Affordable Care Act (ACA)

The Affordable Care Act (ACA)

The Affordable Care Act – typically referred to as “Obama Care” – is widely considered President Obama’s signature piece of legislation passed during his administration. Signed into law on March 23rd, 2010, just 26 months after Obama took office, the ACA was the first legislation that mandated health coverage  (the “individual mandate”) and established federal oversight of health insurance policies.

Broadly speaking, the ACA sought to achieve four goals:

  1. Determine a standard of preventative and quality health care through Delivery System Reform
  2. Lower the cost of health care
  3. Provide consumer protection in the health care market place (protections against discrimination, fraud, waste, non-transparent and non-competitive pricing, etc.)
  4. Provide universal access to health coverage through competitive exchanges.

According to US News the 10 best parts of ACA are:

1. Goodbye doughnut hole. Medicare drug plans (Part D of Medicare) stop providing insurance to people after their claims for covered drugs hit a certain level ($2,970 in 2013), and coverage doesn’t resume until spending hits another level ($4,750 in 2013). Health care reform is closing this doughnut hole in annual stages, and it will be totally closed by 2020. Savings to Medicare beneficiaries will be in the tens of billions of dollars.

2. Free Medicare preventive services. Health care reform greatly expanded the menu of free preventive services to Medicare consumers.

3. Free preventive services to all women. Health insurance plans have added eight women’s health benefits because of the law, in areas including breastfeeding, contraception, domestic violence, gestational diabetes, HIV screening and counseling, sexual diseases and wellness visits. These benefits are free, meaning they involve no co-payment or co-insurance, and women don’t need to meet their plan deductibles to use these free services.

4. Pre-existing conditions. Beginning in 2014, no one can be denied health insurance because of a pre-existing medical condition.

5. Premium equity. Insurers can’t gouge people with pre-existing conditions by forcing them to pay unreasonably high premiums. The law also limits insurers’ ability to impose age-related premium increases for private coverage.

6. End of pre-existing restrictions on children’s access to health insurance. The law has ended insurance denials based on pre-existing conditions for the roughly 20 million children under age 19.

7. Adult dependent insurance coverage. Adult children up to age 26 can now continue to get health insurance on their parent’s policies.

8. Insurance payout limits. The law will end lifetime limits on insurance payouts. It also has been phasing out annual coverage limits, and these will be completely outlawed for insurance plans taking effect next year.

9. Minimum medical loss ratio for insurers. Health insurers must spend at least 85 percent of their premium dollars on health care (80 percent for smaller group plans) or rebate shortfalls to consumers.

10. New consumer health coverage reports. Consumers have begun receiving a standardized report explaining their health insurance. This seemingly modest accomplishment is actually a big deal. For the first time, different health insurance plans have to present their coverage details in the same format, using the same language. Consumers can now accurately compare different health insurance plans.

Failures of ACA

One failure when passing the Affordable Care Act was not including the Public Option, a government-run health insurance agency which would compete with other private health insurance companies.  This was originally proposed but was dropped by opposition from Republicans and Senator Joe Lieberman.

Although the ACA increased healthcare rights and coverage they could do little as private Health Insurance companies increased rates dramatically after the ACA denied them the ability to turn away sick patients.  Private health insurance overhead costs (profits, admin, advertising, etc) are on average from 12 to 22.5% as compare to Medicare which is around 2%.

In addition to failing to regulate private health insurance companies the ACA failed to regulate the Pharmaceutical companies as well.  The ACA barely passed Congress.  The Obama Administration choose to alley with the Pharmaceutical companies to get the ACA passed as a first step and planned on working on Pharmaceutical regulations during the next steps which never happened in large part to a GOP obstructionist congress.  The drug companies remained largely unregulated. They can set their own prices. There are no restrictions on profit margins. And there is very little transparency into the pricing process.  And the prices have soared.  For the last 3 years prescription drug prices have increased by at least 10% each year.  Unregulated Pharmaceuticalcompanies have gotten so bad that in December of 2016, twenty state attorneys general filed a lawsuit on Thursday against several pharmaceutical companies, accusing them of entering into “numerous illegal conspiracies” to fix generic drug prices at consumers’ expense.

Conservatives Political Weapon

The rising premiums and drug prices associated with the ACA became a political weapon for conservatives.  Since the inception of the bill, the reactions of Conservative lawmakers have ranged from skepticism to outrage – so much so that repealing the ACA became a centerpiece of the 2016 Republican presidential primary and the general election. Donald Trump ran on a platform that he would repeal and replace the bill “with something fantastic” if elected.

One of the reasons the GOP oppose the ACA is much of the ACA is funded by new taxes on the upper class.  In total, the immediate repeal of the Obamacare taxes will amount to a $350 billion tax cut for the richest 1% of taxpayers over the next ten years.

The Republicans have adopted a “repeal and delay” strategy to replace the ACA through the budget reconciliation process.  Both sentate and House passed budget resolutions to remove certain parts of the ACA with only needing a simple majority to avoid a filibuster.

According to Urban Institute,

“Since only components of the law with federal budget implications can be changed through reconciliation, this approach would permit elimination of the Medicaid expansion, the federal financial assistance for Marketplace coverage (premium tax credits and cost-sharing reductions), and the individual and employer mandates; it would leave the insurance market reforms (including the nongroup market’s guaranteed issue, prohibition on preexisting condition exclusions, modified community rating, essential health benefit requirements, and actuarial value standards) in place. There is currently no consensus around alternative health policies to enact as the ACA is repealed; consequently, partial repeal via reconciliation without replacement is possible and merits analysis.”

According to a Washington Post Article,

“The biggest and most definitive study of what happens to death rates when Medicaid coverage is expanded, published in the New England Journal of Medicine, found that for every 455 people who gained coverage across several states, one life was saved per year. Applying that figure to even a conservative estimate of 20 million losing coverage in the event of an ACA repeal yields an estimate of 43,956 deaths annually.”

Check out the Full Impact of the ACA Repeal according to the Urban Institute

GOP First Fail Attempt at Repeal

In March of 2017, with the GOP control Congress and presidency, GOP attempted to push through ACA repeal legislation but could not draft a bill that could win majority support among Republicans.

According to a NY Times article,

“The Republican bill would have repealed tax penalties for people without health insurance, rolled back federal insurance standards, reduced subsidies for the purchase of private insurance and set new limits on spending for Medicaid, the federal-state program that covers more than 70 million low-income people. The bill would have repealed hundreds of billions of dollars in taxes imposed by the Affordable Care Act and would also have cut off federal funds to Planned Parenthood for one year”

The bill also removed requirements that insurance plans cover essential health benefits such as emergency services, maternity care, mental health care, substance abuse treatment and prescription drugs.

Trump has vowed to continue to fight to repeal ACA.

Learn more about the GOP healthcare strategies at this clip


The Fiscal Responsibility Myth

A common misconception about repealing the ACA is it’s a fiscal responsible strategy.  By not federally subsidizing private insurance healthcare coverage and funding a $800 billion Medicaid extension the US can save a lot of money.  The reality is the US not only doesn’t save any money by removing people’s access to healthcare but often end up paying more.

The Federal law, “The Emergency Medical Treatment and Active Labor Act (EMTALA)“, or the “Anti-Dumping” law, requires anyone coming to an emergency department to be stabilized and treated, regardless of their insurance status or ability to pay.  But since its enactment in 1986 this law has remained an unfunded mandate.  Hospitals can’t turn away patients in need from their emergency rooms but they aren’t guarantee to get reimbursed for treatment.

People who are uninsured, usually working poor who can’t afford health insurance but make too much to qualify for Medicaid or Medicare, still need their healthcare paid for when they end up in the emergrency room.  These costs are often paid for by:

  • non-profit or state hospitals who in order to pay the costs often have to
  • state programs, paid by state taxes, often compensate full or partial costs of treatment

Without the ACA healthcare coverage, healthcare for the uninsured often is more expensive with more emergency room costs and more dire health situations, that could have been avoided with regular access to healthcare, including preventative care, provided by the ACA.  Currently the ACA is covering much of these costs by extending healthcare coverage to 10s of millions of normally uninsured people.  This coverage is mainly paid for at the federal level with new taxes on capital gains and the upper class.  If the ACA is repealed these costs will go back to being absorbed by hospitals and the middle class at the state level.

One of the main purposes of the ACA Repeal bills is to give huge tax breaks to the upper class, while transferring more of the uninsured costs indirectly to state funded programs and hospitals.


Learn More

Urban Institute: Implications of Partial Repeal of the ACA through Reconciliation

Morning Consult: Why Prescription Drugs Aren’t Part of Obamacare

Time: Prescription Drug Prices in America Are Rising Like No Other Industry

IPA: Medicare’s 50 Years of Low Overhead vs. ACA’s Increasing Bureaucratic Bloat, “Merger Mania”

NY Times: In Major Defeat for Trump, Push to Repeal Health Law Fails


Follow Campaign

Healthcare Now

Families USA

If you want to resist the “repeal and delay” replacement of the ACA, here are a few things you can do right now:

  1. Call your Senator – you can find their contact information here.
  2. If you’ve benefited in any way from the ACA, and you would like it to be part of the narrative, share your story.
  3. Sign a petition. There are many out there, here is one you can start with.