The Affordable Care Act (ACA) was intended to expand access to affordable health insurance policies. To do this, changes were made in individual market regulations, expansion of Medicaid eligibility and changes made to how medical decisions are made.
The Affordable Care Act includes several provisions designed to make coverage more affordable for low-income individuals and families, such as tax credits. Unfortunately, however, these subsidies have faced numerous legal challenges.
1. The Subsidy Cliff
Subsidies for individuals and families above the federal poverty level (FPL) are available to help people pay for Marketplace plans at reduced premiums, helping people save money through this marketplace. They have been available since 2009 but will expire by the end of 2022 unless Congress extends them further.
That means in 2023, premiums would increase for people making under 400 percent of FPL, an estimated total of 3 million Americans. Higher premiums could cause healthy people to drop coverage, creating a sicker risk pool overall.
To combat these effects, American Medical Association advocates are supporting policies to extend and increase premium subsidies beyond 250 percent of FPL. This practice, known as Subsidy Optimization, seeks to lower individual market costs by drawing younger, healthier enrollees. Subsidy Optimization policies may be implemented through tax credit expansion or cost-sharing reduction waiver.
2. The Uninsured
The Affordable Care Act has enabled millions of Americans to gain health coverage, saving countless lives. Furthermore, its implementation has strengthened America’s healthcare system while improving care quality.
However, many individuals still lack coverage. These include individuals unable to afford coverage in the individual market; those excluded from Medicaid expansion due to immigration status; and those who did not qualify for subsidized Marketplace plans.
Uninsured adults typically face greater difficulty accessing health care and may face financial challenges when trying to access it. Nearly one out of every five nonelderly adults skipped needed medical treatments due to costs in 2021, and were twice as likely as others to face difficulty paying their bills.
3. The Employer Mandate
The employer mandate requires Applicable Large Employers (ALEs) with 50+ employees or their dependents, to provide health insurance or pay a financial penalty, with minimum levels of coverage and affordability established as requirements for compliance.
Employers of 50 full-time equivalent employees or more must offer affordable and comprehensive health coverage to all FTE workers; an FTE worker is defined as anyone working 30 hours or more each week.
Small ALEs tend to pay higher premiums for health care coverage due to Affordable Care Act requirements; their costs will likely also increase, since all full-time employees and their dependents must receive coverage.
Many smaller firms may be motivated to reduce staffing levels and employ part-time workers instead of full-time ones to avoid incurring the additional cost associated with providing healthcare coverage; however, empirical research indicates that the Affordable Care Act’s employer mandate has not necessarily led to an increase in part-time work by an undeniably significant degree.
4. The Taxes
The Affordable Care Act (ACA) relies on various taxes to fund its expansion of health insurance coverage, including levies paid by medical-device makers and health insurers which generated $80 billion of financing in its first decade.
But in 2018, another source of financing for the Affordable Care Act vanished due to tax reform bill of 2017 which eliminated individual mandate penalties – raising $4 billion as a result.
Although some funding sources were cut, the Affordable Care Act remains one of the most beloved pieces of legislation ever passed in American history. Over 400 million Americans will gain access to health insurance as a result of the ACA over the next ten years, according to estimates.
