Obamacare is already running into major problems

By Adam Bitely — We are a little less than a year away from Obamacare’s individual mandate becoming the latest tax you will be forced to deal with and already there is trouble in the air with whether or not the law will work.

The mandate says that you must purchase health insurance or else face a fee. That fee, which the Supreme Court ruled was a tax when it upheld the law as constitutional last summer, is considerably smaller than the cost of purchasing health care.

In 2014, the first year that the tax will be collected, the tax is $95. It will increase to $325 or 2 percent of your income in 2015. In 2016, it will increase to its highest amount of $695 or 2.5 percent of your income. Even at its highest point, the tax is cheaper than health care in some cases.

And that fact is scaring many of the people that designed and are in the process of implementing this fatally flawed system.

For Obamacare to work as they claim it would, many more healthy people than sick people need to be paying health care companies for coverage. The more money healthy people spend on coverage makes it possible for the companies to cover the sick.

But many of the uninsured healthy people would probably opt to pay the tax, which is lower than the cost of coverage. This is causing many health care providers and those in the Obama administration to worry that there is not enough incentive to take part in the new system, the result of which could be increased taxes and more fees as well as a spike in the cost of health care coverage.

Many opposed to Obamacare warned about this result. The incentive structure created by such a system would only result in ever increasing penalties to ensure that enough healthy people subsidize the unhealthy people.

As the masterminds behind this system are discovering — even before the system is up and operational — they have no clue how to get the healthy people to participate without increasing the taxes for abstaining from purchasing health care to a higher rate than the cost of health care coverage.

What this whole failure before launch exposes is that incentives matter and that government does not fully comprehend that simple fact. Creating a system where people are forced to purchase a product by penalizing them if they don’t — and the penalty is cheaper than buying the product — it’s odd that they would just now realize that people will pay the penalty.

After all, Obamacare forces insurance companies to insure those with pre-existing conditions, so you only have to buy health care when you need it. It makes little sense to purchase health care when you can go the cheaper route of purchasing only when you need it.

Linda Blumberg, a senior fellow at the Urban Institute’s Health Policy Center said the following to Politico about the incentive structure that the government faces when trying to sell ObamaCare to the young and healthy: “If you have a positive outreach campaign with the message, ‘Here they are, here are the exchanges, here’s affordable coverage, come and get it.’ Isn’t that more effective than, ‘Come and get it or we’re going to come get you?”

We are about to find out which route is more effective as the government attempts to make Obamacare a success. It is much more likely that they will use the tax system to correct their mistake than use a message of come and buy a product you don’t yet need.

So get ready, Obamacare’s first failure won’t cost the government money, just you as the taxes are increased and the cost of health care rises.

Adam Bitely is the Editor-in-Chief of NetRightDaily.com.

This article has 35 comments
  • Guest 16.01.2013 12:03 PM

    For many years as an Independent Contractor with no health Insurance, I did not buy Insurance as for a single person it was very expensive. Just saved the money I WOULD have spent and had yearly checkups/ Cost me so much less. So, I understand why the young and healthy do not wish to purchase forced insurance.
    Maybe they should be able to save ‘the penalty’ as a health savings plan which THEY can administer. I am certain there would be more takers than this forced system.

  • James H Waters Phd 16.01.2013 12:12 PM

    Adam, you keep ranting about this as if the system we have is fine. It’s not. We pay more for worse results than most every developed country, most of which have some form of national health care that covers everyone. Obamacare is the best we could do while obstructionists like you and Bill Wilson were trying, “conservatively” (I guess?), to keep things as they are. So they had to keep the insurance companies in the loop. How about if you propose something positive? People who don’t drive “subsidize” the highway system and roads, and healthy people derive a lot of benefit from having a society in which most people are healthy even if they can’t afford it. Get over it and get out of the way. The only thing better than Obamacare would be Obamacare without the insurance companies, or Medicare for all. I’ve got Medicare and it works fine.

  • Don 16.01.2013 1:00 PM

    These ignorant Politician’s only see one problem and that is the tax is less than the cost of a plan. They are all so stupid that they can’t see that a very large group of people could never be able to afford any plan they come up with. They don’t have to pay for any insurance so they don’t even have a clue about the time of day let alone what these people don’t make enough to buy good food they are forced to buy the cheapest food on the market. This food has very little nutrition it is jest a filler to keep there stomach’s full. The Government can’t figure that this so called food that is nothing but a filler keeps people so undernourished it can’t keep people healthy.

  • Lloyd 16.01.2013 1:11 PM

    Another excuse to raise taxes. What happens when they tax more than the people earn? What else can they find to force us to pay for through the tax system so they can inflate the system more. If people have to pay their whole paycheck out in taxes, then what is the sense in working. If you are not working you can’t pay taxes, and then they can say that if you don’t work you can’t get public aid. Where does it end? With you getting hung for killing the kings deer with a rock that you are not supposed to have because it is a weapon? This administration Will use any excuse they can conceive to make us slaves, dependent on them, just to control us and so they can cry about us being deadbeats and leeches. I thought slavery was abolished. I guess that only goes for the elite wealthy, and the politicians, or are they the same.
    Lloyd

  • David 16.01.2013 1:33 PM

    Here is what I plan to do. I will drop my health insurance as soon as obama care kicks in. The I will pay the 2.5% tax until I get sick. Then I will buy my insurance since they cannot deny me coverage due to my preexisting condition. Wait for all the bills to be paid and then cancel my coverage again. I cannot see any reason to have health insurance if I can get coverage after I get sick.
    Sound like a good deal. Guess the insurance companies will go out of business just like Obama planned.

  • sb36695 16.01.2013 1:34 PM

    Failure is the plan.

  • Christy 16.01.2013 1:39 PM

    James your elitist arrogance is showing and was solidified with your comment “get over it and get out of the way”. It’s narricistic people like you who think they know it all. We do have health insurance, have had it since early 20′s (now early 40′s). I have paid out of pocket on numerous occaisions since it was cheaper to pay cash up front. Our plan went up over $200 a month for the 4 of us and its still considered the ‘cheapest’ (anthem blue cross ppo). This bill is reaming those who follow the rules and now will ream those people even more so. I’m all for helping the next guy but there comes a time when ‘the next guy’ needs to start doing for himself. I know all about the AMA and how AARP is going to make billions by supporting this beast of a ‘law’. I’m guessing by your support, you are one of those. So you ‘get over it’ and ‘get out of the way’ because people like me will utlimately prevail over narcissitic, a**holes like yourself.

  • Lloyd 16.01.2013 1:57 PM

    Save the penalty tax as a health savings? Not a bad concept except for one thing. Freedom of choice. I am not a jackas for some one to crack a whip on. Besides that, if we all have to depend on the so called elite to think for us to make a living then what reason do we have for living. Oh, thats right, it’s so the elite don’t have to get their hands dirty while wiping their own back sides. I would rather try and fail, than fail to try. To Obamacare and the penalty tax (or health savings) thanks but no thanks. The difference is, when you try and fail. you pick yourself and try again and you can take justifiable pride in your efforts and at least then when you do need help, at least you are deserving,but if you fail to try, you expect someone to carry you and you never know the feeling of juustifiable pride, and you deserve no help.

  • undunder 16.01.2013 2:11 PM

    And the only answer to any problem they see is to tax. Dumbtards!

  • TXHusker 16.01.2013 2:11 PM

    Except Medicare is being raped to cover the cost of Obamacare. What you think works fine now, may not be so great within the next couple years. Medicare itself was already going under and this will just add more to the burden. Medicare for all simply won’t work without significantly raising taxes to pay for it, which is what the others were saying….tax us until it is no longer feasible to work.

  • Hotnike 16.01.2013 2:18 PM

    The whole Obamacare bill is an abomination and needs to be scraped. 2500+ pages of regulations will never work especially since many have nothing to do with healdth care.

  • Sandra Lee Smith 16.01.2013 2:25 PM

    Scare tactics often backfire; and it’s going to hurt everyone in the long run! Some people aren’t as “dumb” as the “leaders” assume us to be!

  • Sandra Lee Smith 16.01.2013 2:28 PM

    Oh, now that’s not true at all; they see 2 answers; tax is one, and SPEND is the other! We should always give credit where it’s due…

  • Tommy S. Buster 16.01.2013 2:30 PM

    And Why is this not surprising ?????????

  • Sandra Lee Smith 16.01.2013 2:32 PM

    You’ve missed the point of Obamacare; it’s never been about health care, but about CONTROL of our lives, including what choices we have for obtaining such care, and what care we CAN obtain; it’s a means of “thinning the herd” NOT providing health care. Read the WHO’s Codex Alimentarius, including the “new” standards for nutritional content in our foods, in terms of vitamin and other nutrients in them, which was just reported a few weeks ago; and is so FAR sub par with what our bodies actually need, as to be blatantly obviously intended to cause serious malnutrition globally!

  • Phil 16.01.2013 2:36 PM

    Gee What a surprise.

  • papajair 16.01.2013 3:20 PM

    Has anyone considered this also might be an “unplanned emergency” to get to single-payor?

  • Lastconservative 16.01.2013 3:57 PM

    Yes “some” are. Unfortunately many are as dumb as the political scum assume and many are a lot dumber.

  • MM59 16.01.2013 4:59 PM

    He reinstated slavery in March 2012 , did you miss it?

    Executive Order 13603:
    http://youtu.be/mipJ9Q_UQkg
    http://www.gpo.gov/fdsys/pkg/FR-2012-03-…2-7019.pdf

  • MM59 16.01.2013 5:15 PM

    Please educate yourself on the finances of Medicare:

    GAO Audit report states:

    Significant uncertainties (discussed in Note 26 to the consolidated financial statements), primarily related to the achievement of projected reductions in Medicare cost growth reflected in the 2011 and 2010 Statements of Social Insurance, prevented us from expressing an opinion on those statements as
    well as on the 2011 Statement of Changes in Social Insurance Amounts. The Statements of Social Insurance for 2009, 2008, and 2007 are presented fairly, in all material respects, in conformity with GAAP.”

    http://www.fms.treas.gov/fr/index.html

    Also take a look at the Statement of Social Insurance – look at the PV of expenses over revenues, the unfunded liability, its huge. But remember not to rely on the 2011 and 2010 numbers. The auditors won’t opine on them. They are understated.

    It works fine for you but it won’t be there for the rest of us, it was badly mismanaged by all administrations, right from the start.

  • WhiteFalcon 16.01.2013 6:57 PM

    I wish the people en masse would simply refuse to pay the taxes. The Governemnt cannot put all of us in jail. The way to get this beast under control is to starve it of money. Refusing to pay their taxes is the quickest way to do it.

  • jt fennimore 16.01.2013 7:10 PM

    Millions are with you white falcon

  • Jack Parker 16.01.2013 7:14 PM

    John Roberts is a complete moron. How can NOT buying something cause you to pay a tax? If it walks like a duck (tax) and it quacks like a duck (tax) and has tail feathers like a duck (tax) … it’s a duck (tax).

  • ssilv48 16.01.2013 9:43 PM

    obummercare is illegal. It was implemented illegally, Taxed upon the American people illegally all by an illegal non-citizen muslim in the w/h.

  • Phillip_in_TX 17.01.2013 10:26 AM

    The “Phd” stands for “Piled Higher & Deeper,” right?

  • Phillip_in_TX 17.01.2013 10:27 AM

    Then they will have a “smashing success!”

  • Phillip_in_TX 17.01.2013 10:30 AM

    Maybe they should have “read” the bill BEFORE they passed it. They need to take every copy of “Obamacare” and run them through an industrial size “paper shredder!” These idiots could screw up a wet dream.

  • Thomas Jefferson 17.01.2013 1:07 PM

    Shocker! Something the government will manage won’t work out??? Amazing!

  • Greg137 18.01.2013 9:35 AM

    Obamacare is set to go bankrupt in 20 years even if you pay for the more expensive option… Or at least what I have heard… Why bother investing anything into it if it ain’t even going to be around in two decades, or if it even lasts that long???? And with all of Washington’s spending being what it is, if the dollar dies between now, and then it may even be sooner…. Especially, if people opt to pay the lesser tax, instead…

  • Black Rain 19.01.2013 10:01 AM

    Even if the highest earns pay more of the healthcare tax it will not be enough to pay for the dead beats who will just pay the tax. More taxation on the way and congress are exempt.

  • noname 20.01.2013 4:24 PM

    Not all uninsured are deadbeats! My husband and I do not have health insurance. We have shopped around and there is no way we could afford insurance and have enough $ to eat. We occasionally get sick and go to the doctor only if absolutely necessary. We will pay the penalty because we can’t afford to buy lousy coverage. If we incur a major illness we will cross that bridge. If we could afford good coverage we would go that route. Oh, and our kids are on medicaid and even though they have coverage we only use it in emergencies. We aren’t trying to milk the system.

  • BruceMajors4DC 28.01.2013 6:20 AM

    I just found a DC government new job notice for a PR position for the health care exchange. Pays $150,000. So each state is going to spend $150,000? for how many? PR flaks for Obamacare? Subsidized from federal funds?

    I thought government control meant an end to duplication and overhead?

  • Ed Bradford 09.02.2013 1:00 PM

    It seems that people who pay the doctor in cash before leaving are being penalized. It is those people who hold health care costs DOWN. If all the doctor’s patients did that, there would be two or more fewer office managers in the office because the insurance and medicare/medicaid forms would be unnecessary.
    Government controlling health care means higher costs for all and lower quality of service and less service.

  • Sickofliberals 30.04.2013 12:46 PM

    Yes, the ultimate goal of these liberal SOB’s is to enslave us under their
    tyrannical power structure. The almighty Federal Government will decide what you’re worthy of in the form of entitlements and healthcare, and decide how much income you deserve to keep. Income redistribution structured to penalize achievement and steer more people to the teat of Government will increase. Efforts to expand the Democratic base by rewarding illegal immigration with promises of free healthcare, food stamps, and entitlements are reaching a frenzy under this disgusting administration.
    Yes we are screwed. Our children and grandchildren will never know what a free America was, only the empty shell of a gutted, once free country. You get what you pay for, and America is getting what looked like a pretty slick, like-able individual only to find out that what they got instead is a President and administration with an agenda to subjugate us and transfer our wealth and individual freedoms to a greater good called big government.

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