Saturday, January 21, 2017

how does obama care work

how does obama care work

"obamacare" "the obamacare sign-up deadline gets closerand closer" "the most contentious part of the law is theindividual mandate" "the heart of the law." to be affordable, health insurance needs alot of healthy people for every sick person it signs up. but the problem with that isthat health insurance is worth more to sick people than to healthy people. sick people want it more. and they will pay more for it. so here's what can happen. you get a reallygood health insurance package. really good. so all the sick people rush to buy it. healthypeople decide it's too expensive because of

all these sick people pushing up the very healthiest, the people who think they need it the least, leave. that raisespremiums.those higher premiums push the next healthiest group out too. up go premiums again,out go the next healthiest group. over and over and over again. that is a death spiral. until now, insurers had a real easy way toprevent death spirals. just don't sell health insurance to sick people. or, if you do, makethem pay so much, that you don't have to charge healthy people more. but obamacare says they can't do that. insurersneed to sell to sick people. they can't even

charge them more than they charge healthypeople. the can't discriminate based on pre-existing conditions at all. enter the individual mandate. now rather thankeeping sick people out. the idea is we're going to pull healthy people in. starting this year anyone who doesn't havehealth insurance for longer than three months has to pay at least $95, or 1% of modifiedadjusted gross income. that's your income minus some tax deductions. you can calculateit online. we call it magi for short. the penalty is even steeper next year. so imagine your family's magi is $80,000 bucks.if you go without health insurance this year,

it's $800 to the government. next year its$1,600. and the year after that, $2000. ouch. now that is a lot less money than health insuranceusually costs. but you don't get anything for it. you don't get to see the doctor. youdon't get your hospital bills covered. and so people, even young and healthy ones, tendto buy insurance rather than paying the penalty. we know that from massachusetts, where mittromney actually signed one of these things into law. people ended up wanting health insurance.they just needed that push. in massachusetts, that was enough to preventa death spiral. the question is whether it will be in the united states too.

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