Current Events

Obamacare

I am sure you have all heard about Obamacare in the news and the recent government shut down as a result of the politics around it. This article is designed for those who want a straightforward and simple explanation of Obamacare. First off, what does Obamacare really refer to? Obamacare is another name for The Patient Protection and Affordable Care Act, which was signed into law on March 23, 2010 by President Obama. The foundation for Obamacare really rests on 3 principles that I will explain in a somewhat simplified way below: community rating, the individual mandate and subsidies for the poor. In order for Obamacare to work, all of those three principles have to be in place, similar to a 3-legged stool: take one leg off, and the stool falls down. What is community rating? Community rating in Obamacare requires health insurance providers to offer health insurance to everyone in a community at the same price, regardless of their health status. This makes sure that sick people will not be discriminated against by health insurance companies and will pay the same premium as a healthy person. (Currently sick people have pay more to get the same health insurance.) What is the individual mandate? The individual mandate forces everyone to get health insurance if they don’t have it (if they don’t get health insurance, the government will make them pay a tax or a fine). This policy is in place to make sure that not just sick people are getting insurance, but that healthy and young people are also getting insurance. This is an important leg of the stool because if only sick people buy insurance, then either the premiums charged by insurance companies will be very large and unaffordable. If the premiums are low, the insurance companies will lose money because they will not be enough to cover the sick people’s health care costs. It is essential for insurance companies to generate revenue off of healthy people to keep costs low for everybody. In addition, the individual mandate also prevents people from gaming the system by only buying discounted insurance when they are sick. What are subsidies for the poor? The individual mandate requires everyone to buy health insurance, but not everybody has the money to do so. This is where subsidies come in: for many people, depending on how much they earn, the government will help the person/family by paying all or part of the health insurance bill. Why did the Republicans shut down the government for this? Many Republicans believe in personal freedom and limited government. They felt that the indivdual mandate is an attack on personal freedom. They wanted to remove the individual mandate from Obamacare. The Democrats opposed this because if the individual mandate is removed, they feared that Obamacare would not work. Has something like Obamacare been tried in other countries? A couple of prosperous European countries such as Switzerland and Netherlands have health care laws similar to Obamacare in place. What is Obamacare’s promise? In theory, Obamacare offers the following promise: as a result of Obamacare, everybody will have affordable health insurance and less people will be scared of going to the hospital as a result of not being able to pay the expenses. Ultimately this will increase life expectancy because it makes it easier for everyone (rich, poor, healthy and sick) to receive the medical care they need. Whether Obamacare will deliver these benefits in practice remains to be seen.

–Amol Rajesh

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