What happens with Health Care

I heard commentary yesterday that in the hearings Justice Sotomayor apparently asked the question
along the lines as to whether everyone would be liable for the tax and then those with policies would get a tax credit.

Is it going to work something like that?

How is the amount of the tax going to be determined?

Will it need to be adjusted each year depending on how many people opt for the tax instead of buying a policy,
or to adjust for changes in health care services?
I suppose that would mean continuing fights in congress. 

If I'm understanding what happened yesterday,
the tax will now be under control of congress
as opposed to the mandate that would would have put the penalty under control of the Department of Health and Human Services.
Am I correct about that? 

Yeah, I'm curious, too. 

This is where our VP of HR gets to earn THEIR money.

So here's an explanation BEFORE the ruling.  after the ruling, I'm not sure how it is affected:

"

What it is: The individual mandate is a requirement that all individuals who can afford health-care insurance purchase some minimally comprehensive policy. For the purposes of the law, “individuals who can afford health-care insurance” is defined as people for whom the minimum policy will not cost more than 8 percent of their monthly income, and who make more than the poverty line. So if coverage would cost more than 8 percent of your monthly income, or you’re making very little, you’re not on the hook to buy insurance (and, because of other provisions in the law, you’re getting subsidies that make insurance virtually costless anyway).

How it works: In 2016, the first year the penalty is fully in place, those who don’t carry insurance will be assessed a $695 fine, per year, or 2.5 percent of their income, whichever is higher.

In terms of logistics, the Treasury Department handles the mandate. The penalty gets assessed as a federal tax liability, on the income tax returns that Americans already file yearly. Starting in 2014, federal tax returns will include a new form where Americans will detail their source of health insurance. If they don’t carry coverage—and fall within the mandate— then they’ll get hit with the penalty.

What happens if you don’t buy insurance and you don’t pay the penalty? Well, not much. The law specifically says that no criminal action or liens can be imposed on people who don’t pay the fine. If this actually leads to a world in which large numbers of people don’t buy insurance and tell the IRS to stuff it, Congress could change that. But for now, the penalties are low and the enforcement is non-existent.

Who it impacts: The Urban Institute estimates that if the mandate were enacted today, it would affect about 26 million Americans who are currently uninsured. About a third of those affected, however, would qualify for Medicaid coverage at little to no cost. Another third would qualify for public subsidies to purchase insurance. That leaves “about 7.3 million people—2 percent of the total population (3 percent of the population under age 65)— who are not offered any financial assistance under the ACA and will be subject to penalties if they do not obtain coverage.”

Who is exempt: About 24 million Americans would be exempt from the requirement to carry insurance, according to a Kaiser Family Foundation analysis. That includes those who can’t afford insurance, as well as members of certain religious groups, Native American tribes, undocumented immigrants (who aren’t eligible for subsidies under the law), those in jail and people whose incomes are so low that they don’t have to file taxes (currently $9,500 for individuals and $19,000 for married couples).

Where the policy came from: The individual insurance mandate was the brainchild of conservative economists, as a way to address “free-riding” in healthcare without going all the way to a single-payer system. Our colleague N.C. Aizenman picks up the story:

The tale begins in the late 1980s, when conservative economists such as Mark Pauly, a professor at the University of Pennsylvania’s Wharton School of business, were searching for ways to counter liberal calls for government-sponsored universal health coverage. Pauly then proposed a mandate requiring everyone to obtain this minimum coverage, thus guarding against free-riders...Heath policy analysts at the conservative Heritage Foundation, led by Stuart Butler, picked up the idea and began developing it for lawmakers in Congress.

The Heritage Foundation worked with then-Gov. Mitt Romney (R) to pass Massachusetts’ 2006 health reform law, which required all Bay State citizens to purchase coverage. You can read Wonkblog’s interview with Pauly here.

Why it matters: With no penalty for not purchasing health insurance, but a requirement for insurers to accept anyone who wants insurance, many expected the costs of insurance would increase as the healthy hung back from the system and the sick flooded it. Some states learned this from experience: Kentucky, for example, attempted to eliminate pre-existing conditions in 1994 without the mandated purchase of insurance and saw its premiums spike. Its law was repealed in 2004. Health care economists expect this would happen if federal health reform didn’t include a mandate, either: They project that premiums would go up anywhere from 2 to 40 percent.

Why it’s being challenged: The legal question on the individual mandate centers on whether such a regulation is permissible under the Commerce Clause, which allows the federal government to regulate interstate activity. Health reform opponents contend that the decision not to do something — namely, not buy health insurance — is economic inactivity, rather than activity, and therefore not a behavior the federal government can regulate. Health reform supporters argue that the decision to not purchase health insurance has an economic effect. An individual without coverage, for example, may not have the money to pay for an emergency room visit, sticking hospitals or taxpayers with the bill.

What happens if it gets overturned: Congress could, theoretically, replace the individual mandate with another policy that doesn’t run afoul of the activity-inactivity distinction; the Government Accountability Office recently prepared a report looking at some of the alternatives. It’s unlikely, however, that congressional Republicans would permit such a fix, at least in the near term. It’s also possible that the Court could decide that the individual mandate is so entwined with the law’s guaranteed issue of insurance, that it would also strike down that part of the law, significantly reducing the health reform law’s insurance expansion."

-Washington Post

Unfortunately, it still doesn't answer the question posed as far as everyone being taxed and then a tax credit given to those insured or exempted (which I could have sworn I read somewhere else also: meaning I agree that's the intent), nor does it answer where you go to get this insurance if necessary.  Again, I could have sworn that each insurance company would be required to offer plan that met government mandate minimums and you would purchase from there independently.

There are two other items: 1) the system is "supposed" to be set up to encourage employers to provide healthcare, not discourage it.  It intendeds to provide tax credits to those small businesses that provide it, so I'm not sure why the assumption is that companies will start dropping healthcare left and right.  I would question the motives behind a company that dropped healthcare citing obamacare regulations, but that starts to get into opinion debate on right vs wrong, so I'll stop there.  2) Why is the assumption that you will now automatically drop your health coverage? I don't plan to change a single thing about my coverage, but if rates go up, then I'd pay for coverage I could afford, but I sure wouldn't just drop it.  If the government coverage is better than anything else I can afford then I'll pay for that.  If I can't pay for that, then I likely have some sort of exemption.  I'm struggling to see where the leap is that now that after the bill, all of the sudden fewer people are going to have healthcare than before?  Companies withdrawing coverage from employees in mass exodus and citizen refusing to buy healthcare essentially cutting their noses off to spite their face.

My understanding is you can either not get insurance and pay the tax, or you can buy insurance on the exchange that each state (or group of states??) sets up. 

Yes, the people who don't work now, and don't have health care now, and don't pay taxes now, can now opt out of the mandate by paying a tax. 

This debate isn't even fun to follow since neither side really has a handle on the entire bill.  The only people truly happy about this bill are the guys who were involved in the "fast and furious" investigation.

If you pay the tax, are you covered for something catastrophic?

For example, let's say you get hit by a bus.  The final bill for treatment and rehab is, just to pick a number, $150K.
Are you now liable for that $150K, or is the federal government paying that? 

So if say my company (granted I work for local Gov) were to drop insurance and pay the fine/tax, I would still have to pay additionally for insurance? 

Where this gets gray for me is the idea that right now my job pays for a good portion of my  family health care plan.  I pay a lot as well.  Buy if their costs could be lessened by paying the tax, and this results in me then having to pay the whole for insurance (without any increase in my pay) it could be financially debilitating.  (Say going from $200/mth to $6-800/month for a family)  

I would definitely start looking for another job, but for now I am just curious how this would work.  It would be odd that paying a fine/tax could absolve the company of any responsibility to the employee, but financially it makes sense.  It also seems odd that the fine/tax would not go to the benefit of the employees health insurance, but instead just the pit of the government coffers.  hmmmm.

The people you refer to would be exempt and wouldn't owe a tax on it.

That's even better!!

So you go along and just pay the tax.

You get a checkup somewhere each year.  There's suspicion that you're having heart problems.

You buy insurance. Turns out you need a bypass. You get the bypass. You drop the insurance and go back to paying the tax.

Yes? 

Exactly, it is what is most economically advantageous for most people in the middle class.

Geez.

What about a sudden catastrophic incident.
Let's say you're paying the tax and get hit by a bus. 

Are you liable for the care you'd receive?

Or you pay the tax and drop your insurance. You get into a car wreck that costs you 150k, like above. Now you owe 150k. Picking up insurance after the wreck won't help you much for your emergency care. 

Nope you still get insurance.

I assume that costs will continue to rise as they have for the past x years.  I don't believe for one second that anything this program does will lower HC costs.  My job within Gov has seen my costs increase significantly for the past x years.  The place I work continues to pay the same amount (less percentage).  The budget gets tighter and tigher each year with cuts every year (again this is a local gov, so they are not going to go out of business).  I see no reason why they at some point won't decide to not pay for health insurance at all.  I assume that just offering for the employees to buy insurance won't be enough to avoid the penalty.  

I really have no idea how a Local Government will be affected by this.  Hopefully not at all.

And you don't think this will get eaten by the hospital just like it is now?

Also in terms of a car accident your car insurance will pay for emergent care.

Really?  My "liability only" car insurance I keep on my paid off vehicles will help pay my medical?

Cool!!

Whether you like it or not it is more economically advantageous if you are in about the top half of the middle class to drop your insurance and pay the "tax".

If you are poor you will have health insurance because the government will pay for it.  

If you are in the lower end of the middle class the government will subsidize your insurance to the point of making it advantageous to a wash to have insurance.

If you are rich you will have insurance because premiums are less than 2.5% of your income.

If you are mid to upper middle class you get no subsidies, your premiums will be going way up and it makes more sense particularly if you are young without a family to forgo insurance and pay the "tax".

If you have state farm it does.:

Auto liability coverage falls into two categories:

1. Bodily Injury Liability - which covers medical expenses, pain and suffering, lost wages, and other special damages.
2. Property Damage Liability -- which covers damaged property, and may include loss of use.

Liability car insurance also pays legal defense and court costs.

State laws usually dictate the minimum amounts of auto liability insurance required, but higher amounts are available.

Replace car accident with a tree limb falling on your head and putting you into a coma or racking up 1,000,000 in emergency care and your car insurance only covers 500k then.

Even if the hospital eats it, your life is ruined financially, you go bankrupt, etc. Why would you be risking that? If you can get insurance and decide not to because you can just sign up once you find out you have brain cancer or whatever, you are making a stupid choice, just like you would be now. In no way does it make sense to risk that. That is the entire purpose of having insurance, to mitigate the risk.

Home owner's insurance yours or whomever the property belongs to.

You life is not ruined bankruptcy happens all the time and is no longer seen as that bad.  The government will make sure that lenders cannot discriminate against you due to bad credit plus they have programs to help you repair that credit.  Yes you are playing the odds to a certain extent but it is not stupid.  It is a calculated risk.

Let me ask you then. Assume you lose your employer provided insurance (I assume you have some) are you going to just pay the tax?