On March 23, 2010, President Obama signed into law comprehensive health reform called the Patient Protection and Affordable Care Act. Most people refer to it as Obamacare.
President Obama actually had little involvement in the writing of the law, still since he initiated the legislation and signed it the name Obamacare has stuck.
Affordable Care Act
The law tries to address many issues plaguing the American health care system. Here are a few of the changes:
Many of the ideas incorporated into the law are not new. In fact, many of the ideas were pulled from prior attempts by both Democratic and Republican administrations. The law is modeled after a 2006 Massachusetts healthcare reform law signed by then governor Mitt Romney, commonly referred to as Romney Care.
The Act was signed into law in 2010, but many of the provisions take affect over a period of years. Most of the law is favorable to the average person but some parts like the requirement to buy health insurance are looked upon with great disdain.
The law did not just affect individuals purchasing health insurance, but it affects small and large businesses along with recipients of Medicare and Medicaid as well. Medicare benefits have increased and Medicaid has been expanded to cover a larger portion of the uninsured.
The Affordable Care Act puts in place comprehensive health insurance reforms that improves access, affordability, and quality of health care for all Americans. The affordability part has been questioned by many people.
Generally, the people who earn the least benefit the most. That does have the people earning the most a bit upset.
The law provides many new consumer protections and better regulation of the health insurance industry, while incorporating a number of provisions to control waste and spending.
The law is far from perfect but it is a very good first attempt to address some really complex issues.
Ends pre-existing conditions
Insurers can no longer refuse to provide coverage to anyone with a pre-existing condition. Insurance companies can no longer select just the healthy but also must accept to cover the sick.
December 2018 - A Texas court invalidates entire ACA.
♦ March 2019 - The Trump administration joins the plaintiffs, stating they now believe that the law’s provisions protecting people with pre-existing medical conditions would also be unconstitutional.
♦ December 2019 - 5th Circuit agrees somewhat but sends the case back to Texas court for further analysis.
♦ January 2020 - The Supreme court declines to expedite its decision about whether to take the case.
♦ The U.S. Supreme Court heard oral arguments on November 10th.
Several of the justices sounded like they had little taste for kicking 20 million Americans off their health insurance during a pandemic.
♦ June 2021 - The Supreme court ruled 7-2 against the Texas lawsuit and once again reaffirmed the constitutionality of the Affordable Care Act (ACA).
Life before the Affordable Care Act
Insurers could easily deny anyone because they had been sick in the past or had a chronic condition – in many cases a condition the applicant had been born with.
If an insurer did accept an applicant they could at their choosing require a much higher premium or attach a rider to exclude payment for any treatment even slightly related to a pre-existing condition.
• This practice of denial lead to a congressional investigation of the top four insurance companies.
• It was found that the insurers had a list of 400 conditions they used for refusing coverage or applying exclusion riders.
• It was also found that there was an increasing trend of more denials and rescinding of coverage.
• It was concluded that this issue had to be addressed.
Insurers were in effect excluding a large portion of the population from purchasing insurance. Many people without insurance were forced into bankruptcy due to high medical bills.
Trapped with no way out
It was common practice for insurance companies to trap people in older health plans and then slap them with excessive premium increases year after year. The industry controlled the game.
They could excluded people with even the slightest health issue from enrolling in new lower cost plans. This practice was abolished by the Affordable Care Act.
However, to get the support of the insurance industry the Act had to include a requirement that everyone must have health insurance. By requiring insurance the industry was assured new customers, especially younger more healthy customers, to help offset the costs of covering a larger number of sick people. This is what is referred to as the Individual Mandate.
♦ Grandfathered plans don’t have to cover pre-existing conditions. If you have a grandfathered plan that is not providing coverage for all your health conditions you are advised to change to a new plan.
The election of 2016 brought this provision of the Act into the news and into the homes of millions of Americans for the first time. People who always received coverage through employer plans knew little about this horrible practice. Now they know at least a little.
The vast majority of Americans overwhelmingly support eliminating pre-existing condition rules. This provision of the Act will be politically risky to take away.
Keeps young adults covered
If your plan covers children, you can now add or keep your children on your health insurance policy until they turn 26 years old.
Before the health care law — insurance companies could remove enrolled children usually at age 19, sometimes older for full-time students. Now, most health plans that cover children must make coverage available to children up to age 26. By allowing children to stay on a parent's plan, the law makes it easier and more affordable for young adults to get health insurance coverage.
Children can join or remain on a parent's plan even if they are:
• Not living with their parents
• Attending school
• Not financially dependent on their parents
• Eligible to enroll in their employer’s plan
Children attending college or university in another state may have difficulty obtaining services. Your health insurance plan may not provide access to regional or national provider networks.
If your insurance plan doesn't cover your child at in-network cost then it may be better for you to find your child a plan that offers network providers. You may want to consider a plan associated with the school your child is attending. The premium price negotiated as a larger group may make this option quite affordable.
Ends arbitrary withdrawals of insurance coverage
Insurers can no longer cancel your coverage just because you made an honest mistake. This is a big win for the consumer.
Before the Affordable Care Act — insurance companies were notorious for hunting for any mistake on insurance applications after someone became sick and started to submit large claims. They could and too often did:
♦ Take away peoples coverage
♦ Declare their policy invalid from the day it started
♦ Ask people to pay back any money they’ve already spent for their medical care
Guarantees your right to appeal
You now have the right to ask that your plan reconsider its denial of payment. Before the Affordable Care Act, you could ask for an appeal but your insurance company was under little pressure to act quickly. And there was little recourse if they continued to deny a claim or cover a treatment plan.
Now, if your insurance company denies payment for a claim or terminates your health coverage, you can request an appeal. When your insurance company receives your request, it is required to review and explain its decision.
The insurance company must also explain how you can disagree with its decision. Insurance companies are also required to start and complete the process in a timely manner. If your insurance company still denies your appeal and continues to refuse payment or coverage, the law permits you to have an independent third party review the appeal.
♦ This right applies to plan years or policy years that started on or after January 1, 2012. Health plans that started on or before March 23, 2010 may be 'grandfathered health plans.' The appeals and review rights don’t apply to them.
Read more ... Appeals – Health Insurance and your rights
Ends lifetime and annual limits on coverage
Prohibits health plans from putting annual or lifetime dollar limits on most benefits you receive.
Before the Affordable Care Act — many plans set a lifetime limit — a dollar limit on what they would spend for your covered benefits during the entire time you were enrolled in that plan. You were required to pay the cost of all care exceeding those limits.
Before the Affordable Care Act — many health plans set an annual limit — a dollar limit on their yearly spending for your covered benefits. You were required to pay the cost of all care exceeding those limits.
Before the Affordable Care Act — insurance companies used many tricks to get people into skimpy plans that ended up protecting the insurance companies’ profits more than the patients’ well-being. Now, all plans must provide at least a standard minimum level of benefits. These are known as Minimum Essential Coverage
• Plans can put an annual dollar limit and a lifetime dollar limit on spending for healthcare services that are not considered essential health benefits.
• Grandfathered individual health insurance policies are not required to follow the rules on annual limits.
More information for consumers
The Act provides a way for consumers to more easily compare health insurance coverage options and pick the coverage that works for them. The Marketplaces are built on that premise.
The Act specifies that terms used in describing medical benefits such as in plan literature and explanation of benefits be standardized. The goal is to make it easier to compare one insurance plan to another. And for the average person to be able to read and understand an Explanation of Benefits (EOB).
♦ This portion of the Act is still being coordinated with the insurance companies and has not been fully finalized.
The CMS is requiring ambulatory surgery centers that receive Medicare payments to document and report on a series of safety related issues. A facility that fails to report can have its Medicare payment reduced. The CMS will publish the data. The public will be better able to make an informed choice of a facility to use or not use.
Physician ownership and transparency
Physicians will need be more transparent in regards to their other businesses so that their patients can better understand how they might be impacted by conflicts of interest.
Physician-owned hospitals that do not have a provider agreement prior to February 2010 will not be able to participate in Medicare.
Drug, device, biological and medical supply manufacturers must report gifts and other transfers of value made to a physicians or their practices.
Establishing consumer assistance programs in the states
This is voluntary. States that wanted to setup programs to help consumers navigate the health insurance system could receive Federal funds to do so. The intent was to help consumers file complaints and appeals; enroll in health coverage; and learn more about insurance policies.
The programs will also collect data on the types of problems consumers have, and file reports with the U.S. Department of Health and Human Services to identify trouble spots that need further oversight.
Most States took advantage of the funding but many Republican led states refused to participate. Consumers in those states ended up at a disadvantage.
Reviews premium increases
Insurance companies must now publicly justify any unreasonable rate hikes. States have been allowed to oversee the review process following Federal guidelines. Any rate increase greater than 10% is to be subjected to review.
In practice rate increases have far exceeded 10%. Many States have turned the review process over to their Insurance Commissioner’s office.
Unfortunately, this office is often heavily politicalized, with Republican controlled states tending to favor the insurance industry’s requests over the consumer.
Helps you get the most from your premium dollars
Your premium dollars must be spent primarily on health care – not administrative costs.
To ensure premium dollars are spent primarily on health care, the law requires that at least 85% of all premium dollars collected by insurance companies for large employer plans are spent on health care services and health care quality improvement.
Plans sold to individuals and small employers, at least 80% of the premium must be spent on benefits and quality improvement.
Provides free preventive care
All new plans must cover certain preventive services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance.
Your doctor may provide a preventive service, such as a cholesterol screening test, as part of an office visit. Your plan can require you to pay some costs of the office visit, if the preventive service is not the primary purpose of the visit, or if your doctor bills you for the preventive services separately from the office visit.
Depending on your age, you may have access — at no cost — to preventive services such as:
• Blood pressure, diabetes, and cholesterol tests
• Many cancer screenings, including mammograms and colonoscopies
• Counseling on such topics as quitting smoking, losing weight, eating healthfully, treating depression, and reducing alcohol use
• Regular well-baby and well-child visits, from birth to age 21
• Routine vaccinations against diseases such as measles, polio, or meningitis
• Counseling, screening, and vaccines to ensure healthy pregnancies
• Flu and pneumonia shots
Colonoscopies performed as a screening are preventive but colonoscopies performed because of a symptom or to remove polyps many times will not be considered preventive and you will have additional costs. How your doctor codes the procedure can greatly affect your costs.
Read more ... Preventive Services — Screenings & Immunizations
Extending health coverage to low-income families was a major goal of the Affordable Care Act. To accomplish this, the act proposed expansion of the Medicaid program.
This has proven to be one of the most important and controversial provisions of the Affordable Care Act.
An entire article is devoted to Medicaid Expansion under the Affordable Care Act.
Children’s Health Insurance Program (CHIP)
The Act provides increased federal support for the Children's Health Insurance Program (CHIP). States will be required to maintain income eligibility levels for CHIP through September 30, 2019.
Between fiscal years 2014 and 2019, states would receive a 23% increase in the CHIP federal matching funds, subject to a 100% cap.
♦ At the end of 2017, the Republicans in Congress allowed funding to run out.
This was the first time since it was enactment in 1997 that Congress fought over reauthorizing.
♦ At the end of January 2018, CHIP was finally reauthorized with funding for another six years.
Learn more about CHIP.
Making care more affordable
The Act sets up a funding mechanism whereby tax credits are used to make it easier for the middle class to afford health insurance. The credits are available to people with income between 100% and 400% of the Federal Poverty Level and who are not eligible for other affordable coverage.
The credits are a means for the poorest Americans to finally have health coverage. The credits can be used in advance rather than waiting to claim them at the end of the tax year.
♦ Most people refer to the credits as a subsidy.
Receiving tax credits in advance really helps because most people do not have enough money to pay for insurance upfront and then wait for a reimbursement.
A lot of people are caught the middle. They earn too little and cannot receive a subsidy to help purchase insurance but they won't be able to receive coverage through Medicaid because their state did not expand Medicaid.
• To qualify for a subsidy their income must be at least 100% of Federal Poverty Level. The law intended for low income households, below 100% of FPL, to receive coverage through Medicaid.
• The law also planned that Medicaid expansion would be nationally but so far 12 states have not expanded Medicaid assistance.
The wealthy to pay more
This is one of several funding methods and a sour point for some people. For everyone with yearly earnings of more than $200,000 ($250,000 married couple), the Affordable Care Act imposes a 0.9% additional Medicare tax.
♦ The additional 0.9% tax on the wealthiest people goes to help pay part of the cost of the subsidies provided by the Affordable Care Act.
Establishing the Marketplace
Starting in 2014, everyone who is not able to receive insurance through an employer or does not have access to other affordable coverage is able to purchase insurance through a health insurance Marketplace.
The Marketplace, it was hoped, would offer a choice of health plans. That has not worked out very well. Fewer and fewer insurance companies are offering plans through the Marketplace, with some areas now down to a single insurer.
The Marketplace does remove a lot of the confusion around purchasing health insurance. Health plan information is presented in a more standard format.
Insurance companies selling through the Marketplace have to offer plans that provide at least minimum essential benefits. Skimpy questionable plans are not allowed.
Starting in 2014, Members of Congress would be able to get their health insurance through the Marketplace also. This overlooked point may be why so many politicians say they don’t like the Marketplaces.
Promoting individual responsibility
Under the law, most individuals who can afford it will be required to obtain basic health insurance coverage or pay a fee to help offset the costs of caring for uninsured Americans.
If affordable coverage is not available to an individual, he or she will be eligible for an exemption. Learn about hardship exemptions.
Paying physicians based on value not volume
A new provision will tie physician payments to the quality of care they provide. Physicians will see their payments modified so that those who provide higher value care will receive higher payments than those who provide lower quality care.
The goal is a healthy patient which in the end uses less medical services.
Reducing paperwork and administrative costs
Health care remains one of the few industries that relies on paper records. The new law will institute a series of changes to standardize billing and requires health plans to begin adopting and implementing rules for the secure, confidential, electronic exchange of health information.
Using electronic health records will reduce paperwork and administrative burdens, cut costs, reduce medical errors and most importantly, improve the quality of care.
Increasing Medicaid payments for primary care doctors
The Act requires states to pay primary care physicians no less than 100% of Medicare payment rates for primary care services they provide to Medicaid patients.
♦ The increase is fully funded by the federal government.
It reduces a major obstacle to getting doctors to accept Medicaid patients; money. Unfortunately, there are many doctor's that refuse to accept Medicare's payment levels.
Many doctors are still expected to continue to refuse both Medicaid and Medicare patients.
Increasing payments for rural health care providers
68% of medically underserved communities across the nation are in rural areas. These communities often have trouble attracting and retaining medical professionals.
• The law provides increased payment to rural health care providers to help them continue to serve their communities.
• The expansion of Medicaid has also helped increase reimbursement to rural hospitals, which care for a large number of low-income people.
Increasing the small Business tax credit
The law implements the second phase of the small business tax credit for qualified small businesses and small non-profit organizations.
There is also up to a 35% credit for small non-profit organizations.
The Affordable Care Act does not require businesses to provide health insurance to their employees. It does encourage employers to offer insurance by using the carrot and stick approach.
♦ Large employers may face penalties if they don’t make affordable coverage available.
The Act calls this the Employer Shared Responsibility Provision.
Employers that do not offer affordable coverage or coverage that meets minimum value standards can be penalized.
These penalties apply to firms with 50 or more full-time equivalent employees.
Catastrophic coverage phase
This is a benefit for seniors on Medicare. It refers to prescription drug coverage.
You reach catastrophic coverage for prescription drugs after the Donut Hole is satisfied. A separate article is devoted to explaining the Donut Hole.
Not everyone will reach the catastrophic coverage phase. It starts when your total prescription costs reach $6,550 in 2021.
♦ During the catastrophic coverage phase, you’ll only pay a small coinsurance or copayment for covered prescription drugs for the remainder of the year.
Providing free preventive care for seniors
Seniors on Medicare will now be able to receive additional free preventive services, such as annual wellness visits and personalized prevention plans.
♦ Before Obamacare — many Medicare Advantage plans offered some of these benefits as an enticement to enroll.
Now, all seniors can be assured of an annual check-up without having to worry about how to pay for it.
Improving care for seniors after they leave the hospital
The Community Care Transitions Program will help high risk Medicare beneficiaries who are hospitalized avoid unnecessary re-admissions by coordinating care and connecting patients to services in their communities.
The law also puts new requirements on hospitals to make a greater effort to be help their patients avoid being quickly readmitted to the hospital.
Linking payment to quality outcomes
The law establishes a hospital Value-Based Purchasing program (VBP) in traditional Medicare.
♦ This program offers financial incentives to hospitals to improve the quality of care.
Hospital performance is required to be publicly reported, beginning with measures relating to heart attacks, heart failure, pneumonia, surgical care, health-care associated infections, and patients’ perception of care.