If you are like me, you are probably having difficulty understanding the issue of health care and why it is so expensive. Anybody who’s lost a job in the past and has had to pay COBRA, knows what I am talking about. COBRA is not a snake. It is an acronym for a law passed several years ago which included a provision that allowed those with employer sponsored health insurance to continue on that policy for 18 months, as long as they paid the full premium. The problem is that it is really expensive. Mine is over $500 a month, and I wince every time I send in the check.
What many people do not realize is how expensive health care is becoming and the impact it has on the economy, especially on small business. Employers usually pay a large percentage of health insurance benefits for their employees, to the tune of around 80 percent on average. The rest is deducted from your paycheck, where if you are like me, it gets ignored until tax season. But when costs go up, it makes it harder for businesses to expand because they are paying more money each year just to keep their current employees insured. These rising costs also hurt expansion and this makes it difficult for them to create additional jobs.
The health reform legislation includes an individual mandate to purchase insurance. Subsidies are available for individuals up to a certain income level, but who pays for it? You do, in the form of higher taxes.
Fast forward to April, 2015, when people are taxed with a new penalty should they refuse to buy a policy of about $6,000 for an individual and $12,000 for a family, by today’s standards. I am talking about the individual mandate which is pretty unpopular.
The Affordable Care Act also includes an employer mandate that could hurt smaller businesses, especially if they have over 50 employees. Should one of their employees receive subsidies to purchase coverage through the state health insurance exchange, the business could be fined $3,000 per employee. (see column on health exchanges)
A black and white business decision will hurt many of us individually, because the penalty for not providing insurance costs less than providing health insurance right now. Many companies will decide to drop coverage all together, leaving their employees to purchase insurance through the government run health insurance exchanges. Then who pays? The taxpayer–and that’s you!
The media talks about this law nobody understands, including the members of Congress who voted on it. The Affordable Care Act commonly referred to in the media as Obamacare, is a monumental law. Bigger than Medicare, Social Security and any other government program currently on the books, it keeps getting bigger every day through the regulatory process. Opponents hope the law will be overturned, but this is unlikely, simply because of how huge this thing really is. It is like a train, and anyone who has seen a train try to stop, knows it can take awhile.
So will the Obamacare train continue on down the Illinois Central or is it approaching the end of the line? My next column will deal with the issue of the Supreme Court, my take on how things will play out, and what it means for you. In the mean time, check back regularly for more on this issue and please follow me on Twitter @SeanMMcGuire.