Health Insurance

In 2010, federal insurance legislation mandated that both employers and individuals must adhere to new insurance laws called “The Affordable Care Act” commonly referred to as “Obama Care”. Everyone in the nation will be required to have insurance by 2014 with few exceptions. These insurance laws have both advantages and disadvantages.

Mandatory Health Insurance Laws

Everyone, except those who can demonstrate financial hardship or religious objections, will be required to have health insurance by 2014. Other exempt groups include: American Indians, prisoners, uninsured individuals of three months or less and individuals who cannot find health insurance less than eight percent of their total income. Individuals with income below the tax filing threshold are also exempt. The Children’s Health Insurance Program (CHIP) and Medicaid programs will remain the same until 2019. Both of these programs insure people with incomes up to 133 percent of the federal poverty level. Any individuals with incomes 133 percent above poverty level will be able obtain insurance through state health insurance exchanges if employer-issued health insurance is not available. Even people with incomes of 400 percent above poverty level or $58,280 can qualify for subsidies. Each recipient’s insurance contributions must exceed 9.5 percent of his or her total income. This makes insurance more affordable for a group that would not typically qualify for subsidies.

Advantages of Mandatory Health Insurance Laws

Health Insurance Improves the Overall Quality of Living.

Although, there is significant opposition to the reform, it is designed to make America appear as attractive as other countries with a better overall quality of living. Japan, for instance, has a nominal mandate and a better quality of life. Only 10 percent of their citizens do not comply with the law. Japanese do not assess a penalty for the uninsured, but the United States is considering penalties of $695 for those who do not comply.

Insurance lobbyists (AHIP) state that the insurance mandate is required to support community rating and guaranteed issue. This same group argues that by broadening the risk pool with healthy individuals, insurers will prevent adverse selection. Several American states already have guaranteed issue or limits on community rating. Massachusetts actually has an individual mandate.

Reduces the Number of Unpaid Claims. In Massachusetts, mandatory health insurance laws were enacted in 2005. Subsidies were provided to poor and lower income residents. After the program was implemented, the state eliminated 28 percent of unpaid hospital visits. Thus the primary beneficiaries were those in the healthcare professions. The people got care either way, just some times the hospitals didn’t get paid. Those who lost were the taxpayers because it resulted in a 28 percent increase in taxpayer subsidized insurance thus increasing taxpayer expenses.

Traditionally, Massachusetts had the second highest insurance premium in any state. The premium rates are now some of the least expensive since the mandatory insurance law was passed. So now although healthcare is accessible to all residents, Massachusetts taxpayers are bearing the additional burden.

Disadvantages of Mandatory Insurance

Questioning Constitutional Basis of the Laws. Many people are opposed to the laws and question the legislation’s constitutional basis. The appellate court rulings are indicative of this general sentiment. For instance, only two of the four federal appellate courts have agreed to uphold the mandate. One federal appellate court declared it unconstitutional, and another court stated that the “Anti-Injunction Act” prevents a final decision before penalties are imposed in 2015.

After a poll in February 2012, seventy-two percent of registered voters deemed the laws unconstitutional. Half of registered voters want the Supreme Court to overturn the legislation.

Penalties for Non-Compliance. Penalties may be assessed, but no jail time will be assessed for non-payment of penalties. Non-compliant people will relinquish the right to any refunds from the IRS when taxes are filed. Penalties will be 2.5 percent of a person’s income or $695 and could reach $1000 by 2016.

Editor’s Note:

Even though the Massachusetts Insurance Law passed under Mitt Romney is seen as the prototype for Obama Care, Romney said in a recent USA Today op-ed piece “President Obama’s program is an unfolding disaster for the American economy, a budget-busting entitlement, and a dramatic new federal intrusion into our lives”. Romney also said that “young people coming up through the education ranks are not going to want to become doctors in the future, because of Obamacare”.

According to  Cornell University economics professor Richard Burkhauser, if a family earned $53,000, reaching 250 percent of the poverty line, the plan would cost 23 percent of their income. Spending 23% of your income on Health Insurance is not “affordable” so many of these families will end up simply paying the penalty, in effect just another tax with no insurance to show for it.

One unintended consequence of Obama Care according to Burkhauser is that Obama Care may actually make insurance less affordable for families where only one worker is entitled to coverage by the employer. According to the Washington Examiner, “This is because, if one member of a family receives employer-sponsored health insurance, other members of the family cannot receive subsidized coverage under the exchange. Other family members would have to purchase full-price health insurance, which would be prohibitively expensive for those at low incomes, those who are supposed to be protected.”  Another problem is that healthy individuals who felt it unnecessary (or unaffordable) to purchase insurance prior to the law would be forced to purchase something they felt they didn’t want or couldn’t afford, possibly spending 23% of their income to do so.  Tim McMahon~ editor

See Also:

• Group Health Insurance Policies
• Why Do I Need a Long Term Care Insurance Policy?
• Navigating the Politics of Health Insurance
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• The Life Insurance Safety Net
• 2 Types of Mortgage Insurance
• Should I Roll My Mortgage Insurance Premiums Into the Loan?
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About the Author:

Written by Rachel Oda on behalf of http://www.insuranceswami.com where you can find the insurance coverage you need at the best possible price.