With Obamacare set to start in January of 2014, many are scrambling to learn everything they can about the new Affordable Care Act popularly known as Obamacare. How much will taxes go up? What kind of coverage will Obamacare offer? What happens if I choose not to use Obamacare?
To help you understand more about what Obamacare is and how it will affect you when it starts, as well as issues arising now, check out our list of 8 things to know about Obamacare now.
1. Obamacare Is Mandatory: Non-Compliance Taxes Will Be Assessed To Those Without Coverage
In case you hadn't got the memo, when Obamacare starts in January 2014, it will be mandatory that everyone have some form of health insurance either through the workplace or individually. Those who choose not to comply will be assessed a non-compliance tax. This decision was made and upheld in June 2012 by the U.S. Supreme that ruled the Obamacare non-compliance tax was well within the Congress' power to tax. The requirement does not apply to the elderly aged 65 and above as they will still be covered under Medicare.
So what kind of penalties could you be looking at if you choose not to comply with the Obamacare law? Initially the fee will be nominal as in 2014 non-compliant individuals will pay $95 per adult and $47.50 per child, max amount to pay being $285.
The penalties skyrocket however in the following years with 2015 seeing an increase to $325 per adult, $162.50 per child, and a family maximum of $975. Then in 2016 and beyond, a penalty of $695 per adult, $347.50 per child, and a family maximum of $2,085 per year. These fines for families are hefty enough that many will likely be forced into compliance two years after Obamacare officially starts.
In addition, employers will also be required to offer healthcare to their employees and if they choose not to comply taxes will also be assessed with penalties ranging from $2,000 to $3,000 per employee for not offering health coverage.
2. With Mandatory Healthcare, 30,000,000 Million More American Will Have New Obamacare Medical Care
So now that we know Obamacare will be mandatory when it starts, it's certain that a lot more people will have insurance. In fact, an estimated 30,000,000 new American will receive medical care who weren't before. Many Americans who are without coverage make frequent visits to the emergency room with more serious symptoms or complications due to lack of regular doctor visits. When Obamacare starts, the new coverage will allow for regular check-ups and preventative care visits, lessening the need to visit the emergency room. In addition, no insurance company can deny a person care due to pre-existing conditions. For doctors and particularly hospitals, Obamacare holds some benefits in the form of more new customers and less unpaid medical bills; however, charges for medical services will be regulated by the PPACA while providers who see Medicare patients will receive reimbursement based off performance.
With healthcare organizations being made more accountable for the wellness of the patients they serve, new programs will likely be required and this may lead to much higher costs for the organization as a whole.
Performance-based assessments are not likely to sit well with many health care providers as it is reminiscent of the same standards, which have been set in the recent past for teachers and administrators in public school systems. We have already begun to see a mighty exodus of those in the education field leaving due to the strenuous standards being placed on them and it leads some to wonder if when Obamacare starts we won't see many medical service providers leaving the field for similar reasons.
3. Insurance Companies Will Have To Compete For Government Contracts
One way Obamacare is looking to maintain affordability is by requiring that insurance companies compete for customers, which the administration believes will equal more affordable and better care overall. According to latest data released by the White House Thursday, roughly 90 percent of people who use Obamacare next year will have five different insurance company options to choose from. Allowing consumer choice is certainly appealing and one of the key selling points the Obama administration is pushing for their affordable care plan.
Of course there are no details yet about which states will have more options or what quality the options are at this point, but according to lawmakers, requiring multiple plans to compete for each customer will drive down prices while upping the quality of care provided. This may allow for a break up of the dominant insurance groups which own a majority of the insurance market in some states where less choice equals higher prices for consumers. At this point, over 120 insurance companies have applied to offer coverage in the 19 states where federal government run exchanges take place.
"The early signs are promising and demonstrate a significant increase in competition and an array of options for consumers everywhere," administration officials recently shared in a memo.
4. More Of Your Information and Data Will Be Available To All Health Providers Through Electronic Records
One much talked about change in Obamacare that is meant to lead to better care for users is the change to Electronic health records, or EHRs. This switch to electronic medical records would make it easier for personal medical information to be exchanged and transferred from doctor to doctor or hospital to hospital. To try to encourage this switch, the president adopted a $20 billion "stimulus bill" in 2009 which would pay doctors and hospitals for the switch over. In the long run the electronic system was said to save money and improve client care. The problem is, it looks like it won't.
According to a recent post on Forbes online, it appears the only ones who have benefited from EHRs are "the companies that lobbied for the legislation, doubling some of those companies' profits." The article goes on to mention that this kind of system has been tried in the VA and also has failed miserably while equally massive unjustified costs. Forbes states,
"Had anyone taken the time to look at the VA and its hospital system, which has had versions of electronic health records for decades, they might have been a little less optimistic. A recent National Center for Policy Analysis report explains, "efforts to integrate Department of Defense medical records for service members with VA electronic health records for new veterans have failed, hamstringing attempts to provide a continuum of care for veterans with service-connected conditions, as well as costing taxpayers more than $1 billion dollars."
Taking this into account we can see it's very likely Obamacare, while it's intentions may be good, may have multiple unseen costs and complications which, if not hammered out soon, could make for a very uncertain future.
5. No One Knows How Much It Will Really Cost Or If Obamacare Will Actually Work
The electronic record experiment is just one way in which the unseen costs may be more than we know, but what are other issues with the true cost of Obamacare? The Washington Post wrote an excellent summary of where we are right now as we wait for Obamacare to start, raising the point that right now, one of the scariest things about the new Affordable Care Act is no one really knows how much it will actually cost, or how "affordable" it will actually be for users and the country as a whole. Will taxes currently in place be enough to support it? Will we be able to absorb the taxes that may be coming? Here is an excerpt from that piece:
"We're in a bit of a whack-a-mole period with the Affordable Care Act's insurance exchanges. Each week brings new data from a new state on the premiums insurers intend to charge on the exchanges ... but it's worth stepping back and keeping two things in mind ... First, numbers are simply guesses ...
Insurers have to decide now how much they'll charge next year. Once they've settled on a price and the exchanges open, that's the end of it. They can change the price in the second year. But they can't change it in, say, February of 2014.
The problem is that insurers don't know what their costs will be next year. So they're guessing. They're guessing who will enter the exchanges. They're guessing who will choose to buy their coverage. They're guessing whether healthy, young people will obey the individual mandate or pay the penalty. They're guessing what price they'll need to be competitive against other insurers, given differences in the networks, benefits, etc. But as they'll admit to you with a bit of anxiety, they really are just guessing. If they get it wrong by being too expensive, they'll lose customers. If they get it wrong by being too cheap, they'll lose money..."
And, indeed, it's true that everything right now is a guess because we've never had anything like Obamacare in the United States before. In addition, there are other costs to consider as well. Considering the increased number of patients in the system, the need for more equipment, larger facilities, more beds, more employees etc. will arise. It's impossible to calculate if the increase in customer base will be able to even out the cost of care and if we can manage not to see too much of a hike in taxes as a result.
A huge variable that is incalculable at this point is what will happen with healthy young Americans. Will they buy in to the plan or will they choose to simply pay the non-compliance fee and avoid mandatory medical care? Probably the scariest part about this new plan is the unknown. What if Obamacare succeeds, what if it fails? And if it fails can we as a country recover long term or are we headed for a "huge train wreck" as some lawmakers have named it?
6. You Are Being Taxed For Obamacare Now
Okay, so in preparation for Obamacare's start, Americans are already paying out some taxes so the program can hit the ground running. These taxes include a capital gains tax, a Medicare payroll (FICA) tax increase, taxes on high medical bills, medical device taxes, and taxes on Flexible Spending Accounts (FSA). Obamacare starts in 2014. At that time we can expect to see additional taxes phased through 2018. These include extra taxes on health insurance companies, union members, and early retirees. But then, these are all just estimates. Add to that the fact that a lot of political leaders feel the way this thing is being implemented is poor and there are too many factors that have yet to be addressed -- and a large part of those is how taxes will be administered and collected. According to the Congressional Budget Office, Obamacare will raise over $1 trillion in revenue in its first 10 years-which we are paying right now. In the words of Jim DeMint, president of the Heritage Foundation,
"Obamacare taxes most people with health insurance, and most people without health insurance. Likewise, the law taxes many employers who provide health insurance, and most employers who don't provide health insurance."
When looking at the legislation Obamacare when fully implemented will have at least 18 tax increases, with 12 of them falling on the backs of the middle class (so much for President Obama's 2008 "firm pledge" not to raise taxes on the middle, eh?)
Here's a list of all the taxes coming when Obamacare starts in January 2014.
7. The IRS Will Be In Charge Of implementing Obamacare
Well with all the new taxes being implemented you can bet somewhere the IRS would be involved and in fact it will be the entity overseeing Obamacare when it starts. Hearing that when Obamacare starts the IRS will be in charge of it is likely to set number of Americans on edge as the recent IRS scandal which has emerged left many feeling a strong sense of distrust for the government agency.
In May 2013, it was revealed that U.S. Internal Revenue Service (IRS) targeted certain conservative groups and scrutinized them more heavily based on the names of the political groups and their conservative affiliation. Other allegations included the fact that the IRS released confidential tax documents to political opponents. This is a felony in the US and as a result investigations are underway, but the entire incident has left American increasingly distrustful of the group. In fact, a recent poll by the Washington Post, found that of the three recent White House scandals 44 percent think the IRS scandal is the most important.
This does not bode well for Obamacare if it is trying to gain supporters, and many have voiced their concern including National Republican Congressional Committee (NRCC) spokesman Daniel Scarpinato who recently said,
"Two of the most important things to people are their healthcare and their pocketbook. Clearly Americans are upset about what happened at the IRS, but the fact that the IRS is charged with executing a lot of Obamacare is of great concern."
8. Less Than 50% of Americans Approve Of Obamacare
With all the changes and so much unknown about how Obamacare will run when it starts in 2014, a recent poll by CNN, revealed that 54 percent of American don't actually want to see Obamacare implemented with 35% strongly opposed on the grounds that it is too liberal while 16% felt it was not liberal enough.
In Congress nearly three-fourths of democrats are in support of the plan while only 16 percent of Republicans support it.
The Obama administration is well aware of the opposition to the new plan and sees a tough battle is ahead. The president is likely to target young people but particularly the growing Spanish speaking population which are largely uninsured, while using modern means of marketing like social media, websites to recruit as many young, uninsured American as they can to sign up for the Obamacare insurance when it becomes available on October 1.
"We've got to make sure everybody has good health in this country ... It's not just good for you, it's good for this country. So you're going to have to spread the word to your fellow young people." said the president at a recent Morehouse College's commencement ceremony.
Why lies ahead for our country and the success or failure of Affordable Health Care is unknown. As more details emerge about Obamacare and its implementation when it starts in 2014, we'll continue to provide information.
In the meantime, share with us your thoughts, praises or concerns about the Obamacare mandatory healthcare program in our comments section below.