The real reason Obamacare scares people

Despite the uproar over the individual mandate, the requirement would affect only a tiny portion of the population.

By MSNMoney partner Mar 23, 2012 2:27PM
 U.S. News & World Report on MSN MoneyBy Rick Newman, U.S. News

Sometimes the weatherman predicts a big storm that never materializes.

Politicians do the same thing, and right now many of them are warning that President Obama's 2010 healthcare reform law is about to come slamming into the nation like a once-a-century hurricane. Republican presidential front-runner Mitt Romney calls the law "an unfolding disaster for the American economy." His fellow candidate Rick Santorum routinely tells audiences that Obamacare "is the beginning of the end of freedom in America." Board up the windows. Hurry to the basement.

At the eye of this gathering storm is the "individual mandate," a key part of the law that will require most Americans to buy a minimum level of health insurance by 2014, or ask the feds for an exemption. Those in violation will have to pay a penalty fee that could be as high as the annual premium on a basic insurance plan. The mandate, which some people consider highly intrusive, generated court challenges almost as soon as Obama signed the law, with the Supreme Court now due to decide whether it's constitutional. (Oral arguments are scheduled for Monday morning.) If not, the whole reform scheme could unravel.

The landmark legislation, formally known as the Patient Protection and Affordable Care Act, is a complex monstrosity that's hard to understand, and except for a few provisions, it hasn't even gone into effect yet. So it's not surprising that many Americans fear the worst from a federal bureaucracy they don't trust. But healthcare experts who do understand the individual mandate find less to worry about than the politicians predicting disaster. If they're right, the nation might even survive.

The nonpartisan Congressional Budget Office, for example, predicts that 80 percent of the 272 million Americans subject to the individual mandate requirement will have some form of health insurance in 2014, when the law goes into effect. So no government thugs will be hassling them about failing to comply. Another 48 million or so are automatically covered by Medicare, so nothing would change for them, either. Out of roughly 322 million Americans in 2014, that would leave about 54 million out of compliance with the individual mandate.

Many of those people would wriggle out from the requirement, however. The Kaiser Family Foundation estimates that 40 percent of the uninsured would qualify for an exemption from the individual mandate, for a variety of reasons. Their income could be too low, for one thing, or the cost of insurance could exceed 8 percent of their income, or they could qualify on religious or hardship grounds. That would reduce the pool of mandate violators to about 32 million Americans.

Many of those people would qualify for subsidies set up under the law, which are meant to encourage people to buy insurance and help them pay for it. Some of them, no doubt, would do what the law says, and buy health insurance. So the number of Americans truly subject to penalties for violating the mandate would be less than 10 percent of the population--perhaps far less. Kaiser notes that in Massachusetts, which enacted a statewide law similar to Obamacare in 2006, about 70 percent of the people without insurance qualify for an exemption, and only 1 percent of the population pays a fine for going without coverage. And there's been little uproar about lost freedoms or a wrecked economy.

Changes are always more intimidating when they're poorly understood, however, and that is certainly one reason that Obamacare is so controversial and highly divisive. Polls show that Americans are about evenly split on their view of the law, with many Republicans strongly opposed to it and many Democrats strongly in favor. At the same time, only about one third of Americans say they feel they understand the law--and their self-assessments may be overly generous.

Complexity, therefore, may be the real reason Obamacare spooks people. For starters, the law could end up remaking the whole healthcare system—which accounts for about one sixth of the U.S. economy—in ways nobody can predict. The U.S. healthcare system was a mess before Obamacare, with soaring costs and millions of families that couldn't afford care. But that doesn't mean that shaking things up will automatically improve it. Changing things merely for the sake of change often makes things worse, and people are right to be skeptical.

The new rules will also force millions of Americans to navigate one more government bureaucracy, even if they want to do the right thing. People without insurance who want to apply for either an exemption or a subsidy would have to determine where they reside on a kind of income-insurance matrix that measures the relative affordability of insurance, indexed for family size, regional cost of living, and other variables that will change every year. Maybe the government will devise a snazzy website or iPad app that simply requires users to punch in a few handy figures, then generates a set of step-by-step instructions that can be carried out in half an hour. But anybody who's tangled with the healthcare bureaucracy or a government agency is justified to say, "I'll believe it when I see it."

Meanwhile, in the four-year time vacuum between the passage of the law and the date it goes into effect, we've been left to ponder a mystifying set of new rules from a government that seems disinclined to do us any favors. Santorum's rant about endangered freedoms has gotten a surprising degree of traction, but maybe it shouldn't be that surprising. These days, the government ought to first prove its worth and effectiveness and only then ask citizens to take a leap of faith and accept more complexity. It's hard to believe we need to make the system even more confusing in order to simplify it.

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Mar 26, 2012 1:40PM
Please someone tell me that I am wrong.  If the insurance companies have to take everyone that applies, it seems to me that indeed "the taxpayers" will not be footing the bill.  Those of us with regular policies will be paying it.  The govt is not going to pay any extra subsidies to private insurance that I know of to cover the additional costs for those who are currently being denied coverage.  Every time in the past that anything "extra" has been mandated my premiums have gone way up because the cost is passed onto the only ones who will pay for it, the regular policy holders.  I won't be getting any subsidy if I can no longer afford my premiums.  So- I'm no expert on this whole affair, is there a safeguard in place to ensure current policy holders of private insurance will not see their premiums jacked way up to cover this?
Mar 27, 2012 8:22AM
Firs of all, I just want to say is, if Obamacare is so great why doesn't Congress use it? I suspect none of them would, not just republicans either. I assure you no democrat would either. It's easy to talk about how great something is for everyone when you personally are not going to be using it. Secondly when the article discusses who this will affect, the figures are totally speculative. I do not care who the president is, or whether they are dem or repub, the Government has no common sense, and should not be entrusted to run healthcare. Just look at the bailout and the support for green energy, we supply the money and they waste it. Taxpayers should have first say in whether or not we should get Obamacare. I say we put it up for a vote, much like a regular election  so that every single american can vote and say whether we want it or not. My insurance stinks now, but it will be worse under obamacare. Why is everyone so in love with the man? I could care less if he's black or white, I grew up in a black neighborhood. I've seen black people before. And, I have met many many men and women (who are black) who would have made a better president. I don't care about the color of their skin, just leave my money alone. Stop taking my hard earned money and giving it to welfare frauders. And no that's not a racist comment, cause both races do this. I have seen it. Why take money from those who work and give it to those who refuse to? Some need it, of course, and I do not mind my taxes going to hard luck cases. But, when my money is given to people or companies who really don't need or deserve it, it pisses me off. He doesn't seem to grasp the concept that you only have so much money to spend, stop bankrupting this country. Instead of giving hand outs to those "too big to fail" companies why not give checks to those who have paid taxes, give them a huge "surplus" and let them spend it. Instead of backing up mortgage companies with OUR money, why not pay off a mortgage payment or two for those who have fallen behind. Stop giving our money to people and companies who waste it. And stop forcing gas prices higher in order to support your green agenda, it's not ready yet and too costly for the vast majority of people. Wait until it's workable and make sure people can afford to get to work NOW with the resources WE HAVE NOW. And stop forcing us to do what YOU want, such as Obamacare and let us live/run our lives the way we've been taught. The public is not stupid just because they disagree with the president and his people, it means we have a difference of opinion and that needs to be answered to. If you're going to take our money let us tell YOU how to spend it. Sorry I'm just fed up with this crap. I don't mean to sound rude.
Mar 23, 2012 4:30PM
I'm sure the US Government will run O'bama care just as efficiently as they have run the US Postal Service.
Mar 25, 2012 9:04PM

Will you ever sell your house?

Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it?

That's $3,800 on a $100,000 home etc.

When did this happen?  It's in the health care bill.  What the HELL does this have to do with Health care???  Just thought you should know.

SALES TAX TO GO INTO EFFECT 2013 (Part of HC Bill)  Why 2013? Could it be to come to light AFTER the 2012 elections?


So, this is "change you can believe in"?

Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8% Sales Tax?  The bulk of these new taxes don't kick in until 2013. 
If you sell your $400,000 home, there will be a $15,200 tax.  This bill is set to screw the retiring generation who often downsize their homes. 
Does this stuff make your November and 2012 vote more important? 
Oh, you weren't aware, this was in the obamacare bill?


They had to pass it to see what was in it?????

Guess what, you aren't alone.  There are more than a few members of Congress that weren't aware of it either.

Mar 27, 2012 8:24AM
The thing I want to bring up is "why does the biggest portion of this bill occur AFTER the 2012 elections?". If this bill were so great you would think that the President would want most of it implemented before. Also why is his campaign not promoting this legislation?
Mar 26, 2012 5:31PM

If this law was good, the people who wrote it (Congress and "senior staffers") would NOT have excluded themselves from its coverage.  I want the same health care the president and Congressional leaders take for themselves, or they should be limited to the same health care as the rest of us. 


The party of the people excluding the people, AGAIN!

Mar 24, 2012 3:44AM
"At the eye of this gathering storm is the 'individual mandate,' a key part of the law that will require most Americans to buy a minimum level of health insurance by 2014, or ask the feds for an exemption. Those in violation will have to pay a penalty fee..."

This is the problem. The government has no right to force anyone to purchase something they don't want to purchase. And they certainly don't have a right to force them to pay a fine - which is enforced by the threat of imprisonment...or death, if you rightfully resist being taken to jail for not complying with the fine. No individual, and thus, no government has that right. 

Rationalizing government force by claiming that "less than 10 percent of the population" will be penalized misses the point about freedom entirely. So, only a little under 30 million people will have their liberties violated by the individual mandate? That's not freedom. That's tyranny. Thirty million people forced to do something against their will, with fines, imprisonment, or possibly death if they refuse to comply. 

You gotta love government and its apologists. No, have to. The choice is not yours to make. That's how you know you're free, I suppose. 
Mar 27, 2012 8:24AM
65% of us didn't want it, yet we got it anyway, thank you Comrades Obama, Pelosi, and Reid,
welcome to Amerikastan!

Mar 27, 2012 8:28AM
Why must  the healthcare bill be 29,000 pages long? If congress made the credit card companies  streamline their policies into understandable English, why don't they do it themselves? We need all bills to stand on their own and be no longer than 100 pages so that everyone can understand them!
Mar 24, 2012 12:46PM

Nice explaination Rational Liberty!!


It amazes me what people are willing to give up. I would like to see changes to healthcare also, but not the way this bill was passed. For me it is nothing less than legalized coersion!!

Mar 26, 2012 5:05PM

Wrong.  The real reason many Americans fear "Obamacare" is just what Pelosi said - pass it and then you will find out what is in it.


It should be against the law to have a 2500+ page bill which contains everything but the kitchen sink, and that no one bothered to read before passing it.  Now THAT IS frightening.


The other reason is the reach of government into our lives and pockets.  If this goes through, just what will be mandated next??


Mar 27, 2012 9:38AM
Amendment 28

Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators or Representatives, and Congress shall make no law that applies to the Senators or Representatives that does not apply equally to the citizens of the United States .
Mar 26, 2012 4:46PM
So I run a business, a small business, where we have strived to make insurance a part of our perks we offer. We pay 80% of the premium. Our plan is now being called a cadillac plan, and we will have a surtax put on our premiums, to help support those who have lesser plans or no insurance. We will no longer be able to afford our plan because of the surtax, and oh yeah, the insurance company is set to raise the price of our premiums big time in 2014. If we lower our plan level, so get away from the surtax, we will now get fined for not keeping our plan the way it was, when this bill was signed, plus now I am offering lower insurance plan coverage to my employees, and the fine plus the lower premiums still costs us more than what we pay now. So the next plan would be to dump the insurance all together, pay the fine for changing the plan, and let my employees deal with the government. My employees leave to find a job with someone else would who had crappier insurance than we had when this all began, my business shuts down, because we can't find employees. So what was the point, to reduce small business owners down to the poverty level, create less jobs, and take competition out of the work place, that is called socialism!
Mar 27, 2012 8:20AM

Has anyone, anyone, actually read thru this "law" and cataloged the highlights, both good and bad??  How can something of which no one knows the contents be voted into law.  Isn't that like spending thousands and thousands of dollars on a house or car without at least seeing it, inside and out?  


Dumba$$ pukes in DC are very well down the road of ruining this country!! 

Mar 26, 2012 5:14PM

If you put the federal government in charge of the Sahara Desert , in five years there'd be a shortage of sand. - Milton Friedman

Mar 26, 2012 5:13PM

Derbysailor, you got it....  Why do you all think a bandaid costs $12 at the hospital.  Because, someone has to pay for all the people who pay ZERO for their care.  So those of us with insurance OVER PAY and those without PAY ZERO.  To make it worse, those who pay zero are the heaviest users of HIGH DOLLAR healthcare.  Double whammy.


That's fine if you don't want to pay for healthcare but you also aren't entitled to it then either.

Mar 27, 2012 8:35AM
Mandated.  No way.  My healthcare premiums have already gone up 35% over last year. Why were some exempted from it.  Why aren't the politicians and other government workers on this so-called great insurance policy.  Dump it.
Mar 27, 2012 8:22AM
The individual mandate is not the only scary part. Obamacare has already done terrible damage to the economy; why does no one realize this? Business stopped hiring immediately after the law was signed. My husband's small business actually laid off people for the sole purpose of getting under the headcount requirement to offer employee coverage. Now that there is talk of revoking the law, businesses start hiring again - these things aren't coincidences.

If the law is upheld, expect an increase in overseas outsourcing because that is a given.

Mar 27, 2012 1:17PM
When did government regulation and control ever lower the price or improve the quality of anything?
Mar 26, 2012 4:59PM
If it is sooooo good, why doesn't our president and Congress opt in?  They have their own Cadillac plan that WE are paying for.  Something VERY wrong with that picture.   What makes them better then the people that voted for them and pay their salaries.. the constitution says something about this folks.
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