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Opening the Gift of Obamacare

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Although the conclusion of the open enrollment period for signing up for health care coverage through the individual marketplace had been extended to March 31, 2014, policies that had been adopted by applicants before the December deadline will begin to kick in on New Year's Day, 2014.

Many reports have recently been published claiming that everyone will have higher premiums as a result -- something that the president did not mention on his 2008 presidential campaign trail.

However, the myth that premiums will skyrocket nationwide is skewed to represent the worst possible scenario, not what will be the reality for the average American. The problem is that there are certain states with higher numbers of uninsured people. The higher ratio of the uninsured over the insured effects premium hikes borne by healthy people that will have to sign up for insurance in their respective states. Jennifer Agiesta and Ricardo Alonso-Zaldivar reported that 69 percent of Americans believe that their health insurance premiums will increase, but this statistic is presented in a fashion the precludes the possibility that it could be different from state to state - misleadingly implicating that the statistic is uniform nationwide, without any variance. Measuring the increase of premiums on a national scale does not accurately account for the differences among states. Therefore, the increase must be analyzed on a state-by-state basis to determine who is paying more, the same, and less for premiums. The state you inhabit determines the amount you will pay less or greater in premiums. That's right -- in states like Louisiana and New Mexico, premiums are expected to decrease for individual policy holders, while in states such as Florida, South Carolina, Kansas, Texas and Pennsylvania there will be no changes in premium costs. So when a reporter declares that the public perception of the effects of Obamacare on their personal premiums is dull without examining the intricacies of the effect, he essentially tolerates the ignorance of those who are polled and offers no consoling corrections to help bolster their spirits.

For informative purposes, let's for the moment assume that premiums will increase for most Americans. An often masked beauty of Obamacare is that it guarantees coverage of numerous new health protections and procedures that weren't covered across the board by all insurance corporations before 2010. Due to the expansion of coverage, the price of individual plans will naturally be more costly. Unfortunately, the most likely to assume this increase would be healthier people or those whose previous policies were more meager in the scope of things that would have been covered.

Sticking with our earlier assumption then, individual state reports of the hefty premium increases tend to exclude the looming decrease these premiums will experience once subsidies are factored in. Qualifying lower-income individuals, as well as people up to 400 percent of the poverty line, will be eligible for at least some subsidy that will help diminish the average cost of the premium.

Do individual policy holders have a right to be upset? Sure they do. But the amount who are upset could likely be decreased if they are made aware of the false pretenses under which they were informed that premiums will rise -- that our assumption of a uniform national increase as implied by Agiesta and Alonso-Zaldivar is heavily overplayed, non-reassuring, and only partly true depending on the perspective of the study. Those unhappy individuals should consider that for the most part, those paying higher premiums in 2014 are doing so only because of the wider range of coverage that their new plans will provide for them in comparison to the less sufficient coverage that was previously provided under policies that do not meet current eligibility requirements that were instituted at the passage of the Affordable Care Act in 2010.

Currently, 86 percent of Americans already have health insurance that satisfies the individual mandate, and if their coverage is as legitimate as represented by this figure, then they needn't search for new plans. If one does not receive coverage through an employer, then other avenues such as Medicaid, Medicare, individual private insurance, and the Children's Health Insurance all qualify as venues through which to sign up for health care.

But why should the law compel every American to have coverage? Well, the chaos that would ensue if people only signed up for coverage at the moment of a diagnosis or expensive hospital visit would be economically catastrophic for the average healthy American. In this hypothetical situation, a greater number of sick people signing up for a last-minute health plan will cause premiums for everyone to soar because insurance companies are required to accept them. Of course, depending on the condition of the individual, a company can still charge more in extenuating cases, relative to whether the individual is a tobacco smoker, is filing on behalf of a family or for him or herself, how old he/she is, and even where he/she lives. Once companies start signing up massive amounts of sick people at the time of their illnesses, what would become a "universal increase in premiums" for all policy holders will discourage healthy individuals from remaining on their existing plans. A substantial drop off of healthy insurees will cause the premiums of sick people to escalate even further.

This is why the individual mandate exists -- to prevent an economically distressful scenario for the average American household. As Politico journalist David Nather reports, certain states have tried this before. New York once had a law requiring companies to cover people with pre-existing conditions, which caused premiums for all policy holders to soar. However, when Massachusettes employed the same law in 2006, Governor Romney required an individual mandate in tandem and premiums did not swell.

To the dismay of some, there will be those who undergo higher rates in their copayments, deductibles, and premiums. But given the tradeoff of more expansive coverage for a slightly higher sticker price, before the aid of subsidies, the disappointment expressed by some is more immaterial due to the consequences that would prevail would the individual mandate not exist.