The Shutdown and What Looms Ahead


Citizens protesting ObamaCare.
Citizens protesting ObamaCare.

The world’s largest economy and most viable superpower is paralyzed, and the ongoing political bickering and partisan clamor are not helping.

For the first time since 1995, the US government has failed to pass a spending budget. Effectively, federal workers are unable to be paid therefore services ran by the Federal government – save the ones deemed ‘essential’ – are mandated by law to shut down.

From a Philippine perspective this may seem extreme, in the country if Congress failed to pass the national budget on time the previous year’s enacted budget is carried over until the new budget is passed. But if you think about it, accounting for the funds will be easier if the government shuts down instead.

Those who casually tune in to the news may have a vague or basic understanding of the details, the two major US parties – the Democrats and Republicans – are at war over funding, particularly in funding the Affordable Care Act or known simply as “ObamaCare”. It was suppose to be the answer the millions of uninsured Americans were looking for, a remedy to the rising health care costs; yet the bill is controversial. Why you may ask?

First we must go through the keypoints of the Democrat-enforced Patient Protection and Affordable Care Act. The law makes it a requirement for all US citizens to have health insurance, those who are not enrolled by 2015 will incur an annual fine. If that sounds painful, the penalty will rise each year you still do not enroll to a health insurance provider. This automatically calls for objections, Republicans are calling the clause ‘unconstitutional’. Democrats however are quick to defend themselves by pointing out people can justify opting out of insurance if they cite religious reasons or if their income simply cannot afford it. The latter case makes the candidate a beneficiary of a government tax credit to help ease the cost of the insurance.

Supporters of the bill point out that making people understand what different health insurance policies entail, revealing all hidden costs and detailing what each policy covers will create a competitive platform for all health insurance providers, thus setting a price competition making premiums more affordable. This is another component of ObamaCare, the bill creates an online marketplace for different providers to sell their policies to people; almost like a virtual shopping mall of insurance plans. In plain English, consumers will be explained what each insurer offers and how much they have to pay as well as how comprehensive the coverage is.

In addition, ObamaCare also stops insurance companies from turning down clients who have not declared any pre-existing illness or provide addition charges for different genders or gender preferences. This eliminates underhand, opportunistic corporate tactics from denying people their health benefits. The problem of young adults, most of whom are fresh college graduates unable to find jobs, not being able to afford health insurance? The reform allows them to be included under their parents’ policy until they reach the age of 26.

All those provisions may sound not only fair, but generous for you but take note everything that is good these days comes at a cost. That exactly is where ObamaCare takes most of its’ criticisms from, the expenses it incurs on an economy that is struggling with a sky-high debt as it is.

You see, since insurance companies are forced to take the high-risk clients since the law makes it illegal to turn them down their expenses understandably increase too. This means insurance companies will impose higher premiums on existing policy holders, which means the people who were already struggling to cope with health insurance are made to carry the burden for the people who did not have them. And what about the coverage given to under-26 year olds? Opponents argue, and they have a point, that this demographic is the healthiest and fittest among the population and thus are not desperate for these insurance policies.

The most furious of the ObamaCare opponents are the medium and large-sized business owners and high-income earners. Because of the government’s plans to provide tax credits and subsidies to people who cannot afford healthcare, they are made to churn out more taxes. Even tanning salon patrons are imposed with a new tax which will be a contribution for ObamaCare. The reform also has a clause titled ’employer’s mandate’, which requires all businesses with 50 or more full-time employees to enroll all their staff to health care plans or else face a penalty. This is an added cost for the business, and in anticipation several companies have already cut hours for staff members; this includes fast food workers who already struggled with their minimum wage, now they get less hours.

What about the provisions that would expand insurance coverage to cover more people? Democrats estimate that tens of millions of Americans as well as over nine million children will get access to more comprehensive healthcare. Again, this entails funding and the government has no where else to look for those funds than their own budget. Expanded coverage requires more funding from an already stretched budget, with or without ObamaCare the US government is registering trillion dollar deficits as of late. Cost-cutting measures were suppose to be the solution, now there are more costs greeting taxpayers.

This is precisely why the US government shut down, no one can agree on ObamaCare because quite frankly, it is too complicated. It is a humane and liberal solution for the healthcare woes of the United States but yet it  is so badly crafted that it is going to burn a hole into the ground of the US treasury.

This is not a surprising move from the Democrats however, being the center-left, socialistic party of the two they hold social services dear to them and of utmost importance. Rightly so, it would be impertinent to criticize them for thinking that. But they have to be realistic; obviously everyone would want what is best for the American people, but the method of achieving that should be rational and practical. Is it smart to solve one problem by creating a bigger one? Surely it is not so. Healthcare reform is a major issue that needs to be addressed in the United States, but ObamaCare seems too ill-planned and disorganized to be the answer. Maybe it’s time to go back to the drawing table and debate a solution with less collateral damage.

The US Congress also needs to do this fast. If you see the shutdown as a dangerous, destructive scenario to be in wait until you hear of what looms come October 17. You already know that the shutdown paralyzes the US government from spending and that freezes their services, but it also stops their debt payments. Being unable to spend at all also disables the government from repaying loans, the next repayment is on the 17th of this month and failing to repay loans results into what is called a default. 

Get this, political and economic analysts are saying the shutdown is bad or disadvantageous. They are calling a default on the other hand catastrophic. That is not a hyperbole, in fact it may be that it is not even enough to describe what awaits the United States in a few weeks. The effects that are predicted are thought to be much worse than the recession of 2008, now that is scary.

At the moment however, the US government has time to spare. Congress needs to address this shutdown quickly and turn their heads in raising the debt ceiling – another battlefield that will be hotly contested by both parties – yet one which is imperative.

Sources

http://obamacarefacts.com/obamacare-pros-and-cons.php

http://www.youtube.com/watch?v=3-Ilc5xK2_E

http://www.forbes.com/sites/pascalemmanuelgobry/2013/09/30/why-the-republicans-are-right-to-shut-down-the-government-over-obamacare/

http://useconomy.about.com/od/healthcarereform/f/What-Is-Obama-Care.htm

http://www.bloomberg.com/news/2013-09-30/the-republicans-fighting-obamacare-aren-t-crazy.html

http://finance.yahoo.com/blogs/breakout/u-treasury-default-catastrophic-consequences-explained-170230218.html

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