The Affordable Care Act: An Overview


Written by Ali M. Rasool


Just before this semester started my dad handed me my all new Blue Cross Blue Shield student health insurance card. I was not insured before that. I was one of over 30 million Americans, who were affected by the implementation of the Affordable Care Act, which had its major components go into effect on October 1st, 2013. The Affordable Care Act, also widely known as Obamacare, was signed into law on March 23, 2010. 


One of its major aims is to amend the greatest problem in the US healthcare system – that millions of people are uninsured.  Most industrialized nations in the world provide universal coverage to its citizens like Canada, Australia, India, and Brazil to name a few. Through the Affordable Care Act, America is working towards universal coverage for its citizens. There is a great amount of information involving the Affordable Care Act. The following is an attempt to deliver the necessary amount of information you need to know about the healthcare law.

The Three-Legged Stool

There are three legs that balance the stool of the Affordable Care Act. Without one of these legs, the stool would collapse, so it is important that we have all three. They are the regulations, the individual mandate, and the subsidies.

Insurance companies often charge more or deny coverage to those suffering from chronic illness. The first regulation will address this issue by making it clear that no one could be denied insurance by insurers or providers anymore. This concept is called Guaranteed Issue. Furthermore, people should not be financially penalized for the severity of their illness. In other words, all people should be charged a similar amount. This concept is called Community Ratings.  

We will reach a problem if we follow these regulations alone. Now that no one can be denied coverage when they want it, and no one will be forced to pay more if they are ill, people do not necessarily need to buy insurance before they become ill. They can wait until they become ill, and then get coverage, since it won’t rise. As a result, people will only buy insurance when they are ill, and this will cause an incline in the price of premiums, the amount that must be paid for a health insurance plan. As prices go up, even more healthy people will opt out of purchasing coverage. We will result in a “death spiral,” which leads only the sick to buy insurance at very high prices. To prevent this from occurring, we have to make healthy people buy insurance. The Affordable Care Act charges people a penalty for those who do not choose to get covered. This is the individual mandate.

Now there are many people who simply cannot afford health insurance. The health law provides subsidies, sums of money granted by the government, which will grant a tax credit to individuals making less than 400% of the federal poverty line until March 31st, 2014.

The Impact

As the law is working in effect, there are four main ways many of us will experience change in the healthcare system. About half will receive insurance through our jobs, about one third will get coverage via the government through Medicare and Medicaid, about one tenth will buy insurance themselves, and about another one tenth may not get coverage at all.

Those in in the workplace won’t experience as much change since they are already covered by their employers. They will have reduced out of pocket fees and will gain access to free preventative care for change. People who work for big companies but aren’t covered yet will experience change because the government will make it mandatory for companies with fifty or more employees to cover full time workers. If they do not follow, they will face a penalty. This policy has been delayed until 2015.

Smaller employers will be encouraged to buy insurance for the employees and won’t face the same penalties. If they participate, some will be rewarded temporary tax breaks. If an employee does become ill, prices will not inflate and make it more expensive for the employer to offer healthcare to his employees like they would before the law was put into effect. So all in all, more people in the workplace will be covered.

Many of us depend on help from the government. This includes individuals covered by Medicare, which is a federally administered health insurance plan for the elderly (65+); and Medicaid, which is a federal and state administered health insurance plan for the needy (usually younger people). Not much is going to change for seniors on Medicare. Medicaid, on the other hand, will be expanding to cover more people. If your income is low, about 138% of the federal poverty line, then Medicaid will cover you in a private insurance plan for free. The Supreme Court ruled that governors and legislators of each state should decide if they want to be part of the Medicaid expansion or not. Texas is not participating in the Medicaid expansion as of now.


For those who aren’t covered or find their work coverage to be pricey, there is a new method for buying insurance privately that will be open to everyone—Health Insurance Marketplaces. The marketplace is essentially a cybernetic mall, where private insurers will be competing for your business. There will be all types of plans, ranging from Bronze to Platinum. All plans will cover general healthcare services like hospital and doctor visits and prescription drugs. The marketplaces will make sure insurance companies operate fairly. Open enrollment in the marketplaces will take place from October 1st, 2013 to March 31st, 2014.

Unlike the current situation, men and women will pay the same price, and costs for older people will decrease as young people will have to pay more. To help keep costs low for the younger crowd, the Affordable Care Act allows young people to stay on their parents’ plans till age 26 and buy low budget plans until age 30.

There will be people who still will not buy insurance, either because they want to avoid it or they cannot afford it. Those who plan on waiting on/trying to avoid it should know that coverage is only offered during special enrollment periods, so it is best to get covered as soon as possible. The individual mandate is fixing this. The government will waive any penalty for those who really cannot afford it. A large portion of the money needed to pay for people’s coverage will come from taxes. Many of which will be aimed at the health industry and the wealthiest Americans.

Sources

The following sources were researched and used to write this article. Further your understanding of the Affordable Care Act by clicking any one of the links below:

Healthcare Triage Youtube Channel- http://www.youtube.com/user/thehealthcaretriage
Health Insurance Marketplace Open Enrollment- https://www.healthcare.gov/

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