How Obamacare Hurts Its Beneficiaries: Two Vignettes
Last week, the mainstream media ran two stories about two Obamacare “beneficiaries” who were actually victims.
The first was about a woman whose husband was already extremely sick, and was subject to the risk of being unable to buy health insurance in the individual market if he lost his employer-based benefits. That was a legitimate problem before Obamacare. My proposed solution is health-status insurance, or “insurance against becoming uninsurable”—a type of re-insurance. Obamacare’s solution is a federally regulated health-insurance bureaucracy:
The transition to Obamacare – at least for a 59-year-old man and a 56-year-old woman in south Orange County – wouldn’t be quite that bad. But it would be, in three big ways, far rougher and more frustrating than I’d ever dreamed.
1. Obamacare brought us new health insurance options, but cost us our more affordable plans.
2. We learned patience, but we couldn’t keep our doctors.
3. The Affordable Care Act saved us money this year, but it didn’t alleviate our concerns about obtaining affordable medical care.
The second story involved a woman explaining how Medicaid, expanded by Obamacare, “forces families like mine to stay poor.” Her pregnant sister-in-law suffered a tragic car accident, and fell into the social-safety net:
After the birth, Marcella would have been able to join the university’s student health plan. The baby would be covered by the Children’s Health Insurance Program, the federal-state plan for lower-income children. Marcella and Dave thought they were all set. And then, with the accident, they fell down the social assistance rabbit hole.
At first I thought I would be a great help to Marcella and Dave as they negotiated this web of programs. After all, I’d been teaching and writing about social policy for years, first at Harvard and then at MIT. But I was soon humbled by how immensely complicated the programs are on the ground, and shocked by how penurious. The programs that Marcella now needs as a quadriplegic have helped her in many ways, but have also thrust her, my brother, and their young son into poverty, with little hope of escape. Until this accident, I did not realize the depth of the trap.
And this is not just the story of one family hit by tragedy. Millions suffer under such program strictures and limitations. Between ages 25 and 65, two-thirds of Americans will live in a household receiving means-tested benefits, according to sociologists Mark Rank and Thomas Hirschl.
This “poverty trap” is a consequence of very high effective marginal income tax rates, caused by the loss of benefits as household incomes increase, which incentivizes people to keep their incomes low.
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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.