Brad Tinnon

Brad Tinnon

The Un-Affordable Care Act

The Affordable Care Act (ACA), better known as Obamacare, was partly created to provide insurance for those who were un-insurable. Prior to Obamacare, the United States Census Bureau, in 2012, estimated that around 48 million people in the U.S. were without health insurance. Multiple studies now show that as a result of ACA, the un-insured rate has fallen; but at what cost???

Ironically, one of the other purposes of Obamacare was to increase affordability. I don’t know if you recall, but during President Obama’s first term, he stated that Obamacare would not cause a person’s insurance costs to rise. That turned out to be wildly untrue.

Before the passage of the ACA, a family of four could get health insurance for under $400 per month. I pulled up a quote that I ran for a client (husband, wife, and 2 children) back in 2009 and the cost was $387 / month with a $3,500 deductible. Once the deductible was met, the insurance would pay 100%. Now-a-days, similar coverage would easily cost a family over $1,000 / month in premiums.  Then you add in the much higher deductibles required today and a family would be paying well over $15,000 / year before insurance even kicks in. This is roughly an 84% increase from pre-Obamacare to today.

This is a major problem and has likely caused many families to forgo vacations, put off needed repairs, and retire later. Families are essentially being held hostage by the ever increasing costs of health insurance. The federal government recently stated that Obamacare premiums will be rising by 22% for 2017. If only your salary would rise by an equivalent amount. But you know all too well that you’re likely to get the standard 2% raise because companies just can’t afford to pay more (I wonder why??).

This year (2016), both United Healthcare (UHC) and Aetna have decided to get out of most individual health insurance markets citing massive losses. Additionally, the number of cooperatives established in 2013 as part of the ACA, has fallen from 23 to 7. The remaining 7 posted annual losses in 2015. In other words, the ones that have failed have “gone” bankrupt and the 7 that remain are “going” bankrupt.

In my opinion, the “writing is on the wall”.  UHC and Aetna are shouting from the rooftop saying, “This program isn’t working!!!” I think it’s only a matter of time before the whole ACA program implodes. It just is not sustainable. 

Granted, it is necessary to provide health insurance for those who otherwise would be un-insurable, but there has to be a better way.

Insurance, by design, is meant to cover large expenses, not small ones. Think about it for a second; if a major wind storm swept across our country and blew off one shutter from everybody’s house and then everyone filed an insurance claim, what do you think would happen to the cost of insurance? It would go up!! And most likely it would go up significantly for everybody.

So, why is it that health insurance is treated differently? Why do we file insurance claims for every knick and scrape, annual checkup, or common cold occurrence. 

If everyone was responsible for covering these small ticket items out of pocket (without funneling them through insurance), then I believe the cost of insurance would reduce drastically.

Insurance could then be treated as pure catastrophic coverage meaning that it is in place to cover big ticket items such as surgeries, cancer, heart attacks, etc. This is essentially how home insurance works, so why not health insurance?

No wonder the Affordable Care Act is Unaffordable. 

I would love to hear any experiences you have had with Obamacare. Have you lost your doctor or seen your premiums rise? What has been your experience with the Marketplace? Have you had to put off retirement, forego vacations, or something else? Please share your stories and comments below.

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Brad E.S. Tinnon
CERTIFIED FINANCIAL PLANNER™
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