Here are some facts about Obamacare.

I didn’t write this post. Everything beyond this paragraph came from Reddit. But I did serve on a working group for the Connecticut State Legislature on the topic and I believe it to be factually accurate.

What people call “Obamacare” is actually the Patient Protection and Affordable Care Act. However, people were calling it “Obamacare” before everyone even hammered out what it would be. It’s a term mostly used by people who don’t like the PPaACA, and it’s become popularized in part because PPaACA is a really long and awkward name, even when you turn it into an acronym like that.

Anyway, the PPaACA made a bunch of new rules regarding health care, with the purpose of making health care more affordable for everyone. Opponents of the PPaACA, on the other hand, feel that the rules it makes take away too many freedoms and force people (both individuals and businesses) to do things they shouldn’t have to.

So what does it do? Well, here is everything, in the order of when it goes into effect (because some of it happens later than other parts of it):

Already in effect:

• It allows the Food and Drug Administration to approve more generic drugs (making for more competition in the market to drive down prices)
• It increases the rebates on drugs people get through Medicare (so drugs cost less)
• It establishes a non-profit group, that the government doesn’t directly control, to study different kinds of treatments to see what works better and is the best use of money.
• It makes chain restaurants like McDonalds display how many calories are in all of their foods, so people can have an easier time making choices to eat healthy.
• It makes a “high-risk pool” for people with pre-existing conditions. Basically, this is a way to slowly ease into getting rid of “pre-existing conditions” altogether. For now, people who already have health issues that would be considered “pre-existing conditions” can still get insurance, but at different rates than people without them.
• It renews some old policies, and calls for the appointment of various positions.
• It creates a new 10% tax on indoor tanning booths.
• It says that health insurance companies can no longer tell customers that they won’t get any more coverage because they have hit a “lifetime limit”. Basically, if someone has paid for life insurance, that company can’t tell that person that he’s used that insurance too much throughout his life so they won’t cover him any more. They can’t do this for lifetime spending, and they’re limited in how much they can do this for yearly spending.
• Kids can continue to be covered by their parents’ health insurance until they’re 26.
• No more “pre-existing conditions” for kids under the age of 19.
• Insurers have less ability to change the amount customers have to pay for their plans.
• People in a “Medicare Gap” get a rebate to make up for the extra money they would otherwise have to spend.
• Insurers can’t just drop customers once they get sick.
• Insurers have to tell customers what they’re spending money on. (Instead of just “administrative fee”, they have to be more specific).
• Insurers need to have an appeals process for when they turn down a claim, so customers have some manner of recourse other than a lawsuit when they’re turned down.
• New ways to stop fraud are created.
• Medicare extends to smaller hospitals.
• Medicare patients with chronic illnesses must be monitored more thoroughly.
• Reduces the costs for some companies that handle benefits for the elderly.
• A new website is made to give people insurance and health information.
• A credit program is made that will make it easier for business to invest in new ways to treat illness.
• A limit is placed on just how much of a percentage of the money an insurer makes can be profit, to make sure they’re not price-gouging customers.
• A limit is placed on what type of insurance accounts can be used to pay for over-the-counter drugs without a prescription. Basically, your insurer isn’t paying for the Aspirin you bought for that hangover.
• Employers need to list the benefits they provided to employees on their tax forms.

8/1/2012

• Any health plans sold after this date must provide preventative care (mammograms, colonoscopies, etc.) without requiring any sort of co-pay or charge.

1/1/2013

• If you make over $200,000 a year, your taxes go up a tiny bit (0.9%)

1/1/2014

This is when a lot of the really big changes happen.

• No more “pre-existing conditions”. At all. People will be charged the same regardless of their medical history.
• If you can afford insurance but do not get it, you will be charged a fee. This is the “mandate” that people are talking about. Basically, it’s a trade-off for the “pre-existing conditions” bit, saying that since insurers now have to cover you regardless of what you have, you can’t just wait to buy insurance until you get sick. Otherwise no one would buy insurance until they needed it. You can opt not to get insurance, but you’ll have to pay the fee instead, unless of course you’re not buying insurance because you just can’t afford it.
• Insurer’s now can’t do annual spending caps. Their customers can get as much health care in a given year as they need.
• Make it so more poor people can get Medicare by making the low-income cut-off higher.
• Small businesses get some tax credits for two years.
• Businesses with over 50 employees must offer health insurance to full-time employees, or pay a penalty.
• Limits how high of an annual deductible insurers can charge customers.
• Cut some Medicare spending
• Place a $2500 limit on tax-free spending on FSAs (accounts for medical spending). Basically, people using these accounts now have to pay taxes on any money over $2500 they put into them.
• Establish health insurance exchanges and rebates for the lower-class, basically making it so poor people can get some medical coverage.
• Congress and Congressional staff will only be offered the same insurance offered to people in the insurance exchanges, rather than Federal Insurance. Basically, we won’t be footing their health care bills any more than any other American citizen.
• A new tax on pharmaceutical companies.
• A new tax on the purchase of medical devices.
• A new tax on insurance companies based on their market share. Basically, the more of the market they control, the more they’ll get taxed.
• The amount you can deduct from your taxes for medical expenses increases.

1/1/2015

• Doctors’ pay will be determined by the quality of their care, not how many people they treat.

1/1/2017

• If any state can come up with their own plan, one which gives citizens the same level of care at the same price as the PPaACA, they can ask the Secretary of Health and Human Resources for permission to do their plan instead of the PPaACA. So if they can get the same results without, say, the mandate, they can be allowed to do so. Vermont, for example, has expressed a desire to just go straight to single-payer (in simple terms, everyone is covered, and medical expenses are paid by taxpayers).

2018

• All health care plans must now cover preventative care (not just the new ones).
• A new tax on “Cadillac” health care plans (more expensive plans for rich people who want fancier coverage).

2020

• The elimination of the “Medicare gap”

Politicians face this dilemma in a slightly different form. Can they take a stand for something that most of their constituents want, even if it means alienating the few who contribute funds that get them elected? You can see by the declining approval ratings and by polls on individual issues that congress is often acting against the views of the majority in favor of the views of the money.

Lawrence Lessig calls this corruption – though as he notes – not in the sense of illegal bribery. But in the sense that it forces legislators to be dependent not on “the people alone” as the framers of the constitution intended but to depend also (or perhaps even more so) on funders not just voters.

He has a very interesting solution. Fund congressional campaigns with public money, in the form of vouchers that you could spend for which ever candidate you want. Make that money big enough, he says, and couple it with a restriction that candidates can’t take cash contributions of more than $100 and you’ve got a real incentive for Senators and Representatives to work for “the people alone”.

I think he’s got a point. That’s why I’ve taken the anti-corruption pledge. You can take the pledge too.

Here’s an interesting graphic of how much it cost to run for congress and who pays.

And the best explanation of Lessig’s solution and why transparency of donations won’t solve the problem is in this video and this one (14 minutes total) of Lessig talking with Jon Stewart.

Long time readers know I don’t talk much about politics in this blog and when I do it’s to point out the connection between politics and business. I can’t think of a more important connection than corruption.

I visited Zuccotti park on Sunday (Oct 16, 2011) and it brought back memories of marching against the Vietnam war in the 60’s – and yes, despite the fact that I remember the 60’s I really was there. In once sense the message was the same – Power to The People. A group feeling cheated and wronged were trying to change the course of those in power. But there were differences as well. Here are some random thoughts about those differences.

Conversations

I hear a lot of complaints that OWS (Occupy Wall Street) is unfocused and needs a more succinct list of demands.  I disagree. I think the lack of simple demands engenders a lot of conversation. And conversation was one thing that impressed me on at Zuccotti park. People were talking to each other. For the most part, the protesters were engaging others – media, tourists and just curious folks in conversations about what they believed. And the lack of a consistent message kept those conversations going because everyone I heard talk was there for a slightly different reason.

This contrasts sharply with my recollections of the “peace” marches in which I participated in the 1960’s. We were marching for peace against the war, but our rhetoric and behavior was anything but peaceful. We chanted slogans at people rather than talk with them.

Concern

The people in Zuccotti park showed a lot of concern for others. The place was cluttered but clean, their own sanitation department was organized to keep it that way. Even  flower beds were fenced off and people were respectful of that.  This contrasts markedly with my recollections of anti-war protestors looting stores and vandalizing property back in “the day”. I saw a man with tattoos all over his face reach down with a rag in his (bare) hand to wipe up dog urine while keeping others from stepping in it.

On what appears to be the “official” OWS site, they are talking about first aid just 1 minute into the 7 minute video.

Amenities – a strange word to use in a situation like this, but I can think of none better – ranged from a food line where anyone who wanted to could get a meal to a people’s library. There were probably a dozen buckets holding over a hundred books and even chairs set nearby so folks could read. Someone was even handing out blank calendar booklets

COPS

There were cops. Lots of them. But mostly I saw them just standing around. The only people I heard them admonish were the tourists. They had put up barriers to distinguish the park from the sidewalk and if you were on the sidewalk side, you had to keep moving. If you wanted to stop, you had to move inside so as not to block the walk way.

I’ve seen the videos and read reports of beatings and arrests. So I know terrible things happened. But none of the occupiers (or cops for that matter) seemed to hold a grudge the day I was there.

Violence

I saw none.  I know there had been some by authorities against the protesters. But there’s much less violence from either side than I remember from the 60’s.  I’m aware of the front-page picture of the man tackling a cop.  but I’m also aware that seems to be the exception rather than the rule. When I marched in Washington DC against the war, protestors openly looted from local stores and trashed the place, and it was almost expected we’d get tear gassed – and we did. The tone was far from peaceful when I marched but it was on Sunday.

Outcome

I hope it’s a renaissance – a re-ignition  of the idea that our society functions best for those at the top as well as the bottom when the top and bottom are not so far apart. Even the IMF seems to think so. Hell, Eric Cantor is even pandering up to the idea. I doubt he’s sincere but one of the things that happens when people stake out a claim like OWS is it moves the conversation in that direction.

]]> https://ceobootcamp.com/the-end-of-capitalism/ https://ceobootcamp.com/the-end-of-capitalism/#respond Wed, 31 Jan 2007 22:45:53 +0000 http://thesmallbusinesscoach.com/blog/2007/01/31/the-end-of-capitalism/ Maybe. Ben Stein worries. (Yes – the Ben Stein from Ferris Beuller’s Day Off – he’s a legitimate economist). Check out this article.

Are Health Care Costs a Problem for Your Business?
What the article doesn’t mention is how this problem affects business. I see several effects. One is that companies who can locate across the border will. A car plant in Ontario has significantly lower health costs than one in Michigan. Along with those jobs go all the business it sends to sub contractors etc.

Another is that it forces companies to compete on performance – not if their work force has too many pre-existing conditions which could raise your costs or lower that of your competition.

A third is that having healthier customers who live longer and don’t spend as much on health care is probably a benefit to more companies.

Takeaways:

• This is a problem with a political solution. I know it won’t be easy since it cuts across many deeply held beliefs. But sometimes the facts need to win out over the comfort of a deeply held belief.

[Note: My policy in this blog is only to discuss politics in the context of how it affects business.]

The traditional stand of pro-business thinkers is that anything the government does that costs them money is bad. That is way too short sighted for success. Here’s why. Anything you spend money on has a cost and also a benefit. The trick to a successful business is to spend money on those things that benefit your company and not on the other stuff. We know this when it comes to investing in equipment, advertising, training and that Lexus you drive (I’m sure it brings in a lot of sales). We know this because we can see the benefit directly connected to the investment.

Henry Ford knew this when he doubled – DOUBLED – the wage in his factories. Why? Because he as he said, cars don’t buy cars. In doing so, he was able to recruit and retain a better work force and more importantly, allow more people to buy his product, In effect he spent a little money to create a bigger market.

However, when the government makes us incur a cost we don’t always see the benefit so directly. That doesn’t mean there isn’t one. And of course just because the govt is spending money doesn’t mean there is a benefit – at least not one you and I enjoy. I know politicians can be stupid, selfish and corrupt.

My point is we have to look beyond the cost to see if the benefit is really there or not. And if it is, we have to make sure the money is well spent. If we do that, the government is in a unique position to help business. And by unique I mean no other institution on the planet is in a position to benefit your business like the government. Too bad we’ve had such jerks running the place. If you want more on this and like to read, check out Wealth & Democracy by Kevin Phillips.

Let me give you some examples. Obviously these are generalities and the devil is in the details.

Minimum wage. If you sell to normal people – not just the ultra rich, your company will do better if your market has more money to spend, and if they are able to make a decent living. A situation where the average CEO pay is a gazillion times more than the average worker is bad for most businesses. But left to their own devices, what board of directors would curb that? In fact you can argue that without a regulation that makes them pay everyone a fair wage, they’d be doing their shareholders a disservice to do so and put themselves at a competitive disadvantage. But with such a regulation that applies to everyone, they can be profitable in a situation where their customers are better off – and that’s good for business.

Health Care. If your customers and employees are sick, afraid they’ll be bankrupt if they get sick or in fact are bankrupt because a family member got sick that is bad for business. Health care costs somebody money. If you want to be “nice” or feel like you can get better workers if you spend some of that money fine. But if you’re in competition with someone who doesn’t, then they will have a lower cost basis than you and make it hard for you to compete in the market place. So, if done right, there should be a benefit to spreading the cost of health care in some even fashion so we all get the benefit. And have you noticed that compared to other countries we don’t get nearly the bang for the buck in this area that we could?.

The environment. Hasn’t anyone in power read The Tragedy of the Commons? You want protection from guys like Harry or they’ll put you out of business.

Alternative energy. What could be a more stupid waste of government money than to subsidize the oil industry? I’m talking direct subsidies as well as the security costs of propping up despotic regimes who happen to be built on oil fields. (No, I don’t mean Texas.) Look at the economic benefit this country got from a 10 year commitment of government spending to put a man on the moon.

We need the same kind of effort to develop alternative fuels that will allow us to be energy independent and environmentally beneficial. If we put our American ingenuity behind it (before someone else does) we’ll get the side benefit of developing a whole lot of high paying jobs in this country, and a lot of cool technology we can sell to the rest of the world. That would be a lot better use of the national debt than lowering Paris Hilton’s taxes.
Takeaway:

• My main point is that when it comes to political positions, the “traditional business thinking” is often bad for business.

This hurts business in two ways – the added costs we have to charge make it harder to sell but don’t profit us any. And the added costs we have to pay decrease our bottom line. And who benefits? Not you, not your customer. Exxon is the one with record profits last quarter. But I don’t blame them (at least not for that). This is a problem with political roots. The world system of depending on oil has to change. And this kind of thing has happened before. Europe was powered (or at least heated) by wood hundreds of years ago till they burned all the forests down. So they figured out how to use coal till oil was put to use.

We knew this was coming and decided to go for short term, immediate comfort/profit rather than long term gain. Some of you are old enough to remember gas lines and no-gas-on-Sundays back in 1973. Then President Carter proposed we allocate some resources to developing alternative fuels and to conservation. As a country we didn’t really give it anything but lip service.

And we went back to business as usual. We justified it by taking comfort in those intervening years when oil was $10 a barrel. But that just allowed us to wallow in our denial. Even at $10 a barrel, oil pollutes the atmosphere. We enjoyed our denial about the environmental effect of oil addiction. And our denial about the control over our economy we were giving to foreign leaders who weren’t (and aren’t) exactly working in our bests interests – either economically or in terms of our values: freedom, democracy, human rights etc.

So we played along, ignoring the obvious consequences of our action (or inaction) and now we’re shocked, SHOCKED! that we have to pay 75% of what the rest of the world pays for gas instead of the 50% we’re used to paying. Just wait till we have to pay as much as Europe has been paying for years. And I’m just counting the pump price – not the price in lives lost to air pollution, or war, or _____________ (you fill in the blank).

But it’s human nature to go for short term solutions instead of long term ones. Somehow we believe that going for the long haul makes it less pleasant in the present. And it’s true in many areas (weight loss, quitting smoking, saving for a car instead of borrowing for one). But here’s the real tragedy. It’s not always true in business.

We’ve all read about companies that were forced to put restrictions on their pollution output only to find they could make a profit from chemicals they recovered. Or that were forced to treat employees better only to find they got improved productivity or lower turn over. Is it really so hard to believe that had we put as much effort into energy conservation and alternative fuels in the 1970’s as we did toward the moon shot in the 1960’s that not only would we be better off now, but we’d have been better off by 1976 (say) and the 1980’s and 90’s would have been even better than they were? Carter of course wasn’t as personable as JFK so it was harder for him to get support. Jimmy seemed more of a wimp to us than Jack (or Ronald). And it’s un-American to follow wimps – even when they’re right.

Can you imagine the new products and technologies American ingenuity would have developed? How many high paying jobs that we would have created? How much better our air and water and global warming situation would be? How much it would have affected our trade balance to be exporting that kind of stuff all over the world? Not to mention the effect on peace, if the oil producers had been made as economically and politically impotent as say the buggy whip industry?

Instead we took the short term route and look at the fine mess we’ve gotten ourselves into. It doesn’t take much to figure out which politicians are trying to prolong the status quo when it comes to oil, the environment etc. Unfortunately the ones who want to change things don’t show enough balls or leadership as I’d like to see. But let’s support them anyway. It may be too late, but our only hope is to vote and work as if it’s not.

Takeaways: The political takeways are the same as the business takeaways.

• Vote for (and support) leaders with a vision for the future that’s based on facts – not someone with a nice personality.
• Don’t ignore the facts because they are unpleasant and the consequences aren’t immediate.
• Don’t assume that working for a long term solution – one that’s supported by the facts and the science, even if unpopular – will always mean a long time of sacrifice. You have to be willing to sacrifice for the truth, but when you are, it might turn out better – sooner than you think.
• There’s a real problem with how most businesses think they are affected by politics. It’s too short sighted and hurts them in the long run.