Since the Affordable Care Act was signed into law in March 2009, health insurance has undergone a slow and deliberate overhaul. Before the full implementation began this year, numerous changes to insurance policies were made incrementally to allow insurance companies to adjust to the new landscape. For example, six months after being signed into law, it was announced that children could remain on their parents’ policies until age 26, and children could not be denied due to preexisting conditions. Over the next four years, changes such as preventive care (i.e. annual exams), as well as birth control for women had to be covered – all with no co-pay.
All of these changes were fought by Republicans, staunch ACA opponents since the bill was introduced during the first year of President Obama’s first term. Their arguments were numerous and varied, but usually boiled down to a few main arguments: the changes would be costly to Americans and insurance companies, result in less care and hurt small businesses. Now that the first open enrollment period has ended, facts are, once again, proving their protestations of doom were way off the mark.
While final numbers are still being calculated, it is estimated that almost 8 million Americans signed up for health insurance during the enrollment period beginning on October 1, 2013 and ending March 31, 2014 (due to technical glitches, the enrollment was extended for some until April 15). The signups included people previously insured by noncompliant policies, as well as those who had previously never had insurance. Nearly 5 million of the signups were people eligible for coverage under the Medicaid expansion. Of those that signed up through the exchanges, 85 percent qualified for federal subsidies.
The numbers do not include those who signed up for new policies directly through health insurance companies (i.e. not through a state or federal exchange), since it is believed that many of the new signups were people with pre-existing conditions previously denied coverage, a practice that is no longer allowed.
In 2011, insurance companies were required to meet the Medical Loss Ratio rule (MLR). This meant that companies were required to spend 80 percent of every premium dollar received from policyholders on medical claims (the ratio is 85 percent in large group markets). If that ratio was not met, meaning they spent less than the minimum required, insurance companies had to rebate the money not spent to policyholders. In the first year, insurers paid a total of $1 billion in rebates, with the average per customer of $108. After two years, the amount paid due to not meeting the MLR has shrunk by half.
Contrary to predictions, insurance companies’ profits have not been affected.
The change is attributed to companies slashing overhead and administrative costs. The United States spends nearly three times as much as other developed nations on administrative costs for healthcare, largely due to our health insurance being distributed via private insurance. Countries with single payer have much lower overhead with comparable delivery of care.
The increased spending on actual medical care has also not reduced the benefits policyholders are receiving. In fact, benefits have increased under the law. In addition to changes in preventive care, many services that were deemed optional under the previous system, including pregnancy and adult immunizations, are now standard in all policies. There are also provisions for mental health care and other therapy treatments that would often not be covered under policies without paying a much higher premium – if they were covered at all.
It is estimated that consumers have received more than $3 billion in new benefits since the law went into effect.
Another opponent prediction was that huge job losses were inevitable as many employers would have to reduce the number of employees in order to keep operating. While there have been some (often debunked) protestations from CEOs blaming the costs of Obamacare for layoffs, most employers have adjusted to the new landscape, though employers have seen the larger of premium increases. In order to compensate, some employers have stopped providing coverage to part time employees and instead have helped them purchase insurance in the exchanges which would cost them less.
The coverage requirement for small businesses with fifty or more employees has been delayed until next year. The requirement will not be a huge change for most businesses as few small businesses have that many employees. However, the ACA has already changed the landscape in a somewhat surprising twist: an increase in entrepreneurs and new small businesses.
The new protections under the ACA are most beneficial to those on the individual insurance market. Now that these polices have protections in place, people are no longer forced to remain in a job in order to receive health coverage. This has provided incentives to many who otherwise felt trapped by their circumstances. Having saved or otherwise made a good living, some are choosing to retire early to start businesses. Others are leaving less fulfilling jobs for other companies that may not provide health insurance, but pay them enough to purchase insurance on their own – allowing them to pursue passions that had previously seemed out of reach.
In the end, consumers are receiving better health coverage, insurance companies are still making a profit and small businesses can compete with bigger companies for quality employees. Though the ACA is not without its problems and there is much room for improvement, evidence is mounting that the law is a crucial step in providing better health outcomes for Americans and will be instrumental in improving the economy.
Perhaps the real reason opponents have been fighting every step of the way is because they knew what many are just now figuring out: Obamacare works.