The Affordable Care Act (ACA), also known as "Obamacare," has gradually been unfolding for the past couple years. Until now, the provisions of the federal legislation have focused primarily on employer-sponsored and other group programs. With the new 2014 individual mandates of the ACA, Americans everywhere are suddenly talking about their medical insurance.
The law requires that, no later than March 2014, all Americans have approved medical coverage. Failure to purchase medical coverage will result in tax penalties. Those who either have no medical insurance, those who have coverage that fails to meet the ACA standards or those who have been notified that their coverage is being terminated are now looking for insurance.
We are told that the intention of the ACA is threefold: 1. Guarantee that every American can have medical insurance, 2. Require that all medical insurance plans provide full coverage for all serious medical conditions without internal or lifetime limits, and 3. Make medical insurance premiums affordable for everyone. Certainly it would be hard not to applaud each of these objectives.
In order to accomplish the first goal, the ACA will no longer allow insurance companies to deny coverage to individuals with serious health problems. So far, so good. The second goal is satisfied by making sure that medical plans meet ACA standards for coverage. Again, a fairly simple task.
The third goal of "affordability" is the tough one. How do you guarantee coverage to individuals, no matter what their health condition, without increasing costs?
Washington's answer is quite simple. Require all Americans, particularly the young healthy ones, to buy insurance. If the estimated 7 million who fall in this category participate, then the revenues generated will offset the higher claims of the older, less healthy insured. Since the government is also offering tax credits to subsidize premiums for those who qualify, the premium revenues will need to cover that expense as well.
Additionally, the federal government will be adding thousands of jobs to the Department of Health and Human Services and the IRS so that these agencies will be able to continue to manage and police the success of the ACA. Hopefully, the medical revenues will be able to offset this expense as well.
As with most legislation, there are winners and losers. As I see it, the big winners under the ACA are those individuals who have been denied medical insurance in the past due to serious health conditions. Through no fault of their own, they have been in a position where all their assets were at risk. Hopefully, we will not hear any more stories of people who have lost everything because they couldn't buy or afford medical insurance.
On the other hand, the big losers will be the American taxpayers if the forecasted revenues that are supposed to be generated by participation in the ACA fail to materialize. Let's keep our fingers crossed.
