The Patient Protection and Affordable Care Act (PPACA) (AKA “OBAMACARE”)
The Patient Protection and Affordable Care Act (PPACA) was signed into law by President Barack Obama on March 23, 2010. This was followed with the Health Care and Education Reconciliation Act of 2010 (signed into law on March 30, 2010).
This was the product of the health care reform agenda of the Democratic 111th Congress and the Obama administration. PPACA passed the Senate on December 24, 2009, by a vote of 60–39 with all Democrats and Independents voting for, and all Republicans voting against. It passed the House of Representatives on March 21, 2010, by a vote of 219–212, with all 178 Republicans and 34 Democrats voting against the bill. At the time of the vote, there were four vacancies in the House.
Summary of PPACA Provisions
The law will take effect over a four-year period beginning in 2010.
The primary provisions are as follows:
1.Guaranteed issue and community rating will be implemented nationally so that insurers must offer the same premium to all applicants of the same age, sex, and geographical location regardless of pre-existing conditions.
2. Medicaid eligibility is expanded to include all individuals and families with incomes up to 133% of the poverty level.
3. Health insurance exchanges will commence operation in each state, offering a market place where individuals and small businesses can compare policies and premiums, and buy insurance. (with a government subsidy if eligible); amends the federal tax code with a “shared responsibility payment” (a fine) if the government has had to subsidize an employee who bought insurance in the exchange because an employer employing 50 or more people did not offer a minimum essential coverage plan or better. Also, a fine is imposed on certain persons who do not have minimum essential coverage for at least one month in the year.
This requirement to maintain insurance or pay a fine is often referred to as the individual mandate, though being insured is not actually mandated by law. The individual mandate serves to function to “bring as many people as possible into the insurance pool.” Without this mandate, many healthy individuals would defer obtaining insurance until they become ill, which would lead to those in the insurance pool paying higher premiums than they might otherwise, due to the amount of sick individuals with coverage. This is counter to the concept of insurance which seeks to spread risk and not focus it, and allows a health insurer to reduce risk and costs by maintaining a sufficient loss ratio; improved benefits for Medicare prescription drug coverage are to be implemented; changes are enacted which allow a restructuring of Medicare reimbursement from “fee-for-service” to “bundled payments”.
4. Establishment of a national voluntary insurance program for purchasing community living assistance services and support; low income persons and families above the Medicaid level and up to 400% of the poverty level will receive subsidies on a sliding scale if they choose to purchase insurance via an exchange (persons at 150% of the poverty level would be subsidized such that their premium cost would be of 2% of income or $50 a month for a family of 4).
5. Very small businesses will be able to get subsidies if they purchase insurance through an exchange; additional support is provided for medical research and the National Institutes of Health; enrollment into CHIP and Medicaid is simplified with improvements to both programs.
NOTE: This is just a general overview and does not point out the “fine print” in the act (and the “gotchas”).