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Obamacare: The Mandate

The requirement that most Americans have health care coverage starting in 2014 has generated more public outcry than any other part of the Patient Protection and Affordable Care Act (Obamacare). There are various reasons people would not want to buy insurance on their own...

o They are young and healthy, and the chances of them incurring large health care bills are low.

o They would rather use their money for other things.

o They don't like being told what to do

We'll explain on this page why the requirement is a vital part of the law, and how you can comply with it.

Do I really need to buy health insurance? Why?

The mandate has been a key component of the Patient Protection and Affordable Care Act (ObamaCare) since 2014.

It says that if you don't have health insurance that covers certain essential health benefits, you will pay a penalty. There are a few exceptions - for example if your household income is less than the federal poverty level.

Although you are required to have insurance, the government will help you pay for it. For example...

o If your income less than the federal poverty level, you are eligible for virtually free health care through Medicaid Expansion (unless your state refused it).

o If your income is less than 2-1/2 times the federal poverty level, you are eligible for Cost-Sharing Reduction Subsidies to help pay for your premium, as well as much of your out-of-pocket expenses.

o If your income is less than 4 times the federal poverty level, you still are eligible for subsidies from the government to help pay for your premium.

As part of the 2017 tax overhaul, the penalty for not having insurance has been eliminated. So at least for 2019, you effectively are not required to purchase insurance.

The mandate keeps costs down

The easiest way to understand why the mandate is important and what it does is to imagine a situation without it.

ObamaCare requires insurance companies to insure everyone - regardless of their health status. Without the mandate, people who have the most health issues - such as cancer or diabetes - still would buy insurance. Those who are young and have no immediate health concerns might not.

Here's what would happen...

o Insurance companies would need to increase premiums to cover the missing revenue from healthy people not buying insurance.

o Those with incomes more than 4 times the federal poverty level (and therefore don't receive subsidies) would bear the full brunt of the increased premium costs.

o Those eligible for subsidies might not see an increase. That's because the insurance company would receive the amount of the increase from the government - which comes from tax dollars.

It's worth noting that ObamaCare still works as intended without the mandate - because the government still is subsidizing insurance for millions of Americans who otherwise would not be able to afford health care.

It's just that by eliminating the mandate, Americans pay more in both premiums and taxes.

Not requiring insurance actually helps nobody

Eliminating the mandate also means that fewer people will have health insurance. Some because they feel healthy enough to skip it, and some because higher premiums made it unaffordable. And of course some simply because they choose to not buy it.

That may help some of them in the short term. But for the unfortunate ones who find themselves with an unexpected illness or injury, the requirement to buy insurance could make a difference in their financial health for the rest of their life.

In some situations the government would provide for their care - in which case their decision to not buy insurance becomes the burden of taxpayers (we will ignore the option of refusing to treat someone for an emergency).

But there's a more subtle harm to young healthy people who don't contribute to the health care system while they still are less likely to need it. When they eventually do need it, the generation of young healthy people coming up behind them likely will make the same choice - thus not helping pay for their health care expenses. So they likely would end up paying just as much over the long term anyway.

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