Understanding the Affordable Care Act (ACA) and Why Medicare For All is Still Needed
Key parts of the Affordable Care Act (ACA), most of which are phased in by 2014:
- Individual mandate. Anyone who currently has no health insurance, i.e. through their employer or covered by a government-funded program like Medicare, Medicaid, or the VA, will be required to buy private insurance. Failure to comply will result in a tax (as redefined by the Supreme Court) amounting to $695 a year or 2.5 percent of an individual’s income, whichever is greater. Subsidies are supposed to be provided for people with incomes of up to 400 percent above the poverty line to buy insurance. New state health insurance exchanges will be set up to offer choices.
- Medicaid expansion. The ACA provides for a substantial expansion of Medicaid for people for those with incomes up to 133 percent above the poverty line, a provision accounting for more than half of the additional people who will now have health coverage. But with a big caveat. The court allowed states opposed to the Medicaid expansion to opt out. A number of states are threatening to do so.
- Insurance reforms. The law bars some of the most notorious insurance abuses, including denying coverage because of pre-existing conditions, recisions (dropping coverage when you become sick), and annual and lifetime caps on coverage. Insurers are also supposed to provide rebates to consumers if they spend more than 20 percent of their revenue on administrative costs.
- Young adults. Permitting young adults up to age 26 to remain on their parent’s health plan, a provision already in effect.
- “Donut hole.” The Bush administration program of prescription drug coverage for Medicare recipients through a private supplemental program left a huge coverage gap with large out of pocket costs for seniors. The ACA reduces the gap, by about 40 percent, which has produced important savings for millions of seniors, but does not eliminate it entirely.
- Community health. The law provides for significant increases in funding for community health centers, one of the best provisions of all added late in the Congressional debate at the insistence of Sen. Bernie Sanders
- Preventive care. Insurance plans will be required to include preventative care (i.e. mammograms, vaccinations, colonoscopies, physicals) with no co-pay, by 2018. Medicare will now include an annual physical and no co-pays for preventive services.
- Small businesses. Small businesses, which pay far more than big companies if they offer health benefits, will get tax credits of up to 50% of the cost of premiums for offering health insurance to their workers, a provision already in effect.
Where the law falls short:
- No relief on costs. Insurance companies, drug companies, and hospitals will still largely be able to charge what they want. Restrictions on premium rate increases and out of pocket costs are limited and will likely be ineffective. The probable result —a continuation of bankruptcies linked to high medical bills, and many people, including those forced to buy insurance, skipping needed care because of high out of pocket costs
- Insurance denials. Insurance companies will still be able to deny medical treatment, diagnostic procedures, and referrals, citing such excuses as the care is “experimental,” or “not medically justified.” They will be able to dictate the order of tests and course of treatment. The recourses for patients will remain weak.
- Not universal. Before the court decision, the non-partisan Congressional Budget Office estimated up to 27 million people would be left without health coverage under the ACA, mostly people who will still not be able to afford to buy private insurance. However, the court decision permitting states to reject the Medicaid expansion could cause the number left out to jump by as much as several million more. The principle of “all the healthcare you can afford” remains in effect, as the insurance market is divided into multiple risk pools and multiple plans offering different levels of coverage based on price.
- Insurance loopholes. Insurance companies spend a lot of money on lawyers and claims adjustors who will be experts at finding loopholes in the new crackdowns on insurance abuses, for example, creating new marketing techniques to cherry-pick who they cover despite the ban on denials for people with pre-existing conditions. The law also permits insurers to charge more based on age and for those who fail "wellness" programs because they have diabetes, high blood pressure, high cholesterol readings, or other medical conditions. Further insurers will continue to be able to rescind coverage due to "fraud or intentional misrepresentation" - the main pretext they use now.
- Tax on health benefits. For the first time, the law will tax health benefits beginning in 2018. The main target is comprehensive coverage. The inevitable result will be fewer employers offering good health benefits, and far more people pushed into plans with reduced coverage and significantly higher co-pays, deductibles, and other large out-of-pocket costs.
- Eroding RN practice. The law promotes IT systems in healthcare many of which are wasteful and have been used by many employers to erode RN clinical judgment, and promotes dubious standardized protocols and other efficiency measures. Budget pressures will drive these delivery system changes, under the guise of “improving quality.” The law also encourages the use of dubious “patient satisfaction” schemes such as scripting and rounding that typically undermine nursing practice, by linking them to hospital reimbursements. For more on what’s wrong with these schemes, see RN magazine (issue date?)
- The windfall. Billions of additional profits for insurance companies – through the individual mandate and taxpayer funded subsidies to buy private insurance – the drug companies – whose support for the ACA was negotiated by blocking the ability of the federal government to negotiate bulk purchasing discounts – and hospitals – which will get millions of new customers and higher reimbursements. All of which will further strengthen a healthcare system already too focused on profits rather than patient need.
Visit our Medicare for All page for more information.