March 28, 2012

One Good Consequence of Obamacare's Individual Mandate

Tea Party tax day protest 2010
To be clear, I am not a supporter of Obamacare.  In fact, I strongly oppose the legislation.  All of it.  Due to the recent Supreme Court hearings on the legality and constitutionality of the individual mandate and other parts of Obamacare, I felt compelled to write about this.  This is a personal finance and money blog, and this issue absolutely encompasses both of those topics.  As an opponent of Obamacare, I’m almost ashamed to admit that there actually is something good that could result if this bill holds up.  I have not heard or read anybody in the national media or in the court hearings talk about what I am about to bring up.  This may be one of those unintended consequences.  In this case, it would be one I wish I had not thought of, because I want this bill to be shot down and killed forever.  That unintended consequence is this...

Hospital Costs Go Down
If the individual mandate holds up, this would result in virtually everybody in the United States having health insurance.  There are some exceptions, but the numbers I have heard state that about 30 million previously uninsured Americans would be forced to buy insurance.

I don’t know the truth behind this, but I have long had a theory about hospital billing and the way they cover costs that are forced upon them due to government regulation.  In 1986, Congress passed the Emergency Treatment and Labor Act.  This act gives individuals the right to emergency care regardless of their ability to pay.  My theory is that hospitals charge more for services to patients who actually pay in order to cover the costs for patients who don’t pay.  In other words, the government forces hospitals to treat patients who have no ability to pay.  The hospitals can’t afford to just eat this cost, so they have to get the money from people who can pay.  I wrote more about this in The Emergeny Room Cost Debacle after my son had to visit the ER in the middle of the night a while back.

If virtually everybody has health insurance as a result of Obamacare’s individual mandate, this 1986 Emergency Treatment and Labor Act suddenly becomes obsolete.  For as much as insurance covers, most hospital costs will now be paid through insurance plans.  Sure, some patients will still not be able to afford their portion and hospitals will still have to charge slightly more to paying patients.  But, for the most part this should do away with my conspiracy theory.  Now virtually all patients who visit the emergency room have insurance, so most costs are now covered.

A Conspiracy Laden Conclusion
It is questionable and debatable whether this hospital cost savings would even come close to covering the added insurance costs that Obamacare caused.  I would boldly say that it is doubtful.  The more likely scenario is that hospital costs won’t go down.  Hospitals will keep charging what they charge, and pocket the “new” money that comes in from previously uninsured patients.  

Any way you look at it, it’s all a big conspiracy.  Anything with government is a conspiracy.

I would love to hear your version or thoughts on the Obamacare conspiracy in the comments section below.

This post is a rare 2nd post in one day on this blog.  Since this story is fresh in the news, I wanted to post it immediately.  Make sure you check out my other post for today...

Tipping at Starbucks and The Ice Cream Window


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