The Affordable Care Act and the Insurance Revolution of the 21st Century.
The Patient Protection and Affordable Care Act, also known by its pejorative Obamacare, was signed into law by President Barack Obama in 2010. This piece of legislation is considered by many to be one of the most controversial and important acts since the enactment of Medicare and Medicaid by the Social Security Amendments of 1965. The act had sweeping changes in the health care industry with the overarching goal of providing health insurance to those stuck in the insurance “gap.” This gap consisted of those who were too wealthy to qualify for Medicaid but could not afford to pay for their own insurance or not provided insurance by their employer.
The Affordable Care Act (ACA) should not be confused with a public option, where the state provides health insurance to the people, as it sets up marketplaces or exchanges where private insurance companies offer insurance plans that people can purchase. The ACA also offers rebates to help lower the cost of these plans even further. Premium tax credits are available to those who are making between 100% and 400% of the Federal Poverty Line and work by lowering the premiums through tax credits. Cost Sharing Reduction Subsidies are also available and are provided on the basis of income to reduce out-of-pocket costs.
In addition to making cheaper insurance plans available to those who can not afford traditional plans, the ACA imposed a series of important regulations on insurance companies. First, insurance companies are not allowed to raise their premiums by more than ten percent unless the companies provide proper justification and the hike is approved by state regulators. Pre-existing conditions can longer be used to increase premiums or deny coverage. Insurance companies may not terminate coverage for any reason besides customer fraud or failing to pay premiums. Coverage limits are now a thing of the past as the ACA does not allow insurance companies to limit the amount of annual or lifetime coverage a person may use. Patients no longer have to pay co-pays for services such as wellness exams, immunizations, or woman’s health exams such as pregnancy exams. Insurance companies must spend at least 80% of patient premiums on providing actual medical services instead of expenses such as executive salaries or marketing. If less than 80% is spent on medical services than companies must pay back the difference to policy holders. Finally, adults could stay on their parent’s insurance plans until they were twenty-six.
Another monumental change was a change in the way hospitals and doctors are paid by insurance companies. Before the ACA, hospitals were paid on a fee-for-service model. Under this model, hospitals are paid according to the quantity and complexity of services. With the ACA, providers are paid on a quality-based model where they are paid not by the number and complexity of services but on the overall quality of total care. Accountable Care Organizations were established to reduce the cost of care by increasing efficiency and quality.
As a whole, the Affordable Care Act is an attempt to make every American have affordable health insurance while revolutionizing the health care industry by reducing cost and increasing efficiency.
