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ObamaCare: Mandates Will Devastate the Working Poor

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I’ve written several articles exposing the flaws of socialized medicine and the plans currently being considered in congress. Yet despite all this effort I get a feeling that I’m not reaching everyone I want to reach. Maybe their minds are closed and it’s a pointless effort, but I still hold out hope that reason can reach at least some of those still deluded into supporting this madness. Perhaps if I focus on just one aspect of the proposed legislation demanded by President Obama I can keep things simple enough to reach a few people.

I’m specifically referring to young working people and students who make up about 40% of those who are currently uninsured. This is a group who have made a choice not to invest in health insurance because they are young and healthy, have considered the odds and made the entirely reasonable conclusion that their chances of needing major medical treatment are vanishingly small and the cost of any emergency care they need — for the occasional stitches, injury or minor illness — is far less than the cost of health insurance.

The major health threat for this group of 18 to 30 year-olds is injury in a car accident, a risk for which they do not need health insurance because they are already covered by the automobile insurance their auto loan lender or state government requires them to carry. For them, major illnesses are very rare and other accidental injuries can be treated cheaply and paid for in cash at a cost far lower than the price of a year of health insurance.

These people are one of the main targets of the health insurance mandates which President Obama has demanded as part of national health care reform. This proposed mandate would require all uninsured Americans who don’t qualify for Medicaid, including these young and usually low-earning Americans, to buy insurance, which even the most optimistic estimates of the “public option” suggest would cost close to $3000 a year or more with private insurers. If they did not buy insurance they would be punished by having to pay a substantial tax penalty, estimated to be somewhere between $400 and $3000 depending on their income.

Think about the budget of a typical 20-something facing this mandate. These are people with limited incomes and tight budgets. Just out of college with an income of about $33,000 a year, the $3000 a year for insurance is going to hit hard. Already you’re paying $9000 for rent and utilities plus $8000 for food and clothes and entertainment plus $8000 for car loan and car insurance and gas and maintenance plus $3000 for taxes and finally $5000 on your student loan debt. That’s a tight budget and it doesn’t leave any income to pay for mandatory health insurance, so the poor bastard will owe the government several thousand dollars he doesn’t have. Oh well, time to trade in the Kia Sephia for a 1995 Geo Metro and cut the car expenses by about $3000 a year — just enough for health insurance. On the upside, that reduces the chance of any expensive dating, weddings or children in the future.

Oh did I mention that this is close to a best case scenario for relatively low income workers?

Under the current proposals you don’t qualify for Medicaid if you earn more than 1.33 times the poverty level which will make the qualification cutoff somewhere around $15,000. Imagine how much more devastating the insurance mandate will be for someone at the lower end of that range, like a high school graduate earning an average hourly wage of about $9 for a total of $19,000 a year.

Where this guy is going to get $3000 for good insurance or even $2000 for a stripped down plan with a high deductible is a complete mystery, but the mandate says he has to buy it since he doesn’t qualify for Medicaid. Luckily, he doesn’t have student loans and is already driving a Geo Metro with total car costs of only $5000 a year, plus he is living with two roommates, so housing goes down to $6000. Additionally, his taxes are only $1500, and finally he and his roommates eat mostly Ramen Noodles, to bring his food/clothing/entertainment costs down to about $6000. So with his more economic lifestyle he is barely getting by on his $19,000. When he gets hit with his insurance bill there is no fat to trim. He can’t even raise enough to pay the penalty. So the government makes him borrow the money — probably on high interest credit cards — and he still ends up with no insurance.

What it comes down to is that for people earning between $16,000 and $35,000 the insurance mandate is really nothing but a whopping additional tax of as much as 20% and many of them still don’t get health insurance. It amounts to paying for expanding Medicaid on the backs of the working poor.

This is not the kind of hopeful change which was promised. What’s more, this is only one aspect of the plan which was specifically demanded by the president. There is another mandate which is even more devastating for small businesses in addition to higher taxes, which hit them extra hard as well. That low wage earner may not have to worry about insurance when the other provisions of ObamaCare shut down the business he works for. Then he won’t have any income at all, so he can go on Medicaid and live in a cardboard box in one of the shantytowns which will be springing up around the nation.

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About Dave Nalle

  • http://ruvysroost.blogspot.com Ruvy

    Dave, most of my life, I looked overseas, wondering if i could get to lie in a country with socialized medicine. I thought about Canada, Australia, New Zealand, and finally for reasons that had nothing to do with health insurance wound up here in the Falafel Republic of Israel. Maybe it’s just a falalfel republic but the health care is great – and then there are all those Jewish doctors….

    The only real problem with what Obama proposes is that your country czn no longer afford it.

  • Daniel

    Attention readers: This blog entry is unresearched BS.

    I just spent less than five minutes looking on Google, and found that a 25-year-old male can buy private health insurance right now at the following rates:

    Aetna $81/mo
    Blue Cross $106/mo
    Cigna $86/mo
    Humana One $66/mo

    That’s $800 to $1200 a YEAR in health care expenses. Did you even do any research of your own before writing your article, or did you just see that “$3000″ figure, think it looked good to try to smack people around with, and start using it without bothering to find out if it’s real or not?

    Yes, the major risk to young adults is motor vehicle accidents and not their health. This is why HEALTH CARE IS SO CHEAP FOR THEM. The problem is that they don’t buy it anyway, even with it being this cheap, and then those that DO need it end up racking up thousands of dollars in bills that they cannot pay, and which ultimately get absorbed by either 1) hospitals or 2) taxpayers. The part of the bill you’re describing will actually take the burden of those individuals’ bills off of taxpayers and hospitals and put them where they belong, onto the individual and insurance that they carry for themselves. Given the low expense (just $66/mo!) it does more damage to the public welfare to allow these young adults to go uninsured than it does to require insurance for them.

  • http://www.republicofdave.com Dave Nalle

    Ruvy, if these proposals were for straight-out socialized medicine I would actually have LESS of an objection than I do at this point. A well-thought out program of state run or even better semi-provate single-payer national healthcare would be a viable option.

    But what you have with this proposal is basically just forcing people to buy insurance they can’t afford without real regard to their income or ability to pay or need for it, plus a whole packet of other badly thought out and incomplete ideas.

    It’s reform that’s worse than doing nothing.

    Dave

  • http://www.republicofdave.com Dave Nalle

    Daniel, you need to look at those health plans you found again. They will NOT meet the standards set by the current legislation. At the prices you quote there will be unacceptable high deductibles, percentage based co-payments and other restrictions which disqualify them.

    For example, your Aetna plan has a $5000 deductible, a 20% coinsurance and a $40 co-pay. For a 25 year old that means the plan will be almost completely useless. It basically covers nothing but catastrophic illness or injury, and in those cases the 20% coinsurance structure means that the 20% you have to pay plus the $5000 deductible will bankrupt the person.

    The cheapest plans I could find with full insurance were around $200 a month and they still had deductibles at $1500 a year.

    Dave

  • Bliffle

    Good rejoinder, Daniel. I just hope Roger doesn’t label you a bean-counter for actually using actual numbers from actual sources.

    Still, mandates are a bad idea. Mandates mean that every American is born owing money to an insurance company. What could be worse? Insurance companies are Federally unregulated (by the 1945 McCarran Ferguson act) and only subject to the weak regulation of the states. As time goes by you owe them more.

    MANDATES are a form of slavery. You owe your soul to the company store.

    IMO we’ve gone too far to go back and revoke McCarran Ferguson, rewrite the laws of incorporation, and make the insurance companies good citizens. It was possible many years ago, but no longer. The insurance companies themselves have closed the doors on that by making so much public policy depend on their private business. Big mistake, as we see from that other overprivileged industry that exploded after private business was allowed to determine public policy: the financial system.

    The only real solution I can see is Single-Payer, with insurance companies reduced to clerical duties only, no policy decisions.

    It could have been different, but the Insurance companies scr*w*d the pooch.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Sorry, bliffle. I never meant to put down the empirical argument, from the standpoint of cost.

  • http://www.republicofdave.com Dave Nalle

    The insurance companies screwed the pooch largely because government encouraged and allowed them to do it. And this frankenstein nightmare of a healthcare bill is a continuation of the same policy of indulging and encouraging as much abuse as possible from the insurance companies.

    Dave

  • Doug Hunter

    “Still, mandates are a bad idea. Mandates mean that every American is born owing money to an insurance company. MANDATES are a form of slavery.”

    Now just replace the word MANDATE with TAX and private company with Government and you’d actually be making sense. Big government/Big business is slowly enslaving all of us reaching their tentacles into every crevice of our live and into every decision we make no matter how minor. The majority doesn’t give a damn as long as McDonald’s has it’s dollar menu and the TV is still playing. Everyone else only sees half the problem through a partisan lens and wastes their time bickering while the world burns.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Very good, Doug. It is an unholy alliance.

  • Bliffle

    Dave is wrong again:

    “The insurance companies screwed the pooch largely because government encouraged and allowed them to do it.”

    No. The insurance companies effectively Privatized the government by freely bribing all politicians. The government did not socialize the companies, quite the opposite, the big difference being that companies are in the drivers seat, not the government.

    ” And this frankenstein nightmare of a healthcare bill is a continuation of the same policy of indulging and encouraging as much abuse as possible from the insurance companies.”

    Yes, because the companies own the government and dictate policy.

    That is why 75% of americans want Single Payer but no congressmen do. They are all privately owned by the insurance companies.

    If government controlled the companies then government would impose Single Payer forthwith because the voters would compel congresscritters to so vote.

  • http://www.republicofdave.com Dave Nalle

    Makes no sense, Bliffle. Single payer does not threaten insurance companies at all. They have it in Australia and the insurance companies are integrated into it just fine. Of course, insurance companies may not see it that way.

    Dave

  • http://thingsalongtheway.blogspot.com/ Cindy

    Senators don’t appear to see it that way either, Dave:

    Chair of Finance Committee takes single-payer plan off the table and calls for “more police”

    VIDEO

    This is also an excellent and admirable protest strategy for a public hearing of any kind. The police can only take away people as they interrupt.

  • http://thingsalongtheway.blogspot.com/ Cindy

    I wonder, by the way, where this Senator get his (false) information. Your Senators are basing decisions on either misinformation or outright lies. Why would they lie? If they aren’t purposely lying to favor big business, then how do they get the facts and figures so wrong?

  • http://www.republicofdave.com Dave Nalle

    It has long been my belief that most of them are morons, Cindy. And those who aren’t total morons are too lazy to do any work for themselves and let their staff think for them.

    The whole situation is complex. On the one hand you have people who are presumably for socialized medicine in some form supporting this abominable bill which provides nothing of the kind — as shown in many of the videos on the site you linked to. But on the other hand you have people rejecting a single payer option for no sane reason while endorsing much worse alternatives.

    At the same time you have folks on the left trying to convince us that the systems in Canada and Europe work decently when the facts are out there and clearly show this is not the case, but if they had any sense at all they could just forget that indefensible position and advocate a single payer system, but they can’t even consider a pure single payer system because it looks too much like capitalism.

    If I set aside my libertarian principles or just suppress them for a few minutes I can solve the entire healthcare crisis, get everyone coverage and lower costs while increasing competition and not going to total socialism. In fact, it’s unbelievably easy and does not require a 1000 page bill.

    I know, I’m ranting incoherently.

    I’ll write an article explaining it at much risk to my established position as Chairman of the RLC.

    So WTF is Obama doing and why do we have this monstrosity in Congress?

    Dave

  • http://www.republicofdave.com Dave Nalle

    Oh and Cindy, your link took me to a bunch of interesting videos, but not the specific one you cited.

    Dave

  • http://thingsalongtheway.blogspot.com/ Cindy

    Dave, I just clicked on it again, I am getting the single-payer video with the quote I made. ??? Anyone else?

  • http://www.republicofdave.com Dave Nalle

    Doesn’t seem to work in Firefox on the Mac. I get a tiny thumbnail and when I click on that it takes me to a page of other videos.

    Dave

  • http://thingsalongtheway.blogspot.com/ Cindy

    Dave I put the video on my blog, along with the article that went with it.

    Doctors Protest Exclusion of Single-Payer at Senate Finance Committee May 8, 2009

  • PAT

    its October of 2010 and within a couple months obamacare provisions are going to force my wife’s insurance to change. instead of a 500 dollar deductible we’re going to have a $5000 deductible. we’re young and healthy so this is very bad for us. under no circumstances can we afford to dish out up to 5k for a procedure. obama is the worst thing to ever happen to this country and to me and my family personally. basically we can never afford to have children now because of this non-sense. So I have just one thing to say; to president obama, to his staff and white house, to every gullible idiot who supported him and continues to do so, to nancy pelosi and to all the other legislators who cast a vote for this BS; F*CK YOU!

  • katie stevens

    Excellent article and still on the mark. I’ve checked the Kaiser Family Foundation Subsidy Calculator to see what the mandated coverage will cost me. Assuming my salary in 2014 is $25K a year my share will be $170 a month. The calculator is here.

    That means I’ll have to give up an already sparse budget for food and personal care items. Great! An insurance policy and absolutely no money left for anything including the $2500 deductible.

    It is gratifying to read that someone has taken the plight of the working poor into consideration. I have not gotten any intelligent responses when mentioning that I’m rent poor already and unable to afford this coverage. “Oh, but people LIKE YOU will get a subsidy,” say those who call themselves Progressive. The other thing they tell me is to get a job making more money. Well, I’m self-employed and want to grow my little business. But the future doesn’t look so bright with the law as it currently stands.

    The only people I’ve met who defend the legislation are those who are already quite ill and can afford the high risk pools now being set up. But very few just say outright that they need this and will take what they can get. Oh, no. Those who doubt the cost effectiveness of this legislation are belittled and demonized both on-line and in real life by the same people who are very ill and want the coverage.

    It’s the self-righteous tone of such people that have turned me off the issue and its supporters. Just be honest and stop acting superior.

    The problem is that this law does nothing to make healthcare affordable and does not address the issue of quality care for all. Those who can afford it will still have better policies while low income workers above the 133% of the FPL will get a crap policy with a high deductible and high co-pays.

  • Obamacare lies

    Dave great foresight. If only people had listened. But the libs will say Obamacare like the stimulus, did not go far enough!

  • Igor

    In fact, ObamneyCare didn’t go far enough: single-payer and UHC should have been included.

    We need UHC, both to improve public health, and to reduce total societal cost. We can save about 1/3 of medical cost with UHC, which would amount to about $500billion (or more) per year, which would solve our budget problems.