Affordable Care Act Pros And Cons – What You Need To Know

Is the Affordable Care Act good for America? See how the Affordable Care Act Pros and Cons might affect you!

The Affordable Care Act (ACA), also known as Obamacare, came into effect in 2010.

The prime aim of this act was to provide affordable health insurance coverage for all Americans. The ACA was also designed to provide protection to consumers from insurance company tactics that are majorly designed to drive up patient costs or restrict care.

The ACA has benefitted the scores of Americans by providing them insurance coverage. Many of these people were unemployed or had low-paying jobs that were not enough for them to sustain. Some were unable to work because of a disability or family obligations. Others couldn’t get decent health insurance because of a pre-existing medical condition, such as a chronic disease.

Despite the positive outcomes, the ACA has been mired with controversies.

While conservatives raised objections to the tax increases and higher insurance premiums needed to pay for Obamacare, others in the healthcare industry are critical of the additional workload and costs placed on medical providers. They also think it may have negative effects on the quality of care.

As a result, there are frequent calls for the ACA to be repealed or overhauled.

How the ACA Is Structured

Initially, people were often confused if the Affordable Care Act and Obamacare are the same things. They are! Obamacare is a derisive term for the ACA coined by opponents of the law.

The initial “three-legged stool” approach of the ACA allows insurers to still make money while providing more comprehensive insurance coverage. The three pillars of the ACA as originally designed are:

  • Regulate insurers so they provide better coverage for more Americans, including those with preexisting conditions
  • Require everyone — especially healthy Americans — to purchase health insurance to spread out costs (this is known as the “individual mandate”)
  • Help low-income people afford health insurance through subsidies and a Medicaid expansion

The thought behind it 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 insurers do not face loss. Then, by helping low-income Americans with subsidies, more Americans can get health insurance than ever before.

However, in 2017, the Tax Cuts and Jobs Act put an end to the penalty for people who did not purchase health insurance. The order was effective beginning in 2019. The full impact of this is unclear but so far the healthcare system has remained functional.

Need help with understanding the ACA?

Your view regarding the pros and cons of the Patient Protection and Affordable Care Act might hinge on your political preferences and the part you believe the federal government should have in providing healthcare access for Americans.

Even over a decade after the ACA was first passed, Americans largely approve or disapprove of the ACA based on the party they support. According to a 2020 Gallup Survey, 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 make everyone agree on one viewpoint. One’s own priorities are likely to play a large role in how they weigh the benefits and drawbacks of the ACA. However, when asked about specific provisions, most Americans prefer certain aspects of the ACA over others.

The ACA is an unprecedented act of Congress, and it would take entire books to thoroughly review all of the impacts of the 900-page law, which has had a huge impact on America’s healthcare system.

If you have any doubts or questions about the ACA, we have compiled a list of the pros and cons of Obamacare, that are sure to clarify all your queries.

Feel free to take a look!

Pros of the ACA

1. Health insurance being available to larger segment of population

Within the first five years of the ACA, More than 16 million Americans obtained health insurance coverage. Young adults make up a large percentage of these newly insured people.

2. Affordable for many people

Insurance companies are now bound to spend at least 80 percent of insurance premiums on medical care and improvements. The ACA also aims to prevent insurers from making unreasonable rate increases.

Though insurance coverage isn’t entirely free, people now have a wider range of coverage options.

3. Preexisting health conditions are now also covered under the ACA

Before the ACA, a preexisting condition made it difficult for many people to get health insurance as most insurance companies wouldn’t cover treatment for these conditions because the illness or injury occurred before you were covered by their plans.

Under the ACA, you can’t be denied coverage because of a health problem that was there before you insured yourself.

4. No more limits on care

Prior to the ACA, at times people with chronic health problems ran out of insurance coverage as insurance companies set limits on the amount of money they would spend on an individual consumer.

Insurance companies can no longer limit the coverage they provide their customers.

5. More screenings being covered

The ACA covers many screenings and preventive services which have low copays or deductibles usually. The thought behind it is that with prevention you can avoid or delay major health problems later.

Healthier consumers lead to lower costs over time. Like diabetes screening and early treatment may help prevent costly and debilitating treatment later.

“The ACA is going to help all Americans have higher quality and less costly healthcare in the decades to come,” says Dr. Christopher Lillis, an internist in Virginia and a member of Doctors for America.

6. Expanded and inclusive Medicaid and Medicare

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The states that have chosen to expand their program, Medicaid coverage now includes uninsured Americans under 138% of the federal poverty level. This means that many Americans living below the federal poverty line can still obtain health insurance.

7. Dependents can stay under parents’ plan longer

Your children can be insured under your health plan until they are 26 years old.

8. Limits have been phased out

Limits on lifetime benefits have been completely banned and annual limits phased out. Though this does not include grandfathered plans.

Cons of the ACA

1. Higher premiums for many

As insurance companies now provide a wider range of benefits and cover people with preexisting conditions, this has caused premiums to rise for a lot of people, especially those who already had health insurance.

2. Uninsured to be fined

The ACA aims for people to be insured year-round. Initially, if you’re uninsured and didn’t obtain an exemption, you were bound to be fined. Recent events have changed this fine

Some people find it intrusive for the government to require health insurance. ACA supporters maintain that not having insurance passes your healthcare costs on to everyone else.

3. Taxes are being raised due to the ACA

Several new taxes including taxes on medical devices and pharmaceutical sales were passed into law to help pay for the ACA. Taxes were also increased for people with high incomes. Funding also comes from savings in Medicare payments.

The wealthy are helping to subsidize insurance for the poor.

On the other hand, some economists predict that in the long term, the ACA will help reduce the deficit and may eventually have a positive impact on the budget.

4. Enrollment day is still a pain

When the ACA website was first launched, technical issues made it difficult for people to enroll and led to delays and lower-than-expected signups.

Though fixed eventually, many consumers have found signing up for the right family or business coverage to be tricky. Also, in recent years, the enrollment period has also been shortened to between November 1 and December 15.

Many hospitals and public health agencies have set up programs to help guide consumers and business owners through the setup process. The ACA website also has sections explaining the procedures and available options.

5. Businesses are cutting employee hours to avoid covering employees

Businesses with 50 or more full-time employees are required to offer insurance or make payments to cover healthcare expenses for employees. By reducing hours, many businesses have been able to get by the 30-hour-per-week definition of a full-time employee.

Opponents of Obamacare opposed the ACA, saying that the legislation would destroy jobs. While the number of full-time jobs has gone up in recent years, there are reports of businesses cutting hours from employee schedules.

6. Tax penalties

While the federal penalty for the uninsured doesn’t exist now, some states are now enacting health insurance mandates of their own.

7. Shrinking networks

Many insurance companies made their provider networks smaller to cut costs while implementing ACA requirements. This left customers with fewer providers that are “in network.”

8. Shopping for coverage can be complicated

Shopping for coverage can be complicated with limited enrollment periods, difficulties with the websites, and more coverage options.

Payers’ Perspective

Health insurance companies know that the original strategic reasons for entering the insurance exchange market still hold to be true, assuming that CMS is able to get the website and the data transfers working soon. Companies that have Medicaid plans are also anticipating the Medicaid to evolve, and the enrollment problems to be resolved.

The problems in the initial stages with the rollout of the federal exchange still complicates payers’ strategy, business planning, and forecasts.

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Payers are well aware that they may need to adjust their expectations and future plans to some extent, but have little information from the federal government regarding it which makes their job difficult.

This situation is further aggravated by the uncertainty, such as how consumers will react to the new exchange plans, including their costs and choices. While their business dynamics are innately complex and vary from state to state, health insurers specializing in the Medicaid market are in a better position under the ACA, given the substantial increase in enrollees.

Due to facing the conundrum of an uncertain payer marketplace and deep payment cuts—to help pay for the cost of ACA—hospitals and health systems are anxious.

A decrease in the number of uninsured Americans will help trim uncompensated care costs, but it will generally not offset lower reimbursement from Medicare, Medicaid, and the new exchange plans along with a shift of patients from higher-paying private plans to lower-paying taxpayer-financed health plans.

Insurance companies are well aware that they may need to reconfigure their budgets to cover more Medicaid patients and fewer members with commercial plan coverage or with exchange-based coverage than was expected.

Hospitals in states notably, Wisconsin, Iowa, and Pennsylvania are seeking Medicaid reform waivers and hope to see those get approved and implemented soon. The waivers would help expand access to coverage.

Manufacturers’ Perspective

Pharmaceutical, biotechnology, and medical device companies vary considerably in their understanding of the implications of the ACA.

Some companies are fairly well-versed, but others have limited understanding of its implementation and consequences. Quite often it is harder for drug or device companies than, say, for insurance companies or for large healthcare providers, to understand the potential implications of the ACA on them due the effects of the ACA, being indirect and nonlinear.

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Indirect, because the ACA and changes in the marketplace are fundamentally transforming the economics, incentives, and decision-making of coverage, payment, and care delivery.

Nonlinear, because, in these times of unprecedented, polygonal change, the new policy and market spheres appear chaotic, unpredictable, or counterintuitive, and therefore defy traditional assessment.

Indeed these companies have a tough environment to make strategic, operational, or tactical decisions!

Implementation Lessons of the ACA

The Obama Administration gravely underestimated the resistance from states and the sheer magnitude of the task. The administration’s slow, opaque decision-making process hampered the state-run exchanges as well, and made life in state Medicaid agencies a night-mare to be dreaded.

But the states, by experience and temperament, are generally more adaptable and problem-solving oriented than the federal government. States with their own exchanges jumped in much earlier than CMS, making preliminary decisions, bringing on contractors, and pulling the pieces together as best they could.

Although unprecedented in its scope and complexity, the ACA as legislation deferred most of the decisions to federal agencies, especially CMS and the Internal Revenue Service.

The law was also poorly written in key areas and poorly thought-out. Few laws are truly self-implementing, but virtually everything in the ACA, from a political, regulatory, or technical perspective, requires countless decisions and an astonishing amount of work before it is implemented.

Did the ACA improve healthcare in the U.S.?

The ACA has primarily functioned as designed. At its simplest, the issue is that more and better coverage costs more money. If you believe that the federal government should help Americans get decent health insurance plans, then you likely approve of the ACA.

However, if you believe that the federal government should not play a role, then you may think that the ACA is meddling with the free market and raising taxes and premiums for people who could otherwise find health insurance on their own.

Many of the issues discussed in this article are extensively debated. For example, those in favor of keeping the ACA or instituting a single-payer healthcare system argue that it lowers the overall cost of healthcare and ultimately saves taxpayers money. Others who are opposed, argue that it increases costs and is an unaffordable venture. The U.S. healthcare system is extremely complicated and this article does not take a stance on either side.

The ACA – A Giant Social Experiment

The ACA is a giant social experiment with few precedents. It is impossible to predict precisely what will happen next with the implementation of the law, or how consumers and employers will respond in the post-ACA world.

It is easier to predict the behavior of health insurers and providers, as well as the overall impact on them, but this is still complex. Americans and the US media have a short attention span. Change happens rapidly, and the law is so complex, that few people or organizations have the patience to understand even parts of the ACA. The enrollment numbers in the first 3 weeks of December will be critical to assessing how well the federal exchange is working, as well as the response of the public to the repaired website.

The number of new Medicaid enrollees will likely remain higher than new enrollees in the subsidized exchange plans in the first 2 years. We know that this is the case of states that have state-run exchanges, and Medicaid enrollment increases will be especially high in the states with Medicaid expansion; but nationwide, there is every reason to believe that Medicaid enrollment will outpace the subsidized exchange enrollment. In addition to a massive jump in enrollment through expansion eligibility to millions of low-income adults in half of the states, Medicaid rolls will increase in every state from a streamlined eligibility and enrollment process mandated nationwide by the ACA.

Furthermore, Medicaid enrollment is year-round, not tied to an open enrollment period, and an easier, no-cost decision-making process for consumers, unlike the enrollment process in the exchanges. The enrollment in subsidized exchange plans could outpace the rise in Medicaid rolls if and when more small and midsize employers drop their current healthcare coverage. Sign-ups during January through March 2014, the second half of the initial open enrollment period, will be important to watch, when outreach and marketing efforts are expected to restart.

Under the special enrollment rules, many consumers will be able to sign up for exchange coverage after the open enrollment period, which ends on March 31, 2014, if they have a significant change in family or financial circumstances. However, that volume will not be nearly as large or as important as the exchange sign-up during the open enrollment period or the continuous, always-open Medicaid enrollment.

But volume by itself is not enough information to assess the ACA’s success. For that we will need to know, for example, the impact on the uninsured rate, the age and the health risk characteristics of those enrolled, the benefit design choices, the number of people losing individual or employer-sponsored coverage, and the effect of Medicaid expansion and streamlined Medicaid eligibility.

The law is also a moving target as a result of a series of Obama Administration decisions to delay enforcement of key ACA provisions, for a mixture of practical and political reasons.

Major provisions of the ACA, including the employer mandate and small employer exchanges in most states, are delayed until 2015, the start of the open enrollment period for 2015 has been shifted until after the November 2014 elections, states are encouraged to temporarily allow short-term renewal of insurance policies outlawed by the ACA, and CMS is proposing changes to how exchange plans are paid.

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Overall, most people have not yet experienced the effects, positive and negative, of the ACA. In terms of coverage and costs, the ACA creates a giant game of musical chairs, which has just begun. Every American will be affected by the ACA in some way.

The biggest winners are the uninsured, who are or will be newly covered through Medicaid or through federally subsidized exchange coverage. Some of the losers, including people facing higher premiums, are starting to feel the pain, but the main disadvantages of the ACA are yet to be experienced. The law is all about improving equity through the use of a maze of redistributive mechanisms. It will take time before this plays out.

The short experience with the ACA can only shed light on issues that should have been addressed a long time ago, but for which there was not an interested audience.

Looking ahead

The ACA is subject to changes every year. The legislation can be amended, and budget decisions can affect how it’s implemented. Changes in the healthcare field, along with changes to the political makeup of future presidential administrations and Congress, make it likely that the ACA will continue to change for years to come

John Otero

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.

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