Suppose you are under, say, 40 and healthy. Maybe you need to go to the doctor once every couple years for something like a sinus infection or a flu shot, but nothing more. Under Obamacare, health insurance is going to cost you, at minimum, $12,000 a year. That’s right. $12,000 a year for one office visit every other year.
Of course they can’t force you to buy health insurance and they can’t fine you for not getting health insurance. They can only tax you for not getting health insurance. What is the tax?
An individual with $30,000 annual income would pay a $300 penalty in 2014, $600 in 2015 and $750 in 2016. An individual with $50,000 annual income would pay a $500 penalty in 2014, $1,000 in 2015 and $1,250 in 2016.
So, you can pay $12,000 a year or you can pay between $300 and $1,250 a year plus the $100 of that office visit once every other year. Savings over two years? Between $21,400 and $23,300. Real money, huh?
But what if you get really, seriously sick or are involved in a terrible accident? No worries. Under Obamacare, insurance companies can no longer deny you coverage due to pre-existing conditions or even require you to pay increased premium costs.
Did you break both your legs in a skiing accident? No problem. Call up the insurance company, buy a plan, pay your first month premium and file a claim. When your ambulance bill, ER, doctor and hospital bills are paid, drop the plan. Cheap and easy.
Let’s call this the Economy Plan. Basically, it is catastrophic health care plan for the paltry cost of $300 to $1,250 a year.
People are going to figure out the Economy Plan very quickly and, when enough people go with it, the system will collapse. The thing is, the court ruled that the Economy Plan was a tax, not a fine. What’s the difference?
“The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penalties for unlawful acts often are; and the payment is collected solely by the (Internal Revenue Service) through the normal means of taxation,” Chief Justice John Roberts wrote in the SCOTUS decision.
That means that if the penalty were so high that you had to buy insurance, it would no longer be a tax, it would be a fine. Oops. If it is a fine, it is almost certainly unconstitutional. The court required that the tax be much less than premiums.
So there you have it. The Economy Plan is almost certainly going to destroy Obamacare and the obvious fix – increasing the tax penalty for not purchasing insurance – was largely precluded by the Supreme Court.
Far more Americans will opt out of insurance coverage than was anticipated in any Obamacare model. In fact, many people who had insurance before the passage of the law will drop coverage. Now that they have no fear of being denied coverage for pre-existing conditions, healthy people have no financial reason to be insured.
Insurance rates will necessarily skyrocket casuing more people will opt for the Economy Plan and, thus, rates will further increase. This is the insurance death spiral and it is inevitable. It is going to happen. The system will collapse.
The architects of Obamacare aren’t stupid. They know this is coming. Blame will be placed at the door of the insurance carriers. Those speeches have already been written. Their shock and anger will be convincing.
I am guessing we won’t like what they propose as a “fix”.