Report on the Individual Mandate

Katie

Imagine being Katie, a twenty-something year-old married woman with a toddler. She and her husband have full time occupations that financially bring them a little over the poverty line, which is about $20,000 for her size of family. Before the Affordable Care Act was enacted in 2010, Katie paid $95 each month for insurance for her family. After “Obamacare”, the nickname for the ACA, became law, those premiums reached a drastic high of $350 per month. Even before her insurance reached this height, the couple struggled to pay bills and provide for their small family. With the individual mandate commencing in in January 2014, which enforces all individuals to either purchase health care or pay a penalty, Katie’s family’s finances will worsen or possibly improve(Walsh).

Before you allow your emotions to take hold of you and begin name calling as many do when they hear a political, yet personal story like this, please read on. Many factors play a role in this political issue of why the individual mandate exists. These factors include high costs within the healthcare system today, what creates those costs, and how those costs affect individuals. One person cannot be blamed for the high costs within the healthcare system.. In order to find where such blame goes, the costs and what causes costs should be studied critically to have a complete view of the picture. Once studied, we can move on to how the individual mandate might affect the country’s current health care system. In this report, each of the complicated factors mentioned will be discussed in order to find out how the individual mandate will help improve or complicate the costs of healthcare.

The Current Cost of Healthcare

Before the problems mentioned above are discussed, the current cost of healthcare must be known. Compared with the other expenses our country pays for every year, healthcare costs have reached the highest. In addition to this, the cost grows consistently  each year. As it escalates, it creates numerous difficulties. For example, families and individuals cannot afford health insurance, businesses have to continually revise what they offer to their employees; and taxes must increase in order to pay for the government programs, Medicaid and Medicare, or else capability to join the federal programs declines dramatically(Kaiser).

In 1970, 7.2% of the Gross Domestic Product went towards health care. By 2011, that percentage had risen to the height of 17.9%.  Though the percentage has been rising consistently, in 2002 it slowed down due to the recession.  These costs are projected to rise per person from $8,300 to $13,000 between now and 2017(CBO).

Although the financial measures put towards health care amount to high costs, only a small portion of the population take part in these costs. Almost 50% of the money spent on health care in 2009 paid for only 5% of the population and 21.8% of the money treated the 1% of the population whose expenditures were above $51,951(Kaiser).

Looking even deeper into the cost of healthcare,  the differences between gender and age groups can be seen. When it comes to health care spending,  those 65 and above spend on average the most at about $10,000. Compared with each other, children and young adults have a similar pattern of spending, averaging $1,750. In addition to this, women are more likely to spend more money on healthcare than men($4,635 vs. $3,559). (Kaiser)

What Makes the Costs So High

Although only a brief overview of the costs of healthcare have been given, what makes these costs so lofty can now be discussed. Costs increase for multiple reasons, including technological advances, wasteful spending, aging population, and unhealthy lifestyles. In order to provide a simple view of these influences, two diverse ones will be discussed: technology and waste.

The pursuit of new technology accounts for half of the current health care costs. As more unique and chronic diseases present themselves, more technological advances are pursued in order to find treatments for them. These illnesses are especially common among the elderly. Since many of these are unique, the same treatment cannot usually be used over and over again. In addition, since various illnesses are chronic, like diabetes or Alzheimer's, these treatments must last a lengthy amount of time to provide adequate results for the individual. This technology, then, is benefiting individuals but also costing the country millions of dollars. The Kaiser Family Foundation sums up this problem well: “A small share of the population accounts for a high proportion of costs”( Kaiser).

Wasteful spending accounts for one third to almost one half of the costs spent on health care. One study projected the waste to be $476 billion to $992 billion of the total spending on health care in 2011(Health Affairs). When calculated as a percentage, this adds up to 18% to 37% of the approximately $2.6 trillion amount of costs. Waste can occur in five different spheres of the health system: patients can be cared for in a way that leaves them with more harm than they had at first; patients might receive care which interrupts or complicates their admission to or discharge from the hospital; patients can overtreated by defensive medicine, which intended to be helpful is actually unnecessary or unsuitable; administration in hospitals, insurance agencies, and the government are inefficient and time consuming; and a service expected to cost a specific price actually winds up being more costly(Aetna).

How Costs Affect Americans

The rising healthcare costs affect the country as a whole and when dissected, these costs also affect two specific groups as well: families and businesses, the makeup of this country. As costs continue to rise, families must make difficult choices, such as cutting back on protective health care. In a survey, families answered that in certain circumstances they relied on home treatments instead of going to the doctor, skipped an important medical test, or did not fill a prescription that was needed(Kaiser). Any current monthly cost a family could actually afford simply does not provide the necessary coverage the family needs. In 1965 Medicaid stepped in to help children and disabled individuals who financially could not afford health care. On average, a family must be 250% below the poverty level to qualify for Medicaid. Because health care costs are rising much faster than the federal poverty level, many people with low incomes are still not eligible for government or state coverage. However, since their income is low, they still cannot afford to pay for the high premiums of current insurance. This problem within healthcare greatly affects families.

In addition to families being affected by high costs in the healthcare system, businesses are also affected. Employers and employees are both included in this issue. Premiums usually rise between 3 to 13% each year while wages and inflation only rise about 2% to 4% each year(Kaiser). Because premiums rise faster than wages and inflation, action must be taken within businesses. To combat the rising premiums while retaining coverage, a few things can happen. Employers or businesses can lower wages or hours,  or simply not allow employees to have raises. The other option is that employees must contribute more from their wages for their insurance or their health benefits could be reduced within the coverage. In both cases, employers and employees are seriously affected by the rising costs of health care.

The Mandate to the Rescue

After discussing dramatically rising healthcare costs, what makes those costs so high, and how those costs affect American citizens, it is obvious that many problems exist. In a hopeful effort to lower healthcare costs and to provide coverage for all Americans, Obama and his administration have enacted the individual mandate which will be enforced in 2014. This mandate requires all American citizens to be insured by the first of the year or penalizes those who are not insured. A detailed explanation as to how the mandate will fix the costs is longed for and even expected in such a report as this. However, that kind of answer is impossible at this time due to lacking results. Hopes, opinions, and predictions are offered, but certainty is unknown and could be unknown for years to come. This being said, a look at certain expectations will prove to be helpful and possibly encouraging.

According to most recent studies, the lowered premiums are supposed to save the federal government $190 billion in 10 years. Doing the math, the savings can be envisioned. If  the country spends an average of 2.6 trillion on health care each year, and $190 billion will be saved in the next decade, 13.6 billion will still be spent on healthcare each year. Though these savings might positively affect the government in the long run, currently individuals signing up for Obamacare are not saving, but losing money. Their premiums are skyrocketing and their coverage is changing dramatically(Walsh).

Costs within the government may not exactly be lessening either. With the mandate being enacted, about 16 million people will have new coverage. 6 to 7 million of these individuals will be receiving their insurance from Medicaid. Due to this action, those 6 million individuals will begin using $10 to $12.5 billion in uncompensated care from Medicaid. It is believed that if those individuals had remained without insurance funded by Medicaid, they would only be costing the system about $4 billion in uncompensated care(Forbes). In this sense, costs are not lessening, only shifting elsewhere.

This discussion could continue for hundreds of pages in comparing opinions and predictions of supporters and critics. “Supporters say the changes are holding down costs and increasing doctors’ and hospitals’ focus on keeping patients healthy. But critics say the law is likely having little effect on medical costs, and they accuse the federal government of meddling in the way healthcare is delivered”(CQ Researcher). To be blatantly objective and honest, the results simply are unavailable. The health of the country, the economy of the country, and various other factors cannot be determined at this point.

Necessary Virtues for the Future

This report leaves our figure from the beginning of the paper in a predicament. What Katie and her family have to rely on are only predictions and hopes for the future of our country’s healthcare system.  Although a purpose of the individual mandate is to lower the health care costs for families like Katie’s, the costs could rise or lower depending on many factors. Katie and her husband must have patience, intelligence, and unity along with the rest of America as they proceed down this unknown path towards hopeful progress for their family and country.

Works Cited

Walsh, Matt. “The Definitive Guide to How Obamacare is Destroying American Lives”. The Matt Walsh Blog. Web. 21 Oct. 2013.

“Health Care Costs, A Primer”. The Henry J. Kaiser Family Foundation. KFF. n.p. Web. May 2012.

Congressional Budget Office(CBO). Expanding Health Insurance Coverage and Controlling Costs for Health Care. Web. n.p. 10 Feb. 2009

“Health Care Costs, A Primer”. The Henry J. Kaiser Family Foundation. KFF. n.p. 25. Web. May 2012.

“Reducing Waste in Health Care”. Health Affairs. Health Affairs. n.p. Web. 13 Dec. 2012

“The Facts About Rising Healthcare Costs”. Aetna. Aetna. Web n.p.

Pipes, Sally. “ObamaCare's Individual Mandate Will Raise, Not Lower Costs”. Forbes. Forbes, 2012. Web. 20 Apr. 2012

“Health Care”. CQ Researcher. n. pag. CQ Press Web. 15 June. 2013

A Profile Focus on Obamacare

Loosely Based on a True Story

Beep. Beep. Beep. The sound of the alarm jerked Micah out of a deep sleep. Struggling to find the button that would quiet the wretched noise, he tore himself from his dream of the car accident he had caused the previous day. He shuddered remembering the words of the uniformed officer, “You’re a lucky guy. If you had been going any faster, you would have most likely been placed in the hospital”. Putting on his grey Coke uniform, he imagined the hospital bills that would have been added to the bills he already had: car payments and insurance, school bills, and now a ticket.  As he walked to his car in the 3 am darkness, a word his dad usd the night before popped into his head: Obamacare. As he drove to work, he recalled the conversation from the previous evening. His upset dad had said sarcastically, “Well, next year because of Obamacare you won’t have to worry about being uninsured.” Micah had dismissed the conversation, not wanting to discuss it then. “Obamacare. I wonder what it’s all about,” he thought to himself arriving at Wal-Mart to stock his Coke products. “If it’s going to affect me like dad implied, I should probably look into it”.

After finishing a 12 hour work day and working on some homework, Micah remembered his decision to discover what Obamacare was all about. As he strolled past his sister, Abi, on his way to the inviting, red couch in the living room, he asked: “Have you heard about Obamacare, Abi?”.

“Yeah, it’s one of the discussions in my political science class.” she replied.

“Do you have any idea where I should start in my research?” he asked.

“Well, it’s really complicated; so start on the individual mandate. That might actually affect you since Coke won’t provide you with health insurance”

“Ok, thanks!”

Micah relaxed on the couch and began to research the described mandate. To begin his research, Micah considered the actual law. Luckily he found it online(GPO), but understanding the 906 page bill proved difficult. After glancing through it, he studied a few articles that translated the bill.

From what Micah read, he discovered that part of Obama’s reform, the individual mandate, required individuals to be under a health insurance plan by 2014.  If the individual’s employer does not provide coverage, the individual must buy it. If the individual cannot afford coverage, then the government may offer assistance. As he read further, he also realized that when an individual refuses to purchase a plan, he will be taxed- $695(or 2.5% of income) after the third year(Blodget). “So if I refused to purchase the coverage, I would be taxed $540 according to my wage. But according to the rule, I would have the pay the tax since it’s higher than 2.5% of my income. Wonderful.”

After Micah retrieved a cold Coke from downstairs, he persisted in his research. He discovered next that for those who couldn’t afford the mandated coverage, subsidies would be available. Micah then realized that he would qualify for a subsidy since he earned less than $45,960(Luhby) “But how much assistance will I get?” Micah discovered that, “the lower your income, the larger your subsidy. For instance, those making $17,235 a year will pay no more than 4% of income, or $57 a month.” “Alright, this gives me a few choices: buy a health care plan on my own, buy one with a subsidy, or pay the penalty. It’s still not fair; in my 18 years of life. I have never used health care and won’t use it as long as possible. So why should I be forced to purchase something I don’t need right now? How does my getting health care play a part in the whole reform?”

On his day off the following day, Micah decided to form an answer to his last question. After comparing sources on the internet, he understood. “In order for premiums to lower and for the government to provide subsidies, extra money must come from somewhere,” he said to himself. The young and healthy Americans, like himself, would purchase health care, but would likely not use it because of good health. Hence, his unused money would be put into a pool. This “extra” money would indirectly lower premiums and allow the government to subsidize. “Basically, I will be paying for other people to receive health care.”

He read: “If enrolling in coverage through the state exchanges is too expensive or too confusing, uninsured individuals might choose to skip it and pay the fines instead. That could lead to fewer healthy people enrolling -- which would make coverage in the exchanges more costly for everyone, since they would become populated primarily by people with greater medical needs(Luhby).” “Ok, I understand why it’s necessary. But it seems extremely unfair. This law seems to benefit only the sick. I wonder if it’s even legal!” he muttered to himself in frustration(Thoma).

Although late and Micah had to work early the next morning, he continued researching to find an answer to the probing question. He discovered that though there had been much questioning as to whether the mandate was Constitutional,, the mandate proved to be legal labeled as a tax(Constitution).i

“I do remember reading that some parts of the mandate were unconstitutional though.” Micah thought. He remembered correctly. Micah’s brother-in-law, Luke, worked for “The Becket Fund for Religious Liberty”, which had been defending individuals and groups in court against a first amendment violation. “How does this relate to the individual mandate though?” Micah wondered.

He found out that the government now requires all insurance companies to offer contraceptives, even pills that cause abortions, in all their plans(Becketfund).i “Ok, so not only am I putting money into the health care system, of which I will rarely take a part in, but my money might provide abortions for people.” This fact really hit Micah emotionally due to the fact that abortion, the murder of a child, was completely against his beliefs. “The first amendment states that it is unlawful to force someone to act against their religious convictions. But the government will be forcing me to act against my religious morals in this way.” Micah said, slamming his laptop shut as the realization of how deeply this new mandate would affect him surfaced.

The next evening when Micah was sitting with his family eating dinner, Abi asked him how his research was coming.

“Well,” Micah began, “I have three options as a healthy, American individual. I can purchase healthcare coverage on my own, use a government subsidy to help pay for coverage,  or I can refuse coverage and be taxed. In all three cases, I will be putting my money into a health care “pool”, my money will help pay for the health care of other individuals who actually need health care, since I won’t be using the coverage. In addition to this, my money will be paying for contraceptives that provide abortions for people using the coverage. Basically I am being forced to pay into something that I will rarely use and that provides options for people that I am morally opposed to.”

“Can you do anything to oppose the mandate?” asked Micah’s sister, Susanna.

“That’s what I am going to figure out next. There has to be something I can do to stop this injustice, not just for myself, but for other American individuals as well.”

And that began Micah’s next research project. He, like many other individuals, is not satisfied with the mandate that is being forced upon him. Therefore, he will attempt to find a way to stand up to it.

Works Cited

U.S. Government Printing Office. Public Law 111–148. 23 Mar. 2010. Web. 23 Mar. 2010 (http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf )

Blodget, Henry. “How Much is The Obamacare Penalty Tax?”. Business Insider. Business Insider, 2012. Web. 2 July. 2012.

Luhby, Tammy. “What You’ll Actually Pay for Obamacare”. CNN Money. CNN Money, 2013. Web. 21 Aug. 2013.

Thoma, Mark. “Why We Need an Individual Mandate for Health Insurance.” Economist’s View. Economist’s View, 2012. Web. 28 Mar. 2012.

Article 1, Section 8 of the Constitution.

Becketfund. Becket Fund for Religious Liberties. Web. n.p.