I promised a continuation of the Obamacare discussion. Here it is. Let's talk more about the insurance choices that were offered to consumers prior to Obamacare.
As mentioned in the post on Monday, consumers used to have multiple choices in medical insurance. You could pick very comprehensive insurance with a higher premium or something less comprehensive that was less expensive. Large corporations generally subsidize your medical insurance premiums. Small corporations don't pay as much, or maybe they pay none. My employer pays 70% of the premium for my entire family, and I only pay the remaining 30%. I was trying to decide whether to take a job as a manufacturers sales representative several years ago. In that job, I would get paid a straight commission based on the sales in my region. The company I would work for expected me to pay my expenses and my insurance myself. He suggested buying a major medical type policy that provides good coverage for major illnesses and surgeries, but provides really no coverage for the small stuff. An HMO portion of the policy would give me negotiated prices for medical services, but I would pay the bill most of the time. The result would be a family plan premium of only about $450/month.
How does Obamacare affect this? Well it makes a big difference. Now that same potential employer, with only himself and three other employees, would be violating the law by not providing a comprehensive insurance plan to everyone. Without the insurance, he owes a fine or a tax (depending on whether you call it what the lawmakers or the supreme court called it). Also, whether I buy my own insurance policy or my employer does, the Affordable Care Act requires all insurance to include certain features, including wellness, birth control, pre-existing condition coverage, coverage for kids until they are 26 years old, etc. etc. That bare bones major medical plan is no longer an option. I would have to pay for all the premium insurance coverage and the cost would be well over $1,000/month. Thanks a lot for the help Democrats. Unless your spouse has good coverage in their job so that you don't need insurance, it would be difficult to take that job. Maybe the employer would have to pay his employees a bigger commission rate to make the job attractive, and that would be inflationary. Can he afford to have as many employees now? Maybe not.
You may have noticed that your 2012 W-2 form now shows an amount in box 12 with the code DD. That shows your health insurance cost in total for the year. Mine shows almost $14,000. That means that I paid over $4,000 and my employer pays almost $10,000. That's a bunch. In 2008, the total cost of health insurance paid for by me and my employer totaled less than $8,800. That's an increase of nearly 58% in four years. The compounded annual growth rate (CAGR) is 12.1%. Do you think we've had an inflation rate of 12.1% during this recession and the following years with bare minimum growth? Only the price of energy and medical insurance has had this kind of growth.
Why has medical insurance increased by such a substantial amount in the midst of a recession? (I know that the economists say that the recession ended a while ago, but I think that is a crock. If it wasn't for government meddling, we would have negative economic growth right now -- I think it is called recession/deflation. The government limits the supply of energy and manages to double the cost of gasoline for instance. Economic growth isn't coming from increased demand; it is caused by artificial supply limitations.) Government meddling in the health insurance business has driven up the cost by telling everyone that they want premium coverage. We all are paying for that premium coverage whether we need it or want it. Why should anyone pay for a "Cadillac" plan anymore? They can wait until they encounter a major illness or injury to buy that "Cadillac" plan. Obamacare says that the pre-existing condition must be covered by the new plan. Therefore, the price of the "Cadillac" plan must go up drastically.
So what was the intended consequence? That's not altogether clear is it? We heard things like "tens of millions of people in America don't have health coverage." The costs of paying for uninsured people to go to the emergency room is costing us too much, and the Affordable Care Act will actually save money. Obamacare was supposed to give you wellness coverage that would make you healthier. It was supposed to cover people that weren't covered before. It was even supposed to make our health insurance prices drop. Is that what has happened? No. Instead, we got all those unintended consequences mentioned above.
This is one massive MessAPolitico. How do we stop it? If it gets fully implemented and the insurance companies go out of business or employers quit offering us insurance, what then? If the price of insurance gets much better, how can we afford it? This has to be stopped before it goes too far. Stop this MessAPolitico! Now!
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