Scholes 1 Kyle Scholes Mr.

Xu Li ENG 111 11 November 2013 Obamacare: Bad for the Economy Beginning January 1, 2014, every United States Citizen will be required to have some type of health insurance. Many issues and concerns have become apparent regarding what the new Obamacare policies entail. During the process of creating the new healthcare system, many things were taken into consideration, such as how past systems were run and also whether or not past healthcare models would work nowadays. The solution that the government decided would be best for the United States is requiring every citizen to have some sort of healthcare insurance. The penalty for not having such insurance would result in a fine. Also, according to Amanda Ganglers article Obamacare: Game (Really) ON, everyone must be able to get coverage, no matter how sick. There are a multitude of arguments that have surfaced between the two political parties and normal citizens because of the new policies. As the arguments between the parties have demonstrated, it has been prominently stated that the Obamacare reform will impact economic aspects, both personally and the country as a whole. The views of the political parties related to the new healthcare reform are drastically different. Most Democrats are in favor of the ideas and philosophies of Obamacare. However, even though almost all democrats are supporters of the new reform, a lot of them still have fears about implementing the new policies. This brings into question how good the reform actually is since the party that mainly created it has their doubts. While a majority of the Democrats are in favor of Obamacare, the Republican Party is not in favor of the policies. They are afraid of the negative effects that it will have on the governments functions and the economy. A main cause of this fear is that many people have no idea exactly what the policies are that would be seen as scary by many people. This statement is back up by a USA Today article that says, As the most recent USA TODAY/Pew Research center Poll has learned,

Scholes 2 the more people learn about it, the more they dislike it, (Second Look). The way someone views the policies of Obamacare is directly related to which political party they generally side with. As many people begin to learn more about Obamacare and form opinions, they begin to realize that the reform most likely wont have a positive effect on their personal finances. In order to pay for the soon to be exponential increase in the number of insurance plans, the government plans on using upper class taxes to help pay for insurance plans that arent affordable. Clearly, this makes people in the upper class unhappy since their hard-earned money is being taxed more to pay for something that people who dont work as hard cant pay for. However, there is a counter argument to this statement. The article Reasons for Optimism About U.S. Healthcare looks at this aspect from the side of the hospitals. During one portion of the article, the author discusses how the decrease in the amount a patient has to pay to see a doctor will impact the relationship with the doctor. It then says, One of its (healthcare reform) unintended consequences is that physicians have less time to spend with each patient (Tolan). This shows that paying less for each visit slightly compensates for the raise in taxes. Unfortunately, it results in worsened patient care. This is something else that would upset the upper class because they are used to paying for quality doctor patient relationships. The upper class citizens have more than just one reason to be angry about the soon to be increased tax rate. At the end of President George W. Bushs term of 2004, he worked very hard to reduce the marginal tax rate. He succeeded and lowered it to 43.9% according to the Wall Street Journal. However, with the application of the new reform, the marginal tax rate is expected to grow by quite a bit. The index will be close to 50%, driven up by provisions to Obamacare (Mulligan). This is like a punch to the stomach for upper class citizens and political members who worked to lower and have the marginal tax rate. Had the government found another way to pay for the less fortunates healthcare, many people believe that the policies would be more popular. On the other hand, the upper class does support how people will be penalized if they do not purchase an insurance plan by the first of the year.

Scholes 3 Although this is the main economic issue that people associate with Obamacare, there are many other economic effects that it will have. Unfortunately, the way people interact and participate in the American economy will be another aspect of the economy that will be impacted. The aspects that coincide with one and other are the issue of who is being taxed and how the insurance is being paid for. As a plethora of sources have described, people who cant afford health insurance will be able to pay for the coverage by using the taxes of the upper class. Casey B. Mulligan says in the article, How Obamacare Wrecks Work Ethic, the methods of paying for Obamacare as a whole include, collecting more taxes from families with high incomes, levying employment taxes on businesses, or providing more subsidies to families with low incomes (Mulligans). The government has weighed the pros and cons of each method, and has decided there isnt one method that is better than the other. Another point that is made in How Obamacare Wrecks Work Ethic is, an essential consequence is the same: a reduction in the reward for working. (Mulligan). This brings up the point of how people in the United States are beginning to Free Ride in political policies. Free Riding is covered in the class POL 101 at Miami University. The idea of Free Riding correlates with the idea of the Collective Action Problem (CAP). In my politics class, we have previously talked about the same issue of Obamacare and other issues that arise from these policies. The concept of Obamacare would be considered what my politics professor, Bryan Marshall, describes as a Collective Action Problem. Professor Bryan Marshall, professor of POL 101, explains the Collective Action Problem as, When individuals desire public goods from which they cannot be feasibly excluded and when each individual's contribution to public good yields benefit that is less than cost involved rational individuals will have incentive to free ride (Marshall). This directly relates to the idea of Obamacare still giving health insurance to those who do not pay the costs. This is very detrimental to insurance companies and could cause a lot of problems.

Scholes 4 Obamacares effect on non-government insurance companies will not be beneficial to their own economics and their place in countrys economy as a whole. Unfortunately for private insurance companies, the implementation of the new healthcare reform the government will create a new healthcare marketplace. Author Kimberly Lankford states in her article, Get Ready for Obamacare, that, Each state will have an exchange (also called a marketplace) where you can buy health insurance and apply subsidies to reduce you premium (Lankford). The new concepts will directly affect private insurance since plans will soon be available for purchase on a state marketplace. Since no one can be denied health insurance, most people would think that this would help insurance companies. This is where a majority of the Free Riders will purchase their insurance because of its cheapness. This will be bad for the private insurance companies because more people will flock to the newly created insurance marketplace to purchase the cheapest insurance with the minimal coverage. Without thinking about it, most people overlook the affects this reform will have on other private business other than insurance companies. One way small private businesses are being effected is, To give workers at small companies more insurance choice (in theory), Obamacare created separate small-business insurance exchanges, (Gengler). Unlike small private businesses, large private businesses have to directly supply their employees with health insurance. So, in order to help small businesses, these companies will give their employees a certain amount of money that the employees will take to the state insurance department where they choose the policy they want. Some companies have begun to reduce the hours people work in a week, reducing the amount of full time employees, so the company will not have to directly supply them with health insurance. This is a problem because a majority of people are used to getting their insurance from their employer. According to the article Obamacare: Game (Really) On, *a+bout two-thirds of Americans under 65 get health coverage through a job (Gengler). This will later effect the rate of full-time employees in the United States. Other jobs that could be effected by the new healthcare reform are people who have jobs in the healthcare

Scholes 5 insurance industry. Since there will be an increase in the number of people that purchase healthcare from the state, the number of people that work for private insurance companies will most likely decrease since they will not need as many people working for them. After reviewing the new Obamacare health insurance reform, it has been deduced that Obamacare will not be as beneficial to society as the government had hoped. This is believable because of the huge negative impact the reform will have on Americas economy as a whole. Also, it is easily disagreeable how the method in which the reform is being funded is through the taxes of the upperclass. The government shouldnt have to pay for the health insurance of someone who hasnt worked hard enough to be able to pay for it. If the government found a way to incorporate a better payment method that was better for personal economy, and also a better way to sell the insurance that wasnt unfair to the insurance companies, then this plan and its policies may have worked.