The Affordable Care Act, also known as Obamacare, has become a polarizing political issue over the past several years. Americans are deeply divided over their views of the law, and while leaders on both sides of the aisle seem to agree on the importance of equitable, affordable health insurance, there is great disagreement about how to achieve it.
Newly installed President Donald Trump has made healthcare legislation a top priority during his administration, and a Republican Congress appears willing to repeal the landmark legislation. But with no consensus on a replacement plan, many Americans are wondering how potential changes may affect them. Although there are many unknowns, here are five things to watch for as the Affordable Care Act is almost inevitably tweaked or dismantled:
Minimal changes during 2017
Because rates for individual health insurance plans are locked in for a full year, it’s unlikely that we will see changes to premiums or deductibles before 2018. If the law actually is repealed, any changes to health plan benefits or pricing would have to be approved by individual state legislatures—and that probably wouldn’t happen before the end of the year.
Potential subsidy changes
While insurance companies legally can’t adjust their rates until the end of the year, the federal government could conceivably change the amount of subsidies paid to those who purchase insurance through the health insurance exchange. Approximately 13 million Americans purchase insurance through the federal Health Insurance Marketplace, and many of those qualify for a government subsidy to offset their monthly premium prices. If the federal government eliminates or lowers subsidies this year, some of those consumers could end up paying more to keep their insurance.
While Obamacare requires insurance companies to cover people with preexisting conditions and others they previously would have refused to cover, insurance companies responded by increasing rates for everyone else. In 2017, some states saw an average rate increase of 50 percent. And many Americans are paying significantly more money for significantly less insurance: Once rare, high-deductible health plans, which required deductibles of $1,000 or more before covering services, are now standard, representing more than half of the plans used by Americans.
“Many people don’t really have health insurance anymore, they just have catastrophic insurance,” says Nancy Coutu, CFP, co-founder of Money Managers Financial Group in Oak Brook, Ill. “My premiums have tripled in the past few years and went up 80 percent his year. Most of my clients have experienced increases of at least 60 percent. How do you afford your lifestyle when a major thing you need goes up by 60 percent?”
While price changes vary from state to state, many of those who experience continually increasing prices hope that tweaking Obamacare will result in more stabilized prices, but how to make that happen remains to be seen.
Potential change to tax penalty
On Inauguration Day, Trump signed an executive order stating that agencies can “waive, defer, grant exemptions from or delay implementation of any provision or requirement” of the Affordable Care Act that imposes a burden “to the maximum extent permitted by law.” Some experts have surmised that this order will make it easier for people to qualify for exemption of the tax penalty currently incurred by those who don’t have health insurance.
More insurance company responsibility
“The idea behind Obamacare was perfect, but the law is not perfect,” Coutu says. “One of the important aspects that was omitted was more regulation of insurance companies.” Some experts expect that replacement legislation will require insurers to take more responsibility for covering those with pre-existing conditions or inability to afford insurance.
Approximately 20 million Americans who were previously uninsured now have health insurance as a result of the Affordable Care Act. In a country of more than 320 million, “that’s a relatively small number of people we need to protect, and there’s no way legislators are going to pull the rug out from under those people that just got coverage,” Coutu says. “The odds are always in favor of the insurance companies, and they need to participate in this financially, guaranteeing to protect those people, but while keeping everyone else’s costs affordable. Those costs don’t have to be offloaded to the public.”
As the Affordable Care Act continues to be hotly debated, keep an eye on the discussions to see how your coverage and your pocketbook may be affected. And consider contacting your Congressional representatives to voice your opinion about the law. Change may be inevitable, but every voice matters.