What Happens When Obamacare Gets Repealed?

What Happens When Obamacare Gets Repealed?

Promises to repeal Obamacare (the Affordable Care Act) abound but “replacement” still appears very murky. Many agree that repealing it is warranted (though many disagree) but few can agree on what replacement would entail.


Here is a look at some of the real life effects of repeal, focused on the minimum wage worker. The articulated plans for replacement miss these workers who are most likely to lose health insurance coverage altogether when mandates are repealed.

According to the Bureau of Labor Statistics, In 2014 there were 77.2 million workers in the United States paid at hourly rates, representing 58.7 percent of all wage and salary workers. Among those paid by the hour, 1.3 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 1.7 million had wages below the federal minimum. The average American worker got paid $24.57 per hour, or $850.12 per week. And averages can be deceiving. They lump together those who may be educated with those who have less education and value in the workplace. For this discussion, we focus on those who work full time, at the low end of the wage scales.

Repeal will immediately remove the employer mandate which means that employers who do not care to undertake the expense of insurance coverage for their groups of employees would simply stop covering them. Millions of workers would lose coverage, and be expected to pay for it themselves with so called “health savings accounts” or tax credits.

Those who have announced their positions on this, particularly those most likely to influence what happens after repeal believe that health savings accounts are the answer and that everyone without insurance will then be motivated to save their money and buy coverage themselves.

Reality check: the lowest income workers do not have any money to save. It is not about motivation. It is about living at the edge of poverty. These workers spend every penny of that minimum or low end wage on food, clothing and shelter and there is nothing left to pay for insurance without the existing subsidies. The myth of health savings accounts is that there is, in fact, money available to save so you can pay for insurance yourself. Repeal will mean no health insurance subsidies, which are a controversial feature of Obamacare and one of its main pillars.

Workers who only have coverage through employers who then drop coverage would return to being uninsured. When they get sick or injured, they will not receive treatment, or they will go bankrupt with medical bills they cannot pay. Essential preventive care will not be available as it is now in all insurance policies and minor problems become major health issues, some resulting in death.

Another premise of the as yet undefined replacement plan is that offering tax credits will also motivate people to buy their own insurance when subsidies and the individual mandate, now also main pillars of Obamacare, are gone. As with health savings accounts, the same incorrect assumption applies. Low wage workers do not have enough money to advance for monthly insurance premiums to attain a tax credit at year end. Simply put they can’t afford it at all and a benefit at year end does not create a higher monthly salary for them. The politicians and appointees who want to use health savings accounts and tax credits as replacements for health care insurance subsidies are the same people who vehemently oppose raising the minimum wage. The majority in power will succeed in that.

Ask any minimum wage worker: Do you have extra money left after you pay for your rent, transportation, kids’ needs and groceries each month? They will say no. Anything left buys a child a pair of shoes, not health insurance. They will take a chance on never getting sick, never being in an accident and never having a family member who has a chronic or life threatening health condition. How realistic is that?

Anyone who is working full time and is not quite poor enough to qualify for Medicaid is not in the world of the cabinet picks and advisors who created the fantasy of how it is supposed to be with tax credits and health savings accounts. Perhaps the bureaucrats cannot imagine what it is like to have zero in the bank account after the most essential costs of everyday life are paid from one’s paycheck. Amid that and the force that will keep wages low for the lowest on the wage ladder, where are we leaving so many who work every day but will have no health insurance?

Replacement needs to be thought out in terms of the millions of workers who stand to lose coverage altogether when the law that now helps them buy health insurance is repealed. Keeping coverage for those with pre-existing conditions sounds fine, if you can pay for the insurance premium that is. If you lose your coverage, it matters not whether the insurer would take you with a pre-existing condition. You have to be able to pay for coverage whether there is a pre-existing condition or not. And keeping coverage in place for one’s children until age 26 also sounds fine, but only if you, the worker are covered and can pay for the insurance yourself or you are lucky enough to get it through your employer.

The ACA also expanded Medicaid for those living at and below the poverty line. If Medicaid is shrunk, as some politicians want, so as to “cut government spending” it will destroy the only means the least fortunate have to get any coverage at all. Must we let them die in the streets? No charity in existence buys health insurance for anyone. That is the very reason why Medicaid exists–to cover the poorest among us. As flawed as Obamacare is, that is all there is for over 21 million previously uninsured people. My hope is that better solutions can be found than completely obliterating coverage for so many. Note to politicians: get with it and figure it out!

Carolyn Rosenblatt
Twitter Email

Carolyn Rosenblatt is an R.N. with 10 years of nursing and a lawyer with 27 years of legal practice. She has extensive experience working with both healthcare and legal i ... Click for full bio

What's an Investor to Do When History Doesn't Repeat Itself?

What's an Investor to Do When History Doesn't Repeat Itself?

We’re in an era of extremes. It seems a day doesn’t go by without the word “historical” popping up in the financial news.

The equities market and consumer debt are at historical highs. Interest rates and high-yield credit spreads are at historical lows. We haven’t seen even a 5% pull-back in the market this year—for the first time since 1995—and the DJIA is exhibiting its narrowest trading range in history. These are indeed historical times. And whether this fact has you filled with extreme optimism or extreme pessimism, you have some important decisions to make going forward.

There are theories about how we landed in this particular era of extremes, and most are rooted in the significant changes that have impacted both how we live and how we invest. At the top of the list are globalization, automation, and the largest aging population in history (yet another “historical” to add to the list). It’s said that the most dangerous words in investing are, “it’s different this time,” yet one has to wonder if, in fact, it really is different this time. Not just because of the historical market highs. After all, there always has been and always will be a new market high waiting around the corner. What’s different today is the sheer number and confluence of these extreme highs and lows—and their duration. It’s a situation no investor has experienced before, which can make these waters feel pretty daunting. History repeats itself, and investment strategies are largely built on that conviction. But what do we do when it doesn’t? When history fails to repeat itself, how can investors plan for tomorrow with confidence that they are positioned to protect their assets and gain a reasonable level of yield?

The first step is to recognize that, at least in many ways, the investment landscape really is different this time around. All you have to do is look at the numbers to be sure of that fact. And the catalysts I mentioned before—globalization, automation, and the aging population—aren’t going anywhere. If anything, the impact of each will only grow as time moves on. What that means is that there’s no way to predict what’s coming next. The only thing we know for certain is that predictability is a thing of the past (if it ever really existed at all). The result: you need to approach your portfolio differently than you ever have before.

Your goal, of course, is to find return given a risk tolerance. Current yield is an important part of total return and getting it is an elusive proposition in today’s market. If, like many people, you’re less than confident that the four major sectors that currently drive the equities market—healthcare, discretionary, tech, and financial—are poised to continue to rise at even close to recent rates, it may be wise to seek out alternatives to help drive yield without adding more risk to the equation.

But if alternatives are the wise path forward, which alternatives are the best options?

Real Estate Investment Trusts (REITs), Business Development Companies (BDCs), and energy stocks, traditionally the favored “non-correlated alternatives,” defied expectations when the stock market crashed in 2008, inconveniently revealing high correlations just as the equities market began its freefall. Anyone who was invested in these alternatives at the time knows all too well the devastating impact “non-correlated investments” can have on a portfolio, especially when they fail to do their job when it matters most.

Luckily, there is one alternative that can be counted on to remain uncorrelated to the traditional financial markets and, ultimately, deliver that precious yield: life insurance-based investments. And because this asset is literally built on one of the irreversible catalysts of change, the aging Baby Boomer population, owning life insurance may in fact be the ideal alternative to help investors generate non-correlated returns, regardless of where the market turns next. Even better, these investments typically deliver those returns with very low volatility.

Related: 3 Reasons Alternative Investments May Be Your New Key to Success in Changing Times

What makes life insurance different is that, unlike typical alternative vehicles, secondary life insurance returns aren’t based on the economy. Instead, they are inherently non-correlated because returns are based solely on the longevity of the individual insureds.

As much as we would all love for the bull market to continue on its merry way, one thing history does tell us even today is that a bear market will come. It’s only a matter of when. As you strive to hedge your portfolios and prepare for the inevitable, life insurance-based investments are one tool that can help you achieve the three things you need most: diversification, low volatility, and yield.

Bill Acheson
Investing in Life
Twitter Email

Bill Acheson is the Chief Financial Officer of GWG Holdings, Inc. Mr. Acheson has over 25 years of sophisticated financial services expertise. Mr. Acheson has extensive experi ... Click for full bio