March 23rd, 2020 BY Jennifer Davis
Today marks the 10th anniversary of when the Affordable Care Act became law. Also known as the ACA or “Obamacare,” the Affordable Care Act changed the landscape of the American healthcare system.
For better or worse?
That’s still a debate.
In fact, even now, as we recognize the ACA’s 10th anniversary, the law itself is stuck in a pending court case.The U.S. Supreme Court will once again decide whether a law that’s been controversial since its passage will remain the law of the land.
But a decision won’t come until later this year, possibly after the election. Until then, Obamacare endures.
In honor of a law that continues to challenge our definition of healthcare and health insurance, and what it means in an industrialized nation of over 300 million people, here are 10 things you need to know about Obamacare.
1. Got medical problems? No problem.
Under the Affordable Care Act, insurance companies can’t use your medical history to deny coverage or set premium rates for major medical plans, a process called medical underwriting. That’s good news for the estimated 54 million American adults under age 65 living with a pre-existing condition.
Before the ACA eliminated medical underwriting, pre-existing conditions could have prevented you from getting a health insurance plan. And there’s no set definition of “pre-existing condition,” so it was up to insurers. Even something temporary, like pregnancy, might have counted against you — let alone conditions like high blood pressure, diabetes or cancer.
2. All major medical plans cover 10 essential health benefits now.
Major medical policies have to cover a set of benefits known as “essential health benefits.” There are 10 of them:
- Preventive care
- Maternity care during and after pregnancy
- Mental health care
- Pediatric care, including dental and vision for kids
- Prescription drugs
- Outpatient care
- Emergency services
- Rehabilitative care and equipment
- Lab work
Think of these as categories of care rather than defined benefits. Insurance companies still have leeway within these categories to design competitive plans.
For instance, all major medical plans must cover prescription drugs. But that doesn’t mean every plan covers every drug. Individual plans can set tiers of coverage for prescriptions and decide which ones to cover — and for how much. The same goes for other essential benefits.
And by the way, “major medical” means a health plan that complies with the Affordable Care Act. When we’re talking about health insurance under Obamacare, we mean the full set of benefits that the law requires. You can get these plans on your own or from your job, if your job offers them.
Short term health insurance, as an example, does not comply with the ACA and doesn’t have to cover essential health benefits. But that’s a topic for another day.
3. Preventive care doesn’t cost anything out of pocket.
Preventive care is the kind of care you get to prevent or maintain your health. It includes annual checkups, screenings for certain kinds of cancer, lab tests and other related care that helps you stay healthy before you get sick.
Under the ACA, your major medical health plan must cover preventive services without cost-sharing. That means it won’t cost you anything out of pocket other than the monthly premium you pay for the plan itself.
Regardless of how your plan handles cost-sharing — copays, coinsurance or some combination of these and your deductible — preventive care is covered without any added costs and before you meet your deductible.
In other words, you won’t need to meet your deductible for preventive coverage to start.
So, for example, if you see your doctor for a routine mammogram once a year, your insurer will pick up the tab for the total cost. If you end up needing additional diagnostic tests, you’ll have to pay based on your plan’s cost-sharing rules. But the initial preventive mammogram won’t cost anything out of pocket.
4. There’s an open enrollment period for coverage (for a reason).
The Affordable Care Act created an annual open enrollment period during which people can buy private, non-job-based health insurance. “Private” just means it doesn’t come from a government program, like Medicare, Medicaid or TRICARE.
The enrollment period itself has changed since the ACA took effect. Initially, you had about three months to sign up for coverage. That changed with the current administration, which cut the enrollment period down to six weeks.
As of right now, the current open enrollment period for Obamacare runs from November 1 through December 15 in most states.
Note: In states with individual health insurance marketplaces, enrollment periods might differ. This applies to 12 states and Washington, D.C. as of 2020.
Why can’t you just sign up for health insurance when you want? Put simply, an enrollment period ensures that insurance companies can keep costs in check for everyone with a plan.
Think about it like this: If you wreck your car and then try to buy an insurance policy, it won’t work. You haven’t paid any premiums, for one thing, and the company then has to pay an expensive claim without any commitment from you. It would then raise rates for everyone else with a policy to make up the difference. And since you got what you needed, you’d likely then cancel the policy because there’s no point in paying additional premiums.
The analogy isn’t perfect, of course. Your health and car are very different things. But you get the idea.
Open enrollment periods ensure that people sign up — and commit to — an insurance policy for the year and pay appropriate premiums. Companies can then spread costs more equitably among members and claims.
5. You’ve got more options than ever before.
Let’s say you want to buy some health insurance. Where do you start? That depends on the kind of coverage you want.
The ACA created a federal marketplace to make buying major medical insurance easier for consumers. Individual states have the option to create their own marketplaces (also called “exchanges”). As of March 2020, a dozen states and Washington, D.C. have their own marketplaces.
Federal and state exchanges:
- Offer a place to compare plans side by side
- Help people who qualify for programs like Medicaid and CHIP learn about their eligibility
- Make it possible for people who meet income requirements to get subsidies, in the form of advance tax credits, that lower monthly premiums
Obamacare doesn’t require every insurer to offer a plan on the public marketplace, either federal or state. You may find that some top insurers only sell a handful of plans on HealthCare.gov while reserving the rest for direct or private sales.
Federal and state marketplaces aren’t the only options for getting major medical coverage. You can also apply directly through an individual health insurance company; talk to an agent or broker who represents different companies; or use a private health insurance marketplace (like ours), staffed with remote agents who can help you find what you need.
6. Family plans can cover adult children.
If your offspring haven’t quite left the nest yet, you’re not alone.
Millennials, loosely defined as young adults between 25 and 40 years old, tend to stay at home longer than other, older generations. One Zillow report found that 22% of young adults live with their parents, up from just under 12% in 2001. Effects of the Great Recession, expensive housing and other economic factors keep young adults from branching out on their own.
The Affordable Care Act recognized that young adults sometimes need a helping hand when it comes to health insurance. Under Obamacare, your kids can stay on a family plan until they turn 26.
They don’t even have to live with you, either. In fact, your kid can be married and in his own house but still a member of the family health plan as long as he’s under 26. (How’s that for generous?)
7. The law expanded Medicaid.
Speaking of generous, the ACA included a boost for people with low incomes. Medicaid, a joint state and federal program that provides health insurance for the poor, can now cover a broader range of people with a slightly higher income cap. Under the federal ACA:
- The income cap jumped to 138% of the federal poverty level.
- Anyone who meets the income requirement qualifies for Medicaid. Before, only certain categories of low-income households could sign up. Now, individuals, younger people and others with low incomes may be able to enroll in a state Medicaid program.
- States have a federal funding match of 90% if they expand their Medicaid programs per Obamacare guidelines. That means the state only has to cover 10% of the funding for anyone who enrolls in a state Medicaid program under the expanded guidelines. (Current federal funding is about 57%.)
The ACA expanded Medicaid at the federal level, but a 2012 Supreme Court case ruled that states could choose to expand or not. To date, 37 states and D.C. have expanded their individual Medicaid programs.
In states that expanded Medicaid, enrollment grew by an average of just over 34% from 2013 to 2019. An extra 13 million people got health insurance thanks to changes in state Medicaid programs. As of April 2019, nationwide Medicaid enrollment tops 72 million people.
8. Medicare got a boost, too.
Medicaid covers people with low incomes. Medicare, often confused for Medicaid, primarily covers America’s seniors. Younger people with certain disabilities can also enroll, but Medicare was specifically designed for adults over age 65 who need health insurance.
Medicare has four parts:
- A (hospital coverage)
- B (medical coverage)
- C (a private version of Parts A and B together called Medicare Advantage)
- D (private prescription drug coverage)
The Affordable Care Act made several changes to the Medicare program, but one of the most notable changes came to Part D. This portion of Medicare covers prescription drugs. It’s private, meaning sold by commercial companies, and only available to people with Original Medicare (Parts A and B together).
Before the ACA changed this, Part D had what’s called a coverage gap or “donut hole.” Once you reached your plan’s limit on coverage, you were stuck in a grey area where you had to pay the full cost of your prescriptions until you hit the plan’s catastrophic limits.
Obamacare introduced subsidies to offset costs in the donut hole, phased in over a decade. As of 2020, the gap is “closed.” People who hit their Part D initial coverage limit now pay 25% of the cost of their medication until they reach the catastrophic coverage limit.
Other ACA changes to Medicare include provider payment reforms, a new income-related premium surcharge for Part D, a higher payroll taxes for high earners to fund the Medicare Hospital Trust Fund, and other administrative reforms designed to reduce waste in the program as a whole.
9. Obamacare made a bunch of changes you probably don’t realize.
When people say the Affordable Care Act made “sweeping changes” to the U.S. healthcare system, they’re not exagerrating. The law spans over 2,000 pages. And in those pages, there are rules and regulations that don’t get much airtime compared to the heavy-hitters like coverage for pre-existing conditions and Medicaid expansion.
Here are a few of the lesser-known provisions of Obamacare:
- Calorie counts on menus. If you’ve noticed that your favorite burger comes with a nauseating calorie count these days, thank the ACA. The health law requires food places — restaurants, fast food joints and even vending machines — with more than 20 locations to post calorie content. Some places started doing this before the rule was finalized. The FDA finally made it official in 2018.
- A push for electronic health records. In a world dominated by lightning-fast tech products, you’d think we’d all have access to a single electronic health record that follows us from doctor to doctor. That’s not the case, unfortunately, but it’s not without legislative effort. The ACA attempted to incentivize developers to make electronic health records more universal. So far, that dream hasn’t become reality on a grand scale.
- Time and space for nursing mothers at work. If you’re a working mother who wants to breastfeed, Obamacare supports you. The ACA requires employers to provide nursing rooms — separate from bathrooms — and adequate breaks to pump milk at work for up to a year following birth.
- Smoking cessation as preventive health.Trying to quit smoking? If you have a major medical plan, your policy should cover smoking cessation products as a preventive health benefit. And under the ACA, preventive services are covered without cost-sharing, meaning it won’t cost you anything out of pocket for things like patches and gum to help you quit.
10. Costs are lower for more people — but not everyone.
The Affordable Care Act sought to make health insurance both accessible and affordable. There’s still a debate over whether the law has achieved its primary objective: On one hand, more people have coverage than ever before. On the other, insurance still costs too much for millions of Americans.
Because the federal and state marketplaces offer subsidies to lower monthly premiums, more families can afford the cost of insurance.
Per data from the Centers for Medicare and Medicaid Services (CMS), which administers the federal marketplace, enrollment in HealthCare.gov and state-based exchange plans topped 11.4 million people in 2019. About 87% of people who buy plans on the marketplace qualify for subsidies.
CMS also reported that the average monthly cost of an individual plan on the marketplace before subsidies was $612 in 2019. After subsidies, it dropped to $87 a month. If you earn between 100% and 400% of the federal poverty limit, you qualify for these subsidies to reduce your premium costs.
But some people don’t fall into this income range. For people who earn too much, health insurance costs remain unaffordable.
Job-based plans cost more now, too. Over the last 10 years, premiums for employer family plans have jumped 54%. Annual deductibles for these plans have doubled in the same time period.
The CMS projects that annual healthcare spending will hit $6 trillion by 2027. Millions of American families still can’t afford coverage — or can afford the premiums but can’t afford to get care.
Where do we go from here?
However controversial Obamacare has been, support for the ACA has grown over the last 10 years. At the very least, fewer Republicans outright oppose the idea, especially when compared to the “Medicare for All” movement dominating 2020 election headlines.
What was once considered a shocking overhaul of our entire healthcare system — not to mention a hard line between Republicans and Democrats — is now less a divider and more a working point for fixing what’s still broken.
But we still have work to do.
Health insurance still costs too much for many Americans, as does healthcare itself. More people now have coverage, but that coverage can be costly. And in some cases, costly coverage might as well be no coverage.
Where do we go from here? That’s up to lawmakers and the voters who put them in office. In the meantime, you’ve got options for health insurance. Make sure you explore all of them.