Obamacare: We Hate It, Love It, and Really Don't Have a Clue What It Does

By Sean Williams Markets Fool.com

It's been a little more than two weeks since Republicans in the House of Representatives pulled the American Health Care Act (AHCA) from vote. The bill was aimed at replacing the Affordable Care Act (ACA), commonly known as Obamacare.

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The AHCA, which would have repealed Obamacare's mandates, penalties, and subsidies and replaced them with age-based tax credits, failed to garner enough support among Republicans for either going too far, or not far enough. Some lawmakers saw it as a toned-down version of Obamacare and believed it retained too many of the ACA's provisions, while others were concerned that the AHCA didn't do enough for lower-income Americans and would spike the uninsured rate.

Image source: Getty Images.

With Obamacare now looking as if it'll remain as the law of the land for now (although that might change next week), Americans are once again tasked with deciding if this is a law they hate, love, or really don't understand. It turns out that the answer might be all three.

Americans hate Obamacare

During Barack Obama's presidency, you could have counted on two hands how many months consumers had a more favorable view of Obamacare than unfavorable, according to the Kaiser Family Foundation's (KFF) near-monthly Health Tracking Poll. For instance, in November 2013 and again in July 2014, the percentage of respondents who had an unfavorable view on the ACA was 16% higher than those who had a favorable view of the health law.

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There were a number of factors that accompanied Obamacare's implementation that caused consumers to dislike it.

To begin with, former President Obama had suggested that consumers would be able to keep their health plan and their doctor following Obamacare's implementation. However, millions of Americans learned that this was a decision insurers would have to make. Many insurers simply chose not to update their plans to be ACA compliant, causing those Americans to lose their health coverage and have to seek a new primary care physician.

Image source: Obama White House, Flickr.

Consumers also weren't too hot on the idea that they would be forced to buy something (insurance), and that if they didn't they would pay a penalty, known as the Shared Responsibility Payment (SRP). In 2014, the SRP averaged only $150 for those who didn't buy health insurance. However, KFF estimated that the SRP for 2016 would average nearly $1,000 per household for those who chose not to buy health insurance (and who weren't exempted for hardship or income reasons).

We probably shouldn't forget the exceptionally high premium inflation in 2017 that went along with three national insurers paring back their coverage this year and three-quarters of the 23 ACA-approved healthcare cooperatives closing their doors last year. UnitedHealth Group (NYSE: UNH), the nation's largest insurer, reduced the number of states it's selling ACA plans in by 31 in 2017 (34 to just three), with Aetna (NYSE: AET) and Humana (NYSE: HUM) following with similar-sized cuts. The result, according to HealthPocket, was that the average unsubsidized premium for a bronze and silver plan (which encompass about 80% of all plan purchases between the two tiers) rose by 21% and 17%, respectively, in 2017.

But they also love Obamacare

And yet, there's so much that the American public likes about Obamacare. In fact, in the March KFF Health Tracking Poll, favorability hit 49%, which was its highest reading since July 2010, just a few months after it was signed into law. The 5-percentage-point gap in favorability compared to those with an unfavorable view was the largest since September 2012.

One thing Obamacare did was right a lot of wrongs for those who'd been on the outside of the healthcare system and looking in for years. Title 1 mandates within Obamacare required health insurers to accept all people, regardless of whether or not they had pre-existing conditions. Furthermore, insurers could no longer place lifetime caps on spending tied to essential minimum benefits -- and these benefits were expanded to 10 provisions under the ACA. In short, millions of Americans who were too sick to get health insurance were suddenly covered.

Image source: Obama White House, Flickr.

Obamacare also allowed all 50 states the option of expanding their Medicaid programs to cover individuals and families earning up to 138% of the federal poverty level (the traditional cutoff for Medicaid is 100% of the federal poverty level). Some 31 states chose to expand their Medicaid programs, allowing an estimated 15.7 million low-income individuals and families the opportunity to get the medical care they need. In total, the Centers for Disease Control and Prevention found that the ACA helped lower the uninsured rate by 7 percentage points to an all-time record low that dipped below 9% at one point.

Obamacare also made health insurance more affordable for low- and middle-income individuals and families via the Advanced Premium Tax Credit (APTC) and cost-sharing reductions (CSRs). If you earned between 100% and 400% of the federal poverty level, you probably qualified for the APTC, which was responsible for substantially lowering the monthly cost of health insurance premiums. CSRs, which reduced the cost of copays, coinsurance, and deductibles associated with seeing a physician, were available to those people who purchased a silver plan and earned between 100% and 250% of the federal poverty level.

The threat of these millions of Americans potentially losing their avenue to health coverage has recently spiked Obamacare's favorability.

We really don't have a clue when it comes to health insurance

But, truth be told, we also don't really have a clue about anything when it comes to health insurance or Obamacare.

As a reminder, it's been more than seven years since Obamacare was signed into law. However, a fairly new poll by Morning Consult that was released just two months ago found that 35% of respondents didn't understand that "Obamacare" is just another name for the Affordable Care Act. Some 17% genuinely believed they were different policies, and 18% simply didn't know if they were the same or different.

Image source: Getty Images.

And trust me, it gets worse.

A January 2017 poll from NPR/Ipsos asked Americans a number of ACA questions. Some 51% incorrectly believed that the ACA had caused the number of uninsured to rise, stay the same, or simply didn't know. Even worse, just 18% of respondents knew that the ACA had no end-of-life care limits, meaning more than 4 in 5 people were wrong.

Another survey from PolicyGenius that came out this past November found that nearly all Americans overestimate their understanding of health insurance. The survey focused on consumers' understanding of four key health insurance terms: deductible, co-insurance, co-pay, and out-of-pocket maximum. Just 4% could correctly define all four terms.

So to summarize:

  • We hate that Obamacare forces us to buy health insurance and penalizes us if we don't.
  • We love that it's allowing low- and middle-income folks, and those with pre-existing conditions an opportunity to be covered.
  • And we really don't understand how health insurance works in the first place.

And you wonder why health reform is so hard?

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Sean Williams has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.