Special Report: A Closer Look Into Obamacare

The Patient Protection and Affordable Care Act has been both reviled and revered. Here is an in-depth look into Obamacare.

Why were Republicans willing to shut down the federal government and risk the first default in U.S. history to repeal or scale back the Patient Protection and Affordable Care Act (ACA)—Obamacare? Why were Democrats willing to risk the same to preserve it?

Does the ACA represent a massive, unworkable new federal program that will cripple businesses, reduce real worker wages and destroy the American health care system, as Republicans charge? Or, does it provide essential access to health care for millions of previously uninsured Americans, as Democrats claim?

Peeling back the layers of rhetoric surrounding the ACA and finding some essential truths about this controversial law is a daunting task. There’s no doubting the passion on both sides of the debate, but a close examination of the act, its origins and its potential future reveal that those passions may be less about the merits of the law—good or bad—than about the political weapon it has become in our nation’s partisan battles.

We’ll try to examine some myths about the ACA and provide accurate information that will better illuminate what the law is and isn’t. The goal is not to confirm or allay fears about the law, nor is it to buoy or temper support. We seek simply to replace hyperbole with fact as the debate moves forward.

What does the ACA actually do?

It does many things, but here are the ones that are likely to affect the most individuals:

  1. Beginning Jan.1, 2014, it requires all Americans not covered 
by employer-paid insurance or other programs to purchase 
health insurance or pay a penalty (the “individual mandate”).
  2. Beginning Jan. 1, 2015, it requires all employers with 50 or more people to offer health insurance to full-time employees 
or pay a penalty (the “corporate mandate).
  3. It establishes minimum standards for insurance policies.
  4. It prohibits the denial of insurance because of pre-existing 
  5. It prohibits insurers from rescinding a policy once a person 
becomes ill.
  6. It creates health insurance “exchanges” as an option to purchase health insurance policies.
  7. It provides premium subsidies to Americans making 400 percent of the poverty level.
  8. It gives states the option to expand Medicaid to families making 138 percent of the poverty level.

The heart of the ACA is the individual mandate, which the Supreme Court narrowly upheld in 2012. Who came up with the idea for the individual mandate?

The Heritage Foundation. Yes, that Heritage Foundation. Others may have articulated some form of the idea before, but the conservative think tank’s Stuart M. Butler put it in the political mainstream during a 1989 lecture outlining a conservative alternative to universal, single-payer national health insurance. Point No. 2 in the Butler’s program: “Mandate all households to obtain adequate health insurance.”

Butler likened a health insurance mandate to those for seat belts or auto insurance: “Neither the federal government nor any state [currently] requires all households to protect themselves from the potentially catastrophic costs of a serious accident or illness.”

Like the plan that became law, Butler also called for government support (primarily in the form of tax credits) and changes to state Medicaid programs. There were numerous other features for the elderly not reflected in the ACA.

Heritage maintained its support of the individual mandate through 2006, when it was the centerpiece of a Massachusetts health care bill signed into law by then-Gov. Mitt Romney (with a Heritage scholar present at the signing ceremony).

As for Butler himself, he had dropped his support of the mandate by early 2012, saying “health research” and “advances in economic analysis” convinced him “an insurance mandate isn’t needed.”

How did President Obama come to embrace the mandate, given its origins?

Reluctantly. Obama spent the 2008 campaign opposing an individual mandate. During that year’s primaries, Hillary Clinton and John Edwards were proponents of a mandate and candidate Obama blasted them. One Obama television ad warned voters: “Hillary Clinton’s attacking, but what’s she not telling you about her health care plan? It forces everyone to buy health insurance, even if you can’t afford it, and you pay a penalty if you don’t.”

In 2009, the President finally accepted the mandate, coupled with an employer mandate to provide insurance for full-time workers, as the clearest path to health care reform.

What did Obama want in the way of health care reform?

At the outset of his campaign, it wasn’t clear. In the speech announcing his candidacy, Obama devoted 62 words to his call for health care reform. He used 87 words to praise ethanol and other alternative fuels. Later, he released a more fully developed plan, but the closest he came to an individual mandate was a proposal that all children have health insurance. Some of the eventual ACA was there, including the employer mandate and insurance exchanges. He even had a limited public, single-payer plan for small businesses and individuals.

Why does the individual mandate start this coming Jan. 1 but the employer mandate doesn’t start until Jan. 1, 2015?

The administration exercised its discretionary authority to push back the employer mandate by a year, saying that the federal government wanted to give businesses more time to prepare for implementation. ACA opponents have used this delay to say even the administration knows the plan is unworkable.

What about the problems with the health insurance exchanges and will it delay the individual mandate?

The exchanges opened for business on Oct. 1, in preparation for the upcoming individual mandate, and the results aren’t pretty. People can’t log in, individual information is wrong and it is unclear whether they have successfully signed up.

Administration spokespeople are leaving a tiny amount of wiggle room about the individual mandate line but for now, the administration is relying on a “tech surge” (hiring more outside consultants) to address the problem. Here, too, opponents are having a field day.

All the politics and glitches aside, does the ACA provide universal health care coverage?

No. The Congressional Budget Office (CBO) estimates that 53 million non-elderly Americans are uninsured today. In a July 2012 report, CBO estimates that about 30 million of those Americans will remain uninsured by 2022.

Why isn’t every American insured?

Neither proponents nor opponents ever claimed the ACA would provide universal coverage.

The Supreme Court’s upholding the individual mandate guaranteed more Americans than expected will participate in the health insurance exchanges, which opened for business Oct. 1. However, in allowing states to opt out of the ACA’s expanded Medicaid program, the court ruling limits somewhat the number of poor Americans who will be covered.

What exactly is the Medicaid expansion and why did Florida opt out?

As noted, the ACA expands Medicaid coverage to families making 138 percent of the poverty level (about $32,500 for a family of four). Because Medicaid is administered by the states, the Supreme Court ruled that states did not have to participate (so far Florida and 21 other states are not participating). The ACA committed the federal government to cover the cost of the expansion, which for Florida would have meant an average of about $5.1 billion per year in extra federal funding for the next 10 years to insure an extra one billion Floridians. Gov. Rick Scott supported the expansion, but the Legislature rejected it, for now. At least one Super Region lawmaker, State Rep. Jim Boyd, R-Bradenton, said the Legislature could give the concept a second look.

What about the charges that the ACA is too burdensome on business and that it will lower real income?

There is no question the ACA will create new requirements, paperwork and otherwise, for business, and FORWARD Florida covered many of these earlier (see Issue 3, Page 47). As for the impact on real income, it is likely some workers will experience a wage squeeze. More than a few businesses and other organizations may choose to lower workers’ hours below 30 per week, the point at which the mandate to provide insurance applies. (Actually, employer insurance has been on the decline for some time. According to a 2012 report from the Employee Benefit Research Institute, the number of workers offered health insurance declined slightly between 1997 and 2010, from 70.1 percent to 67.5 percent. The number of workers accepting the insurance coverage dropped from 60.3 percent to 56.5 percent. Keep in mind, though, some of these workers may be covered by their spouse’s insurance.)