Before the ACA, individuals without employer insurance bought an insurance plan directly from an insurer (i.e. United Healthcare, Aetna…). Plans were typically poorly regulated and had very few consumers to share the risk, so costs were high. The ACA sought to establish a single virtual marketplace, where consumers could shop for and purchase an insurance plan, allowing individuals across a county to be pooled together, minimizing risk and lowering cost. The health insurance exchanges established by the ACA offer transparent cost comparisons between plans and enforce the inclusion of essential health benefits to ensure quality across all plans.
Those in the individual market now have the opportunity to shop for a plan that best fits their needs with options ranging from the low premium/high deductible bronze plans to the high premium/low deductible platinum plans. Additionally, all marketplace plans are subject to a number of consumer protections, including:
- Pre-existing condition exclusion limitations make it illegal for plans to exclude consumers or charge more to patients with a pre-existing condition;
- Women no longer pay disproportionately higher premiums than men;
- Essential health benefit requirements ensure that all plans will include a package of baseline coverage intended to create a standard of quality coverage without lifetime or annual caps;
- Premium tax credits paid by the federal government to consumers making less than 400% of the Federal Poverty Level (FPL) help lift the economic burden of monthly premium payments;
- Cost-sharing reductions for individuals making less than 250% of FPL offset the cost of deductibles, out-of-pocket maximums, and copayments.
The Supreme Court struck down the Medicaid expansion requirement in NFIB v. Sebelius, which allowed states to opt out of expanding their Medicaid program. So far 33 states have expanded Medicaid, however, the language in the ACA assumes that every state expanded. The result is that those Americans who fall below 133% FPL, but remained above their state’s Medicaid eligibility, do not qualify for subsidies in the exchanges. However, these individuals are not penalized for lacking health insurance by the individual mandate. It is unfortunate that the majority of states refusing to expand Medicaid are the states with the greatest number of low-income, uninsured individuals.
In December 2017, Congress passed a tax bill that brought the penalty for not complying with the individual mandate to a hefty $0, effectively eliminating the individual mandate—although it is important to note the mandate is still very much in place, simply without a penalty for noncompliance. This and other actions taken in the years since the passage of the ACA have left certain marketplaces, particularly those in rural areas with few consumers, at risk. Calls to “stabilize the marketplaces” have come from both the right and the left, making this an important issue to keep an eye on.
Image from healthcare.gov.