Obamacare myths, facts and unknowns Updated 10/15

Overall

Obamacare is basically a wealth redistribution measure from the middle class to the poor, with  around 20% of the money transferred going into increased profits for health insurance companies and large drug companies.

The CBO estimates that Obamacare will cost 800,000 American jobs and it is easy to see why it will cost at least that number.

Obamacare is estimated to increase healthcare spending by more than $400bn a year.

Somebody will have to pay for this increase in spending, the insurance companies are not going to give extra coverage away for free.

The great majority will be paid for by the middle class earning above the Obamacare subsidy limits.
Some of it will be paid for by the young who are now mandated to have increased coverage (or pay the fines).
Obamacare was set up so that the young are planned to subsidize older people by overpaying for Healthcare coverage.
(Hence Obamacare detractors always quote the massive increases in young people's premiums, e.g. 300% and Obamacare supporters always quote lower income older people because they are the largest beneficiaries.)

This increase in spending will be due to :
Covering around 30 million, currently uninsured people ($150bn to $300bn)
Stealth taxes on medical products and insurance ($100bn) to part pay the massive government subsidies - businesses will pass these increase in costs to the consumer
Increases to Healthcare premiums (30 to 100% depending on State)
Additional coverage required to qualify as an Obamacare insurance plan
Switching from employee Healthcare coverage to private Healthcare coverage which is more expensive
Increased profits of large Health Insurers and large drugs companies.

Obamacare does nothing to address the real issue with American Healthcare, which is that it costs far too much.
Subsidizing some people's healthcare insurance with taxpayer money does not alter this basic fact.
American Healthcare already costs double what it costs in other developed countries.
America ranks 37th for Healthcare efficiency and has worse outcomes- e.g the lowest life expectancy in the West.
Obamacare is about to make an extremely bad situation even worse.

American Healthcare is too expensive due to :-
Insurance Companies acting as a cartel in each state - lack of competition.
Lack of pressure on Healthcare providers to charge less - insurers just pass on the high costs in their premiums.
The exorbitant prices paid for prescription drugs - due to protectionist measures by the government on behalf of the large drug companies.
Over treatment and over prescription.
High prices paid for common tests, procedures and treatments - often ten times what it costs in other developed countries.
Medicare fraud.
Doctors spending a large proportion of their time filling out insurance forms instead of treating patients.
The extremely high cost of medical malpractice insurance - it's far higher than anywhere else in the world.
The exclusion of cheap natural remedies and treatments - again due to protectionists measures by the government via the FDA.

Obamacare does nothing to address the above problems.
It will make them worse.
Obamacare increases demand for Healthcare but does nothing to address the supply side issues.

Obamacare only applies to people that do not receive Health Insurance as part of their benefits package from their employer.
There will be more of these people in the future as businesses are actively seeking to reduce the increase in their costs due to Obamacare putting up the cost of Health Insurance in general.
There are multiple stories already of employers moving employees to part time working to avoid Obamacare fines and of spouses no longer being covered.

Healthcare Demographics

Currently only 5% of the population obtain Health Insurance privately.
16% of the population are uninsured.
49% obtain coverage through employee Healthcare plans.
30% obtain coverage through Medicare and Medicaid.
http://kff.org/other/state-indicator/total-population/

Initial estimates were that around an extra 32 million poorer people (around 10% of the population) would now get Healthcare coverage through Obamacare.

A higher proportion of the uninsured, than the general population, will have pre-existing conditions and will therefore be more costly to insure.
The insurance companies will still charge full price but the government will subsidize the coverage.
Those uninsured may still not be able to afford coverage due to very high deductibles.

Currently young people tend to buy low cost catastrophe insurance for the unlikely event that they will get ill.
Young people are expected to part subsidize the healthcare costs of older people through increased premiums and by forcing them to buy policies with more coverage.

A significant number of people who used to get Healthcare coverage from their employer will now have to buy Healthcare privately (which is more expensive) or pay the fines and go without.

Obamacare Costs

It is very unclear how the massive costs of the government (taxpayer) subsidies will be paid for.
Obamacare offers subsidized Healthcare for individuals earning less than $46,000 and for multiple income families earning less than $92,000.

The median male income is now around $32,000.
The median Household income is now around $51,000.

Romneycare is 50% paid for by Federal taxpayers, i.e. those living outside of Massachusetts.
Romneycare is going bankrupt even with these outside subsidies.

Somebody has to pay for these taxpayer funded subsidies.
That somebody will be people earning between $46,000 and $100,000, the young and businesses.
Businesses will pass on their increased costs in higher prices charged to the consumer.
(Someone earning $100,000+ is very likely to have employee coverage.)

Stealth taxes on medical products are expected to only raise $100bn a year.
Medical businesses will pass on these costs to the consumer.

Obamacare Fines

Obamacare levies fines on those who do not buy an approved Obamacare Health Insurance plan.
For individuals in 2014 the fines are $95 or 1% of income.
In 2015 the fines rise to $325 per adult or 2% of income whichever is higher.
In 2016 the fines rise to $695 or 2.5% of income whichever is greater.
Uninsured children will be fined at half rate.

So an individual earning $50,000 will be subject to a fine of $1,000 in 2015.

So a middle class family of four with Household income of $100,000 a year will be subject to a fine of $3,750 in 2016 if they do not buy an Obamacare policy.

There are several get out clauses or loopholes in the Obamacare rules to avoid paying fines, but most of these are aimed at the low paid (see below).

It was announced in 2013 that fines for businesses have been delayed until after the mid term elections in 2014.
Obama knows that businesses will pass on their increased Healthcare costs to the consumer which will increase inflation and exacerbate the economic downturn, which in turn will lose the Democrats votes in the key demographic of floating middle class voters in 2014.

Businesses will tend to avoid going over the 50 employee thresh hold due to the costs of Obamacare. It will be a drag on future growth.

It is not known how much revenue will be generated from fines (which is just another name for a tax).

The Profits Rake Off

Obamacare sets a supposed lower limit of Healthcare claims to premiums of 80%.
I.E. insurance companies can make up to 20% profits straight off the top, on premiums.

To put this in context Motor Insurance pays out 105%+ of claims and costs compared to premium income.
This seeming loss is made up by investment income - making money on investing the premiums before it is paid out in claims.

Health insurance should actually be paying out a higher percentage in claims than Motor Insurance - there is a longer period (on average) of paying premiums before people get ill and start making claims.

Motor Insurance is an efficient, very competitive industry - while Health Insurance is not.
Health Insurance operates more like a series of small cartels (monopolies) with around 3 major insurers in each state.
The large Health Insurance companies in each state try and sign up as many Healthcare providers as possible (irrespective of how much they charge for their services).
This acts as a barrier to entry for other companies who might want to enter the market - there is no one left to provide Healthcare servi

Even the 80% so called lower limit on claims is intended to be got round by large insurers buying offshore subsidiaries.
Excess American profits above 20% are intended to be diverted to foreign subsidiaries, by various accounting schemes (fiddles).
The offshore subsidiaries are usually in lower Corporate Tax rate countries to save on paying Corporation Tax.

Drugs companies will also receive a sizable profits boost from Obamacare.
If more people are covered and receive treatment the drugs companies will sell more drugs.
There have also been a sizable number of drugs that have recently come onto the market that cost $100,000 per person per year.
The drugs companies are hoping that Obamacare is the route to enable the drugs companies to sell sufficient quantities of these very expensive drugs.

Healthcare costs in general will go up.
Demand will increase with Obamacare (by about 10% to 15%) but frontline Healthcare supply hasn't.
Large Healthcare providers such as hospitals will be able to charge even higher prices due to a further lack of competition.

Obamacare will increase the deficit by around $300bn a year

Increased government costs :- 

Covering around 30 million uninsured people with subsidized insurance ($150 to $300bn)

Subsidizing insurance premiums for the 15 million people who currently have personal healthcare insurance.
Subsidies apply to individuals earning less than $46,000 and multiple income families earning less than $92,000.
Only 15 million people are currently affected but this may increase in the future.
Current cost $60bn to $80bn.

Medicare Expansion - cost unknown

More Health Clinics for poor areas - cost around $95bn

Lower tax takes and higher welfare payments from the lower GDP growth brought about by people spending $400bn a year more on Healthcare. Cost unknown.

Increased government revenue :- 
Stealth taxes around $100bn

Fines for not having Obamacare approved insurance - unknown but probably small.
There are drastic penalties for people that do not receive Obamacare subsidies.
Those that will receive Obamacare subsidies will probably enrol.

Business fines for not having Obamacare approved insurance plans may be a bit more substantial as they affect three times as many people.
Business fines have been delayed until 2015.

Deductibles 

It is not known how many of the currently uninsured will be able to afford Healthcare even with the subsidized premiums in Obamacare.
Healthcare Insurance companies will still be charging full price (plus a bit more in increased profits).
The price is a mixture of premiums paid plus deductibles for any healthcare received.
If someone on minimum wage or near minimum wage gets very low premiums but still has to pay 40% of Healthcare costs in deductibles they may still not be able to afford Healthcare treatment.

Insurance companies are also taking advantage of the switch to Obamacare approved schemes.
Loss making existing schemes will be dropped to be replaced with similar schemes under a different name that charge higher premiums or have higher deductible charges.
There are already stories being published of people with existing conditions that cannot continue with their currently affordable policies and would have to switch to much more expensive plans which they cannot afford.

Less Choice and Increasing Monopolies 

There will be fewer insurance companies offering Healthcare Insurance in each state.
Part of the reason is the high cost of entry of joining the Obamacare Healthcare Exchanges.
The second reason is the necessity of changing policies to meet Obamacare criteria, the company may have concentrated on selling relatively efficient bare bones insurance before Obamacare comes in.
It has just been announced that there will be nine fewer companies in Nebraska offering Health Insurance as a result of Obamacare.
http://watchdog.org/110391/obamacare-effect-9-companies-exit-nebraskas-health-insurance-market/

Increasingly each state will operate as a small monopolistic cartel of around three large insurers.
Less choice, less competition and more monopolistic markets are always bad for the end consumer - it results in higher prices and poorer products.

Monopolies are only good news for the monopolists.
Kings of old used to sell monopolies in a multitude of different things for very high prices.
Obamacare is giving monopoly powers away for free to large insurers.

Other Unknowns

The gang of 8 illegal aliens amnesty bill currently being pursued in Congress, together with Obamacare offers large perverse incentives for employers to employ illegal aliens rather than American citizens.
This would be a total disaster for the economy if it ever went through.
http://ian56.blogspot.com/2013/07/ted-cruz-explains-why-gang-of-8.html

More employers may be tempted to opt out of Obamacare approved schemes and out of Healthcare Insurance cover altogether, due to the higher costs.
We have already seen numerous announcements of employers moving low wage staff to part time working, to avoid being included in Obamacare rules.

The overall cost of Obamacare is unknown.
The money set aside for pre 2014 subsidies rapidly ran out and subsidies had to be rationed- i.e. estimates of costs were wildly inaccurate and under stated.

It is not known how much the taxpayer funded subsidies will cost, but they will be very substantial.

The middle class will not have $400bn a year to spend in the rest of the economy, as they will be spending it on Healthcare - one way or another - directly or indirectly.

This will have a substantial detrimental effect on the rest of the economy and exacerbate the coming economic downturn.
There will be even higher unemployment as a result of Obamacare.
U6 unemployment is already at 14%, real unemployment including discouraged workers is at 24%.

Government tax revenues will be lower as a result of Obamacare.

There will be more low paid part time workers having to hold down multiple part time jobs to make ends meet.
The middle class will have to tighten their belts even further as the rise in their Healthcare costs will be substantial.
This will increase overall stress levels, leading to further demand for even higher stress relieving drugs like Prozac.
10% of Americans are already on anti depressant drugs like Prozac - by far the highest percentage in the world.
Obamacare is good news for large drug and insurance companies, but bad news for everyone else.

There are also the long term socio-economic costs to be considered.
Increasingly young people just cannot afford to leave their parents home because they do not earn enough.
They are also leaving it later to get married and start a family, because they cannot afford it.
Increasingly the middle class are having less children and smaller families.

This is now a huge problem in countries like Italy, where young people routinely do not leave home until their thirties and the birth rate has now dropped below the replacement rate, so the population will contract going forward (if government policies are not changed).

The young are often the ones that can afford to take the risks involved in starting a new business. They are being discriminated against in Obamacare.
It will be harder for young people to start new businesses in the future (the risks will be greater).
Would Bill Gates have even started Microsoft in the current economic and regulatory environment?
Would Steve Jobs have started Apple?

The middle class are the ones that drive the economy forward.
They are being wiped out through a variety of government policies.
Obamacare is going to exacerbate all of the above issues and make life harder for everyone.

References

Obamacare Fines
http://www.obamacarewatch.org/primer/individual-mandate

Get out clauses / loopholes to avoid Obamacare fines
http://www.theatlantic.com/health/archive/2013/09/all-the-ways-to-get-out-of-obamacare/280075/
http://www.economicpolicyjournal.com/2013/06/loopholes-how-to-avoid-paying-for.html?spref=tw

Further facts and articles on Obamacare
http://ian56.blogspot.com/2013/01/the-affordable-care-act-should-be.html

Obamacare stealth tax increases - around $100bn a year
http://ian56.blogspot.com/2013/10/obamacare-tax-increases.html

Update 10/15 
The supporters of Obamacare often quote the benefits of universal health care coverage in other countries, e.g. Canada or the UK.
But the systems set up in other countries are totally different to Obamacare and have their own numerous problems.

In Canada and the UK the government controls the total amount spent on healthcare (to a very large extent) - they set a budget for the government run healthcare system.
There are no limits to spending on Healthcare in Obamacare - the profits of the large insurers and drugs companies have even fewer limits and  restrictions.

Both Canada and the UK have long waiting lists (often many months) for treating non life threatening health issues - e.g. hip replacements.

America is already extremely inefficient in providing Healthcare - it ranks 37th in the world, behind every other developed country.
Despite the numerous ways that are available to improve the efficiency of Healthcare in America, Obamacare goes the opposite way and makes it even less efficient.

Canada and the UK are also very inefficient Health care providers - the service is run by the government.
They are about twice as efficient as America and about half as efficient as they could be.
France has the most efficient government run healthcare system.
Part of the reason for that is that the French have a better work/life balance, drink red wine and eat more healthy foods so they get sick less often than Americans, Brits or Canadians.

Both Canada and the UK have high taxes levied (on just about every worker) to provide the funds for their government run Healthcare systems.

Both Canada and the UK have numerous rules and regulations that limit the Healthcare that is provided by the government.
Certain high cost treatments and drugs are not provided (e.g. some treatments for cancer).
No country can afford to pay for every treatment available for everybody.
The rapid advances in medicine over the last few decades mean that there are many more, often very expensive, life saving treatments available. Medicine is advancing at an ever increasing pace.
The UK at least can still find money for some non essential services like taxpayer funded sex change operations and breast implants.
In Canada if you want to pay for a treatment not provided by the government you have to travel abroad. It is illegal to provide such treatments in Canada.