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 27, 2012 11:59AM
Things ObamaCare DIDN't DO!

1) Increase the number of Doctors, Nurses, etc...  So who is going to treat these 50 million people who will now want physicals?

2) Reduce the cost of Drugs and Medical Equipment.   Canada "negotiated" (strong armed) the drug companies into reducing the cost of the products.  The USA doesn't.

3) increase competition in the Insurance industry.  Sure they will create the "market".  But no insurance company will care about an individual account when they can go after the large corporate accounts.

4) Break up healthcare conglomerates.   When doctor's work for hospitals and labs it is too easy to increase profits by ordering more tests.  If the doctor works for a private practice,  they are less likely to be influenced.
Mar 27, 2012 11:57AM
We need to overthrow our King.  He didn't think this through and it's only going to get worse because the real problems are not being addressed at all.  I thought I worked for a good company but the healthcare at HP is not much better than Medicare.  We pay on average about $800 more per month for our lousy coverage than I did at the last job I had.  Not to mention the hours we spend on the phone to find out why something is not covered.  I screwed up.  From now on the first question I ask a recruiter is what type of healthcare is being offered.
Mar 27, 2012 11:56AM

Health care is a scam.  I am healthy, yet my rates continue to go up every year.  Not to mention that the past three years my coverage has went down.  I am not sure that this is a great plan, but at this point I am willing to try anything.  Also, why is it that Republicans are always against anything they did not come up with, or vise versa.  Why don't Politian's work together for the greater good of the country?  I do not affiliate with either political party, and that seems to be what all of this is about, POLITICS!  The american citizens are the ones who suffer in this debate.   

Mar 27, 2012 11:56AM
Just joking Huntchef. I only want to make your point. Why do I have to pay for someone eles's healthcare? I dont want to and shouldnt be made to.
Mar 27, 2012 11:56AM
Don't even assume that you or anyone else is going to be paying for my golfing.  I worked for 50+ years in two different career fields to finance my retirement activities. hard work, but fun. Now I want health care paid by the government in my senior years. And you should too when you get too old to produce work for society.  It's the honorable way to take care of your brothers and sisters in life.
Mar 27, 2012 11:55AM
Postal Service:                               Bankrupt
Social Security:                              Bankrupt
Medicare:                                        Bankrupt
Government Run Healthcare:     Well, you get the picture (or you soon will.)

Finally understanding that more government is not the answer:  Priceless

Mar 27, 2012 11:54AM
I'm a republican but this Obamacare is not hlf bad. If it pays my premiums I can use the money to buy a new car. I love these democrats.
Mar 27, 2012 11:53AM
weel canchrist, if the insurance does not cover the proceedure or drug in the first place, mandating people to carry insurance is not really going solve that problem is it.
Mar 27, 2012 11:52AM
Instead of opening up a tab to pay for everything, why don't we go after the root cause of high health care costs? This plan does nothing to encourage savings and cost reductions, it just encourages insurance and Hospitals to jack up the cost, and with it being law to have to pay them, there is no relief in the end.
Mar 27, 2012 11:50AM
Nobama care.  It's a government mandated invasion of our Constitutional rights.
It's why I won't vote for Obama again.

Mar 27, 2012 11:50AM
anthony(BANONE) it is the people like you that will let this continue.  Is it really ok just just say who cares it will give me more money for golf (or anything else).  Where do you think the money will come from to pay for this care that Obama says he is going to give you.  It will come from taxes, yours and mine, and if you have retired then I get to pay for you to play golf.  I don't think I want to do that.
Mar 27, 2012 11:49AM
Attention toadies for the rich (GOP), the sky is not falling!
Mar 27, 2012 11:48AM
The mandate opens the door for further government imposition of what I can and can't do.

When will they stop requiring car insurance? My state still does.
Mar 27, 2012 11:47AM

The way I see it is Mandated!:

Or Denied by the Insurance companies because I have too many health problems!

WHich are high blood pressure that is controlled and depression also controlled.

. SOunds like a rip off to me.

I am self employed and deserve to be covered!

Which would you choose?

Mar 27, 2012 11:46AM
Yes!  More golf and leisure due to more extra spending cash I don't havwe to toss out for meds.
Mar 27, 2012 11:46AM
Nobody really has take the time to understand this law and they just believe the crap FROM FOX NEWS.

IN 1993 REPUBLICANS and the Heritage Foundation proposed in individual mandate DURING THE CLINTON HEALTH CARE DISCUSSION.  It's not an Obama issues.  WAKE UP!!!

80% of the people on this site the will not be significantly effected because theY have insurance but they will receive benefits of not having the insurance company cancel theM when they need the insurance, kids stay on longer, there is additional benefits for preventive care and it saves $100 billion over 10 years from current cost spirals.

The 20% freeloaders will now have to pay and many of you Republicans are now in favor of them continuing to be freeloaders... unbelievable!!
Mar 27, 2012 11:46AM
What we hear in these forums is what they call FUD in sales or Fear, Uncertainty and Doubt.    This is being used on both sides of the argument to sway public opinion.  

FOR Obamacare : Costs are skyrocketing,  you will die without health insurance, free loaders are stealing from you.

AGAINST Obamacare : Death Panels,  lose of Liberty,  Government take over....

While I just don't think, Obamacare will improve care or reduce costs.  The only thing that it will do is increase profits of the Insurance companies,  the drug companies and the healthcare providers.
Mar 27, 2012 11:44AM
Health Care in this country is a $2 trillion a year business.  If it was run as it is in other parts of the world, it would be a $1 trillion a year business.  There are a trillion reasons why a lot of people don't want any changes.
Mar 27, 2012 11:44AM

There is a lot to be said for the healthcare act and a lot to be desired as well.  The first issue is addresses (and rightfully so) is that people with pre-existing conditions or serious health issues should not be denied health care coverage.  THIS IS A NECESSITY AND NEEDS TO BE ADDRESSED.  I understand the insurance companies are in business to make money, however, when a large percentage of bankruptcies are caused by people becoming ill and being unable to afford their medical treatment, and in the meantime the CEO's and top employees of these large insurance companies are making over $1,000,000 in bonuses a year, there is obviously an issue that is unjust.


That being said, the area that laves much to be desired is the government's ability, under this act, to FORCE every American to have health insurance.  My only options, as an American under this law, would be to buy insurance, apply for subsidies (which I already know I am not qualified for because I am one of the MANY Americans that are considered working poor, wherein I make too much money according to the government, but not enough money in reality) or die because I am relinquishing my right to live a healthy life by not having health insurance.  For those who wish to compare this to car insurance, the same concept applies.  If I choose not to buy car insurance, I choose not to drive.  So if I choose not to have health insurance (or cannot afford it) I choose not to live. 


With such HUGE gaps in necessities and overstepping government boundaries and common sense, this bill would need a COMPLETE overhaul before I would consider it worthwhile.  Then again, pork is pork, and in order for the largest lobbyist group (insurance companies) to agree to such a bill, they would have to see a cost benefit which is why it would mandate that EVERYONE is forced to purchase insurance, thereby off-setting the cost paid out to those who have illnesses and cannot be dropped.

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