PSU professor asks: ‘What will ‘Obamacare’ mean?’

On Friday Oct. 11, PSU Professor of Economics Rajiv Sharma led an economics seminar on campus discussing the Patient Protection and Affordable Care Act, also known as the Affordable Care Act or simply, ‘Obamacare.’

Sharma began by asking two questions: “How much do we spend on healthcare?” and, “Why do we need health insurance?”

Early on he added that the seminar was purely for informational purposes. “Use it to make your own healthcare decisions,” he said, adding that the ACA is designed to make healthcare more affordable by enacting universal and mandatory health insurance coverage.

“In order to have a functional modern health care system,” Sharma said, “we need to have a pool of money from everybody to pay for those unlucky few who become catastrophically sick, and that’s the main objective of the health insurance system.” A larger, more stable pool might mean that health insurance costs will go down.

The ACA, as Sharma suggests, addresses two principle “leakages” in the available pool of funding: people with pre-existing conditions can no longer be excluded from the insurance pool, and healthy people can’t opt out of it without paying a fee. In other words, people in these two categories will now be contributing financially to the pool, providing what Sharma called a “waterproofing system.” These changes will go into effect on Jan. 1 of 2014.

Sharma explained that the ACA will also expand Medicaid, a government program that helps pay for healthcare for low-income families and individuals. “Income limits on Medicaid are going to be substantially relaxed,” he said. “Many people that don’t qualify now will qualify under the expansion.”

Medicaid will become available to US citizens less than 65 years old who earn an income below 133 percent of the federal poverty level. For an individual, that amounts to an annual income of $15,282. For a household of three, that amounts to $25,975 combined annual income.

States are not required to participate. According to Sharma, 26 states will not be expanding their Medicaid programs, and 58 percent of people who would qualify for expanded Medicaid live in those nonparticipating states. Oregon is expanding its Medicaid program, known as the Oregon Health Plan.

Sharma’s presentation was part of a seminar series by PSU’s economics department. The next seminar, “Alternatives to Corporate-Led Globalization: Regional Trade Policies for Latin America,” presented by Lewis and Clark economics professor Martin Hart-Landsberg, will be held on Oct. 25 from 3:30-5pm.

For more information on this and future seminars, see