Home > Health Insurance > The Pros and Cons of Obamacare-Part I

The Pros and Cons of Obamacare-Part I


Unless you are fortunate enough to live on a secluded tropical island, you are probably aware of the new changes in health care in the US by way of the Affordable Care Act, commonly known as Obamacare.  I wanted to wait a few weeks after the grand launch to see how things would shake out before offering my opinions. I don’t know that I can say one way or another if this plan is what our country needs to get healthcare under control, but I do see some positives and negatives with Obamacare. We’ll start with the bad first so we can finish on a good note!



Cost– For most young  to middle age people who make more then 400% of the poverty level, your insurance premiums will go up because you won’t qualify for any subsidies. I fall into this category. For a family of three, the cutoff is about $78,000 per year. My current insurance policy has a $10,000 deductible and costs $190 a month for myself and our six year old. (Jim has a good plan at his job) We got a letter stating that our plan was “grandfathered in.” That means we don’t have to change plans or experience a large premium increase for 2014. I called to see if our plan could extend longer than 2014, and no one knew. What we have now meets Obamacare standards. Colorado passed a law several years ago that required all insurance plans to cover preventative care at no cost, plus add maternity and drug benefits subject to a deductible, so I’m hopeful our plan can continue. However, I’m also realistic. If the insurance company can cancel our cheap plan and make us enroll in a more expensive one, I’m sure they will.

Now, I guess you can argue that we should be able to afford $400-$500 a month in insurance costs if we had to pick a plan from the health care exchange. Honestly, you’re right. We can afford it, but that does mean taking away money from other areas of our budget or savings/investments. However, if this had been during credit card debt repayment years or if we lived somewhere really expensive, adding a few hundred dollars to insurance costs would be more of a hit.

Confusion-Anything the government does is confusing, and Obamacare is no exception. No one really understands how it works without doing some research, and most people never investigate political ideas before forming an opinion. We live in a pretty conservative area, and I have heard many outcries about how Obama is going to ruin us with this plan. In reality, lots of those crying  are under the subsidy threshold and will be helped by the plan. When that light switch goes on, I think there won’t be as much complaining.

Some Employees Will Get Hours Cut– I know that our city municipality can’t afford to offer health insurance to all of it’s employees. Many of their workers, like the lifeguards at the rec center or the desk clerks at the public library make minimum wage, and their positions don’t include insurance. In order to keep insurance out of the mix, I know the city has cut hours for many employees. That’s really sad to me because anyone making minimum wage is going to qualify for a subsidy or Medicaid anyway, so all you are taking away is wages. I think maybe employer requirements should be based on revenue, not necessarily number of employees. You can have a big employer who doesn’t bring in much money. If you require them to pay for insurance, they are going to have to cut other areas. No CEO is going to take a pay cut, so that means less salary or benefits to employees, probably the ones who are struggling most.

Medicaid Expansion– One huge red flag to me is the huge increase in the number of people who qualify for Medicaid. Medicaid is the government subsidized plan for the lowest income bracket. Generally, you don’t have to pay anything, other than a small copay when you are on Medicaid if you go to a Medicaid provider.

In the past, if you were a child or pregnant woman, it was pretty easy to qualify for Medicaid. If you didn’t fit that demographic, you had to be disabled or blind. If you wanted to sit on your duff all day as a healthy person and qualify for Medicaid, you were not able to. Now you can. It’s solely based on income. I think Medicaid is a great program for those who are in need, but I see lots of potential abuse with income based eligibility.

The other big problem is that Medicaid reimbursement to doctors and hospitals is well below market value. You might argue that market value is too high, and it certainly is in many instances, but providers can’t survive on what Medicaid pays. For example, our normal fee for a child’s vision exam is $100. Medicaid pays $22. As a result we can only see one Medicaid patient a day. From a business standpoint, you can’t cut your profit that much and stay in business. I see providers dropping or severely limiting Medicaid appointments. Everyone might  be covered, but if no one accepts your coverage, it does no good.

There also needs to be limits on how far you can use your Medicaid coverage. In my experience, I’ve seen many instances where people  go to the emergency room because it’s more convenient than making a doctor’s appointment and taking off work. I get that some people don’t have sick days, but charging the government to make health care fit your schedule, even at a reduced rate, is wrong.

Since we are over 900 words already, I’ll save the pros for another post. I really do think there are some good points to Obamacare, so don’t put my in the Debbie Downer camp just yet!

What cons do you see with Obamacare? Do you think Medicaid should be solely income based?

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.


  1. Here in our country we have “Phil Health” it means Philippine Health Insurance it is a governmental health care program. Even the self employed can become a member of this, it has a lot of benefits for the members.

    • I do sometimes envy how other countries seem to do a better job with making health care available and affordable.

      • Here in Canada, its all about how much taxes we pay. We get taxed at a much higher bracket than the US, (I know from experience) and taxes are higher for higher incomes. It is really hard sometimes to swallow a 40% tax bracket! Are people in the US willing to pay more taxes? That is for your nation to decide. I think Obamacare is at least a step in the right direction because it is starting to address the problem.

      • We all have health insurance from the government. I think it is similar to your Medicare or Medicaid. A portion of everyone’s income taxes and sales taxes funds the health care system. Expanding your public health care system would probably be cheaper for everyone in the long run.

        I have never considered NOT seeking medical attention because I couldn’t afford the deductible. What a frightening thought that illnesses would go undetected or untreated because people cannot afford to see a doctor.

  2. Good rundown Kim, thanks. I’m not a supporter of Obamacare in general, but I know that there will be some winners and losers when it’s finally rolling along. From the numbers I’ve seen though, the losers are going to be paying WAY more than they used to be, and the winners only a little bit less. Here’s hoping it gets better!

    • I don’t think that’s true for early retirees with a high net worth but low income. If you have other income producing assets besides W2 wages and can adjust your income below the subsidy level, it’s a wonderful thing for having insurance between the years when you quit working full time and until you hit Medicare age.

  3. I don’t know much about medicaid (or medicare for that matter), but I can comment on the “regular” health insurance sold through the exchanges. I like that you pointed out the confusion aspect to it. The law is definitely confusing. I’ve been working on health care reform-related things for three years now and I still have a ton to learn. I think it was inevitable for rates to go up if you look at the law. The unfortunate thing for Democrats is that most people don’t understand WHY the rates are going up or even expected them to be cheap/affordable. Well, they are cheap for some but relatively expensive for others. Looking forward to part 2!

    • Part 2 will be about that a bit. For people like me who don’t plan on working until age 65, it means more money for a few years, but the ability to have affordable insurance until I hit Medicare age, if Medicare remains viable that is.

  4. I had to write an eBook for a client on Obamacare and up until then I hadn’t taken the time really understand it. However, after I did I found out that it will benefit people like me. Everyone seems to complain about it but then when I explain it to them and how it will benefit them (most of the people I talked to will get a subsidy and cheaper plan) they’re all for it.

    • I know. The lady I wrote a post about a few months ago who was all set on taking the penalty has now realized that the subsidy will make it very affordable for her to insure her family and is excited about the whole plan. I think there is a knee jerk reaction with anything new from the government, but often it’s not as bad as you think. I’m so glad you will be able to have insurance!

  5. I’m currently working on a post about Obamacare and health savings accounts. Basically, to qualify for an HSA in 2014, your plan can only have an out-of-pocket max of $12,500. Well, many of the bronze plans have an out-of-pocket max of $12,700. So, the cheapest plan available to me (at $738 per month!!!) doesn’t qualify for an HSA even though it has a 10K deductible. The out-of-pocket max is $200 too high.
    To be able to use a HSA, I’ll have to buy a more expensive plan.

    Make sense of that.

    • I believe the government likes HSA’s, so I am hopeful they will resolve any issues like that before the end of next year. I expect many changes to health care laws as thing unfold and different people get elected.

      • Well, I dug up more since then (I’m writing about it tomorrow!) Apparently the out-of-pocket limit will be 12,700 next year. But still, some high deductible plans won’t be HSA compatible in 2014 for a reason that no one can explain. In my state, I can only choose from three health insurance options that will allow me to have an HSA. THREE!!! Read tomorrow for the gory details =/

  6. We live in NJ who just passed a law providing automatic minimum wage increases. Combine that with the requirement to also offer health insurance to this population, and watch the jobs disappear and the hours shrink. It amazes me that with unemployment rates so high, legislation is passed which makes it more expensive to employ people.

    • It is a sad but true fact that all these laws designed to help the lower income wage earners are going to get lots of people fired. Big companies are not going to roll over and take pay cuts for the CEO’s and major players. It’s the guy working the counter who is going to get the shaft.

  7. I have a lot of thoughts on why what they’re doing might not work, but I also think the system we have isn’t working. I don’t necessarily think that immediate increases in premiums is a bad thing IF it helps decrease the overall costs in the long-term. I’m not saying Obamacare will do that, just that it doesn’t make sense to me to react as strongly as many people are to the immediate effects. It will take a long time for everything to settle down and for new offerings to come out based on the new market forces. Time will tell whether it’s an improvement.

    • I think that’s a huge issue in this country. Everyone is either politically polarized or listens to news from politically polarized sources, and no one investigates for themselves whether or not things are factual. My neighbors were freaking because they got an email from some organization about how they would have to pay the tax if they sold their homes and were sending checks into the Republicans to try and defeat that provision. I had to send them a link that showed they didn’t have to pay any tax unless they made over $250K per year. They also have no intention of selling their house, but that’s a good example of how political interests can sway people’s opinion.

  8. Good post Kim! I like that you’re dividing the Pros and Cons. I’ll say first that I do hope it works and believe that movement in this direction is important, and thanks to our lovely government nothing will be perfect – not that it would’ve been anyway. That said, the biggest problem I see with Obamacare is the confusion. Yes, there are other big factors going on, but confusion is rampant and will only make it worse for those who don’t try to figure it out. Unfortunately because of how it was structured from a marketing perspective, and good ol’ politics, little money has been spent to educate the public on it. Because nothing spells success for a major policy shift like politics and not educating the public on it. 😉

  9. The biggest con to me is that it impedes on our freedoms and our right to choose. What good is freedom if you are told how to use it? I don’t see a scenario in how the continuation of this program ends well for the citizens of our country.

    • You do have a choice. You can take the penalty and not have insurance. The big problem with those who choose not to have insurance is that they aren’t willing our able to pay for health care out of pocket. If you have a car wreck or a heart attack, you are going to go to the hospital. Most people aren’t wealthy enough to pay $100,000 or whatever it costs for emergency treatment, so that cost gets passed on the hospital or government in some cases. I get that people should be able to choose not to have insurance if they don’t want it, but that means not seeking care if you can’t afford it, and I have not seen anyone willing to do that.

  10. Dicey subject here Kim! I know that there are good and bad points about this law, but as with anything, it is going to take time to iron out all of the details on get on a real and functioning model. The same thing happened with Social Security, and many forget about the terrible rollout of Medicare Part D. That was done poorly, but it eventually got working and now it is a standard. Big change does not come easy and there are many hiccups along the way.

    • I really hope this will make some difference for those who are uninsured right now. It will all be a moot point if a Republican gets elected and tosses the whole thing out. The bad thing is that even if it gets thrown out, I don’t see premiums decreasing. Once the price goes up, it stays up.

  11. I’m still confused. 🙂 My insurance is going up $33 from 323 to 265. Would it have gone up anyway without OC, maybe? I have no idea. It’s a pretty big hit to my income and budget, but right now I’m just going to deal with it (I have a 5k deductible). I’ll have to see how much of the preventative stuff is covered. So far no cost for my mammogram, but that stuff tends to trickle in later, and when I need a colonoscopy, I’m hoping that OC will affect that cost positively. Wait and see…

  12. The biggest drawback is the simple fact that it destroys underwriting. This is what many people don’t understand. It’s not even really insurance any longer, as insurance requires some form of underwriting. Since companies can’t identify risk on an individual basis, everyone is charged more. This kills young, healthy people, and many others.

    • In reality, it doesn’t kill young people. If you make above the subsidy level, you will pay more, but you should be able to afford it. Who it will kill is those young people with a high income who are drowning in debt. They might not have a few hundred extra dollars a month for increased health insurance premiums. Young people will have to be smarter about finding ways to earn more money or save to replace money that will have to go to increased insurance premiums. However, if you have a hope of retiring early, I think Obamacare allows you to afford health insurance that might have been out of reach otherwise if you structure your income and investments correctly, you can get a subsidy!

  13. Thanks for sharing your opinions, Kim. I think most everyone can agree that affordable healthcare is needed in this country. RIght now there is so much posturing and confusion with Obamacare which makes it even harder to understand what’s true and and what’s not. 🙂 As others have noted, big government programs rarely rollout neatly but hopefully over time things will become more clear so people understand their options and can make choices that suit their family’s needs, rather than any political agenda.

  14. I do not know about medicaid since I’ve had insurance through my employer. I agree premiums going up for people in your bracket is one of the cons. However, for people like us, the old way was just expensive if you did not have insurance through a job. I guess the cons now were the same cons low income people were facing in the old plans. Meaning, there is no way to keep everyone happy.

    • No, there is no way to make everyone happy. While I do not look forward to paying more now, I think it will be a good thing if we decide to retire early.

  15. I am in a very similar situation as you Kim. I have a grandfathered plan with fairly reasonable premiums. But yeah, I have a feeling it is just a matter of time before I get a letter in the mail saying my plan doesn’t meet some ridiculous criteria and all I will have available is much more expensive options. Sucks big time.

    • Yes, I’m sure the cost for the whole family will go up substantially. If it gets too high, I can always sign up on Jim’s plan. It will cost us and extra $500 a month, but at least we will get good coverage.

  16. So far it’s not impacting us, as our employers have graciously eaten any cost increases to date. Actually my employer changed plans in 2010 after the law was passed to get into a plan they thought more likely to be grandfathered in… and we’re still in that plan.

    I’m worried about the roll-out. I have heard that so far the population that has managed to sign up is significantly older on average than they were hoping for, and without the young people overpaying to balance them out, the plans might not be actuarially sound as-is. This would mean premiums would only increase more next year… Not such a good plan.

    • I think lots of people will take the penalty. It really isn’t much of a penalty at all, so $95 vs a few hundred a month. Money wins out.

  17. We are really interested in getting a plan through the health care exchange because we are on my husband’s work plan, which costs us as much as a similar plan on the exchange ($1200/mo with $2k deductible!!!). Except, the exchange plan would be based in our home state (as opposed to the state where my husband’s work is headquartered). That means better coverage for us. Unfortunately, we can’t sign up for Jan 1 because his plan doesn’t end until Feb 28 — and we’re not going to pay double for two months. That’s the biggest downside to us: That we can’t use it.

  18. Love the thoroughness of this post, Kim. I’m not a big fan of the program right now, but we’ll see how it works out after the bugs are fixed. Holly’s post on the HSA stuff was very eye-opening, I thought.

  19. I thought early on that Obamacare needed to be repealed, but not because the plan was bad (as Republicans were suggesting). Instead it was because the plan was too good and people were going to love it. “Good” or “bad” wasn’t at all the issue (and I was frustrated to see politicians arguing “good” or “bad”). Affordability is the issue. We can’t afford the subsidies it provides for some pretty great care.

    I’m also frustrated to see that in Repubican controlled states the plan appears to be awful, where in Democratic states it’s being rolled out as intended. The knife twisting going on in politics today is absolutely horrible. Why would any sane person want to get involved?

  20. The major “Con” I see with Obamacare is that is unsustainable over the long haul. The intentions of the bill were good, but it is not the solution to the problem. Social Security is a great example. It started off as a way to help people who lived past the average life expectancy at that time and it has now turned into a major source of retirement income that is unsustainable.

  21. i hope none of this leads to more unemployment. how can small businesses afford to keep people now??

  22. You are lucky to have such an inexpensive policy. Heavens, for a bare-bones policy, we were paying over $700 a month, we who are living on one social security check. HCR has made all the difference; we will be getting a wonderful subsidy.

  23. I live in Canada and I’m very thankful for our healthcare system. I’m diabetic and there’s no way I could afford to see my doctor or pay for all the monthly medications I need (I also have metabolic disease and several other health problems) and I have to take 18 pills per day to keep me alive. For my medication, I only have to pay my annual deductible (which is less than the cost of one month’s supply of drugs) and then I’m good for the entire year.

  24. There is so much confusion surrounding this topic. This information was helpful. I just do not understand it all and I hope all the glitches get worked out because I know a lot families including myself are barely making it and do not qualify for help. We just can not afford the added expense. Thanks for this post and looking forward to more.

  25. I haven’t seen your site in a little while and like what you have done with it. It is a much cleaner look than you had before and I like how you integrated optometrist touches at the top. 🙂


  26. Thanks for writing this, the view of a medical provider is definitely interesting. The biggest thing I have noticed is that no one really knows how any of it works, like you said. I seem to get a ridiculous amount of news coverage, despite living in Canada!

    • No kidding! If I didn’t read blogs, I would have no idea about the Canadian system. I’m not sure why we are so interesting unless it’s kind of like watching a train wreck.

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