Obamacare Pros and Cons

Is Obamacare Worth It?

Obamacare has a lot of benefits that most people don't know about. That's possibly because spending on negative messages about Obamacare has exceeded spending on positive messages by 15 to 1. Three years after it was approved, 54% of Americans opposed the Act. Donald Trump took actions to weaken it, and Congress made failed replacement plans. In December 2017, the Tax Cuts and Jobs Act repealed the tax on those who don't get insurance effective December 31, 2018. 

Here's a list of advantages and disadvantages of the Patient Protection and Affordable Care Act of 2010

Hugo Lin © The Balance 2019 

Pros

  1. The biggest benefit of the ACA is that it slows the rise of health care costs. It does this partly by providing insurance for millions and making preventive care free. This means people receive treatment before they need expensive emergency room services. Between 2012 and 2017, health care costs increased about 1.3% per year, and the Centers for Medicare and Medicaid Services (CMS) believes it'll grow at about 2.5% per year over the next decade. 
  2. It requires all insurance plans to cover 10 essential health benefits. These include treatment for mental health, addiction, and chronic diseases. Without these services, many patients wind up in the emergency room.
  3. Insurance companies can no longer deny anyone coverage for pre-existing conditions. They can't drop them or raise premiums if beneficiaries get sick.
  4. It eliminates lifetime and annual coverage limits. Insurance companies used this to contain costs to $1 million per year. Beneficiaries who exceeded that limit had to pay 100% of costs.
  5. Children can stay on their parents’ health insurance plans up to age 26. As of 2012, more than 3 million previously uninsured young people were added. This increased profit for insurance companies. They receive more premiums from these healthy individuals. 
  6. States must set up insurance exchanges or use the federal government's exchange. Either method makes it easier to shop for plans.
  7. The middle class (earning up to 400% of the poverty level) receive tax credits on their premiums. It expands Medicaid to 138% of the federal poverty level. It provides this coverage to adults without children for the first time.
  8. It eliminates the Medicare "doughnut hole" gap in coverage by 2020.
  9. Businesses with more than 50 employees must offer health insurance. They receive tax credits to help with the costs.
  10. The Congressional Budget Office originally estimated it would reduce the budget deficit by $143 billion by 2022. It would theoretically accomplish this in three ways. First, it reduces the government's health care costs. Second, it raises taxes on some businesses and higher-income families. Third, it shifts cost burdens to health care providers and pharmaceutical companies. The CBO has since revised its estimates. 

Cons

  1. Between 3 million and 5 million people lost their employment-based health insurance. Many businesses found it more cost-effective to pay the penalty and let their employees purchase insurance plans on the exchanges. Other small businesses find they can get better plans through the state-run exchanges. 
  2. Increased coverage raised overall health care costs in the short term. That's because many people received preventive care and testing for the first time. It was expensive to treat illnesses that had been ignored for decades. 
  3. The ACA taxed those who didn't purchase insurance. But many avoided the tax through an ever-expanding list of exemptions, and the Trump administration later removed the penalty tax.
  4. The number of people with health insurance was estimated to decrease by 4 million in 2019 and by 13 million in 2027, which could cost them millions of dollars.
  5. In 2013, the ACA raised the income tax rate for individuals with incomes above $200,000. It also raised taxes for couples filing joint returns on incomes exceeding $250,000. The rate increased from 1.45% to 2.35% on income above the threshold. They also pay an additional 3.8% Medicare tax on investment income. That applies to the lesser of income from dividends, capital gains, rent and royalties or income above the threshold. 
  6. Indoor tanning services paid a 10% excise tax. This might discourage those businesses from hiring new employees. 
  7. Starting in 2013, families could deduct medical expenses that exceeded 10% of income. Before, they could deduct any expenses that exceeded 7.5% of income. The Tax Cut and Jobs Act restored the deduction to the 7.5% limit for 2017 and 2018, and subsequent legislation extended the 7.5% limit through 2020. 
  8. Rebates close the "doughnut hole" in Medicare Part D. However, prices for drugs have continued to increase and for many, out-of-pocket expenses have continued to rise.
  9. Insurance companies were originally supposed to be assessed a 40% excise tax on "Cadillac" health plans. However, the Trump administration later repealed this tax.

In Depth: How Obamacare Works | How Much It Costs You | Obamacare Explained | Summary | How It Affects the Nation's Debt | Why Reform Health Care