An Updated Overview of the Affordable Care Act for 2023

The Affordable Care Act (ACA) was enacted in March 2010 by former President Barack Obama. This eventually led to it being dubbed “Obamacare” by some, which is a worthy note to clarify. The ACA and Obamacare are the same piece of legislation.

Years later, in 2023, the Biden-Harris administration saw a record-breaking Open Enrollment Period (OEP), where more than 16.3 million people selected an ACA health plan in the Marketplace. Needless to say, its success, even in the wake of some public criticism, is enduring.

But, what exactly is the ACA, what were the high-level goals that were outlined for the program during its creation, how it is funded and what have been the long-term implications of the act? Here, we'll answer all of those questions and more.

What Is the Affordable Care Act?

The Affordable Care Act is a landmark health care reform law that was signed more than a decade ago. Through its outlined and high-level primary goals, the Act sought to expand access to health care for millions of Americans through:

• Expanded access to insurance. The Act mandates that employers extend health care coverage to their employees and offers premium tax credit to specific enterprises that shoulder designated expenses related to health insurance plans for their staff.
• Increased insurance patient protection. Under the ACA, lifetime monetary caps on insurance coverage are prohibited. It also applies limits on annual caps and mandates rate reviews for insurance premium increases.
• Improved health care quality. Health information technology is a main point of investment under the ACA. It also introduced guidelines intended to reduce medical mistakes in health care settings and establish efficient payment mechanisms that improve outcomes and coordination between health care providers.
• Better price transparency. Lastly, the ACA implemented first-of-its-kind legislation to mitigate health care fraud, increase competition and improve price transparency.

These key features of the ACA are in direct response to the highlighted goals of the program. Striving to achieve those goals has greatly contributed to the program's continued success.

Here are those goals:

What Are the Three Primary and Intended Goals of the ACA?

For context, the three primary goals of the ACA are as follows:

• To make affordable health insurance available to more individuals. The legislation offers financial assistance in the form of subsidies, known as “premium tax credits,” which reduce expenses for families with incomes ranging from 100% to 400% of the federal poverty level (FPL).
• Medicaid expansion. The ACA seeks to provide health care coverage for all adults below a defined level of income: below 138% of the FPL. While this has been achieved in many states, some have yet to expand their Medicaid coverage and programs.
• Support innovative medical care delivery. This goal is being achieved through designed methods intended to lower the costs of health care in general across America.

Low-income earners are the main point of focus for the Affordable Care Act; however, the law has defined criteria about who is eligible to benefit from it.

Who Benefits From the Affordable Care Act?

The ACA was specifically designed for families and households that fall under a specific category below certain levels of the FPL. For context, the FPL is a measure of income issued yearly by the Department of Health and Human Services (HHS). It's used to determine someone's eligibility for certain programs and benefits, including the ACA and savings on Marketplace health insurance.

As such, the FPL is updated annually with new numbers and thresholds and is further adjusted based on the size of a family. Here are the most recent FPLs as of 2023:

How Is the Affordable Care Act Funded?

Obamacare is paid for via a variety of sources. Most notably, the program is funded as the result of cuts in federal government spending in other areas, increased taxes and penalty payments. Let's look at the sources of income in a little more detail.

• Employer mandate penalties: Employers are required to offer a health insurance plan to their employees. Failure to comply with this mandate could result in penalties against the employer wherein any money collected contributes to ACA funding.
• Taxes on high-income earners: The ACA imposed new taxes on individuals with higher incomes, specifically on net investment income and wages. These taxes were intended to help fund the program and the expansion of health care coverage for Americans.
• Fees from pharmaceutical companies and health insurers: There are established fees on pharmaceutical manufacturers and health insurance companies, which both contribute to the funding of provisions under the ACA.

While funding for the ACA is acquired via many different means, it's important to note that funding mechanisms are always changing. The Act has undergone many changes throughout its lifetime, wherein different administrations may have modified, delayed or repealed certain funding structures.

What Is the Long-Term Impact of the ACA?

The ACA has accomplished a lot of good over the years. In summary, here are a few milestone moments:

• The ACA has reduced the number of uninsured people in the United States to historically low numbers.
• More people, especially low-income earners and people of color, have more affordable access to health care.

In its 12th year (2022), the U.S. Department of Health and Human Services distributed a press release highlighting even more specific accomplishments that the ACA achieved. We'll highlight a few of those wins here, but a complete list of achievements can be found in the press release.

Health of Women and Families

58 million women now benefit from an insurance plan that covers preventive health services, such as:

• Birth control and counseling.
• Well-woman visits.
• Breast and cervical cancer screenings.
• Prenatal care.
• Interpersonal violence screening and counseling.
• HIV screening and STI counseling.

A pregnancy assistance fund (PAF); Maternal, Infant, and Early Childhood Home Visiting Program (MIECHV); and increased funding for community health centers were also newly introduced.

Health of Older Adults and People with Disabilities

Older adults and people with disabilities have received extended protection against discrimination by health insurance providers, and essential drugs necessary for their health and well-being have been made more affordable.

Health Coverage Gains & Patient Protections

The past few years have marked historic gains in health coverage, reducing the number of uninsured Americans by an estimated 20 million. The ACA has also mandated that most insurance companies provide coverage for what the Act calls the 10 essential health benefits:

• Ambulatory patient services.
• Emergency services.
• Hospitalization.
• Pregnancy, maternity and newborn care.
• Mental health and substance use disorder services, including behavioral health treatment.
• Prescription drugs.
• Rehabilitative and habilitative services and devices.
• Laboratory services.
• Preventive care and wellness services and chronic disease management.
• Pediatric services, including oral and vision care.

Mental Health and Substance Use Support

Millions of dollars have been funneled into many programs that are intent on education and prevention of mental health and substance abuse. Parity protections have also been extended to reduce stigma and provide treatment support and insurance coverage for approximately 30.4 million enrollees.

Lewis & Ellis, Inc.

The health care and insurance landscape is always changing, as is the legislation that surrounds them. As such, it's important that employers stay up-to-date on any revelation, landmark shifts and updates to health care coverage and insurance.

Contact Lewis & Ellis today to speak with a qualified actuary and learn more about how we help organizations understand the current health care landscape and plan for the future.