Living With the Reality of Affordable Care Act

I think Jack Nicholson is crazy.

I don’t know him personally, but he just looks… off. Particularly in those old films like “Five Easy Pieces,” “One Flew Over the Cuckoo’s Nest,” and “As Good As it Gets.”

Perhaps that’s why his characters stick with us, long after the end credits.

Take that one line he spoke in “A Few Good Men,” for example. As Colonel Jessup, Mr. Nicholson gets that crazy look in his eyes before yelling at Tom Cruise:

“You can’t handle the truth!”

I can’t remember a single one of Mr. Cruise’s lines, but like most other Americans, I can clearly see Jack Nicholson’s outburst in my head.

When it comes to the Affordable Care Act (ACA), or Obamacare, it’s as if we simply can’t handle the truth…

People seem to be in one of two camps. They either love the idea of everyone buying insurance so much, they can’t see the flaws in the plan…

Or they hate the notion of the government demanding we buy insurance so much, they can’t see any of the benefits.

Parts of both narratives are true. This makes the law difficult to swallow and even harder to unwind. And, of course, we have Congress to thank for the mess.

Most of the hardest-hitting parts of the ACA are not even in effect yet.

For example, parts of the mandates require larger employers to provide insurance for workers at certain levels. This has driven companies and public entities, like cities and states, to limit worker hours so they stay under the threshold.

However, this requirement keeps getting pushed out or adjusted. Right now, individuals will only pay a penalty if they don’t comply, after they file their 2014 taxes in 2015.

Still, the fallout has been tremendous in some areas, like the cancellation of existing policies that don’t meet the benefit requirements of the law.

The Associated Press estimates that 4.7 million people were kicked off of their insurance as of December 31, 2013, which makes the current administration’s claims of success a bit odd.

As of January 31, the U.S. government estimated that 3.3 million people had signed up for insurance through a health exchange. However, the insurance companies estimate that only 80% of them had paid for coverage, so the effective sign-up number was 2.7 million people.

With 4.7 million people losing coverage and only 2.7 million buying new policies, we’re actually going backward.

Not included in this calculation is the fact that the U.S. government had estimated we would have six million newly insured people by the end of January.

There are some mitigating factors…

No one knows how many of the 4.7 million canceled consumers joined their spouse’s plan or had another path to coverage that didn’t involve a health exchange. What we do know is that some people who were uninsured have now signed up for health insurance, which was the goal of the law in the first place.

Stories about people finally being able to purchase insurance aren’t just tales of subsidies or the unemployed. Many hard-working, self-reliant Americans desperately wanted the simple privilege (privilege!) of paying for insurance, but had been denied because of pre-existing conditions.

These people — our friends, neighbors, and family members — can now purchase health coverage and stop living in fear of medical bankruptcy.

It’s a travesty that this group was unable to get health coverage at any cost in a country as rich as the U.S. before the ACA was enacted.

Unfortunately, nowhere in this story is the real issue: Health care is still really expensive.

Creating a system by which people not only can, but also must, buy insurance, does nothing to alleviate the cost of the care itself. To do that, we have to lift the covers and ask what really makes sense.

Does it make sense that companies can write off the cost of health-insurance premiums from their taxes, but individuals can’t?

Does it make sense that we pay money to insurance companies that negotiate wildly different prices with providers than what they offer to the man on the street?

Does it make sense that two providers in the same town will offer prices on a service that can be tens of thousands of dollars apart?

Does it make sense that we’ve turned our doctors into box-checking uber-administrators who have to manipulate the coding of Medicare to get paid at least the cost of the service provided (which ends up sending the private billing of any service through the roof)?

The Affordable Care Act is darkly humorous because the law does nothing to make care more affordable. It just spreads the cost among more people.

Unfortunately, we can’t turn back the clock. If Congress repealed the ACA, would we look at those who were only recently able to get coverage and tell them: “No, you can’t have insurance anymore… Sorry!”?

Of course not.

Some form of the ACA is here to stay, even if it’s called something different.

The cold reality is that the hard work of reining in health care was not accomplished, or even attempted, in the ACA. That would have required staring down special interest groups, like pharmaceutical companies, large public firms, hospitals, and the American Medical Association — something for which Congress has shown no appetite.

Instead, our representatives passed a law more than 1,900 pages long and in draft form — in less than a week — before any of them had read the proposed law, much less debated it.

That’s not good government. That’s idiocy.

We have to work on making health care not only affordable in terms of the premiums individuals pay, but also affordable to our nation as a whole.

If we don’t start looking at the bigger picture, health care will be the animal that ate the country.

At its current rate of growth, health care is estimated to take up more than 20% of our economy in just a few years, moving quickly toward 25%.

These numbers are so big, even Jack Nicholson might be scared.


Rodney

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Categories: Health Care

About Author

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.