Obamacare is another name for the Patient Protection and Affordable Care Act (PPACA) that was signed into law on March 23, 2010. This law is also commonly known as the ACA.
The ACA requires health insurance exchange plans (a.k.a. Obamacare Plans) to include the ten Essential Health Benefits. Insurance companies may not reject applicants based on medical status and premium costs may only vary based on age, location, smoking status, and (in the case of small group plans) number of people. While the ACA guarantees individuals will be covered for a broad range of conditions and services, it also increases costs for some consumers, state governments, and the federal government. The following is a non-exhaustive list of pros and cons of the ACA.
|Insurance companies are required to issue a health plan to any applicant, regardless of the applicant’s health status or other factors.||Underlying behavioral issues contributing to healthcare expenses (e.g. obesity, diet, lack of exercise) besides tobacco smoking are not addressed by the ACA, and positive behaviors are not incentivized with subsidies.|
|Creates new type of private non-profit health insurer called “co-ops” that offers more affordable, higher quality, and more consumer-friendly health insurance plans.||The federal government has spent over $2 billion dollars to fund 23 co-ops and most were forced out of business when the federal government defaulted on the risk corridor program.1|
|For qualifying individuals, subsidies can lower premiums and out-of-pocket costs.||Subsidies do not address the underlying cost of healthcare and risk furthering healthcare spending and deficit increases.|
|All individual health insurance plans must have annual caps on out-of-pocket costs for covered services. In the pre-reform market, 4% of plans lacked these caps.2||Increased use of narrower networks by insurers. Patients will incur greater out-of-pocket costs if they seek treatment out of their network.|
|Preventive care services such as screenings do not have out-of-pocket costs.||Essential health benefits requirements reduce ability of insurers to offer lower-cost health plans with narrower benefits that are targeted to specific types of people’s needs.|
|Medicaid expands to cover individuals with incomes up to 138% of the federal poverty level.||Not every state is expanding Medicaid, the Medicaid expansion uses state and federal funding, and it removes healthy people from the ACA risk pool.|
|The Children’s Health Insurance Program (CHIP) expands to cover millions more children, including coverage of legal immigrants.||CHIP expansion also requires federal and state funding, including increased taxes on tobacco products.|
|Citizens and legal residents without health insurance are guaranteed coverage. Young adults under age 26 can stay on their parents’ plans.||The implementation of Obamacare and the increasing number of primary care doctor visits could lead to primary care doctor shortages.|
|Premiums may vary by at most a 3:1 ratio for adults age 21-64 and at most a 1.5:1 ratio for smokers versus non-smokers.||Older adults will pay premiums that do not cover their healthcare expenses and young adults will pay premiums that cover more than their healthcare expenses (many believe a 5:1 ratio would be more fair).3|
|All companies that employ 50 or more full-time equivalent employees (FTEs)are required to provide qualifying health benefits to their full-time workers Employers with fewer than 25 FTEs qualify for tax credits if they cover at least 50% of full-time employees’ premium costs and their full-time employees make an average of $50,000 or less a year.4||Employers with at least 50 FTEs will pay penalties if they do not provide affordable coverage, supposing that any of their employees receives a premium subsidy for marketplace coverage.|
|Group health plans that were created or individual health insurance policies that were purchased on or before March 23, 2010 (grandfathered plans) are exempt from many changes required under ACA.||Individuals who do not enroll in health insurance will have to pay a penalty thru 2018.|
|Legislation highlighted public importance of acquiring health insurance coverage.||The online federal individual and family health insurance marketplace experienced technical issues for months after the website was first released. The release of the online federal small business health insurance marketplace was delayed until November 2014.|
|Obamacare made improvements to Medicare, including eliminating the drug plan coverage gap over time (as well as giving beneficiaries a discount on brand drugs during the coverage gap in the years before it is fully eliminated) and offering more preventive services for less money.||Hundreds of billions of dollars were cut from Medicare to fund the implementation of Obamacare.|
|All Obamacare individual and small group market plans must include prescription drug coverage. Nearly 20% of individual market plans lacked prescription drug coverage before Obamacare was implemented.||Obamacare plans only cover the drugs on their formularies, and are only required to cover as many drugs in each category as their benchmark plan. Out-of-pocket limits for individual plans are allowed to exceed $6,000, so even if a drug is on the plan's formulary, an individual enrollee may still have to pay over $6,000 for that drug.|
Since President Trump was inaugurated, many attempts have been made in an attempt to replace the Affordable Care Act with a Republican alternative. However, no full “repeal and replace” option such as the American Health Care Act has been able to pass. Instead the Trump Administration took steps to get rid of one of the most controversial aspects of the ACA, the Individual Mandate. The Tax Cuts and Jobs Act passed in December of 2017 includes a full removal of the Individual Shared Responsibility Payment (better known as the Obamacare tax penalty) starting in 2019.
By removing the tax penalty, President Trump and Congress have successfully removed one of the key drivers that encouraged so many to enroll. Many believe that with the tax penalty gone, healthy consumers will be less likely to participate, further exacerbating the rising premium rates.
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