The Pros and Cons of the Affordable Care Act (Obamacare)
Your view of the pros and cons of the Patient Protection and Affordable Care Act (ACA, commonly referred to as Obamacare) may depend on your policy preferences and the role you believe the federal government should play in providing access to health care for Americans. Even more, than a decade after it was first passed, Americans largely approve or disapprove of the ACA along party lines. According to a 2020 Gallup Poll, for example, 84% of self-identified Democrats approve of the ACA, while 87% of self-identified Republicans disapprove of it.
No discussion of the pros and cons of Obamacare can avoid disagreement. Your priorities are likely to play a large role in how you weigh the benefits and drawbacks of ACA. However, when asked about specific provisions, most Americans prefer certain aspects of the ACA over others. Below is a non-partisan summary of these pros and cons.
The ACA is a significant and unprecedented act of Congress, and it would take entire books to review in-depth all the impacts of the 900-page law, which indisputably transformed the American healthcare system. Fortunately, however, the larger and more controversial aspects of the law can be summarized relatively briefly.
How the ACA is structured
Initially, there was some confusion over whether the Affordable Care Act and Obamacare are the same things. And they are. Obamacare is a derisive term for the ACA coined by opponents of the law.
The ACA first centered around the idea of a so-called “three-legged bank” that allows insurers to still earn money while providing more comprehensive insurance coverage. The three pillars of the ACA, as originally conceived, are:
- Regulate insurers to provide better coverage for more Americans, including those with pre-existing conditions
- Requires everyone – especially healthy Americans – to purchase health insurance to share the costs (this is known as the “individual mandate”)
- li>Help low-income people pay for health insurance through subsidies and a Medicaid expansion
The idea is that if we require private health insurance companies to cover everyone, including Americans with preexisting conditions, then we also need healthy Americans to purchase health insurance so that insurers can remain profitable. So, by helping low-income Americans with subsidies, more Americans can get health insurance than ever before.
However, in 2017, the Tax Cuts and Employment Act eliminated the penalty for people who did not purchase health insurance, with effect from 2019. The full impact of this is still unclear but so far the health system has remained functional.
Benefits of the Affordable Care Act
The Affordable Care Act increased the number of Americans insured and improved the coverage offered by health insurance companies. Millions of previously uninsured Americans were able to obtain health insurance due to the ACA.
P>Prior to Obamacare, there were few guidelines for what a health insurance company could and could not cover. As a result of Obamacare, health insurance now generally covers more procedures, including mental health and maternity care.
One of the most well-known and popular features of the ACA is its rule that prevents health insurance companies from denying coverage to people with preexisting conditions, including heart disease, diabetes, and others. Before the ACA, anyone seeking insurance who already had a health problem could be denied coverage or face exorbitant fees. It may not be cost-effective for insurers to take in patients with pre-existing conditions. It is estimated that one in four Americans has a preexisting health condition.
Expanded Medicare and Medicaid
The ACA also expanded Medicare coverage. For example, the ACA closed the so-called Medicare “donut hole”. Before the ACA, people taking Medicare Part D could lose coverage after spending a certain amount of money on drugs. The ACA has gradually reduced the donut hole, and as of 2020 it has been eliminated. Medicare now continues to help pay for the drugs, regardless of the amount already spent. It does not pay the full cost of the drugs, however (as of this writing it covers 75% of the cost of generic drugs).
Thirty-seven states have also expanded Medicaid programs, meaning many Americans living below the federal poverty line can still get health insurance.
Improved Health Outcomes
There are also signs of better health outcomes due to ACA. For example, the ACA prevents hospitals from charging for infections that come from a hospital stay. Hospital infections are one of the leading causes of death in the US. Perhaps in part because hospitals now lose money from patients who become infected in hospitals, infection rates have dropped dramatically in recent years. Supporters of the law also argue that it has improved early detection of cancer and improved preventive care, leading to lower healthcare costs and better outcomes for cancer and other medical conditions.
In recent years, it is noteworthy that insurance premiums under Obamacare have also improved.
Affordable Care Act Negatives
Requiring health insurance companies to provide additional coverage has increased the price of insurance for some people, including their insurance premiums. People who prefer very minimal insurance are forced to pay more for better coverage. The ACA also raised the marginal tax rate for some Americans.
Impact on Small Businesses
Much of the concern voiced by critics involves small businesses. The ACA may provide an incentive for companies to keep their employee counts artificially low, as only companies with 50 or more employees are required to provide health insurance for their employees. This can affect how many people are employed full-time by small businesses.
Fourteen states also refused to expand Medicaid programs, leading to decreased coverage in those states.
Particularly shortly after the enactment of the ACA, Americans were not always able to keep their existing doctors. Some health providers were not covered by insurers under the ACA. After the enactment of the ACA, it was difficult for some Americans to find insurance in a market. There were also fewer insurers offering plans because of concerns about whether insurance companies could make money from offering plans. While it is still a concern, most Americans can now find a health insurance plan in their area.
Health Is Still Expensive
Finally, while the ACA has allowed more Americans to have health insurance, the underlying cost of medical care has not been reduced. Even insured Americans often find it difficult to pay medical bills, and 40% of all bankruptcies in the US involve medical debt.
The Individual Mandate
Another key (and controversial) aspect of the ACA, as originally approved, was the individual mandate. Under the ACA, Americans who didn’t buy insurance had to pay a penalty on their taxes. However, even after being approved for the first time, the penalty could be less than the cost of paying the insurance, so some taxpayers chose to pay only the penalty. In 2017, the Tax Cuts and Jobs Act removed the penalty, so Americans who chose to go without health insurance do not face any consequences.
While the ACA has so far continued to operate without the individual mandate, there are concerns about whether insurers can continue to provide coverage if enough Americans choose not to get health care. In 2019, for example, 400,000 fewer people signed up for health insurance in one market than in the previous year.
The individual mandate also faced numerous legal challenges. The Supreme Court maintained the individual mandate as constitutional in 2012. However, legal challenges remain, and the Supreme Court will re-decide this issue in 2020.
Did Obamacare Improve Healthcare in the US?
The ACA has largely functioned as intended. In its simplest form, the point is that more and better coverage costs more money. If you believe the federal government should help Americans get decent health insurance plans, then it’s likely to pass the ACA. However, if you believe that the federal government should not play a role, then you may think that the ACA is interfering with the free market and raising taxes and premiums for people who might otherwise find health insurance on their own.
Many of the issues discussed in this article are hotly debated. For example, those in favor of maintaining the ACA or instituting a single-payer healthcare system argue that it lowers the overall cost of healthcare and ultimately saves taxpayers money. Opponents argue that it increases costs and is an unaffordable undertaking. The US healthcare system is extremely complicated and this article does not take a position on either side.
Need Help With Understanding Your Rights Under the ACA? Contact a Lawyer.
Health insurance is complex and ACA is no exception. If you have questions about insurance coverage, contact an insurance attorney or an insurance attorney if you have any legal questions about ACA.