Obamacare: An Intro

This week was the fourth anniversary of passing the Affordable Care Act (ACA), colloquially known as Obamacare. Many, including Canadians and numerous Americans, thought first that it meant universal health insurance and were subsequently surprised to realize this is not the case.

The ACA’s intent is primarily to increase the number of Americans who have health insurance. Of the roughly 46 million Americans who were “uninsured” in 2009, a substantial chunk could not afford insurance. Several others–roughly half and most of whom are young and healthy– thought it not worth their while to have it. However, if they got injured, hospitals picked up the bill, which was then dispersed among other people’s insurance premiums.

There are three provisions in the bill:

1)    Mandates requiring individuals to purchase health insurance or else suffer a significant penalty: either purchase health insurance from a private company or pay a fee to the federal government

The Supreme Court’s (SCOTUS) ruling in 2012 confirmed the bill’s constitutionality and it has been gradually taking effect since 2013. The second mandate requires employers with more than fifty employees to provide all full-time staff with health insurance or, similarly, pay a substantial fine. Alternatively stated, this means that employers cannot hire (or retain) full-time workers unless hey can also afford to pay for that person’s health insurance. Labour unions caught on to this and many of them now voice strident opposition to Obamacare. Thus far, there have been thousands of documented layoffs because of the employer mandsate.

2)    Expansion of state Medicaid programs

Canadians unfamiliar with American healthcare should know that while private firms insure a majority of Americans, Medicaid is a safety-net health insurance program for those without the means of acquiring insurance (typically the poor). It is run at the state level, which bears the cost and financial responsibility for their expansion. Because of this, nearly 33 states have refused to expand their Medicaid programs in the wake of Obamacare, citing fear of future insolvency issues. In addition, the Medicaid fee schedules for doctors seem to be so low that many of them no longer accept Medicaid patients.

3)    “Health insurance exchanges”

Essentially, an exchange is a regulated and subsidized marketplace where the uninsured can shop for health insurance policies, the price of which adjusts to their annual income. They came into effect in October 2013 and were the subject to scrutiny due to technological errors precluding consumers from accessing the website.

In sum, Obamacare is not universal health insurance. Principally, it is a mandate requiring Americans to purchase their own health insurance. If employers fail to provide coverage, individuals may hope to find subsidized policies through the marketplace exchange or become eligible for Medicaid in certain circumstances. While the implementation of each of these reforms has been shaky and mixed with unintended consequences, the policy community remains divided on whether, on balance, the bill has been a success thus far.

Michael Craig is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute

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