Obamacare Will INCREASE Ranks Of Uninsured . . .
by Andy Adams on April 2, 2010 at 10:35 AM
Been looking over the provisions of the health bill . . . putting two and two together. Believe it or not, the incentives they have built into this thing will discourage the purchase of health insurance, not increase it. I am not seeing this reported anywhere in the MSM or on the conservative blogosphere. Exposing this could be a big coup.
Obamacare will actually make the number of uninsured Americans INCREASE. . .
The chief goal for healthcare reform, as repeatedly articulated by President Obama, Speaker Nancy Pelosi, and every Democrat who voted for it was the expansion of coverage to the estimated 32 million Americans currently uninsured.
Guess what? Their efforts will actually make the number of uninsured Americans INCREASE. Yes, that’s right. I said INCREASE.
Point #1 – Starting in 2014, health insurance companies will no longer be able to deny coverage to anyone with a pre-existing condition.
Point #2 – Starting in 2014, everyone must purchase health insurance or face an annual fine of $695 per individual not covered up to a maximum of $2,085.
Point #3 – If you make up to 400% of the federal poverty level, the government will cap your premium expense at 9.8% of your income. So, a family of four making $88,200 a year (i.e., 400% of the federal poverty level for a family of four) will not have to spend more than $8,643 ($720.00 a month) for health insurance. People making more than 400% of the federal poverty level will not have the benefit of the cap.
Point #4 – Employers with more than 50 employees must provide health insurance or pay a fine of $2000 per worker each year if any worker receives federal subsidies to purchase health insurance.
OK, let’s examine what sort of incentives these four points put in place. As of 2014, you have a choice between purchasing health insurance or paying a maximum annual fine of $2,085.
Let’s say you get the benefit of the annual cap, 9.8%, because you have a family of four that makes $88,200. Your health premiums cannot exceed $8,643 a year for your family. Let’s say you find a great deal on health insurance in the “exchange” that will cover your entire family for $5000 a year. Will you buy it?
“Of course! That’s a great deal!” As an insurance agent that sells group and individual health policies, I would agree. That is a great deal . . . right now. But, what if you and your family do not have any large health expenses this year? What if you don’t have any large expenses next year? You could have saved that $5000, right? Sure, you would have to pay the $2,085 as a fine, but you would still be $2,915 ahead. Over two years, that’s $5,830!
Why not wait until you have to buy health insurance? Why not wait until you or someone in your family has a health problem that will require a large expenditure? After all, the insurance carriers can no longer deny coverage based on pre-existing conditions! Now there is no incentive to purchase insurance before you really need it!
Thus, large numbers of individuals and families will now choose to forgo insurance and save their money (or spend it, who cares?) until they HAVE to buy insurance. As long as the cost of health insurance exceeds the penalty or fine they may or may not pay there will be an incentive to forgo coverage.
Consider Point #4. We insure many companies who pay 100% of their employees’ premiums. The costs of these annual premiums far exceed $2000 per year. Employers provide health benefits for two reasons: (1) they consider it the “right thing” to do; and (2) they believe providing benefits helps them recruit and retain quality employees. Both of those incentives have now been eliminated if their employees are now mandated to buy insurance and cannot be denied coverage. Thousands of employers will choose to pay the fines rather than continue offering health insurance coverage.
Combine these two incentives and the result will be a swelling of the uninsured. Far from solving the problem of the uninsured in America, Obamacare is about to make it far worse.