The Affordable Care Act is misnamed, in that it will to do little to make health care more affordable. That has become clear in a number of ways, and the recent decision to delay, by a year, the implementation of a part of the law that would mandate all businesses with more than 50 employees to provide health coverage seems yet another example.
A cynic might say the president deliberately postponed implementation until after the mid-term elections, because of how unpopular it will become when Americans come face-to-face with what the law means. But it's clear the administration was not prepared with the rules businesses need in order to comply with the law's requirements. Meanwhile, the individual mandate for obtaining insurance is scheduled to take effect next year, and that also could prove to be unpopular.
Businesses have hailed the delay in the portion affecting them. As the law is written, companies that refuse to provide insurance would face fines of $2,000 per employee (with the first 30 employees being exempt). For some, this would be an incentive to turn full-time workers into part-timers in order to avoid the extra costs. To others who already provide health insurance, the $2,000 fine may be less than what the company currently pays to provide the benefit. That would give those companies an incentive to remove health coverage and let taxpayers cover the difference. Neither outcome would be good for the economy.
Under the individual mandate, every American will be required next year to have health insurance or face a penalty. This may lead many to seek government assistance to compensate for increased costs. These subsidies may be made available without adequate verification requirements to determine whether applicants actually qualify to receive them. This also creates a perverse incentive for businesses to withhold coverage and push employees toward a subsidized plan. It is also an open invitation for fraud and abuse that will likely drive costs even higher.
At the least, the act seems designed to create confusion and incentives that would harm a fragile economic recovery.
Americans need a functional, less-expensive and cost-effective health care system. The Affordable Care Act was designed as a way to make sure all Americans have insurance coverage. It wasn't designed to reduce the actual costs of health care. Thus, the system's problems of runaway and inefficient costs will remain, with an added burden on taxpayers to pick up much more of the bill.
Unfortunately, a divided Congress isnít likely to do the sensible thing, which would be to either fix the law's perverse incentives, which would require a major overhaul, or scrap the law altogether. The Affordable Care Act was passed during a narrow window when Democrats held the White House as well as majorities in the House and Senate. It passed without any Republican support or attempt at compromise. It should surprise no one that this sort of thing leads to bad law.
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