Understanding Obamacare and How to Enrol
Open Enrollment runs annually from November 1 through December 15. Outside the Open Enrollment Period, you generally can enroll in a health insurance plan only if you qualify for a Special Enrollment Period.
In this period, you can also re-enroll or tweak your healthcare plan via the Health Insurance Marketplace. The question remains, should you take advantage of the so-called Obamacare marketplace, or is the controversy surrounding it warranted?
What is Obamacare?
The Affordable Care Act (ACA), formally known as the Patient Protection and Affordable Care Act, and commonly known as Obamacare, was signed into law by President Barack Obama on March 23, 2010. It was a culmination of many years of lobbying and advocating for affordable health care (as the name would imply). Up until that point, the US was one of few nations in the world not providing wide-scale, affordable medical coverage for its citizens. In fact, this was largely unheard-of in developed nations.
Named after President Barack Obama, Obamacare doesn’t represent nationalized healthcare you can find in France, the UK, Sweden, or Germany. Instead, under the auspice of the federal government, Obamacare provides insurance to people with lower incomes by regulating private health insurance companies. Specifically, making them cover pre-existing medical conditions (including mental health) and discouraging policies aimed at driving up rates or curtailing medical care.
As a result, the number of uninsured Americans dropped by 7.6% from 2010 to 2017—to 27.4m from 46.5m. However, from 2017 to 2018, the number of uninsured began to rise again, according to the US Census Bureau. This is not surprising given the fact that healthcare insurance premiums have doubled since Obama left office. Needless to say, this trend calls into question the “affordability” of the ACA.
Obamacare Pros and Cons
There are many reasons why Obamacare is considered controversial. Many now view it as a half-measure that provided a boon to insurance corporations, instead of substantially reforming healthcare as exists in almost all European countries.
Considering that the US had the highest number of people lacking any medical insurance among developed nations, Obamacare proved to be a success. Since Obamacare became law, about 19m people gained healthcare insurance, most of whom were young adults.
Obamacare also set up a framework in which insurance corporations have to allot at least 80% of insurance premiums to either actual medical care or improvements. Consequently, people have a wider range of insurance options, even those with chronic conditions—ie pre-existing medical conditions, who could no longer be denied coverage or be charged extra.
Furthermore, Obamacare eliminated expiration limits for insurance plans that cover chronic conditions. Before the scheme, insurance providers were able to limit expenditures per individual customer. Obamacare effectively removed this limit.
A big part of effective healthcare is preventive services. To that end, Obamacare expanded many preventative measures and covered screenings with low deductibles. This is also in the interest of insurance companies as early treatments are more effective than dealing with the fallout of already developed conditions.
Lastly, Obamacare caused some medication to drop in price. The pool of generic drugs continues to expand under Obamacare coverage. Consequently, people under Medicare were able to save nearly $27 billion on prescription drugs up until 2017, as reported by CMS.
As you can already tell, Obamacare is all about expanding coverage and limiting previous coverage restrictions. However, we do not live in a universe with limitless resources and limitless human capital. When insurance providers must, by law, expand their coverage with fewer limits, that extra cost must be somehow covered.
Unfortunately, people already under coverage bore the brunt of these increases. Almost all suffered increases to their insurance premiums—some doubling by the time Obama had left office.
Moreover, Obamacare was not designed as a voluntary proposition. In order to increase coverage, the scheme introduced fines for those still uninsured (to incentivize them to seek coverage) This introduced legal confusion, as it could have been interpreted as a form of Obamacare tax.
Predictably, this was brought to the attention of the US Supreme Court, who in 2012 made a heavily divided ruling, 5–4, that the programme is indeed constitutional thereby avoiding its repeal. However, due to the penalty’s unpopularity, it was removed in 2019.
Another consequence of expanding medical coverage options is the increase in taxes. In addition to fines, depletion of Medicare savings, and rising premiums, Obamacare caused a tax increase in many states who implemented the ACA. To make things worse, this extra taxation was placed on drugs and medical devices, alongside targeting higher-income groups.
In conjunction with rising costs, employers were forced to cut working hours to stay afloat. Obamacare decreed that any business with over 50 employees had to cover healthcare expenditures for their employees. As a result, many small businesses resorted to reducing work hours so their employees wouldn’t count as full-time.
How Does Obamacare Work?
Obamacare enrollment decreases the financial burden incurred as a result of insurance premiums. Every insurance plan requires a monthly contribution—premium—to remain valid. Obamacare makes health care insurance premiums less costly, as it provides a range of subsidies (tax credits) to lower them. However, only those with lower incomes would end up having lower premiums.
Originally, Obamacare allotted funds to go into insurance companies’ pockets for deductibles to stay low. This is no longer the case under Trump Obamacare, as the Trump administration eliminated those funds. Nonetheless, the ACA law stating that deductibles must remain low is still in effect. This means you can still lower your health insurance cost if you apply for Obamacare, through its subsidies.
Are Short-Term Health Plans ACA Compliant?
Most of us are lucky enough to live healthy lives. However, when an illness occurs—it can be disruptive. For these short-term healthcare emergencies, you need to ensure your plan is sufficient to protect your health, keeping these facts in mind:
- You can only apply for ACA-compliant insurance during the open enrollment period (OEP), as stated earlier.
- Expecting to pay for short-term healthcare insurance outside of ACA while getting the same minimal coverage under ACA is not realistic.
- Depending on your specific health status, and health plan, you may end up much less with a non-ACA compliant short-term insurance.
- You can’t get a non-ACA, short-term health plan with a pre-existing condition.
Therefore, short-term health plans are not ACA compliant.
Who Can Get Short-Term Health Insurance?
While waiting for another OEP for Obamacare eligibility, you can get short-term health insurance under the following conditions:
- Early retirement.
- Job loss that had a healthcare plan, but you do not qualify for a COBRA plan.
- Losing group healthcare coverage due to divorce.
- Young adults over 26 who lose their parents’ coverage.
- Moving out of state into a new state which doesn’t have your existing plan.
Outside OEP, most people cannot sign up for major medical health insurance unless they have certain major life changes, dubbed “qualifying life events”. Those who are unable to afford major medical plans may consider buying a short-term health insurance policy outside of OEP. These short-term plans have many disadvantages— they cover less than major medical plans, and can often reject applicants for medical reasons.
Therefore, no matter which healthcare plans are enacted, insurance companies will always have to balance individual mandates and rising premiums. Obamacare demonstrated this in no uncertain terms. Extra coverage is welcome for the needy, but it will have to be funded by someone.