We have answered the question, “how does Obamacare work?”
The Affordable Care Act (ACA) offers many advantages and protections to consumers. Additionally, it is a way to reduce healthcare costs for people of all income levels.
It facilitates access to affordable health insurance by offering tax credits and special subsidies. Furthermore, it expands Medicaid and encourages states to offer private health coverage through online marketplaces.
The mandate
The individual mandate, a policy that requires nearly all Americans to have health insurance or pay a penalty, is one of the most divisive elements of Obamacare. Supporters see it as necessary for market-based reform; detractors believe it erodes individual freedom and puts an unaffordable strain on families who would rather invest their income elsewhere.
Our simulation model, COMPARE, estimates how the repeal of the mandate would impact enrollment and premium prices. According to our results, eliminating the mandate would decrease marketplace enrollment from 2.8 million to 13 million people and raise premiums for bronze plans from 3 percent to 13 percent.
The marketplace
In 2010, President Obama’s Affordable Care Act created the health insurance marketplace. This marketplace serves as a one-stop shop for shoppers to compare plans and find coverage that meets their individual needs.
The marketplace also provides access to a help desk and other resources that can answer questions and provide information. You can get assistance online, over the phone, or in person.
Individuals or small groups alike can take advantage of the marketplace to save on premiums and out-of-pocket expenses. Furthermore, the Affordable Care Act has increased income-based tax credits to make health insurance more accessible and affordable for more people.
Marketplace plans must meet the Affordable Care Act standards for essential health benefits such as hospitalization, emergency care, maternity care and more. Depending on the state, they may also have to cover additional types of insurance.
Subsidies
Under the Affordable Care Act, everyone is required to have some type of health insurance or face a penalty. But that doesn’t guarantee an affordable individual plan if you don’t have a job or aren’t already covered by Medicare or Medicaid.
One way that the Affordable Care Act has made it easier for lower-income individuals to obtain health insurance is by offering subsidies. These can take the form of premium tax credits and cost sharing reductions.
Subsidies are determined based on the cost of the second-lowest Silver plan available in your area, known as “the benchmark plan”. If that plan costs more than 8.5% of your income, you qualify for a subsidy.
Medicaid expansion
Under the Affordable Care Act, states are required to extend Medicaid eligibility to adults with incomes up to 138% of the federal poverty level (about $26,347 for a family of three). As compensation, the federal government will provide each state with enhanced 90% funding in exchange for covering this newly eligible population.
The Medicaid expansion under the ACA has resulted in a dramatic increase in health insurance coverage. It has also reduced healthcare costs and enhanced self-reported health for low-income individuals.
Moreover, Medicaid expansion offers an opportunity to address care gaps that lead to health inequities, particularly among people living with chronic diseases or disabilities. Despite its successes, more work needs to be done in order to guarantee all Americans access high-quality, affordable health care.
Tax penalties
The Affordable Care Act mandated that all Americans have health insurance, and provided financial assistance to make plans more affordable for those with lower incomes. Furthermore, the law made it illegal to deny coverage based on pre-existing conditions.
However, the Affordable Care Act (ACA) had a controversial provision known as the individual mandate penalty that required those without health coverage to pay a federal tax penalty on their tax returns. Thankfully, this fee was abolished in 2018 and no longer applied in most states.
People without health insurance could apply for exemptions from the penalty. This exemption applied to individuals in certain groups (like members of a federally recognized Native American tribe or those with grandfathered plans), limited-benefits coverage plans and others as well.
