The federal Patient Protection and Affordable Care Act of 2010, popularly known as the “ACA” or “Obamacare” is the most significant piece of social welfare legislation to come out of Washington since the 1960s. It has been controversial since its inception. Seven years on, despite court challenges to several key provisions and repeated calls for repeal or substantial amendment, the Act remains largely unchanged.
The nearly 20,000-page long ACA is an extremely complex law that affects nearly every aspect of how health care is delivered and financed in the United States. In this article, we look at some of the Act’s most significant – and often its most controversial – provisions.
The Individual Mandate
This is among the Act’s most vigorously debated provisions. It requires most individuals who can afford to do so to obtain health insurance. The intent is to prevent so-called “adverse selection.” This is the phenomenon in which younger persons who are generally in better health opt not to obtain insurance, leading to higher costs for those in poorer health. The Act imposes a financial penalty on individuals who choose to remain uninsured.
Opponents contend that the mandate is impractical to enforce and will lead to widespread public resistance, all while doing little or nothing to contain premium increases. Supporters assert that the provision is a linchpin of the Act and that its repeal will doom any chance of success in reforming health care in the U.S.
The Massachusetts Experience
Supporters also point to the generally positive outcome of health care reform efforts in Massachusetts. In 2006, the state adopted health care legislation that resembles the ACA in several major respects, including its inclusion of an individual mandate provision. By 2012, the state had the fewest uninsured residents per capita in the country. A study that same year by the Henry J. Kaiser Foundation found that in 2009 less than one percent of state residents paid a fine.
Treatment of Pre-existing Conditions
Historically, insurers could deny individual coverage or charge higher rates for so-called “pre-existing conditions.” In 2017, the U.S. Department of Health and Human Services reported that between 50 and 100 million non-elderly Americans suffer from one or more such conditions. By severely limiting insurers’ ability to impose different terms on affected individuals, the Act made participation in the individual insurance pool possible for millions of people.
The Employer Mandate
The ACA requires most employers with fifty or more employees to offer group insurance plans. These plans must meet minimum standards of coverage and affordability. As with the individual mandate, employers who fail to obtain coverage face a financial penalty.
While not required to provide employee coverage, owners of businesses with 25 or fewer employees who do so can get a tax credit of up to half of the employer portion of premiums. They may also qualify for federal assistance if they offer health insurance to employees who retire before they become eligible for Medicare, ordinarily at age 65.
The ACA expanded eligibility coverage by Medicaid, a state and federal program providing health care coverage to lower-income individuals and families. Although a court challenge gave individual states the ability to opt out of expansion, following Maine’s adoption of expansion via a November 2017 voter referendum, thirty-three states had opted to expand their Medicaid programs.
The Marketplaces and Premium Tax Credits
Non-Medicaid-eligible persons who do not have access to an employer-provided plan may obtain individual coverage from one of the “marketplaces” created by the ACA. As with employer coverage, the marketplace plans must satisfy minimum coverage and cost requirements.
Individuals whose incomes exceed Medicaid limits, but fall below 400% of the federal poverty level are eligible for “tax credits.” These are subsidies intended to reduce the cost of marketplace plans. Other lower income individuals may qualify for subsidies that reduce deductibles and other out-of-pocket expenses.
The Future of Obamacare
While few people today are fundamentally opposed to the Social Security retirement income program or Medicare, news reports of the day regarding their adoption should remind us that major social legislation is rarely adopted without significant debate and compromise. Only time will tell whether the ACA, or perhaps some revised or replacement program, will achieve the level of acceptance and even popularity enjoyed by those programs.
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