The Truth about Obamacare

As the mid-term elections season primaries pass, and the actual November elections approach, political rhetoric is flying fast and heavy … and it seems that the biggest itch getting people’s panties into a twist is the healthcare bill passed by Congress earlier this year, and signed into law by President Obama.

People are upset about the perceived government involvement in healthcare, and quite frankly are just making shit up to scare people. But guess what … government is already involved in healthcare … it’s called Medicare, Veteran’s benefits for retired military personnel, and benefits for government employees, including members of Congress.

I don’t see any of those recipients of government healthcare clamoring to give up their insurance to move back into private insurance.

For the most part, all the government is doing is setting up a regulatory structure for the private insurance companies to protect patients rights. In addition, they will be providing an alternative state-controlled insurance program to people whose premiums total nearly 10% of their annual income. You know what alternative means? It means “choice”; it means “another option” … it doesn’t mean “you’re going to be forced into a government-run insurance program, even if you don’t want to be”.

So the various provisions of the Patient Protection and Affordable Care Act (otherwise known as “Obamacare” by its detractors) are listed below. Somebody please tell exactly which provisions are a bad thing … and why … and without resorting to hyperbolic rhetoric using words such as “socialized” or “socialist” or “Do I need to post the clip of Obama inadvertently trashing government involvement in business? You know the one…the USPS vs. UPS/FedEx?”

I especially would like someone to point out to me exactly where the provisions of the law remove a person’s choice as to the type of healthcare coverage they can receive.

Effective at enactment

  • The Food and Drug Administration is now authorized to approve generic versions of biologic drugs and grant biologics manufacturers 12 years of exclusive use before generics can be developed.
  • The Medicaid drug rebate for brand name drugs is increased to 23.1% (except the rebate for clotting factors and drugs approved exclusively for pediatric use increases to 17.1%), and the rebate is extended to Medicaid managed care plans; the Medicaid rebate for non-innovator, multiple source drugs is increased to 13% of average manufacturer price.
  • Support comparative effectiveness research by establishing a non-profit Patient-Centered Outcomes Research Institute.
  • Creation of task forces on Preventive Services and Community Preventive Services to develop, update, and disseminate evidenced-based recommendations on the use of clinical and community prevention services.
  • The Indian Health Care Improvement Act is reauthorized and amended.

Effective June 21, 2010

  • Adults with pre-existing conditions will be eligible to join a temporary high-risk pool, which will be superseded by the health care exchange in 2014. To qualify for coverage, applicants must have a pre-existing health condition and have been uninsured for at least the past six months. There is no age requirement. The new program sets premiums as if for a standard population and not for a population with a higher health risk. Allow premiums to vary by age (4:1), geographic area, and family composition. Limit out-of-pocket spending to $5,950 for individuals and $11,900 for families, excluding premiums.

Effective July 1, 2010

  • The President will have established, within the Department of Health and Human Services, a council to be known as the National Prevention, Health Promotion and Public Health Council to help begin to develop a National Prevention and Health Promotion Strategy. The Surgeon General shall serve as the Chairperson of the new Council.

Effective September 23, 2010

  • Dependents (children) will be permitted to remain on their parents’ insurance plan until their 26th birthday, and regulations implemented under the Act include dependents that no longer live with their parents, are not a dependent on a parent’s tax return, are no longer a student, or are married.
  • Insurers are prohibited from excluding pre-existing medical conditions (except in grandfathered individual health insurance plans) for children under the age of 19.
  • Insurers are prohibited from charging co-payments or deductibles for Level A or Level B preventive care and medical screenings on all new insurance plans.
  • Individuals affected by the Medicare Part D coverage gap will receive a $250 rebate, and 50% of the gap will be eliminated in 2011. The gap will be eliminated by 2020.
  • Insurers’ abilities to enforce annual spending caps will be restricted, and completely prohibited by 2014.
  • Insurers are prohibited from dropping policyholders when they get sick.
  • Insurers are required to reveal details about administrative and executive expenditures.
  • Insurers are required to implement an appeals process for coverage determination and claims on all new plans.
  • Indoor tanning services are subjected to a 10% service tax.
  • Enhanced methods of fraud detection are implemented.
  • Medicare is expanded to small, rural hospitals and facilities.
  • Non-profit Blue Cross insurers are required to maintain a loss ratio (money spent on procedures over money incoming) of 85% or higher to take advantage of IRS tax benefits.
  • Companies which provide early retiree benefits for individuals aged 55–64 are eligible to participate in a temporary program which reduces premium costs.
  • A new website installed by the Secretary of Health and Human Services will provide consumer insurance information for individuals and small businesses in all states.
  • A temporary credit program is established to encourage private investment in new therapies for disease treatment and prevention.

Effective by January 1, 2011

  • Employers must disclose the value of the benefits they provided beginning in 2011 for each employee’s health insurance coverage on the employees’ annual Form W-2’s
  • Insurers will be required to spend 85% of large-group and 80% of small-group and individual plan premiums (with certain adjustments) on health care or to improve health-care quality, or return the difference to the customer as a rebate.
  • The Centers for Medicare and Medicaid Services is responsible for developing the Center for Medicare and Medicaid Innovation and overseeing the testing of innovative payment and delivery models.
  • Flexible spending accounts, healthcare reimbursement arrangements and health savings accounts cannot be used to pay for over the counter drugs, purchased without a prescription, except for insulin.

Effective by January 1, 2012

  • Companies will be required to issue 1099 forms to any vendor of services or rental property to which the business has paid more than $600. Form 1099 is also sent to the IRS. Under the existing law, businesses issued the Form 1099 only to individuals who provided services or property to a business. The healthcare law included the same form be issued to corporations as well, and that the form be issued to individuals and corporations that provide property to the business. Only business related payments are reportable, personal payments not. There are a number of exceptions, for example: payments for merchandise, telephone, freight, storage, payments of rent to real estate agents are excepted. The health care bill mandate aims to collect lost revenue from companies that under-report on their tax returns. The provision is expected to raise $17 billion over 10 years. The amendments made by this section of the bill (SEC. 9006) shall apply to payments made after December 31, 2011.

Effective by January 1, 2013

  • Self-employment and wages of individuals above $200,000 annually (or of families above $250,000 annually) will be subject to an additional tax of 0.5%.

Effective by January 1, 2014

  • Insurers are prohibited from discriminating against or charging higher rates for any individuals based on pre-existing medical conditions.
  • Insurers are prohibited from establishing annual spending caps.
  • Expand Medicaid eligibility; individuals with income up to 133% of the poverty line qualify for coverage, including adults without dependent children.
  • Two years of tax credits will be offered to qualified small businesses. In order to receive the full benefit of a 50% premium subsidy, the small business must have an average payroll per full time equivalent (“FTE”) employee, excluding the owner of the business, of less than $25,000 and have fewer than 11 FTEs. The subsidy is reduced by 6.7% per additional employee and 4% per additional $1,000 of average compensation. A 16 FTE firm with a $35,000 average salary would be entitled to a 10% premium subsidy.
  • Impose a $2000 per employee tax penalty on employers with more than 50 FTE employees who do not offer health insurance to their full-time workers (as amended by the reconciliation bill).
  • Set a maximum of $2000 annual deductible for a plan covering a single individual or $4000 annual deductible for any other plan (see 111HR3590ENR, section 1302). These limits can be increased under rules set in section 1302.
  • Impose an annual penalty of $95, or up to 1% of income, whichever is greater, on individuals who do not secure insurance; this will rise to $695, or 2.5% of income, by 2016. This is an individual limit; families have a limit of $2,085. Exemptions to the fine in cases of financial hardship or religious beliefs are permitted.
  • Under the CLASS Act provision, creates a new voluntary long-term care insurance program; enrollees who have paid premiums into the program and become eligible (due to disability or chronic illnesses) would receive benefits that help pay for assistance in the home or in a facility.
  • Employed individuals who pay more than 9.5% of their income on health insurance premiums will be permitted to purchase insurance policies from a state-controlled health insurance option.
  • Pay for new spending, in part, through spending and coverage cuts in Medicare Advantage, slowing the growth of Medicare provider payments (in part through the creation of a new Independent Payment Advisory Board), reducing Medicare and Medicaid drug reimbursement rate, cutting other Medicare and Medicaid spending.
  • Revenue increases from a new $2,500 limit on tax-free contributions to flexible spending accounts (FSAs), which allow for payment of health costs.
  • Chain restaurants and food vendors with 20 or more locations are required to display the caloric content of their foods on menus, drive-through menus, and vending machines. Additional information, such as saturated fat, carbohydrate, and sodium content, must also be made available upon request.
  • Members of Congress and their staff will only be offered health care plans through the exchange or plans otherwise established by the bill (instead of the Federal Employees Health Benefits Program that they currently use).
  • A new excise tax goes into effect that is applicable to pharmaceutical companies and is based on the market share of the company; it is expected to create $2.5 billion in annual revenue.
  • Most medical devices become subject to a 2.9% excise tax collected at the time of purchase.
  • Health insurance companies become subject to a new excise tax based on their market share; the rate gradually raises between 2014 and 2018 and thereafter increases at the rate of inflation. The tax is expected to yield up to $14.3 billion in annual revenue.
  • The qualifying medical expenses deduction for Schedule A tax filings increases from 7.5% to 10% of earned income.

Effective by January 1, 2017

  • A state may apply to the Secretary of Health & Human Services for a waiver of certain sections in the law, with respect to that state, such as the individual mandate, provided that the state develops a detailed alternative that “will provide coverage that is at least as comprehensive” and “at least as affordable” for “at least a comparable number of its residents” as the waived provisions. The decision of whether to grant this waiver is up to the Secretary (who must annually report to Congress on the waiver process) after a public comment period.

Effective by 2018

  • All existing health insurance plans must cover approved preventive care and checkups without co-payment.

The only one I see that can be argued as bad is the fine for not securing insurance … but you know that if an uninsured needs medical care, it’s going to cost the government (and by extension all of the rest of us) a helluva lot more than the $695 maximum individual limit, and likely more than the $2085 family limit.

The vast, vast majority of people will still be carrying private insurance, but with additional protections over what they currently have. Others will have the option to choose an alternative. People who elect not to carry insurance at all will have to pay a penalty tax, yes … but those people already have government provided healthcare since hospitals aren’t allowed to turn people away and must provide care; and if patients can’t pay, then either the hospital or the taxpayer eats the cost. The penalty tax just ensures that some money is coming back into the system; seems like people would be excited that a benefit that is already being provided will now be paid for, at least in part, by the people actually using it.

You know what pisses me off? Tax breaks for multiple children … I have **many** co-workers who receive back well more in income tax refunds than they ever put in to begin with, because they spent thousands of dollars of money to squeeze out the 5th and 6th child, in a single-earner family making $40,000/year.

Child tax credits should stop after the second child, and NO ONE should ever get back more than they put in to begin with. If you had $1000 in Federal Income Tax payroll deductions throughout the course of a year, you get back a maximum of $1000, not $1001, and certainly not $5000-10000.

And yet no one is trying to fix THAT problem because it would be “a tax increase” … but hey, talk about redistribution of wealth; that’s taking money that I earned as a single taxpayer and directly giving it to someone who effectively isn’t contributing ANYTHING.

One Comment

  1. People are opposing the Individual Mandate, the requirement that everyone must buy health insurance that meets government standards or else face a penalty.

    You get penalized if you don’t buy insurance.
    You get penalized if the insurance you buy does not meet the government imposed standards of acceptability.

    Although I supported the reform the irony is that I will not be able to afford it if prices continue to go up. Yes, even with a subsidy I will not be able to meet my required payments on the mandated coverage.

    This worries me no end and the fact that I am working poor, living on the edge, have cut all expenses down to the bare necessities–how can I describe the awful feeling it gives me that through no fault of my own the government will still peanlize me if they refuse to give me a hardship waiver?

    I recommend you visit the Kaiswer Family Foundation’s Subsidy Calculator at

    Here you can see what an estimate of your subsidy (if any) will be and what the required premium will be.

    I cannot adequately explain to you the terrible feeling and realization I have had after seeing the figure I’ll have to pay. It’s more than what remains from my monthly salary after paying rent (which is $1000 a month from a $1800 a month salary).

    People say I can always get another job but who knows where the economy will be in 2014? Who knows if I’ll every make $45K a year again? Besides, I’m now self employed so if my salary goes over $35K a year the burden of the mandated coverage will be completely on me.

    I can’t speak for other people who are expressing objections to the legislation but am taking the time to let you know that there are people like me who are very worried about the burden this imposes on those of us for whom $100 or more a month is a large amount of money to pay.

    The mandated coverage will have about a $2000 deductible and then will cover about 70% of expenses after that. All this information comes off the Kaiser Family Foundation Website. I recommend you visit there for more information.

    Feel free to talk to me more if you’d like to discuss this. How will you meet the expense? How will it effect your ability to pay rent and auto insurance? Will you give up your car to have health insurance? There’s alot to think about here and no one should form a judgement about those who oppose or dislike the way things are shaping up.

    It looks to me like the health insurance policies for an individual will cost over $10K by 2014 if things keep up.

    It would’ve been better to phase people into Medicare over a period of 2-5 years. The system is already in place and so is the structure. It could be worked on. I wouldn’t have minded an approach like that. We would all pay 6% of our salaries into the Medicare fund and work on the reform through there. There shouldn’t be this whole new burdensome, money consuming bureacuracy in place. It just eprpetuates the existence of the for-profit industry.

    What will happen is that smaller insurance companies will merge into the bigger ones to survive. It doesn’t make me think well to see only a choice between Blue Cross, Aetna and Cigna.

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