Obamacare has been surprisingly up held. The Supreme Court's ruling is based on the idea that congress in allowed to tax under the constitution and thus the individual mandate is constitutional. This means that if you chose not to purchase healthcare you will be stuck with a small fine, at first. For the first two years of Obamacare there will be a fine much less than that of the actual cost to have a health insurance plan and then the fine goes up substantially. What does this do?
This cheaper fine is not only for individuals, it is for businesses as well who will be required to provide health coverage. The fact that a business can pay a small fine rather than provide health coverage to its employees creates an incentive to not provide health coverage at all. Whether employers choose not to provide it to their employees is yet to be seen, of course, as an effect of Obamacare, but rather from the current recession. Given the fact that we are in a recession it would make sense that employers will look for any incentive to keep their business afloat and choose not to provide health insurance but rather leave it up to the individual employee to acquire on their own. I suspect many will choose to pay the fine as well because their healthcare was originally free but now must be paid for and it would only make sense that most would simply pay the fine because it is cheaper. As soon as this begins to happen, the Affordable Care Act is in full swing and the economic effects will begin to take place. Health insurance providers will probably lower their prices for a short period as well to match the subsidized pricing. However, this is not meant to last. Competition will weed out the the firms that can't compete with the subsidized healthcare or the fine and as soon as that happens prices will start to climb again because less firms means more market power for each individual firm. By this time, the fine will have been increased for those who chose not to purchase healthcare and if you notice, prices are now higher across the board. This is obviously a generic outlook on the economic repercussions of Obamacare.
Now, what we have is an oligopolistic market where a few large firms share most of the market. I feel this will only amplify the wage gap that already exists in our economy which is ever so often brought up by the media and the occupy movement. Now a few large firms can charge substantially higher prices to those top wage earning individuals and the government will just provide healthcare to the low wage earners. Everyone is happy because they receive healthcare! Woo Hoo! The End right? Not so fast. Why are the top wage earners paying more? Not only can they afford it but they will be paying for a better service. This means they get care first and this is possible because it is a private firm that they have health insurance from. Remember, fewer can afford it, so much fewer customers, and thus much shorter line meaning better and faster healthcare. This concept of the rich getting richer and the poor getting poorer is unethical and capitalism at work according to today's rhetoric in the media but this is what you get with the Affordable Care Act. Now those on subsidized care must wait. This is the effect of one firm crowding out the rest of the market. While everyone has access to the service, there is only one place to get it. However, I'm sure we can be reassured by a hopeful message like, "great things come to those who wait." Yeah, good luck with that.
No comments:
Post a Comment