Are Americans Forced to Buy Health Insurance?
Healthcare costs more than it ever has. With people living longer and advanced technology improving the quality of care, hospitals and doctor’s offices are costlier to maintain and charge higher fees. Because healthcare costs so much, insurance prices have raised as well, and many people find that they cannot afford to pay health insurance premiums.
People without health insurance cause the rates for existing policyholders to increase even further. When a person goes to the hospital with an emergency condition and cannot pay their medical expenses, these costs are absorbed by the hospital or passed along to the state through indigent funds or other programs. This results in care providers needing to raise their rates to compensate. Additionally, people without health insurance often avoid receiving medical care until they cannot avoid it, so their condition may be severe and expensive by the time they see a doctor.
In a controversial bill aimed at reforming healthcare, President Obama has set down the framework to make health insurance a necessity for all people in the country. The bill won’t completely go into effect until 2014, but certain changes have already occurred. While many people have resisted the bill, colloquially called “Obamacare,” it is designed to have a positive impact on both the economy and the health of individuals throughout the country.
How Obamacare Works
The goal of President Obama’s health reform is to reduce the overall number of people without health insurance. The first step of this plan is requiring all employers to provide health insurance or pay a fine; later, individuals will need to pay similar fines if they opt not to have health insurance. The bill also prevents insurance companies from denying people due to preexisting conditions, and the government will have more control over the health insurance providers operating in a state.
The insurance mandate should improve the overall cost of health insurance by causing more healthy people to purchase coverage; this should dilute the risk and lead insurance companies to lower their rates. It should also reduce the cost of healthcare as more people will be able to pay heir medical bills, thus causing medical providers to lose less money.
How will the Obamacare Bill Affect Me?
Many employers are already affected by the bill, which requires businesses to pay a penalty for uninsured employees. Only businesses with more than 50 employees are forced to pay these penalties, and in some cases employers are choosing to pay the penalty rather than purchase insurance as it is cheaper. This is not the case with all employees, however, and as the cost of healthcare decreases nationwide, employers may be more likely to provide group health plans. Additionally, businesses will be able to attract more employees with affordable group health plans once the bill finishes taking effect.
The individual healthcare mandate will be enforced through the tax code. Each year, you will receive a document similar to a W-2 that will prove you have health insurance. This will be attached to your taxes when you file. If you do not have health insurance, the penalty will be paid to the government at the same time as your taxes.
The legislation will require all insurance companies to offer a comprehensive policy to cover hospital stays, doctor’s visits, prescription drugs and other expenses. Young people who cannot afford a regular plan may be able to purchase a high-deductible policy, but this will be fairly rare; the bill allows people to stay on their parent’s insurance until age 26, and low-income families will still qualify for Medicaid.
Of course, if you do not wish to purchase health insurance, you can choose to pay the penalty instead. It starts at a low figure, around $95, for the first year and increases over subsequent years. The cost of the penalty will still likely be lower than the price of an insurance policy, and there will be income-based exemptions for people who cannot afford coverage.
Do I Have to Buy Health Insurance Right Now?
At present, you do not need to purchase health insurance, but you should be prepared to purchase a policy when the bill goes into effect in 2014. Fortunately, the insurance market will be different by then; after the initial wave of purchases, insurance prices should begin to decrease. There will be more competition between insurers and the shared risk of so many healthy applicants should work to lower the overall cost of coverage.
Meanwhile, you can begin searching for an individual policy or stay with an employer’s group coverage. Bear in mind that many of the protections offered by the government bill do not become effective until 2014, so you may still be turned away by an insurer due to preexisting conditions until then.