Obamacare’s Y2K: Coverage for pre-existing conditions

Starting in 2014, one of the signature features of the Affordable Care Act (ACA) will be implemented: No adult with a pre-existing condition can be denied health insurance.

But it seems from recent news reports that both the administration and the nation’s health insurance carriers are getting a little nervous about exactly how much that will cost and whether sufficient funds will be available.

In theory, the individual mandate ensures that enough healthy young people buy insurance to keep premiums affordable and provide enough money to cover the care of the already sick. But no one knows with any certainty how many healthy young people will not buy insurance, or exactly how much it will cost to care for the added millions of people with pre-existing conditions.

In late November, the Obama administration revealed its plan “to help stabilize premiums for coverage in the individual market” through an annual $63-per-person insurance fee. The fee is supposed to be temporary, decreasing and then phased out entirely by 2017 (unless, of course, Congress votes to extend it).

The private insurance companies, however, want to increase the financial penalties on those who ignore the mandate. As it stands, in 2014 if someone does not buy health insurance, they will only be fined $95 or 1% of their income, whichever is higher. By 2016, the fine goes up to $695 or 2.5% of income, still well below what average monthly premiums are expected to cost.

Will Obamacare be a financial disaster or, like Y2K, are there enough people working on the problems behind the scenes that everything will work smoothly on January 1, 2014?

We can only wait and see.


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