I have been saying Obamacare is going to fail long before the bill was passed into law. Obamacare will fail because of multiple system design defects.
I would hate to believe these defects were built into the system purposefully.
It was done to prove that free market forces do not work. The Obama administration created a “not so free market”. These not so free markets have been proven to fail over and over again.
It seems logical that given the $1 trillion dollar a year deficits of the Obama administration, someone, somewhere would be interested in decreasing the deficit spending.
None of the increased government spending has improved the economy, decreased unemployment or decreased uncertainty.
The computer system defects in the health insurance exchanges are much deeper than the sound bite treatment they getting from the Obama administration.
The task of integrating 40-50 year old legacy computer systems is an extremely difficult task using 50-year-old software.
Information technology experts have told me that the health insurance exchange computer sign up system (healthcare.org) is months to years away from getting the health insurance exchange information system fixed.
It should be destroyed after spending $634 million dollars and redone using modern technology.
The verification of people who qualify for government subsidies is being dropped. The patient’s word about need is being accepted in lieu of verification.
This is a tremendous glitch in the system, opening the system to tremendous fraud and abuse. It is not a way to run a business.
John McAfee former CEO and founder of McAfee antivirus said the health insurance exchange web site is a hacker's wet dream. The You Tube explains why he came to this conclusion.
Poor patients who might qualify for the Obamacare tax credits do not pay income tax. Therefore they have no income to apply a tax credit against.
The administration has dropped word tax credit. It is now called a subsidy. The law’s tax credit will be given to the healthcare insurance company selling the insurance.
This is a “glitch.” The law was written to pay the states for those who qualify for a tax credit. A Washington D.C. ruled that the case by states against Obamacare has merit.
The states contend that persons’ insured through the federal government exchanges do not qualify for federal tax credits. Only states can receive and distribute the tax credits.
The law was reinterpreted by the Obama administration without the consent of congress.
Another “glitch” is that the healthcare insurance industry is given limitless power to collect money from the Treasury. The mechanics are not transparent.
“The Affordable Care Act may give health insurance companies a virtually limitless power to tap the U.S. Treasury, thereby lifting insurers' profits to undreamt-of heights. This power derives from the mathematical formula for calculating individual subsidies.”
The mathematical formula for calculating the subsidies will cause America’s deficit to skyrocket further each year.
President Obama told America that Obamacare would bend the cost curve downward and provide an efficient cost effective healthcare system for all.
Let us look at the payment formula. A family of four earning $30,000 year will not pay more than 2% a year for healthcare insurance ($600/year). This makes the Accountable Care Act (Obamacare) affordable for the poor (maybe).
If the premium of the healthcare insurance policy obtained by this poor family costs $10,000 a year through the health insurance exchange the federal government will pay the remaining $9,400 in the form of a tax credit to the insurance company.
Originally, it sounded like the family would get a tax credit after the family paid $10,000. A family making up to $40,000 a year does not pay any taxes and therefore a tax credit is worthless.
The wording was changed from a tax credit to a subsidy. The tax credit now goes to the healthcare insurance company providing the insurance policy.
The tricky thing about all this is the insurance industry’s tax credits reduce the governments tax receipts and increases the insurance companies net profit.
The net effect is an increase in tax-free income from the federal treasury.
The government collects less income tax from the insurance company.
The Obama administration has given the healthcare insurance industry a huge tax break. The tax break will increase the industry’s bottom line profits.
Obamacare has permitted the insurance company to have a Medical/Loss ratio of 80/20. The Medical/Loss ratio means that the healthcare industry must spend at least 80% of the insurance premiums collected on direct medical care.
If it only spends 75% on direct medical care, the healthcare company must give provide a 5% rebate.
Here in lies the rub. The Obama administration has let the healthcare insurance industry define direct medical care.
- The cost of verifying the credentials of doctors in its networks.
- The cost of ferreting out fraud such as catching physicians over testing patients or doing unnecessary operations.
- The cost of programs such as help desks that keep people who have diabetes out of emergency rooms.
- Some insurers have insisted that typical business expenses are included — such as sales commissions for insurance agents and taxes paid on healthcare insurance companies investments
Each one of these "direct medical care expenses" has an added on profit included in the direct medical care expense category.
This is the way the healthcare insurance industry takes 40-60% of each premium off the top and leaves only 40-60% of healthcare dollars for direct medical care.
Next year the healthcare insurance company will be permitted to raise the healthcare insurance premium of a poor family to $12,000. Its excuse will be that it is losing money.
If the premium is not raised the healthcare insurer will quit providing the insurance. The government is totally dependent on the insurer whether the insurer provides insurance as it does in the health insurance exchanges or for administrative services as it does for Medicare (a single party payer).
The poor family still makes $30,000 dollars a year and still pays $600 dollar a year for the now $12,000 dollar premium.
The insurance company now keeps $2,400 vs. $2,000 for overhead and profit plus all the profit they can get from the direct care dollars that should really be overhead.
The federal government gives the healthcare insurer a tax credit of $11,400 vs. $9,400.
The poor insurance enrollee doesn't pay a penny more for his healthcare insurance.
The only loser is the American taxpayer who will pay the subsidy in the form of increased taxes.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone
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