So there are a whole host of benefits that, for the average American out there, for the 85 to 90 percent of Americans who already have health insurance, this thing has already happened. And their only impact is that their insurance is stronger, better, more secure than it was before…. The implementation issues come in for those who don’t have health insurance.
The President’s comments come amid reports that the American people remain confused about how the ACA (or “Obamacare”) will work. People will come to understand much more about the law as federal, state, and private outreach campaigns kick into high gear this summer, but now may be a good time to review how different segments of the public will (and will not) be affected by the ACA. Here’s a quick primer, reviewing what the law will mean for various groups based on their current health insurance status.
Working for a big employer: The vast majority of people working for large employers already have health insurance, and that insurance generally meets the requirements in the ACA, so not a whole lot will change. There are a few enhancements to coverage that are already being phased in and will affect some people: guaranteed coverage of preventive care with no patient cost sharing (although some “grandfathered” plans that existed prior to passage of the law and haven’t changed significantly since are exempt from the requirement to offer these benefits); a cap on the maximum amount that patients will have to pay out of pocket under their insurance; prohibition of lifetime and annual limits on how much an insurance plan will cover; and an option for young adults to stay on their parents’ plans until age 26 years.
Some people working for big companies do not have health coverage because their employer doesn’t provide it, they are working part-time and are not eligible for it, or they cannot afford it. Typically, these are people working in low-wage jobs, such as in restaurant and retail chains. Starting in 2014, employers with 50 or more workers will be required to offer affordable insurance to their full-time employees or pay a penalty. Workers still not covered will have new options, as described below.
Working for a small business: Small employers are much less likely than larger ones to offer insurance to their workers. As a result, many people working in small businesses—often including the business owners themselves—end up uninsured. There is no requirement in the ACA that small employers offer coverage, but there are provisions to make the coverage more accessible. Insurers will not be able to turn away small employers or charge them more if 1 or more of their workers have preexisting health conditions, and insurance will have to meet minimum requirements regarding patient cost sharing and benefits. Temporary tax credits will be available to smaller and lower-wage businesses that do offer coverage.
Covered by Medicare and Medicaid: For people now covered by Medicare and Medicaid, not a whole lot changes. As a result of the ACA, Medicare beneficiaries are now guaranteed preventive benefits and the coverage gap for prescription drugs, known as the “donut hole,” is being closed. Also, higher-income Medicare beneficiaries are now paying somewhat higher premiums under the law.
Buying your own insurance: Less than 5% of the population now buys insurance on their own in the individual market. Few would dispute that this is a broken market, characterized in most states by medical underwriting (where people with preexisting health conditions get turned down or charged higher premiums), unlimited age and gender rating (in which someone’s age or gender is a factor that results in paying higher premiums), and skimpy benefits (that may exclude or limit coverage for maternity care, mental health, and prescription drugs).
It is this market where the big changes in insurance under the ACA will take place next year. Coverage will be guaranteed regardless of preexisting conditions, premiums will not vary by health status or gender and be limited due to age, benefits will improve, and low- and middle-income people will be eligible for tax credits to make coverage more affordable when they buy through new health insurance exchanges.
The Congressional Budget Office estimates that more than half of people buying individual insurance will receive tax credits and therefore will likely pay less under the health reform law than they would under the status quo. Still, for some not receiving such assistance, premiums could increase as benefits improve and coverage for people with preexisting conditions is guaranteed. And although premiums will decrease for many women and older people, they could increase for younger men with higher incomes because of the ACA’s limits on age and gender rating.
Uninsured: Helping people who lack health insurance coverage to get it is, of course, one of the ACA’s primary aims. How this will happen varies, depending on people’s personal circumstances:
- For those who are poor or just above poverty level, Medicaid will be expanded (up to 138% of the poverty level, or about $32 000 for a family of 4). Right now, Medicaid is limited to people with very low incomes in some states, and it generally does not cover adults without children. There’s a catch, though: the Supreme Court decision last summer made the Medicaid expansion voluntary for states (even though the federal government will pay the full cost initially and the vast majority of the cost over time), and many states as of now will not be taking up the expansion, at least initially. This will leave uninsured poor people in these states with no new options for health coverage because the ACA was written with the assumption that states would be required to cover all individuals in this group under Medicaid.
- For low- and middle-income uninsured people without access to other coverage, coverage will be guaranteed in health insurance exchanges (operated by states or the federal government), with substantial tax credits to make the coverage more affordable. Eligibility for the tax credits extends up to 4 times the poverty level (about $94 000 a year for a family of 4) and down to the poverty level (meaning people with income from 100% to 138% of the poverty level will get access to these subsidies if their states do not expand Medicaid). For higher-income uninsured individuals without access to employer coverage—a relatively small group—coverage in the individual market will be guaranteed with no restrictions for preexisting health conditions. The so-called “individual mandate” means that they will generally be required to buy insurance or pay a penalty.
Although people are perplexed right now about the details of the ACA, they are going to hear a whole lot about the law this summer and into the fall, when open enrollment begins on October 1. ACA implementation will then enter a new phase, shifting from what has been a largely hypothetical debate—based at times on misinformation and fear—to one based on real experiences.
About the author: Larry Levitt, MPP, is Senior Vice President for Special Initiatives at the Kaiser Family Foundation and Senior Advisor to the President of the Foundation. Among other duties, he is Co-Executive Director of the Kaiser Initiative on Health Reform and Private Insurance.
About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.