Obamacare – What is it?

Americans are about to be dragged through a debate about Obamacare as the new Trump Administration prepares to “repeal and replace” it.  It’s a debate that most Americans are really not ready to have because 6 years after the law passed, many aren’t really sure what Obamacare is.

This hit home for me a few weeks ago as I was speaking with a Republican friend. My friend said he thought Obamacare needed to be replaced with something that required everyone to have insurance. I was shocked and left wondering how in the world my very educated friend did not realize he just said he wanted to replace Obamacare with something that is essentially Obamacare.

My friend is not alone, PE Trump demonstrated in October he might not be clear about what Obamacare is.

Before Americans watch the new President and Congress argue over repeal and replace, we should know the basics of Obamacare including what it is, what is working and what’s not, who’s benefiting and who will gain and who will lose when Obamacare is repealed.  If we don’t know these basics, how will we know if whatever the replacement is is likely to be better or worse?

Over the next few weeks, I’ll write a few short articles to help explain Obamacare the good, the bad and the ugly.  I’ll start with what is the thing called Obamacare.

  1. Obamacare refers to the Patient Protection Affordable Care Act, a complex bill that impacts many different parts of health insurance.
  2. At its core, Obamacare simply requires all Americans to have health insurance. Health insurance can be employer provided, purchased through private health insurance brokers, be provided through the federal government Medicare program, be provided through state government Medicaid programs or purchased through federal or state health insurance exchanges. Some commentators insist only insurance purchased via an exchange is Obamacare. It’s not that easy though because the law includes a bunch of other things.
  3. Individuals who are not covered by health insurance are assessed a tax.
  4. Companies that employ more than 50 people are required to provide health insurance; tax credit are provided to offset the cost.
  5. Obamacare made it illegal for insurance companies to deny coverage based on preexisting conditions or increase your premiums if you do get sick.  It also bans “frivolous cancellations” for errors made on applications. (Insurance companies used to use this practice to deny coverage after people got sick).
  6. Lifetime and annual coverage limits were eliminated. In the past, policies had lifetime coverage limits that were often exceed by patients with chronic illness like cancer or other catastrophic health emergencies.
  7. All insurance plans are now required to cover ten essential health benefits (mental health and addiction, chronic diseases, maternity and newborn care, outpatient care, emergency health care, hospitalization, prescription drugs, rehabilitation, laboratory testing and services, preventative care(check-ups, cancer screening etc. and care for chronic conditions like asthma.)
  8. Children up to age 26 can be covered by their parents’ insurance.
  9. Tax credit for middle class earners (below 400% of poverty level) are eligible for tax credits for purchasing health insurance.(Federal poverty limit is $11,880 for singles and $24,300 for family of four).
  10. Medicaid was expanded so that anyone making 138% of the poverty level is eligible for Medicaid coverage.  (Not all states have opted in to the Medicaid portion; 19 states fall in this category.)
  11. Medicare drug coverage(Part D) was expanded.
  12. The costs of Obamacare are covered in part by an increase in the Medicare taxes assessed to high income individuals(>$200k) and families(>$250k).
  13. Other taxes that were imposed to help pay for Obamacare include:
    • Excise tax on medical device manufactures and importers.
    • Pharmaceutical companies will pay an additional $84.8 billion over 10 years to pay for the changes to Medicare.
    • Beginning in 2020, insurance companies will be assessed a 40% tax on health care plans that are excessive ($10.2k for individuals and $27.5k for families)

That’s it in a nutshell, the basics of Obamacare.

The next article will cover what about the law is working as planned and who is benefiting from Obamacare.

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