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Obamacare Pros and Cons

Detailed Advantages and Disadvantages of the Affordable Care Act

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Obamacare pros and cons

Obamacare pros and cons will be debated for years.

Photo: Joe Raedle / Getty Images
health worker exam

Insurance companies cancelled many plans that didn't meet Obamacare requirements.

Credit: David McNew/Getty Images
doctor with woman

Many people with chronic illnesses can get insurance for the first time.

Credit: Joe Raedle/Getty Iages

The Patient Protection and Affordable Care Act of 2010, more popularly known as Obamacare, was highly controversial right from the start. That's partly because the Act is so complex that anyone can easily pick out whichever facts support their points of view. Furthermore, the advantages mostly accrue to those who don't have health insurance, whether it's because of cost, employer or pre-existing health conditions. The disadvantages accrue to those individuals and businesses who pay more taxes or incur higher operating costs. Find out How Much Will Obamacare Cost Me?

Pros

The non-partisan Congressional Budget Office lists these advantages:
  1. The Act was designed to reduce overall health care costs by making services available to the 32 million who currently can't get insurance. They often use a hospital emergency room as their primary care physician, increasing costs for everyone. This starts in 2014.
  2. It requires that all plans cover 10 essential health benefits. Preventive services are free, which lowers health care costs by treating diseases before they reach an expensive crisis.
  3. For people who can't afford health insurance, the Federal government will pay the states to add them to Medicaid. The income requirement is expanded up to 133% of the Federal poverty level - roughly $31,000 for a family of four.
  4. Those who don't qualify for expanded Medicaid receive tax credits if their income is below 400% of the poverty level ($94,000 for a family of four). States are required to set up insurance exchanges, or use the Federal government's exchange, to make it easier to shop for insurance plans.
  5. Insurance companies cannot deny children coverage for pre-existing conditions. This benefit applies to everyone in 2014. Insurance companies can no longer drop anyone from coverage once they get sick. If a company denies someone coverage, that person can go to an external appeals process.
  6. Parents can put their children up to age 26 on their health insurance plans. This increases profit for health insurance companies, since they receive more premiums without higher costs for these healthier individuals. As of 2012, more than three million previously uninsured young people were added. (Source: Department of Health and Human Services)
  7. The Medicare "donut hole" gap in coverage is eliminated by 2020.
  8. People with existing health insurance can keep it (unless the provider drops it). Businesses prefer to offer a tax-free benefit like health insurance to attract good workers. That won't change under Obamacare.
  9. Obamacare does not apply to businesses with less than 50 employees. Larger businesses are required to offer health insurance, but receive tax credits to help employees pay premiums. In 2015, the tax credit increases to 50%.
  10. The Act lowers the budget deficit by $143 billion over the next 10 years by raising some taxes and shifting cost burdens to health care providers and pharmacy companies. (Source: CBO CBO Report on Health Care Reform and the Budget; Wall Street Journal, What Health Insurance Ruling Means, June 28, 2012; NPR, Medicaid Expansion, June 27, 2012)

Cons

The CBO (and other non-partisan groups, as cited below) point out these disadvantages:
  1. There are 30.1 million people who currently buy their own private health insurance. Many of them ahave had their plans cancelled by the insurance company because the plan doesn't meet the 10 essential health benefits. Their costs of replacement insurance is higher because it provides services, like maternity care, that many of them don't need. (Source: Factcheck.org, The Keep Your Plan Promise, June 28, 2012)
  2. Between 3-5 million people could lose their company-sponsored health care plans. Many businesses will find it more cost-effective to pay the penalty and let their employees purchase their own insurance plans on the exchanges. Other small businesses might find they can get a better plan through the state-run exchanges. (Source: CBO, The Effects of the Affordable Care Act on Employment-Based Health Insurance, March 15, 2012)
  3. Increased coverage may actually raise overall health care costs in the short-term. That's because many people will receive preventive care and testing. These additional tests, such as cancer screening and cholesterol tests, will lead to higher medical spending. (Source: CBO, 2009 Study on Preventive Health Care, August 7, 2009)
  4. Those who don't purchase insurance by March 31, 2014, and don't qualify for Medicaid, will be assessed a tax of $95 (or 1% of income, whichever is higher) in 2014. It increases to $325 (or 2% of income) in 2015, and $695 (or 2.5% of income) in 2016. (Find out how to calculate it in Obamacare Taxes)
  5. About 4 million people, or 1.2% of the population, will wind up paying the tax rather than purchase health insurance. The CBO estimates this will cost them $54 billion.(Source: Washington Post Factchecker, Tax Breaks vs Tax Hikes, July 6, 2012)
  6. Taxes were raised in 2013 on one million individuals on incomes exceeding $200,000 and four million couples filing jointly on incomes exceeding $250,000. They would pay a total of 2.35% (up from 1.45%) Medicare taxes on income above the threshold. They also pay an additional 3.8% Medicare taxes. This applies to the lesser of income from dividends, capital gains, rent and royalties or income above the threshold. (Source: About.com, Tax Impacts of Supreme Court's Health Care Decision, July 3, 2012; Smart Money, What Obamacare Means for Taxes, June 28, 2012)
  7. In 2013, medical-device manufacturers and importers paid a 2.3% excise tax. Indoor tanning services pay a 10% excise tax. This could discourage those businesses from hiring new employees.
  8. In 2013, families could only deduct medical expenses that exceed 10% of income. Previously, they could deduct expenses that exceeded 7.5% of income.
  9. Pharmaceutical companies pay an extra $84.8 billion in fees over the next ten years to pay for closing the "donut hole" in Medicare Part D. This could raise drug costs if they pass this onto consumers.
  10. In 2018, insurance companies will be assessed a 40% excise tax on "Cadillac" health plans. These are plans with annual premiums exceeding $10,200 for individuals or $27,500 for families. Many of these plans are for people in high-risk pools, such as older workers or those with dangerous jobs. Most of the tax will be passed onto the companies or employees, raising premiums or deductibles.(Source: Kaiser, Cadillac Tax Explained, March 18, 2010)

Even three years after it's been approved, 54% of Americans opposed the Act, and many groups are still working to repeal Obamacare For more cons, see conservative think tank The Heritage Foundation's analysis, Impact of Obamacare. Article updated December 14, 2013

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