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I had a strange dream the other day.
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I dreamed I died and went to heaven.
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My first two days there were wonderful.
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The weather was beautiful, moderate with a gentle breeze and just a hint of rain.
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There was relaxing music all around me.
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There were nubile young ladies attending to my every need.
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Oh my god, the seafood plateaus.
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And it was the seafood plateaus that were the problem.
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On my third day in heaven, I woke up feeling nauseous with a shooting pain in my stomach.
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I threw up as soon as I got up.
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I generally felt really terrible.
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I called one of my attendants and told her, I need to go to a doctor.
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She giggled nervously and went outside with her mobile phone.
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Two minutes later she was back.
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Sir, there is a problem, she said.
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It's those damn seafood plateaus.
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Did you get an appointment?
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Oh mighty Amit, I got an appointment.
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It's six months from now.
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I need to see a doctor right now.
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Well, it's six months from now.
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And by the way, have you got any money with you from earth?
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You have to start paying premiums now.
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It's one crore a month, sir.
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Such a long waiting period.
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I mean, what on heaven has happened here?
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Heaven has implemented Obamacare.
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Welcome to The Seen and the Unseen, our weekly podcast on economics, politics and behavioral
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Please welcome your host, Amit Varma.
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Welcome to The Seen and the Unseen.
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My topic today is Obamacare, which has been the subject of ideological arguments for a
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few years now, so much so that it's almost become an article of faith for many people.
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But I want to discuss today what Obamacare is actually all about and what its unseen
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And to discuss that with me, I have a special guest with me in the studio.
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Sudhanshu Nima is a lawyer and economist who's lived in the US, who's come back to India,
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and he started work this Friday at free a billion.
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Welcome to the show, Sudhanshu.
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Thank you very much, Amit.
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It's very nice to be here.
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Sudhanshu, one of the key policies which Barack Obama will be remembered for was, of course,
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Affordable Health Care Act, which is called Obamacare after him, and on paper, it sounds
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Its intended effects include expanding coverage, lowering costs, and so on and so forth.
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But you hold the view that Trump won the last election primarily because of Obamacare.
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Can you tell me about the unseen effects of Obamacare?
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So basically what happened with Obamacare, the intentions were very good.
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The government wanted to give insurance to everyone.
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They wanted to provide coverage to people who have pre-existing conditions, like they
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had a heart disease or they had some other kind of ailment which exists without.
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So when you go to get insurance, the insurance company doesn't give you insurance because
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you have this condition and it would be costly for them to cover you.
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And then there were other intentions behind Obamacare that it wanted to reduce the cost
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to the average American.
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It wanted to cover services and ban insurance from not paying for emergency services, such
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as if you take ambulance, you fall sick, it's an emergency, you run to the emergency room,
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the hospital cannot deny your service, and it had many such policies designed.
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However, what happened in reality was completely different because of Obamacare, the cost of
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healthcare, instead of going down, it increased.
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And it increased not because of the intention of the government.
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It increased because of the way it was designed, right?
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So with the intention of banning insurance, discriminating between people, Obamacare banned
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discrimination on the grounds of sex.
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Now you can see women live longer than men.
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So previously, they could obtain insurance for cheaper.
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Now since Obamacare bans discrimination on the grounds of sex, they would have to, men
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would pay cheaper rates for insurance and women pay higher rates for insurance because
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it's disparity has to be maintained.
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That's one of the key problems.
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Secondly, it banned discrimination on the grounds of pre-existing conditions.
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Now what happens is, let's say there are two people, one is 30 and another is 30.
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They both go to insurance.
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One is a very healthy individual who is going to gym every day, hitting it hard for one
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There's another individual who eats chips, watch TV, plays video games, and has a heart
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If they both go to insurance, they're living in the same area.
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Under Obamacare, they would have to pay the same premium.
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Now you see the problem here, what the policy was as the intentions was really good because
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like everyone should be able to get the insurance.
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But for the insurance company turned out really bad because now they would have to design
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a program in which their finances work in such a manner that they can provide insurance
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to both of them at the same cost.
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So the cost for the healthy people went up.
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What would effectively happen is just to kind of break it down.
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Let's say you're a healthy person and I have a pre-existing condition and because I'm so
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much likelier to fall ill than you, the premium I would have to pay is 30 bucks, but the premium
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you as a healthy person would pay is 10 bucks a month.
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Because both of us have to be kept at parity, the new premium both of us end up paying is
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That is ideally what would happen.
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But instead of that premium being 20 bucks, it went actually above 30.
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And that happened not because of the problem I explained, that happened because of the
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excessive regulations under Obamacare.
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So under Obamacare, the first, the law itself is 2,000 pages, then there are 20,000 pages
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of regulation under that.
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And so there is, it created so much bureaucracy that the cost has increased for insurance
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That's one aspect of it.
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Secondly, what has started happening is most of the healthy people realize, why should
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I pay twice the cost for insurance?
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So they don't buy insurance at all.
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They prefer instead to choose to pay a penalty.
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So under Obamacare, there's something called an individual mandate.
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So individuals are forced to buy insurance or pay a penalty.
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What has happened, the government thought that every individual, even the healthy people
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under the age of 30, who have no issues or exercise heavily, they will also buy insurance,
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but they are refusing to buy insurance, they just choose to pay a penalty.
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So just to break it down, like in India, for example, many of my left liberal friends will
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correctly protest, you know, things like the imposition of Aadhaar on the grounds of consent,
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and yet they will reflexively support Obamacare.
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Well, one of the key issues with Obamacare to me seems consent itself, the individual
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mandate whereby people are forced to buy insurance or else pay a penalty, which could be up to
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2% of their annual income, which just to break it down, if you're making an annual salary
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of 10 lakhs a year, 20,000 would be a penalty for not buying insurance as the government
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So in a sense, it's a tax on healthy people.
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It's a tax on healthy people.
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And these are just the, you know, some of the basic problems with Obamacare.
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There are other problems like, for example, under Obamacare, insurance are forced to cover
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Now the services, the list has expanded to three to 400 services.
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Now I can understand some services are very necessary.
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Emergency, for example, you meet car accident has to be covered.
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For example, you know, you have a heart attack, you go to hospital, obviously you're not going
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to find out, you know, if your insurance cover because you're incapacitated to make that
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But once you have four or 500 disease covered under emergency services and insurance has
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to pay, then it becomes a problem.
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And now how would the insurance pay for this is by raising premiums.
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So since Obamacare has come into effect on January 1st, 2014, at least most of it, it's
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actually going to come into full effect on in 2020 because of all its provisions are
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so complicated to put into effect.
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But let's say 80% of it is in effect from January 1st, 2014.
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Now if you have this many diseases, the insurance has to get money from somewhere and they do
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it by raising premiums.
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So now premiums have gone up for some group of people, 25%, some group of people it has
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For some it has, well, gone up by 10%, but it has gone up overall.
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So can you give me an example of some of the diseases included in this list of 300, 400,
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which would otherwise not fall under?
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These are normal diseases, diabetes, things like that.
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So I mean, nothing which would call for an emergency and this kind of diseases, they
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should ideally be covered by market forces.
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And so let's go to the basic issue under Obamacare and basic issue with the American health care
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Their main problem is that the health care is really costly and why it is so costly.
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The reason being insurance.
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Now under American laws, insurance has to cover each and everything.
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Now let me ask you, let's say you have a home, you buy a home insurance.
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Obviously if your home, your house burns down, you need insurance.
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If it floods, you need insurance.
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You want to change the paint on Diwali, why do you need insurance?
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This is, you know, you go hire a painter, do it.
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Now if insurance is forced to cover each and everything you change in your house, how would
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By charging you only, the government is not giving them the money.
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So the premiums have gone up at a certain level.
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Now that is one of the major problem.
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And then health care has a second big problem, which is scarcity of resources.
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So to simplify the problem, I'll say, let's say there are 90 beds and 100 patients.
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Now you can provide services only to 90 people.
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Now then it becomes a question of which 90 people get it.
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Under a free market system, people who need it the most, they are willing to pay for the
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services they need and then those people get it.
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Under a controlled market or insured market, these prices are completely distorted.
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So it becomes roughly first come first serve.
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So that is the main problem with the American system as such.
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So to sort of use a very frivolous kind of illustration of that, let's say that I have
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the flu, the common cold, and someone else has a kidney failure.
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And under a market system, because the price of the beds would rise slightly, I would say
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I'll recover at home and the guy with the kidney failure would get it.
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But in this case, if I come first, I get it and he sleeps on the floor or whatever.
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And you would be going there, filling out insurance form.
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The cost of administration has gone up under Obama care because of 20,000 pages of regulation.
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And now doctors have to comply with all those regulations.
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Most of the doctors, especially in rural areas, they have to hire another person to take care
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Now if you're in a rural area, and US has very sparsely populated rural areas, to give
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you an example, the state of North Dakota has a population of 800,000.
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And that too is scattered across the state, not just concentrated in one or two major
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So if you're a doctor in a rural area, you have 50 customers, you cannot afford to hire
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another person because you won't be able to recover the cost.
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So the number of doctors has drastically gone down in rural areas.
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Most of them are chosen to either move to another professions which pay or move to cities
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where they have more customers and bigger markets so they can compensate to hire another
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And I imagine the cost of actually paying for someone who can navigate the 20,000 pages
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of regulations or whatever would be enough to turn you from being a profitable doctor
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to an unprofitable one and therefore you have to shut down and go.
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And it's a similar thing to what, for example, coming back to a local example because it's
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so current, GST, it's supposed to be so incredibly good for CAs and there are special GST consultants
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now a friend of mine was recommending that don't just go with your CA, get a GST consultant
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because it's so complex.
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And those are the people helped by it.
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And it can get so bad that a business can be just tipped over the edge because of too
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And it comes to another problem, Obamacare has actually cost jobs to the US economy.
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So under Obamacare, employers are forced to provide insurance if they are more than 49
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So once they cross that magic number of 50, they have to provide insurance.
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So what most companies do, they go up to 49 employees, then they don't hire.
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Even if they need a person, they just choose not to because the hiring next person, you
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would have increased cost of not just that person's salary, but an insurance program
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for all your employees.
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I mean, the 50th employee is really your most expensive employee because you have to pay
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insurance for all the first 49 as well.
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So Obamacare therefore artificially puts a limit on the growth of small to medium sized
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Yes, especially a small to medium sized firm because bigger firms, they're located in major
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They don't have to deal with this problem.
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And that's why you will see in US, there would be a lot of support for Obamacare in the urban
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centers and not in the rural centers.
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And that's because rural people actually suffer from the consequences of that law, whereas
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urban doctors, they can raise their prices, they have a huge market for their services
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So now for a regular guy in a small town, how does it impact his healthcare provision?
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Like if the number of doctors has come down, that therefore means that, you know, he's
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less likely to find a doctor when he wants one, right?
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So let's say if you have a problem which requires a specialist, then in rural areas, there's
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no chance that you would find a specialist because for a general practitioner is still
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fine that they can hire another person.
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They still have a large customer base.
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Let's say if you have a very specific problem, let's say, you know, you have some neurological
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Now, if you've tried to find a neurologist in this area, obviously for three patients
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in one particular area, one doctor is not going to open his practice.
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So you would actually have to go and travel to another state, maybe a major city nearby
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to find a neurologist and then insurance in US, they have networks.
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So they will tell you that this guy is not in our network or this guy is in our network
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and then you have to contact that person because if you go out of network, you have to pay
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cost out of pocket and insurance will not cover it and Obamacare allows it.
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So just demystify this for me.
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So I've lived in India all my life, you've just come back from the states where you live
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Now over here, what happens when I fall ill is that if it's not something major, I'll
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So if I fall ill at 4pm at 5pm, I am at my GP's clinic and he sees me and he gives me
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medicines and I take them and so on.
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That's how smooth it is.
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Well, let's say you fall sick.
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If you have a small problem, you choose not to go to a doctor because first getting an
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appointment, it would take at least one week and I have been in situations where I've called
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eight doctors and none of them have appointments for the next three months.
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And I was in Washington DC metropolitan area.
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Now you can imagine for a rural person, obviously I was looking for a specialist.
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So for a general practitioner, I would say one week or two weeks, you get an appointment.
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But if me living in the biggest metropolitan area in the United States, I could not get
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appointment for the next three months.
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Imagine a rural person living in Kentucky and if they have a problem, they just have
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And it's absolutely crazy because either then you have to fall ill, it's so badly that it
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justifies going to an emergency room of a hospital or you just have to somehow, you
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know, tide it over and wait your three, four weeks.
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And most of the cases, if you are waiting for three weeks, if you have, let's say a
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flu or cold, it just by the time your appointment comes, you're done with it.
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And I would assume that if the supply of doctors has therefore gone down, Obamacare would have
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So now what has happened because of Obamacare, and this is a personal experience, I met students
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who are studying medicine and they were like, you know what, I don't want to become a doctor
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because I honestly can't deal with this paperwork.
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So not just that supply has gone down, the future supply is also impacted.
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And obviously if you have less number of doctors, your costs are going to go up sooner or later
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because they will realize that there are so few of them, they would have to price their
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services higher and therefore the cost will go up.
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So let me go through some of the unseen effects that you've described.
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Unseen effect one is the premiums go up and that happens in two ways.
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Number one, because doctors and hospitals are forced to cover many more diseases and
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conditions than they otherwise would, the premium has to go up.
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Number two, because they're not allowed to discriminate for pre-existing conditions and
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So the average premium also rises because of that.
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Number three, there's massive amounts of paperwork and the cost of that also factors in.
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And because in addition to the cost rising so drastically, what further makes it worse
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is the individual mandate, which is essentially a tax on the healthy, by which people are
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forced to buy insurance, whether they want it or not, it's like a disincentive for healthy
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And not just disincentive, there's a question of can the government force you to buy things
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Like as an individual, I should be able to decide if I want insurance.
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If I exercise one hour every day, I should, you know, I should, if I eat right, I should
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be able to buy something called a catastrophic insurance that, you know, if I get a heart
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attack, sure I need insurance.
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It's the same, I gave you a previous example that if your house burns down, you need insurance.
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But you know, let's say your kitchen tap is not working.
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You don't need insurance.
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You just call a plumber.
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They come and fix it and that's how it should work.
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Unseen effect one, premiums go up across the line for everyone.
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Unseen effect number two, it's actually an assault on a person's autonomy by ignoring
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consent and by making him either buy insurance or pay the penalty, whatever it is.
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Number three is that the current supply of doctors, especially in rural areas goes down
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because the paperwork with the 20,000 pages of regulations just make it unfeasible for
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them to stay in the business.
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Number four, it affects future supply of doctors because people who might otherwise choose
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a medical profession just look at all the daunting paperwork and the mess they have
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to deal with and say, Hey, I don't want to do that.
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I'll do something else instead.
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And number five for patients, it increases their wait times and reduces their access
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to medical health care.
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And then there is the question of job creation.
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So number six is a job creation because of the mandate that once a company goes beyond
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49 employees, you have to buy insurance, which takes the costs up so far that it's a disincentive
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from small and medium sized enterprises from expanding.
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You think companies expanding is good for the economies, create jobs is good for society
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and it kind of prevents that.
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And the other problems, for example, this is just, you know, what happens in the market.
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There is a government side to it.
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So because of Obamacare, some of the people who could previously afford insurance, they
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So now they're dependent in the American government runs a Medicare and Medicaid program,
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which are designed for older generations, people 65 or older, or for people with disabilities
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or people who have just lost their jobs.
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So now the number of people dependent on this programs have drastically expanded because
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They don't have insurance.
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And this individual mandate applies only if your income is above a certain level.
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So if your income is below that level, you can enroll in Medicare or Medicaid.
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So now the enrollments have gone up drastically.
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Of course it has provided coverage, but then look at the cost.
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You would have taxpayers fund this bill.
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And again, healthy individuals working hard, they will be the ones paying the extra cost
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Now you are bringing productivity down and you are actually promoting getting jobs overseas
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because now companies will say, well, you know what?
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We'll just open an office in India or Vietnam or Laos or Cambodia, because all these countries
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are looking forward to hosting these companies and are actually providing incentives.
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And there are no such regulations and the cost of healthcare is really low.
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So your argument is that net-net we've kind of gone through, you know, the seven unseen
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effects of Obamacare in a sense, and your argument would be that while there is much
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liberal support for it in elite circles, ordinary people feel the pinch so much that it's the
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backlash from them that brought Trump into power.
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That is essentially my argument.
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And liberals in US have refused to believe it.
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During the whole campaign, they have refused to even talk about problems with Obamacare.
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Right now they refuse to repeal it and they want to expand it actually.
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They want more and more coverage, which will make the problem worse.
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And right now only, I'm informing you, only 80% of Obamacare is actually in effect.
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There are four more years to go, three more years to go.
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In 2020, it will be in full effect.
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Now once it comes to that level, you would see complete chaos in the markets.
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You would have lack of doctors, lack of medicines, and all the unseen effects I have described
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they will become much more apparent as the time passes, because right now they're in
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We don't see them as clearly.
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Three years, we'll see them very clearly.
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Sudhanshu, your dark dystopian vision of America's future makes it sound like the third world.
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Now I know why you came back to India.
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Thank you so much for coming on the show.
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That was very nice talking to you.
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If you enjoyed listening to The Scene and the Unseen, please hop over to sceneunseen.in.
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Our archives are absolutely awesome.
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You can follow me on Twitter at Amit Verma, A-M-I-T-B-A-R-M-A.
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Oh, oh, oh, oh, oh, before I sign off, do you know something about me?
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I used to be a professional poker player for a few years and my past has caught up with
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If you're someone who plays poker, are mildly interested in it, or have never played it
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before, then here's a fun new podcast I recommend you check out.
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It's called Mera Kaam Poker, hosted by Azeem Banatwala and my friend Peter Abraham.
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The show captures the fun side of poker and it's a must-listen for everyone.
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New episodes are out on the IVM Podcast website.
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I am a guest on one of them, look out for that.
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Guys exciting news, Indus Vox Media's flagship podcast, Cyrus Says, hosted by my friend Cyrus
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Brocha, completes 200 episodes.
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A big congratulations to Cyrus from me and the guests and the producers of the show for
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entertaining us for over two years now.
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We hope to reach the 200 episode mark ourselves many, many, many weeks from now and Cyrus
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If you haven't already, check out the IVM Podcast website or just download their app.
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Good evening, ladies and gentlemen.
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This is your captain speaking.
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Sorry to say, but there's been a slight delay due to the apocalypse having suddenly begun.
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As you can see, there's death, destruction and chaos taking place all around us.
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But don't you worry, food and drinks will be served shortly and I would recommend checking
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out IVM Podcasts to get some of your favorite Indian podcasts.
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We'll keep you going till this whole thing blows over.
