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Why ObamaCare is Doomed
As we all know the Supreme Court gave its "narrow blessing" to the Affordable Care Act, or ObamaCare at the end of June. The big question on everyone's mind is whether it will deliver any of the benefits promised. Schiff believes the plan will backfire and cause fewer healthy people to buy insurance, while at the same time raise premiums for those that choose to purchase it. The Act will destroy employment opportunities and essentially cripple the health insurance industry.
Schiff clarifies that the ACA makes it illegal for insurance providers to deny coverage to anyone for any reason. This in turn allows healthy people to drop insurance until they actually need it without incurring any risk. To counteract these free riders, the law imposes "no insurance" penalties. This is basically a $400-$600 dollar tax, depending on your income, imposed by the Supreme Court to punish those who choose not to purchase health care. The flaw is that the roughly $400 is far cheaper than paying for a year of health insurance.
Schiff explains that in 2010, on average, a typical young person paid $2500 per year for insurance. Keep in mind this his plan would not include significant out of pocket expenses. A single person earning $40,000 per year who chooses to go uninsured would be subject to a $400 tax. Schiff argues that even in 2016, as the penalty or tax increases to the greater of $695 or 2.5% of household income, it will still not make sense for many people to buy insurance. This thing is set up for failure as most citizens who cannot afford or do not believe in Obamacare will simply opt out and be forced to pay the tax or penalty.
The ACA will have a horrible impact on small businesses as can be seen in France. The French implemented a similar rule that states businesses with more than 50 employees must offer insurance to their workers. The French law involves significant regulatory requirements for businesses that have more than 50 employees. As a result, there are currently 2.4 times more French companies that have 49 employees than there are with 50. This kind of incentive for businesses to stay small will no doubt have a negative impact on the US economy.
Schiff believes it only a matter of time before the Obama Administration raises the penalty or taxes for those opting out to compensate for the losses. Schiff closes with this ominous and very true quote:
"The Court has a history of opening small cracks in the Constitutional barn door for the bureaucratic horses to stampede."
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