One thing is clear about Obamacare – it is here to stay for the foreseeable future, even if the President has delayed the implementation of some aspects of his plan. That means we had better start preparing for the program whether we agree with it or not.
We had better get ready for Obamacare because it will go into effect on Jan. 1, 2014, and when it does, Obamacare will be the law of the land, and we’ll have to obey it.
For those of you who have been living under a rock, Obamacare will require all Americans to buy health insurance or pay extra taxes. Practically, that means it will raise the average person’s income tax by around $100 if they don’t buy insurance. At the moment, nobody will go to jail or face prosecution for not buying health insurance.
What’s Been Delayed
The provision of Obamacare that has been delayed is the employer mandate, which would require businesses that employ more than 50 people to provide employer health insurance. Obama has delayed this for one year because it has been extremely unpopular.
This will not affect most businesses because the vast majority of small businesses employ less than 50 people. Larger employers have until next year to start providing insurance unless Obama delays the enforcement again.
The provisions of Obamacare that will affect most people, the insurance mandate and the health insurance exchanges that are supposed to help people buy insurance at a lower cost, will still go into effect. The major effect on average families will be the health insurance exchanges.
Some of these provisions, such as laws banning insurers from denying those with preexisting conditions, may help average people. This will help some people, but it could hurt others by raising health insurance costs.
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Effect of Exchanges Mixed
The effects of the health insurance exchanges will vary from state to state. In Colorado, where I live, my insurer has informed me that he will no longer offer the plan I currently have. My premium did go up slightly in July because of additional charges imposed by Obamacare.
Instead, my insurer has promised to offer me new plans through the exchanges. The health insurance exchanges are online marketplaces where individuals will be able to shop for insurance. Those who qualify for the exchanges will get cheaper health insurance using a tax credit.
The tax credit is the amount of the health insurance policy that the federal government will reimburse. It’s based on a number of factors. Basically, if your credit is $300, that’s the amount of your insurance tab Uncle Sam will pick up if you qualify for the exchange. The credit is handed out on a monthly basis.
If you qualify for the exchanges and they work as planned, they will be a good deal for those who qualify. In Colorado, that’s individuals making between $15,000 and $46,000 a year, couples making between $20,000 and $62,000 a year, and families making between $31,000 and $94,000 a year. That means most of the population should be able to take advantage of these exchanges in the states that offer them.
How The Exchanges are Supposed to Work
To find out what your state is offering, go online. A few states like California and Colorado have websites that explain the program and what it can provide. Colorado has a calculator on its website that shows what your credit is supposed to be.
Obviously, many details of this system, such as the policies that will actually be available, are up in the air. I wasn’t able to tell if the policies offered would be Preferred Provider Organizations (PPOs), which let you pick your doctor from a list, or Health Maintenance Organizations (HMOs) that require you to go to certain doctors. Most health insurance policies currently offered in the US are PPOs.
Most likely, the health insurance offerings through the exchanges will be what’s currently in the market. The only difference will be how it is paid for.
If you have an existing policy, your provider will tell you if it is going to change and what alternatives will be offered. The letter I received from my insurer indicates that some popular plans are going to be discontinued in Colorado.
Insurance agents will have to get a special certification to work through the exchanges, which means your insurance agent may stop offering health insurance. You’ll have to check with your agent to see if he is participating in the program or not.
The exchanges will benefit self-employed people and persons in rural areas if they work like the one in Colorado. Most people will be able to take advantage of them.
Some people that currently get insurance through their providers might be better off going through the exchange. Obviously, you’ll have to see how it actually works in your state. If it works like unemployment insurance, you might end up having to call or email your state legislator to get the benefits you want.
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How will it Affect Insurance Rates?
The big question is how Obamacare will affect health insurance rates. From the way it looks now, health insurance will cost less for those who can use the exchanges, but rise for those who cannot. The administration is claiming that the costs of average policies in six states, including Colorado, will fall by about 18 percent.
The problem with this hypothesis is that the policy costs that will fall are for small businesses with less than 50 people that offer insurance. Since those businesses don’t have to offer insurance, that may not affect many people. Press reports indicate that the lower rates may not go into effect nationwide.
Nor is it clear if these rates will be available to individuals and families directly. Part of the problem is that to offer lower rates, the exchanges will have to attract large numbers of younger and healthier people who will pay for insurance, but not use care. If that doesn’t happen, the cost of the premiums might be higher than the administration expects. There are fears that it will be cheaper for younger people to pay the tax penalty for not having health insurance than to buy insurance, so that’s what they’ll do.
The big problem is that those who are most likely to sign up are those who need health insurance, namely sicker people and older people. This is one of the big problems currently affecting our health insurance system – the young and healthy don’t participate, but the sick and old do. That means costs might go up because insurance companies will be facing higher costs, but have less money coming in, and whether this forces companies out of the health insurance business remains to be seen
One possible outcome is that major health insurance companies might pull out of states that have older or less healthy populations. If that happens, costs could increase and there could be less choice in health insurance plans.
Effect on Medical Care
So how will this affect medical care? Well, if it works as it is supposed to work, there might be longer lines at clinics and doctors’ offices as lots of new patients show up. That could create a real problem in rural areas and some smaller cities that already face shortages of doctors and medical professionals.
So What Should You Do?
My recommendation for average people is to adopt a wait-and-see attitude. Wait and see what your insurance company or employer does and what they will offer. If your insurance will change, your company will let you know.
If they offer an exchange in your state, then by all means, go to it and see if you can qualify for cheaper insurance. Regardless of your feelings on Obamacare, it makes absolutely no sense not to take advantage of cheaper health insurance when your tax dollars are funding part of the tab. This doesn’t mean we quit fighting Obamacare or that we quit busting down the doors of our congressmen and women to do the right thing and defund/repeal this whole boondoggle mess. But until the gutless wonders in Congress stand up and finally do the will of the people, we have to live with the mess they’ve created. Unfortunately, that means working the best we can within the system.