The Affordable Care Act, also known as Obamacare, continues to stay in the news – and for good reason.
Most government programs turn out to be different than the original stated goals. In fact, we often see results that are almost the exact opposite of the originally stated purpose.
In this case, the legislation really is the Unaffordable Care Act. It is making medical insurance far more expensive, and it's resulting in the exact opposite of the stated intention of the legislation, which was to make insurance accessible to more Americans. Instead, it is leaving more Americans without insurance.
As a side note, you should not hesitate to refer to this legislation as “Obamacare” – even if some on the left don’t like it. Obama pushed hard for the legislation, and it is his signature piece for his presidency. And let’s not forget that Obama himself said it was okay to call it Obamacare during one of his presidential debates with Romney.
The Website Fiasco
When the main piece of the law went into effect on October 1, 2013, it didn’t take long to see problems. Many Americans going to the infamous healthcare.gov website were finding it didn’t work.
We now find out that hundreds of millions of dollars were spent on this website that doesn’t work. The government probably could have paid a couple of kids right out of college with programming degrees a few thousand dollars to put it together, and it would have likely been more functional than it is now.
Then the Obama administration started making excuses that the website was only supposed to handle a certain number of people at one time. Yet it was the promoters of Obamacare themselves who would constantly cite figures of 40 million (or pick a number around there) Americans who don’t have health insurance.
If tens of millions of Americans had to obtain health insurance over just a few months' time, then several million people per month would have to sign up.
The website continues to be a source of many jokes for late night comedians.
While watching a failing website has been entertaining for some, it is just a minor failure compared to other aspects of Obamacare.
A significant piece of Obamacare that's coming to light now is that it makes certain coverage mandatory. It's essentially copying many aspects of many state laws. You cannot pick and choose what coverage you want for your health plan; your insurance is required to meet certain minimum standards.
For example, Obamacare requires that insurance plans contain coverage for maternity and for drug rehab. But what if you don’t plan to have a baby, and what if you don’t plan on using or abusing any drugs? It doesn’t matter. You still have to have the coverage – and you have to pay for it.
This has made many existing insurance plans illegal under the new Obamacare provisions. Therefore, millions of Americans are receiving cancellation notices from their insurance companies. They are being told they can no longer keep their current plans because they are no longer legal.
In other words, when Obama was going around telling everyone they could keep their current plans if they were happy with them, he wasn’t telling the truth. Many Americans realize this now, and that probably explains his shrinking approval ratings.
At this time, we still have no idea how many millions more are going to be removed from their insurance plans. It is possible that this may be one part of the legislation that gets revised over the coming months.
This May Be the Final Nail in the Poverty Coffin
But the most significant failure of Obamacare is something that is still coming to fruition. It will mean severe hardship for millions of middle class Americans.
I still don’t think most people realize just how much Obamacare is going to cost them. Middle class Americans will be looking at an extra several hundred dollars per month in premiums alone.
The problem is that most Americans do not have a hundred extra dollars per month to spend. Many are living paycheck to paycheck as it is. If they have to start canceling vacations, cell phone plans, and cable television just to afford the increased insurance premiums, they are not going to be happy.
But the crazy thing is that it isn’t just the premiums that will go up. Many people will sign up for high-deductible plans just so they can afford the premiums.
What will happen when the first big medical bill hits for the year? That person will owe 100% of the bill with a high-deductible plan. An overnight stay in the hospital will easily cost thousands of dollars, and insurance hasn’t even kicked in yet.
So on top of the higher premiums every month, does the average American family have an extra few thousand dollars lying around in case of a big medical bill?
This whole piece of legislation is turning out to be a disaster for Obama and the Democrats. When most government programs go bad, the results are not usually so immediate and so evident.
It usually takes many years for a government program to go bad. Even with that, sometimes the bad results can be blamed on something else.
This is not the case with Obamacare. There is no question that medical insurance premiums were already rising at an alarming pace. But Obamacare has made it even worse and will likely take a lot of the blame.
While many Republicans in Congress have certainly contributed to the problems over the years in regards to rising medical expenses, there was almost universal opposition to Obamacare by the Republicans. And there was almost universal support from the Democrats.
In 2012, the Republicans nominated Mitt Romney for the presidential ticket. He is the founder of Romneycare in Massachusetts. There have only been two individuals in American history who have signed legislation mandating that individuals buy health insurance, and those two individuals were the two main presidential candidates in 2012.
The Romney nomination is not going to hurt the Republicans now. The recent government shutdown, for which Republicans took a lot of blame, is also not going to stick for long.
But Americans are not going to forget Obamacare. How can they forget when the monthly premiums will keep coming due every month? How can they forget when they have to pay 100% out-of-pocket costs on many of these new plans? How can they forget when they continue to struggle to pay their monthly bills?
I think the Democrats are going to take a beating in the 2014 elections – and likely in the 2016 presidential election as well.
With that said, it won’t be the Republicans who defeat Obamacare. It will be Obamacare that defeats Obamacare.
Your Limited Options
It's still hard to say what will happen at this point, but something has to change. The current cost of medical insurance, along with the cost of medical care itself, is simply unsustainable.
Eventually, we will either see nationalized government health care or we will see a more free market system that will bring down costs. But it will not last in its current form.
You don’t have a lot of choices at this point. The whole system is a disaster filled with rules, regulations, and little competition. There's not much left of the free market when it comes to medical care and medical insurance.
If you have to get insurance, your best bet will likely be to choose a high-deductible insurance plan, particularly if you are healthy. If you are not healthy or you are expecting a big expense such as surgery or having a baby, then a high-deductible plan probably won’t be your best choice.
However, if you are healthy, then you should probably take your chances with a high-deductible plan. You can put pre-tax money into a health savings account (HSA) and use that money for your medical expenses. If you don’t use it all in a given year, you can still keep it. This is not to be confused with an FSA, where you have to spend the money in that calendar year.
In terms of investing, it's probably best to stay away from the health care sector unless you really know what you are doing and you are willing to speculate heavily. This whole thing could go either way right now, and you don’t want to take any big losses if bureaucrats in Washington D.C. change policy.
The next few years will be challenging for middle class America. It will be expensive no matter what. In terms of your medical care, the best advice may be to eat right, exercise, take your vitamins, and avoid doctors and hospitals as much as you possibly can.
Until next time,
Geoffrey Pike for Wealth Daily