10 Ways Obamacare Changed Healthcare as We Know It

By Dan Caplinger Markets Fool.com

The Affordable Care Act has been contentious since before it became law in 2010, and Thursday's 217-213 vote in the House of Representatives set the stage for a possible repeal and replacement of the legislation now known as Obamacare.

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Yet even with the law on life support, Obamacare changed the way that Americans look at healthcare. Whether you support the Affordable Care Act or hate it, the law's provisions have had sweeping effects on healthcare behavior, and even a full repeal of Obamacare would still leave many Americans calling for the same or similar provisions going forward.

1. Mandating health-insurance coverage

The Affordable Care Act sought to get everyone to obtain health-insurance coverage, and to do that, it set up what became known as the individual mandate. Under the provision, Americans had to have minimum essential health-insurance coverage or qualify for an exception, or else they would have to pay a financial penalty. Those penalties started out small, but they grew to as much as $695 per adult and $347.50 per child by 2016. Moreover, because of supplemental provisions in the individual mandate, even higher penalties can apply to upper-income Americans. Requiring insurance coverage helped broaden the risk pool and potentially led to cost savings, but a surprisingly large number of people chose not to get coverage despite the penalty provisions.

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2. Coverage for those with preexisting conditions

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The Affordable Care Act required plans sold via the health-insurance marketplace to cover treatment for preexisting medical conditions. In essence, no insurance plan could reject you or charge you more because you had a preexisting condition, and once you were enrolled, your insurer couldn't raise rates solely based on your health. That changed the nature of health-insurance risk, as insurers could no longer charge higher-risk patients higher premiums or deny coverage entirely.

3. Greater numbers of people covered

One area of controversy involves the number of people who have coverage under the Affordable Care Act. Numbers vary widely on the number of newly insured Americans under Obamacare, with common numbers ranging from 14 million to 20 million. Yet it's important to understand that (as we'll see below), Medicaid expansion provisions in the ACA were responsible for a large number of uninsured Americans getting coverage. Marketplace exchanges have brought some people coverage, but they aren't responsible for all of the gains made toward bringing coverage to all.

4. Medicaid expansion

All 50 states offer Medicaid coverage to those who qualify, but the qualifications differ from state to state. The Affordable Care Act offered the opportunity for states to expand Medicare coverage to everyone earning 138% or less of the federal poverty level. As of the beginning of 2017, 31 states and the District of Columbia had decided to adopt Medicaid expansion, while 19 states had not. Obamacare didn't require states to participate, but the result has been a patchwork of provisions that create very different incentives for Americans depending on what states they live in.

5. Coverage for preventive care

The Affordable Care Act broadened the set of preventive services that health plans were required to cover. Preventive care includes annual physicals, various screenings, and appropriate immunizations and vaccines for all adults. Women qualify for contraception services and women's health tests such as mammograms, while children receive scheduled vaccinations and routine age-appropriate screenings. Typically, these services are now free when provided by in-network health professionals, which was a change from some plans that charged co-payments or deductibles before providing coverage.

6. Coverage for young adults

Young adults between 18 and 25 used to be among those least likely to have insurance coverage. Once a parent's plan no longer allowed a child to maintain coverage, options were limited. In response to that situation, the Affordable Care Act changed things so that in most cases, adult children can remain on a parent's plan until they turn 26. While not a perfect answer to the problem, those extra years often give young adults enough time to get their own coverage through an employer.

7. Removal of lifetime benefit limits

Before the Affordable Care Act, dollar limits on the benefits an insurance plan would pay during an insured person's lifetime were common. Those limits often seemed quite high, but even lifetime limits of $1 million or more left people vulnerable to rising costs of inpatient care, specialized prescription drugs, and other high-cost healthcare services. The Affordable Care Act prohibits health plans from imposing lifetime limits on essential health benefits, preventing the catastrophe of losing coverage entirely in the event of a major illness or injury.

8. Limits on health-insurance company profits

The Affordable Care Act included a requirement that 80% to 85% of all premium payments be spent on actual healthcare services. The intent of this provision was to limit the amount of profit that an insurer could use to spend on administrative services or return to investors. If healthcare expenses turned out to be less than projected, then insurance companies would theoretically have to send rebates to policyholders. Although some health insurers have reported difficulty in making their marketplace insurance plans profitable, it's unclear whether the ACA's requirements on healthcare spending have reined in industry profits overall.

9. Patient-appeal rights

Prior to the ACA, rights to appeal an insurer's decision to deny claim payments or end coverage were more limited. Patients typically had rights to an internal appeal with the insurance company itself, but after that, legal remedies could be arduous. Under the Affordable Care Act, you're allowed to have an independent third party do an external review. If the reviewer rules in your favor, then the insurance company must comply.

10. Protection from policy cancellations

In the past, some insurance companies denied coverage if they found mistakes on an insurance application. In some cases, this might even involve retroactive denial back to the beginning date of a policy, which could result in no coverage for healthcare expenses you had already incurred. The Affordable Care Act made it illegal for insurance companies to cancel coverage simply because of an error. Instead, they must prove that you either fraudulently put false or incomplete information on an application, or you failed to pay your premiums.

Even with the House vote, Obamacare isn't yet history. Moreover, it's possible that some of the ways in which the Affordable Care Act changed healthcare as we know it would survive even in a replacement law. Nevertheless, it's useful to know what the ACA changed, so you can compare any future plan against it accurately and completely.

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