The Patient Protection and Affordable Care Act, AKA Obamacare, is a broad sweeping reform of the health care industry that was signed into law by President Barack Obama in 2010.  The goals of the act are to expand medical coverage to all US Citizens and controlling the rapidly rising costs of medical care.  The proposed benefits of the legislation are the following:

• Expand medical coverage to 30MM people who are uninsured or underinsured in the US today.
• Require insurance companies to provide a standardized minimal coverage in their plans.
• No one is turned down by insurance companies for pre-existing conditions
• The Act would be deficit neutral

In order to accomplish these goals without adding enormous debt the legislation enacted the following features:

• Over $500 Billion in new taxes are levied against individuals, the healthcare industry, and insurance companies over 10 years.
• Everyone is mandated to buy insurance coverage so that more people are paying into the system.  Those who don’t pay a penalty tax.
• Price controls are enacted on insurance companies.
• Price controls are enacted on pharmaceutical companies
• Minimum requirements of coverage are imposed on all plans offered by insurance companies.
• An independent review board is given broad power to issue cost controls on Medicare/Medijcaid.
• Broad expansion of Medicaid funding to states to pick up those who can’t afford health insurance.

Topics of Controversy

1. Mandate

Pro:

• Everyone already participates in the health care industry.  Therefore, they should pay for coverage before they become sick and put the cost on society.
• The mandate will also help subsidize insurance companies that can no longer turn down patients with pre-existing conditions by putting more healthy patients in the insurance pools.

Against:

• If the government can force you to buy health insurance based off the argument that everybody gets sick, there is no limit their powers.  Everybody will need to eat, find shelter, communicate, use transportation, etc.   The mandate sets a precedent for unlimited intrusion into our lives.  The free society created by our founders officially dies with this provision.  “Because it is good for you” is the same argument used by Mao, Stalin and Hitler.
• The idea that health care is so important that it should not be left to the private sector ignores reality.  Should the “important” industries be managed by the same forces that give us the DMV, IRS, and TSA?  Consider the advances and accessibility that have come from our freest industries such as the internet, phones, and clothing.  I would prefer the same market forces governing these to provide and improve upon my health care.
• The price of health care will be minimally affected by the few extra people that will buy insurance.   Most will likely opt out and pay the tax because it is cheaper.  Once they become sick, they can then buy coverage due to the regulations.  The net effect will be that only acutely ill patients will join the insurance companies. 

2. Insurance Regulation

Pro:

• Health insurance companies will be mandated to spend more of their revenues on the patients they insure.
• Anyone who likes their insurance plan will be able to keep it under the Obamacare legislation.
• All essential aspects of medical care should be covered by medical insurance.

Against:

• The current profit margin of the insurance industry is one of the lowest in the country (3.3%).  If more of the income is directed to premiums one of two things will happen.  Vital programs such as fraud prevention will be cut, or the companies will go out of business.  This will lead to the single payer system Obama is gunning for (see here)
• People will not be able to keep their insurance plan if they make any change in coverage.  If the employer needs to make a change or add extra people, they have to change one of the plans on the exchanges.  Making this statement is like telling somebody that they can keep their car unless they want to put gas in it.  Then the government will make them hand it in for one of the government approved cars.
• When the government states essential coverage what they really mean is any provider or service that lines their pockets.  Instead of a free market in which a customer and provider decide what is important, decisions will be made based off the re-election aspirations of politicians.  These mandated services have already been driving up the cost of insurance at the state level.  There are over 1800 mandates currently.  For instance, almost every state in the country demands chiropractic coverage.  It is an expensive treatment that has never been proven to help anybody.  They do, however, have powerful lobbies.  The fact that this drives up insurance prices everywhere it is mandated is of no concern to a state legislator trying to get elected.  It is a sure bet our national representatives will see this as a cash bonanza.

3. Taxes

Pro:

• Increased taxes are necessary to expand coverage through expansion of Medicaid and subsidies for low-income insurance applicants.
• Only those wealthy companies and individuals who can afford to pay their fair share will see their taxes go up.

Against:

• Obamacare taxes against individuals such as the medicare income tax and the investment tax will take money from productive individuals and stifle private investment in the economy at a time when we need it most.
• Obamacare taxes against industry such as the branded pharmaceutical tax and medical device tax will take money directly from the medical innovation forces that have created the health care revolution world-wide since the Reagan era.  R&D budgets will be slashed, jobs will be lost, narrow marging companies will go under, and great medical ideas will sit on the shelf.
• Obamacare taxes aimed at providers of insurance are designed in a way that will drive up the costs of insurance for everyone who is on private plans. It will decrease the number of people privately insured, and, combined with the new regulations, eventually phase out the insurance industry all together.

4. Medicare

Pro:

• The Independent Payment Advisory Board (IPAB) mandated to control Medicare costs is not a death panel. It explicitly has a mandate to not limit access to lifesaving medicine and devices.
• The $ 720 billion removed from the Medicare fund to finance Obamacare will be paid for by sensible cost savings put forth by IPAB and will not limit care to seniors.

Against:

• The IPAB is a thinly veiled death panel.  Determining if a device, medication, or service will be compensated by the government is effectively dictating if it will be available to people.  It will add uncertainty to technology development and try to cram the extremely diverse and individual practice of medicine into a one-size-fits-all model.
• Medicare Advantage is one popular part of Medicare that has actually been more cost effective than predicted when it was impimented. The free market mechinism that makes that possible is abhorrant to the liberal mind, so it was the first program targeted to be cut.
• The Medicare 50% reduction in branded drug prices is taking money directly from the source of all pharmaceutical innovation.  That money that isn’t going towards direct studies is used as an exit for smaller companies that don’t have the funds to market drugs (all of them).

 

5. Medicaid

Pro:

• Medicaid expansion will help subsidize hospitals and other health care providers that bear the brunt of cost saving cuts.
• The expansion will provide preventative medical services to previously uncovered patients and decrease the overall cost of care for these patients in the long run.
• The cost of Medicaid expansion will be funded by the federal government and not be borne by the states.

Against:

• People will always take advantage of something that is free.  When Medicaid was provided for the people of Tennessee the cost nearly quadrupled from 2.5 billion to 8 billion in 10 years and ate up 1/3^rd of the state budget.  The entitlement is currently priced at 1.242 trillion.   If Tennessee is an example (states are generally better at controlling costs than the federal government), then expect the entitlement to be 4 trillion.  This is not including the increased costs of health care due to other parts of the regulations. See a report on what happen in Tenessee here.