Sunday, February 5, 2017

Payment Processing and Obamacare

The above is a graphic illustrating the payment processing system used by many merchants and their customers. Although they are not banks, they adhere to many of the laws which apply to banks (such as: "Know Your Customer") which help protect us from financial crimes. I used to work for one of these firms.

Like banking, there has been a great shrinkage in the number of these firms. And a handful of these firms process the bulk of consumer payments made today. Typically, a merchant will be approached by a salesman from one of these firms, and then negotiate the price(s) for each transaction made via Phone or Internet, including the expected mix of ACH or Card transactions. (Lockbox transactions made by check are usually not included, as these payment firms are not banks.) Sometimes, the merchant absorbs the costs of processing the transaction - as is often the case when one does business with major stores.  And at other times, the merchant and the processing firm tells the customer that he is being charged a price to use this "alternate" payment mechanism. I have done business with several firms using these companies, and resolving disputes can get tricky unless one keeps ALL appropriate paperwork.

As I said above, I worked for one of these firms, and will be purchasing my health insurance from the firm until my COBRA benefits run out. Making a $2.00 payment error caused my old firm to send me a letter, which in turn triggered my thoughts about the ACA and what might happen if I were unable to buy decent health insurance at an affordable price. If I were to use this firm's services to make a healthcare payment, it would cost me an extra $20 each time I make a non-recurring payment.  That's a little over 3% added to my bill IF I want to pay electronically.  So I go "Old School" and use checks instead.  I can only imagine what I'd be thinking if I had little savings and had to worry about that $20, much less paying $630 as an individual.

Sadly, I am no longer sure that I will be able to get decent health insurance via the healthcare exchanges (as GFJ does today) when COBRA runs out, due to the shenanigans going on in Washington DC.  Although our president has said that he wants Repeal and Replace to take place concurrently, the GOP has not settled on a single formula which will give them maximum cover with the voting public.  Leaked recordings indicate that the GOP members of the Legislative Branch of government are like Wile E. Coyote when he caught the Road Runner.  He didn't have a clue of what to do next.  (Yes, they did make that cartoon, and it was very funny!)

Hopefully, our leaders will avoid playing a game of Repeal, Delay, then Replace.  Tweak the existing law, lie that it has been repealed, and claim that it has been replaced. This way, one can take the credit for improving the law when they are ready to act.  There is no need to rush into doing something stupid.  There is only a need to improve what we have without hurting people in the name of political expediency. Maybe we'll get lucky this time, and see Washington DC come to its senses and do something right within the next two years....


  1. I lot of people, especially younger ones, lost their coverage when the mandates of Obamacare hit. They had to buy expensive policies that they did not want, did not need and could not afford. Also a lot of businesses actually had to decrease the coverage that they had been providing in order to fit within the mandates of Obamacare and they had to pay more for that changeover.
    I think that many more people were hurt by Obamacare then were helped.

    1. The analysis of Obamacare depends on the state one is in. If in a state that expanded medicaid, most had positive results. If in one that didn't, the results look bad. Yes, it is a financial transfer from the young to the old. But doing so makes the insurance pools larger, and able to cover older folks like us at an "affordable" rate. The system is far from perfect. And healthcare is now in play. It should have been so for generations, and wasn't because people were afraid to make the status quo even worse. Now, they have the freedom to carefully tinker with it - as long as they don't tinker too much.

      My limited sample shows more people are being helped than hurt. We now have apples to apples comparisons - something not possible before Obamacare was enacted. Is healthcare overpriced? Yes. But until we can get a truly market based system in place, we will have major flaws in the pricing model. In some European countries, they actually give you quotes for procedures before the operation, so that you can shop around. We don't have that kind of mechanism in use for general non-emergency situations. For emergency situations, we have prices for procedures that don't make sense. One hospital may charge $5000, and the next $25,000. How can individual markets work in emergency situations?

      It took generations to screw up our system with government subsidies, and employer provided health care. Until the individual buying health care is the only one doing the purchase decision (for non emergency procedures), we will have the crappy, expensive system we have today. We need results based medicine - and that will mean government intervention to ride herd on big pharma, the hospitals, doctors, and other participants in the market. Right now, the distortions in the market prevent results based medicine from being powerful in the market. But someday.....