Obamacare’s Stunning Redistribution of Wealth (Frontpage.mag)

 

January 6, 2014 by John Perazzo 22 Comments

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For all the attention Obamacare has drawn in recent weeks, few observers have noted that the law is having the unexpected, yet most welcome, effect of transforming scores of millions of Americans, virtually overnight, into generous benefactors of the less fortunate. A real-world example—representative of countless millions of similar situations—will make this crystal clear:

Let’s say that you are a healthy, hardworking 54-year-old single adult in San Francisco earning $45,960 per year—the income level at which federal Obamacare subsidies from your fellow taxpayers are no longer available to help you pay your monthly health-insurance premiums. As a San Francisco resident, you are permitted to choose from among 16 separate Obamacare-compliant insurance plans. Four of these are so-called “Bronze” plans, low-level policies whose average premium will cost you $453 per month, or $5,436 per year. In exchange for those premium payments, a Bronze plan will cover 60% of your medical expenses—that is, after you meet the $5,000 out-of-pocket annual deductible. For this priceless peace of mind, you can thank Obamacare—the Democratic Party’s gift to a grateful America.

Let us contrast your case with that of Joe, another 54-year-old single individual in San Francisco, who happens to be an obese alcoholic and longtime drug abuser with little ambition and no history of ever having held a full-time job for very long. Joe currently earns $15,860 per year, which is just above the income level that would have made him eligible for Medicaid. Because Joe doesn’t qualify for Medicaid, Obamacare stipulates that he must now purchase his own health insurance—thereby proving that, contrary to the shrill rhetoric of conservative naysayers, no one gets an undeserved free ride under Obamacare.

Like you, Joe can choose from among 16 separate plans that are available to San Francisco residents. But unlike you, he is eligible to receive federal government subsidies—money that other, wealthier Americans, such as you, magnanimously “contribute” toward the healthcare expenses of financially “disadvantaged” individuals. If he selects one of the four Bronze plans (whose average monthly premium is $453), Joe qualifies for $452 in average monthly subsidies—meaning that, regardless of which Bronze plan he chooses, he will pay a monthly premium of exactly $1. You read that correctly. The very same healthcare plan that would cost you $453 per month, is available to Joe for $1 per month—i.e., the cost of three oatmeal-raisin cookies at your local Subway sandwich shop. Over the course of a year, you will pay a total of $5,436 in policy premiums, while Joe, who sadly failed to qualify for free healthcare through Medicaid, will pay his own fair share of $12. This is all in the interest of social justice, you understand. And please, don’t even think about whispering that Obamacare might be some sort of “wealth redistribution” scheme, lest you expose yourself as a petulant reactionary who doesn’t give a damn about sick people.

Oh, imagine what a wonderful world it would be if we could somehow transfer this same brand of Obamacare-style fairness to realms other than health insurance. In such a utopia, for example, the $25,000 new automobile that you purchase would cost a deserving soul like Joe just $55. Your $100 nightly fee at a motel would be 45 cents for Joe. And the $25 hardcover book you purchase at Barnes & Noble would set Joe back about a nickel. What’s that, you say? These items aren’t life-and-death necessities, like medical care, and thus don’t serve as useful analogies? Good point! Let’s stick with real necessities, such as food and housing: The same load of groceries that costs you $250 would cost Joe 55 cents. Your $1,200-per-month rent or mortgage payment would be available to Joe for about $2.65 a month. And the $250,000 home you seek to buy could be Joe’s for about $552. Yes, we’re talking about a veritable paradise of fairness!

But let’s return, for a moment, to the subject of healthcare in the here-and-now. Suppose you decide to opt for something substantially better than the aforementioned Bronze plan. As a resident of San Francisco, you can also choose from among four separate Silver plans, which each pay 70% of your medical costs (after a $2,000 annual deductible) and have an average monthly premium of $614. For Joe, these same four plans are available for an average of $38 per month—thanks to the marvelous, magical subsidies that are built into Obamacare. In fact, one of the Silver plans in particular would cost Joe just twenty nickels per month—a darned fair deal for someone needing healthcare, wouldn’t you say? And again, try not to view the disparity between your fee and Joe’s fee as some form of “wealth redistribution,” but rather as an opportunity for you to cultivate the fiscal virtue that our president terms “neighborliness,” whereby those who are “sitting pretty”—like you—extend a helping hand to the “less fortunate”—like Joe. Yes indeed, think about how deliriously happy you’re making good-ol’ Joe!

Now, if you’re feeling somewhat bold and are inclined to seek out even better coverage, you might opt to enroll in one of San Francisco’s four Gold insurance plans, which pay 80% of your medical costs (with no deductibles) and have an average monthly premium of $752. For Joe, the average cost of such a policy is $166 per month.

And then there are the top-of-the-line policies—the four Platinum plans—which will pay 90% of your medical expenses and will cost you, on average, $843 in monthly premiums. For Joe, by contrast, the cost of these plans will run about $258 a month.

So, let’s review: Joe can have the very best coverage available—the type of Platinum plan that our revered overlords in Washington have carefully secured for themselves—for roughly half the cost that you must pay for the most meager, bare-bones, low-end Bronze coverage in existence. Or, alternatively, he can have:

• a Gold plan for about one-third of what you pay for the Bronze;
• a Silver plan for one-twelfth of what you pay for the Bronze; or
• his own Bronze plan for less than four-tenths of 1 percent of what you pay for the same plan.

And why is Joe able to do all this? Because you, my generous comrade, are largely buying his plan for him. Hooray for you! Hooray for advancing the vision that our president so eloquently laid bare just one month ago, when he identified the eradication of “inequality” as the motive that “drives everything I do in this office.” Ain’t it wonderful to be part of such a grand crusade?

And in case you seek additional cause for celebration, rest assured that Obamacare imposes the same type of fairness and equity on family plans as it does on individual plans. For instance, a 54-year-old San Francisco couple with two grown children (ages 19 and 20) living at home—and with a $94,200 household income (the income level at which subsidies are no longer available)—can enroll in a bare-bones Bronze family plan (with an annual deductible of $10,000) for an average monthly premium of $1,175. Meanwhile, an identically structured San Francisco family whose household income is $32,500—just above the level that would have qualified them for Medicaid—can obtain a Bronze plan for precisely $4 per month. Yes, the same plan that costs $14,100 per year for the first family, costs $48 per year for the second family.

The four Silver family plans, meanwhile, have an average monthly premium of $1,593 for the first family, and $81 per month for the second family. Annual outlays would be $19,116 for the first family, vs. $729 for the second family.

This, in a nutshell, is the exquisite beauty of Obamacare: It is redistribution … er, um, er … It is neighborliness on a scale never before seen in this country. And many millions of Americans are poised to reap its glorious benefits! As a form of shorthand, you can simply refer to these fortunate millions as “Democrats,” in honor of the party of benefactors that is, at this very moment, purchasing their eternal political allegiance with your dollars. Take pride in the fact that this wonderful arrangement is but one aspect of the “fundamental transformation” of America that our president is so faithfully pursuing, true to his word. At its essence, it is an arrangement designed to take from certain individuals according to their ability to pay, while giving to other individuals according to their need—a profoundly neat and elegant formula if ever there was one. It almost makes you wonder if anyone else has ever thought of anything like it before.[1]

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