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The Failure Of Obamacare

Freemont Group
13 January, 2014

Last September the much discussed Affordable Care Act came into effect. A policy so special that Obama named it after himself. It looks like Obama might reconsider if that was a smart choice.

In this article, we will first make a quick recap on what Obamacare is and what was its original intention. Secondly, lets look how it turned out.


THE AFFORDABLE CARE ACT (ACA)

From Wikipedia:

"The ACA was enacted with the goals of increasing the quality and affordability of health insurance, lowering the uninsured rate by expanding public and private insurance coverage, and reducing the costs of healthcare for individuals and the government. It introduced a number of mechanisms--including mandates, subsidies, and insurance exchanges--meant to increase coverage and affordability".

Fair enough. It is aimed to help individuals to obtain health care. And how exactly? Wikipedia again:

"The ACA has two primary mechanisms for increasing insurance coverage: expanding Medicaid eligibility to include individuals within 138% of the federal poverty level, and creating state-based insurance exchanges where individuals and small business can buy health insurance plans - those individuals with incomes between 100% and 400% of the federal poverty level will be eligible for subsidies to do so."

A centralized and mandatory system which will provide insurance for 32 million Americans that are currently uninsured. And that will provide cheap healthcare for the middle and working class. With heavy government regulation.

So far, does it deliver?


HOW IT TURNS OUT

Before the implementation a number of big (unintended) consequences took place. To name a few:

Employers are required to pay for health care (and face huge additional costs) when they have personnel on payroll for more than 30 hours. So there have been massive layoffs, with the lucky folks getting rehired for 28 hours.

The ACA heavily regulates the interaction between patients and doctors. This has resulted in doctors resigning or retiring early. They think they are the ones in the best position to decide what kind of health care they recommend (and honoring their Hippocratic Oath) and not the government. Others decide they do not want to deal with the bureaucracy.

People with private health insurance packages saw their policy cancelled when it did not live up to the minimum ACA cover requirements. Much more have lost their coverage than obtained new one as is described further below.

Hospitals and doctors face reduced remunerations, with some hospitals having to make cuts. With the increasing amount of clients now eligible for health care and the aging population, it means that the access to health care (and likely the quality) is being reduced. And waiting lists increased.


WHEN IT BECAME A PUBLIC FAILURE

But things became absurd when the website of Obamacare went public. The website production has cost USD 600 million and was designed to support the online enrolling of millions of Americans before it becomes a legal requirement on the 1st of January 2014.

It does not work. Of the almost 9.5 million visitors in the first week only 35 thousands were able to enroll in the mandatory system (3.7 million tried!). This is, when the website was working, because most of the time it was showing only error messages.

An emergency plan was enacted to make sure that everything works smoothly and a number of public re-launches were performed. The result being the website failing on live television and tv-hosts not being able to register themselves.


WHERE WILL IT GO FROM HERE?

As of now, more people have lost their health care coverage than have obtained a new one. Furthermore, most of the people who actually enroll find out that they have to pay much more than they used to. Facebook pages and government websites with comment functions are filled with people complaining about it.

As of 19 December, the government has given an exemption to the group of Americans whose existing policies would be cancelled. This could have major implications, when other special interest groups will start looking for exemptions. Why? Because these are the people who need to fund Obamacare in order for it to be afloat.

As of now, the Affordable Care Act is not providing care and not making it more affordable. The legislation enacted is so large and implications so fast that only time will tell the exact result of Obamacare.

So far, it looks terrible.

Our advice, always look for results, and not for fancy stories and ideals.


AN INTERNATIONAL SOLUTION FOR INDIVIDUALS

Like with taxes, health care systems are jurisdiction based. When you are living in a country that has or implements collectivist health care policies that reduce the availability of the right care to you, there are options.

International health insurance is available for those who live and work internationally. This is often cheaper than national policies, especially for young people.

For care itself there are countries like Thailand and Costa Rica, where high class doctors are actually listening to your complaints and providing the care you need at decent prices and without waiting lists.

So next to internationalizing your businesses and assets, try also thinking about internationalizing your healthcare!


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About the Author


Freemont Group

Freemont Group is a comprehensive provider of fiduciary services, including corporate formation and administration, trust, fund formation, legal-and tax services. Contact: info@freemontgroup.com

 

 

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