You may remember this day or the event. It is 2010 when President Obama signed the Affordable Care Act into law. This was the biggest overhaul to the national healthcare system since Medicare and Medicaid were introduced in 1965. In this lesson, I will provide a very high-level overview of the Affordable Care Act and discuss some pros and cons. Lastly, I will discuss where it might be headed and its affect on the United States insurance system. So, now we have the ACA, and many hope that it will solve the woes of healthcare and health insurance, specifically improving both the cost and access to health insurance. Unfortunately, while the ACA is focused on both cost and access, it is more heavily focused on improving access to health insurance. What that means is that it includes many reforms that make it easier for everyone to purchase health insurance. Improving access is important. However, if you are expanding the number of people covered by insurance, but not reducing the cost of healthcare, then over time, the model is unsustainable. I will cover some of what is in the ACA, but at a very high level because I am sure you have heard the ACA was quite expansive, and we could have a whole series of lessons just to discuss its different parts. The ACA introduced federally-funded subsidies to help people who meet financial threshold to purchase health insurance. These subsidies are used by people to purchase private insurance coverage through marketplaces or exchanges. Depending on the individual's income level, subsidies are provided to pay for premiums in any cost sharing obligations like deductibles or co-payments. The ACA also provided financial incentives to states to expand access to Medicaid coverage for those meeting lower financial thresholds. The ACA includes many new rules for insurance markets intended to make insurance more accessible to people. For example, insurance premiums can not discriminate against sick people, meaning you cannot charge a higher premium to someone just because they are sick, and insurance products must be available to everyone regardless of their illness burden. Premium rating rules were created. That limit the variation in rates by age so that an older person is paying more than a younger person but with a limited differential. A minimum package of essential benefits was created so that people are no longer forced to buy insurance plans that do not cover services like childbirth, mental health services, or prescription drugs. There are new rules so that people no longer risk purchasing plans with very high deductibles or plans with limits on the covered benefits. All plans now provide comprehensive coverage. Preventive services are covered without any out-of-pocket expenses to the patient to encourage people to get annual physical exams, mammograms, and other preventive services. Dependence can continue to be covered under their parents' insurance plans until age 26. Thereby, increasing the number of young people that remain insured. If you recall back to our discussion on insurance and pooling and think about the favorable impact that these young people would have on risk pools, you'd understand that that is a very good thing. Rules were also established to ensure that a majority of the health insurance premium dollar is used by insurance companies to pay for healthcare services rather than administrative expenses or profits. Other insurance reforms included the creation of risk adjustment, reinsurance, and risk corridor mechanisms. All intended to stabilize the risk pools and avoid differences across insurer risk pools based on patient illness burden. All of these rules were created in direct response to insurance markets that existed prior to the ACA that prohibited people from purchasing health insurance or being charged exorbitant premium rates for that coverage. The ACA also included provisions to address increasing healthcare costs, including new payment models for Medicare. While the outlook for cost mitigation is good, many of these provisions are long tailed in terms of timing of implementation and the realization of results. Sustainable change can only be achieved if Improved access is paired with improved cost. So, there is more work to be done to achieve those goals.
