Putting the Brakes on “Obamacare” – Obstructionism or Prudence?

Recently a number of my acquaintances, left-leaning in their politics and not terribly discriminating with respect to the accuracy of the messages they disseminate, have been inundating certain electronic channels with attacks on efforts by Republicans in Congress to derail implementation of the so-called affordable health care act. These messages represent this effort as being an attack by corporate interests on the poor of America, motivated by greed and without merit.

I beg to differ. While I believe that the way that health care is financed and allocated in America does not serve the general population well, and have always supported reform in principle, the Affordable Care Act has many drawbacks, about which thoughtful and knowledgeable people have legitimate concerns. If a person in a political office, having reviewed the picture, concludes that these drawbacks outweigh any benefit to be derived from implementing the law, and that there would be net harm to his constituents, doesn’t common integrity and the nature of representative government create a mandate to oppose the act by any legal means, including obstructionist tactics such a filibusters and refusal to approve spending bills, tactics which the Democrats did not scruple to use when the Republicans were in office?

The immediate effect of implementing the bill will be to direct the Federal Government to pay some undetermined but undoubtedly large sum of money directly to insurance companies to subsidize health insurance for younger people who lack employer benefits and do not earn sufficient money to buy private insurance. Some of these have pre-existing conditions that make it difficult to obtain individual insurance. Both rates and the number of people in this category have increased substantially since passage of the act. While the payments will begin in January of 2014, the government subsidy will not show up in Federal accounting until April of 2015, when it will appear (in the form of a refundable tax credit) as a shortfall in revenue. Essentially, the government is borrowing money against future tax receipts to subsidize the insurance industry.

For self-employed and lower wage workers with no employer coverage, the result for people without serious chronic health problems will not infrequently be decreased access and increased financial burdens. Suppose, for example, a family is currently paying $1000 yearly out of pocket for care. They sign up for “Obamacare”, and the insurance exchange determines that they can afford $200 a month towards a $1200 a month policy that has a $500 deductible per person and 20% copay. These are theoretical figures but based on a median or slightly below median income family of four, and the government’s site for estimating subsidies and premiums. In the first year, assuming their good health continues and consuming patterns don’t change, they will end up spending $3400 for the same services, and the government will have spent an additional $12,000 in subsidies. As for decreased access, I know personally that when I was a low wage earner and parent on a very tight budget – albeit covered by employer insurance – I avoided seeking medical help for treatable conditions and did not always fill prescriptions for things like pain killers, because of deductibles and co-pays.

The histories of the student loan debacle and Hurricane Katrina relief illustrate a very real danger to committing Federal funds for some service to people, and making the gatekeepers for certification for that service the firms that stand to profit from (or in the case of nonprofits, depend for their operating expenses on) maximizing the number of people certified. From its outset, the subsidized and guaranteed student loan program was inundated by private trade and career schools of questionable value, and when students at these schools failed to realize any benefit and were unable to pay off student loans, the Federal government, rather than foot the bill for repaying the loans they had guaranteed, took away bankruptcy protection, leaving young Americans who had been defrauded by so-called educational institutions burdened by a lifetime of debt.

In the case of Hurricane Katrina relief, certification was handled by private firms with ties to the construction industry, which encouraged applicants to apply for grants to which they were not entitled, omitting key information. People who had suffered losses were encouraged to submit false claims, and when the claims were audited, they found themselves liable for what was in effect a loan.

So what happens in April of 2015, when the government is finally faced with having to pay for subsidies to the insurance companies in 2014? First, they’ll look at all those 2014 returns and determine that in a certain number of cases more subsidies have been paid out than the actual finances of the taxpayer justified, either because their income was higher than estimated or because some mistake was made in the initial application. That overpayment to the insurance company now becomes an individual’s tax liability, difficult to discharge in bankruptcy and subjecting future tax refunds, including earned income credit, to seizure by the IRS. Going forward, the public and our Congress members will need to be very vigilant about clauses buried in unrelated bills that change the nature of the subsidy from an outright grant to some sort of individual obligation.

The insurance industry and the health care industry were both heavily involved in the design of “Obamacare,” and there are players in both camps who are every bit as unscrupulous as the private trade colleges and the lenders who hijacked the 1965 Education Act and turned it into a cash cow financed on the backs of lower-income Americans, with the collusion of the Federal government. “Obamacare” has some of the same dangers, with an additional coercive aspect not present in the higher education industry. The public benefits, which are real, could be achieved at much lower cost. This strikes me as being a very costly band aid that is likely to exacerbate the overall problem of health care access and affordability while not being very effective at fixing even those specific problems it purportedly addresses. It deserves all the obstructionism it can get.

Image Credit

“Is the Restaurant Industry Ready for Obamacare?” by Czarina Alegre. Creative Commons Flickr. Some rights reserved.

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