The Affordable Care Act, more commonly known by its acronym of Patient Protection and Affordable Care Act and more commonly as Obamacare, has taken great strides toward its ultimate goal of universal health coverage. American Medical Association (AMA) remains dedicated to helping patients obtain coverage while also working for changes that will strengthen the law over time.
January 2014: Key provisions take effect, such as mandating that individual and small-group plans cover essential health benefits.
1. Coverage for Pre-Existing Conditions
Prior to the ACA, millions of Americans were denied health coverage due to preexisting medical conditions. Before its passage, individual insurers could reject those with preexisting conditions and charge higher premiums or exclude coverage for specific illnesses and body parts (from cancerous ones such as lymphoma to milder ones such as situational depression or seasonal hay fever).
The Affordable Care Act or Obamacare made it illegal for health insurance companies to deny health coverage based on an individual’s health status, no longer charge more for people with preexisting conditions, or exclude coverage due to age, gender or tobacco use. This applies to marketplace plans and private supplemental Medicare policies in particular; employer-based plans as well as some Medicaid/CHIP policies still may engage in experience rating or preexisting condition exclusions; this regulation did not apply across the board though.
2. Health Insurance Exchanges
Under Section 1011(b) of the Affordable Care Act, insurance exchanges were created (effective January 1, 2014). These Internet websites enable individuals to identify coverage options and select competing insurance carriers. Exchanges also perform various market functions including eligibility determination and enrollment; managing plan management functions including QHP certification; providing consumer and employer assistance via navigators services; as well as conducting financial management functions.
In addition, the Affordable Care Act prohibits lifetime and annual limits on health coverage while allowing young adults to remain on their parents’ insurance until age 26. It also establishes consumer choice, transparency and accountability for exchanges; Law and the Public’s Health looks into challenges states will face when developing these exchanges1. Tim Jost discusses some difficult issues states may encounter while creating health insurance exchanges (see Commonwealth Fund September 2010 for details). 1
3. Tax Credits for Premiums
The Affordable Care Act offers premium tax credits to families purchasing health insurance through either the individual market or small business marketplace, directly subsidizing insurance companies to offset monthly premium costs. Enrolled individuals may claim their credit when enrolling or wait until filing taxes to claim it.
Credits under this approach are calculated based on the second lowest-cost silver plan available on an individual’s marketplace, and its amount is capped as a percentage of enrollee income. RAND conducted numerous subsidy floor analyses and concluded that linking credits to benchmark marketplace plans provided similar coverage gains while mitigating premium increases risk exposure for government.
Note that tax credits are only available for marketplace plans compliant with ACA and not other types of coverage like catastrophic coverage, short-term health plans or standalone prescription drug coverage.
4. Medicaid Expansion
Since the ACA took effect, 38 states and three U.S. territories have chosen to expand Medicaid coverage for those whose income falls within 133% of FPL. While temporary increases in federal matching rate were made available through stimulus law 2009, states still face substantial near-term costs regardless of whether or not they participate in expansion.
The remaining states should move quickly to expand coverage, which would benefit millions of people and mitigate economic downturn-related job loss in front-line industries, narrow health disparities and keep essential workers (particularly health care and other service workers) employed. Making such an important decision requires carefully considering various powerful considerations that are often at odds.
5. Essential Health Benefits
Essential health benefits (EHBs) are required of insurance plans by law, with no annual or lifetime limits placed on them.
These services may include ambulatory patient services (such as doctor’s visits and same-day surgeries); emergency services; hospitalization; maternity care coverage; mental health and substance use disorder coverage; prescription drugs; pediatric oral and vision services (such as twice annual cleanings and x-rays ); as well as preventive services.
Individual and small-group plans purchased through the Affordable Care Act Marketplaces must include these benefits; however, self-insured large group and federal employee plans do not need to cover them.
