Not even the most ardent defenders of Obamacare — aka the Patient Protection and Affordable Care Act — claim anymore that the law will lower health coverage costs for Americans. How, then, will it achieve universal coverage, its central goal?
The short answer is, it won’t.
and I agree with her. So it’s not affordable except with substantial subsidies. How about universal? Not likely…
For starters, the Supreme Court dealt a big blow to Obamacare’s key mechanism for covering the uninsured by making its Medicaid expansion optional for states — and many states are opting out. An even bigger problem, Scandlen notes, is that Obamacare has created perverse incentives that will encourage employers to drop coverage in droves — and employees to forgo it in droves.
The solution for many businesses? Stay under 50 employees where they stay outside the reaches of Obamacare OR pay the fine. Guess what, paying the fine makes sense.
It doesn’t take a rocket scientist to understand their calculation here: The penalty will cost a company $2,000 per employee, while a family insurance plan costs $12,000 to $16,000. This means that the company can pay the penalty, give employees generous raises to buy their own coverage, and still come out ahead.
Shikha includes the following claims that I don’t necessarly agree with.
As for the subsidies, Scandlen maintains that their allure, too, is overrated. They will be relatively modest for middle-income families, and to qualify, purchasers will be required to obtain very expensive “Cadillac” coverage.
People will also have the option of waiting to buy insurance until they get sick. Thanks to Obamacare’s “guaranteed issue” provision, insurance companies can’t turn anyone away, even those calling from the intensive care unit. This will only deepen the problem of the “adverse selection death spiral” as healthy people stay out of the insurance market while sick people jump in. This, in turn, will trigger even more premium hikes.
For the employees (“purchasers”) to receive a subsidy, the will be required to purchase either a bronze, silver, gold or platinum plan from the state based exchange. I don’t believe referring to all of these plans as ‘cadillac’ coverage is a fair desription.
And a word on adverse selection. I believe there WILL be a type of adverse selection but now what Shikha describes. The adverse selection of buying insurance when one gets sick will be somewhat mitigated by only issuing plans during open enrollment periods. Perhaps your accident or illness will line up with open enrollment but that’s a pretty big gamble to take.
The type of adverse selection I see is the bronze to platinum plan adverse selection. Let’s face it, a large majority of people will buy the bronze or silver plans. If they are diagnosed with a serious illness with long term consequences, they will “do the math” and if it makes economic sense will upgrade to the platinum plan the next open enrollment period. My prediction is that over time, platinum plans will become more expensive due to this adverse selection process.