Health Insurance in the United States was implemented as a means to help individuals as well as families to cope up with the rising medical expenses. The annual report by has stated that the number of individuals seeking health insurance coverage (public) has seen substantial increases since 2010. This finding is in line with the assumption that the rising medical assistance costs have been putting a tremendous amount of pressure on people. They have been finding health insurance as the only viable solution to meet their medical expenses. But paying for insurance is not a relieving matter either (especially for low-income groups) and this problem does not end there. The rise in health insurance costs and health care costs have exposed the low income groups to a new but severe predicament as they are usually not covered by Affordable care act. When paying for health insurance is even more expensive than paying for healthcare, the very purpose of it stands disputed. If both the problem and its solution are simply unworkable for the poor, it makes it hard for them to comply with the rules. This is especially right in the case of the new rule that makes health insurance mandatory.
Introduction
There is a significant reason why health insurance premiums are getting just as expensive as health care costs. As we know, medical insurance claims are filed quite more often today than it was in the past. This is due to the tremendous advancements that have occurred in the medical sector in the last few years . Today, there are viable treatment strategies available for even the most chronic diseases which were considered untreatable in the past. As the possibilities in health care increases, the probability of an individual claiming medical insurance increases as well. So the insurance companies, as they are running a business, have no other solution other than to increase the premium amounts so that they can meet the increased number of insurance claims.
The low income groups are the ones who are mostly likely to be affected by the rule, which made it mandatory for everyone to have health insurance. They are caught in this predicament where they earn more than the income ceiling to be eligible for Affordable care but far less to afford health insurance on their own. In this sense, if it is just as expensive to pay health care costs on your own as it is for paying healthcare insurance premiums, then the very purpose of providing health insurance is questionable. Paying for insurance premiums in the current situation is simply to help the insurance company as this does not give any advantage to the payee. Therefore, the act of penalizing low-income groups for not having medical insurance is akin to punishing people for working hard to meet their ends. So it is important that we rethink making health insurance mandatory for everyone.
Even though most of the provisions in the Affordable Care Act, such as providing subsidies for retirees, children, and sick people, are appealing, penalizing people for not being able to afford health insurance is unjustifiable. It is in the best interest of the low income sections to have this provision repealed and given a choice to opt out if he/she finds that he/she can’t afford to pay for health insurance premiums out of his/her pocket.
Thesis statement: Because Health Insurance has become more expensive and unaffordable to many individuals than healthcare itself, the act of penalizing them for not having medical insurance is an act of injustice; therefore, it is in the best interest of these individuals that penalties and fines in this regard be eliminated as well as given a choice to opt out of health insurance for low income groups. This report shall study this issue further and draw credible conclusions.
Health Insurance and Affordable Care Act
The provisions in Affordable Care act are mostly intended to bring the uninsured masses of United State under coverage. The act focuses more on uninsured retirees, children, people who can’t afford coverage, people ailing from chronic illness, etc . These were the people who were usually neglected by insurance companies while providing insurance services in the past. But with the affordable care act, all of those who were once considered uninsurable can be brought under insurance coverage. And to make sure that no American citizen is left out from health care, this act also makes it mandatory for every taxpaying U.S. citizen to have private or public insurance coverage (valid from 2014). And defaulters will be penalized by fines or tax penalties. This act, which was applauded by many, had a serious flaw that most people overlooked at the time it was mooted.
This serious flaw behind the implementation of Affordable Care Act was the assumption that the rise in health care costs can be curbed by subsidizing health insurance to the poorer sections of the society. To understand the real reason why making health insurance mandatory is not practical in the current scenario, let’s go through the underlying assumptions in the Affordable Care Act one by one. Here, the assumptions made by legislators are twofold. One, by providing every class of people with health insurance, it will be accessible to everyone. And two, by making health insurance mandatory, no citizen will be left out in medical emergencies. But how far are these assumptions true?
The truth is that the health insurance subsidies are simply cushioning the hardships of expensive healthcare for the poorer sections. The rising medical expenses and health care costs are not affected by health insurance at all. The more the government provides subsidies to poorer sections to help them cope with the rising healthcare costs, the more it is likely for the insurance companies to seek for solutions to meet with the increased claim rate. This is the financial aspect of the business of insurance. One of the provisions given in the Affordable Care Act makes it mandatory for the insurance companies to make a public statement of justification for any premium hikes. But all the available data related to health insurance shows that the premium amount is already at an unjustifiable high.
The next assumption, that making health insurance mandatory can help all Americans get affordable care, is also questionable because of this rise in health insurance costs. As one of the provisions of Affordable Care Act strictly prohibits discrimination in providing insurance coverage (in case of unhealthy people who are usually considered uninsurable), the burden of covering their medical expenses shall have to be shared by the healthy class of people. This will further increase the premium amounts for health insurance. It is highly likely that this rise in health insurance trend can finally cause many individuals to choose to drop out of insurance coverage, especially low-income groups.
As mentioned in the beginning, if the probability of insurance claims increase, the insurance companies shall be forced to increase the premium amounts to meet the demands. For instance, at the time of a local epidemic, it is highly likely that the number of health insurance claims from this area will be high. But what if this local epidemic is seasonal and repeats every year. In that situation insurance companies shall be deterred to give coverage to this locality unless they are willing to pay very high premium amounts. In the situation of the average American individual this is happening already. The premium amounts are already at a blown up high . The brief statistical analysis done by the aforementioned report has already made it clear that the rate of hike of insurance premiums is following an exponential trend. So the question is, if the government is providing subsidies to help the poor sections, who is going to be affected by this rising health insurance costs? The answer is: the middle class.
The people who fall under middle class sections usually have a salary that is above the ceiling to be eligible for the Affordable Care coverage. They are deemed to be able to afford health insurance without subsidies. But the current scenarios are not helping their situation. A detailed statistical analysis given in the report by has shown that the average rise in insurance premiums from 2003 to 2008 in the United States was 26% for single and 33% for families. But the average income hike was only less than 10% for the same period.
Mandatory Health Insurance
The Supreme Court decision on Affordable Care Act has made health insurance mandatory. Individuals and family falling under the poverty line will be provided subsidies to help them pay for the premiums. They will also be given tax reductions to encourage them with the enrollment. The idea behind this is to ensure that no American is left out in medical emergencies. This act is the first step in eliminating the inequality that exists in availing healthcare benefits in the United States. The argument made by the congress in this regard is that most people who “self-insure” and take on their medical expenses without health insurance end up being unable to afford such medical assistance in the long run. Due to professional obligations and federal laws, hospitals are usually forced to take these cases by putting the extra costs of meeting the medical expenses of these people (nearly $45 billion annually) on the shoulders of insured people, thereby increasing the premium amounts . The congress believes that it is necessary that they take enough steps to avoid this unnecessary burden that may fall on insured individuals.
The article in has indicated the other side of this argument. They state that premiums are only likely to increase if healthcare insurance is made mandatory. Due to this law, households shall be forced to purchase coverage (while many more may have to purchase additional coverage) which will further force health insurance companies to boost the premium amounts by about 1.5% . Even though this mandatory health insurance is highly likely to decrease the insurance premium amounts of the sick and unhealthy, the burden of carrying them shall fall on the shoulders of healthy people.
Another quite significant burden imposed by mandatory health care is on state funds. As healthcare insurance has become mandatory, many states are now struggling to find funds to provide subsidies to the increased number of eligible individuals and families in these states. Many states are now rationing care because of this added burden caused by mandatory health insurance . And since premium amounts are constantly on the rise, this burden is only likely to increase.
Low income groups and Mandatory Health Insurance
The low income groups are the people who earn less than twice the federal poverty line which is almost 41,100 for a family of four . They are not covered by Affordable Care Act unless they have dependent children or are eligible in any other way mentioned in the Act. This means that they have to meet the rising health insurance premiums out of their small income. The issue brief by has stated that more than 83% adults who belong to low-income group do not have a regular doctor or a usual source of care. The report by has indicated the large percentage of American adults who are not eligible for coverage under Affordable Care Act. According to the author, adults under 65 who do not have dependent children and Employer Sponsored Health Insurance (ESI) have the least options due to this act. They will most certainly have to pay for insurance out of their empty pockets.
The truth is that the number of individuals who are covered by Employer Sponsored Health Insurances is on the decline. Since the economic recession of 2008, many employers have opted out of providing healthcare benefits to their employees. One of the primary reasons for this withdrawal is the rising health insurance costs. The employers are forced to bear the burden of health insurance premiums as most of their employees earn significantly lower income to have the insurance amount deducted from it. Affordable Care Act made it mandatory for employers to provide health insurance coverage if his/her business comprises more than 50 employees. This had forced many employers to cut short the working hours of a majority of their employees so as to reduce the number of employees who are eligible for insurance coverage.
Even though the provision for Medicaid expansion, wherein the Medicaid services shall cover incomes up to 138% of poverty line, is provided in the Affordable Care Act, the Supreme Court decision has made this provision optional for states (due to funding reasons). It is highly uncertain that how many states will be willing to comply now that it is optional. Even if this was accepted by these states, there will still be a large mass of people in the low income group (earning less than 200% of federal poverty line) who will be left out of subsidized insurance care.
It is suffice to say that the mandatory health insurance is putting unbearable burdens on low-income sections of people. The huge number of people who remain in the low income sections shall gradually find paying for healthcare less expensive than paying for health insurance. This is because, as mentioned by , by making health insurance mandatory, the healthy insured sections shall have to bear the burdens of the insured unhealthy sections. For the high-income families, this might not be much of a burden but a slight inconvenience. But for low-income sections having to pay for expensive health insurance premiums while fighting to meet their ends can be really detrimental.
This trouble was further increased by the provision in Affordable Care Act that made the low-income groups, who might otherwise have been eligible for subsidized health insurance, ineligible for subsidies if they are offered care through their employers . This means that even the low-income groups with dependent children in their family are not eligible for subsidized insurance coverage. The added burden of having to pay for health insurance premiums out of their pockets are forcing these families to opt out of health insurance. This is exactly an opposite outcome than that was expected from making health insurance coverage mandatory.
Another significant concern raised in the article by is the forceful nature of this mandate. By this rule, the government is forcing the citizens to come into contract with a private company. Unlike the previous mandates issued by Governments (such as filing income tax returns, responding to census, etc), where these were just obligations of citizens to their Government, this one is dictating in nature . With this scheme, the Government has entered a new era where with these personal mandates, the congress will be capable of controlling every aspect of an individual’s life. This rule has had individuals (especially low-income groups) have their choice of insurance companies decided for them by the Government. According to this is just as scary as having to pay for expensive health insurance coverage.
Needless to say, making health insurance coverage mandatory has put the lives of many low-income families under misery. These people, who are already struggling to pay for their basic needs, are now forced to worry about unaffordable health insurance too.
Conclusion
The low-income sections of our society have always been the victims of many unplanned and experimental reforms brought by legislators now and then. Even with perseverance and great effort these sections often find themselves at loss in making ends meet do to such reforms. The new rule of making health insurance coverage mandatory is not any different from this trend. Even though it is claimed that there is a provision for subsidized health insurance coverage for eligible candidates, the truth is that more than eighty percentages of low-income sections shall not be covered by these subsidies. Even though the legislators have promised to expand the Medicaid coverage, it has been fixed at a bare minimum of only up to incomes that are 138% of poverty line. And with the added burdens caused by increasing health insurance premiums and employers fighting to reduce eligible employees for insurance, the situation is getting worsened every day. In conclusion, legislators should refrain from imposing this rule until the concerns of low-income sections are eradicated. Governments should make sufficient provisions to ease the burden of low-income groups before making health insurance coverage mandatory. Until credible alternatives are available at least low-income groups should be given a choice to opt of health insurance if they find it very hard to afford.
Works Cited
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