FAQs About Obamacare—What's True & What's Not

Answers to the Questions About Controversial Aspects of Obamacare

Sorting out healthcare reform's war of words. Image © iStockphoto/Ken Brown

Healthcare reform by the Affordable Care Act has been extremely controversial. One side fears a government takeover of the healthcare system and a slippery slope toward socialism. The other side wants healthcare for everyone, regardless of their ability to pay. The combination of money, politics, and healthcare make the subject almost too hot to handle.

Let's put aside the name-calling and shed light on some of the more controversial aspects of the ACA with these frequently asked questions about healthcare reform.

Question: What's wrong with leaving things as they were?

Answer: Without reform, escalating healthcare costs would have become an unsustainably large burden on the country's economy.

In his March 1, 2010 CNBC interview, billionaire investor Warren Buffett compared that burden to a tapeworm, saying "everything we produce for export, everything we compete with . . . is bearing that cost, and it's a cost that the rest of the world isn't bearing."

The Institute of Medicine warned that both public coverage and employer-sponsored health insurance was being threatened by rising costs in its 2009 report, "America's Uninsured Crisis: Consequences for Health and Health Care."

And from an individual perspective, there were simply too many people who were unable to obtain health insurance prior to 2014 - either because they couldn't afford it, or because they had pre-existing conditions that made them uninsurable.

High risk pool coverage was available in many states for people with pre-existing conditions, but it was often priced above what consumers could afford. Only five states had guaranteed-issue individual market coverage prior to 2014. 

Question: Will there be healthcare rationing?

Answer: We already had healthcare rationing to some extent.

For example, insurers commonly require pre-authorization before planned procedures and hospitalizations, and this hasn't changed with the ACA. 

The ACA created an advisory panel, the Independent Payment Advisory Board, to propose ways to keep Medicare costs in check. But, since the IPAB isn't allowed to propose changes that would ration care, raise premiums, or increase beneficiary cost sharing, it's hard to see this as a path to new rationing.

Question: Are there death panels?

Answer: No, there are no death panels. There is nothing in the ACA that will force you into hospice care against your will, or mandate euthanasia.

Question: Is this socialized medicine?

Answer: The ACA did not create a system of socialized medicine. Actually, some parts of our healthcare system, like military medicine, have been socialized for years. Those aspects have remained socialized. But the ACA didn't add any additional socialized medicine systems. Under the ACA, most care is provided by private companies, just as it was before.

Question: Will there be long waits to see the doctor or for non-emergency surgeries like I've heard about in other countries?

Answer: Maybe. There is concern that the current number of physicians isn't sufficient to provide prompt care to the increased number of people who'll seek care over the coming decade.

The Association of American Medical Colleges has predicted that by 2025, there could be a shortage of up to 31,100 primary care physicians, and up to 63,700 specialists.

In some parts of the country, it can be hard to find a doctor who accepts Medicaid. The influx of people who have been added to the Medicaid system over the last few years has increased that problem in some areas. The ACA has added about 11 million people to Medicaid who became newly-eligible for Medicaid as a result of the law's expansion of coverage, and about three million additional people who were already eligible for Medicaid prior to 2014, but not enrolled.

Question: Will the quality of my healthcare go down?

Answer: The ACA has multiple provisions to improve patient safety and increase the quality of healthcare. You'll find a summary of those provisions and a discussion of how some states are implementing them in this report by the National Academy for State Health Policy.

There's also an increasing push towards value-based payment systems, as opposed to traditional fee-for-service payment systems. In other words, doctors and hospitals are increasingly being paid for care that keeps patients healthy and out of the hospital, rather than simply being paid for each procedure they perform. 

How you perceive the quality of your own healthcare may differ from how your doctor or the government does. The most important thing you can do to ensure you get the kind of quality healthcare you want is to become an empowered patient.

Question: Are my taxes going up to pay for other people's health insurance?

Answer: There are several tax provisions in the ACA that might affect you. If you're single and earn over $200,000 or married, together earning over $250,000, your taxes have increased. Also, some tax deductions have decreased which might increase your overall tax burden.

There's also a penalty, which the Supreme Court considers a tax, for going without health insurance after January 1, 2014. The penalty started out relatively small in 2014, but has ramped up considerably since then.

And, if you own a business with 50 or more full-time-equivalent employees, you'll pay more taxes (the employer shared responsibility provision penalty) if you don't provide your employees with affordable health insurance.

Question: Am I being forced to buy health insurance?

Answer: You aren't technically forced to buy health insurance, but you may be penalized if you don't. The Affordable Care Act's individual mandate imposes a financial penalty on people who aren't insured, unless they're exempt from the penalty. The majority of the uninsured population qualify for exemptions from the penalty; the penalty really only applies if you could have afforded and accessed health insurance, but chose not to do so.

The penalty increased significantly each year from 2014 to 2016, although increases in future years will only be based on inflation. There are two methods of calculating the penalty (flat rate or a percentage of income), and the assessed penalty is always whichever one results in a higher penalty amount. After 2016, the percentage of income penalty will remain at 2.5 percent, but the flat-rate penalty will ratchet up based on inflation.

Read more about the penalty, called the shared responsibility payment, and find out if you might be exempt. If you're not exempt, learn how much your penalty will be.

Question: I run a business; am I forced to buy health insurance for my employees?

Answer: A business with 50 or more full-time-equivalent employees faces tax penalties if it doesn't provide affordable insurance for those employees. But, it may share the burden of the premium cost with the employee. Guidelines define how much the premium can cost the employee, and what type of coverage must be provided to avoid penalties.

Businesses with fewer than 50 full-time-equivalent employees aren't penalized for not providing insurance. Some small businesses that want to provide health insurance to their employees may be eligible for tax credits.

Question: I like the health insurance I have now, and I've had it since before the ACA took effect. Will healthcare reform force me to give up my current insurance?

Answer: Probably, yes. But that might end up being a business decision on the part of your health insurance company, your employer, or yourself.

Depending on when you (or your employer) purchased the health insurance plan you have now, it may be grandfathered or it may be grandmothered.

If it's grandmothered (ie, it was purchased after March 23, 2010, but before the exchanges opened in October 2013), it can remain in place until December 31, 2017 at the latest; there are 35 states where grandmothered plans still exist, and most of them have agreed to let those plans remain in force until the end of 2017.

If the plan is grandfathered (which means you or your employer had already purchased the plan when the ACA was signed into law on March 23, 2010, and it's remained substantially unchanged since then), it can technically remain in place indefinitely, as long as it continues to be substantially unchanged. But health plans can opt to terminate grandfathered plans, employers can drop grandfathered plans in favor of new coverage, and individuals might find that grandfathered plans eventually become prohibitively exepensive, and opt to switch to a newer plan.

As time goes by, there are fewer and fewer remaining grandmothered and grandfathered plans. All grandmothered plans will be gone by the start of 2018, and grandfathered plans will steadily disappear as individuals, employers, and health plans opt to switch to ACA-compliant coverage instead.

It's important to note that health insurance carriers have always utilized "sunsetting" to do away with older plan designs and implement new ones. They would simply close a plan to new enrollees, and start offering a new plan design instead. Over time, the rates for the remaining enrollees on the sunset plan would increase to the point that the plan was no longer attractive, and enrollees would switch to other coverage instead. The same basic concept is currently in effect for grandfathered and grandmothered plans, since these plans have not been available to new enrollees since 2010 and 2013, respectively.

Question: Why should I have to pay more so someone else can have health insurance?

Answer: Arguments against paying more so someone else can have health insurance differ, but many can be summed up by this quote from business philosopher Jim Rohn, "It can be dangerous to weaken the strong in our attempts to strengthen the weak."

While there are also many arguments for why you should pay for someone else's health insurance, it's not clear that you'll pay more in the long run under the ACA than you would have paid without healthcare reform.

What is clear is that the path we were on without reform was unsustainable. If the ACA can rein in healthcare inflation - which is currently the major obstacle - then everyone's healthcare will eventually be more affordable.

It's getting more difficult for the Congressional Budget Office (CBO) to accurately compare how things are now versus how they would have been without the ACA, since several years of water have gone under the bridge at this point. But the CBO originally predicted that the ACA would decrease the budget deficit over time. If that prediction comes true, things will be better for all concerned.

Sources:

Affordable Care Act, Section 3403. Accessed 5/30/16.

Cornell University Law School, Legal Information Institute, National Federation of Independent Business v. Sebelius, Secretary of Health and Human Services. Accessed 5/30/16.

Cornell Univerity Law School, Legal Information Instituate, 26 CFR 5000A, Reguirement to Maintain Minimum Essential Coverage. Accessed 5/30/16.

Internal Revenue Code, Section 4980H. Accessed 5/30/16.

Internal Revenue Service, Affordable Care Act Provisions. Accessed 5/30/16.

Kaiser Family Foundation, State Health Facts, Individual Market Guaranteed Issue, Accessed 5/30/16.

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