What does Obama-care mean for me?

Opinion

July 14, 2012

What does Obama-care mean for me?

By Wyatt Emmerich, Syndicated columnist The Picayune Item Picayune Item Sat Jul 14, 2012, 06:43 PM CDT

PICAYUNE — Right after the U.S. Supreme Court decision on Obamacare came down, Holly Dean, an ad rep for the Northside Sun, walked into my office. As a wife and mother of three young children, she wanted to know what this meant for her and her family.

Many people fear Obamacare will mean losing their company insurance and being thrown into a government plan. For Mississippians, they fear losing their Blue Cross of Mississippi coverage and getting something like Medicaid instead.

I doubt this is likely to happen in the near term. Whether it happens in the longer term will depend largely on whether the Democrats or Republicans are in power.

As an employer, my company offers Blue Cross medical coverage to all employees. It is a benefit and helps attract good employees. My company doesn’t have to offer any insurance at all. Under Obamacare, my company will be fined $2,000 per employee if I don’t offer a company plan.

The average Blue Cross cost per employee for my company is around $4,000 a year, so the fine is less than the cost of the insurance. But remember, even with no penalty whatsoever my company has been offering health care. So if I was offering health care when there was no penalty, I sure am going to be offering health care if there is a $2,000 per employee penalty.

Again, the reason for this is health insurance is vitally important to employees. Many employees won’t even consider working for a company that doesn’t offer health insurance.

So under Obamacare, employers have even more incentive to offer company plans.

The question is whether employees will care as much given the new rules which allow anyone to sign up for the government plan at the last minute, even if they are suddenly diagnosed with cancer.

Remember now that about a third of the lower income earning families may be eligible for Medicaid, which is virtually free. So we are only talking about working families for whom health insurance is a real struggle to afford.

Under the old rules, these families were taking a big risk going without health insurance. If they got cancer, they could not get coverage at the last minute because insurance could exclude you based on “pre-existing conditions.”

Under the old rules, these risk takers were not left to die on the side of the road. They got their cancer treatment, but they were then in a precarious financial position. Not all hospitals will see someone without insurance. And hospitals like UMC that would, would send these patients a big bill. The hospital then had full legal powers to collect.

In that case, the uninsured cancer patient would have to either file for bankruptcy or negotiate with the hospital. Typically, the hospital would demand the uninsured patient present their tax return and other financial information to determine how much they could pay. A payment plan for a reduced amount was usually negotiated.

Hospitals had an incentive to work out reasonable payment plans with uninsured patients. State and federal regulators would reward hospitals who were generous with Certificates of Need allowing them to expand. There were Medicaid and Medicare and other financial rewards as well.

Under Obamacare, a family can go uninsured and pay their medical expenses out of pocket. If someone gets seriously ill, the family can sign up at the last minute for health insurance, no questions asked. Pre-existing illnesses cannot be used to deny coverage to anyone.

Going without health insurance will mean a fine: For individuals, the penalty would start at $95 a year, or up to one percent of income, whichever is greater, and rise to $695, or 2.5 percent of income, by 2016. For families the penalty would be $2,085 or 2.5 percent of household income, whichever is greater by 2016 and beyond.

So a family making $75,000 a year will pay a fine of $750 in 2012 for not having health insurance. That fine will be $1,875 by 2016. There will probably be quite a few families who decide to pay their medical costs out-of-pocket and only sign up for Obamacare if there is a major illness. In a way, this is introducing more free market efficiency because when families pay out of their own pockets, they shop around better for the best price.

The problem is that the fines of the uninsured will probably not be enough to cover the cost of those sick people who sign up at the last minute for the government plan. But remember, hospitals are already covering these patients anyway.

Hospitals generally like Obamacare because they no longer have to collect from uninsured patients. Instead, they can bill the government.

Doctors generally don’t like Obamacare because it increases the power of the federal government in their business. The feds have often tried to use their power to lower physician compensation.

As Blue Cross has to offer more and more perks to comply with government regulations - such as no denial based on pre-existing conditions - company plans will cost more and more, tempting private companies just to cancel their private plans and pay the per employee fine.

Free marketers like me don’t like Obamacare because it increases government control and centralization. We would prefer to see deregulation and more competition. For instance, right now insurance companies can’t compete across state lines. This is crazy and has kept insurance prices high and uncompetitive.

One thing is for sure: If the fine for not having insurance really is just a tax, as the Supreme Court claims it is, then you can bet your bottom dollar it will go up - a lot.

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