Is the mandate that people buy insurance a good thing?

What are the ramifications of the Excise Tax portion of the new federal health care bill?




The Patient Protection and Affordable Care Act, which was passed by the Senate on Christmas Eve, calls for a 40% excise tax on health plan costs that exceed $8,500 annually for single coverage and $23,000 annually for family coverage.

Many employer-sponsored plans exceed or will exceed the PPACA excise tax threshold simply because the plans include many older workers or retirees with higher cost health care needs, or are concentrated in locations with high health costs. Some Cal-PERS options would be taxed. Most retiree plans would be taxed. Even the standard Federal Employees Health Benefit plan would be taxed. You can bet that plan will get exempted shortly after passage.

As far as I know, they have not indexed this for inflation, so in a few years, almost all of the plan designs we are familiar with would be taxed.




Is the mandate that people buy insurance a good thing?




Under its current design it wont have the desired effect. The penalty is much too small to force an individual to purchase coverage. One would be much better off to go uninsured, pay the penalty and purchase insurance if and when a problem arises. Since insurers will be required to issue a policy regardless of ones medical condition, there is no reason to pay a premium until its needed. Most people will buy insurance at the point where their claims exceed the premiums charged. This will raise the rates considerably.

There is also a high likelihood that this mandate is unconstitutional.




Why do you say that?

The government must have the right under the constitution to do anything. It has never written a law requiring anyone to buy anything. Imagine if the government decided to require all of us to buy at least one General Motors vehicle every four years. If this were legal, there would be no part of our lives they could not control.




Isnt it the same thing as requiring us to buy auto insurance?




No. The government built the roads. They require us either to have insurance or the financial ability to pay a minimum sized claim as a condition of issuing a license to drive on their roads. That is far different from requiring us to purchase health insurance.

Category:

Education

Tags:

• Health insurance reform
• health care reform
• sonoma county
• ask the expert

[GoTimothy]

No, it is unconstitutional. You can not force people to pay for car insurance, because it is not "Their Roads" it is "Our Roads" What Country are you guys in?