So, when do they pass healthcare REFORM?

The bill is passed.  Finally, after hundreds of years, we have healthcare.  No more poverty, no more sickness, no more evil insurance company profits.  But before you cancel your policy and call your representative for your free health insurance card, you might want to do a little research and see just what is, and isn’t, in this bill.

First of all, you won’t see the majority of the provisions in this bill until 2014.  The tough parts of the bill hit in odd years, and the best provisions start in even years.  Guess what else happens in even years…elections.

In 2010, we see expansions of coverage.  Children with pre-existing conditions cannot be denied coverage, even if parents had ample time to establish coverage before the condition was discovered.  The definition of a dependent (for insurance purposes only) will change to anyone up to 26 years of age and insurance companies must cover them under their parents’ plan.  Seniors who have spent more than $2,830 on prescriptions will get an extra $250.  There will be tax credits for businesses with up to 25 employees, but that may be subject to average salary levels which could be as low as $25,000 a year.

Hospitals, healthcare providers, home health agencies and others will face significant reductions in Medicare payments.   Many will probably stop taking new Medicare patients, especially when healthy young 26 year olds can go to the doctor’s office for the sniffles and daddy’s insurance has to pay for it.  When I was 26 I was making less than 25k a year and buying health insurance for my family.

What about taxes?  Well, in 2010 we see a 10% sales tax on indoor tanning.  Good thing I live in a beach town.  What about free healthcare?  Not yet.  In fact, we will all be paying more to make up for lower Medicare payments to doctors.  But senior voters will get their $250 vote bribe.

In 2011 we see a voluntary long-term care benefit created to cover nursing home costs or home health, but benefits won’t start until you’ve been paying in for five years.  Medicare patients who have spent that $2,830 get a 50% discount on name brand drugs, not generics.  Doctors in underserved areas, who are still taking Medicare patients, get a 10% bonus to continue taking Medicare patients.  Payments to Medicare Advantage are frozen, but funding for community health centers is boosted.  Whether or not those centers will be able to perform abortions with that funding is still up in the air.  And finally, the bill imposes a $2.3 billion tax on drugmakers which will go up every year.  It shouldn’t take an economics degree to know who will pay that $2.3 billion tax.

In exchange for that $2.3 billion in extra taxes that drug-makers will pass on to consumers, competition from generics is crushed.  Also, with this bill it is illegal for the Government to negotiate for lower prices on Medicare drugs.  That’s probably why the Wall Street Journal calls this bill a huge victory for big drug companies. Good job Democrats.  By the way, in 2011 still no free health insurance.

In 2012 we will have the public option.  Yes, you read that right.  A new government program will be set up to create non-profit insurance co-ops to compete with commercial insurers.  While it is not a government run insurance program, it will be interesting to see how it is implemented and subsidized.  Also, hospitals with high readmission rates will be penalized and possibly cut off through lower Medicare reimbursements.

So, no free health insurance in 2012.  But it is Obama’s re-election year, so we will see a de facto public option.  Will the public option cut costs?  It’s doubtful when everything else in this bill sofar increases actual healthcare costs.  Public option co-ops may not have to pay for profits, but they will have to pay the embedded taxes and make up for Medicare cuts.  But that doesn’t matter.  What matters is the PR generated by the public option being generated in Obama’s election year.

In 2013 we have some good news.  Insurance company paperwork will be standardized, which should hopefully eliminate confusion and cut costs.  The bad news is that it is being standardized by the Government.  More bad news in 2013 includes limits on Flexible Spending Accounts (cafeteria plans) deferrals and higher taxes.  The wage threshold for deducting medical expenses will go up from 7.5% to 10% for all Americans, and we will pay a 2.3% sales tax on medical devices and equipment.  All these additional taxes will take effect in 2013 but the only mandates sofar are that insurers provide coverage to children with pre-existing conditions and 26 year olds under their parents’ plan.  There is some relief for Medicare patients (not enrolled in Medicare Advantage), however experts feel Medicare doctors and providers are hit hardest by the bill.

For individuals making $200,000 (joint filers making $250,000) Medicare taxes are going up .9%.  Also these individuals will also owe an additional 3.8% in taxes on investment income, including stock sales, dividends, interest, rental income, etc.  I suppose Obama is counting on the economy being all better before we get hit with these taxes on economic growth.  Of course, by the time these taxes hit, we might have a Republican President.

2013, still no free healthcare.  Not even cheaper healthcare.  Instead, by 2013 prices will have skyrocketed from embedded taxes.  Insurers will still be able to drop anyone older than 26, and drug companies will be making out like bandits with little competition.

2014 is when the major provisions of the bill finally hit.  So free healthcare, right?  In 2014, insurers will no longer be able to deny coverage to anyone based on pre-existing conditions.  But they also won’t be able to vary rates based on anything beyond age, location, and tobacco usage.  This means that healthy Americans will pay the same rates as the obese and drunk, so long as they don’t patronize the evil tobacco industry.  Insurance rates can go as high as $27,000 per family without the insurance company paying additional taxes.

States will be forced to create and maintain insurance exchanges (whether they can afford it or not), but these insurance exchanges won’t provide free coverage.  They will just squeeze any smaller insurance companies out of the market so that the bigger companies can charge more.  Every American will be forced to purchase insurance, which will increase demand and prices.  In fact, businesses will have to pony up $2,000 for every employee they don’t cover, and individuals will have to pay up to $2,250 in penalties to the IRS if they don’t buy insurance.  The government is hiring 17,000 new IRS agents to enforce this unconstitutional mandate.

So when does the government start giving us free insurance?  It doesn’t.  When you get laid off from your job because your boss can’t afford another $2,000 per employee, how do you afford $27,000 premiums and embedded taxes on your drugs, equipment and doctor’s visits?  The government gives you tax credits.

To qualify for this government handout, you have to be making less than 400% of the poverty level.  The subsidy would be on a sliding scale, up to 9.5% of your income.  So how would this work?

If you are single, making $42,400 or less you can get a tax credit.  But 9.5% of your income on a sliding scale means you probably wouldn’t even see $4,000 in subsidies.  If you make more than 400% of the poverty line, you are out of luck.    My wife and I are just above the threshold for couples and would not be eligible for any tax credits.

In the meantime, in addition to higher prices on drugs and medical supplies, embedded taxes on doctors and providers, and limitations on competition, in 2014 every insurance company left is hit with $8 billion a year in taxes to pass on to us.  This tax will weed out any remaining competition, and will help drive prices up even higher so that even an $8,000 credit for a family of four won’t cover half your plan.  With additional taxes not hitting insurance plans until they reach $27,000, that may be the point.  We can’t have the single payer socialist system Obama always wanted until this plan fails.

No free healthcare, no competition, no help for the middle class, no punishing evil CEOs, and surprise surprise, no healthcare reform.

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