Now that the key provisions of Obamacare are finally being implemented (and I use “implemented” loosely) a picture of who the winners and losers are has begun to emerge. For the last four years, President Obama has sold the law as one that would help just about everyone by insuring the uninsured and lowering costs for everyone else.
Conservatives argued the opposite, that the law would be a disaster and completely ruin healthcare for millions. For purposes of our analysis, we will break the winners and losers into four categories: those who had employers-based insurance, those who had individual policies, those who could not afford policies, and those with pre-existing conditions.
Those with Pre-existing Conditions
The “pre-existing condition crisis” was one of the more overly-dramatic reasons for the desperate need for Obamacare. In reality, many people with pre-existing conditions already had health insurance with the same exact rates of their healthy counterparts. Given that most people are insured through employers (or were, before Obamacare anyway) or through the government (and now more are, thanks to Obamacare) either through employment or welfare, it did not really matter if you had a pre-existing condition or not. Such group plans typically do not know the health status of individual members and the costs for pre-existing conditions are spread equally across all plans.
Those with pre-existing conditions who benefit most currently have privately purchased plans with health status being taken into consideration. Given that the purpose of insurance is to be a safety net in case something bad happens, not after it happens, it stands to reason that high-risk individuals would be charged more. Obamacare made that illegal and those with pre-existing conditions can no longer be charged more than the healthy.
People with Pre-existing conditions on Private Plans: Big Winners (Greatly reduced rates, as their healthy counterparts make up the difference)
People with Pre-existing conditions on Group Plans: Losers (Reduction in coverage, higher costs. More below)
Those on Group Plans
“If you like your insurance plan, you can keep it.” This was the promise of Obamacare. For now, most companies – especially those with a large middle class and upper class employees with competitive work forces – have kept insurance plans similar to what they had been offering. This also goes for the obscenely large percentage of the population working in government. For the most part, these plans were already of the more expensive variety, subsidized by the employer to a good degree, and covered most of the minimum requirements now required by Obamacare.
But these plans were still hit with re-insurance taxes – a welfare tax to help insure those not in the group plan pay for others with pre-existing conditions. The law also required that these plans offer a ton of “free” services and products that many didn’t offer, including contraceptives, breast pumps, and smoking cessation drugs. Other taxes, such as the medical device tax, also lead to insurance companies having to charge more to handle coverage. These factors, and more, forced a rise in deductibles, premiums, and co-pays for millions of existing plans. So for many, they got to “keep” their plan, but those plans were made more expensive and burdensome. And remember the other promise: the average family would save $2,500 on average on their premiums. (And this is only looking forward through 2014. There is no telling what the viability of these plans will be down the road.)
On the flip side, low-wage, low-skill employers often offered cheaper plans that were adequate for insurance purposes. With these plans now banned, the new requirements forced smaller companies to make decisions to avoid the new penalties. As a result we’ve seen a reduction in the workforce, reduced hours, and an unwillingness to expand. In many regards this law has led to the emerging “part-time economy.” Millions of the jobs lost during the economic downturn that are now “coming back” and lowering the unemployment rate have transitioned from full-time to part-time status to avoid the costly impact of Obamacare.
People with middle-class or government group plans: Slight Losers (Typically slightly higher premiums, deductibles, and co-pays)
People in lower-paying sectors: Big Losers (Loss of plans, reduction in hours, or forced to “transition” into an Obamacare exchange)
Those on Individual Plans
This is where Obamacare has had the biggest impact, and it has not been pretty. Purchasers of individual plans have seen their plans cancelled (don’t worry, the President says, you will get a better plan at a better deal) or premiums sky-rocket. Those with plans that have been cancelled have few options outside of the exchanges. These people are typically self-employed, independent contractors, or small business owners who cannot purchase group insurance. In many cases, these were plans that people were happy with and were promised that they could be kept. As even the media has been forced to recognize, this has not been the case and the Obama Administration knew it all along.
The new plans are forced to cover things people do not want as well as pay for the insurance of those who enter the plans after they need it. The new Obamacare plans are often 3-4 times more expensive than what people had been paying. Obama argues that this is “only” 5% of the population (notice he gives the percentage rather than note that 5% is actually 15 million people, because that isn’t so small a number) or says to blame insurance companies for cancelling the plans that are no longer allowed by law. Make sense?
People who liked the plans they had: Big Losers (Cancelled plans, people forced into the exchanges with tripled premiums and deductibles)
People with pre-existing conditions on Individual Plans: Winners (Drastic premium drop as expenses covered by those without pre-existing conditions see drastic premium increase)
Again, there are different types of people who were uninsured. There were those who were uninsured because they could not afford the premiums and those who were uninsured by choice (think: young people). For the most part, those who were uninsured because of cost reasons are either eligible for major subsidies through Obamacare or Medicaid, through newly expanded eligibility. There are also those who were voluntarily uninsured who are forced to buy insurance, find one of many waivers, or pay a small fee.
People with a low income eligible for expanded Medicaid: Winners (Low cost across the board as taxpayers foot the bill)
People with a low income eligible for subsidies: Losers (Shocked by this one? For most basic plans, the deductible for a single person sits around $6,300. So low income people who get a subsidized plan still have to pay for most of their healthcare until they reach that deductible, which is likely a very large chunk of their income. So while their premium may be “affordable” the amount that must be spent before they start getting payouts is not. A much better idea would have been to keep the much older plans and attach it to a Health Savings Account.
Mostly Losers in an Ineffective, Poorly Conceived Bill
There are so many poor decisions regarding this law it’s hard to summarize them. The only winners are a small percentage of people with either pre-existing conditions who weren’t on group or government plans or people now eligible for more welfare benefits. People in group plans, those with individually purchased plans, and even those now eligible for subsidies through an exchange are all worse off. The Medicaid expansion could have happened without doing everything else. The subsidies also could have happened without doing everything else. Indeed, rather than subsidizing plans that were $55 in 2013, we are now subsidizing basically the same plans at $215. Wouldn’t it have been more cost-effective to subsidize the $55 plan? I know, I know. Government doesn’t do cost-effective.