Sunday, October 13, 2013

Finding out what's in ObamaCare

Listening to Paul Krugman on ABC's This Week with George Stephanopoulos, you'd believe that the measure of success for ObamaCare is someone being able to log into the insurance exchange and create an account. He assures us that these glitches will be resolved.

There is no doubt that the not-ready-for-prime-time Internet software will be fixed eventually. That's not what people will be fuming about in November of 2014. Two aspects of the ACA will be front and center when voters are about to cast their ballots.

First, when the $515 million healthcare.gov website (see the NY Magazine article here) is fixed, health insurance shoppers will get to see pricing for bronze, silver and gold plans. For millions of people, this will be sticker shock because of their expectations, fueled by the President and his administration for several years, that policies offered under the Affordable Care Act will be affordable.

Adding tens of millions of newly-insured individuals and families to our already short-handed health care system, particularly with respect to primary care physicians, will not be without its challenges. Health care delivery is not immune to the effects of supply and demand. When supply is dwarfed by demand, expect 1) higher prices, 2) longer lines, and 3) inferior quality.

As we close in on January 1, 2014, we will hear report after report of people being unwilling or unable to pay the premiums, deductibles and co-pays for the plans that meet the minimum coverage standards of the ACA. Many will sign up anyway with the idea that they might be able to make ends meet, but later will realize that hope doesn't change the fact that family budgets have limits. This epiphany will come about during the height of the U.S. House and Senate re-election campaigns.

Second, in spite of the fact that businesses have been given a hiatus until January 1, 2015 to meet their ACA mandates, millions of employees who fall below middle management in the corporate hierarchy will feel the brunt of full-time jobs being slashed to part-time status in advance of this start date. A 29-hour work week will be commonplace for these folks, the magic number for businesses to avoid the ACA requirement to provide employee health insurance.

In an effort to balance the family budget, second jobs will also become the norm for those who lose their full-time status and their corresponding benefits. Oddly, the selfless act of working harder to keep their heads above water will also push many beyond the threshold for receiving subsidies to help pay for their ObamaCare.

Even if a family of three's income falls below the $73,000 subsidy threshold, say $65,000, insurance premiums will be capped at around $6,000 per year for a high deductible policy, but the family would put at risk another $8,000 to cover the maximum annual out-of-pocket exposure. Will people consider putting up $14,000 for health insurance affordable? (See the chart here.)

As Nancy Pelosi famously proffered: "...we have to pass the [health care] bill so that you can find out whats in it...." Voters will be finding out what's in the bill just in time to weigh in at the polls on November 4, 2014.

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