle of my Bar Exam to become an attorney, so I declined and simply paid a penalty for the government’s mistake. I still don’t understand the logic of penalizing people for making less money than they stated. I guess that is bureaucratic logic. However, had this executive order been in place, I may have saved several hundred dollars and avoided this whole insanity.

Hopefully, we can all avoid the insanity of another bailout due to bad government policy.

 

Learn more about how healthcare costs can be reduced and support this blog at the same time by purchasing The Primal Prescription: Surviving The “Sick Care” Sinkhole.

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