10 Obamacare Pros and Cons
Is Obamacare Worth It?
Obamacare has a lot of benefits that most people don't know about. That's because negative messages about Obamacare outnumbered positive messages 15 to one. Three years after it was approved, 54 percent of Americans opposed the Act. That led to Donald Trump's plan to repeal and replace it.
Here's a balanced list of advantages and disadvantages of the Patient Protection and Affordable Care Act of 2010.
- The biggest benefit of the ACA is that it slows the rise of health care costs. It does this by providing insurance for millions and making preventive care free. This means people receive treatment before they need expensive emergency room services. In 2016, the cost of health care services increased 1.2 percent for the year. That's much less than the price increase of 4 percent in 2004.
- 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. Those costs are passed onto Medicaid and therefore the taxpayer.
- Insurance companies can no longer deny anyone coverage for pre-existing conditions. They can't drop them or raise premiums if beneficiaries get sick.
- 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 percent of costs.
- 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.
- States must set up insurance exchanges or use the federal government's exchange. Either method makes it easier to shop for plans.
- The middle class (earning up to 400 percent of the poverty level) receive tax credits on their premiums. It expands Medicaid to 138 percent of the federal poverty level. It provides this coverage to adults without children for the first time.
- It eliminates the Medicare "doughnut hole" gap in coverage by 2020.
- Businesses with more than 50 employees must offer health insurance. They receive tax credits to help with the costs.
- It lowers the budget deficit by $143 billion by 2022 according to the Congressional Budget Office. It does 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 pharmacy companies.
- Three million to 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.
- Thirty million people never had company plans and relied on private health insurance. Insurance companies canceled many of their plans because their policies didn't cover the ACA's 10 essential benefits. For those who lost those cut-rate plans, the costs of replacing them are high. The ACA requires services that many people don't need, like maternity care.
- 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.
- The ACA taxed those who didn't purchase insurance. But many avoided the tax through an ever-expanding list of exemptions.
- Four million people chose to pay the tax rather than pay for coverage. The Congressional Budget Office estimated they paid $54 billion.
- In 2013, the ACA raised the income tax rate for 1 million individuals with incomes above $200,000. It also raised taxes for 4 million couples filing joint returns on incomes exceeding $250,000. The rate increased from 1.45 percent to 2.35 percent on income above the threshold. They also pay an additional 3.8 percent Medicare tax. That applies to the lesser of income from dividends, capital gains, rent and royalties or income above the threshold.
- Starting in 2013, medical device manufacturers and importers paid a 2.3 percent excise tax. Note: This tax was suspended for 2016-2018. Indoor tanning services paid a 10 percent excise tax. This might discourage those businesses from hiring new employees.
- Starting in 2013, families can deduct medical expenses that exceed 10 percent of income. Before, they could deduct any expenses that exceeded 7.5 percent of income.
- Pharmaceutical companies pay an extra $84.8 billion in fees between 2013 and 2023. That pays for closing the "doughnut hole" in Medicare Part D. Drug costs could rise if the companies pass this onto consumers.
- In 2020, insurance companies will be assessed a 40 percent excise tax on "Cadillac" health plans. These are plans with annual premiums exceeding $10,200 for individuals or $27,500 for families. Many of these plans are for people in high-risk pools, such as older workers or those with dangerous jobs. Most of the tax will be passed onto the companies and employees, raising premiums and deductibles. (Sources: "Federal Budget Bill to Delay ACA’s Cadillac Tax & Suspend Two Other Taxes," Kistler Tiffany Benefits, December 21, 2015. "Cadillac Tax Explained," Kaiser Health News, March 18, 2010. "What Obamacare Means for Taxes," Smart Money, June 28, 2012.)
More on Obamacare
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For more on how to save money on Obamacare, see my book The Ultimate Obamacare Handbook (2015 - 2016).
The Affordable Care Act
In the United States, The Affordable Care Act is a health care decree established by the federal government (it is commonly referred to as Obamacare). The Act was adopted as a law by the US president Barrack Obama on March, 23 in the year 2010. The goal of this law is to reform the United States health systems by providing and improving access to quality and affordable health care, health insurance and providing American citizens with more rights and protections by reducing health care expenditure for both individuals and the government. The law also aims at expanding private and public insurance coverage, as well as, regulating the insurance industry. On this note, this current paper will discuss how Obamacare works, its advantages and disadvantages.
How Obamacare Works
PPACA requires every authentic American citizen to get health insurance or otherwise pay tax. Registration entails a simple sign up procedure, which is either done through a health insurance marketplace, a broker or a direct provider. Obamacare works by providing cost subsidies to moderate income earners and small businesses through taxing health care benefactors and high income earners. Depending on the level of income, one is required to pay a monthly health plan that is either a Platinum, which has the highest premium rate, Gold, Silver or a Bronze Plan. The lowest premium rate has at least ten health care rights and protections. Therefore, the higher the premium rate, the less out-of-pocket expenses and the more doctors and health care providers one can utilize.
Advantages of Obamacare
The shared benefit is that Obamacare makes health care services affordable and accessible to almost everyone. The fact that it requires all health insurance plans to cover at least ten crucial health rights and benefits, favors millions of patients and uninsured citizens by offering free or low health care costs. Consequently, it allows parents to cover their children up to the age of 26, which on the other hand, gives more profits to insurance companies.
Disadvantages of Obamacare
On the contrary, Obamacare is an incomparable competitor in the insurance market because it aims at providing high quality health care with very low cost. In Tate’s perspective, the Act also covers sick people, which tend to increase everyone’s cost of insurance. Lastly, it negatively affects those who may not want to purchase the insurance through Obamacare tax penalties.
In comprehencive logic, Obamacare is a sustainable solution for improving and providing quality and affordable health care for the low income earners, the young generation and the society at large.