Obamacare: A Real Reform? Author:    Posted under: Health InsuranceHealth Insurance questions answeredHealth Insurance Types

In March 2010, the United States government had passed a new health care bill called the Patient Protection & Affordable Care Act, H.R. 3590 (PPACA).  This was signed by President Barack Obama into law on March 23, 2010.*

PPACA includes numerous health-related provisions as the following:

  • Prohibiting insurers from rejecting clients based on pre-existing conditions
  • Expanding Medicaid eligibility (Medicaid being a healthcare program for low-income families)
  • Providing incentives for businesses to provide health care benefits
  • Providing Health Insurance exchanges

The cost of the following provisions is then offset by a variety of taxes.  Moreover, this law also sets a tax penalty for citizens who will not avail any health insurance (except if they are exempt due to low income).

The American population may be very interested in the fact that health care companies can no longer impose lifetime limits, or impose unreasonable annual limits.  They cannot also withdraw any policy except in the condition of fraud.  Preventive services should likewise be included in the standard health care place, as is immunizations.  For those dependents that are unmarried, they can likewise be covered under their parents’ own policy until the age of 26.

Among the good feedback received from this law is that insurance companies may no longer deny coverage based on pre-existing conditions.  This is a good thing since no exam life insurance, being one of the alternatives to this problem, could also be costly.  Since this will take effect on 2014, the government will now be creating a temporary insurance program for those people who have been uninsured due to pre-existing conditions.

The expansion of the Medicaid eligibility will cost the government billions of dollars.  It will enable subsidizing health care for those people who cannot afford it themselves.  To qualify, these people are the unemployed, self-employed, and those that work for businesses that do not offer health insurance.  Not only that, healthcare would now also be mandated – the law now requires that everybody be insured.  The government will now come up with what they call as “health exchanges” or a marketplace of sorts where consumers can shop for their insurance plans.

Mandating the American population to get insured will also impose additional taxes for those who will not comply.  For now, this would not apply, but come 2014, an initial rate of $95 will be taking effect.  This now would rise to $350 by 2015 and to $750 by 2016.

Insurance firms may be sulking at this point given that they can now no longer turn down any client based on pre-existing conditions.  However, the expansion of insurance coverage—which is now mandated by government—would enable these companies to turn the profit around.  Young people who initially thought that they would not necessarily need to insure themselves would now need to do so.  What’s more, the government would actually be willing to shell out money just to help move this along.

A downside to this though, come 2014, many skeptics are projecting that insurance companies will start to fall off the market.  It is because they will not be able to sustain the cost that the risks for the clients with pre-existing conditions entail, not even with more people buying insurance policies.  There will be an increase in the cost of premiums in order for these companies to maintain being profitable.  The rest of the companies who will not be able to adapt with this change will definitely see losses and eventually just drop out of the scene.

Although PPACA claims itself to be a reform for health care, many people are saying that the citizens should retain the right to choose which and what healthcare is most suited for them.  Citizens are also clamoring that what is needed is for disadvantaged individuals to be able to have the capacity to purchase the securities that they need, in the same way that the rest of America’s citizens are able to do so.



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