What Happens When Obamacare Gets Repealed?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for replacement miss these workers who are most likely to lose health insurance coverage altogether when mandates are repealed.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!
When it Comes to Your Money, Does the Truth Hurt?
“We’ve been arguing about this for year, and here we are in our 50’s. It’s time to stop!” Laura said empathically.
Paul’s downcast eyes and silence spoke volumes.
Laura continued, “We’ve worked with several advisors who have tried to help us invest our money in a sensible way. Then whenever the market goes down, Paul calls the advisor and tells him to sell everything! In all these years, no matter how much we work to build our financial security, we’re always playing catchup.”
Her words hung like a rain cloud about to burst when Paul began to speak. “I know, I know. I just can’t help it. I get nervous that we’re going to lose all our money. When the market goes down, I scramble—in my thoughts and in my actions. The driving force behind it is: At least if it’s in cash, the balance won’t go down.”
This is the moment where I felt I could lend my advice. First, I needed to learn about this particular couple and their values. Then, I could begin helping them take control of their finances.
“Tell me Paul,” I said. “What did you learn about money growing up? What messages did you hear as a child about money? From your father? From your mother?”
Paul’s eyes moved up and to the left, indicating his mind was reaching for memory. “My parents never talked to us kids about money, really. The one thing that stands out is my grandfather talking about The Great Depression and how it was such a tragic time. My parents both worked, but they never made a lot of money. They fought about money sometimes.”
“Any other memories about money?”
“Actually, yes. I remember when my father took me to the bank to open up a passbook savings and how exciting it was. The bank manager typed the passbook on this old manual typewriter and gave it to me. He showed me how the interest on the account added to the amount I deposited. I felt very grown up that day! But I guess that was the sum total of money training from my parents.”
“Can you help me understand how you and Laura make financial decisions?”
The question couldn’t be more impactful if a boulder had landed on his head. While Laura looked at Paul with a mildly accusatory glare, Paul searched for something to say that would keep his well-conceived protective fortress from crumbling. I interjected to ease the tension. I could feel the guilt in the air.
“Let me frame that another way, Paul and Laura. We all do the best we can as we live our lives. Let’s face it, our lives are filled with responsibilities in our families and our jobs, not to mention outside interests, health, and friends. While financial issues are important, unless you either have the knowledge and experience—or the help, most people avoid getting too deep into the confusion of managing their finances by doing the very least they can. What we don’t know scares us. So we defer, delay, make rash decisions based on our lack of time, knowledge, desire. Add a dash of fear to that equation, and you have a formula for financial problems. I want you to know, you are not alone. It’s more common than you could even imagine. The question is, do we allow the truth in so that we can move forward?”
It’s important to admit the truth behind our actions in order to rectify past and future mistakes or regrets. Living in denial only perpetuates making decisions that could potentially lead to financial disaster.
“I hate to admit it,” Paul said. “I guess in my desire to protect Laura from stress, I’ve made decisions that have hurt us, and I’m sorry. Michael, you hit the nail on the head. You defer, avoid, and allow your emotions to take over. And as a result, bad stuff happens. I think I’m ready to ask for help.”
Laura’s expression softened, and said, half-kiddingly, “You think?”
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