Why The Healthcare Mandate Is No Big Deal

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The piece of the Affordable Care Act that requires all U.S. citizens to have health insurance has caused quite a bit of controversy. It seems that a lot of that controversy is caused is by a lack of awareness of the details of the mandate. I’ve found that when I explain some of the details of the mandate to people that don’t like it they often end up realizing that it’s really not all that bad.

Let’s start with this: there are approximately 40 million people in the United States that don’t have health insurance.

And getting healthcare when you don’t have health insurance is super expensive. So when you don’t have insurance you tend to delay getting care until your condition becomes serious. Even when it’s serious, because you’re not insured, you still don’t get care through the appropriate channels, such as a Primary Care Provider or a specialist.  Instead, you very likely just show up at the emergency department of your local hospital (hospitals are required by law to give care to anyone that shows up at their emergency department, regardless of insurance or ability to pay). But emergency departments aren’t setup to deal with these people. They’re setup to deal with emergencies. They’re setup to stabilize a condition, not provide ongoing treatment or preventative care.

People without insurance that are getting care only when they’re desperate and through the wrong channels are costing the healthcare system lots and lots of money.  They’re waiting until they’re very sick to get care, they don’t access care through cost effective channels and, perhaps most significantly, when they get care from the emergency department they don’t pay their bills.

So who do you think pays for these inflated healthcare costs that are caused by the uninsured?  Answer: the insured.  In order to provide this level of care at no cost to the uninsured, hospitals must raise prices for the insured.

So Obama has proposed a solution that will alleviate the suffering for the uninsured and the suffering of the insured. This solution is a law that requires everyone to have health insurance.  The mandate.  And this is the controversial point in the Affordable Care Act.

But it shouldn’t be that controversial.  For a lot of reasons.  For one, nobody actually has to get health insurance.  If you believe that being uninsured is part of your freedom as an American, no problem. You’ll just have to pay a slightly higher tax rate each year (not more than a 1% increase). 

Also, of the 30 million that are uninsured, most are going to be getting insurance anyway as a result of some of the other components of the law such as expanded Medicaid to individuals with higher incomes and increased insurance coverage requirements for employers.

In addition, if you make less than what is required to file a tax return (somewhere around $9k/year) then you are obviously exempt from any tax penalty that comes from not having insurance.

So the fight over the mandate is really only about a group of approximately 7 million people (about 2% of the population). 7 million people that are costing those of us that are insured a lot of money because they delay care and don’t pay their healthcare bills.  And all the mandate is doing is asking those 7 million people to either get insurance or pay a slightly higher tax rate (not more than 1%) to make up for what they’re costing the system.  When you look at it this way, suddenly the mandate doesn’t seem like such a big deal.