 Personal Finance PowerPoint presentation, Affordable Care Act, the ACA, prepare to get financially fit by practicing personal finance. Remember that insurance planning is part of our risk mitigation strategy where we use the adage of measure twice, cut once. We go through a formal process looking something like this. We set the goals, we plan and do our research. We then put the plan into action. We review the results and then we go through that process periodically again and again. We're looking at the Affordable Care Act, the ACA. Most of this is from Investopedia, which you can find online. Take a look at the references, resources, continue your research from there. It's by Bill Kenton, updated October 12, 2021. So we're focused here on the medical insurance and the medical insurance is similar to other types of insurances, but there's a lot more kind of laws and regulations that are involved that kind of complicate the medical insurance. So just remember insurance in general, if you were to compare it to something like property insurance where you're trying to insure against something that could happen in the future, which hopefully is not likely to happen. But if it were to happen, it would be financially devastating, possibly devastating in other ways as well. But we're looking to get financial support from the insurance company. So for example, if the house burnt down, that's not likely to happen. But in the event that it did happen, it would be financially devastating. So we might want insurance to mitigate that kind of risk. Same thing on the health insurance. You could have insurance where you're saying I'm trying to insure against an event that I'm hoping doesn't happen, but would be financially devastating as well as devastating in other ways, such as coming down with some kind of disease, which would cost a lot of money. And therefore, we would want to have some financial coverage or some insurance coverage to cover that kind of event. However, the medical insurance, because of political pressure and other kind of pressures in just the nature of the medical profession or the medical industry in and of itself and the fact that we don't want people to go without things like preventative care leads to more laws and regulations to try to get one, more people insured and two, to increase the amount of things that are covered within insurance. So you're talking possibly not coverage just for a big event that could be financially devastating, but now coverage for the day to day or whatever time frame it is to have a doctor's visits and that kind of stuff would be included in the coverage. That of course complicates the concept of what we're buying with the insurance and you can imagine more complex kind of packages that could be offered once you add on these different kind of components. So then we've got laws and regulations that are surrounding this, one of them of course being the Affordable Care Act, the ACA, which can have a big impact on how the whole healthcare system works and how the insurance works. So the Affordable Care Act, the ACA is the comprehensive healthcare reform signed into law by President Barack Obama in March 2010, formerly known as the Patient Protection and Affordable Care Act and often called Obamacare. The law includes a list of healthcare policies intended to extend access to health insurance to millions of uninsured Americans. So obviously that's going to be one of the components of the laws, try to extend the health insurance, see if you can lower the health insurance and this kind of coincides with some other debates from a political perspective which are just interesting to know and they might give you some kind of insights on how your health insurance is basically working and that being the idea of whether health insurance should be something that is more market run or is it something that should be run basically from the top down kind of controlled more by the government type of thing. Is it a right or is it a privilege would be another kind of question that would lead into that same kind of concept. How can we get basically more people insured? How can we lower the costs of the health insurance while also keeping more people insured? One of the ways that the Affordable Care Act originally thought to do that was to eliminate what economists call the free rider effect and that would be that if you don't buy health insurance then you're still getting some level of care because if you had a real problem you could probably still get care in that event which you may not be able to pay for and that kind of cost then goes to everybody else who is paying for it through insurance and their other medical costs and therefore the thought was that if you can get everybody on health insurance by providing affordable health insurance by basically lowering the cost by putting everybody on it and giving subsidies basically in tax benefits possibly to lower income individuals then you may be able to actually lower the cost that would be the idea. So that was the kind of original thought but then it kind of got taken apart a bit because there's questions as to whether you can force someone to buy something and whether or not you know a big pool or one pool or standardizing the insurance would be beneficial or would it be better to have more diverse kind of insurers on a market more market based system. So these are the questions that have been been shifting the health care and have big impacts on us as we think about our health care activities and how the insurance is going to work. So the act expanded Medicaid eligibility created health insurance exchanges mandated the Americans purchase or otherwise obtain health insurance and prohibited insurance companies from denying coverage or charging more due to preexisting conditions. So note obviously from the insurance standpoint if you're going to buy insurance and you have a preexisting condition that is a problem for insurance because you would think they would want to increase increase the cost because you're clearly at a higher risk than the standard pool. So that's an issue because we want to have people to be covered. So that was of course a big issue and then the insurance. So the insurance companies are going to be skeptical of doing that because they need to basically make money. But then the idea was that they're going to force everybody to be insured which on that side the insurance companies like it right because then they're going to force all the people that weren't buying insurance to buy insurance most likely from them. And so that was the kind of interplay the interesting kind of thing that happened there. It also allows children to remain on their parents insurance plan until age 26. Now there was a problem of course with this with this requiring people to then get insurance from the federal level. So that that that ran into some difficulties which leads to where we're at kind of now. So understanding the Affordable Care Act. So the ACA was designed to reduce the cost of health insurance coverage for people who were qualifying for it. The law includes premium tax credits and cost sharing reductions to help lower expenses for lower income individuals and families. So it's kind of interesting because part of the idea was to get rid of the free rider effect so that people that were not paying for insurance paid for insurance so that then you would have you would have not have the free rider effect and basically you would be able to cover the cost and hopefully that would lower the cost of the insurance. But then they actually did to do that they subsidized the insurance right. So now the people that couldn't afford it they're going to try to say well we don't want to make you worse off therefore we're going to in essence you know subsidize the insurance through possibly taxes and whatnot to kind of make that work. So the premium tax credits lower your health insurance bill each month. So so now you get a credit. So if you were to get this kind of insurance on the marketplace then then basically you they would basically say well I'm going to try to figure out how much the credit would be that you would get and I'm going to lower your premium by the amount of the credit that you might get. And that's where the tax component comes into play and how they kind of subsidize it for the low income individuals. But one of the issues with that is it gets quite complex to low income individuals whose taxes should be fairly easy because now you have to actually estimate what their income is estimate what the premiums would be after the credit and then give them that benefit when you when you're making the payment and then when you do your tax return you have to reconcile that whole process which is which makes the actual tax calculation a lot more confusing and it's kind of hard to wrap your mind around what exactly is going on and until you get used to it at least. So the premium tax credit lower your health insurance bill each month cost-sharing reductions meanwhile reduce your out-of-pocket costs for deductibles co-pays and coinsurance as well as lower in your out-of-pocket maximum so the total amount you pay and a year for a covered health expenses. So all ACA compliant health insurance plans including every plan that sold on the health insurance marketplace so when you hear the health insurance marketplace that's basically when you're when you're looking at these these types of plans and you might have you know this idea of the credit that could be involved when you're thinking about how much you're going to be paying and getting the credit in advance. So it must cover specific essential health benefits including ambulatory patient services mental health and substance use disorder services breastfeeding pregnancies maternity and newborn care emergency services prescription medications family planting preventive preventive and wellness services and chronic disease management hospitalization pediatric services laboratory services rehabilitative and habilitative services. So those are the things that are required to be covered here. So in addition the ACA requires most insurance plans including those sold on the marketplace to cover at no cost to policyholders a list of preventative services. So this is where we get in that preventative stuff and you can see why from a policy standpoint why it would be you know they have an incentive to do this because they're trying to get people to do that preventative care but it also complicates things because that's kind of different than what you do on other kinds of insurance that's kind of like your car insurance saying they're gonna cover your oil change in your car in your tire rotations and stuff like that it may you know it's not really what you normally think so it makes things possibly a little bit more difficult or possibly adds more complexity in the types of insurance plans that would be available if you were to allow insurance companies to package different plans based on different people's needs or we can standardize everything and say we're just gonna make it one one-size-fits-all. So again again there's pros and cons to those arguments on which you would think would be a better way to go. So these include checklist, patient counseling, immunization and numerous other health screenings. It also states that opted in to extend Medicaid coverage to a wider range of people as of June 2021 37 states and the District of Columbia exercise that option. Every year there is an open enrollment period on the health insurance marketplace during which people can buy or switch insurance plans. You got to get into when that period is in terms of when you're going to be switching up your plans if you're on the insurance marketplace. If you miss this time you cannot enroll until the following year unless you qualify for a special enrollment period because your circumstances change for example you marry divorce become a parent or lose a job that provided health insurance coverage. Special considerations a critical part of the original ACA was the individual mandate at provision requiring all Americans to have health care coverage either from an employer or through the ACA or another source or face tax penalties. So this is where they are trying to get that free rider impact and this was you know really one of the keystones holding the bridge up of this whole strategy or plan because that's how you are going to basically decrease the fact that the premiums are high and the medical costs are high by reducing the free rider effect but that that was basically taken out so it's kind of weird the way the whole thing works at this point in time because you don't have that you don't have that component. So the mandate was eliminated in 2017 so we still have the kind of law in place but that that mandate was removed which which kind of changes a lot of the calculus on how this is going to work. So this mandate served the double purpose of extending health care to uninsured Americans and ensure that there was a sufficiently broad pool of insured individuals to support health insurance payouts. So the idea being if you have a wider pool then that lowers the risk to the insurance company so they should be able to lower their premiums and if you get everybody on insurance then you don't have that kind of free rider effect where people are people are uninsured and therefore there's no payment for some of the health care services that should lower the cost of the medical care. Some of the issues on the counter side of that just note is that is that other people would say well I'm not sure we want everybody in one pool because people have different health care needs. So in other words the other argument going the other way would say I want I think we should allow more people to have more companies to have differing health care plans that would be specific to spur certain individuals. In other words we don't need a whole like if a health care plan wanted to put a pool that's specific to a group's needs then then they wouldn't have to cover some of the things in the wider pool. Obviously if you're talking about things like a man doesn't have to have coverage related to a pregnancy and stuff like that so if you know if you can eliminate some of the risks that are involved with certain individuals in that area and the same would be true for certain male diseases or whatnot you would think that that would lower the risk so if you can put your pools in and in that kind of way you might actually be able to lower costs. So the question is should we force everybody to be in the same pool which might lower risk because you got a bigger pool which generally lowers risk or should you let the marketplace break up people into into what they actually want and have different different markets which could lower risk in that you could specialize the risks for for particular groups possibly based on their particular needs. So the argument goes back and forth. So criticism of the Affordable Care Act the ACA critics of the ACA have pointed out that it represents an unprecedented expansion of federal power within the health care industry because it required all individuals to purchase a service health insurance whether they wanted to or not. So from from just a free rights standpoint there was arguments I believe whether it would be constitutional or not from the federal government to force you to buy something because usually from the federal sides the bill of rights or things that your your actual rights are usually things that the government can't take away from you. They're not rights whether the government has to give you right. So that would mean that health care isn't really a right. It's you have a right to take care of your own your own health that's different because one is saying that you know that the government is required to do something whereas usually the rights are designed in such a way that the government is not allowed to take something away. And in this case they're taking something away. You could think of which would be taking away your right not to want to buy health insurance right. So in any case so this aspect of the law was a major focus of debate and it was challenged in the U.S. Supreme Court in 2012 by the National Federation of Independent Businesses. The court ruled in favor of the individual mandate as a constitutional exercise of the Taxing Authority. Now this was a really interesting conclusion that they came to because they kind of it seems kind of like a little bit of a twisting of what's going on here because they basically said that well no you're not buying a service we're charging you taxes. Well really because really that's you know you're kind of so it's a little bit you know they're charged they're making you buy taxes but your taxes are going to a specific service so it's a little a little bit of a twist here but that's what they came to. So the authority of Congress characterizing the penalties levied against the uninsured as a tax. So in other words the enforcement to make people buy insurance they said was it was it was a tax which the government does have the right to do under the Constitution. But you know but you know the idea was it seems kind of like a penalty and so but that's what they came to. So recent history of the Affordable Care Act the ACA after President Barack Obama left office the ACA with a weathered opposition and a number of significant changes. So then you got the Trump administration they came in and obviously you know they have different kind of objectives I guess. So on the January 20th 2017 for his first executive order after taking office former President Donald Trump signaled his intention to defend to defund the ACA the Affordable Care Act saying executive agency heads should quote delay the implementation of any provision or requirement of the act that would impose a fiscal burden on any state in quote the intention of this order signaled the first phase of Republican efforts to repeal and replace the ACA attempts by the government in 2017 to repeal the law altogether were not successful. So it's kind of interesting what happened because a lot of the you know they kind of ran on this slogan of repeal and replace it because they wanted to go back to the like a more market approached and that kind of stuff but that's not really what happened because obviously when you have laws of this magnitude that impacts such a huge component of of our lives and what that it's hard to kind of just just pull something just stop it right which is why it's useful to have the laws to be slow to be implemented in the first place generally but so however the government substantially scaled back its outreach program to help Americans sign up for the ACA and cut the enrollment period in half so changes have been made to the law that addressed some of the objectives raised by opponents while still keeping the marketplace open for users so we still have the marketplace so for example in December 2017 as part of the Tax Cut and Jobs Act the TCJA Congress removed the penalty for not having health insurance so they did this on the federal side of things which is again you might be a pro or con on that depending on where where you stand on it but that was that was kind of a linchpin to try to get to try to get everybody on the health insurance by penalizing them if they weren't on there but it also did have a lot of complications to a lot of people in terms of their tax code and you know how the whole thing kind of fits together it's a little bit complicated so they remove that so starting with the tax year 2019 the individual mandate penalty was reduced to zero dollars essentially removing the requirement that many Republicans hadn't had opposed so in other words I mean you can't really require someone to do something if there's no teeth in the law meaning now they don't have the penalty to enforce if people don't have health insurance so there's really not so that people so there's no there's no consequence if you don't have health insurance so by if you don't have health insurance so by 2018 the number of Americans covered under the ACA had dropped to 13.8 million from 17.4 million in 2015 according to a report from a health care research organization Kaiser Family Foundation by 2021 there was 11.3 million people with plans through the ACA but 14.8 million people newly enrolled in the Medicaid through the ACA expansion in March 2019 House Democrats unveiled legislation to shore up the act and expand coverage while the Trump administration revealed revealed it would seek to repeal the entirety of the ACA in a letter to the federal appeals court the justice department said it agreed with a federal judge in Texas who declared the health care law unconstitutional and added that it will support the judgment on appeal the case was heard by the Supreme court in November 2020 with a coalition coalition of 21 attorney generals defending the ACA and now we've got the Biden administration so president Biden Joseph Biden who helped Obama passed the law so clearly he was the vice president at the point in time that that that the law was going through is widely expected to make efforts to strengthen the ACA during his term and veto further legislative attempts to overturn it in addition to setting up a new special enrollment period the executive order president Biden signed on January 28 2021 also focused on quote rules and other policies that limit Americans access to health care and quote this executive ordering federal agencies to examine five areas and decide whether action is needed there so we got the protections for people with preexisting conditions so that was a key you know talking point work requirements and other limitations on access to Medicaid and the ACA policies undermining health insurance markets including the health insurance marketplace policies increasing the defect difficulty of enrolling in Medicaid and the ACA policies reducing affordability or financial assistance for recipients or dependence so the bottom line the Affordable Care Act was created in 2010 and is more commonly known as Obamacare it extended the health care coverage to millions of previously uninsured Americans the act required that all Americans purchase or otherwise obtain health insurance and prohibited insurance companies from denying coverage or changing more due to preexisting conditions it also it allows children to remain on their parents insurance plan until age 26 so obviously you can see how the health insurance has a lot of laws and regulations and that could kind of muddy the water with a particular decision-making process and they're also really interesting decisions with regards to just how we think things should be running going forward what what's what our rights and what are not rights and what kind of things should be done on this on the on the federal down top-down level and what kind of things do we need market forces for and so on so it's pretty interesting area the ACA also created the health insurance marketplace through which eligible people may find and buy health insurance policies all ACA complaint health insurance plans complaint health insurance plans including those sold through the marketplace must cover a number of essential health benefits the Biden administration is expected to extend the ACA over the next few years