obamacare 2011

theres been a lot of talk about the patient protection and affordable care act (ppaca) often referred to as "obamacare"; usually by those that are not a big fan of it. and my goal here is to not take any political sides, and hopefully give an overview of what all of the debate is about and what this 'affordable care act' is all about. and i'm going to start with the most controversial part, and this is the 'individual mandate' and this is the idea that you either have to get insurance, or pay: a penalty; or a fee; or a tax. -penalty- which is now being referred to as a tax by many folks. and the idea here is that there are obviously many folks who are uninsured right now, and when they get sick especially when they get very sick they still get healthcare.

in particular they will go to the emergency room. they will go to the e.r., and that is quite posiibly the most expensive part of the healthcare system to interface with. so there's kind of a moral argument here, that- 1) these people are getting sicker than they need to get if they had insurance. e.g. getting preventative care and not getting that sick. then there's a financial or, i guess you could say, a fairness argument: that these people are getting sick, going to the e.r., and they have to be given care at that e.r. the hospitals bear those costs, and then eventually recoup those costs by charging more for all sorts of other services. [these costs] go back to the people who are paying for the healthcare. so, if you have an individual mandate it will clear things up a little bit. people will have to

essentially pay for the healthcare they are already getting. now, the argument against the 'individual mandate' is that this is the government putting into law that people *have to buy something*. in particular, that they have to buy health insurance. now, the counterargument that many people make is that there is something similar going on with car insurance. if you want to drive in most states, you have to buy some type of car insurance or at least show that you have financial abilities to pay any liabilities you might have if you get into an accident. now the 'counter-counter-counter-argument' to that is that, driving is something that someone chooses to do. that you do not have to drive, while in the case of health insurance, this is something that every person in the country is being forced to [purchase]. i'll leave it to you to decide where you sit on that, and what balances what other issue.

now, obviously, if you're going to decide whether you want insurance, or whether you are going to pay a penalty/tax, you have to figure out how high that penalty is going to be on you. or if you want to figure out if this is a fair situation. you have to think about high that penalty is going to be. and the current provisions say that by 2016, which is when the full penalties take effect, you are going to have to pay the maximum of either 2.5% of your income, or $695 for an individual, or $2085 for a family. and there are exceptions, and this whole individual mandate won't apply to you if having/getting insurance will cost you more than 8% of your total income. or if you belong to a religion that does not participate in the healthcare system, then it doesn't apply. so you will never have to pay more than 8% [of your total income] to get an insurance policy.

but these are the general penalties; if you made $100,000 and chose not to get the insurance, you would pay $2,500 (2.5% of income, and is greater than the minimum penalties). if your [family] makes $50,000, then the 2.5% [$1250] would be less than the [family] minimum, so you would pay $2085. now the other provisions of the ppaca are based around the idea that, "if we want people to get insurance, - then we need to make it easier for them to get insurance" the biggest deal, at least in my mind, is this one covering pre-existing conditions. right now, if you have a pre-existing condition, e.g. cancer, and you do not have insurance, or your employer does not cover it - or perhaps you are unemployed - and if you try to get insurance on your own, you are likely to be denied. if you are offered insurance, it will be ridiculously expensive.

this is because the insurance company knows that they're going to take a huge loss on paying all of your medical expenses. the ppaca says that you can no longer base the premiums, or whether you will or not give someone insurance based on pre-existing conditions. people will be charged premiums, which what you pay to receive the policy, based on age and geography. so if you have two 40-year-olds, and one of them has the misfortune of having cancer, the other not having any pre-existing conditions; and they both live in, let's say, in virginia. under this, they will pay the exact same amount for insurance, the same premium. these other two points are just to make it easier to get insurance. right now, if you've ever tried to get insurance, it can be really hard to compare and contrast policies,

and to really understand what you're getting and what you're not getting. so this part of the act says that every state will set up one of these insurance exchanges, which will allow for more transparency in terms of buying and selling policies. and then this final part here, -though this is just an overview, i'm not covering everything, not all the details- is the idea that the government will also subsidize people getting policies, especially if they are in lower income brackets, or in more difficult financial situations. now on top of this, if you're deciding whether or not you support things, if you're saying, 'this might be a good idea', or 'this is a bad idea' because you don't like the government forcing things like this, there is also the issue of the cost. now this whole thing, even thought there might be

savings in terms of lower medical care, because people would get preventative healthcare, there is still a net cost to this. it will primarily be paid for by an increase to the medicare tax for high-income brackets. so it's really going to be larger medicare taxes on people with larger incomes. this is estimated to generate about $200 billion a year, (or $210 billion, there are different estimates) but that's going to bear most of the costs, and on top of that, there are some extra fees on insurers, as well as what's called an 'excise tax', which tends to be a large tax on a specific type of policy, which are referred to as 'cadillac' policies. these policies are very very very generous. this will be used to make up some of the cost of all this. once again, i'm not going to take any political sides on this, but hopefully this gives some clarity about what people are actually debating.