The Affordable Care Act, more commonly known by its nickname – Obamacare – was one of the most significant reforms of our health system when enacted in 2010. Unfortunately, a recent RAND survey discovered that many Americans remain confused about its potential effects and remain unclear about its provisions and possible penalties.
Only 61% of adults were aware that repealing and replacing ObamaCare with nothing would result in many losing coverage via Medicaid and subsidies that help people purchase private health plans – this knowledge gap being particularly noticeable among Republicans.
The Patient Protection and Affordable Care Act
The Patient Protection and Affordable Care Act (PPACA) is an intricate piece of legislation with far-reaching effects for California residents. It creates new federal health exchanges which offer plans tailored specifically for individuals, small businesses and large employers alike.
It also creates a federal high-risk insurance pool to assist individuals with preexisting medical conditions who cannot purchase health coverage on the exchanges, but still need coverage. This new pool may serve as a temporary stopgap solution while states work toward fully operating their exchanges by 2014.
PPACA extends funding for CHIP (formerly the Healthy Families Program) until September 30, 2015 (an extra two years than under current law), providing states a 23 percentage point increase in CHIP match rate between 2016 and 2019, increasing California’s federal match rate from 66% to 88%.
The Individual Mandate
The Individual Mandate requires most Americans to purchase health insurance or pay a penalty; its implementation has caused considerable controversy and outrage among many citizens.
Some experts have advocated against an individual mandate as it doesn’t broaden coverage; others see it as an effective policy tool to increase enrollment in coverage plans.
Studies examining the individual mandate have concluded that it is effective at increasing coverage. Their results were drawn from surveys asking individuals about their enrollment intentions and then comparing those to data on actual enrollment decisions.
Saltzman (2019) analyzes data from both California and Washington and finds that a mandate has a positive effect on demand for insurance, particularly among lower-income families with children. While its effect may be diminished among high-income adults, its effect can be much stronger for lower-income populations due to a possible “taste for compliance.”
The Expansion of Medicaid
Before the Affordable Care Act was implemented, Medicaid eligibility was restricted to people living below 64% of the federal poverty level, or roughly $12,000 for single individuals annually. Under this new system, eligibility has been expanded up to 138% of FPL and states receive enhanced federal matching rates.
Increased coverage has been associated with improvements in access and health outcomes for low-income individuals, particularly in states which expanded coverage. Residents in expansion states were more likely to have their own doctor, receive ongoing care for chronic conditions, and get annual checkups.
Research also suggests that children whose mothers became eligible for Medicaid during gestation can experience positive long-term health and education impacts, possibly because prenatal care provided in an expanding state can promote both fetal health and early development, which benefits them in turn.
The Tax Credits
Tax Credits help make health insurance coverage more accessible by offering refundable, advanceable tax credits that reduce enrollees’ monthly premiums for Marketplace plans.
Family credits depend on household income (calculated using an Affordable Care Act-specific algorithm for modified adjusted gross income). Eligibility is restricted to families earning between 100 percent and 400 percent of federal poverty level.
In 2021 and 2022, eligibility for premium tax credits will depend on how the cost of a benchmark plan compares with a household’s income. Under the American Rescue Plan (ARP), households with incomes above 400% of poverty level may qualify if their benchmark plan costs no more than 8.5% of their household income.
However, if your income changes during the year, filing taxes could involve reconciling your credit with actual income, potentially leading to you forfeiting much of your refund.