What is Obamacare and why doesn't it seem to be working? – an FAQ


The fact that this package of legislation has come to be known as "Obamacare" makes it pretty clear that the President's name and reputation is going to sink or swim with its success or failure. And right now, in many people's mind, it's looking like its failing, but why?

Because of how aggressive the US press is compared to the UK, its often difficult to get a clear picture of exactly what's happening. So here is a basic overview to answer some often asked questions about Obamacare.

Q: Is Obamacare like the American version of the NHS?   No. The US doesn't have universal socialised* healthcare like we do in the UK (*socialised is something of an Americanism, which means 'paid for and run by a government body'). In that respect, the US is something of an anomaly in the developed, democratic world. Countries that do have an NHS equivalent include India, Israel, Japan, France, Germany, Canada, Australia, and Argentina. There are many more, proving how much of an anomaly the US is.

But it's important to note, the US has had some government paid for healthcare long before Obamacare in the form of "Medicaid", which is the free healthcare offered to the over 65s. If you are poor enough, there's also a system where you don't have to pay in insurance up front, like much of the US healthcare, but you can pay afterwards. It's this system that is a big part of the reason why in the US sixty percent of all bankruptcies are caused by healthcare costs (something unheard of in countries with NHS equivalents). Although if after pursuing you for the money for some time, it turns out it is impossible for you to pay, the government ends up assuming the costs. Many have argued that its systems like this that prove that the US does have socialised healthcare, it just has a really bloated and inefficient socialised healthcare system.

Q: So if it's not an NHS, what is Obamacare trying to do?

It attempts to solve the problem of the 47 million US citizens who don't have health insurance in the US.

For many and complex reasons, healthcare insurance is very expensive in the US. If you compare what the average US citizen spends for health insurance to what the NHS spends on the average British citizen, the US comes in at around about double the price, spending 16% of its GDP on healthcare, compared to the UK's 8.3%. The average US employer sponsored healthcare plan for an individual costs $6,000 per year. That's about half of what the average two bedroom apartment rents for, so it's not surprising that lots of people don't want to buy healthcare.

This means that when lots of people come to making economic decisions in the US, lots of them have to be a lot more conservative in what they do, because they can't risk losing out on healthcare. This means people can't innovate and start businesses in the way they might want to, which is bad for the US economy, because small businesses are the primary drivers of economic growth in every country.

Q: How does it solve that problem if it doesn't provide free healthcare?

By creating circumstances that make healthcare cheaper in the long run. Hence the law's actual name, the "Affordable Care Act" (ACA).It does this in three ways:

First, there are regulations. Currently, because the US healthcare system is based largely around insurance and the operations of private companies, that means that it may be possible for you to actually be denied healthcare by a company because you're too ill to insure. Imagine trying to buy insurance for your car mere minutes after you crashed it. This means lots of people with chronic conditions can't get insurance, or if they can, it's massively expensive. Under the ACA though, that doesn't happen anymore. Insurance companies aren't allowed to charge you more just because you have a chronic condition.

The second part of the ACA is the individual mandate, and it's very important. If sick people and healthy people have to be charged the same amount, there isn't an incentive for healthy people to buy insurance. Instead, they can just wait until they fall ill, and then they can buy it at the same cost. But then if only unwell people buy insurance, the cost of supplying the insurance increases, this then drives even more healthy people away from buying insurance, which in turn means even more people only buy insurance when they're not well, and we end up with an endless negative feedback loop in the health insurance industry. To combat this, the ACA has what's called the individual mandate, which is a part of the law which means you can be fined if you don't buy health insurance, in a similar way to how you get fined if you don't buy car insurance.

But now there's another problem. How do you force people to buy something they can't afford? Some people in the past have called this solution akin to trying to solve the problem of homelessness by making it illegal not to own a house. This is where the third part of Obamacare comes in. The subsidies. If you make less than four times the poverty line in the US, you can receive a tax credit which will help cover the cost of the healthcare insurance.

To help simplify things, the government has also created what is called the "healthcare marketplace" where different companies can offer healthcare insurance plans at what are called bronze, silver, gold, and platinum levels.

Q: So what's been going wrong?

There have been two main problems.

Firstly, the website and the administration surrounding it haven't been at all up to scratch. Often times the website is overloaded, which is something that is kind of unbelievable in 2013. Many argue that the government should have expected more traffic and bought better servers as a result, and that criticism has largely been accepted by the Obama administration. This is a problem, in terms of the speed of the processing of everything, but it's far from the main issue.

The big problem, the one that's got lots of people very angry, and has led many to accuse Obama of being a liar, is that many healthcare providers are now discounting various healthcare plans because of the new requirements demanded by Obamacare. This contradicts Obama's oft quoted phrase "If you like your plan, you can keep your plan". The administration has said that he was referring to specific policies dating back more than three years, but that can only really mean it applied back in 2010, and his continued use of the phrase is definitely false. Lots of people have had to buy new healthcare plans when they were promised their old ones would be sufficient. This is partly Obamacare's fault, in that this eventuality was not predicted, but it takes two to tango, and it's also the insurance companies fault for not consulting with the government earlier, and telling them that this might happen.

Q: Is this going to sink Obama's presidency?

No matter what happens, Obama is going down in history. The question is, will it just be because he was the first African-American President, or will it be because he made the biggest domestic policy shift on healthcare in half a century.

Predicting the future is notoriously difficult, but both of the big problems people are having with the ACA appear to be transitory. The website is being fixed, and people's objection to the new healthcare plans will probably be transitory. The bigger question though is whether or not it will make Obama, and the Democrats in general, so unpopular that a future Republican President could come in and repeal the law, turning the clock back to 2010. If that happens, it's quite possible that Obama's tenure will be regarded as an anomalous blip in the system.

But given other big national trends right now, the increasing size of the largely Democrat leaning Hispanic community, the continued Republican intransigence on immigration reform, and the continuing rise of influence of unpopular right wing, "tea party" extremists within the Republican party, it isn't looking likely that a Republican will be taking the White House in short order. Or at least, if they do, they aren't going to be right wing enough to fight a law like the ACA.

In short, while predicting the future is always tough, Obama's legacy looks safe. For now.

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