October 24, 2013
The Danger of Obamacare
By Mike McManus
Headlines about the rollout of the Affordable Care Act or Obamacare have
focused on the difficulty people have experienced enrolling due to complex
computer glitches. They are so bad Consumer Reports has warned people “to stay
away from Healthcare.gov” for a month or two.
However, the technical chaos obscures the real danger of Obamacare - that “too
many healthy people will exit or never sign up…leaving only the people who are
most expensive to insure,” asserts John Goodman, president of the National
Center for Policy Analysis.
“Healthy people (will) leave the pool because they are being overcharged. Sick
people remain because they are being undercharged,” adds Goodman as quoted in
the “Washington Update” of Tony Perkins, President of the Family Research
What compounds the problem is a secret in the nature of health insurance.
Because young people need insurance less than older people, their premiums are
much less – one-fifth that of their elders. However, instead of a 5-1 ratio,
Obamacare has only a 3-1 ratio.
Why? The law includes new mandates for insurance companies. No one can be
excluded because of previous health problems. Young people up to age 26 can get
free coverage on their parents’ policies. Finally, birth control, sterilization
and abortion drugs must be included at no cost. Those factors drive up the cost
Of course, there is no free lunch. So premiums charged to 21 to 27 year olds
will be $850 higher than under the 5:1 rating. However, 57-64 year-olds save
$1,770. These figures will be somewhat offset by federal subsidies.
However, economic incentives will clearly lead many older and sicker people to
sign up and will persuade few young to do so. One of the great hopes of
Obamacare was that millions of young people without health insurance would sign
up and pay the bills of older, sicker people.
That is naïve and overly optimistic.
Another dark economic cloud on the health horizon is that employers – who pay
the biggest share of health costs today – are dropping coverage.
UPS dropped health insurance for 15,000 of its employees’ spouses. In a memo to
employees, UPS said it expected the cost of medical care to rise 7.25% in 2014
due to the Affordable Care Act requirement to cover dependent children up to age
26. Similarly, Premier Health will no longer cover spouses of its 14,000
What’s more serious, the 55,000 employees of Securitas, the nation’s largest
security guard provider, will lose their health insurance altogether, even
though the firm only offered basic coverage, capping employee benefits at
When White House Press Secretary Jay Carney was asked about this trend, he
dismissed them as only “anecdotes” which contrast with the “overwhelming facts”
that employers are not eliminating health insurance. Yet The Wall Street Journal
reported 1,200 firms plan to drop health insurance.
At present, one in 10 employers plans to drop health coverage for workers as the
federal law begins, according to the consulting company Deloitte. Its rival,
McKinsey & Co., puts the figure at 30%.
U.S. companies provide health care insurance to 162 million employees. Thus,
tens of millions of workers could find that the only coverage they can get is
federally subsidized Obamacare.
The Federal Government will charge employers who drop coverage a $2,000 fine.
However, for large employers of workers earning below $65,000, there is a
substantial incentive to drop coverage. Smaller employers will find it in their
self-interest to drop workers with incomes below $80,000, according to a
Since 58% of households have an income less than $60,000 – the numbers of people
added to the federal dole could be very substantial – and horrendously
The call to repeal Obamacare by Sen. Ted Cruz and Tea Party leaders was brushed
aside by senior Republicans in Congress, not to mention stout opposition by
Obama and Democrats.
However, consider some international comparisons. The percentage of men and
women who survived cancer five years after diagnosis is 65% in America but only
46% in England and 42% in Canada – which offer national health insurance.
Of patients diagnosed with diabetes, 93% of Americans received treatment within
six months, but only 15% in England with its socialized medicine, according to
Investor’s Business Daily. Of patients needing hip replacements, 90% of
Americans got them vs. 15% in England.
Repealing Obamacare could be a major Republican issue in 2014. Socialized
medicine could become very unpopular.
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