Thought Leadership

Affordable Care Act in a nutshell

| Pat Purdy

This was written some months ago by a former employee, but I thought it may still be useful to our readers.

While Pacific Resources is 100% focused on helping our clients with their non-medical benefits, healthcare reform affects our clients – so we too are watching this issue closely. With the Supreme Court of the United States (SCOTUS) now having upheld the constitutionality of the Affordable Healthcare Act, below is a quick overview on what the decision means for different Americans.

The uninsured
The decision leaves in place the individual mandate - the requirement for Americans to have or buy health insurance beginning in 2014 or face a penalty - although many are exempt from that provision. In 2014, the penalty will be $285 per family or 1% of income, whichever is greater. By 2016, it goes up to $2,085 per family or 2.5% of income. Health care exchanges, which are designed to offer cheaper health care plans, remain in place as well. Of course, tax penalties are subject to change. And many states have not yet set up an exchange through which insurance could be purchased.

The insured
Because the requirement remains for people to have or buy insurance, the revenue stream designed to help pay for the law remains in place. So insured Americans may be avoiding a spike in premiums that could have resulted if the high court had tossed out the individual mandate but left other requirements on insurers in place.

Young adults
Millions of young adults up to age 26 who have gained health insurance due to the law will be able to keep it. The law requires insurers to cover the children of the parents they insure up to age 26. About 2.5 million young adults from age 19 to 25 obtained health coverage as a result of the Affordable Care Act, according to the U.S. Department of Health and Human Services. Deleted info about the carriers.

People with pre-existing conditions
Since the law remains in place, the requirement that insurers cover people with pre-existing medical conditions remains active. Starting in 2014, the law makes it illegal for any health insurance plan to use pre-existing conditions to exclude, limit or set unrealistic rates on coverage for adults (the requirement to cover children under age 19 for pre-existing conditions began in 2010). It also established national high-risk pools that people with such conditions could join sooner to get health insurance. As of April, a total of only about 67,000 people were enrolled in federally-funded pools established by the health care law, according to the National Conference of State Legislatures. More than 13 million American non-elderly adults have been denied insurance specifically because of their medical conditions, according to the Commonwealth Fund. The Kaiser Family Foundation says 21% of people who apply for health insurance on their own get turned down, are charged a higher price, or offered a plan that excludes coverage for their pre-existing condition.

All taxpayers
No matter what the Supreme Court had decided, it may have been a mixed bag for all Americans when it comes to federal spending. There is dispute over what impact the health care law will have on the country over the long term. The federal government is set to spend more than $1 trillion over the next decade to subsidize coverage and expand eligibility for Medicaid. The nonpartisan Congressional Budget Office estimated that the law could reduce deficits modestly in the first 10 years and then much more significantly in the second decade. The CBO said a repeal of the mandate could reduce deficits by $282 billion over 10 years, because the government would be subsidizing insurance for fewer people. But the nation faces costs in various ways for having people who are uninsured. The Urban Institute's Health Policy Center estimated that without a mandate, 40 million Americans would remain uninsured. Meanwhile, the Flexible Spending Accounts that millions of Americans use to save money tax-free for medical expenses will be sliced under the law. FSAs often allow people to put aside up to $5,000 pre-tax; as of 2013, they face an annual limit of $2,500.

Small business owners
The rules and benefits small business owners face as a result of the health care law remain in place. As CNN has chronicled, the law brought a mix of both. The director of the National Federation of Independent Business is one of the plaintiffs who pushed the court to strike down the law. Meanwhile, a group called Small Business Majority fought to protect the law, saying its loss could be a nightmare. As of 2014, under the law, small firms with more than 50 full-time employees would have to provide coverage or face expensive fines.

All Americans, in lesser known ways
The health care law requires numerous provisions, including doctors to report payments and other items of value they get from medical supply companies, breastfeeding rooms and breaks at companies with more than 50 employees and that larger chain restaurants list calories under every menu item.

Doctors and other health care providers
Health care providers have already begun making changes based on the 2010 law, and in preparation for what will go into effect in 2014. Those plans continue. In the short term, doctors avoid the "chaos" that may have resulted from the law suddenly being dropped or changed, according to Bob Doherty, senior vice president of governmental affairs at the American College of Physicians, who wrote a blog post on the issue this spring. Medical trade associations have disagreed over the law.

While the SCOTUS ruling has been made, the debates over healthcare reform continue. And if Mitt Romney is elected, the ruling may be subject to repeal. Stay tuned…

Opinions posted above belong to the individual blogger and are not necessarily that of Pacific Resources.

    

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