I am not talking about GOP arguments against Obamacare, their promises to repeal it or any new plans.   I am talking about passed (past) legislation that can be reviewed in practice.    I am talking about [...]]]> The short answer as with many large policy issues is “Absolutely and to the core of their policy direction.”

I am not talking about GOP arguments against Obamacare, their promises to repeal it or any new plans.   I am talking about passed (past) legislation that can be reviewed in practice.    I am talking about a comparison between the GOP HSA Healthcare plans and Obamacare.    I talked about this before when I was investigating HSAs.    I have since joined my HSA compatible plan and linked up my Health Savings Account.

Simply reading through the documentation, I was struck at how different this is from the discussions and legislative language of Obamacare.   I think a side by side comparison of the basic philosophies in these two models is worth noting.

Health Insurance; what’s that?

At the core, an HSA is Health Insurance not a Health Plan or Health Coverage.   In an HSA the premiums are low (mine less than $200 a month) and the deductibles are high ($3000).      It covers only yearly exams until you reach that $3000 maximum and then it covers you 100%.  Some plans have a 80/20 split window to another maximum out-of-pocket.   I elected for the 0/100 to 100/0 option.

Obamacare and the health exchanges are Health Coverage with higher monthly premiums and co-pays.   You pay each month into a pool to cover the majority of expenses.  That pool is then used above and beyond your co-pay , 80/20, 70/30 or 50/50 split to pay the medical practitioner up to your out-of-pocket maximum.   In most cases the total out-of-pocket maximum exceeds the $3000 I selected.

Tax Deferral

The HSA term itself  really refers to the bank account (Health Saving Account) that you link to a high deductible (HSA compatible) health plan.   The money that you put into that account can be used to pay medical expenses, buy prescription drugs,  other medical services and over the counter medications.    You can put whatever money you need into the account but the first $3000 is tax deductible (or pre-tax in the case of a payroll deduction).    Note that the deductible and the maximum contribution are the same… this is not a coincidence.   The short strokes:  You use tax free money to pay your medical bills.

In traditional health care plans your monthly premiums and Flexible spending account contributions where also paid tax free.

Obamacare did not leave this untouched.    The total cost of your health care plan is now part of your paycheck and you will be taxed (as income) on the coverage that exceeds the government regulation.   Though this may not directly tax you on the payments you are making, it can have a tax impact if you have elected high valued coverage options.

Who is swimming in my Risk Pool?

In my case the HSA is individual insurance.    If I have a huge outlay of expenses, I draw against my savings until the $3000 and then insurance covers the rest.   If that expense has ongoing repercussions, my premiums could be raised or I could be dropped.   This is simply a fact that my potential to repeatably cost the insurance company money in excess of my $2400 premiums has now been increased.   Same as car insurance and those with frequent accidents.

Side note: I approve of  the Obamacare goal to limit insurance companies from dropping people outright due to increased usage.   I believe that some cap on year over year increases (due to usage [not inflation]) should be put in place.     When I entered into this agreement with the insurance company, they agreed to take on some risk.  They should not reserve to right to cancel at any time when that risk does not pay out.    However, I also understand that they are a business and cannot be required to lose money year over year simply to benefit me.    I think a simple 25% usage-based premium increase cap and a 3-5 year contract period should be in place.   If after that time I am still a losing proposition they can set me free.

I also believe that some sort of shared risk pool should be created among insurance companies to mitigate these outlays (aka insurance for insurance companies).    This will protect their business models, they likely do this today in some form.

I know it is possible to have HSA compatible plans in a corporate structure.   This is a slightly larger to much larger pool that mitigates risk.     This mitigated risk pool is usually a social contract entered into as a benefit* of employment.

*It is a benefit to those in the high risk area and a increased cost to those in the low risk pool.

Obamacare hopes to set up a larger more public risk pool among millions of US citizens.  Asking healthy citizens to pay more to give coverage to the poor and provide coverage at a huge discount to the unhealthy and the currently uninsurable.

Basic Truth

In the final analysis the basics are this:  Freedom and Individual choice (with individual risk) versus Government control and shared risk (with shared expense).

If you can get through this whole article [Social Security to See Payout Exceed Pay-In This Year] without swearing, [...]]]> This is the kind of article this site was built to find (and eventually expose).   A stunning misrepresentation of facts around social security insolvency and lack of intent to give a balanced view of the issue.

If you can get through this whole article [Social Security to See Payout Exceed Pay-In This Year] without swearing, yelling or shaking your head, you need to read related articles and begin thinking for yourself.   Even if you are shocked by the article, I would appreciate you reading ahead and seeing what we saw and adding in more that we may have missed.

Here is a bit of truth from the CBO.

Stephen C. Goss, chief actuary of the Social Security Administration, said “that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.”

The times follows this with a general review of how the CBO and Social Security got this wrong.  “Officials foresaw an average unemployment rate of 8.2 percent in 2009 and 8.8 percent this year, though unemployment is hovering at nearly 10 percent.”   Buehler?…anyone?… This projection was before the stimulus bill was passed which was a massive expenditure so that unemployment would  “reach a peak of 7.8%”.   Did they forget that; or would that fact make the “experts” missed estimate even larger and possibly make one think that increased spending and debt may not have been the best solution for job creation?

In this and the following paragraph they bring out two more facts.   That Social Security “last year projected revenue would more than cover payouts until at least 2016.”  And that is because of this data “they moved the year of reckoning forward, to 2037 from 2041.”  The year of reckoning being the point where Social Security is completely bankrupt.    I find it a bit hard to believe that being wrong by 6 years on the short term estimate would give you confidence in a smaller four year move on the long term.  Basic math would say that less short term revenue would mean less interest and a faster decline in long term value.   But this is an opinion which I can excuse…until “Goss said that large cushion could start to grow again if the economy recovers briskly.  Indeed, the Congressional Budget Office’s projection shows the ravages of the recession easing in the next few years, with small surpluses reappearing briefly in 2014 and 2015.”    And if it does not we end it all when?

In an unrelated thought, The CBOs estimates of the intakes and outlays of Social Security are still wrong after over 50 years of practice.   Yet we think they are accurate on the 10 and 20 years projections of a brand new health care system.   Another unrelated, unrelated thought from design:  You can not predict changes in behavior.

Moving on, The NY times states, “politicians, who are already struggling over how to reduce the nation’s debt.”   Maybe their definition of  “struggling over” is a bit different than mine.  Or did they choose this over “unable” or “unwilling” purposefully?

Then it gets fun.  “The United States’ soaring debt — propelled by tax cuts, wars and large expenditures to help banks and the housing market — has become a hot issue as Democrats gauge their vulnerability in the coming elections.”  and…and… No that was it.   No mention of stimulus [does this explain why it was ignored above as well?].  No mention of a billion dollar health care bill.  Even if you think it will curb health care costs, you think it would be mentioned as a potential risk.

But that is not the worst of it, the fact is that the tax cuts increased jobs and amounted to over 1.5 Trillion more dollars of tax revenue to the federal government over the years from 2004-2007.   But even that is really not connected because tax cuts have nothing to do with gross income which is the basis for FICA and Social Security.   Having a job is the basis for Social Security income and that is the problem.

They end with this, ““Even if the trust fund level goes down, there’s no action required, until the level of the trust fund gets to zero,” he said. “At that point, you have to cut benefits, because benefits have to equal receipts.”   Fact, truth and a PONZI scheme [definition: "pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned."]    The fact is your money, as paid in, is gone.  It was given to current recipients with the knowledge that we will go bankrupt in less than 30 years,  yet ” there’s no action required.”  And this has no impact on the NY Times.   The fact is,  Bernie Madoff is in jail for 150 years for this same thing.  In pronouncing the sentence, Judge Denny Chin called the crimes “extraordinarily evil.”  I agree.

There are a few more things missing that I believe should have been mentioned.  For example, George Bush tried to reform Social Security in 2004 and was saying, “allow younger workers at their choice to invest some of their own money in the private markets to get a better rate of return so that the Social Security promise will be kept.”    The argument against it was that he was fear mongering and it required significant cuts in retirement benefits and heavy borrowing during the transition to the private system.

MSNBC covered it back then subtitled “How credible are President Bush’s dire predictions?”, “By exaggerating the severity of Social Security’s problems, Bush risks alienating even many of those who might be inclined to support [his plans]“. ““In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes,” Bush said.  That is just plain wrong.”   Well it was wrong, it will happen two years earlier.   At least they got that part right.

Update 8/5: Social Security in the red in 2010. They were off by a mere 6 years in a 6 year prediction from less than 6 months ago.     But that is ok,  “The deficit will last through 2011, then an improving economy [emphasis added] will put it back into balance for three years, then it will dip back into the red in 2015, the actuary said.”  So we have nothing to worry about.  These “experts” obviously know what they are talking about.

This alone proved to me that the Democrats and the President were not being truthful.   They continue to try and shoot down the [...]]]> When it gets too hard to dig through all of the spin on both sides, I tend to take a step back, read the actual bill and act on common sense.

This alone proved to me that the Democrats and the President were not being truthful.   They continue to try and shoot down the argument that this is a public takeover of health care by stating that if you like your coverage you can keep it.   That may be technically true.  Only your existing coverage of choice will be allowed BY LAW.  You don’t dare change to another plan of your choice or enroll “any individual”.   Does this mean adding your spouse after marriage or a job loss or a change to add a new child?  You would have to believe that they count as “individuals”.  So this will force millions of people out of plans they like and into government mandated coverage.  Especially, younger more dynamic families and those switching jobs.  In today’s economy that is tens of millions of people.

SEC. 102. PROTECTING THE CHOICE TO KEEP CURRENT COVERAGE.

(a) GRANDFATHERED HEALTH INSURANCE COVERAGE DEFINED.—Subject to the succeeding provisions of this section, for purposes of establishing acceptable coverage under this division, the term ‘‘grandfathered health insurance coverage’’ means individual health insurance coverage that is offered and in force and effect before the first day of Y1 if the following conditions are met:

(1) LIMITATION ON NEW ENROLLMENT.—

(A) IN GENERAL.—Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day of Y1.

Next major element of contention is the budget neutrality released by the CBO.  Very confusing how this ratings are controlled but one element jumped out at me.   The cost is 950Billion and this will “save money” because they are raising taxes by over 300billion and shaving Medicare payments to doctors by 500billion.     This leaves very little room for the actual payments of premiums.   The fact that premium payments will be far less than tax increases (on only the rich) and cutting payments to doctors for services rendered.   It sounds a lot like redistribution to me.

Add to this that the house already passed a bill to reverse the cuts in payments to doctors (a costs of $247billion).  It is stuck in the Senate which I guess gave them the ability to count that $247Billion as savings because they technically have not yet reversed it.  That bill alone will reverse the budget neutrality of the bill.

In summary; three facts that should show you there is no way this bill should pass.

1.  Keeping your own coverage is very limited and will force millions of people to buy government mandated plans.

2. It is supported primarily by redistribution of wealth and not a lower cost plan or a cost savings plan.

3. To be budget neutral it relies on future cuts in benefits, payments and tax increases.  All items that they are unlikely to pass in a hostile political environment.