Beginning of the End?

We have been suggesting that Affordable Healthcare Act (Obamacare) will become the default or even go-to plan for many businesses, governments or employers … and Chicago’s decision is the beginning of total socialization of medical care in the USA.

Mayor Rahm Emanuel plans to start reducing health insurance coverage next year for more than 30,000 retired city workers and begin shifting them to President Barack Obama’s new federal system.

The move is aimed at saving the city money and comes as the Emanuel administration has been trying to wrangle significant pension cost concessions from employee unions.

The details are found in a letter the city plans to send to retirees this week.

Still getting health insurance: Police officers and firefighters who retired between the ages of 55 and 64 and are not yet eligible for Medicare but whose coverage is guaranteed under union contracts, as well as workers who retired before August 1989 and are protected by a legal settlement.

Cut out as of Jan. 1 will be the rest. That’s when the city will begin a three-year phase out of the coverage, according to the letter signed by Comptroller Amer Ahmad. During that period, premiums, deductibles and benefits could change, the letter states.

Once the phase-out is complete, those retired workers would have to pay for their own health insurance or get subsidizes under the Affordable Care Act, known as Obamacare. The city-subsidized coverage is particularly important to retired workers who aren’t yet eligible for Medicare, as opposed to those 65 or older who use the subsidies for Medicare supplemental insurance.

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  • jasoncoker

    I’m a bit surprised by the simplistic characterization of Obamacare in this post Scot. There is a great deal of nuance to this issue, but the fact is that The Affordable Healthcare Act is a very long way off from “the socialization of medical care in the United States.” Consider:

    1. Private citizens will purchase health insurance from private companies.

    2. Medical expenses will not be paid by a single-payer (i.e. the Federal government) but rather, by multiple private insurance companies.

    3. Current private, for-profit hospitals and clinics will remain private, for-profit organizations.

    4. The employees of such organizations will remain non-government employees.

    If you want to see what socialized medicine looks like, just drive to your local VA hospital. Military healthcare is utterly, totally, and completely socialized.

    Far from being socialized medicine, the ACA on the other hand, will drive more Americans into the private health insurance marketplace than ever before. It will be a more highly regulated marketplace than ever before, but it will be a marketplace nonetheless. Regulation is not socialism. Indeed, the essential reasoning behind the ACA is that healthcare organizations and pharmaceutical companies who are currently unhindered by marketplace pressures due to their overwhelming control of the system, will now be subject to those pressures, causing overall costs to decrease. ACA is essentially an effort to force some of the virtues of the marketplace on a system that has been protected from those pressures by it’s biggest and wealthiest participants.

    In this way, I would argue that Emanuel’s move is actually a move away from a system that is far more “socialized” than ACA. Government pension provided healthcare is essentially a single-payer reimbursement system, not unlike Medicare. Government insures your health coverage and pays your bills. After this move, however, Chicago retirees will be forced to buy private healthcare from private companies and receive care from private physicians in a regulated marketplace. That’s precisely why, supposedly, costs will go down.

    For better or for worse (for worse, in my opinion), Obama has bet America’s healthcare future on a regulated marketplace solution, not a socialized one.

  • scotmcknight

    Jason, thanks for this. What I’m saying is that Emanuel’s move may represent the tip of an iceberg of employers (who provide much of insurance today) asking employees to get insurance through ACA. When everyone goes to ACA, what do we have?

  • jasoncoker

    Thanks for the clarification Scot, but it’s important to note that in the Chicago case the employer you’re referring to is a government. Emanuel is moving retirees from (moderately) socialized healthcare to private marketplace healthcare.

    To answer your question, when everyone moves to ACA, what we’ll have is a regulated, private, for-profit industry for a product that everyone is legally required to buy. Again, that’s not socialism.

  • scotmcknight

    Well, I’m only talking about socialized medicine, not socialism as an economic theory about the means of production. Yes, of course, it’s a State govt, passing things on to the Feds, but the issue for me is not that Emanuel is a mayor and dealing with govt but that of setting a trend of employers who move folks to ACA because they can’t afford premiums.
    Question: how private is it if everyone has insurance through ACA?

  • jasoncoker

    Right, I understand the difference. At minimum, socialized medicine is where government directly provides either public healthcare services (i.e. Govt owned facilities with Govt. employed professionals), or public health insurance, or both. My point is, ACA does none of that.

    Nobody will have insurance through ACA. It is not an insurance provider (unless you consider Medicare and Medicaid to be part of ACA). The original form of ACA included a provision for public health insurance, but that was dropped. ACA is merely regulation which requires private insurance providers to meet new standards, requires the public to purchase insurance (or enroll in Medicare or Medicaid if they qualify), and establishes regulated marketplaces for this activity.

  • …More people in the private health insurance market, as Jason already said! 😉

  • Robert Dunbar

    The real issue here isn’t the ACA; it’s the inability of a government (in this case, a municipal government) to continue to provide both a pension benefit and good government. This is hitting states, counties and cities around the nation–Illinois itself worst of all.

  • Jeff

    We learn yesterday that the IRS illegally removed 60,000,000 health records in California. We also know that the IRS has been politicized and is being used to oppress political and policy dissidents of the current Administration.

    The IRS is tasked (by statute) with enforcement of Obamacare.

    Yeah, what could possibly go wrong?

  • Andrew Dowling

    Scott, ACA is an exchange of private health insurance plans (that vary by state, although the original and better plan would’ve been to just have a big national exchange). There is no “public option” or government plan. It’s not socialized medicine in the slightest.
    What do you get when employers shed insurance and people move into the exchanges? A much better economy for small businesses, that’s what. We are the only advanced nation on Earth with a completely outdated system in which medical coverage is coupled with employment. It’s a huge cost burden on businesses and screws people who leave a job, get laid off, or have a job that doesn’t offer insurance(or bad insurance). Instead of being chickin littles about the status quo changing, we should be celebrating as employment and health coverage initiate their long overdue divorce in American society.