Affordable Care Act: what are the advantages should I know of

The Affordable Care Act ( ACA ), formerly known as the Patient Protection and Affordable Care Act , and colloquially known as Obamacare, is a landmark United States federal law enacted by the 111th United States Congress and signed into law by President Barack Obama on March 23, 2010. Along with the Health Care and Education Reconciliation Amendment Act of 2010, it represents the most significant regulatory overhaul and coverage expansion of the U.S. health care system since the enactment of Medicare and Medicaid in 1965.

The main provisions of the ACA came into force in 2014. By 2016, the uninsured share of the population had roughly halved, with estimates ranging from 20 to 24 million additional people covered. [5][6] The law also enacted a host of delivery system reforms designed to contain health care costs and improve quality. After it took effect, increases in overall health spending slowed, including employer insurance plan premiums. [7]

The increase in coverage was driven, about equally, by an expansion of Medicaid eligibility and changes in individual insurance markets. Both received new spending, funded by a combination of new taxes and reductions in Medicare and Medicare Advantage provider rates. Several Congressional Budget Office (CBO) reports have stated that, overall, these provisions reduced the budget deficit, that repealing the ACA would increase the deficit, [8][9] and that the law reduced income inequality by taxing primarily the top 1% to fund about $600. benefits on average to families in the bottom 40% of the income distribution. [ten]

The law largely retained the existing structure of Medicare, Medicaid, and the Employer Marketplace, but the individual markets were radically revamped. [1][11] Insurers were forced to accept all applicants at no cost based on pre-existing conditions or demographic status (except age). To combat the resulting adverse selection, the law required individuals to purchase insurance (or pay a fine/tax) and that insurers cover a list of “essential health benefits”.

Both before and after its enactment, the ACA faced strong political opposition, calls for repeal, and legal challenges. In National Federation of Independent Business v. Sebelius , the Supreme Court ruled that states could choose not to participate in Medicaid expansion, but upheld the law as a whole. [12] The federal health insurance exchange, HealthCare.gov, encountered major technical issues early in its rollout in 2013. Polls initially found that a plurality of Americans opposed the law, although that its individual layouts are generally more popular. [13] In 2017, the law had majority support. [14]President Donald Trump reversed the federal tax penalty for violating individual mandate through the Tax Cuts and Jobs Act of 2017, effective in 2019. [15] This raised questions about whether the ‘ACA was still constitutional. [16][17][18] In June 2021, the Supreme Court upheld the ACA for the third time in California v. Texas . [19]

Provisions

  The President and White House staff react to the passage of the bill by the House of Representatives March 21, 2010. Jim Clyburn and Nancy Pelosi celebrate after the House passed the amended bill on March 21.

The ACA amended the Public Health Service Act of 1944 and inserted new affordable care provisions into Title 42 of the United States Code. [1] [2] [3] [20] [4] The individual insurance market was radically reshaped, and many regulations of the law applied specifically to this market, [1] while the structure of Medicare, Medicaid and the employer market have been widely held. [2] Some regulations applied to the employer market and the law also made changes to the delivery system that affected much of the health care system. [2]

Insurance regulations: individual policies

All new major individual health insurance policies sold to individuals and families faced new requirements. [21] The requirements came into effect on January 1, 2014. They include:

• Guaranteed issue prohibits insurers from denying coverage to people because of pre-existing conditions. [22]
• States were required to ensure the availability of insurance for individual children who were not covered by their families.
• Partial community pricing allows premiums to vary only by age and location, regardless of pre-existing conditions. Premiums for older applicants cannot be more than three times higher than those for younger applicants. [23]
• Essential health services must be provided. The National Academy of Medicine defines “essential health services” as follows: “ambulatory services to patients; emergency services; hospitalization; maternal and newborn care; mental health and addictions services, including behavioral health treatments; prescription drugs; rehabilitation and rehabilitation services and devices; laboratory services; prevention and wellness services and chronic disease management; and pediatric services, including oral and vision care” [24] [25] and others [26] rated at level A or B [27]by the US Task Force on Preventive Services. [28] To determine essential benefits, the law required that standard benefits provide at least that of a “typical employer plan”. [29] States may require additional services. [30]
• Preventive care and screening for women. [31] “[W]hole Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women of childbearing ability”. [32] This mandate applies to all employers and educational institutions except religious organizations. [33][34] These regulations were included on the recommendation of the Institute of Medicine . [35] [36]

  In 2012, Senator Sheldon Whitehouse created this summary to explain his views on the law.

• Annual and lifetime coverage caps on essential benefits have been banned. [37] [38] [39]
• Insurers are prohibited from depositing policyholders when they fall ill. [40] [41]
• All policies must provide a maximum annual out-of-pocket (MOOP) payment cap for an individual or family’s medical expenses (excluding premiums). Once the MOOP payment is reached, all remaining charges must be paid by the insurer. [42]
• Preventive care, vaccinations and medical examinations cannot be subject to user fees, co-insurance or deductibles. [43][44][45] Specific examples of services covered include: mammograms and colonoscopies, wellness visits, gestational diabetes screening, HPV screening, STI counseling, HIV testing and counselling, contraceptive methods, breastfeeding support/supplies and domestic violence testing and counseling. [46]
• The law established four levels of coverage: bronze, silver, gold and platinum. All categories provide essential health benefits. The categories vary in their distribution of premiums and payouts: bronze plans have the lowest monthly premiums and the highest payouts, while platinum plans have the reverse. [29] [47] The percentages of health care costs that schemes are expected to cover through premiums (as opposed to out-of-pocket) are, on average: 60% (bronze), 70% (silver), 80% (gold ) and 90% (platinum). [48]
• Insurers are required to implement an appeals process for determining coverage and claims on all new plans. [40]
• Insurers must spend at least 80 to 85% of premiums on health costs; discounts must be issued if this is not respected. [49] [50]

The individual mandate [51] required everyone to take out insurance or pay compensation. The mandate and limitations of open enrollment [52] [53] were designed to avoid the insurance death spiral, minimize the free rider problem, and prevent the healthcare system from succumbing to adverse selection.

The mandate was to increase the size and diversity of the insured population, including more young and healthy participants to broaden the risk pool and spread the costs. [54]

Among the groups that were not subject to the individual mandate are:

• Illegal immigrants, estimated at around 8 million — about a third of the projected 23 million — are not eligible for insurance subsidies and Medicaid. [55] [56] They remain eligible for emergency services.
• Medicaid-eligible citizens not enrolled in Medicaid. [57]
• Citizens whose insurance coverage would cost more than 8% of household income. [57]
• Citizens who live in states that are opting out of Medicaid expansion and are not eligible for either existing Medicaid coverage or subsidized coverage. [58]

The Tax Cuts and Jobs Act 2017 [59] reduced the fine/tax for violation of the individual mandate to 0, from 2019. [15]

Exchanges

The ACA required that health insurance exchanges be provided for each state. Exchanges are regulated, largely online marketplaces, administered by federal or state governments, where individuals, families and small businesses can purchase private insurance plans. [60][61][62] Exchanges first offered insurance for 2014. Some exchanges also provide access to Medicaid. [63] [64]

States that create their own exchanges have some discretion over standards and prices. [65] [66] For example, states approve sales plans and thus influence (through negotiation) prices. They may impose additional coverage requirements, such as abortion. [67] Alternatively, states can make the federal government responsible for operating their exchanges. [65]

Premium subsidies

Individuals with household incomes between 100% and 400% of the Federal Poverty Level (FPL) are eligible to receive Federal Premium Subsidies for policies purchased on an ACA exchange, provided they are not eligible to Medicare, Medicaid, the children’s health insurance program. , or other forms of public assistance health coverage, and do not have access to affordable coverage (no more than 9.86% of income for employee coverage) through their own employer or that of a family member. [68] [69] [70]Households below the federal poverty level are not eligible to receive these grants. Legal residents and certain other legally present immigrants whose household income is less than 100% FPL and who are not otherwise eligible for Medicaid are eligible for subsidies if they meet all other eligibility requirements. [71] [68] Married people must file taxes jointly to receive grants. Enrollees must have U.S. citizenship or proof of legal residency to obtain a grant.

Subsidies for an ACA plan purchased in exchange stop at 400% of the Federal Poverty Level (FPL). According to the Kaiser Foundation, this translates into a strong “processing discontinuity” at 400% FPL, sometimes referred to as a “cliff subsidy”. [72] Post-subsidy premiums for the second-cheapest silver plan (SCLSP) just below the cliff represent 9.86% of revenue in 2019. [73]

Grants are awarded in the form of a refundable, refundable tax credit. [74] [75]

The grant amount is sufficient to reduce the premium of the Second Least Expensive Silver Plan (SCLSP) on a trade-in cost by a declining percentage of income. The percentage is based on the household’s Federal Poverty Level (FPL) percentage and varies slightly from year to year. In 2019, it ranged from 2.08% of revenue (100%-133% FPL) to 9.86% of revenue (300%-400% FPL). [70] The grant can be used for any plan available on the exchange, but not for catastrophic plans. The subsidy cannot exceed the premium of the purchased plan.

(In this section, the term “income” refers to modified adjusted gross income. [68] [76] )

Small businesses are eligible for a tax credit provided they register with the SHOP Marketplace. [77]