Benefits of Obamacare
How the ACA's Benefits Lower Health Care Costs
Obamacare has a lot of benefits that people now take for granted. These benefits are designed to save you money and lower U.S. health care costs. In 2010, Congressional leaders realized that the cost of Medicare, Medicaid, and employee health benefits was eating up the federal budget. They agreed that reforming health care was a priority.
Obamacare's Three Strategies
Obamacare had three strategies to lower health care costs.
- The ACA makes health insurance affordable by providing subsidies
- Obamacare emphasizes preventive care
- The ACA legislation improved how health care itself is delivered
The Affordable Care Act's three strategies means more people can get treatment before they need expensive emergency room care.
Why is preventive care so crucial? A day in the hospital cost $2,517 on average in 2018. Most people assume their insurance pays most of this. Some may be unprepared to pay a high deductible. But before the ACA, they could also get hit with another bill. Many found out their plans had a low maximum. They were responsible for any costs above that.
Once a patient declared bankruptcy, the hospital had to declare a loss on any unpaid treatment. To make up the profit, it must pass this cost onto everyone else.
Obamacare's Impact on Bankruptcy
Obamacare reduced the number of bankruptcy filings. In 2010, 1.5 million people filed. That dropped to 770,846 by 2016. The ACA forced insurance companies to cover all costs by eliminating annual and lifetime limits. That reduced unexpected catastrophic costs for individuals.
Obamacare's strategy has been working to slow the increase of health care costs.
From 1990 through 2018, the highest rate of health spending growth occurred in 2002 at 9.6%. This high growth rate followed a steady growth of 6.6 and 8.5% in 2000 and 2001, respectively. After the exchanges opened in 2014, spending on health care rose more slowly. It grew by 5.2% in 2014 and 5.8% in 2015.
In 2018, a Health Affairs study found states that expanded Medicaid saw 40% increase in the number of prescriptions filled for diabetes drugs. States that didn’t expand Medicaid expansion saw no increase.
Lower health care costs are one reason why the ACA was projected to reduce the deficit by $143 billion over its first 10 years. If health care is less expensive, so is Medicare and Medicaid. Obamacare also shifted cost burdens to health care providers and pharmaceutical companies. Last but not least, it raised taxes on those earning at least $200,000 a year. Those taxes would end if Obamacare were repealed, thus adding to the debt.
Make Insurance Affordable
The first of Obamacare's three strategies was to make health insurance more affordable. It did this by offering tax credits, setting up insurance exchanges, and allowing children to go on their parents' plan. It also eliminated the "Part D" prescription drug coverage "doughnut hole" and offered a small business tax credit.
The ACA provides tax credits for insurance to the middle class, those whose incomes fall between 100% and 400% of the poverty level. It limits out-of-pocket costs to $8,150 for an individual plan and $16,300 for a family plan in 2020, and $8,550 for an individual plan and $17,100 for a family plan in 2021. It expands Medicaid to 138% of the federal poverty level and provides this coverage to adults without children for the first time.
In 2014, states were required to set up insurance exchanges or use the federal government's exchange to make it easier to shop for insurance plans.
You can use the exchanges to compare prices and purchase health insurance online. You can also compare doctors, hospitals, and other providers in your area. Make sure you know how to get Obamacare. Each year, the enrollment period starts in November.
Add Children to Parents' Plans
Under the ACA, parents are allowed to add their children up to age 26 on their plans. That lowers costs for everyone else by adding the premiums from these relatively healthy people to insurance company revenues.
Eliminate Part D "Doughnut Hole"
The ACA eliminated the Medicare Part D “doughnut hole” in 2020. This benefit was phased in over time. It gave seniors a 55% discount on prescription drugs and 42% for generic medicines in 2016. That amount increased until they only paid 25% in 2020.
Small Business Health Care Tax Credit
The Small Business Health Care Tax Credit benefits employers with fewer than 25 full-time equivalent employees. Small businesses get a tax credit worth up to 50% of their contribution to employees’ health insurance. Non-profits receive a 35% credit.
ACA Emphasizes Prevention
The ACA emphasis on prevention is critical in cutting health care costs for the nation. Here's how:
10 Essential Benefits
The ACA requires all insurance plans to cover the following 10 essential health benefits.
- Preventive and wellness visits, including chronic disease management
- Maternity and newborn care
- Mental and behavioral health treatment
- Services and devices to help people with injuries, disabilities, or chronic conditions
- Diagnostic lab tests
- Pediatric dental and vision care
- Prescription drugs
- Outpatient care
- Emergency room services
Most of these 10 essential benefits are preventive care services.
Preventive care cuts costs by identifying and treating diseases before they become emergencies.
These include well-woman visits, domestic violence screening, and chronic disease management. It also covers lab tests to diagnose diseases, including mammograms and colonoscopies. In addition, maternity and newborn care, and dental and vision care for children is free.
Expands Treatment for Chronic Diseases and Mental Health
The ACA expanded treatment for mental health, addiction, and chronic diseases. These patients can be the most expensive to treat, which is why insurance companies try to avoid coverage. When left untreated, many of them ended up homeless or in prison, which costs the government much more.
The ACA covers services and devices to help people with injuries, disabilities, or chronic conditions. It also covers more drug benefits.
The ACA mandated that the National Prevention Council must coordinate all federal health efforts to promote an active, drug-free lifestyle. It also established the Prevention and Public Health Fund to invest in proven public health programs, from smoking cessation to combating obesity.
Eliminates Lifetime and Annual Coverage Limits
Another way the ACA provides a safety net is by eliminating lifetime and annual limits. That helps those with chronic conditions get enough insurance to cover treatment. This safety net is critical for hemophiliacs and children with heart problems or cancer. This would probably be repealed.
Prevents Denial of Coverage Due to Pre-Existing Conditions
Obamacare prevents insurance companies from denying you a policy because you have, or get, a health condition. That's known as a pre-existing condition, and it kept millions from getting coverage.
Companies can't drop your coverage because you made a mistake on your application, or because you’ve entered a clinical trial for cancer or another life-threatening disease. Plans can’t make you wait more than ninety days before coverage starts. You can appeal claim rejections or other health insurance decisions through your state regulator.
Limits Administrative Costs and Profits
The ACA requires that insurance companies spend 85% of all premium dollars for large employer plans on health care services and quality improvement. That drops to 80% for plans sold to individuals and small employers.
If insurers do not meet these goals because their administrative costs or profits are too high, they must send rebates back to consumers. You might have already received it and not know it was because of Obamacare.
Improve How Health Care Itself Is Delivered
Here are the ways that Obamacare improved how doctors and hospitals deliver health care.
Accountable Care Organizations
The ACA authorized Medicare to change how it pays doctors and hospitals. It used to pay for every test and procedure you get. It will transition to a system that bases payments on how well you get. That forces hospitals, doctors, and pharmacists to work together in a comprehensive approach. So far, these so-called Accountable Care Organizations have shown significant results. The ACA encourages more of them.
You probably assumed your primary care physician already coordinated the care you receive from hospital visits, specialists, and tests. But like the former system, doctors didn't get paid more for doing that. Doctors today must focus on activities that generate income. That means even the best practices can't afford to coordinate care.
Computerized Medical Records
The ACA works with prior legislation to make sure all medical records are put on computers so they can be transferred electronically. You probably thought that also happened, but medical records have been traditionally kept on paper records. That meant test results had to be mailed or faxed.
The ACA is working toward a system that keeps one electronic record.
That will allow all your doctors to share their diagnoses and treatments as well as your clerical and payment information. Once implemented, electronic records will further lower health care costs.
Funds Health Care Training
The ACA requires states to make sure the Medicaid payments that doctors receive are no lower than payment rates for Medicare. It funds scholarships and loans to double the number of health care providers. It adds funding to attract doctors to medically underserved communities in rural areas.
Center for Medicare and Medicaid Innovation
Obamacare established the Center for Medicare & Medicaid Innovation. It's in charge of creating a national strategy to improve health care and lower costs.
The ACA created the Independent Payment Advisory Board to advise Congress on how to extend the life of the Medicare Trust Fund. The Board will target waste in the system. It will recommend ways to reduce costs, improve health outcomes, and expand access to high-quality care.
The ACA also targets fraudulent doctor/supplier relationships. It gives guidance to states reviewing excessive insurance rate hikes. It also requires background checks of all nursing home staff to prevent abuse of seniors.
Obamacare created the Community First Choice Option. It encourages states to offer home and community-based services to physically challenged individuals through Medicaid. That lowers costs by keeping them out of nursing homes.
To make sure you are getting all your Obamacare benefits, check out the author's book, "The Ultimate Obamacare Handbook" (2015-2016).