The Affordable is Neither as Great as You Think, Nor as Awful as You Think

Affordable Health Care Act

This in-depth story about the Affordable Health Care Act discusses where people have been helped in terms of finding affordable health insurance and where people have been hurt. It provides facts and allows the reader to formulate an opinion.

When the Affordable Care Act was signed into law on March 23rd, 2010, not one single person knew how the legislation would affect all 310 million American citizens. Left-wingers believed the law would close the uninsured gap of 50 million Americans, while conservatives believed the law would cause the 2nd Great Depression. Neither was even close to accurate.

4 years later we have a pretty good idea of who the law has allowed to prosper and who is uncomfortable. Simply put, the law helps individuals that are not offered health insurance through their employer. It also helps low-income households. The Affordable Care Act hurts higher-income households and individuals that do not qualify for subsidies, which represents about 80% of the population.

Affordable Care Act neither insure-all nor kill-all law

First off, the Affordable Care Act, or infamously known as Obamacare, is neither an insure-all nor a kill-all law. It was very specific in its origin of lowering the uninsured rate in America. That has been accomplished, though with a caveat. The uninsured rate in America was around 16% when the Affordable Care Act was passed 4 years ago. As of May 2014, 2 months after the initial enrollment period ended in March, the uninsured rate has dropped about 1%-1.5%. There is no getting around that number. That is a fact. Now, if you are a democrat, that number denotes a significant drop in the uninsured rate. If you are a Republican, that number signifies a monumental failure as lowering the uninsured rate. So who is correct? The answer is both and neither.

Approximately 8 million Americans signed up for health insurance between October 1st, 2013 and April 15th, 2014. About 80% of these individual were able to qualify for subsidies, or tax credits that lower insurance premiums. The problem with these subsidies is that you have to meet certain criteria in order to qualify:

  1. You must not be offered “affordable” health insurance through your employer or any other federal program.
  2. You must file a tax return.
  3. You must meet income requirements.

If you do not meet these three requirements you are out of luck. There is no other way around it.

As written in the Affordable Care Act, the closer your income is to the Federal Poverty Level, the more of a subsidy you will receive. You could qualify for a health insurance plan that costs you $.01 per month if your income is low enough. Conversely, if you are closer to 400% of the Federal Poverty Level, you would receive virtually a $0 tax credit. To me this goes against the fabric of capitalistic principles. The law encourages individuals to make less money and work less hours. Therefore, businesses also suffer because employees will, more or less, “get a raise” when they stop paying money out of their pocket for health insurance each month because the government foots the bill.

Doctors, hospitals and clinics have come to realize that the reimbursement rates for individuals insured through are below Medicaid levels. What does this mean? Doctors don’t get paid by these plans. I will guarantee you know at least 1 person who has been told by their doctor that they do not accept Obamacare. That is because Obamacare will not pay that doctor the amount the doctor requires in order to make a living.


Insurance companies don't always act according moral or legal law

Second, insurance companies have always been profit-mongers. I’m ok with that. They are private companies that are operated by private citizens. This is the essence of capitalism. However, many times, health insurance companies do not act according to moral or sometimes legal law. What the Affordable Care Act tried to do was force insurance companies to insure every single person that wanted to apply, regardless of health condition. Before Obamacare was implemented health insurance premiums were already outrageously high. The astonishing thing is that the pool of insureds was essentially relatively healthy people for the most part.

If you had a major pre-existing condition you were either declined or issued an exclusion so the insurance company would not have to insure you.

Insurance companies were required to accept any and all takers as of January 1st, 2014 - that man with cancer, that woman needing a triple bypass, that child needing a lung transplant. Personally, I believe this was a good thing for American citizens. However, insurance were infiltrated by a mass of unhealthy individuals needing services immediately. This overwhelmed insurance companies into a position they had never experienced. They now had to insure these people who were paying $12/month (since the government will eventually cover the rest) for health insurance with a $500 deductible needing a heart surgery that would cost $100,000. This means the insurance company must cover $99,500 in some cases before the premium has even been paid. You do the math and determine if you think premiums will decrease by $2,000 per year for the “average” family like the President mentioned during campaign season.

So who does the Affordable Care Act help? The Affordable Care Act undoubtedly helps individuals with high dollar claims, pre-existing conditions, low incomes, and individuals whose job does not offer health insurance or offers unaffordable health insurance. The Affordable Care Act also helps county hospitals that are required to accept patients with and without insurance. Some insurance companies are also going to profit from the law.

As stated earlier in this post, individuals with pre-existing conditions will have no problem getting health insurance. The premiums may be high, but paying $600 per month as opposed to $75,000 for a surgery is certainly worth the expense. Not only are insurance companies required to accept any and all citizens, they also must cover any medical bills after the individual has paid $6,350 out of his or her own pocket. This limits the liability of the insured to a sustainable number.

It's affordable for individuals with lower income

Third, individuals with lower incomes are at the heartbeat of the law. Individuals on disability and social security, individuals with low-paying jobs pay the least for their health insurance. The lower your income, the more of a tax credit, and thus, lower premium you have to pay. This allows individuals who need expensive procedures to have access to the care that they need when they need it. The problem here is that many states have refused to expand their Medicaid programs to include adults. This means that if your income is lower than the Federal Poverty Level, you do not have access to Medicaid nor do you have access to tax credits. Your only option would be to pay full price for a health insurance plan, which, of course, would be unaffordable.

Conclusively, this is not an exhaustive list of people the Affordable Care Act hurts and helps, but it gives you a better understanding that the Affordable Care is not the worst piece of legislation ever written, nor should it even be considered “good legislation”. We will see how the Affordable Care Act will play out over time, but as it stands right now, we have too small of a sample size to judge.

Written by John Claborn of The Claborn Agency, Inc.