Over the first 10 years, the program adds $940 billion to the Federal budget. However, a study by the Congressional Budget Office said the Affordable Care Act will lower the budget deficit by $143 billion over these same ten years. How? The Act was designed to offsets its costs by:
- Lowering payments to hospitals.
- Increasing Medicare taxes on higher income households.
- Assessing penalties on employers who don't offer, and individuals who don't take, health care insurance.
- Assessing taxes on various health related activities.
- Reducing overhead by consolidating the higher education loan program with the Pell Grant program.
There has been tremendous opposition before, during and after its becoming law. Lawsuits argue that the mandate that all U.S. citizens must purchase health care insurance from a private carrier, or pay a penalty, is unconstitutional. The Supreme Court ruled it was constitutional, under Congress' right to impose a tax. The House of Representatives has voted to repeal the law numerous times. There has been so much opposition, in fact, that 22% of Americans think the law has already been repealed. What changes does the Affordable Care Act create, when are they rolling out, and how do they affect you?
Patient Affordable Care Act Changes That Occurred in 2010
Small businesses received tax credits to cover up to 35% of their total employee premium payments. This increases to 50% in 2014. (For details, see Small Business Tax Credit.)Indoor tanning services were assessed a 10% excise tax.
A re-insurance program offset the costs of health benefits for workers age 55-64 who were forced into early retirement.
Medicare beneficiaries who fell into the Medicare Part D Prescription Drug "donut hole" received a $250 rebate. They received a 50% discount on brand name drugs in 2011, and the doughnut hole is eliminated in 2020.
Children were allowed to stay on their parents' health insurance until they turn 26.
New private plans were required to cover preventive services with no co-payments, and they are exempt from deductibles. Consumers who applied to new plans have access to an external appeals process if coverage is denied.
Insurance companies were prohibited from dropping coverage if someone got really sick. They couldn't create lifetime coverage limits. They could no longer deny coverage to children with pre-existing conditions. The same will apply to adults in 2014. Until then, adults with pre-existing conditions who have been denied coverage will get access to temporary health insurance coverage until the exchanges are set up. (To see how to sign up, go to Pre-Existing Conditions.)
Patient Affordable Care Act Changes in 2011
- Medicare-covered preventative services were exempted from deductibles and the co-pay was eliminated.
- Insurance companies must prove they spent at least 80% of the premium payments on medical services, rather than on things like advertising and executive salaries. Those that didn't were required to provide rebates to policyholders.
- States were funded to require health insurance companies to submit justification for all rate hikes.
- Funds were expanded to increase the number of doctors and nurses, and more community health centers -- enough to double the number of patients they can treat in the next five years.
Changes in 2013
Medical expenses must be at least 10% of income before they are deductible for those under 65. Manufacturers and importers of medical devices will pay a 2.3% excise tax. Federal funds will increase to allow Medicaid to offer free preventive services, and to extend CHIP for an additional two years. The Federal government will fund states to pay primary care physicians 100% of the Medicare fee. Medicare will start a pilot program to encourage hospitals to bundle services before submitting for payment. (Source: Healthcare.gov)Additional taxes will be paid by the 1 million people who make more than $200,000 and the 4 million couples filing jointly who make more than $250,000. Specifically, they would pay 3.8% Medicare taxes on dividends, capital gains, rent and royalties and 2.35% (up from 1.45%) Medicare taxes on income.
Changes in 2014
In 2014, the state-run health exchanges will be set up. Medicaid eligibility will be expanded to include those with incomes up to 133% of the Federal poverty line ($29,000 for a family of four). New subsidies will become available for with incomes up to 400% of the poverty level ($88,000 for a family of four). To find out how this will work, see Affordable Care Act from the About.com Guide to Health Insurance.Those who don't purchase insurance will be assessed penalties:
- 2014 - The greater of $95 or 1% of income.
- 2015 - $325 or 2% of income.
- 2016 - $695 or 2.5% of income
