HEALTH CARE
Bitter Pill to Swallow: Negatives of ObamaCare
Though the health care reform may sound inviting, there are many slips between the cup and the lip. Sunny Sethi looks at the negatives of the health care reform bill.
Since the very beginning this bill attracted a lot of attention from political parties, businesses and media because of the huge impact it could have on the economy of this country. In the last issue, I wrote about the good things the new health care law could bring. There is always a flipside, here are some of the bad effects of the same health care reform.
Cost. Adding about $1 trillion over a decade to the deficit cannot be a good thing for U.S. economy, more so under the current circumstances. At approximately $100 billion per year, this is about the same cost as the annual cost of fighting the Iraq war.
Despite such a big cost, most experts claim that cost of health insurance will keep rising while the quality of care will diminish as the number of people without private insurance who need to be treated will increase.
Medicare Cuts. Seniors will be the worst hit by this law. They will see their benefits change dramatically. Congress is reducing Medicare benefits by $500 billion. This is particularly concerning for about 76 million baby boomers about to hit retirement over the next decade.
Individual Mandates. Beginning 2014, the U.S. government will require each individual to purchase basic health insurance or pay an income tax penalty. The people who do not carry health insurance will pay $695 as fines every year with the exception of some low-income individuals. Many states have filed lawsuits stating that it is unconstitutional for the federal government to require individuals to purchase insurance.
Higher Premiums. Over the past decade, we have seen the insurance premiums double. Unfortunately, introducing an additional 30 million people into the insurance pool will result in much higher insurance premiums for the 80% of Americans that currently have health insurance. The average person could see a premium increase of 8-12% each year due to the healthcare reform bill.
Higher Taxes. Most businesses and high net worth individuals and families earning over $250,000 per year will see their Medicare taxes increase in an effort to support some of the costs of this health care reform law. Apparently, one will be punished for being successful while most illegals without insurance continue to fill the emergency rooms as they find convenient. Medical device makers will face a new 2.9% excise tax.
Excise Tax on Cadillac Health Plans. Many large employers offer the so-called “Cadillac” insurance plans -- those with a value of $10,200 or more for an individual and $27,500 for a family. Beginning 2018, these employers will be forced to reduce these benefits as they will be charged a 40% excise tax for offering these plans. This will lead companies to reduce their insurance offerings to avoid these taxes.
Employer Mandates. Many employers are concerned as by 2014, employers are required to offer health plans to all employees who work more than 30 hours per week, or pay a $2,000 per employee penalty to the government. Many companies I work with have been telling me that they will not be able to afford this and may end up closing locations or laying-off people.
HSA Withdrawal Tax. For the past decade, Health Savings plan have gained popularity. Government has decided to increase the penalty from 10% to 20% for any withdrawals made for non-health expenses.
In conclusion, the real effect of the health care reform bill is yet to be seen. At this point, it just seems like a huge gamble by President Obama. It makes one wonder, is this law really worth the hassle?
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Sunny Sethi is an insurance professional and is based in Santa Clara, Calif. He can be reached via email at 
