The Affordable Care Act (ACA) requires all Americans to have health insurance starting this year. It also offers financial assistance for those who can’t afford it.
Those subsidies, called Premium Tax Credits, help some people purchase private insurance on the new state health exchanges. However, they can also push some people into deep debt.
Costs
The ACA lowers costs based on income, but they can vary greatly based on plan, region, age, family size, and what type of assistance you qualify for based on your income. Costs can also change each year because of regional cost factors (increasing or decreasing your premium by 20%).
Those that do not qualify for assistance, like many who are uninsured, can still find affordable coverage through Medicaid/CHIP and through the Health Insurance Marketplace. In addition, millions of others receive free or low-cost coverage through employer-based plans.
The ACA tried to control healthcare costs through delivery system reforms and other mechanisms, but these efforts have proven less successful than expected. Some of the ACA’s costs are coming from the law’s employer mandate, which forces employers with 50 or more employees to offer coverage or pay a fine.
Coverage
ACA subsidies and reforms provide coverage to people who don’t have access to employer-based insurance or cannot afford to pay the full cost of their premiums. Consumers who make up to 400 percent of the federal poverty line receive tax credits to help them purchase affordable health insurance.
The ACA also requires that most individual and small group health plans cover important essential benefits, such as maternity, mental health, and preventive care. This requirement has resulted in millions of Americans getting coverage for key health services they couldn’t otherwise get at an affordable price.
ACA reforms also help individuals protect themselves from unfair practices in the insurance industry, such as gender rating and discrimination against preexisting conditions. For example, the ACA prohibits insurance companies from charging women more than men for health coverage or from denying or charging more because of a preexisting condition. The ACA also holds insurers accountable by requiring them to return money if they overcharge consumers for medical care.
Taxes
The Affordable Care Act includes several tax-related provisions that affect individuals, families, businesses, insurers, tax-exempt organizations and government entities. These include a variety of tax increases and deduction limits, as well as new taxes and tax credits.
The ACA provides low-income Americans with health coverage through tax credits that help lower premiums and expand Medicaid and CHIP (Children’s Health Insurance Program). It also imposes new taxes on high-cost health plans, which are often referred to as the “Cadillac” tax.
In addition to the taxes associated with the ACA, many people also pay higher premiums because of the law. A recent analysis estimates that the ACA will cost consumers $16 billion in 2020.
For those who cannot afford the new premiums, federal subsidies have been available to buy policies through the state marketplaces. However, these subsidies are under legal attack and may soon be ended. The Congressional Budget Office has estimated that ending these subsidies would increase the number of people without health insurance by 20 million.
Access
The Affordable Care Act provides a smorgasbord of benefits to consumers including better and more affordable coverage, a Patient’s Bill of Rights and end to pre-existing condition discrimination. Additionally, it has brought down costs through tax credits and marketplaces where insurers must compete for your business.
Although the ACA has improved access to health care in many ways, cost remains a significant barrier for some. Even with the aid of a Premium Tax Credit and Medicaid expansion, many Americans are still left to pay out of pocket for their insurance premiums.
Despite the many new and improved policies to make healthcare more affordable, older and higher income consumers are the most likely to find that a high deductible plan is their only choice. The ACA is also lagging behind in its implementation of the many health care improvements and innovations that have sprung up since the enactment of the legislation. The ACA has made major advances in the areas of transparency, consumer choice and efficiency but there is much work to be done before we can truly call it a success.
