Latest posts by Wanderer (see all)
- Investment Workshop 43: Socially Responsible Investing - September 13, 2017
- Investment Workshop 42: Double-Fisting your Retirement Accounts - September 6, 2017
- Investment Workshop 41: How Painful Will the Housing Crash Be? - August 30, 2017
Hello again and welcome back to the Millennial Revolution Investment Workshop! New readers, please click here to start from the beginning.
We’ve been yammering away about the Canadian housing market for a few weeks so I thought it would be interesting to check in with our American friends and see what they’ve been up to.
Well, as it turns out, a LOT.
I thought we were over this crap weeks ago, but in the past few weeks the Republican plan to Repeal Obamacare has been showing back up in the news, and in rather alarming fashion.
The House Freedom Caucus announced Wednesday that with new changes to the Republican Obamacare repeal bill, the conservative lawmakers are now willing to support the bill and are urging the rest of their party to get behind it as well.
Why Is This Important?
Let’s back up for a moment.
To all our Canadian, British, and Australian readers, feel free to sit back and relax. You all have Universal Health Coverage, so your health care strategy in retirement is no different than your health care strategy when you were working: Do nothing, your government will take care of you.
However, to our American readers, this is a massively important issue. This is because in America, health coverage is tied to your job. If you don’t have a full-time job, you don’t have health coverage. So if someone were to, say, retire in their 30’s, the burden of providing health insurance would fall from the employer to the individual.
And that cost can be substantial. In 2016, the average cost of insurance premiums for a family in the US was $833 a month, or $10k a year. That additional continuing expenditure increases your retirement portfolio (as per the 4% rule) by $10k x 25 = $250k! So that shit ain’t cheap.
But all that changed with Obamacare, which introduced income-tested Federal Subsidies to help pay for health insurance premiums. Now, someone who’s FI could leave their job and retire without fear of not being able to afford health insurance, as our good buddy Justin McCurry from RootOfGood wrote about: OBAMACARE MAKES EARLY RETIREMENT EASIER AND MORE SECURE.
How Did We Get Here?
So for those of you who aren’t news junkies like me, let me recap. When the Republican Party came into power, they assumed control over the House, the Senate, and the White House, so everyone figured (including me) that Obamacare Repeal was a done deal. With nothing opposing them, Congress should have turned into a rubber-stamping legislation factory who would quickly make good on all of Trump’s campaign promises, of which one of the biggest-ticket items was Repealing Obamacare.
That didn’t happen.
Instead, the Republican party devolved into intra-party bickering, in which the Moderate/Centrist Republicans couldn’t support the bill because it threw too many people off of health insurance. Meanwhile, the far-right Freedom Caucus couldn’t support the bill because, and I shit you not, it didn’t throw enough people off of health insurance.
How politicians like this get elected, I will probably never understand.
Anyway, the end result was a messy and highly embarrassing/hilarious debacle in which the Republicans were forced to pull their own bill from a vote, leading to House Speaker and bill author Paul Ryan to declare in March that “Obamacare is the Law of the Land.”
So What Just Happened?
Well, as I mentioned back there at the top of the article, last week it came out that Republican Leaders had made a deal with the Freedom Caucus that was largely responsible for sinking the bill the first time, and that they were now willing to vote yes.
So what did they offer them?
Apparently, an amendment that allowed individual states to opt out of regulations mandating what insurance policies could or could not do. For example, they could now decide to drop maternity benefits from their policies. Ditto with mental health treatment. And they would once again be able to discriminate against people with pre-existing conditions.
That last point is HUGE, because the ban against charging different amounts based on pre-existing conditions was the single biggest change that Obamacare made to the health insurance market. Not the subsidies. Not the exchanges. The Pre-existing condition discrimination ban.
Before Obamacare, insurance companies would happily take your money and sell you insurance. But if you ever got seriously (and expensively) sick and it turns out you had a pre-existing condition, they could claim you lied on your initial application and drop you from your coverage. And because a “pre-existing condition” can be pretty much anything, this led to absurd situations where women were denied health care because they once had a yeast infection, or a baby being denied because they were too fat.
Obamacare fixed that loophole, and now they’re trying to roll it back.
So What Do We Do Now?
For now, nothing. We will continue to monitor the health care situation as it develops and provide updates as they come in, specifically how it affects our American readers who are trying to achieve Financial Independence.
The situation seems surprisingly fluid so far. Just a few days ago, Republican leaders were crowing that they were confident they could get this bill passed, but just yesterday, it was reported that key Republican House members were saying they were pulling support because it removed protections for exactly this issue.
“I have always stated that one of the few good things about Obamacare is that people with pre-existing conditions would be covered,” Long said in a statement. “The MacArthur amendment strips away any guarantee that pre-existing conditions would be covered and affordable.”
And in a weird quirk of Senate rules, because the Senate normally requires 60 votes to get legislation passed (which the Republicans don’t have), they are relying on a legislative tool called reconciliation which only requires a simple majority. But for some reason, once they pass a budget to keep the government from shutting down this Friday, they will lose the ability to use a reconciliation measure. This has led to one news outlet calling this week a Make-Or-Break moment on this issue.
Republicans need a new budget in order to pass a tax cut or tax reform package. But once they pass a new spending blueprint, they lose their authority provided by the current budget to approve health care reform using the majority-vote tool called reconciliation.
So whether early retirees can continue to rely on Obamacare or have to come up with something completely new, we’ll know by the end of the week.
So what do you guys think? Are the Republicans going to be able to cram their repeal bill through? Or will it get bogged down and go nowhere? Sound off in the comments below.
Breaking Update: The House just voted to Repeal Obamacare!
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