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Could Obmacare “Life Insurance Edition” Soon Become a Reality in 2016?

by Scott G on December 7, 2015 · 4 comments

Could Obmacare “Life Insurance Edition” Soon Become a Reality

Is Government Mandated Life Insurance Closer Than You Think?

The controversial Affordable Care Act better known as Obamacare went into full effect on January 1st 2014 making it a government mandate that nearly every American citizen must carry health insurance either through a private provider or through a state or federal exchange program. The penalty for not owning health insurance in 2014 will be a $95 fine which increases to a $695 fine in 2016 for individuals (the fine for families is much greater).  The government mandate was signed into law on March 23, 2010 and was upheld by the Supreme Court on June 28, 2012.

Why was Obamacare created?

Obamacare was enacted with the goal of increasing the quality and affordability of health insurance in America by requiring insurance companies to cover all applicants and offer the same rates regardless of pre-existing conditions or sex.

When one looks closer at the issues that Obamacare intends to “fix”, it’s basically a carbon copy of the life insurance industry, affecting the same people with the same health and financial issues.  This begs the question will the drum start to beat for the same reform and will “Obamacare Life Insurance Edition” soon be next?  The precedent has been set.

Pre-existing conditions

At its core, the reason why Obmamacare was created was to address the estimated 44 million Americans who were unable to get health insurance in 2013 and the millions more who struggled with maintaining affordable health care coverage.

In 2013, these same 44 million American who were unable to get health insurance were likely unable to qualify for life insurance, or their pre-existing condition made the premiums unaffordable.  In fact, according to  LIMRA, 41% of all U.S. households or 95 million adults have no life insurance at all.  Health (pre-existing conditions) and sex are two of the largest factors in determining ones eligibility and rate for life insurance, just as it was for health insurance.  Obamacare was created to for solve this very same “social injustice” (Obamacare buzz word) that existed with health insurance coverage that exists with same people who need to purchase life insurance.  One could argue that if there is a law (Obamacare effective January 1st 2014) that makes it illegal for an insurance company to deny or charge higher rates for a pre-existing condition or based on someone’s sex  then why is the same very thing legal in life insurance?  In addition, many of the same companies that can no longer deny coverage or charge higher premiums based on someone’s gender or pre-existing condition are still using that old model for their life insurance product.  The same proponents that enacted Obamacare to prevent this “social injustice” can argue that the same “issues” exist with the same people trying to get life insurance.

Can the same advocates who drafted and signed Obamacare into law say the precedent has been set and you can’t have one without the other, since they are nearly a carbon copy of each other? That the same “social injustice” exists with life insurance as it did with health insurance preventing the same people the opportunity to provide for and protect their loved ones in the event of a premature death? How about a “social injustice” that exists someone who has a pre-exiting condition or is of low-income can’t have a proper funeral of their choice or according to their religious beliefs?  How about the guilt and legacy of passing on one’s final expense costs to the family and loved ones because the deceased could not qualify or afford proper life insurance?

Even more similarities

To further illustrate the similarities between health and life insurance let’s look at age.  It makes sense that as one ages the premiums for both health and life insurance increase.  This is because as one ages, statistically they are more likely to develop a health issue, just as one gets older they are more likely to pass away.

Under Obamacare, insurers can only charge older people as much as three times the rate charged to younger people for health insurance.  If Obamacare makes it illegal to charge more than three times more for older people as for younger people, how can it still be legal to do so with life insurance?

Another big push for Obamacare was the fact is about 60 percent of all personal bankruptcies in the US are related to medical bills.

How many bankruptcies and financial devastation does a death of the main breadwinner cause?  It is a similar problem that one can argue is need for government intervention just as they did in health insurance.

The precedent has been set Obamacare Life Insurance may be the next shoe to drop

Obamacare was revolutionary in its mandate and created a slippery slope in its precedent.  Don’t be surprised when you hear the same advocates of Obamacare push for the same government reform for its sister industry life insurance.  As you read above, the two are nearly a carbon copy of each other with the same problems affecting the same people.

What do you think? What is your opinion on Obamacare and how has your experience been thus far with the roll-out? Do you think Obamacare Life Insurance could soon become a reality?

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Jason January 10, 2014 at 8:25 pm

Brian, I don’t know if life insurance will ever be required, but I can definitely see life insurance receiving certain favorable standing, such as tax benefits. And I would be in favor of tax benefits for life insurance. If we allowed life insurance to have tax breaks, (like write offs for small business), then more people would carry it. If more people carry it, then more money is flowing into the system (i.e. economy). More money in the economy means more money flowing into business. More money into business flows back into the family. So by providing government incentives, families are benefiting from the money flowing into the family from the actual life insurance policy, and families are benefiting from the money that flows into the economy because of the proceeds left behind from life insurance. WIn-Win.

Brian M January 11, 2014 at 8:55 am

Thanks for your comment Jason! Yes, I don’t know if life insurance will become a government mandate like health insurance but the topic is interesting when you compare the two.

Thomas Rockford January 15, 2014 at 10:32 pm

Please don’t give them anymore ideas!
“Obamacare” health insurance was already too much!

Brian M January 16, 2014 at 5:18 pm

Ha! Good point Thomas!

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