The Health Care Mess Gets Murkier

Did you cheer or jeer when President Obama and his fractious band of Democrats overcame strident opposition to define medical care as a right for all Americans?

Since I’ve written before about our personal struggle to afford medical insurance (read my posts tagged “health insurance” from oldest to newest if you’re interested in our ordeal), Curious Business will tackle the same topic as every other blog in the US this week. “Obamacare” – a first step toward bringing the US health care system up to par with the rest of the civilized world -- is a weaker version of the “Romneycare” reforms that Massachusetts implemented four years ago. (That’s right: This Socialist apocalypse was born as a Republican plan.) Being a Massachusetts business gives me a perspective that you won’t find from shriller commentators.

That’s my angle, anyway.

The background: Our self-employment income plus unemployment benefits exceed 3x the federal poverty level, so we don't qualify for individual insurance subsidies through the Commonwealth Connector. Kraken Enterprises can't afford to subsidize me as an employee, so the small business rates are unattainable. The state says that (because we’re below 4x the poverty line) we’re too poor to afford any of the plans offered through the Connector. Our prize for falling into that gray zone was a get-out-of-insurance free card: They won’t fine us if we choose to go uninsured. Obamacare will provide subsidies up to 4x the poverty line, so we would qualify for help under federal reform. Unfortunately, that part of the bill doesn’t kick in until 2014 and we've only got four months to solve this.

Anne and I rely upon COBRA, the 65% federal COBRA subsidy, and the state’s Medical Security Program (MSP).

• COBRA is the federal law that lets us keep our Blue Cross/Blue Shield plan from Anne’s previous job at the employer’s group rate.

• The federal government has subsidized 65% of our COBRA premiums, off and on, since shortly after Anne was laid off. That’s kept us solvent this whole time. But because Congress only extends the subsidy for a few months at a time and Republicans constantly threaten to interrupt it, it's a chronic source of anxiety.

• MSP theoretically reimburses us 80% of our remaining insurance payment. We were accepted into the program last October, yet we are still waiting for our first check. Every time we mail some new paperwork into the bureaucracy, they set the processing clock back by eight weeks, then eventually ask for more new paperwork. The MSP is a poster child for bad government. But since the real help comes from the on-again, off-again COBRA subsidy, the MSP is a financial footnote. And because it predates our universal coverage law, it's an orphaned program anyway. Before the economy collapsed it only served 4,000 people. Now it tries to serve more than 40,000 with the same resources.
  

If Anne doesn’t find a job first, our status quo should keep lurching along until COBRA expires in August. At that time we will lose both the federal COBRA subsidy and her former employer’s subsidized rate, and we’ll have to pay the full retail price of our marginal Blue Cross/Blue Shield plan. Our monthly premium will rise from $270 to something over $1,000.

The new law won't rescue us, so we’ll go back to the Mass. Connector again. We can enroll in a state-sanctioned insurance plan for around $800 a month, and if we're below 3x poverty by then we'll draw at least a small subsidy. Theoretically, MSP will continue to reimburse 80% of our premiums, but I’m obviously not counting on that.

Where’s the small business angle that I promised? Massachusetts offers “Business Express”, a new group health insurance plan for small employers provided through the Health Connector. Right now, Kraken Enterprises can't afford to subsidize my health insurance, so it wouldn't work out even with federal subsidies. And Business Express was launched just weeks before federal reform changed all of the ground rules.

Leaving aside state programs, let's look to the feds again. From 2010-2013, they will provide a tax credit for 35% of its contribution if Kraken Enterprises pays at least 50% of our health insurance premium. In 2014, that subsidy goes up to 50%. Sounds great! How exactly would it work? S Corporations don’t pay income tax; they distribute their profits to the stockholders who owe the taxes. Does the tax credit get passed through to stockholders as well? Or does it reduce payroll taxes rather than income tax? One source that I read mentioned that the tax credit is only good for two years; is that really so? I need answers.

Bottom line: Four years from now, Kraken’s cash flow might enable my company to offer me health insurance through the state's Connector. The Obamacare tax credit would certainly tip the balance in favor of doing that. For now, it’s cast some doubt upon existing state programs that I understood imperfectly in the first place.

I can’t speak to its effect on big corporations. But Obamacare looks like a winner for small businesses. Eventually. Potentially.

Final footnore: If this is the greatest social advance since Medicare, don’t you think it deserves a snappier name than “health care reform” or “Obamacare”?

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In the end I decided to blow off the Cavalcade of Crap this year. The cellar flood drowned my open to buy budget, my ankle was still swollen and tender a week after I sprained it, and the weather was raw. Crapfest just plain wasn’t worth the effort. I feel mildly guilty, but I’ll get over it.

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My second chargeback was reversed and another $149.43 was restored to my checking account. Hooray! That blunts the flood expenses a little. I’m not entirely confident that the bank won’t snatch that money back again; I keep getting emails saying that my chargeback status has been updated. The online status report tells me nothing. I approach each morning’s bank deposit report warily.

When the plumbers installing our new water heater wanted to point out some work detail to me, I switched on my lighted cap to have a better look. That had exactly the effect that I intended: They wanted to know where they could get one. I traded them five caps for knocking $100 off the installation. Writing those caps off instead of selling them is an accounting no-no, but Kraken Enterprises certainly benefits from having hot water and should justifiably contribute toward that home repair.