The Affordable Care Act, commonly known as Obamacare, has long been contentious since it first took effect. Under its provisions, insurance companies cannot deny coverage due to preexisting conditions and must cover a list of essential health benefits.
Obamacare may have admirable goals, yet its implementation can cause numerous complications that lead to outrage among some people. That is one reason many find opposition to its passage frustrating.
Costs
Before the Affordable Care Act was in place, insurance companies could discriminate against people with preexisting conditions, charge more for specific diseases, and cancel coverage due to paperwork errors. Now with this law in effect, these practices have been prohibited as insurance providers must spend 80-85% of premiums on health care or improving medical facilities – otherwise you get a rebate to account for overcharges.
The Affordable Care Act also helps people afford private health insurance by creating healthcare exchanges where plans from competing insurers can be purchased at reduced prices, providing financial aid for those unable to afford private plans, and setting limits on out-of-pocket medical expenses.
However, it did little to mitigate rising prescription drug costs or alter incentives that drive hospitals, primary and specialty physicians and other providers to negotiate collectively for higher payments from Medicare and commercial insurers. It also did little to restrict pharmaceutical or medical device companies from increasing prices at will.
Coverage
Once the Affordable Care Act (ACA) became law, several states and interest groups quickly sought ways to undermine it without outright repeal. Instead, they attempted to slow its implementation through various regulatory countermoves.
The Affordable Care Act requires insurance companies to spend between 80% to 85% of premiums on healthcare costs, prohibits lifetime and annual dollar coverage limits, prohibits preexisting condition exclusions and provides consumers with various other safeguards. Furthermore, individual and small group health plans must cover essential benefits like mental health care, maternity coverage and prescription drug coverage as part of their essential benefits packages.
Even with these safeguards in place, some individuals still find the cost of insurance unaffordable. For these individuals, the Affordable Care Act offers subsidies designed to assist with payments; these subsidies are funded by new taxes on medical devices and pharmaceuticals as well as savings in Medicare payments.
Taxes
The Affordable Care Act includes various changes to taxes. Additionally, it establishes insurance exchanges – websites where individuals can select health plans with subsidies covering some of their costs – and choose one to suit their needs.
Among the numerous tax changes brought about by the Affordable Care Act was an excise tax known as the Cadillac tax on employer-sponsored health care plans that exceed certain thresholds, known as employer-sponsored plans with more generous coverage. This tax would have reduced after-tax incomes for middle-income families.
Other tax changes brought about by the Affordable Care Act include community rating and premiums based on age. This was done to retain healthy people in the risk pool so as to offset higher costs associated with sicker enrollees; without an individual mandate penalty in place, less healthy people would contribute funds into the system to offset such increased costs.
The Affordable Care Act contains several spending cuts designed to address deficits, such as reducing Medicare’s Disproportionate Share Hospital payments; however, intensive lobbying efforts have led Congress to postpone these reductions, leading them to possibly never take effect. Furthermore, its planned productivity adjustment for Medicaid payment updates has also been repeatedly delayed in response to lobbying pressure.
The Individual Mandate
One of the more contentious provisions of the Affordable Care Act (ACA) is its individual mandate, which mandates people to obtain health insurance or face penalties; its goal is to expand coverage and enhance health outcomes.
The individual mandate serves two objectives by raising the cost of not having health insurance and encouraging more individuals–particularly healthy ones–to get it. Furthermore, this creates an ongoing source of customers for insurers, helping to lower costs.
Conservatism opposes this aspect of the Affordable Care Act because they believe it encroaches on American sovereignty over health care decisions, leading some to accuse it of being an attempt at “government takeover”.
