Proponents of the Affordable Care Act, or ACA have been surprised by the rise of vocal opponents and continued resistance to the law. At first the argument for the law was that it would be wonderful and after it was passed everyone would agree it was a great idea. After costs started going up rather than down, doctors started leaving the practice over loss of control and low reimbursement rates, and astronomical amounts were spent building websites that didn’t work, the argument went to “it’s the law, so get used to it.” Now that the law continues to be unpopular the argument has gone to “at least some people are being helped and we can’t take away their healthcare.”
Meanwhile the vocal opponents of the law, who surprised the Democrats and even establishment Republicans with their veracity in the 2010 elections, have been demonized. In general these are mothers and fathers who have never been involved in politics who saw the new law as too great an intrusion into their private lives to be ignored, so they felt they needed to speak up. Since then they have been roundly demonized; called thugs, terrorists, idiots, and lunatics in an effort to discredit them. So what is it about the ACA that is so insidious that it is causing people who normally just go about their lives to become involved?
Certainly there are other government programs that are wasteful and could be done so much better if the function were fulfilled through private charities and local groups. There is enormous amounts of fraud and waste in the food stamp program. Yes, there are a lot of people who fall on hard times temporarily and programs like WIC provide them with the sustenance they need to survive until they can get back on their feet and be self-sustaining. Many others, however, use the program to allow them to never do what is needed to sustain themselves, meaning that they spend their whole lives never contributing to society. Part of the reason for this is that there is a big chasm between being on the program and being self-sustaining that many people are unwilling or unable to bridge. There is also a great deal of fraud in the program with recipients selling their benefits to purchase drugs, alcohol, cigarettes, and lottery tickets, leading to the requirement of providing free lunches and breakfasts in schools since parents somehow don’t find the resources to feed their children despite receiving government food charity.
Local groups would be better able to discriminate between those truly in need and those just using the system. They could also tailor what the provide to the things that don’t get abused, like directly providing meals, from things that do get abused, like EBT cards. Costs of such program could easily be cut in half or more, meaning that those who are paying for the programs would see less of their money taken. And yet most people stay silent. So what is it about the ACA that is different?
A big theme in this blog is using a portion of your income to invest and grow wealth so that you can sustain yourself later in life when you are no longer able to work. It is also about getting to the point where you are not dependent on a job or others for your necessities. The ACA takes a very basic need – healthcare – out of the hands of individuals who are able to provide it for themselves and forces them to pay the government (through a set of highly regulated healthcare payment companies) to provide healthcare for them. Furthermore it adjusts the amount paid for this healthcare, which is way more expensive than it would be if individuals simply paid the doctor themselves with a check when they got sick, based on one’s income. Those who make little pay nothing have their costs paid for by others. Those who do make a decent salary pay a lot more and get far less than they receive. This also has the effect of incentivizing people to use more healthcare, driving up costs, since they are paying for it anyway whether they use it or not. This makes costs rise further, increasing the number of people who cannot pay the full bill and increasing the amount of subsidies that must be collected and dispersed.
Middle income earners, the ones most upset by the healthcare law, have very little left over from each paycheck to save and invest as it is. In 2014 families are seeing their healthcare premiums rise by an average of about $2500 per family. In 2015 we could see prices rise another $1,000-$5,000 per family since many of the people the health insurance companies expected to sign up for the program are not, partially because the requirement that individuals sign up or pay a fine has been waived through Executive Order. It can be expected that this cycle will continue until, as is the case with college tuition, most people are paying all that they can and are subsidized by others. For all but the most wealthy of families this eliminates the possibility of saving and investing since any extra money not needed for living expenses will be paid in healthcare premiums for services you won’t be using for most of your life.
When you do get to the point where you need more healthcare, you will have no choice of what is provided. Because you don’t have the investment account that would let you pay cash if you don’t like what is offered, it will be take-it or leave-it from what is being provided through the public system. Wealthy individuals (those who started out wealthy or who were able to gain wealth through the creation of a company rather than through paychecks) will be able to travel to other countries for the latest treatments or to bypass the lines that will inevitably form in the US as there are fewer doctors than needed, but regular families will be left in line, hoping they can see a doctor before they succumb to their illnesses. We have seen this in Great Brittain and in Canada. We have also seen it in the US in the Veteran’s Administration Healthcare System.
So this becomes more than a fight about wasteful spending on those who cannot or choose not to do what is needed to provide for themselves. It is about making those who can provide for themselves dependent on the government and making it impossible for most people to realize the American dream of going from poverty to self-sustainment. Perhaps the ACA was a step too far and many who are normally silent will be silent no more. If this is not the case, there is little reason for this blog.
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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.