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.

More from US News

Mar 26, 2012 9:28PM
I don't understand why Republicans are upset about the mandate. It was their idea supported by the Heritage Foundation back in 1993 when Clinton made his healthcare proposal that companies all had to provide healthcare the Republicans said not  individuals must be mandated to buy it!  SO WHATS THE ISSUE..... 
Mar 26, 2012 9:27PM
For many of you "quoting" the Constitution. It is apparent that you have never read it. The elastic clause has been pulled over the head of the constitution to the point that it is useless. If I decide it is for the general welfare to lock up every third person that would be covered under the elastic clause that no longer id properly used. Everyone can get a copy of the Constitution for a couple of bucks. Read it. It only take about 45 minutes.
Mar 26, 2012 9:26PM
What the Hey?  What is real scary is if the poison pill and his pals (Supreme Court Chief Jusice John Roberts and the other radical right on the court) that George Bush left us with strike down the  National Health Care law.  They will leave the door wide open for the racketeers that are running (and ruining)  our health insurance industry and the health care industry.  These racketeers only insure people that are young and healthy, they cherry pick whom they will insure or not insure.  That is one reason a lot of company's are doing away with group insurance.  whiteagle38
Mar 26, 2012 9:25PM
i don't see why they can't model our healthcare system after some other places like canada or the uk or somewhere else that has a system that works the best. i don't really know much about obamacare or how it will effect me so i can't say anything good or bad just yet.
Mar 26, 2012 9:24PM

I don't have insurance, company doen"t offer it. I had my right kidney out in Sept. , cancer. I don't knoe total on bills they keep coming because of follow ups. I can't afford to buy insurance outside, I owe to much. Live with older mother, so what happens to me?


Mar 26, 2012 9:23PM
Please feel free to define "valuble skill" and why those people are allowed access to health care but those that work hard for their money such as fast food workers do not?
Mar 26, 2012 9:23PM
Those people are covered by medicaid

Which under this law expands under the power of the federal government by how much was it again?

Mar 26, 2012 9:22PM
I don't profess to know alot about this law,,but one thing I do know is there is no such thing as a free lunch.. Who is going to pay for this ?  I haven't seen an answer yet on that,, Its going to be taxes on the sale of home,, etc,, I don't know about the rest of you,,but tell me how can a person lets say over age 26 still living with his parents because he can't afford an apartment on his income is now forced to buy health insurance,, or pay a fine,, This whole bill stinks,,
Mar 26, 2012 9:21PM
They work you part time so they do not have to give you any benefits

So I am to believe these people working part time, likely for low wages, will be able to afford their government mandated health insurance?

Mar 26, 2012 9:21PM



Those people are covered by medicaid, the ones the AHA covers are those that work hard and but their employer doesn't offer health care. Those are facts, this law is about America and Americans and those that oppose it are probably just caught up in fox facts and do not know the truth.

Mar 26, 2012 9:14PM
Has anybody on this list given a thought to the fact that companies are doing away with medical insurance at work

For people without valuable skills yes.  That's nothing new.

Mar 26, 2012 9:14PM

To; Trade441

Do you think that those families getting 4carts of free goceries with 10kids is all of a sudden going to start paying for insurance? no its those same people who everyone complains about that will be exempt, so we still lose. It just means that there will be more of us working people supporting the entitlement minded minorities, why do you think so many libs support it because nothing changes for them, they still get it for free, and if they are paying for it its from the increased wellfare money that comes from our taxes. Think about that for a minute!!!1

So when you go and vote Obama into office again, and the Dems increase the tax base for us regular folk to 45% not to mention the extra your putting out to support the poor wellfare leaches don't B*&ch about it, take it like a man.

Mar 26, 2012 9:14PM
this article does nothing to de-mystify a situation which is already confusing and obscure.
Mar 26, 2012 9:13PM
Wow...  A liberal got offended, unbelievable.  Maybe we should have congress enact a Blog Gestapo.  All messages sent anywhere must be approved by a trained TSA like agent.
Mar 26, 2012 9:11PM
Health care experts are owned by the industry.  Neither Insurance companies or doctors see any thing to worry about because they both get a cut of the financial pie.  The fact is that the 1,000 pages of political double talk does nothing to improve medical care,  It appoints committees to study and recommend and it taxes people who don't join the medical-insurance system.  It does nothing to correct the most expensive and (according to WHO) one of the worst health care systems in the world.  There's nothing to worry about.  Canada has cheep drugs, Mexico is good for dental work and if you need major surgery, you can fly to Europe and pocket the change.  A medical emergency, don't worry, there is already a long line ahead of you.
Mar 26, 2012 9:10PM


 i could not disagree with you more. having lived in europe for close to 6 yrs and having friends there, i can say they are NOT happy with the medical care they get. i am not sure where you get your info other than tv. 

 it is great to pay the same amount for a liver transplant as an ear infection...of course one must live to receive the transplant.

Mar 26, 2012 9:08PM
Preventative medicine..  How about a walk for some of these fat Americans?  How about we regulate that? 
Mar 26, 2012 9:05PM

ChickenMic and the rest of the idiots posting on here ... I'm in the wrong blog.  I need to go back to Politico ... there you have people of intelligence. 


Quoting my statement about being self-employed and working hard for every penny.  You took that very innocent statement to insult me by saying WE SUCK AT WHAT WE DO or whatever stupid remark you made.


You're probably jealous that you're not smart enough or have enough 'cojones' to go at it alone!  You're an IDIOT posessed by ENVY and strike at any thing and anyone!


This is my first and last time on this 'non-think tank'.   BYE SUCKERS!!!!!!!!!!!!!!!!!!!!!

Mar 26, 2012 9:05PM
I thought the right were the crazy conspirators...
Mar 26, 2012 9:03PM
Prime minister of Canada coming down to Chicago for open heart surgery a couple years ago.

Maybe the Prime Minister of Canada was not so well liked up there?

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