Get Ready In Neonatal ICU When ‘Affordable Care’ Is Born

There are nine months left until most of the important provisions of the Affordable Care Act go into effect.

That’s enough time to make a perfect, brand-new human being from scratch. But we know the health care baby that will arrive on New Year’s Day is not going to be perfect; the best we can hope for is that it will not have life-threatening congenital defects.

Regular readers of this blog will be unsurprised to learn I am not optimistic.

I have written many times about the oncoming legislative train wreck the Affordable Care Act represents. As 2014 approaches, the realities of the law’s provisions are becoming clear to all except those who are most stubbornly clinging to the wishful thinking that substituted for sensible health care reform.

Information is gradually trickling out that points to large, and possibly massive, premium increases for the individuals and small groups – for example, entrepreneurs and professionals like architects and lawyers in sole practices – who will buy their coverage on the new exchanges. These increases will vary in size, of course, both by insurance company and region. The best guesses for rate hikes currently hover between 30 and 40 percent. But in California, UnitedHealthCare warned its agents in December to expect raises of up to 116 percent in the individual market, with most of that figure directly due to the new law. This scenario may be an outlier, but there is no way to be sure yet.

Backers of the act say even the more moderate predicted consequences are overblown and unrealistic. They, in all likelihood, are still in denial. “We’re talking about a small sliver of the population that’s going to be affected,” Larry Levitt, senior vice president with the nonprofit Kaiser Family Foundation, told Cox Newspapers. Yet this “sliver” is largely composed of people the law was supposed to help – individuals without employer-provided coverage and employees of the small businesses that cannot offer the choice and value of larger employer-negotiated plans.

The new health care exchanges are supposed to open in just seven months. Yet just this week, the administration announced that in the 33 states where Washington will be running or helping to run exchanges, small-group employers are likely to have no choice of plans until 2015 at the earliest. Like Henry Ford’s Model T, small groups can get any color of coverage they want, as long as it’s black.

Worse, the competition that the administration promised will hold down prices may simply not show up, even once the exchanges are up and running. Insurers are hardly in a hurry to craft a variety of plans which will all cost more than consumer advocates hoped, and which will accordingly give insurers a fresh batch of PR headaches.

In states where the exchanges are not waiting for federal support, such as Minnesota, insurers are also saying they may not be able to make deadlines for submitting plans for state approval.

Even exchanges that offer several choices may find that all are priced so high that young, healthy individuals and employees would rather pay the relatively modest and poorly enforced penalty for remaining uninsured. The entire point of focusing on universal coverage is to control costs by spreading them among a large pool of policyholders, including those who are likely to need little in the way of care. But those are the very same people who are more apt to go without coverage if premiums rise too high.

The Affordable Care Act is here. It isn’t going to go away any time soon, if ever. And while I never had high hopes for this law, I take no satisfaction in seeing the country’s health care delivery system made worse than it already was. Unfortunately, as the future becomes clearer, this is the logical outcome of a system that relies on private insurance but which has undermined the economics of such insurance at every turn.

This baby is going to spend a lot of time in neonatal ICU, I fear, before it even stands a chance of thriving on its own.

About Larry M. Elkin 564 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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