Additional Defects In Obamacare
Stanley Feld M.D.,FACP,MACE
I have been saying Obamacare is going to fail long before
the bill was passed into law. Obamacare will fail because of multiple system
design defects.
I would hate to believe these defects were built into the
system purposefully.
It was done to prove that free market forces do not work.
The Obama administration created a “not so free market”. These not so free
markets have been proven to fail over and over again.
It seems logical that given the $1 trillion dollar a year
deficits of the Obama administration, someone, somewhere would be interested in
decreasing the deficit spending.
None of the increased government spending has improved the
economy, decreased unemployment or decreased uncertainty.
The computer system defects in the health insurance
exchanges are much deeper than the sound bite treatment they getting from the
Obama administration.
The task of integrating 40-50 year old legacy computer
systems is an extremely difficult task using 50-year-old software.
Information technology experts have told me that the
health insurance exchange computer sign up system (healthcare.org) is months to
years away from getting the health insurance exchange information system fixed.
It should be destroyed after spending $634 million dollars
and redone using modern technology.
The verification of people who qualify for government
subsidies is being dropped. The patient’s word about need is being accepted in
lieu of verification.
This is a tremendous glitch in the system, opening the
system to tremendous fraud and abuse. It is not a way to run a business.
John McAfee former CEO and founder of McAfee antivirus
said the health insurance exchange web site is a hacker's wet dream. The You
Tube explains why he came to this conclusion.
Poor patients who might qualify for the Obamacare tax
credits do not pay income tax. Therefore they have no income to apply a tax
credit against.
The administration has dropped word tax credit. It is now called
a subsidy. The law’s tax credit will be given to the healthcare insurance
company selling the insurance.
This is a “glitch.” The law was written to pay the states
for those who qualify for a tax credit. A Washington D.C. ruled that the case
by states against Obamacare has merit.
The states contend that persons’ insured through the
federal government exchanges do not qualify for federal tax credits. Only
states can receive and distribute the tax credits.
The law was reinterpreted by the Obama administration
without the consent of congress.
Another “glitch” is that the healthcare insurance industry
is given limitless power to collect money from the Treasury. The mechanics are not
transparent.
The mathematical formula for calculating the subsidies
will cause America’s deficit to skyrocket further each year.
President Obama told America that Obamacare would bend the
cost curve downward and provide an efficient cost effective healthcare system
for all.
Let us look at the payment formula. A family of four
earning $30,000 year will not pay more than 2% a year for healthcare insurance
($600/year). This makes the Accountable Care Act (Obamacare) affordable for the
poor (maybe).
If the premium of the healthcare insurance policy obtained
by this poor family costs $10,000 a year through the health insurance exchange the
federal government will pay the remaining $9,400 in the form of a tax credit to
the insurance company.
Originally, it sounded like the family would get a tax
credit after the family paid $10,000. A family making up to $40,000 a year does
not pay any taxes and therefore a tax credit is worthless.
The wording was changed from a tax credit to a
subsidy. The tax credit now goes to the
healthcare insurance company providing the insurance policy.
The tricky thing about all this is the insurance
industry’s tax credits reduce the
governments tax receipts and increases the insurance companies net profit.
The net effect is an increase in tax-free income from the
federal treasury.
The government collects less income tax from the insurance
company.
The Obama
administration has given the healthcare insurance industry a huge tax break.
The tax break will increase the industry’s bottom line profits.
Obamacare has permitted the insurance company to have a
Medical/Loss ratio of 80/20. The Medical/Loss ratio means that the healthcare
industry must spend at least 80% of the insurance premiums collected on direct
medical care.
If it only spends 75% on direct medical care, the healthcare
company must give provide a 5% rebate.
Here in lies the rub. The Obama administration has let the
healthcare insurance industry define direct medical care.
- The cost of verifying the credentials
of doctors in its networks. - The cost of ferreting out fraud such as
catching physicians over testing patients or doing unnecessary operations. - The cost of programs such as help desks
that keep people who have diabetes
out of emergency rooms. - Some insurers have insisted that
typical business expenses are included — such as sales commissions for
insurance agents and taxes paid on healthcare insurance companies investments
Each one of these "direct medical care expenses"
has an added on profit included in the direct medical care expense category.
This is the way the healthcare insurance industry takes
40-60% of each premium off the top and leaves only 40-60% of healthcare dollars
for direct medical care.
Next year the healthcare insurance company will be
permitted to raise the healthcare insurance premium of a poor family to
$12,000. Its excuse will be that it is losing money.
If the premium is not raised the healthcare insurer will
quit providing the insurance. The government is totally dependent on the
insurer whether the insurer provides insurance as it does in the health
insurance exchanges or for administrative services as it does for Medicare (a single
party payer).
The poor family still makes $30,000 dollars a year and
still pays $600 dollar a year for the now $12,000 dollar premium.
The insurance company now keeps $2,400 vs. $2,000 for
overhead and profit plus all the profit they can get from the direct care
dollars that should really be overhead.
The federal government gives the healthcare insurer a tax
credit of $11,400 vs. $9,400.
The poor insurance
enrollee doesn't pay a penny more for his healthcare insurance.
The only loser is the American taxpayer who will pay the
subsidy in the form of increased taxes.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone
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