The Affordable Care Act (ACA) strives to ensure people can afford health insurance by mandating employers provide coverage or pay tax penalties, creating state or multistate based exchanges for individuals and small businesses, offering subsidies towards premium costs, as well as prohibiting insurers from denying coverage due to preexisting conditions.
The Individual Mandate
The Affordable Care Act’s Individual Mandate was an essential element, mandating fines on those who opted out of health coverage and providing financial incentives to participate. This created a financial incentive to get covered while encouraging healthy individuals to join the market. Furthermore, ACA included provisions like guaranteed issue coverage of preexisting conditions as well as premium tax credits to make coverage more cost-effective.
Court cases challenging these provisions have attempted to strike down the Affordable Care Act as a whole; none succeeded. Nonetheless, the mandate remains an essential component of the law as it ensures people have real choices in how they obtain health insurance; without it many healthy people would opt out and insurance costs for everyone would skyrocket dramatically. Furthermore, its presence ensures insurers spend at least 80% of premium dollars directly on medical care or quality improvement and not on advertising, overhead or bonuses for executives.
The Expansion of Medicaid
One of the most contentious elements of the Affordable Care Act (ACA) is its individual mandate, which requires most Americans to purchase health insurance or pay a penalty. At first, this was perceived as coercive because healthy individuals would need to contribute funds into the system to offset care for sicker people.
An additional source of contention involves Medicaid expansion. Under the Affordable Care Act (ACA), states were mandated to expand their programs so as to cover adults up to 133% of poverty or face federal penalties (such as withdrawal of existing funding for Medicaid programs). States that adopted this provision now pay approximately 90 cents on average for every additional dollar spent on Medicaid while also saving money due to decreased uncompensated care expenses for poorest citizens – something critics often point out as evidence that the ACA failed. But such claims disregard existing health system problems such as high prices for drugs and limited coverage for those needy.
The Subsidies for Insurers
Under the Affordable Care Act (ACA), consumers purchasing insurance through exchanges receive a premium tax credit to offset the cost of their policy. The credits are calculated based on the cost of second-least expensive silver plans in their area and can be customized based on family size, tobacco use or any other factor that applies. Furthermore, this law prevents insurers from denying coverage to people with preexisting conditions and caps their ability to increase rates.
This system has proved controversial due to inadequate subsidies that fail to incentivize take-up of marketplace plans and lower uninsured rates. Recent state policies and federal policy changes demonstrate how subsidy improvements can significantly increase this impact, with potential for reduction of uninsured rates within several years. Reinsurance programs allow premiums for subsidized consumers to drop dramatically, leading to such drastic results as one single 45-year old earning $24,000 paying less than 8.5% of her income for her benchmark silver plan in 2019 (premiums cannot exceed 8.5% under ACA), an immense improvement from 2018.
The Taxes
The Affordable Care Act, more commonly known by its acronym Obamacare, was funded through taxes and other measures intended to generate revenue to cover its estimated $1 trillion cost over its first decade. These included fees on those without qualifying healthcare plans as well as levies against medical device makers and health insurers.
But many taxes and fees have since vanished due to political maneuvering and legislative changes, including cancellation of the individual mandate penalty for 2019 as well as delays of medical device sales taxes under ACA such as “Cadillac Tax” from 2018-2024.
Goldwein finds it somewhat surprising that these cuts in spending have proved so long-term, when considering all of the factors at play when creating and sustaining major government policies. It will ultimately be up to states whether to pursue goals of the Affordable Care Act on their own terms.
