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 5:32PM

If you don't pay then you don't get. Republicans should be loving this. HMO prices have to go up because the audience is captive. Business and Republicans should be loving this. Stock market goes up as the net worths of American companies grow. Those companies grow and hire more folks which means that unemployment comes down some. Republicans should be loving this so why don't they!? Who thought this program up? President Obama. Oooh, now I get it.

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 26, 2012 5:30PM
Its funny how people start off by saying its a ".....2500 page bill that no one has read" - then turnaround to say that its an intrusion on Freedoms!!! Perhaps you should read it fast before you start making ignorant assessments. What bothers me the most is that the vast majority (80% according to this article)will already have health insurance & will be virtually unaffected. These are the same clowns complaining about how the individual mandate is going to destroy their freedoms!!!!! [Just out of curiosity- if you had to choose a mandate, wouldn't buying your own health insurance be the least invasive??]  If people tried to get a basic understanding of the bill, most would find that it significantly benefits them.
Mar 26, 2012 5:30PM
Yeez...where do I start?  First:  The vast majority calling President Obama a "socialist" wouldn't know a socialist if one rose up and bit them in the keister.  Same for "Marxist" or "communist".

Republicans had EVERY opportunity to join with Democrats on this and work out a solution that would satisfy nearly everyone.  They instead chose to be obstructionist, along with demonizing the President to keep their fear tactics alive.  They'll bend over backward to kowtow to big money but do absolutely nothing to help the common person.  Nothing.  It continues to amaze me that a person of modest means would even consider voting Republican.  Of course, Republicans cloak everything in the trappings of religion, "family values", etc., etc., etc.  Anything to disguise their true agenda:  Help the rich get richer and who cares about anyone else.

Mar 26, 2012 5:29PM

It's a good thing the young are naive (or just stupid).  Otherwise, those fools who voted for Obama in such large numbers would be rebelling at the oppressive costs that THEY will pay for the older, more affluent Americans to have subsidized health insurance.


It serves them right.  Call it a tax on stupid.

Mar 26, 2012 5:28PM
Mar 26, 2012 5:28PM
It doesn't scare the 99% American People, it only scare the INSURANCE CORPORATIONS!
It's time for corporates to give back to the SAME PEOPLE that made them successful!
Enough is enough! It's time for change, and that time is NOW! Not later, but right NOW!
Stop the BullCrap and give back to the 99% American People!

Mar 26, 2012 5:27PM
This unconstitutional law makes it illegal NOT to have prepaid health care.  It is an attack on free people. 

People should be scared.  It is a very scary law.  The scariest part is that there are millions of people who support it.    
Mar 26, 2012 5:25PM

The only thing scary about "Obamacare" is the large dose of miss information some have put out there.  The insurance companies not the government will still run the operation.  Government is only telling them what they can't do like not allowing you to get insurance because of pre-existing conditions.  I'm tired of paying the tab for those who don't want to get insurance and running to the emergency room and guess who gets stuck for the bill.....the TAX PAYERS.  I would also like to remind you that the Republicans put in something like 400 amendments as well and do keep this in mind Obamacare was fashioned after Romney healthcare in Mass. and the Heritage Foundation liked his plan then because it pushed PERSONAL RESPONSIBILITY!

Is the real reason so many Republicans don't like Obamacare is that it was presented by Obama?  No other President could take the healthcare issue and do anything with it but he did.  In 2014 we should also see premiums start dropping as well.


Mar 26, 2012 5:24PM

Just a quick question.... what in the world do Democrats or Republicans have to do with our healthcare? Healthcare is an individual choice.  The American govt. cannot FORCE any American to buy health insurance. It is unconstitutional.  And to all the previous comments regarding Socialism, yes, our govt. is moving in that direction.  Open your ignorant eyes.  Step out of your opinionated box, read the facts of what has happened over the last 3 years ~ not news stories that are biased ~ FACTS!  Then, YOU decided what kind of life you want, not the kind of life the govt. says your'e going to have.


Mar 26, 2012 5:22PM

OK, you have all these liberal political hacks saying it's unfair, racist, class warfare, to have people required to have  a picture ID to vote.


So all you brilliant liberals splain to me how you are going to buy health insurance without some form of Legal ID??


Guess they can all get health insurance under John Doe!! Sign with an X.

Mar 26, 2012 5:15PM

The prisoners in Gitmo have more choice and they all have a lawyer.................


Here with ObamaCare, we are in prison, if WE don't give money to HIS Majesty!

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
David and Robert65 need to keep with the thread or at least be conversant in facts.  This forces people to have health insurance through their employer or on their own.  It mandates insurers take anyone,  making their costs more expensive.  It mandates everyone participate so the companies can recoup that loss (and undoubtedly add profit).  That is NOT government run health care!
Mar 26, 2012 5:13PM
My main point is, this law will now make it where people had coverage, they may not have any when 2015 rolls around. I don't think anyone took this into account when they ran the numbers for this article, there will be more people relying on the government because of this law.
Mar 26, 2012 5:13PM
What we had wasn't working too well, while the compromise of the bill is not what is needs to be it is a good first step in actually creating a workable health care policy, NOT controlled by the insurance companies who have proven they are not to be trusted.  The rest is just political hyperbole,  Fixing the "mandated" part is definately something that should be addressed,
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 26, 2012 5:12PM
"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"

Probably the most intelligent statement anyone has made in the past 10 years.  Why the hell would we, the people, believe that our gubmint could do much of anything, much less healthcare.  Since Kennedy died there's been one crook after another trying to be president and you know what - they were all losers.

For some reason Americans don't seem to think that we deserve better than obama, bush and reagan.  And with that attitude, we probably get what we deserve.
Mar 26, 2012 5:12PM

Either the number of uninsured is so drastically hurthing the countries interests that providing them insurance cards is so important that it must be done, or the numbers impacted are so minor that the impact isn't scary.  It can't be both.  What is being done here is called talking out of both sides of your mouth.


Additionally, stop calling it health care.  The law only requires them to have an insurance plan and pay for it, that is it.  Millions and millions of people now have insurance plans who don't follow the Dr's advice, don't correct bad habits or simply don't use services.  Owning an insurance plan/card does not cause a person to be healthier.


A government mandated health insurance plan/card won't make one single person change go to the Dr or change their behaviors, yet.

Mar 26, 2012 5:11PM

Imagine people so poor they can not pay for the life insurance they need to help keep themselves alive. Now imagine these suffering people are told that not only will they suffer and die sooner without medical care but, the government will now make them criminals and charge them $8000 more for their suffering.

Why not just ask for suicide bomber volunteers?

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