Dire consequences of taking away Obamacare subsidies

The NYTs has it right. All of the following are likely if the SCOTUS rules against tax subsidies in federally run exchanges. But here is the thing, beyond all the undesirable consequences lies the fact that Obamacare is a house of cards waiting to crumble now or in the years ahead. You see, none of this would be an issue if health care had been truly made “affordable.” Easier said than done of course.   Instead as you can see, the entire system is now based on tax subsidies. Individuals, health care delivery systems and even the state’s are now dependent on a system of transfers and taxes.  

If we think we have a problem now, what about the long term issues as health care costs continue to rise and millions more Americans receive subsidies? 

And then there is this less obvious, but very significant consequence. We have created a system with disincentives for many Americans to earn more lest they then lose their subsidies and hence health insurance again becomes unaffordable. Once again we have trapped great segments of the middle class at the same time we cry out against inequality. It’s really quite ironic is it not?😡 

Excerpt from the New York Times 3-8-15 “State economies would suffer, insurance markets would be disrupted, millions of people would lose coverage, hospitals and insurance plans that have counted on revenues from newly insured people would be left high and dry, and people who continue to hold policies would pay a lot more for them. The health care markets in which individuals and families buy their own policies — on the exchanges and outside them — would fall into chaos.

With subsidies no longer available, the younger, healthier and less costly people to insure would decide to go without insurance, and insurers would be forced to jack up their premiums for the remaining people, likely sicker and requiring more health care. That would trigger a so-called death spiral that would cause more people to drop out and rates to rise even higher, making things worse than they were before the reform law was enacted.

Those who can pay for insurance would face much higher premiums, as high as 47 percent more on average, according to a RAND Corporation analysis, and would most likely have a smaller choice of plans and networks of doctors and hospitals.

Important segments of the health care system would be gravely damaged. As Stuart Butler, a leading conservative analyst, has noted, hospitals and insurance companies redesigned their business models to meet the needs and incentives of the Affordable Care Act on the assumption that they would be getting hordes of new patients who were once previously uninsured.

Hospitals that hired lots of health care workers to meet the anticipated demand would presumably have to lay them off. Insurers that set their rates on the assumption of high volume would have to recalibrate them and might leave the market. Trade groups for both hospitals and insurers have urged the Supreme Court to retain the subsidies.

State economies would suffer with the disappearance of the huge federal subsidies that help insure people; state governments would see reduced tax revenues when health care providers and insurers lose business. The two hardest-hit states would be Florida, where the subsidies bring in about $400 million a month, and Texas, which rakes in about $200 million a month, according to a senior economist at the RAND Corporation. That translates over the course of a year into billions of dollars in those two populous states.”