The Patient Protection and Affordable Care Act, often referred to as just “Obamacare,” was passed in 2010. Although the Trump Administration has taken efforts to reduce the impact of this legislation, there are still some positives that have come from this legislation.
It is sometimes difficult to find the positives in Obamacare, as negative messages and stories outnumber positive messages in a 15:1 ratio. Just 36 months after it was passed, before the legislation had even taken full effect on the marketplace, a majority of Americans opposed the health care law.
These Obamacare pros and cons show that there is a balance to find in this idea. As with any legislation that impacts a household’s finances, there are individual winners and losers. These pros and cons are based on the whole of society and may not reflect the exact experiences of specific individuals.
List of the Pros of Obamacare
1. It required 10 essential health benefits.
All insurance plans under Obamacare are required to cover specific health issues, including chronic disease, mental health, and addiction. Before this insurance requirement was in place, emergency rooms were the only place where some people could receive the treatment they required. Before this legislation, if someone could not afford their healthcare, their only option was to visit a hospital emergency room.
2. It slows the rise of health care costs.
Although there have been complaints about premiums rising, sometimes more than double, in some areas of the country, Obamacare limited the overall rise in health care costs. With more people insured and preventative care options offered for free, more people could access meaningful care without the high costs of visiting an emergency room. The cost of healthcare services in 2016 rose by 1.2% in the United States. In 2004, the cost of healthcare services rose by 4%.
3. It provided coverage for pre-existing conditions.
Health insurance companies were no longer allowed to deny coverage for people who had a pre-existing condition. The insurance companies were also stopped from dropping people with certain conditions. They were also prevented from raising the health insurance rates on people just because they got sick. That meant more people could afford to go to the doctor because their insurance companies couldn’t get rid of them if they were “too costly.”
4. It eliminated coverage limits.
Under Obamacare, the annual cost limits and lifetime coverage limits were abolished. On older policies with these limits, if the insurance company reached the maximum value of the plan, then the consumer was responsible for either paying the total cost of services or finding a new health insurance provider.
5. It allowed adult children to stay on their parents’ healthcare plans.
One of the most popular provisions of Obamacare was the ability for parents to keep their children covered up to the age of 26. In just the first 24 months of the legislation being active, more than 3 million young adults were added to their parents’ healthcare plans in the United States. That gave the insurance companies an extra boost because more healthy people could be covered with the insurance.
6. It offered free care expansion and meaningful subsidies.
Under the guidelines of Obamacare, anyone earning up to 138% of the federal poverty level would qualify for Medicaid coverage. Medicaid coverage was also provided to adults without children for the first time. For working families, those earning up to 400% of the federal poverty level could receive tax credits on their premiums. Businesses with more than 50 employees were required to provide health insurance as a benefit and received help with those added costs in the form of tax credits as well.
7. Millions of people received healthcare insurance for the first time.
According to a 2016 research study conducted by the Urban Institute, about 19.2 non-elderly people gained health insurance coverage because of Obamacare. Repealing the law would have an immediate impact on these individuals, as they would either lose their coverage or be forced to transfer it to a non-subsidized plan. The highest coverage gains achieved came from low-income households which chose to expand Medicaid.
At the same time, some people have been able to find part-time work because there are more ways to obtain health insurance. Before Obamacare, the most common way to receive health insurance coverage was to earn it through work or to be covered by a spouse.
8. More routine services are covered under Obamacare.
As part of the 10 essential health benefits, many preventive screenings and services became available to a larger population group. The goal of providing these services was to delay, or even avoid, future health issues. In doing so, the overall cost of healthcare could be reduced for individuals and as a society. Being proactive against diabetes, for example, instead of reacting to it provides a potentially higher quality of life and healthcare costs that are potentially lower.
9. It created savings in prescription drug costs.
One of the primary goals of Obamacare was to make prescription drugs become more affordable for the average person. In the first 5 years, more than $15 billion was saved on prescription drug spending, with the highest savings located in the 65+ age demographic.
List of the Cons of Obamacare
1. It was too expensive for many people.
According to the Kaiser Foundation, 45% of adults who did not have health insurance stated that they remained uninsured because the costs of coverage were too high. Many of the people in this category were either ineligible for financial assistance, did not have health insurance as a job benefit, or were self-employed in some way. Although spending has been cut in the healthcare sector, insurance premiums continue to rise because of the coverage demands Obamacare requires of providers.
2. It required coverage for services not required.
One of the 10 essential benefits that was required to be covered under Obamacare was maternity care. That provision was included in policies that were issued to men. Because many health insurance policies would not cover maternity care for men, those on private plans found their policies being canceled because of this legislation. In total, about 30 million people were affected in some way because of the required coverages that were involved.
3. It required a tax for not participating.
Perhaps the most controversial provision in Obamacare was the tax on those who did not purchase any form of health insurance. Exemptions were permitted, though not every household qualified for an exemption. In 2017, the penalty for not having health insurance was $695 per adult, up to a family maximum of $2,085, or 2.5% of total household income – whichever figure was greater.
4. It raised income tax rates for high-income earners.
In 2013, Obamacare was responsible for raising the income tax rates for about 1 million people who earned more than $200,000 per year. Another 4 million households saw a tax increase as a couple filing jointly with an income level above $250,000. At the same time, the threshold for medical expense deduction went from 7.5% to 10%. That meant a household earning $250,000 per year would be required to increase medical expense spending from $18,750 to $25,000 before they would qualify for this deduction.
5. It increased wait times at medical clinics.
In rural areas, Obamacare had an immediate impact on the quality of care people could receive. Many medical clinics saw a sudden and dramatic increase in the number of individuals requesting care. Some counties, such as Jefferson County, WA, saw 3-month wait times increase to 6-month wait times almost overnight. With a shortage of doctors and nurses already present in the United States, expanding the coverage to more people meant higher coverage ratios in many areas.
6. It created fees for pharmaceutical companies.
For the first decade of its primary implementation, Obamacare was budgeted to collect over $84 billion in fees from pharmaceutical companies. No controls were put into place to limit how those companies could price their products. Many companies decided to pass the drug costs onto their customers to limit the impact of the fees on their revenues. There are several examples of extreme price hikes.
Pfizer raised the prices of 116 drugs, from 3% to 9.46%, in the years after Obamacare. Novartis raised the prices on 75 different products, up to 9.9%. Lomustine pricing has risen by 1,400% since 2013, from $50 to $768.
7. Good health plans would be taxed at high rates.
Obamacare also included what was called a “Cadillac excise tax” on health plans which provided high annual premiums. The tax applied to plans with an annual premium exceeding $10,200 for individuals or $27,500 for families. These plans are generally offered to individuals who work in dangerous professions, are older workers, or are placed in a high-risk insurance pool. The tax, which is a 40% excise tax, was delayed until 2020. If it is ever implemented, there is a good chance the costs of taxation would simply be passed along to those receiving insurance.
8. It required an excise tax on medical device manufacturers and importers.
There was a 2.3% excise tax placed on those who manufactured medical devices from 2013-2015 because of Obamacare. This tax also applied to those who imported medical devices. In 2016, this tax was suspended through the 2018 tax year. Another 10% tax was also required because of this legislation to those providing indoor tanning services.
9. Obamacare required an annual enrollment.
Those taking advantage of the coverage benefits of Obamacare are required to reenroll each year. They must either enroll in the federal-level exchange or use the exchange that was created by their state. Even when the website is working correctly, finding the correct insurance policy and completing the sign-up process can be a difficult and tricky experience. This has forced public health agencies, medical providers, and social services providers to produce guides or provide assistance to ensure everyone can get the healthcare they need.
10. Businesses cut hours to workers to avoid paying healthcare benefits.
Obamacare defined full-time employment as working 30 hours per week. In the year before the legislation was passed, just under 10% of part-time workers were on the job for 25-29 hours. About 8% of workers were on the job 31-34 hours. In 2013, the number of workers in the 25- to 29-hour category rose to 11.1%, while those in the 31- to 34-hour category fell to 6.6%. Average weekly hours worked rose in the U.S. during this time, while averages fell in the employment areas most likely to be affected by the health insurance provisions for employers.
These Obamacare pros and cons are often contentious because of how this legislation impacts individuals and families. You will find some people who are thrilled with this legislation, just as you will find people who have been financially hurt by it. Many agree that the intent of Obamacare was good. How it was implemented, however, was not necessarily as good.
Some believe Obamacare could be fixed. Others think it should be scrapped for an entirely new system. There may not be one correct answer.