Obamacare
This is a topic that I do not have very strong opinions about, largely because of how complex it is. My previous post pretty much sums up the extent of my knowledge on health care, so I took this week to do some basic research on Patient Protection and Affordable Health Care Act, also known as Obamacare.
I was able to find a lot of information on Obama Care Facts, a nonprofit website, about the basic provisions of the bill. Signed on March 23rd, 2010, the PPACA’s main purpose is to extend insurance coverage to as many people as possible and lower the costs of insurance. The bill’s policy implementation spans out from six months after the bill was signed to 2020, so we have still not felt the full effects of the bill today.
Here is a basic list of some of the provisions:
- Insurers are required to offer the same premiums to all applicants regardless of gender or preexisting medical conditions (excluding tobacco use).
- All individuals not covered by an employer-sponsored health plan, Medicaid, Medicare, or other public insurance programs are required to secure an approved private-insurance policy or pay a penalty (this is commonly known as an “individual mandate”).
- Health insurance exchanges will operate in each state, offering a marketplace for insurance.
- Federal subsidies will be offered to cover the cost of health insurance on a sliding scale based on income.
- Medicaid eligibility will be expanded and the CHIP enrollment process will be made easier.
- Minimum insurance policy standards will be established by the government and annual and lifetime coverage gaps will be banned.
- Firms not offering health insurance but employing at least 50 people will pay a shared responsibility requirement if an employee’s health care is subsidized by the government.
The funding for these programs comes from a series of tax increases on high-income individuals, high insurance premiums, and manufacturers and importers of certain medical devices and branded drugs.
Of course, what interests me most about the PPACA is the wave of protests and criticisms it received during and after its passing. The media has portrayed it largely as a political battle between the parties, and for once, the media is right. With the exception of one abstaining Senator, all Republican representatives from both houses voted against the bill (Senate Roll Call, House Roll Call). Its passing was the direct result of a majority in the House and a supermajority in the Senate.
Before researching the criticisms themselves, I wanted to use my own intuition to find out why this bill was so controversial. The first thing that stood out to me was the individual mandate. Personally, while I understand the good will behind it (make sure everyone has health insurance), I think the government is crossing the line. Not only does it infringe on our liberties, but it also puts young people at a disadvantage. I know one of the provisions of the act was that children may stay on their parents’ insurance until the age of 26, but what happens after that? With the amount of schooling people need nowadays, many graduate and professional students will be at a severe disadvantage. I also think it is unfair for people who choose not to buy insurance (i.e., the upper income bracket) to pay a penalty.
Additionally, while I agree that health care should be available to everyone, I do not think that health insurance should. Like I mentioned in my previous post, insurance is a system that is meant largely for emergencies, not coverage of every single little problem. As such, the provision that insurers are required to offer the same premiums to all applicants sounds like a horrible idea. This will only cause insurers to either go out of business, or raise the cost of insurance to levels as ridiculous as health care itself. Though the act allows the government to help lessen the cost for consumers, this system will ultimately end up bankrupting itself.
Source: Forbes Magazine
The taxation meant to cover the costs of these changes also alarmed me. I have never been a fan of the “tax the rich a higher rate” idea. I think they ultimately end up putting a disproportionate weight on the middle class: The poor are generally subsidized by the government, and the rich hire lawyers and accountants to find every loophole possible. As such, I think a flat tax on income and insurance premiums should be implemented instead. Furthermore, raising taxes on pharmaceuticals and medical equipment will only exacerbate the unnaturally high cost of health care. This will then raise the cost of insurance, and the vicious circle continues.
So what do Republicans think about this? Their arguments are a more condensed, less “economic,” version of my concerns: The government is overstepping its boundaries, health insurance should be private, people should get it only if they want it (Republicans Hold Tight to Party Line).
Furthermore, the question over the constitutionality of the individual mandate and Medicaid expansions actually led to a Supreme Court case: National Federation of Independent Business v. Sebelius. In a tight 5-4 ruling, the justices determined that the individual mandate was constitutional under the Commerce Clause – which lists the government’s right to tax – but did not approve the Medicaid expansion, placing it under the purview of the states. In response, many Democrats worry that conservative states will not allow this expansion, putting the poor and old populations of those states at a disadvantage. Personally, I do not agree with this ruling at all; in fact, I see the individual mandate as unconstitutional, and the Medicaid expansion as constitutional.
All in all, my biggest worry about the PPACA is that it will go bankrupt in the same way Social Security is heading, but at an even faster rate. With that many people forced into the health care system, costs will continue to rise for everyone at a rate faster than taxes can cover. Of course, the full effects of this act will not be felt until 10 years from now, and as such, I hope my worries will be proven wrong.
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