What Happens When Obamacare Gets Repealed?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for replacement miss these workers who are most likely to lose health insurance coverage altogether when mandates are repealed.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!
Most Read IRIS Articles of the Week: May 22-26
Here’s a look at the Top 11 Most Viewed Articles of the Week on IRIS.xyz, May 22-26, 2017
Click the headline to read the full article. Enjoy!
I know Gen Y are stereotyped as being transient, digital natives who are impossible to capture, but that is just the world we live in today. Technology has caused a proliferation of advancements and the financial services industry is (or should be) feeling the pressure ... — Missy Pohlig
Combining an alternatively-weighted index with a multi-factor stock screening process can diversify uncompensated risk, potentially leading to less volatility in down markets and an overall smoother experience for investors. But what are factors and why should they be a major consideration for every ETF investor? — J.P. Morgan Asset Management
There is something gratifying about jotting down all the things you need to do. It quenches one’s thirst for being organized and for wanting some control over one’s life generally complicated by too many things to do with insufficient time and financial resources to do them. — Roy Osing
College graduation is a time of celebration and pride. It’s also a time of significant financial transitions—for new graduates as well as their parents. As an advisor, this is a great opportunity to connect with your NextGen clients to help them make smart decisions that position them for greater financial success throughout their working lives and even into retirement. — Laura McCarron
Let your prospects see what working with you will be like, including exactly who will be holding their hand along the way. — Paul Kingsman
How should investors feel with all the advances in robotics and technology in our industry in the near future? — John Alshefski
Want to know how to grow your business fast? Discover here two things that you need to smash in order for you to take your business from startup to a great business. — Stewart Bell
Unlike many other industries, most people in finance confront the reality on a daily basis that a market downturn they have no control over could cast them out onto the street. — Sara Grillo
One year after I risked everything to launch my own venture, I penned a short article chronicling my journey up to that point. One commenter responded with near-vitriol, wondering how I could be so misguided as to influence – encourage, even – others of my generation to take on extensive levels of risk in order to successfully launch a new business. — Brian Hart
People are automating hellos and introductions instead of taking 3 seconds to personally do it. Folks are requiring followbacks if they give you one. Everyone believes that ads are the answer. And business owners think they know what’s best for their social channels. — Ahna Hendrix
Business growth doesn’t come from wishful thinking. As you know, it takes a lot of hard work. The growth of your business is not an option – it is a necessity. Coordinating the right mix of strategies to gain market share and improve client acquisition rates is essential to advance your firm in today’s economy. — Michelle Mosher
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