Tuesday, October 29, 2013

Danger: Affordable Care Act Ahead

As regular readers of this blog know, I am not partisan; I hate ALL Politicians so I generally avoid political subjects.  I do, however, care about the Federal Debt and the U.S. economy; with that said, Obamacare is not entirely a Political issue.  I said when Obamacare was passed that it would add on more Debt to the US.  (The Congressional Budget Office, the nonpartisan analytical arm of Congress, has calculated the gross cost of Obamacare’s coverage provisions at approximately $1.8 trillion over [a] 10-year period. - http://www.politifact.com/truth-o-meter/statements/2013/sep/27/saxby-chambliss/saxby-chambliss-says-obamacare-biggest-entitlement/ ).  The current uproar over the Obamacare website has gotten all the attention, but that is about to change.

The problems with the Obamacare website are almost meaningless.  The real issue is that large numbers of middle-class citizens will not be able to keep their current health plans and will have to pay more for a plan that meets Affordable Health Care Act (ACA) requirements (a good Orwellian title).  The additional money will upgrade their plans and pay for the poor and currently un-employed who previously couldn’t afford a health insurance plan.  Over the next several years, this will be a drag on our struggling economy.

WHITE HOUSE KNEW MILLIONS COULD NOT KEEP PLANS UNDER OBAMACARE [even though Obama repeatedly promised that they could.] (CNBC)
“Four sources deeply involved in the Affordable Care Act tell NBC News that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a "cancellation" letter or the equivalent over the next year because their existing policies don't meet the standards mandated by the new health care law.”

“One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience ‘sticker shock.’”

“…Those getting the cancellation letters are often shocked and unhappy….George Schwab, 62, of North Carolina, said he was "perfectly happy" with his plan from Blue Cross Blue Shield, which also insured his wife for a $228 monthly premium. But this past September, he was surprised to receive a letter saying his policy was no longer available. The "comparable" plan the insurance company offered him carried a $1,208 monthly premium and a $5,500 deductible.

And the best option he's found on the exchange so far offered a 415 percent jump in premium, to $948 a month.

"The deductible is less," he said, "But the plan doesn't meet my needs. It’s unaffordable."

"I'm sitting here looking at this, thinking we ought to just pay the fine and just get insurance when we're sick," Schwab added. "Everybody's worried about whether the website works or not, but that's fixable. That's just the tip of the iceberg. This stuff isn't fixable."  Story at…

It appears that Mr. Schwab is not alone and he has a good point.  Why buy insurance if you can pay a small penalty (1% of taxable income), and get insurance later during an annual open season if you need it for a long-term illness?  Only Politicians could dream up a system like this.  Imagine if you could buy car insurance after an accident. 

In particular, middle-class Californians with individual health coverage are discovering they need policies that cover more and cost more…As Forbes reports: ‘Over 500,000 individuals have seen their insurance policies canceled in just 3 states.’” Story at…

I’ll post my usual market analysis later today.