What Is Obamacare? Pros & Cons

Obamacare is a name used by critics of President Obama’s efforts to reform health care. It’s a common term used to describe the Patient Protection and Affordable Care Act of 2010. Those who oppose the Act are concerned that it gives the Federal government too much control over personal health care decisions and benefits, forcing a “complex one-size-fits-all health system” onto the states. Those who are in favor of the Act want lower health care costs overall by making it affordable for more people.

Obamacare Pros

The non-partisan Congressional Budget Office lists the advantages of Obamacare:

  1. The Act was designed to reduce overall health care costs by making services available to the 32 million who currently can’t get insurance. They often use a hospital emergency room as their primary care physician, increasing costs for everyone. This starts in 2014.
  2. For people who can’t afford health insurance, the Federal government will pay the states to add them to Medicaid. The income requirement will be expanded to include more of the working poor.
  3. Those who don’t qualify for the expanded Medicaid will receive tax credits. States will be required to set up insurance exchanges to make it easier to shop for private health insurance coverage.
  4. Insurance companies cannot deny children coverage for pre-existing conditions. This benefit applies to everyone in 2014. Insurance companies can no longer drop anyone from coverage once they get sick. If a company denies someone coverage, that person can go to an external appeals process.
  5. Parents can put their children up to age 26 on their health insurance plans. This will bring more profit for health insurance companies, since they will receive more premiums without higher costs for these healthier individuals.
  6. The Medicare “donut hole” gap in coverage will be eliminated by 2020.
  7. People with existing health insurance will keep it. Businesses prefer to offer a tax-free benefit like health insurance to attract good workers. That won’t change under Obamacare.
  8. Obamacare does not apply to businesses with less than 50 employees. Larger businesses are required to offer health insurance, but receive tax credits to help employees pay premiums. In 2014, the tax credit increases to 50%.
  9. The Act will lower the budget deficit by $143 billion over the next 10 years by raising some taxes and shifting more cost burdens. (Source: CBO CBO Report on Health Care Reform and the Budget; Wall Street Journal, What Health Insurance Ruling Means, June 28, 2012; NPR, Medicaid Expansion, June 27, 2012)

Obamacare Cons

The conservative think tank The Heritage Foundation lists the disadvantages of Obamacare:

  1. New taxes, penalties, and fees will discourage businesses from growing, lowering economic growth by $706 billion and costing 800,000 jobs.
  2. The Federal government will force 18 million of the uninsured to go on Medicaid. Despite this, millions will still remain uninsured.
  3. Each year, $125 million will go towards subsidizing school-based health centers and programs to reduce teen pregnancy, with no requirement to reduce abortions. Parents won’t know what services their children will receive.
  4. Half of those on Medicare Advantage will lose this coverage thanks to rate increases.
  5. Health care costs will rise thanks to $47 billion in new taxes on drug companies and medical device makers.
  6. Nearly two-thirds of doctors are considering abandoning any kind of government-sponsored health care insurance, stating that regulations are too high and reimbursement too low.
  7. By forcing States to accept federally-mandated health insurance, the Act violates States’ rights.
  8. Small businesses, the drivers of new job growth, will be especially penalized by $52 billion in new taxes and new IRS reporting requirements.
  9. Despite $500 billion in new taxes, Obamacare will increase the deficit by $500 billion over the next 10 years. (Source: Heritage Foundation, Impact of Obamacare)

Is Obamacare Unconstitutional?

On June 28, 2012, the Supreme Court ruled that the Federal government does not have the Constitutional right to mandate that people must buy health insurance from a private company. However, it does have the right to tax those that don’t. Therefore, it upheld the Act.

The Court struck down the mandate that states must add people to Medicaid. However, many states will still take advantage of this portion of Obamacare because the Federal government will foot the bill for the first several years. For more, see What Is the Status of Health Care Reform?.

Obamacare Background

2008: The controversy started during the 2008 Presidential election campaign. One of Obama’s campaign promiseswas to create a government program, similar to that used by Congress, that would extend health care insurance coverage to everyone. He also wanted a national electronic information exchange system to provide patient care records to any doctor who needed it. Critics called this socialism, since it involved the government in mandatory health care for everyone, similar to countries in Europe and Canada. It was ironic that these same legislators didn’t have the same objection to their own government-sponsored health care.

2009: Obamacare critics furthered intensified their attacks when Obama submitted his first health care reform plan in 2009. In that proposal, Obama kept most of the elements of his campaign pledge. He modeled the government health care plan, known as “Universal Health Care Coverage,” to be more like Medicare and Medicaid than the Congressional health care plan.

2010: In 2010, the Patient Protection and Affordable Care Act was signed into law. It retained a mandate that nearly everyone in the U.S. must have some form of health care insurance by 2014, or be fined by the Federal government. This mandate is the main issue for most of those opposed to Obamacare. Soon after the act was signed into law, Attorneys General in 21 states filed suits to protect their citizens from being forced, in violation of the Constitution, to purchase government-approved health insurance.

2011: The mandate that everyone must get health insurance was ruled unconstitutional by the 11th Circuit Court of Appeal in Atlanta. It stated that this particular mandate falls outside of Congressional authority to regulate interstate commerce. In response, the Treasury Department petitioned the Supreme Court to hear the case in 2012. This ruling falls within the 2012 Presidential Campaign.

In fact, three of the 2011 Republican Presidential candidates promised to repeal Obamacare. Mitt Romney was accused of being hypocritical, since he instituted a form of Obamacare when he was Governor of Massachusetts. Some critics called it Obamneycare. Former candidate Rick Perry believed that employer-sponsored health care insurance was sufficient. Former candidate Michele Bachmann filed a bill to repeal Obamacare. (Article updated June 30, 2012)

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