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What Is the Affordable Care Act (ACA)?
In March 2010 a comprehensive healthcare reform was signed into law by President Barack Obama called ‘The Affordable Care Act (ACA)’.
The law has a list of healthcare policies with the intention of extending health insurance coverage to millions of uninsured Americans.
Officially it is known as the Patient Protection and Affordable Care Act, and sometimes also called – Obamacare.
The affordable care act stretched Medicaid eligibility, created health insurance exchanges, authorized Americans to purchase or obtain health insurance, and forbade insurance companies from denying coverage and charging more due to pre-existing ailments.
The act also allows children to remain on their parent’s insurance plans until age 26.
Understanding the Affordable Care Act (ACA)
The affordable care act was originated to reduce the cost of health insurance coverage for qualifying people.
The law includes premium tax credits and cost-sharing reductions to help reduce expenses for lower-income individuals and families.
Every month your health insurance bill is reduced by premium tax credits.
Your out-of-pocket costs for deductibles, copays, and coinsurance, are reduced by cost-sharing reductions, and it also lowers your out-of-pocket maximum: bringing down the total amount you pay annually for covered health expenses.
A few “essential health benefits” must be covered by all affordable care act compliant health insurance plans, which includes all plan that’s sold on the Health insurance marketplace. The benefits being:
- Ambulatory patient services
- Emergency services
- Pregnancy, maternity, and newborn care
- Breastfeeding
- Pediatric services
- Family planning
- Hospitalization
- Laboratory services
- Mental health and substance use disorder services
- Prescription medications
- Preventive and wellness services and chronic disease management
- Rehabilitative and habilitative service
A list of preventive services like checkups, patient counseling, immunizations, and numerous health screenings is required to cover at no cost to policyholders by The ACA from most insurance plans, including those sold on the Marketplace.
It also allowed states were allowed to opt for extending Medicaid coverage to a wider range of people.
About 38 states and the District of Columbia have used that option till now.
There is an open enrollment period on the Health Insurance Marketplace every year when people can buy or change over their insurance plans.
You cannot sign up until the next year if you miss this time unless your circumstances have changed and you qualify for a special enrollment period, for instance – you marry, divorce, become a parent or lose a job that was providing health insurance coverage.
Special Considerations
The individual mandate, which is a provision that required all Americans to have healthcare coverage, was a critical part of the original ACA this coverage should be either from an employer or through the ACA or another source, and if not then face tax penalties. Then in 2017, the mandate was eliminated.
The double purpose of extending healthcare to uninsured Americans got served with this mandate and it also ensured that there was a sufficiently broad pool of insured individuals to support health insurance payouts.
To overcome problems described by the economic theories of asymmetric information and the principal-agent problem these parts of the law were designed.
The mandates would create a massive industry-wide adverse selection and moral hazard problems for guaranteed issues and pre-existing conditions.
Because they were guaranteed coverage, the unhealthy people would have an economic incentive to buy most kinds of health coverage, while healthy people would have a motivation to put off purchasing coverage until they needed it, creating a widespread adverse selection.
Meanwhile, this gave healthy people the opportunity to engage in behaviors that put their health at risk, secure in the knowledge that they would be guaranteed coverage even if their behavior produced poor health outcomes.
That is the issue with moral hazard. to overcome both the adverse selection and moral hazard problems that the other provisions of the law would predictably create, all individuals were required to purchase and maintain health insurance coverage whether they needed or wanted it.
Criticism of the Affordable Care Act (ACA)
With this mandate, it spoke of an unprecedented expansion of federal power over the healthcare industry and the economy in general where it required all individuals to purchase a service (health insurance) on the market whether they wanted it or not.
In 2012 the National Federation of Independent Business challenged this aspect of the mandate which was a major focus of debate in the U.S. Supreme Court.
The individual mandate won the ruling in its favor as a constitutional exercise of the taxing authority of the Congress, characterizing the penalties levied against the uninsured as a tax.
The Affordable Care Act weathered opposition and a number of significant changes after President Obama left office.
The first phase of Republican efforts to repeal and replace the ACA took place on Jan. 20, 2017, When former President Donald Trump after taking office, in his first executive order signaled his intention to defund the ACA.
He said the executive agency heads should hold up the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State.
The Affordable Care Act Summary
The government’s attempts to repeal the law altogether were not successful. However, the government considerably cut down its outreach program to help Americans sign up for the ACA and reduce the enrollment period in half.
According to a report from healthcare research organization KFF, the number of Americans covered under the ACA had dropped from 17.4 million in 2015 to 13.8 million in 2018.
A federal judge in Texas declared the healthcare law unconstitutional and added that it will support the judgment on appeal and it was also agreed by the Justice Department as well.
With a coalition of 21 attorney generals defending the ACA, the case was heard by the Supreme Court in November 2020.
The then-President Obama was helped by current President Joe Biden to pass the law. And now he is expected to make efforts to strengthen the ACA during his term and veto further legislative attempts to overturn it.
Along with setting up a new special enrollment period, the executive order Biden signed on Jan. 28, 2021, focused on “rules and other policies limiting American’s access to health care,” federal agencies have been ordered to examine five areas to decide if any action is needed there:
- Protecting people with pre-existing conditions, including COVID-19 complications
- Work requirements and other limitations to access to Medicaid and the Affordable Care Act.
- Policies wearing health insurance markets, including the Health Insurance Marketplace
- Policies increasing the difficulty of enrolling in Medicaid and the ACA
- Policies reducing affordability or financial assistance, for recipients or dependents.
Conclusion
The Affordable Care Act (ACA), or the Obamacare, was signed into law in March 2010. With an intention to extend health coverage to millions of uninsured Americans.
The Act gave Medicaid eligibility, created a Health Insurance Marketplace, and prevented insurance companies from turning down coverage due to pre-existing conditions, and wanted plans to cover a list of essential health benefits.
Families with lower income qualify for grants for coverage purchased through the Marketplace.
On Jan. 28, 2021, an executive order was signed by President Biden that opened an ACA Special Enrollment Period from Feb. 15, 2021, to May 15, 2021.
This was done to let Americans have the opportunity to sign up for that needed health care coverage during this global pandemic.
According to polling from Gallup, at the end of 2020, support for the ACA returned to a record high of 55%.
