Obamacare

by Dr. S. Russell Vester, MD 26. October 2013 13:56

Dr. S. Russell Vester

Obamacare is very much in the news right now. It appears to be THE hot button issue of this year's upcoming elections. People know that the provisions of Obamacare are far reaching. What appears to be missing is a clear understanding of exactly what's coming. To help with this absence of factual information I thought I'd let you know what you can expect from Obamacare starting in 2011. Remember, the total impact of this bill is set to be phased in over many years with the phase-in concluding in 2018. The most sweeping aspects of the bill don't roll out until after 2012. Surprisingly, this would coincide with happening after President Obama's supposed re-election. I'm sure this is just a coincidence.

So what can we expect next year? One thing that is going to happen is that over-the-counter medications will no longer be eligible to be paid for from money in health-related savings accounts unless they are covered by a doctor's prescription. These savings accounts include HSA's (health savings accounts), FSA's (flexible savings accounts), HRA's (health reimbursement accounts) and MSA's (medical savings accounts).

Let’s sort through this. For example, to get a doctor to write a prescription you would need to go to his or her office and see him or her in person or ask him or her by phone to call a prescription in for you. Neither of these services will be free and will add substantially to the cost of the aspirin or vitamins or whatever it is you wish to buy. Hence you won’t do that and will just pay for the medication out of your own pocket because it is now cheaper and more convenient to do so.

Health-related savings accounts were designed to give individuals some skin in the game regarding the cost of their health care. What you didn't spend you would ultimately get to keep. This gives you a big incentive to be frugal and carefully evaluate what you were buying for your and your family's health care. Additionally, the accounts are typically funded with your pre-tax dollars taken from your paycheck.

Starting in 2011 using your pre-tax healthcare savings account dollars to pay for the most common things most folks spend healthcare dollars on (i.e. - over-the-counter medications) will be, from a practical standpoint, impossible. Yes, you could do it, but virtually no one will. It is now too difficult.

Americans spend somewhere between 5 and 10 billion dollars each year on over-the-counter healthcare expenses. Those with health-related savings accounts used to be able to use cheaper pre-tax dollars from their accounts to cover these expenses. Now they can't. Now they will use after-tax dollars like everyone else. Therefore these individuals and families have just had their healthcare costs go UP. Not down. Hundreds of millions to billions of dollars of expenses have now been shifted back to well-intentioned individuals' back pockets.

Thus their healthcare-related savings accounts have been devalued.

Come November 2nd, go to the polls and tell us all if you think this is good or bad.

Comments (1) -

Bob
Bob
11/9/2014 11:28:11 AM #

By the time we have this figured out it is going to be de-funded or dismantled then were going to have to analyze it again!  Great write up though!

Comments are closed


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