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Obamacare’s Design Flaw

November 7, 2016

It’s open enrollment season, the time when many Americans choose their health care plans for the upcoming year.


Regardless of what happens in the 2016 election, one thing is certain – Barrack Obama will no longer be in charge. But that’s not true when it comes to health care. See, he’ll never be too far, at least for the foreseeable future, because of the Affordable Care Act (aka Obamacare).


In many ways, it’s his legacy. Some people like Obamacare, while others loathe it. But most everyone can agree, it could use some changes.


Millions more Americans now have access to health insurance, which is tremendous. However, access to health insurance is not the same as access to health care. And with premium increases coming down the pike, Obamacare isn’t exactly “affordable” either.


For too many people, this open enrollment season will mean receiving “affordable” NON-care and crushing premium increases. Is it any wonder insurers are pulling out of the Obamacare business altogether?


The whole point of insurance is to spread risk – everyone pays a little to avoid being the one who pays a lot. It works well for fires and earthquakes, but with health care, everyone will get sick eventually. It’s just a matter of time.


However, not everyone will experience a fire or earthquake. So it’s a design problem at the core.

By that I mean that Obamacare was designed for people with no other health insurance option (i.e., no Medicare, Medicaid or employer-sponsored coverage). But on average, those using Obamacare are sicker and have higher claims, so the risk isn’t spreading. Costs then skyrocket, and the plan becomes too expensive for those who really need it.


Clearly this will become a top agenda item for our next president.

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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