The Affordable Care Act: What It Is and What It Isn’t

The Affordable Care Act is not a type of care or a health plan. It’s a law that makes everyone get health insurance and provides financial support to help people do that.

So: We can stop calling it Obamacare. It would be nice if it actually was Obamacare—if, in 2014, you could go down to your local government building and get your government-issued Obamacare card and show that to your doctor who would swipe the card and give you health care. But that would be called a public option, and the health insurance lobby made sure that went nowhere (please see: death panels, the fate of Clinton’s Health Plan).

What the insurance industry did allow to happen was the enactment of a complex system that says in 2014, you will need to have health insurance from a private health insurance company. Exactly what you would expect. But don’t head out to join your local chapter of the tea party just yet. In exchange for mandatory insurance, the people of this country will get better and more affordable (and in some cases free) insurance.

So what does this mean for you? That depends on whether you have insurance or not and, if you do have it, where you get it. 

• If you are one of the 157 million people with employee-sponsored health insurance (half of the country), things shouldn’t change much. This law wasn’t really designed for you. (However: If you have crappy employer-sponsored health insurance, they will have to give you better coverage.)

• If you are on Medicaid, things shouldn’t change for you either.

• If you buy health insurance on the private market, that insurance should get cheaper (through something called community rating provisions, which “prohibit the use of previous healthcare claims or health status as a factor in premium determination, and premiums for older Americans can be no more than three times that for younger Americans.”) Private market benefits should also get better.

• Finally, and most importantly, how will if affect  you if you are among this country’s 50 million uninsured or 50 million underinsured (paying more than 10% of your income for insurance through co-pays and deductibles)?

First off, if you get insurance, you get a tax rebate. Or, if you prefer the language, if you don’t get insurance, you pay a tax penalty.

Uninsured and underinsured people will either qualify for the expanded Medicaid (for people with about $15,000 annual income) and can get care through that program (provided your state participates) or will be able to purchase insurance through the health exchange.

The government is providing money to states to set-up  these exchanges, which are basically websites where you enter your info and will be given a menu of insurance plans you can purchase. The deadline for the exchanges to be operation is January 1st, 2014. They may roll out gradually, but I doubt many states will be handing this assignment in early. To see an example of an exchange, check out the Connector in Massachusetts.  Go to their site, enter a fake MA zip code—try 02201 for Boston—and experience the future.

So: That’s how you’ll buy healthcare. But if you make less than 400% of Federal Poverty (44,680 for single, 92,200 for family of four)the government will subsidize your healthcare so that it is no greater than 9% of your income. The less you make, the higher the subsidies. Here’s a chart detailing the subsidies from a Commonwealth Fund article by Jonathan Gruber and Ian Perr:

If it will cost more than over 8% of your income to buy insurance, you are exempt from this mandate to purchase insurance. The CBO estimates that in 2016, there will still be 30 million people without insurance, but most of them will not be subject to the penalty. Immigrants for example, will be exempt. (For more information on possible penalties for the uninsured, this report from the Congressional Budget Office is a good resource.)

So, how do you pick insurance once you are given your nifty menu? The government only counts health insurance that meets certain minimum standards of coverage. Gone are the high deductible plans with no preventative care. Now they must provide certain benefits and a minimum amount of coverage.

The plans are grouped into four groups which have different percentages of cost sharing. They are bronze (60%), silver (70%), gold (80%), and platinum (90%). The cost sharing will be through some mix of co-pays and deductibles, so if you have a bronze plan they will have to at least cover 60% of the costs. Compared to a high deductible plan, which covers nothing until you hit several thousands of dollars of damage, this is a dream.

The four levels of coverage are based on “actuarial value.” Actuarial value is a measure of the level of protection a health insurance policy offers and indicates the percentage of health costs that, for an average population, would be covered by the health plan. (Employer-sponsored health insurance will now have to meet these minimum standards as well.)

At the webpage you will likely be shown the different tiers and the monthly price. I’m not sure how the subsidies will be displayed, perhaps it will be discounted from the price shown, but you will get your menu and pick a plan from there. Purchasing insurance intelligently often requires looking at annoying charts which list out benefits. If these exchanges are good, they will have a comparision option so you can look side-by-side at plans.

I think the best way to shop for insurance is to think of your regular medical needs and see what you will have to pay out of pocket based on the information provided. So if you see a doctor rarely, and the co-pay is $40 in an inexpensive plan and $20 in a more expensive plan, than you may want to consider the less expensive plan because you don’t utilize that service. However, if you think you may need medical care because of your lifestyle (you bike without a helmet) or there is a history of chronic illness in your family, you may want to pay more for a plan with less cost sharing. Another thing to consider, in addition to your current needs, is you potential needs and how those scenarios will play out. Like a bike accident in one plan versus another.

The plan benefit charts should have a table listing co-insurance rates, rates for hospitalization, rates for ER visits, pharmacy benefits, and co-pays. Try to fit these vague numbers into actual scenarios. Additionally, they may provide you with the option to look at the full benefits offered.

Check out this example of a more extensive plan summary. If you look through it, you will see the innumerable scenarios that are taken into account and the co-pays for them. Don’t freak out about the pages and pages of information. Insurance companies can calculate complex risk, you canot (or at least, not without driving yourself crazy). So: Do an assessment of your needs, take into consideration what you can need and what you are willing to pay, and then pick a plan. Too much stress can lead to hypertension, don’t let picking health insurance make your health worse.

And that’s basically it. No death panels. No storm troopers. Just a webpage and a monthly payment adjusted for your income. Is it the best solution? Maybe, maybe not. But for now, it’s a way to get healthcare and save you from potential bankruptcy.

 

Stone Goldman (not his real name) is a health policy analyst who has worked in various high level government positions in the health care field. Got health care questions? He’s got health care answers: stone.goldman@gmail.com

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23 Comments / Post A Comment

jfruh (#161)

Two questions about how this works, some from the perspective of a freelancer.

1) How do you get the tax subsidies if you buy through the exchange? I’ve heard it said that the tax subsidies are “advanceable,” meaning that, for fairly obvious reasons, you get them when you pay your premiums, rather than when you fill your taxes out at the end of the year. But does Uncle Sam send you a check, or send a check to your insurance company, or …? Does this all add another baffling layer to filling your taxes at the end of the year?

2) Say you’re a freelancer and you’re not sure what your income will be from year to year. You sign up for a plan and tell them you make (say) $30K a year, and get subsidied for that amount. Then when you actually do your taxes, it turns out you made $40K. How do you make up the difference in subsidies from what you got to what you should have gotten? How would the process work if things worked out the other way, i.e., you should have gotten a higher subsidy than you did?

Stone Goldman (#1,558)

@jfruh I’ll try to answer some of the questions to the best of my knowledge and using Massachusetts as a model. The tax subsidies will likely be taken out of the premium. What will happen when you enroll is that there will be an income projection at the time of enrollment. Based on the determination they will use that to figure out where your subsidies will be, and when you enroll they will be automatically deducted from the premiums. That projection, and the methodology, will be very important in establishing these exchanges. They may not just be self attestation, but require a certain look-back period for determining income level. Accuracy is important because if it is inaccurate there may need to be an end of the year reconciliation, which would be awful and make people not want to enroll in the first place. This method will develop over the next year as the realities of implementation come into focus.

sally (#917)

Thank you for this.

jfruh (#161)

Oh, also: are there now out-of-pocket maximums required, even for people who don’t qualify for the subsidies? LIke, when it says that a SIlver plan pays for 70% of costs, and you are undergoing cancer treatment that costs hundreds of thousands of dollars, are you still on the hook for tens of thousands of dollars of that, even if you make more than 4x the poverty level?

Stone Goldman (#1,558)

@jfruh There will be out of pocket maximums. Check out the chart on page 4 of this document – http://www.kff.org/healthreform/upload/8177.pdf

julebsorry (#1,572)

Considering that I was driven to shout “if I get pregnant due to your insane and complicated policies, im suing you for child support” at some poor medco rep (yes, this really happened)a few minutes ago, I think the ACA was WAY overdue. These companies have gotten really adept at minimizing convenience & service to the customer while maximizing profit (and ignoring that most meds are vital, not optional). If you’re under an employer plan, they know you’re over a barrel and basically have to take what they dish out. My “good” insurance charges me $60 to fill a generic BC scrip in a pharmacy in an attempt to force me to use their “meds by mail” program (which obvs benefits them, bc no need to reimburse a pharmacy if they supply the drugs). However, they refused to transfer my existing pharmacy prescription and instead forced me to get an entirely new prescription for the mail-order program (thus inconveniencing both me AND my doctor, who already wrote a perfectly valid scrip). Then, they informed me it would be 15~20 days before I could expect to receive the drugs. As BC has to be taken every day, this is obvs not ideal – could run out in the interim before I get my new pack. Do they care at all? No. All this so I could pay $10 for the mail-order vs. $60 in the pharmacy.

Under the ACA, I believe I’ll be able to waltz in to my local pharmacy and just pick up my generic BC free of charge, rather than having to jump through all these stupid Medco administrative hoops. And that’s exactly what it was meant to do – the ACA recognized that it’s TERRIBLE to make it so difficult to procure birth control, when the pill must be taken regularly every day…it really should be made as easy as possible to get and use (for the greater social savings, since pregnancy costs wayyyy more than a generic pack of bc).

MuffyStJohn (#280)

@julebsorry I’ve run into the “oh, we’ll only cover that script by mail!” scenario with BC before, and gotten into other, equally humiliating fights (complete with tears in a fucking CVS parking lot) over trying to get the rep to understand that I actually did need to take this pill TODAY. Baby making: not optional. And of course all companies can make exceptions and waive these rules, but they never do.

I’m waiting until January 1 and getting a nice, free, shiny IUD, because the ACA also recognizes that this higher up-front cost option is more effective and cheaper in the long run than remembering to take a pill at the exact same time every day (and also that I shouldn’t be screwed out of my first-choice BC thanks to arbitrary insurance company rules). Thanks, Obama!

honey cowl (#1,510)

@MuffyStJohn You will love that IUD. I’m still paying for mine (thanks, high-deductible insurance, for your lack of coverage on this one) (but really, thanks Planned Parenthood, for having payment plans), but even so, IT IS THE BEST. No more hormones. No more condoms. No more being a crazy person because of HBC. Wooooooo copper in my cervix!

MuffyStJohn (#280)

@Lauren YOU’RE THE ONLY PERSON I’VE HEARD FROM THAT DIDN’T HAVE MIRENA. I am so glad to hear you love your experience; progesterone doesn’t agree with me and yet everyone tells me to just get a Mirena because they love theirs so so so so much. NO. I want no hormones.

You have given my child-hating uterus and me so much hope. Thank you, Internet Stranger.

editrickster (#279)

@MuffyStJohn I have the copper IUD too! IUD party! I’ll bring the heating pads.

sara moon (#650)

@julebsorry I also have a copper IUD! It was one of the best decisions I ever made. Pills with oestrogen gave me migraines, pills with progesterone made me nauseous and crazy. After trying to get various doctors to let me get an IUD (God forbid my form of birth control should be my choice! They kept wanting to just give me a different type of pill) I eventually found one who would listen to me and agreed that it was a valid option.

I live in Australia so this was much much cheaper for me. I went to family planning where they inserted it for free, and it paid $120 for the IUD itself. This is actually expensive because copper IUDs aren’t on the Pharmaceutical Benefits Scheme which means the government doesn’t cover any of it. If I had wanted a Mirena it would have cost me about $30.

So basically what I am saying is move to Australia.

beet hummus (#946)

I have an IUD too (though it’s the Mirena) and I LOVE it! IUD PARTY WAHOOO!

I fought tooth and nail with the doctor’s office and the insurance company to make sure mine was covered by our health reimbursement account before my dad lost his job… it’s a long story that I hope many, many women can avoid in the future, thanks to the ACA.

(Also thanks to the ACA for extending parental insurance to under-26ers!)

Megano! (#124)

Oh my God I wanna talk about that dude’s glorious hair but it would not be appropriate.

kellyography (#250)

@Megano! Let’s start a side thread about that and how Stone Goldman is an amazing porn star name.

Megano! (#124)

@kellyography oh my god it so is

MuffyStJohn (#280)

Great article! Also the Boston insurance rates terrified me. Although I would have strongly preferred a public option, I guess we can’t win them all. I am convinced that good insurance will continue to be unaffordable for me for the next several years, but I’ll take my annual checkups and free lady-wellness exams and all the birth control I can handle, thanks!

jfruh (#161)

@MuffyStJohn Out of curiosity, what would you consider a reasonable or affordable premium? I plugged some numbers into the Massachusetts thingie and got a $220ish monthly premium for a “bronze” plan, unsubsudized — I assume this goes down if your income is less than the $33K a year cutoff they ask you about up front. Not nothing but seems not insanely out of reach — it’s along the lines of the subsidized plan we get through my wife’s work now.

Even if there were a “public option,” it wouldn’t have been free or anything; a public option of the type under consideration when the ACA was being put together in Congress would have been a gov’t-run plan that would have competed with private plans in the exchanges, and you would have paid premiums for it like you would private incurance. I know people in California who are on the public “high-risk pool” plans (for those with pre-existing conditions; these will only be offered until 2014 when private insurance loses the right to discriminate) and they pay low-ish $200s a month too.

MuffyStJohn (#280)

@jfruh How does $0/month for national healthcare sound? That, to me, is reasonable. Lacking that, a completely sliding-scale program that allows everyone to get the insurance that members of Congress get (which takes local COL into account) sounds reasonable. Nothing Congress put forward was reasonable at all, because Congress is not filled with reasonable people.

In all honesty the premium amounts were less surprising to me than the coverage levels. A $250/month policy with a $3k deductible (which is what the “bronze” offer was for me) is not progress at all. I don’t think it’s unreasonable to pay a $200-300 premium for an individual, but it should cover everything. To me these plans were no better than the other high-deductible garbage the insurance industry has been peddling for years. I’m glad that they will now be forced to cover basic preventive care, but it surely isn’t doing anything to make premiums more affordable.

But basically, 9% of my income for a catastrophic policy that will cover little more than a pap smear and birth control? That’s unreasonable. I could pay for these services out of pocket for less (and I do).

jfruh (#161)

@MuffyStJohn not to argue too much with you — yes, it’s an unreasonably high proportion of your income or anyone elses — but it’s going to cover a lot more than a pap smear and BC if you need more than routine care. Out-of-pocket maximums are huge, and a huge advance over the current situation, where cancer treatments leave you on the hook for tens or even hundreds of thousands of dollars even if you have insurance. (The out-of-pocket maximum is something like $6K — not nothing to be sure, but an order of magnitude easier to deal with than $20K.)

I also think it’s an advance that people who are currently literally uninsurable due to pre-existing conditions can get health insurance at community rates. And yes, those of us who don’t use a lot of health care at this point in our lives pay more than we otherwise would to make that happen, and to ensure that we won’t be left in the cold when the time comes for us, as it probably will.

Also, as a side note, once the main provisions of the ACA kick in in 2014, members of Congress will no longer get the health care plan they get now and will be expected to buy their insurance through the exchanges.

Mugsy Brogues (#2,262)

I am currently a medical student, and required by my university to carry health insurance. In a very good year, I might earn $4,000, but my remaining expenses are necessarily covered by student loans. How might I be effected by this? Would there be any provision allowing me to hop onto medicaid? Given access to lower-cost insurance? There is a special frustration (RAGE) that comes from being forced to take out long-term, rather high interest loans to cover my personal health-care costs.

I realize that I present a rather unique case, so I can ask in this way as well: undergraduate and graduate students in the US are commonly required to carry health insurance. Although the ACA extends the period during which they may be covered by their parent’s insurance (26y/o), many parents do not have health insurance, have rather poor health insurance, and many of us are now over the age of 26 (I am 30). How does the ACA address this real issue? If we are changing regulation of the health-care industry, how can health-care costs continue be lumped into “the costs of education” for one (particularly large) group?

Stone Goldman (#1,558)

@Mugsy Brogues I’m know that the federal government issues regulations in the past 6 months which would require student health plans to meet similar requirements regarding actuarial values, benefits, and out of pocket-max’s that the other qualifiable plans will have to meet. I don’t know enough about student health plans and their interaction with the ACA to comment on whether you will be able to apply for medicaid while in grad school. I have read that the new requirements on student plans may lead to many schools dropping their health plan, so this may open up the exchange plans for you. If you want, shoot me an e-mail with some more specifics on your situation and I’ll see if I can get you a better answer.

mulligan (#2,265)

I live in GA. The State Gov’t has decided against the medicaid expansion and also has not begun creating the exchange system. I would qualify for medicaid but in GA Peachcare requires you to be a child/pregnant/mother etc to be covered. What are my options? If the state does not expand medicare or create a state health exchange, will I still be fined for being uninsured?

Stone Goldman (#1,558)

@mulligan If your state does not set up a health insurance exchange, the Federal Government will set one up which you can use to purchase health insurance. I believe there will still be the subsidies. However, because of the SC decision, they don’t have to expand Medicaid. However, opting out on this will loose them a great deal of money, which states are reluctant to do. I anticipate a lot of states that claim to opt-out, will opt back in when the reality of loosing out on federal funds becomes a reality. If your state does actually opt out, and purchasing health insurance will require greater than 9% of your income, then you will be exempt from the fine for being uninsured.

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