After yesterday's Supreme Court ruling on the Affordable Care Act (Obamacare), I have several patients and friends ask for my opinion on the pros and cons of the legislation. Below of summarized what I feel to be the good and bad aspects of the Obamacare legislation. Some portions of the law have already gone into effect, while the major portions of the legislation including the 'individual mandate tax' to purchase health insurance, will be begin in 2014.
Pros:
- Insurance companies will no longer be able to deny coverage based on pre-existing conditions.
- Younger adults will be able to stay on their parents' insurance plan until the age of 26.
- A larger portion of the general population will have insurance coverage.
- Starting in 2014, all lower income individuals will be able to enroll in Medicaid.
- Closing of the 'donut hole' in Medicare Part D coverage.
- No annual or lifetime benefit limits in insurance coverage.
- Anti-discrimination language is included to ensure equality amongst provider groups (MDs, DOs, and DCs)
Cons:
- Infringement upon individual liberties - for the first time in American history, individuals are being forced to buy a product against their will.
- Government being interjected between the doctor and the patient.
- By 2019, 4.8 million seniors will be forced out of Medicare Advantage.
- Obamacare cuts $528 billion dollars out of Medicare, resulting in decreased services and reimbursement to providers.
- A reduced number of providers will accept Medicare patients due to the reduced reimbursement and increased paperwork involved.
- The 'Doctor Fix' dilemma - there has been a steadily increasing reimbursement percentage cut for Medicare providers. Neither political party is willing to implement the pay cut (currently over 27%) because they realize that it will result in a mass exodus of providers from Medicare. This will cause a shortage in doctors for Medicare beneficiaries, increase wait times in offices continuing to take Medicare patients, and increase emergency room visits. This 'Doctor Fix' composes over $500 billion of which the supporters of the Affordable Care Act propose to pay for it, and equate the implementation of this Act as a net 'cost savings'. The problem is that if the 'Doctor Fix' is never implemented, the Affordable Care become 'unaffordable' costing the American taxpayers over $500 billion dollars.
- Increased taxes associated with Obamacare / the Affordable Care Act:
- Individual Mandate Excise Tax - beginning in 2014, those without 'qualifying' health insurance will be taxed 1% of their adjusted gross income (this rises to 2% in 2015, and remains at 2.5% for 2016 and beyond).
- Employer Mandate Tax - applies to employers with over 50 employees that does not provide health insurance for employees. The employer is fined $2,000 - $3,000 per full time employee (amount depends upon whether the employee acquires their insurance through an exchange).
- Surtax on Investment Income - applies to individuals making over $200,000, and families and small business owners making over $250,000. Applies an additional 3.8% tax on investment income (capital gains, dividends, etc...). This would bring capital gains tax rates to 23.8%, and dividends tax rates to 43.4%. This tax does not apply to non-resident aliens.
- Excise Tax on Comprehensive Health Insurance Plans ('Cadillac Plans') - beginning in 2018, there will be a new 40% tax on high-end 'Cadillac Plans'.
- Medicare Payroll Tax Increase - for those making over $200,000, their Medicare Payroll tax will increase from 2.9% to 3.8%.
- Medicine Cabinet Tax - Americans will no longer be able to use their pre-tax dollars in Health Savings Accounts (HSAs) or Flex Spending Accounts (FSAs) to purchase non-prescription, over the counter medications (except insulin).
- Flex Spending Account Cap - imposes a cap of $2,500 on FSAs (currently unlimited). This tax has been dubbed the "Special Needs Kids Tax" because many families with special needs children use their FSA to pay for education costs, and will be hit especially hard.
- Medical Device Manufacturer Tax - Obamacare imparts a new 2.3% tax on all medical devices costing over $100. This will increase healthcare costs.
