Few acts in recent memory have been as controversial as the Patient Protection and Affordable Care Act. Taking aim directly at the insurance industry, the ACA, more commonly referred to as Obamacare, sought to make health insurance more affordable for millions of Americans and expand Medicare coverage to people who cannot afford private insurance.
From the beginning the law met resistance from members of Congress. Though the bill passed in 2010, it was one of the only times in U.S. history when a major piece of legislation passed without the support of a single member of the minority party, and since Republicans took control of both houses of Congress, there have been multiple attempts to repeal the act.
Why Was the ACA Necessary?
The insurance industry in the United States was guilty of multiple abuses in the early 21st century, according to the Obama administration. High premiums and deductibles caused patients to spend thousands of dollars a year on coverage without ever receiving benefits. Lifetime and annual limits exposed people to economically devastating medical bills that they would never be able to escape. Worst of all, rising costs made insurance unaffordable altogether for many people.
Before the ACA, the uninsured rate in the U.S. reached almost 16 percent, or just more than 42 million people. Since then, because of the provisions of the ACA, the uninsured rate dropped to 9.2 percent, with higher gains for citizens age 18-64.
What Does the ACA Do?
The ACA is a series of provisions that were rolled out over a five-year period. The provisions fall into three broad categories.
The ACA expanded coverage protection, especially for children. Coverage protections included:
- Pre-Existing Medical Conditions — One of the most important provisions of the ACA required insurance companies to accept all new applicants, regardless of pre-existing medical conditions. Before the introduction of this provision in 2014, providers could collect premiums from patients for months before providing a minimum level of coverage, or deny coverage completely to people with long-term ailments, like cancer or multiple sclerosis.
- Age Limits — Under the old regulations, parents could only insure their children until age 18, or 22 if the child was in college. The ACA expanded the limit to 26. The higher age limit allows recent graduates more flexibility in job choices and more financial security in the first years of their career, because they do not have to worry about carrying their own health insurance policy.
- Right to Appeal — When an insurance company denies payment, patients have the right to appeal the decision as a result of the ACA. The appeal may be an internal appeal by the insurer or it can be escalated to a third-party arbiter.
- Rescinded Coverage — The ACA also protects patients by requiring insurance companies to demonstrate legitimate reasons for the cancellation of coverage. The only reasons an insurance company can cancel a plan include fraud or intentional misrepresentation by the patient.
A critical component of the ACA is the introduction of cost controls.
- Rate Reviews — Insurance companies are no longer allowed to raise premiums without public discussion. The company must make a case that the increase is necessary and justifiable before the increase may occur.
- Allocation of Funds — Before the ACA, insurance companies spent a fraction of their income on patient care, and the majority on administrative costs, advertising, and marketing. Patients were left with little money to cover medical procedures, which was the reason for high deductibles. The ACA requires companies to allocate more than 50 percent of all income to patient care, and caps the percentage of premiums that can be spent on administration or marketing.
- Coverage Limits — Lifetime and annual coverage limits were the primary reasons why insured Americans faced health-related bankruptcy. Insurance companies could cancel policies when patients hit the lifetime caps, but the caps were far below the amount necessary to care for cancer treatments or many long-term illnesses. Some young people who survived cancer as children found themselves ineligible for any coverage as adults. The ACA prohibits limits on lifetime or annual benefits, so as long as a patient pays premiums, he or she remains covered.
The ACA brought insurance to millions of Americans for the first time.
- Preventive Care — The best way to limit insurance costs is to address an illness in its early stages. Preventive care can save the United States billions of dollars a year, but few policies provided coverage prior to the ACA. Many of the new ACA plans include free preventive health services, allowing patients to be treated before they become sick.
- Healthcare Exchange — The controversy of the ACA centers around the provision that requires all Americans to have health insurance, or they must pay a tax penalty. To make sure people had access to the coverage that they need, the ACA created the health care exchange. The exchange is an insurance marketplace where companies compete for patient dollars, and the federal government provides subsidies for low-income citizens.
- Medicaid Expansion — A percentage of the population falls between being able to afford insurance on the health care exchange and earning too much money to qualify for Medicaid. The ACA offered a Medicaid expansion to the states through a federal subsidy of 80 percent of the increased costs. Thus far only 23 states accepted the expansion, leaving more than 21 million Americans in the Medicaid gap.
Legal Implications of these Issues
Considering the broad impact of the Affordable Care Act, health care professions, health insurance companies and patients will need to be well versed on this health initiative. For example, it is important that healthcare professionals understand this act so they can act as a reliable educational resource for patients. If they provide patients with false or inaccurate information, they could be liable for legal action. Furthermore, patients also need to know that within the regulations of this act, they are able to legally appeal any payment that a health insurance company denies.
The Patient Protection and Affordable Care Act will remain controversial for the foreseeable future. Critics on the right complain the act infringes on freedom of choice, and limits the patient’s access to the doctor of his or her choice. Critics on the left argue for an expansion of the program, culminating in a Medicare for all universal health care system.
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