Blog | Tuesday, April 30, 2013

Obamacare fee will cost you

Americans are learning of a new fee attached to Obamacare. This fee is expected to rake in $25 billion over three years, and many corporations aren't happy. Millions of dollars could flow from major companies into government coffers if the fee is implemented as planned. The cost? Sixty-three dollars per person per year.

Given that most employers would pass the fee onto employees, that would add $63 (probably pre-tax) to a yearly insurance bill. That works out to about $2.50 per pay period for me.

And what does this exorbitant fee get us?

The fee is meant to offset the cost of insuring people with medical problems. Since Obamacare demands that insurance companies take everyone, not just the healthy, the cost of providing insurance will go up. Let's step back and examine the premises here.

Obamacare is not health care reform as such. It's insurance reform. Rather than changing the basic structure of health care in the U.S., it aims to create better access to insurance, especially for people who traditionally have been hard to cover.

Health insurance takes a pool of money from premiums and uses it to pay medical bills. For-profit insurance companies get to keep the leftovers, so it's in their best interest to minimize how much they pay out. One way to do this is to insure the healthiest people possible. This is why they would like to exclude pre-existing conditions.

If we ask insurance companies to insure everyone at affordable rates, we have to make it worth their while. The new fee would help offset the cost of caring for people with expensive, pre-existing conditions.

Arguments against the fee come in a few flavors. Employers, who provide most working people with insurance complain that they are paying someone else's bill, and they are. The cost to individual workers is negligible, so why whine?

This money will essentially flow right into insurers pockets through a government run fund. We could argue that paying insurance companies to administer these plans is a gift, a government subsidy. I would agree with that, but insurance reform rather than health care reform is what we as a nation have chosen.

One way or another we have to pay for health care. Right now the uninsured are paid for by all of us as they rack up unpaid charges at emergency departments and clinics. This fee appears to make it more explicit, and to spread the pain fairly evenly. In the system we've chosen, this doesn't seem like such a bad deal.

But if I read about insurance executives holding meetings in Bora Bora, I'm going to be rather annoyed.

Peter A. Lipson, ACP Member, is a practicing internist and teaching physician in Southeast Michigan. After graduating from Rush Medical College in Chicago, he completed his internal medicine residency at Northwestern Memorial Hospital. This post first appeared at his blog at Forbes. His blog, which has been around in various forms since 2007, offers "musings on the intersection of science, medicine, and culture." His writing focuses on the difference between science-based medicine and "everything else," but also speaks to the day-to-day practice of medicine, fatherhood, and whatever else migrates from his head to his keyboard.