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Health Care Reform aka ‘OBAMACARE”: What’s in it for me (The CONS):

Since the very beginning this bill attracted a lot of attention from political parties, businesses and media because of the huge impact it could have on the economy of this country. During the last edition, I wrote about the “good things” the new health care law had to offer. So here I am back discussing about the “not so good” affects of the heath care reform. Is this law really worth the hassle? I will let you be the judge of that. Here are some so called “Cons” in a simple language:

Cost – Anyway you look at it, adding about $1 trillion over a decade to the deficit can not be a good thing for US economy. Approx. $100 billion/year, this is about annual cost of Iraq war. May be its about time for government to start focusing on the internal issues now. Despite this huge cost, most experts claim that cost of health insurance will keep rising and quality of care will go down as the number of people that need to be treated will increase.

Medicare cuts – The seniors will be among the worst hit population by this law. They will see their benefits change dramatically. Congress is reducing Medicare benefits by $500 billion. This is particularly concerning to about 76 million baby boomer population that is about to hit retirement over the next decade.

Individual mandates – Starting 2014 government will require each individual to purchase the basic health insurance or pay an income tax penalty. The people who do not carry health insurance will pay $695 fine every year with the exception of some low income individuals. Many states have filed lawsuits stating that it is unconstitutional for the Federal government to require individuals to purchase insurance.

Higher premiums – Over the past decade, we have seen the insurance premiums double. Unfortunately, introducing an additional 30 million people into the insurance pool will result in higher insurance premiums for the 80% of Americans that currently have insurance. The average person can see premium increases of 8-12% each year due to the healthcare reform bill.

Higher taxes – Most businesses and high net worth individual and families earning more than $250K per year will see their Medicare tax increase in an effort to support some of the costs of this health care reform law. So now apparently, you will be punished for being successful while most illegal’s without insurance continue to fill the emergency rooms as they find convenient. Medical device makers will see a new 2.9% excise tax. Think, You are not affected yet? Wait till the costs eventually will be passed on to every single one of us.

Excise tax on Cadillac health plans – Many large employers offer so called “Cadillac” insurance plans — those with a value of $10,200 or more for an individual and $27,500 for a family . Starting 2018, these employers will be forced to reduce these benefits as they will be charged a 40% excise tax for offering these plans. This will lead companies to reduce their insurance offerings to avoid these taxes.

Employer mandates – Many employers are concerned as by 2014, employers are required to offer health plans to all employees who work more than 30 hours per week, or pay a $2,000 per employee penalty to the government. Many companies I work with has been telling me that they will not be able to afford this and may end up closing locations or laying off even more people. Is this what we really need at these times?

HSA withdrawal tax – For the past decade, Health Savings plan have gained popularity. Government has decided to increase the penalty from 10% to 20% for any withdrawals made for non-health expenses.

So you have read about both sides of the story. As I mentioned, the real effects of the health care reform bill is yet to be seen. At this point, it just seems like a huge gamble taken by our dear government. At last, I can just hope for the best for us, so called “Middle Class” who usually suffers.

Sunny Sethi

510-593-8484

sunny@matrixia.com