Health Insurance Essay

President Obama’s plan to insure healthcare for all marks a positive step for the well – being of our country’s citizens. Still, the Patient Protection and Affordable Care Act (PPACA) also known as ObamaCare has been one of the most controversial topics of our time. In order to understand why this is such a controversial topic we must understand exactly what this act means to the people. The Patient Protection and Affordable Care Act (PPACA) states that with limited exceptions, every resident of the United States must have health insurance that must meets certain basic requirements. Beginning in 2014, individuals who do not acquire health insurance will be subject to a fine. This fine will rise over time, reaching $895 per person or 2.5 percent of income, whichever is greater, by 2018. Beginning in 2014, each state is to establish an Affordable Insurance Exchange. Separate exchanges are to be established for individuals and small businesses with fewer than 50 employees. The intention is that private insurance companies will compete by offering policies on the exchanges to individuals and small businesses. Low – income individuals and small businesses with 25 employees or less will be eligible for tax credit to offset the cost of buying health insurance. For the employers, beginning in 2014, every firm with more than 200 employees must offer health insurance to its employees and must automatically enroll them in the plan. Firms with more than 50 employees must offer health insurance or pay of $3,000 to the federal government for every employee who receives a tax credit from the government for obtaining health insurance through their state’s health exchange. The government plans to regulate insurance companies by requiring all insurance to participate in a high – risk pool that will insure individuals with pre – existing medical conditions and were unable to get insured.

There will be some changes to Medicaid and Medicare as well. Eligibility for medicaid will be expanded to people with incomes up to 400 percent of the federal poverty line; in 2011 the federal poverty line was an annual income of $10,890. In order for the government to fund this program several new taxes were added. In the beginning of the year, workers who earn more than $200,000 will have their share of the medicare payroll tax increase from 1.45 percent to 2.35 percent, and investors who earn more than $200,000 will pay a new 3.8 percent tax on their investment income. This debate played a very important role during the 2008 presidential campaign. As a country we must create innovations that will drive our economy and better our residents.

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Similar to The Great Depression and the tenebrous years during the Hoover administration, the country needs change because this is what’s happening now. Franklin Delano Roosevelt, arguably the greatest President of all time, was elected because of his commitment to create government programs that would eradicate the great depression. During his time in office he established the “New Deal” program. This program established 42 new organization which amongst other things created jobs. Many of these organizations such as Social Security Administration, The SEC and FDIC (Federal Deposit Insurance Corporation) are still here today, helping our Government safeguard our economy. However the economic crisis was so severe that these programs alone could not end the Great Depression. Even though the “New Deal” programs did not completely resolve our issue at the time it guided and helped the U.S. become the superpower that we are today. People use the idiom “If it ain’t broke, don’t fix it”, and clearly something broke therefore I welcome change and you should too.

Universal health care is not something new. Many countries around the world have similar health care policies. In Canada, Japan and the United Kingdom the government either supplies health care directly by taking ownership of the hospitals or by paying for most of the expenses. The system in Canada has a single – payer health care system in which the government provides national health insurance to all Canadian residents; each of the 10 Canadian provinces have their own system. They all have to abide by the federal government’s requirement of covering 100 percent of the cost for all medically necessary visits and procedures. Residents still pay for this indirectly through the taxes they pay to the provincial and federal government. But unlike the United States, doctors and hospitals are required to accept the fees that are set by the government. Japan has a universal health insurance system. They require all of the residents of the country to either (a) enroll in one of the many non – profit health insurance societies that are organized by industry or profession, or (b) enroll in the health insurance program provided by the national government. The funds for the system come from the premiums paid by the employees and firms as well as a payroll tax similar to the tax that funds the Medicare program in the United States. Unlike the others system this one is highly costly for the residents; they are charged a co -payment which can be as much as 30 percent of the bill. The Japanese system does not cover preventative health care or any pregnancy related visits. Similar to the United States system doctors are not government employees and most hospitals are privately owned. In the United Kingdom the government, through National Health Services (NHS), owns nearly all hospitals and directly employs almost all doctors. Because there are very few private insurance and private hospitals their health care is often referred to as socialized medicine. The NHS focuses on preventative health care and non life – threatening conditions. Elective care – such as a hip replacement is considered a low priority. Such procedures require patients to go on a waiting list where treatment might take as long as a year. To avoid such hassles more than 10 percent of the population also has private health insurance which is typically provided by employers and ensurers use to pay for elective procedures.

What are the advantages or disadvantages? The main objective PPACA or ObamaCare is to lower the overall cost of health insurance by making it affordable to more people. Its aim is to target target two important under insured markets. Since young people are typically healthier, this should lower cost because they will pay premiums but should use less services. Those with ill health will now be insured without rejection. The ability to receive preventative health care should lower cost because people will have the ability to discover any health issues at earlier stages. It also gives us a sense of fairness. Prior to the Act only certain people would be able to receive affordable health care: people who worked for companies that provide it; the people who could afford it and have no pre existing conditions; poor people who receive Medicaid and people 65 years of age or older who receive Medicare.

The main disadvantage is that the PPACA could actually increase health care cost over the short term because many people will receive preventative health care for the first time in their lives. This may lead to the treatment of heretofore unknown illnesses, which would drive up cost. Other disadvantages pertain to those individuals and businesses who pay higher taxes. Somewhere between 3 – 5 million could lose their existing company – sponsored health insurance if those companies decide to let employees buy their insurance on their own and pay the penalties. Furthermore all residents are required to be insured either by a private provider or a state/federally assisted program. If you do not have insurance you must pay a tax penalty equal to 1 percent of your income in 2014 and 2.5 percent in 2016. The people against claim that it violates the constitution, that the government was never intended to tell individuals nor individual states what they can and cannot do. That is why we are called the United States; each state imposes laws upon the individual only. Each state is governed according to voting, elections, and legislation. In 2011, Judge Napolitano discussed with CNN that “when pertaining to the PPACA expectations from the states and insurance companies . My understanding is that to regulate means that Congress has the responsibility to make sure commerce between states should abide by the rules of the Act. Not that the federal government has jurisdiction to order commerce of any sort to be purchased by American citizens.”

If we abolish the PPACA what will happen to the cost of health insurance? It is estimated that health care was less than 6 percent of the GDP in 1965, but had risen to about 17.5 percent by 2011, and was projected to rise to about 19.5 percent in 2019. Compared to the United Kingdom’s health care, which is only 9 percent of the GDP in 2011. Then, the United States ranked 50th in global life expectancy, even with people living longer due to medical research and government agencies like Medicaid, Medicare and the Veterans Administration. We still lag behind many countries when it come to life expectancy. It is said that Japanese residents live on average 10 years longer than American residents. In the president’s speech to congress he said “The plan I’m announcing tonight would meet three basic goals: It will provide more security and stability to those who have health insurance. It will provide insurance to those who don’t. And it will slow the growth of health care costs for our families, our businesses, and our government.” I wholeheartedly agree with President Obama, in order for us to rise from our recession there has to be a change. Hubbard and O’Brien’s Macroeconomics forth edition states “health care spending increased from 5.2 percent of GDP in 1960 to 17.5 percent in 2011, an upward trend that is expected to continue.” It remains to be seen whether the U.S. health care system will achieve its intent of moving towards greater government intervention, similar to other countries or whether market based will successfully be implemented. Health care is so important to our future and with health care spending looming so large over our economy, it’s encouraging to see the government take a stand in the health care system and this will be the cause of many debates to come.

References:
(Source: CBO, 2009 Study on preventative health care, August 7, 2009) (Obama’s speech published September 9, 2009 by nytimes.com)

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