You know that I’m a big fan of personal accountability. It’s one of the key mantras in my life and it’s something that I’ve harped on here before: Congressional Leaders Promote Individual Financial Un-Accountability.
Accountability is the key tenant of being successful in everything: life, money, love, and more. People who don’t hold themselves accountable for their actions fail at everything. Truth.
Right now, I wanted to highlight how accountability is playing a key role in this whole Obamacare debate. Love Obama or hate Obama; love healthcare or don’t want healthcare; watch Fox News or can’t stand Fox News – you need to know and understand this:
Obamacare isn’t health care reform. Obamacare is health insurance reform.
Let me explain.
Health Care Versus Health Insurance
Since 1986, everyone in the United States, regardless of citizenship, legal status, or ability to pay has access to medical care at any hospital as part of the Emergency Medical Treatment and Active Labor Act. Notice, this act was signed into law by none other than the “Father” of the Republican Party, Ronald Reagan.
What does this mean? That anyone can get health care. The real question is who’s paying for it.
If you have insurance, you insurance company pays, and you most likely pay a portion of it (either through a deductible or copay). If you don’t have insurance, the costs are absorbed by the hospital (i.e. passed on to other patients in the form of higher prices to offset this expense).
In 2011, the American Hospital Association estimated that uncompensated medical care represents 6% of total hospital costs. So, realize this 6% is passed on to the 94% of payers, which also includes the government via Medicare and Medicaid (so everyone via taxes).
Does this system promote personal accountability? NO!
This system doesn’t promote accountability because the usage of the uninsured imposes on the insured. I could choose to not be insured, get care, not pay my $20,000 hospital bill, and let other payers in the system deal with it. From my perspective, as a responsible individual, this is bullshit. I shouldn’t have to pay for other people’s lack of responsibility and accountability to themselves.
To make matters worse, 80% of hospital care costs are due to chronic conditions, and 40% are related to obesity in some way. To paraphrase in a totally politically incorrect way – I’m paying for fat people who chose not to take care of themselves or at least take care of the financial aspects of their conditions.
Health Care and Health Insurance Circa 2010
Prior to Obamacare, there were three ways that you could get insurance: your employer provided insurance for you, you bought your own insurance on the private market, or you qualified for a government program like Medicare or Medicaid.
This system sounds great, except for the many loopholes in it. First, more and more employers were shifting away from providing healthcare to their employees due to rising costs. Buying health insurance on the private market was becoming increasingly difficult and costly, and many insurers only wanted to provide coverage for prime specimens of humans, and not everyday people (remember the problems with chronic conditions and obesity we discussed above). Finally, qualifying for a government program required you to be young, old, or poor – and by poor I mean really, really poor.
If you were one of the estimated 105 million Americans that were either uninsured or underinsured, you faced a dilemma. If you needed medical care (which everyone does at some point in their lives), you could choose to pay your medical bills out of pocket, or you could choose to not pay them. Yes, there are financial repercussions to not paying your medical bills, but the affordability issues of healthcare make paying medical bills difficult of impossible for many.
Realizing The Need For Change
The bottom line is that most people saw the need for change, and I agree. The system was flawed in that there were too many people that couldn’t afford health care, but were going to use it anyway.
I liken it to driving a car. In most states, if you drive a car, you have to have insurance. Why? Because shit happens and you could hurt someone else. Realize, the insurance isn’t there for you – it’s there for those around you.
The same is true for health care. If you’re a human, you will need health care. Fact. Health insurance isn’t there to give you the best care possible, it exists to prevent you from imposing on others in the system, which is EVERYONE ELSE.
Now we’re getting some accountability.
The Impact of ObamaCare and Accountability
ObamaCare instituted a few things that changed the rules for health insurance:
- Young Adults can remain on their parents insurance until 26 years old
- Prevents insurance companies from canceling coverage while you’re receiving medical treatment
- Prevents insurance companies from limiting coverage due to annual or lifetime limits
- Requires all health insurance companies to cover people with preexisting conditions
- All health plans must include 10 essential benefits, including emergency care, hospitalization, prescription drugs, maternity care, newborn care, and more
- All health plans must offer free preventative services, including annual check ups and immunizations
Beyond the new rules for health insurance, it also imposed new rules on Americans:
- An Employer Mandate for companies to provide health insurance for their employees if they have over 50
- An Individual Mandate that requires all Americans to have a qualifying health insurance plan or pay a fine
- New taxes on the wealthy
- New subsidies for the poor that can’t afford health insurance
So, what impact does this have on personal accountability?
It’s making the system a bit more accountable. Is it fully accountable? No. People can still get exemptions to the individual mandate, companies are trying to get out of the employer mandate, and the fine for not getting health insurance is still too low. A more accountable system would see a huge penalty for not paying your share – the tax should be $10,000 per person or more. That way, only the wealthy who could afford to pay out of pocket anyway are getting out of paying for health insurance.
Because, remember, health insurance isn’t there for you. I don’t care if you use it or not. It’s there to protect me from you and your poor choices.
But… Who Pays Under ObamaCare and What About Health Care Costs?
ObamaCare did make a big change in who pays for the uninsured – they moved the burden from the hospitals to the insurance companies. Before, when someone skipped on the medical bills, the hospital had to take the hit, and in turn, they passed on the cost to other hospital patients.
Now, since everyone is insured (or should be anyway), the cost is passed on to the insurance companies. The most the hospitals will ever be out is the deductible or co-pay, which is capped under ObamaCare. This really changes the system and it has the potential to lower health care costs.
Take my friend, for example. She is 22, has diabetes, and is in excellent health otherwise. She needs to buy test strips and insulin. If she has these, she will remain perfectly healthy. If she doesn’t have these, she will face a lot of expensive medical complications. Under the old system, she would NOT have had insurance because her employer out of college didn’t provide it. She couldn’t afford to buy the test strips and insulin because she didn’t make enough, but she wasn’t poor enough to qualify for subsidies or government programs. In this scenario, she would have likely ended up in the hospital facing expensive life threatening conditions – and racking up $100,000s of medical bills.
Now, she gets coverage because her employer is forced to provide it. She pays $56 per paycheck (so $1,450 per year), and on her W2 last year, it said her employer paid $3,200 for healthcare for her. The total cost for 1 year of health care for her: $4,650. By having covered preventative care, the entire cost of the system should go down – a single emergency for her would exceed that cost completely.
That’s what we need to see. The trouble is everyone has to play for this to work.
What’s The Solution
The solution is pretty simple – everyone needs to have some form of minimum coverage. Everyone. I personally don’t care what that is, because I will choose the coverage that best suits my needs. All I ask is that you don’t impose on me.
Go get some insurance. Make sure that I don’t have to pay for your life choices. Isn’t that what everyone really wants in the end?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.