I was planning about talking about this a few months ago, but I completely forgot about it until I heard that on Tuesday, October 1, 2013, the United States Health Insurance Marketplace was open for business. Therefore, I’m going to give my opinion of the Patient Protection and Affordable Care Act (a.k.a. Obamacare). The open enrollment period for the Health Insurance Marketplace for the year 2014 is from October 1, 2013 to March 31, 2014. For those that purchase insurance through the marketplace by December 15, 2013, their coverage would start on January 1, 2014.

For those that are unaware, it was signed into law by President Barack Obama on March 23, 2010, and it would end up being amended by the 111th United States Congress via the reconciliation process with the Health Care and Education Reconciliation Act of 2010 and signed into law by President Obama on March 30, 2010. The law was largely passed among party lines with the Democratic Party mostly supporting the law and the Republican Party rejecting the law. According to Wikipedia, “the ACA aims to increase the quality and affordability of health insurance, lower the uninsured rate by expanding public and private insurance, and reduce the costs of health care for individuals and the government.”

I’m not going to go into all of the facets of the law, so if you want to read about it, there are 906 PDF pages that one can read about the Patient Protection and Affordable Care Act by clicking here. Additionally, if you want to read the 55 PDF pages of the Health Care and Education Reconciliation Act of 2010, you can read about it here.

Some of the most unpopular elements of the health care law include the following: the individual mandate, the employer mandate, and how it is financed to begin with.

Individual Mandate:

Starting 2014, most people must have health coverage or pay a fee (the “individual shared responsibility payment”). You can get an exemption in certain cases.

  • The fee in 2014 is 1 percent of your yearly income or $95 per person for the year, whichever is higher. The fee increases every year. In 2016 it is 2.5 percent of income or $695 per person, whichever is higher.
  • In 2014 the fee for uninsured children is $47.50 per child. The most a family would have to pay in 2014 is $285.

Note: In the wording of the law, a taxpayer who fails to pay the penalty “shall not be subject to any criminal prosecution or penalty” and cannot have liens or levies placed on their property, but the IRS will be able to withhold future tax refunds from them. Additionally, there are some exemptions to the fee for not having coverage, and I listed the source near the end of the post.

Employer Mandate:

  • A $2,000 per employee penalty will be imposed on employers with more than with more than 50 full-time employees who do not offer health insurance to their full-time workers (as amended by the reconciliation bill). “Full-time” is defined as, with respect to any month, an employee who is employed on average at least 30 hours of service per week.

Note: In July 2013, the Obama administration announced this penalty would not be enforced until January 1, 2015.

Financing:

I’m not going to touch upon all of the taxes that were put in place to fund the law, but I’ll post my sources near the end of the article so people can do some further reading.

Effective June 21, 2010:

  • A 10 percent tax now applies to the retail price of indoor tanning services at salons or establishments providing this service.

Effective January 1, 2013:

  • Income from self-employment and wages of single individuals in excess of $200,000 annually will be subject to an additional tax of 0.9 percent. The threshold amount is $250,000 for a married couple filing jointly (threshold applies to joint compensation of the two spouses), or $125,000 for a married person filing separately.
  • In addition, an additional Medicare tax of 3.8 percent will applied to unearned income, specifically the lesser of net investment income or the amount by which gross income exceeds $200,000 ($250,000 for a married couple filing jointly; $125,000 for a married person filing separately).
  • Most medical devices become subject to a 2.3 percent excise tax collected at the time of purchase. This tax will also apply to some medical devices, such as examination gloves and catheters, that used in veterinary medicine. However, eyeglasses, contact lenses, hearing aids, other devices for personal use, and devices that the general public typically purchases at a retail outlet are exempt from the tax.

Effective January 1, 2014:

  • The health insurance sector must contribute an annual aggregate fee of $8 billion in 2014, rising gradually to $14.3 billion in 2018 and indexed according to growth in premiums in years thereafter.
  • A new excise tax goes into effect that is applicable to pharmaceutical companies and is based on the market share of the company; it is expected to create $2.5 billion in annual revenue.

Note: To finance part of the new spending, spending and coverage cuts are made to Medicare Advantage, the growth of Medicare provider payments are slowed (in part through the creation of a new Independent Payment Advisory Board), Medicare and Medicaid drug reimbursement rates are decreased, and other Medicare and Medicaid spending is cut.

My Opinion:

Ever since President Obama laid out the plans for the Affordable Care Act, I have been strongly opposed to it on many levels. While I favor motorists having, at least, liability insurance to protect other motorists in case of injury, I don’t see any kind of rational logic requiring individuals to have health insurance. After all, who is that supposed to protect? Providing individuals with health insurance should not be a responsibility of the federal government; it should be an individual responsibility. People should have the right to choose whether they want health insurance or not and not be dependent on the federal government to provide for their health needs. I was initially going to not purchase health insurance, pay the fee each year, and be done with it. However, since I make anywhere between $16,320 to $18,240 a year (I was only employed at Alorica for one day this year at $9.50 an hour, worked at Target for six months at $8.50 an hour, and currently working at Best Buy at $9.00 an hour from August 2013 to present), the fee I would have to pay is anywhere between $163.20 to $182.40 (since those amounts are higher than $95).

Additionally, I am not fond of how the law will be funded. Granted, I don’t know how many small business owners make over $200,000, but I have a strong opinion that people don’t often work for other poor people. In other words, why would anyone work for someone that doesn’t make enough to pay them a sufficient wage? Increasing the taxes of those that make over $200,000 is going to hurt others because it will make business owners less inclined to hire new employees. Furthermore, since businesses with more than 50 full-time employees will have to provide health insurance for them or face a $2,000 penalty, it gives employers less of an incentive to hire new full-time employees. Due to the recession, tax increases that have been implemented over the past few years, the provisions in the health care law, and some uncertainty regarding the economy, many companies have already scaled back hiring new employees. Even though it won’t be implemented until January 1, 2015, I have several friends that have seen their hours at work reduced to under 30 hours a week as part of the employer mandate.

Regarding health insurance providers, since by law, they have to cover additional people and pay annual fees and must spend 80 percent (for individuals or group insurers) or 85 percent (for large group insurers) of premium dollars on health care costs and claims, it would only leave them with 20 percent or 15 percent respectively for administrative costs and profits, subject to various waivers and exemptions. With these regulations, it will be incredibly difficult for them to remain in business to make a profit without raising rates. However, since insurers are subject to a rate review if they want to increase rates by 10 percent or more, some insurance premiums have increased (while not increasing by 10 percent or more). If health insurance companies cannot remain in business, the only avenue that individuals will have in order to have health coverage would be the federal government. One would argue that it’s the plan of the Democratic Party to shift the country into a single payer system, similar to the United Kingdom and Canada, but I will not discuss this here.

All and all, this article is to inform people about my personal opinion regarding the Patient Protection and Affordable Care Act. I don’t expect everyone to agree with my opinion, and each person is entitled to their own opinions. From a financial standpoint, I don’t see this law being incredibly beneficial to the country and will lead our country into further debt and financial ruin. From a personal liberty standpoint, I feel that such a law is moving the United States to becoming more of a socialist country. In short, I firmly believe that the federal government should not be involved in health insurance, and the open market should dictate prices and quality of health care in the United States.

Source: Wikipedia – Patient Protection and Affordable Care Act

Source: Wikipedia – Health Care and Education Reconciliation Act of 2010

Source: Wikipedia – Provisions of the Patient Protection and Affordable Care Act

Source: U.S. Government Printing Office – Patient Protection and Affordable Care Act

Source: U.S. Government Printing Office – Health Care and Education Reconciliation Act of 2010

Source: Insure the Uninsured Project – The Affordable Care Act: How Is It Financed?

Source: HealthCare.gov – What if someone doesn’t have health coverage in 2014?

Source: HealthCare.gov – How do I get an exemption from the fee for not having health coverage?