PPACA or "Obamacare" Basic overview of what is sometimes referred to as "Obamacare"
PPACA or "Obamacare"
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- Theres been a lot of talk about the Patient Protection and Affordable Care Act (PPACA)
- often referred to as "ObamaCare"; usually by those that are not a big fan of it.
- And my goal here is to not take any political sides, and hopefully give
- an overview of what all of the debate is about and what this 'Affordable Care Act' is all about.
- and I'm going to start with the most controversial part, and this is the 'Individual Mandate'
- And this is the idea that you either have to get insurance, or pay: a penalty; or a fee; or a tax.
- -Penalty- Which is now being referred to as a tax by many folks.
- And the idea here is that there are obviously many folks who are uninsured right now,
- and when they get sick especially when they get very sick they still get healthcare.
- In particular they will go to the Emergency Room. They will go to the E.R., and that is
- quite posiibly the most expensive part of the healthcare system to interface with.
- So there's kind of a moral argument here, that-
- 1) These people are getting sicker than they need to get if they had insurance. e.g. getting preventative care and not getting that sick.
- Then there's a financial or, I guess you could say, a fairness argument: that these people are getting sick,
- going to the E.R., and they have to be given care at that E.R. The Hospitals bear those costs, and then
- eventually recoup those costs by charging more for all sorts of other services.
- [These costs] go back to the people who are paying for the healthcare.
- So, if you have an Individual Mandate it will clear things up a little bit. People will have to
- essentially pay for the healthcare they are already getting. Now, the argument against the
- 'Individual Mandate' is that this is the Government putting into law that people *have to buy something*.
- In particular, that they have to buy health insurance. Now, the counterargument that many people make is that there
- is something similar going on with car insurance. If you want to drive in most states, you have to buy some type of
- car insurance or at least show that you have financial abilities to pay any liabilities you might have if you get into an accident.
- Now the 'Counter-Counter-Counter-Argument' to that is that, driving is something that someone chooses to do.
- That you do not have to drive, while in the case of health insurance, this is something that every person in
- the country is being forced to [purchase]. I'll leave it to you to decide where you sit on that,
- and what balances what other issue.
- Now, obviously, if you're going to decide whether you want insurance, or whether you are going
- to pay a penalty/tax, you have to figure out how high that penalty is going to be on you.
- Or if you want to figure out if this is a fair situation. You have to think about high that penalty is going to be.
- And the current provisions say that by 2016, which is when the full penalties take effect,
- you are going to have to pay the maximum of either 2.5% of your income, or $695 for an individual,
- or $2085 for a family. And there are exceptions, and this whole
- individual mandate won't apply to you if having/getting insurance will cost you more than 8% of your total income.
- or if you belong to a religion that does not participate in the healthcare system, then it doesn't apply.
- So you will never have to pay more than 8% [of your total income] to get an insurance policy.
- But these are the general penalties; If you made $100,000 and chose not to get the insurance,
- you would pay $2,500 (2.5% of income, and is greater than the minimum penalties).
- If your [family] makes $50,000, then the 2.5% [$1250] would be less than the [family] minimum, so you would pay $2085.
- Now the other provisions of the PPACA are based around the idea that, "If we want people to get insurance,
- - then we need to make it easier for them to get insurance"
- The biggest deal, at least in my mind, is this one covering Pre-Existing Conditions.
- Right now, if you have a Pre-Existing Condition, e.g. Cancer, and you do not have insurance, or your employer
- does not cover it - or perhaps you are unemployed - and if you try to get insurance on your own,
- you are likely to be denied. If you are offered insurance, it will be ridiculously expensive.
- This is because the insurance company knows that they're going to take a huge loss on paying
- all of your medical expenses. The PPACA says that you can no longer base the premiums, or whether
- you will or not give someone insurance based on Pre-Existing Conditions.
- People will be charged premiums, which what you pay to receive the policy, based on age and geography.
- So if you have two 40-year-olds, and one of them has the misfortune of having cancer,
- the other not having any pre-existing conditions; and they both live in, let's say, in Virginia.
- Under this, they will pay the exact same amount for insurance, the same premium.
- These other two points are just to make it easier to get insurance. Right now, if you've
- ever tried to get insurance, it can be really hard to compare and contrast policies,
- and to really understand what you're getting and what you're not getting.
- So this part of the Act says that every state will set up one of these Insurance Exchanges, which will allow
- for more transparency in terms of buying and selling policies.
- And then this final part here, -though this is just an overview, I'm not covering everything, not all the details-
- is the idea that the Government will also subsidize people getting policies, especially if they are in lower income
- brackets, or in more difficult financial situations.
- Now on top of this, if you're deciding whether or not you support things, if you're saying,
- 'This might be a good idea', or 'This is a bad idea' because you don't like the government forcing things
- like this, there is also the issue of the Cost. Now this whole thing, even thought there might be
- savings in terms of lower medical care, because people would get preventative healthcare,
- there is still a Net Cost to this. It will primarily be paid for by an increase to the Medicare Tax for
- high-income brackets. So it's really going to be larger Medicare taxes on people with larger incomes.
- This is estimated to generate about $200 Billion a year, (or $210 Billion, there are different estimates)
- but that's going to bear most of the costs, and on top of that, there are some extra fees on insurers,
- as well as what's called an 'Excise Tax', which tends to be a large tax on a specific type of policy,
- which are referred to as 'Cadillac' policies. These policies are very very very generous. This will be used to make up some of the cost of all this.
- Once again, I'm not going to take any political sides on this, but hopefully this gives some clarity about what
- people are actually debating.
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