The Affordable Care Act, signed into law by President Obama in 2010, provides several strategies to increase overall insurance coverage. It expands Medicaid, offers tax credits to help people buy coverage, and creates state-level or multi-state health insurance exchanges.
The ACA also makes important investments in clinical preventive services, such as cancer, diabetes and blood pressure screenings that are covered without copays or deductibles for many Americans. It promotes the development of accountable care organizations and other programs to encourage doctors and health care providers to work together to deliver better health care.
The Patient Protection and Affordable Care Act
ACA was enacted in 2010 and is known as “Obamacare.” The law was intended to expand coverage, control costs, improve health outcomes, and improve the performance of the US health care system.
In general, ACA aims to increase insurance coverage and make it more affordable for individuals and families by providing subsidies in the individual and small group markets. In addition, ACA creates state-based exchanges or online marketplaces where people can buy coverage.
The law also requires employers to offer coverage to full-time employees and their dependents or pay a fee. In addition, it prohibits insurance companies from denying plan participation based on health status, medical history or condition, prior claims experience, genetic information, disability, or evidence of insurability.
The Health Insurance Exchanges
The major provisions of the ACA center around the creation of Health Insurance Exchanges (formerly known as “Marketplaces”). These centralized online shopping centers are where consumers can compare multiple health insurance plans side-by-side and buy the best plan for their specific needs.
The exchanges are designed to make it easy and affordable for millions of Americans to obtain insurance. In addition, people can receive premium subsidies and cost-sharing reductions that serve to lower their costs and out-of-pocket expenses.
To ensure that the insurance products sold on the exchange are affordable, exchanges must certify health plans and require them to submit justifications for premium increases to the exchange. They also must maintain standardized information on plans and publicly rate them on quality, benefits, and other factors.
The exchanges also play a role in coordinating eligibility determinations among state programs. The exchanges will need to determine and redetermine eligibility for federal subsidies offered through the exchange, as well as eligibility for Medicaid and CHIP.
The Tax Credits
The ACA created a new refundable tax credit, called the Premium Tax Credit, to help people purchase health insurance through exchanges. The credits can be claimed in advance to lower monthly insurance premiums or received as a refund when filing taxes.
The American Rescue Plan Act expanded eligibility for these ACA premium tax credits starting in 2021, and Congress passed the Inflation Reduction Act2 in August of 2022 to extend them through 2025. While the extended credits have helped millions of Americans, there are still concerns about the overall impact and how the program will work moving forward.
Despite the influx of new enrollees and increased coverage, many Americans continue to struggle with the cost of health care. For those who don’t qualify for government programs like Medicaid, premiums can be unaffordable. That’s why premium tax credits are crucial.
The Medicaid Expansion
Medicaid is a program that provides low-income people with access to health care. The Affordable Care Act gives states the option of expanding their eligibility to include individuals with incomes up to 138% of the federal poverty level (FPL).
During the first three years, the federal government will pay 100% of the cost of coverage for those who qualify under expansion. Then, the federal share will gradually shrink to 90 percent, and states will be responsible for the remaining 10 percent after 2020.
Expansions have produced positive effects on the health and well-being of the poor, especially for those who are pregnant or young children. Moreover, studies have found that expanding Medicaid to pregnant women can lead to benefits for their babies throughout life.
In addition, expanding Medicaid can help narrow health disparities, improve access to essential preventive care and reduce the amount of money spent on uncompensated care for low-income people. These effects are achieved without imposing additional pressure on state budgets.