Obamacare

The Affordable Care Act, aka “Obamacare,” launched a fundamental reform of the U.S. healthcare system. The goal was to guarantee affordable health care insurance for all Americans and to eliminate the financial burdens of the uninsured. Obamacare was rolled out gradually over four years, beginning in 2010.

The first phase – the “Patients Bill of Rights” – was intended to add stability and flexibility to the healthcare system. Some of its features included eliminating pre-existing condition exclusions, allowing young adults (age 26 and under) to be covered under a parent’s health plan, making certain types of preventive care available at no cost, and ending lifetime coverage limits for new Health Insurance plans.

In 2011, the Affordable Care Act rolled out provisions that had a major impact on the quality and affordability of health care for seniors. Medicare patients became eligible for no-cost preventive services. Prescription costs for brand-name drugs for seniors who reach the “donut hole” coverage gap were discounted by 50 percent as part of a sliding scale plan to completely close the gap by 2020. In 2017 once you and your plan have spent $3,700 on covered drugs you’re in the coverage gap.

Provisions rolled out in 2012 were primarily focused on improved coordination of medical care between providers. Physicians were encouraged to join “Accountable Health Care Organizations” as well as other programs to streamline and improve the quality of care.

In 2013, Obamacare made sweeping changes to Medicaid. Funding was provided to state Medicaid programs to provide free or low-cost preventive services. Medicaid payments to primary care physicians were also increased. One other major rollout, effective October 1, 2013, was the commencement of open enrollment in the Health Insurance marketplace.

In 2014, The Health Insurance marketplace, the cornerstone of Obamacare, rolled out nationwide and participation in either the marketplace or an employer-sponsored health plan was “required” for all Americans. There’s a tax penalty for being uninsured (in 2016, 2.5% of income or 695 per uninsured adult). The marketplace – a system of exchanges that individuals and small businesses have access to – provides affordable health care options for all Americans. Coverage options are divided into several levels, termed “metal tiers.” Premiums are calculated based on those levels, and on a sliding scale to make them affordable to low-income and middle-income families.

Obamacare divided health insurance into several levels, termed “metal tiers.”

Catastrophic Plans

Catastrophic Plans are also available under the Affordable Health Care Act. These plans have low premiums but very high Deductibles and are only available for people under age 30. The Deductible on a catastrophic plan is the same as your “maximum out-of-pocket” expenses, so you will pay for all of your medical costs, other than some specified preventative services until that maximum is reached.

Bronze Plans

Bronze Plan is the “lowest” metal tier, and on average insurance covers 60 percent of medical costs with the insured responsible for the remaining 40 percent. This metal tier has the lowest premiums, but the greatest risk of facing significant financial obligation in the event of a critical illness or serious accident.

Silver Plans

Silver Plans are the second metal tier in the Affordable Health Plan. On average, Silver Plans pay 70 percent of medical costs with the insured responsible for 30 percent through Deductibles and Coinsurance. Silver plans still carry a significant risk if faced with unexpected medical costs.

Gold Plans

Gold Plans have low Deductibles and insurance pays on average 80 percent of medical costs. This second-highest metal tier in the Affordable Health Plan has a high monthly premium but is a safer choice for people who expect to have frequent medical expenses and prefer to buy insurance rather than incurring greater risk to personal assets.

Platinum Plans

Platinum Plans are the top metal tier under the Affordable Health Plan. Monthly premiums at this most precious metal level are high, but insurance pays for, on average, 90 percent of medical costs often with no Deductible to satisfy in advance. These plans are typically chosen by individuals with known health conditions that requiring frequent and regular treatment.

Obamacare seeks to provide health insurance for more people by operating health exchanges to simplify the health insurance purchase process, giving tax credits to low-income people to help cover a portion of the premium, and removing pre-existing condition exclusions so everyone can have health insurance regardless of their health history.

However, health insurance is still expensive despite the tax credits, and over 90% of people on the health exchange opt for the cheaper Bronze and Silver plans. These plans have high deductibles and max out-of-pocket limits, which can be disastrous in a catastrophic medical event and can result in an out-of-pocket cost in excess of $10,000 for many Bronze and Silver family plans.

Obamacare makes it easier for small businesses to provide insurance for their employees through the Small Business Health Options Program (SHOP) marketplace and giving tax credits to cover health insurance premiums. However, employers and employees still have to pay the majority of the premium, and health insurance is expensive, so many opt for a High Deductible Health Plan (HDHP). HDHP’s high deductible and max out-of-pocket limit can be disastrous in a catastrophic medical event and can result in out-of-pocket expenses in excess of $10,000 for many Bronze and Silver family plans.