Obamacare - Mind-numbing Complexity

"Professor Butts and the Self-Operating Napkin"

The implementation of the Patient Protection and Affordable Care Act is causing some considerable perplexity and dissension among the citizenry. But its goal is crystal clear.  According to Kathleen Sibelius, Obamacare’s primary objective is to “make coverage more secure for those who have insurance, and extend affordable coverage to the uninsured.”

This presumes that expanded insurance coverage will improve health, and well it might. But this is not a given – there are many other factors affecting the nation’s health. (Hint – obesity, alcohol, tobacco).

A secondary goal of Obamacare is to “bend the cost curve”, that is, to make health care (and hence insurance premiums) cost less than it otherwise would have. Again, this is within the realm of the possible, perhaps over a long time frame. But early experience shows 2014 insurance premiums increasing at an alarming rate, often double the cost of 2013.

A key feature of Obamacare is its complexity: a multitude of tightly interdependent moving parts. The inauspicious roll out of Healthcare.gov (termed a "debacle" by the administration) is only a symptom of the law's impenetrable convolution. 

One might make reference to Rube Goldberg, whose contraptions were fantastically complex. But in the end, they could actually be made to work. The administration is fervently hoping for such good fortune.

As well meaning as it is, Obamacare has two fundamental shortcomings:

1. Mind-numbing complexity

1. Valiant but misdirected goals

To the first point, Obamacare features a flurry of economic features intended to fund the program. These include requiring all policies to provide a broad range of “essential” services regardless of whether the policyholder wants or needs those services. For instance, young single men do not require maternity coverage but will be forced to pay for it. Older folks do not need pediatric care but are obligated to purchase it. This is not “essential” coverage at all but, rather, hidden taxes.

But Obamacare has plenty of obvious taxes, too. From a sympathetic website (www.obamacarefacts.com), here is a partial list of Obamacare taxes:

• 2.3% Tax on Medical Device Manufacturers

• 10% Tax on Indoor Tanning Services

• Blue Cross/Blue Shield Tax Hike

• Excise Tax on Charitable Hospitals which fail to comply with the requirements of Obamacare

• Tax on Brand Name Drugs

• Tax on Health Insurers

• Elimination of tax deduction for Rx drug coverage with Medicare Part D

• Employer Mandate $2000 to $3000 per employee

• Medicare Tax on Investment Income of 3.8%

• Medicare Part A Tax increase of 0.9%

• 40% Excise Tax on "Cadillac" plans

• Annual $63 fee per subscriber to fund “risk corridors”

• Medicine Cabinet Tax (OTC medicines no longer qualified as medical expenses for HSA/FSA)

• Additional Tax on HSA Distributions

• Contributions to FSAs are Reduced

• Medical Deduction Threshold tax increase

• Individual Mandate (the tax for not purchasing insurance if you can afford it)

Using static scoring, the Congressional Budget Office has projected the revenue to be garnered from these sources. But humans aren't static and behavior easily morphs. Another source of complexity and uncertainty.

This combination of mandates and complicated funding sources (not to speak of over 11,000 pages of regulations) has made the program mind-numbingly complex and led to the first of many unintended consequences (the recent cancellation of millions of “non-conforming” policies). People are perplexed, puzzled, and, perhaps, a little bit scared.

To the second point, the stated goals of Obamacare are misdirected in that what we want, what we really really want, is to directly improve the health of the American public. Obamacare assumes that insurance for all will improve general health. And it might.

But if we’re in a mandating mood, then let’s mandate that sugar and fructose and salt and unhealthy fats be removed from our diets. Require that people eat high fiber, low glycemic-index diets under threat of penalty. Demand that everyone walk 10,000 steps per day (age adjusted) or pay a sloth tax.

According to Harvard Health, the medical costs of poor diet and obesity run nearly $200 billion per year to treat diabetes, cancer, heart disease, etc.  That amount, if even partially avoided, would most assuredly “bend the cost curve”.

But we are Americans, free of spirit in our loose fitting clothes. We’d rather purchase mandated “essential” insurance coverage than have our love affair with junk food disrupted. As voters, that’s our prerogative. And who knows - it just might work.