Affordable Care Act
Affordable Care Act. According to the U.S. Census Bureau in 2010 there were 49.9 million residents without health insurance, (Rak and Coffin, pg. 319). The United States was ranked 37 by the WHO for their health care system in 2008 and 72 out of the 191 overall of its members included in the study, (Rak and Coffin, pg. 319). The Patient Protection and Affordable Care Act (PPACA) otherwise known as the Affordable Care Act (ACA). The objective in the development and passage of the Affordable Care Act was to confront the deficiencies of healthcare in the United States.
Since its inception the ACA has been open to much debate and criticism particularly for college students as the passage has made it difficult for graduates to locate jobs with healthcare benefits. Another aspect of the ACA was the elimination of the lifetime limits. The removal of this limit was removed in 2014 which was particularly beneficial to those individuals with health problems such as cancer and other terminal diseases. These individuals can ultimately be confronted with medical expenses exceeding hundreds of thousands of dollars easily exceeding the lifetime limits on the health insurance rapidly.
Of greatest significance was the ability to provide coverage to the uninsured by means of various methods without increasing costs of healthcare. Eligibility for Medicaid was expanded to include childless adults, parents and children not previously eligible while having income up to 133% of the federal poverty line (FPL), (Rak and Coffin, pg. 319). The ability to permit states to contract across state lines with other states also became an option with the ACA. Employers were required to provide insurance benefits were under the “grandfather” provisions.
Obamacare. Constitutionality of Medicaid was challenged almost immediately once the ACA became law in court. There was no doubt the federal government had federal authority to require Medicaid for everyone under the constitution. However, requiring the expansion of Medicaid and requiring individuals to purchase health insurance was overstepping their reach. Ruling in both favors the ruling held the expansion of Medicaid was permitted while at the state level each state could opt out of the expansion while still maintaining current funding. The “individual mandate” was ruled as valid if only in the event it was viewed as a tax should the individual elect not to purchase then as being penalized for non-compliance of a regulatory law prohibiting being uninsured.
Individual Mandate. As part of the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education and Reconciliation act of 2010 (HCERA) known as the ACA utilized the tax code to broaden access to health care across the United States, Hymson and Ornelas (2016, pg. 80). Accordingly, it has been mandated each taxpayer and the dependents of the taxpayer not covered by an employer’s insurance or government plan must maintain minimal essential coverage. Those not maintaining coverage must pay a penalty in the form of increased income tax. Further employers with more than fifty full-time employees are obligated to provide affordable health insurance for all full-time insurance or pay penalty.
Premium Assistance. Individuals not eligible for coverage by an employer or government and not quality for an exemption in the form of a premium tax credit to offset the purchase of qualified health plans through an Exchange. A taxpayer appropriately eligible for the premium tax credit has a household income which falls annually 100 percent above the Federal Poverty Level (FPL) and 400 percent for the size of the taxpayer’s family, cannot be claimed as a dependent on the taxes of another and files a joint tax return if married, states Hymson and Ornelas, (201, pg. 82).
Veteran Affairs. While the passage of the Affordable Care Act was intended to expand access to health care options when implemented the provisions itself did not alter the eligibility coverage of the Veteran Affairs.
Individuals eligible to enroll increased significantly during open enrollment the number of veterans enrolling were minimal for individuals with no copayment and slightly higher for those with a copayment, writes Silva, Tarlova, French, Huo, Martinez and Stroupe, 2016, pg. 473). States electing not to expand Medicaid saw a slight increase in the enrollment of VA enrolments. Reasons cited were due to meeting the mandate on an individual income level enrolling in the VA or purchasing insurance in the Marketplace.
Evidence indicated between January-March 2009 and January-March 2014 enrollment during this entire time was flat. Service-connected disability groups enrollment dropped which bridges the initial tracking of data coinciding to the withdraw of military forces from recent conflicts. This drop-in enrollment may be a result of military policy impacting the enrollment of VA than the coverage of health insurance both of which are priorities for these particular groups.
Repeal of Individual Mandate. In December 20l7 a tax legislation passed which repealed the penalty linked to the individual mandate of the Affordable Care Act (ACA) requiring an individual not qualified for an exemption to obtain health insurance. Not only did the health insurance mandate necessitate an individual to purchase health insurance its impact on health insurance coverage is still under debate. Analyses performed by the Congressional Budget Office has determined the individual mandate has had a significant impact upon the increased insurance coverage. Conversely the repealing of the individual mandate has reduced insurance coverage there are those that believe it has had little if no effect on insurance coverage
Ramifications. Analysts believe the elimination of the individual mandate and penalty will significantly impact the health insurance industry causing premiums to rise, and healthy people to drop coverage. There are other aspects of this law to be considered as well such as the subsidies assisting those individuals to purchase insurance through insurance exchanges keeping the cost of insurance to increase by absorbing the cost of some of these increases.
It had been estimated repealing the individual mandate premiums would increase by 12.6 percent, 7.8 million would lose coverage as compared to a loss of 16-24 million, states Sheils and Haught (2011). As of October 2011, two appeals court ruled the individual mandate was unconstitutional. The mandate continued to be challenged with the Supreme Court in the Eleventh Circuit have continued to hear arguments. Having been challenged in the Supreme Court in 2012 the individual mandate requiring individuals to purchase health insurance or pay a penalty was unpopular. A critical component of the ACA was the achievement of affordability of health insurance with the goal being universal coverage. Before the inception of the ACA insurance companies could deny coverage or charge high premiums to new applicants based on the health status of the applicant. As a result, many applicants were denied coverage until expensive health care was needed while making the cost of medical care unaffordable for the average American having preexisting conditions.
As part of the ACA insurers were required to issue coverage to all applicants known as “guaranteed issue”. Insurers can apply a form of “modified community rating” utilized in some states allowing varied premiums by age to a set limit. It does prohibit varying premiums based on the applicant’s health status, sex, or other aspects of the applicant. It is these characteristics of the individual who are younger and healthier can increase premiums or for the elderly or sick reduce premiums. Individuals making the decision not to purchase health insurance will pay a penalty for being uninsured phased in over three years beginning in 2014. At the end of three years the penalty will equal $695 per person ($2,085 per family) or 2.5 percent of a family’s income.
Impact of Out-of-Pocket Spending Caps. Financial caps are of significance to individuals having insurance and considered underinsured are exposed to high levels of financial risk. Financial burdens associated with high medical bills produce adverse consequences, non-compliance, delays in bill payments and ultimately bankruptcy. The objective of healthcare reform was intended to primarily due to the high cost of health insurance with the majority of attention of the ACA directed towards the purchasing of health insurance by means of the marketplace (exchanges).
Evidence indicates the implementation of a uniform cap on out-of-pocket spending as required by the ACA the benefits to individuals will be minimal, writes Riggs, Buttorff, & Alexander, (2015, pg. 677). Reduction of uniform caps or those based on incomes as compared to the ones available in the exchanges would produce somewhat higher reductions. It has been common practice to have spending caps in place as evidenced by private insurance prior to the passage of the ACA with 88% of employer plans having individual caps as further stated by Riggs, Buttorff, & Alexander, (2015, pg. 678).
Insurance exchanges. Individuals with income up to 133 percent of the federal poverty level (FPL) were provided with additional opportunities to purchase health insurance with the passage of the ACA. Expansion of the Medicaid and the development of Exchanges provided these opportunities. While not every state elected to expand Medicaid health insurance exchanges for those individuals with income between 133–400 percent of the federal poverty level are eligible to receive subsidized health insurance, writes Austin, Luan, Wang, and Bhattacharya, (2013, pg. 1532).
It was assumed those eligible for federal subsidies to purchase insurance would take advantage of the opportunity rather than being assessed the penalty (tax). Surprisingly, this was not the case with many opting not to purchase coverage with the overall impact on the federal government budget exceeding estimations. According to Austin, Luan, Wang, and Bhattacharya, (2013, pg. 1536) 50 percent of the uninsured have incomes between 133-250 percent of the federal poverty level are eligible for the exchange subsidies and net cost would not increase.
Impact state by state. States ceding all enforcement of control of the ACA to the federal government experienced welfare losses of $245 per individual yearly as compared to individuals in other states, (Kowalski, 2014 pg. 277). Significant issues related to the six states having issues with the implementation of exchanges showed an annual loss of $750 for each individual. It goes without saying that as time moves forward costs of coverage and premiums will change the impact across the states will change as well.
Typically, there were two regulations prior to the implementation of the ACA at the state level associated with the individual mandate. Community rating governs the health insurance market requiring the charging of premiums be the same to all subscribers regardless of “observable characteristics”, writes Kowalski, (2014, pg. 278). Guaranteed issue on the other hand, prohibit insurers from denying anyone coverage regardless of their health condition. States were granted the authority by the federal government to expand Medicaid as legislated by the ACA with a little more than half electing to take the opportunity. In addition, the states were also given permission to renew non-ACA “non-compliant non-grandfathered plans” (Kowalski, 2014 p. 278). Individuals eligible for Medicaid elected to take this opportunity rather than purchase insurance through the marketplace as the impact on adverse selections as a higher or lower cost compared to others in the insurance market for individuals.
Employer coverage. Employer response to the expansion of the Affordable Care Act is significant for various reasons. Employers not participating in the program led to Medicaid enrollment increase or the distribution of federal subsidies. Employers electing not to supply coverage for their workers had increasingly ill employees the risk pool would worsen thereby increasing the premiums. Lastly, the ACA was presented to Americans to repair the healthcare system while not impacting the employer sponsored health insurance program. Of the individuals receiving health insurance through their employers this was welcome news.
Conclusion. The Affordable Care Act had minimal impact on more of the uninsured than predicted. Of primarily effect were the uninsured were those moved from Medicaid or individuals obtaining subsidized insurance through government exchanges. It was stated individuals with single coverage would not have a change in coverage, receiving the same care and at the same cost compared to the inflation of Medicaid. This has been proven not to be the case.
Affordable Care Act