Monday, March 26, 2012

Carol Costello, CNN, ObamaCare, 3/26/2012

COSTELLO: All of this over a law many Americans simply don't understand...

That's despite the fact that some aspects of the law are now in effect. Children up to age 26 can stay on their parents' plan. The prescription coverage gap for seniors is reduced. Insurance companies cannot drop coverage for people with preexisting conditions. States are allowed to cover more people on Medicaid. And new plans can't charge for a certain preventive services like mammograms and colonoscopies.

Actually the one aspect most Americans do understand is the requirement that everyone have insurance, the widely-reviled individual mandate...
You know what Dan, though? We talked to a lot of people. Most Americans do not understand this law. They don't understand what's in it. They don't understand what it means for them...

ELIZABETH COHEN, CNN senior medical correspondent: So let's take a look at a couple of people who we invented to see how they're going to do under health care reform and what will happen if the Supreme Court changes all that. So I want to introduce you to my friend, Eddy the Entrepreneur. So there he is. Eddy earns $80,000. He is an entrepreneur, so he doesn't have an employer. So unlike you and me, he doesn't get insurance through his employer. So under health care reform, eventually what will happen is he will spend $4,500 on insurance. That's what he would be required to pay.

And Carol, if he doesn't pay, look at that penalty there. He gets a $2,000 penalty. So what this all rests on is what will people like Eddie decide to do? Will they buy insurance, or will they pay the penalty? The penalty costs less, right? But you don't get anything for it. If you fork over more money, you actually get insurance. And if you want to know how you can put in your income and you can figure out what this means to you, go to We have a link to a calculator. You can figure out what your insurance would cost and what your penalty would be.

COSTELLO: And the reason the Obama administration wants this individual mandate requirement is because it pays for the other things in the law.

COHEN: Exactly. Exactly. Because I want to introduce you to two other people who need that payment. So the individual mandate is going to help pay for people like Maria the Musician. Maria only earns $25,000. She will only have to pay $1,726 for insurance and then the government is going to give a big subsidy. That's why that cost is so low. The reason why the government can give the subsidy is because of that individual mandate that you mentioned.

Now, in her case, she will have a penalty of $695 if she doesn't – if she doesn't, you know, pay – if she doesn't buy it. So, again, that's going to be her choice and it will be fascinating to see what people do. Will they pay $1,700 for insurance or will they pay $700 as a penalty? Again, you don't get anything for that penalty. You just pay it and it goes away.

COSTELLO: Okay. And then another factor I think people don't quite understand about the individual mandate, and this is from the Obama administration's viewpoint, right? So if you force everyone to buy insurance that means the insurance companies have more money, right? So that they can afford to cover people with pre-existing conditions. So they can afford to do that.

COHEN: Right. The whole thing about the individual mandate is that if you bring in everyone – okay, everyone – including healthy people, you get more money in that pot. And that means, theoretically, that insurance companies can afford to insure people with pre-existing conditions.

Because before – or right now, if you have a – if it you're an adult and you have a pre-existing condition and you try to get insurance on your own, good luck to you. Because insurance companies are going to say why should I insure you? You had a heart attack last year. Or even a heart attack ten years ago. I don't want to pay to insure you. That's going to be expensive.

Health care reform says, uh-uh, you've got to say yes to these people. And where that money comes from to say yes to these people is the individual mandate.