If Republicans repeal the individual mandate, it could put an end to Obamacare. Once healthier people are no longer compelled to subsidize Obamacare, the system is likely to collapse.
The initial motives behind Obamacare were probably good: provide the American people with affordable and near-universal healthcare. However, the reality of Obamacare has been much different. Healthcare plans are ridiculously expensive, with the burden of paying for the system largely pushed onto healthy people and taxpayers in general.
Obamacare did little to nothing to address the deep systemic issues that plague the American healthcare system.
For 2018, Obamacare premiums are expected to rise steeply in most states. In Iowa, for example, silver plan premiums are expected to rise by a whopping 69%. Across all states, silver plan premiums are set to rise about 34%. Gold plans will see rates increase by “only” 16%, while bronze plans will increase by 18%, on average. These price increases will be a bit easier to manage, but with premiums already sky-high, many Americans will feel the pinch.
Of course, subsidies are available for those who are unable to afford healthcare insurance. I’m all for helping people secure health insurance. However, our current healthcare scheme seems to be another case of throwing good money after bad. Obamacare did little to nothing to address the deep systemic issues that plague the American healthcare system.
Meanwhile, it’s individual mandate and various restrictions that have been keeping Obamacare afloat. However, skyrocketing prices and the likely end of the individual mandate may be the death of Obamacare.
Repeal of Individual Mandate May Signal Death of Obamacare
“The individual mandate is at the heart of the PPACA (AKA Obamacare). The remainder of the statute necessarily depends on its inclusion because without the mandate, the statute’s reforms cannot work as intended.” – Congressional Letter to Supreme Court
The individual mandate is the ghost in the machine for Obamacare. It compels people, including those who probably don’t need healthcare, to buy healthcare. The choice is simple: buy healthcare or pay increased taxes.
Many people would prefer to get something in return for their money. They won’t see any direct benefits of paying higher taxes, but by enrolling in Obamacare, they can gain access to health insurance. As a result, many will choose the latter. May as well get something for your money, right?
However, Republican tax reform efforts are likely to put an end to the individual mandate. The Republican Senate plan features a repeal of the individual mandate, meaning that people will not be penalized if they don’t have health insurance. The recently passed House tax reform bill lacked such a mandate, but most analysts expect little resistance from the House to add the repeal.
Obamacare takes money from healthy people to pay for healthcare of the sick.
The repeal of the individual mandate could signal the end of Obamacare. The mandate compelled healthier, often younger people to buy insurance. These healthier people paid a lot for healthcare all while rarely using it. Their money helped subsidize healthcare for people who used it more frequently, such as older individuals and those suffering from chronic diseases.
With the end of the mandate, Obamacare may no longer be financially tenable. Already, the healthcare program is on unstable ground. Soon, its entire foundation may be wiped out.
Obamacare Was a Doomed and Ill-Advised Wealth Distribution Scheme from the Get-Go
That individual mandate? Yet another wealth redistribution scheme. Such schemes can be useful for paying for public goods and ensuring some basic level of equality. Obamacare takes money from healthy people to pay for healthcare for the sick. That’s basically how any pooled insurance scheme works. In particular, however, Obamacare burdened younger people, a cohort that has struggled since the Great Recession, requiring them to pay for older people.
The hollowing out of America’s manufacturing business and the declining value of college degrees, among many other factors, mean that younger generations will not be afforded the same opportunities as those of the past.
Before Obamacare rates, older people could be charged as much as 6X for healthcare as younger people. Higher rates are needed because older individuals generally need much more healthcare than younger individuals. In order to decrease burdens on older individuals, Obamacare mandated that insurers could charge only 3X as much as younger people. This brought premiums down for the elderly, but also increased premiums for the young and healthy.
Problem is, millennials have struggled mightily since the Great Recession. It’s tempting to blame that on generic generational laziness, and to be sure, some millennials have not taken advantage of the opportunities afforded. However, the hollowing out of America’s manufacturing business and the declining value of college degrees, among many other factors, mean that younger generations will not be afforded the same opportunities as those of the past.
Wealth redistribution is necessary in some instances, but taking money from young people and small businesses isn’t going to yield great results.
Of course, many middle and working class Americans of all generations are struggling with the systemic shifts in the economy. Generation versus generation “battles” aren’t overly useful. However, with Obamacare, it’s fair to question if younger people have the funds to subsidize the healthcare of older generations.
Consider that student loan debt has surged to $1.3 trillion, with the average student taking on roughly $38,000 worth of loan debt. Homeownership among those aged 25-34 has also plummeted, with only 8% of said people owning their shelter. I can rattle on about the stats, but that doesn’t add much to the argument at this point.
Likewise, many small businesses were hit hard by Obamacare. Many such small businesses are also not in the position to be subsidizing healthcare for others. Wealth redistribution is necessary in some instances, but taking money from young people and small businesses isn’t going to yield great results.
Now, the untenable position of Obamacare is coming to a head. If Republicans are able to successfully repeal the individual mandate, it could signal the demise of Obamacare entirely.