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The Affordable Care Act and You

With each passing day, the news on Obamacare gets worse. At the outset, it was just a matter of a few “glitches” in the website. And after all, didn’t Google and Amazon and all the great technologies of our day have some glitches along the way? Of course, now we know that describing the problems with the Obamacare website as “glitches” is like calling World War I a food fight.

Not to worry, as a few weeks ago, Wolf Blitzer breathlessly reported to the nation that the healthcare website would be spinning like a top by the end of November. More recent reports on the prospects for the website are not so breathless.

Now we know the website is the least of Obama’s worries about his “signature legislation.” Reports now peg the number of people who have lost their policies at 5 million and counting versus only 26,000 who have actually signed up for insurance on one of the exchanges. (And don’t believe the regime’s propaganda that there are actually 106,000 who have signed up, because although that larger number is reported, that includes the 80,000 who have signed up not for insurance but for coverage through Medicaid, which is welfare, pure and simple.) For those of us who understand even the basics of the functioning of markets and economics, the failure of Obamacare is expected. For a recent real world example of government control, just look at what Chavez did to Venezuela in fourteen years. (Yes, but Venezuela still produces the most Miss Universe winners!)

Why aren’t people signing up on the exchanges? The problems with the website are mere distractions. Assuming that eventually the website starts working, the number of enrollees will continue to lag the numbers needed to meet the regime’s projections because 1) potential buyers are clicking off the website or hanging up on their overpaid “navigators” because of the sticker shock they are experiencing with the increase in their premiums; and 2) the Obamacare website has been declared by its perpetrators to be unsecure, and many people are not about to divulge all their confidential information. Furthermore, browsers on the Obamacare website have found that they can’t get any information on prices and coverage without first giving up all of their own confidential information.

But all of these problems are mere prelude to the storm that is gathering, as the vast majority of Americans begin to learn what their premiums will be on their employer provided policies. If you think there has been outrage to this point, just wait until the notices start coming as to changes in coverage, increases in deductibles and increases in premiums which will be hitting employer-provided plans in the coming twelve months. My company has already been informed of a 49% increase under Obamacare. I will consider myself fortunate if my premiums only increase by that amount.

And what of the following years? If Obamacare is not repealed, I expect the following to ensue: premiums will continue to escalate year after year, resulting from 1) fraud and incompetence associated with any government operation; 2) the adverse selection of insureds, i.e. those buying the insurance and paying premiums will be the sicker and older segments of society instead of the young and healthy that the regime had projected would prop up the program; and 3) the over-utilization of health care resources which naturally results when the market place ceases to function. In an effort to keep costs down, government will likely step in to put a cap on fees which can be charged by healthcare providers. As always happens with such caps, this will lead to a scarcity of services because fewer providers will be willing or able to provide services at the reduced costs. As a result, wait times will increase, and we’re not talking about hours; we are talking about months.

The response to all this will be an increase in self-insurance and in providers who will not accept Medicare, Medicaid or insurance. The risk to those who choose to go without insurance is that the penalties (yes, I know Justice Roberts twisted himself into the Gordion Knot and called it a tax) will increase to as much as 2.5% of your adjusted gross income in a few years. The good news, at least for now, is that the IRS cannot enforce collection of the penalty other than by withholding any tax refund you have coming. So for now, if you choose to go bare and not buy a policy, then as long as you do not allow overwithholding on your paycheck, the government will have no way to enforce the penalty against you. However, I fear that given time, the penalty will be enforced with an added box on your tax return which says: “Do you have health insurance through an approved provider? If you checked the box marked “NO” multiply your amount on line 34 by 2.5% and add this to your total tax due.” All it will take will be a simple amendment to that 2700 page monstrosity, laughably called the “Affordable Care Act,” to enforce the penalties through the tax reporting system.

I am hopeful that there will be a big increase in Medical Tourism, i.e. I expect many new first class hospitals and capable physicians and nurses will be located outside the US and you will be able to purchase access to these providers, either by direct pay or perhaps even by insurance policies established under the laws of other countries, which, by being entirely outside the US, will not have to qualify under Obamacare. You will go to your regular concierge doctor for the sniffles on a self-pay basis, and for major medical, you will get on board a jet, fly to Costa Rica and have your hip replacement done in a sparkling hospital. Unfortunately, this will be available only to those Americans who are relatively well off, but no such options will be available to many of the people with more modest resources, and such people will be consigned to an ever-declining level of care. If Medical Tourism can develop in this manner, it may be possible to bring a semblance of market forces back to the health care system, which will lead to improved services and reduced costs, beginning outside the US and, it is hoped, someday returning to our shores.

The question is whether this will be “allowed” by the regime.

Milton Friedman once described why government services are so much worse than what is provided by private enterprise. He explained it like this: If you spend your own money to buy something for yourself, you will be careful to a) get a good price, and b) get something you really want for that price. Next consider what happens when you buy a gift for someone else: you will be sure to a) get a good price, but b) it is doubtful you will really get exactly what the person wanted. Next consider if you spend someone else’s money to buy something for yourself. You will definitely get what you want, but you won’t care too much about how much you spend. Last consider what happens if you purchase something for someone else with someone else’s money. What will happen? You will likely not care how much you spend, neither will you care what you provide to that other person, particularly when that person is unknown to you. This fourth scenario is what you get from government, that is, someone, a bureaucrat, spending someone else’s money, your tax money, on some person or group of persons the bureaucrat does not know personally and does not personally care about, with the result that much more is spent than is necessary on something you didn’t want in the first place.

As government continues to grow, it squeezes out private enterprise, with the result that we get more of what we don’t want, government, at ever-increasing cost. Adam Smith famously said, referring at the time to the British Empire, “There is a lot of ruin in a country.” It will be interesting to see how much more ruin this country can sustain.

Mark L. Dodds
Attorney at Law
Grant Morris Dodds
Trust, Probate & Guardianship Attorneys