Understanding Obamacare Part 6: Unintended Consequences

(When I set out to write a weekly column on Obamacare, I could not have imagined what a daunting task was before me.  I thought it would be simple enough to read the entire bill and then break it down, section by section, and explain it so that we could all better understand how the new healthcare legislation will ultimately affect everyone.  Small business owners, health care providers, seniors, patients with chronic illnesses…everyone has a vested interest.  I planned to leave the politics out of it, to the best extent possible, and just focus on the facts.  However when I interviewed doctors and small business owners, I found that people are so passionate about this issue and have so much to say, that the politics always made its way back into the discussion.  Still, I will do my best to present facts only.  Texas PolitiChick Lara Maertans Rhea)

Earlier in the week when I was working out at the YMCA, some of the employees who know about my column were telling me that their hours had been cut back from 40 to 29.5 hours per week.  They knew that it was because the company did not want to provide (or could not provide) health care benefits under Obamacare.  In order to keep from paying the necessary fines imposed for not doing so, the company cut all employees to part-time status.  I have been harping on this for a while, but I just want to make sure everyone is prepared for the unintended consequences of this new legislation.

The important bottom line:  With Obamacare, there is little incentive for any company to keep full-time employees.

According to the Florida Sentinel, Darden Restaurants, which operates around 2,000 restaurants throughout the U.S. and Canada (Olive Garden, The Capital Grille, Red Lobster, etc.), have also cut back on full-time schedules in preparation for the new legislation.  According to Forbes, Federal Express and many other companies are following suit.  In the coming year as companies look to trim fat in the recession, they will be looking to cut expenses via cutting worker pay and avoiding the cost of health insurance and the fines that will be imposed in 2014.

Companies who need to keep full-time employees will typically find it cheaper to pay the fines instead of providing health coverage.  So obviously another unintended consequence of the bill is that many companies will choose to do this.  Many will also change the policies that they have in order to save money.  So for example, right now your employer might be willing to offer you a plan where your yearly deductible is only $500.  In order to handle the expense of all that is required under this new legislation, that same company could decide to change your deductible to $2500.  Believe me, companies will protect themselves from the rising costs.  You can be sure that you will pay more for most goods and services as they pass those costs down to the consumers, along with their employees.

So let’s talk numbers.  According to the Heritage Foundation, today almost 60% of Americans have employer-covered health care.  Around 6% have individual policies, and 16% have Medicaid/Medicare/Tricare. 19% of Americans have no health coverage, which is important to remember because presumably the entire purpose of the legislation was to protect this group.  Now remember, this number goes up somewhat if we include all of the illegals without coverage, but for now, let’s just stick with actual U.S. citizens.

In 2014, people will be redistributed.  Most people who gain coverage will not do so through employer-based coverage any longer, but through government controlled exchanges or Medicaid.  The statistics will change so that 32% will be on Medicaid, 28% will have Insurance Exchanges, and 41% will be uninsured.  Again, that uninsured number doesn’t represent the entirety if you add in all of the illegals.

But to make the point, we will go from 19% to 41% U.S. citizens without coverage!  Again, these are the unintended consequences of this legislation.  No one from our government thought through this well enough to realize that companies would drop coverage in order to save money and spare themselves the fines.  I guess that was too difficult to project.

In my previous articles, I discussed all of the hidden and overt taxes in the legislation, so I won’t go over that again here, but I will just say that when there is a medical device tax of 2.9% imposed on things like medical supplies and equipment that will clearly get passed down to health care consumers.  One of my readers, Brian McKenzie, brought to my attention that the FDA is currently debating whether or not a cell phone should be considered a “medical device” if there are health apps loaded onto it.  Brian is in the healthcare field so many people like him are hearing about these things that the rest of us probably won’t unless it makes its way to more mainstream media.  What this could potentially mean is the 2.9% tax could make its way to cell phones (and your pocket) as well.  I found an article about this subject entitled, “There’s an App for That…and the FDA is Figuring Out How to Regulate It” by David Yeager in the January 2012 edition of Radiology Today Magazine.

To me, the most disturbing and frightening aspect of the legislation is the codification of the “economic substance doctrine” from the Reconciliation Act.  The Patient Protection & Affordable Care Act or “PPAC” is the main health care bill, whereas the Health Care & Education Reconciliation Act of 2010 is an enhancement to the bill.  They both were passed and signed into law.  This provision allows the IRS to disallow completely LEGAL tax deductions and other plans that minimize taxes for the simple fact that the IRS decides the action “lacks substance” and is only intended to reduce taxes owed.  Excuse me, but aren’t ALL deductions intended to reduce taxes owed?  Seriously folks, this gives the IRS an enormous amount of power!  I do not want the IRS to have the right to just “decide” to tell me I cannot take deductions because it might mean I get a lower tax bill!

Another unintended consequence of the bill is that right now, healthy people and younger people are able to choose the coverage that they need.  According to the Business Insider, with this new legislation the costs will be spread out, so this group will have to subsidize the other groups, meaning an increase of 17% in their premiums alone.

I have mentioned this before, but the Business Insider also says there will be a shortage of 150,000 physicians by 2014.  Because of this, patients will have to wait longer for care and will not always have access to the most qualified physicians.  Since Medicare reimbursements currently only pay 81% of private payments and are being further reduced by the legislation, many doctors will not take Medicare patients.  If you remember the statistics from above, we currently have a percentage of 16% of patients on Medicare.  That will go up to 32% in 2014.  Who will see this influx of patients? Of course all of this is very bad news for seniors.

Medicaid is even worse.  It pays doctors only 56% of the private payment amounts.  In 2014 the states will have to pay the difference to keep Medicaid doctors in practice.

Even more bad news for seniors is that under the new legislation, hospitals, hospice care facilities, dialysis centers, and nursing homes will be paid less to care for the same number of seniors than if Obamacare had not been enacted. Payments to doctors will also be cut.  Scientific evidence published in the Annals of Internal Medicine, a leading scientific journal, suggests that forcing hospitals to spend less on elderly patients will produce deadly results.

Because of all of this, some 56% of doctors think the quality of medicine will decline in the next five years, 69% are considering dropping out of government health programs, and according to The Daily Caller, 83% of physicians are contemplating leaving the profession altogether.  With more paperwork, more bureaucracy, and caps in pay, there is little incentive to practice medicine.  There is even less incentive to go to medical school and rack up that exorbitant debt when new laws will no longer allow tax right off’s, there is malpractice insurance to consider, and add there is the problem of being a small business owner with caps in pay…it’s too difficult to make a profit at it.

Because employers will now have to cover children of employees up to age 26 and lifetime benefit levels have to be eliminated, health care costs to employers will go up exponentially.  This along with the added regulations, paperwork, and bureaucratic red tape will only give companies more incentive to reduce employee hours to 29.5 or pay the penalties instead.

With Native Americans and illegals being exempt from this whole business of having to provide individual coverage or pay fines, is it little wonder that many people will suddenly have roots as Native Americans? My 13th great-grandmother was Pocahontas.  Maybe I can claim her and not have to pay!

In a previous article I talked about how fast food restaurants will have to provide the nutrition information on all of their food.  Well, if for example a McDonald’s Quarter Pounder with cheese has 510 calories and 26 fat grams, in order to entice you to feel better about eating more “healthy” you will likely see those numbers decrease as portion sizes decrease, with costs staying relatively the same.  So again, the consumer will be the last to benefit.

If the government is in control of our healthcare, then when will they begin to decide how your lifestyle affects the quality of the care you receive?  Let’s say you used to smoke; does the government decide that your choices led to your cancer and so therefore you aren’t covered the same as everyone else? What if you are overweight?  Gay?  They could conceivably contend that all of your lifestyle choices led to your illnesses so they won’t cover certain things–or worse, they will meddle into your personal life.  This is why people fear the “death panels” as they have been called.  If a person is 65, will they get a transplant?  There are certain limits on this now and to be fair, I am just asking people to think of the knock-off consequences to our government being in complete control of our health.

So when the new legislation is enacted and the United States has…

  1. More people becoming uninsured
  2. More doctors leaving the profession than ever before
  3. More taxes to be paid by businesses and individuals alike
  4. More bureaucracy, and less quality of care
  5. Companies reducing their work force and cutting back hours
  6. The IRS having far too much control

…. Is there really any upside to this at all?

Please, please understand that we can still repeal and change much of this if you vote out Obama and elect Romney in the upcoming election.  I can’t stress enough how really imperative it is that we do this for the future of our country!

Read the rest of Lara Maertans Rhea’s Understanding Obamacare series:

Understanding Obamacare Part 1

Understanding Obamacare Part 2

Understanding Obamacare Part 3

Understanding Obamacare Part 4

Understanding Obamacare Part 5







Lara Rhea

Lara Rhea has always had a passion for God and her family. She is the former Ms. Texas and Ms. Conservative United States (2012-2013). She is a political writer, blogger, and reporter living in Austin, Texas, and her passions are politics and healthcare. Among her many endeavors, Lara is also currently a graduate student in clinical mental health counseling and planning to become a licensed therapist. She is interested in mental health issues, but because of heart conditions which require her to have a pacemaker and defibrillator, she also has a vested interest in physical health and well-being. She is training for a half-marathon in support of the American Heart Association to show that those living with health challenges can still live a great quality of life. Her interest in politics began many years ago while working on a congressional campaign as a speech writer and campaign manager. With undergraduate degrees in English, Psychology, and Business, along with her passion for politics, she is able to write about various topics but typically focuses on Obamacare issues. Lara had a near-death experience when her heart stopped and sees things through the lens of a person who realizes there is a great purpose to life. She is currently writing a book about how the American health care system is under siege and would like to write about her spiritual journey as a heart patient, as well. After she graduates, Lara would like to advocate for mental health patients on legislative issues and bring awareness to the public about all healthcare related issues.

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