Search ForexCrunch

Since the Affordable Care Act (aka Obamacare) first became enacted into law in March, 2010 much has been said and written about it.   We in the United States all know that it is scheduled to be implemented in January, 2014.

However, what isn’t said or talked about is the impact it will have on US citizens in 2014.

Applications for Obamacare are scheduled to be launched in October, 2013 and from what I can gather thus far the application is 60 pages long.   Yes, sixty pages long.   I’m in a unique position in that in my state I’m licensed to sell insurance.   I currently hold a NJ Life, Health and Variable Authority which means I can sell Life, Health and Annuity products in Chris Christieland.

This law came about because the United States is the only civilized nation in the Western world that does not have National Healthcare for its citizens.   Yes, we do have Medicare but that is solely for retirees, not the general public.   The United States is unique in that it does offer a variety of choices concerning health insurance as there are dozens of insurance carriers, most of whom are publicly traded entities.

However there’s never really been one set of rules to abide by because each state in the United States has their insurance commissioner and hence their own rules as to what are acceptable in their state of domicile.   For example in New Jersey (aka Chris Christieland)   we have Guaranteed Insured which means that if an insurance company accepts an application for insurance and the insured has paid their premium and gone thru their free look period, they’re insured regardless of the insurance company does (or tries to do) after the fact.   Other states will run MIB reports and investigate for reasons to either increase the premium or deny coverage altogether.

Additionally the law was created because up to 45 million Americans do not have health insurance for even basic coverage.   Traditionally employers here provide health insurance because it is a huge tax deduction for them. Besides that the US government never really wanted to get involved with individual coverage.

There was never a law that stated employers must carry coverage for employees hence many small businesses don’t carry any coverage at all.   This is all based on the “rugged individual” theory rampant in many parts of the US or the “ownership” theory.   What no one says is that “ownership” means you’re on your own.

When this law was first enacted, I, like many of my countryman applauded the effort.   However as we getting closer to the implementation date, I’m seeing many “cracks in the foundation”, so to speak.   The law provides vouchers by means of tax credits for individuals or families that make up to $93,000 a year.

At first glance you may think well what’s wrong with that?   Many people in the US don’t earn $93,000 a year.   True.   However the “voucher” will only cover about 50% of the premium and the balance is paid by the individual.   So, you ask what’s wrong with that?   Wouldn’t that serve to reduce the monthly premium?   Maybe, but probably not.

As I mentioned earlier, the majority of major health insurers are publicly traded firms.   Companies such as Aetna, Cigna, United Healthcare are major, well known firms that are publicly traded.   What do you think will happen if they now have to, by law offer insurance to 45 million Americans who otherwise wouldn’t qualify for coverage?

You guessed it.

Insurance premiums will go up.   In fact it’s estimated that even with the “voucher” a family of 4 will pay close to $1,000.00 per month for coverage.   Insurance premiums will double because the law never mandated what an acceptable premium is.   Case-in-point, someone who had Cobra benefits that are due to expire and now has to get individual coverage will be quite surprised at what they will now have to pay for coverage.

Heretofore they may have been paying $1,000.00 per month; they may see their premiums increased by up to 100%.   So instead of paying $1,000.00 per month, they will now pay upwards past $2,000.00 per month.

Medicaid?   Unless you’re living in the street it is virtually unattainable.   Another hole in this bill is that it doesn’t mandate cobra continuation across the board to all states.

Employers who do not provide group coverage to their employees will pay a $2,500.00 penalty per employee who isn’t covered by health insurance.   So if you’re a small business and you don’t provide coverage, you’ll pay the penalty.

So what?   If you provide coverage you’ll pay far more than that in insurance premiums.   In contrast $2,500 is cheap compared to the $12-15,000 a year you’ll pay in providing insurance coverage.

This law is another example of legislation that doesn’t go far enough.   It’s another example of a law devised by people who live in a glass bubble and really don’t know or understand the real world issues that we, the people face.   This law could in fact be the nail in the coffin for the middle class in America.

True, it does mandate that all Americans must have coverage but most of us assumed that the government by virtue of “vouchers” would be paying for it.   The fact is that we the policyholders will be paying for it by virtue of higher premiums.   No publicly traded firm is a charitable organization; they are for profit firms that are beholden to shareholders, not policy owners.

Who is going to pay for the medical coverage for nearly 20% of the population that don’t have coverage?   We the policy holders will.   It is estimated that 900,000 bankruptcies are filed in the United States for medical reasons.   I suspect that number will increase in the time to come.