OBAMACARE: Problems that Could Prove Difficult to Fix

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Signed into law in 2010 by President Obama, the Patient Protection and Affordable Care Act, or as it’s more affably known, Obamacare, laid out a number of goals in its attempt to completely transform the way Americans purchase and receive healthcare.

Obamacare’s goals
Gone are the days of being denied coverage by an insurer simply because you have a pre-existing condition. Also gone is the choice of not purchasing health insurance — at least not without a penalty.

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Primarily, Obamacare looks to reduce the number of uninsured citizens in the United States. Uninsured individuals drive up costs at hospitals and doctors’ offices because of inability to pay, which translates into higher rates for everyone else down the line. By making healthcare accessible to millions of additional Americans, the idea is that insurers would be able to spread their medical expenses over a greater swath of the U.S. population, resulting in more modest medical cost inflation — especially when it comes to insurance premiums.

Secondarily, and building on the prior point, Obamacare aims to create a healthier America where medical cost inflation is under control. Arguably, the last five years post-Great Recession have been the best five-year period for medical cost inflation in five decades. The pressure put on health insurance premium prices from the recession has kept rising costs at bay. Over the long term, the goal/hope of Obamacare is that it’ll encourage the insured to visit their doctor regularly, such that chronic conditions can be caught and monitored early instead of turning into costly, later-in-life complications. Catching these problems early is critical to keeping insurers’ expenses under control.

Initial enrollment through two years for Obamacare of nearly 12 million easily surpassed the 9.1 million that the Department of Health and Human Services anticipated the program would have by the end of 2015. In other words, things are going pretty well.

Problems with Obamacare that could prove difficult to fix
However, this initial success may prove short-lived, as there are problems with Obamacare that could prove difficult to fix. While the technical glitches that plagued the health reform law in 2013 were a nuisance, they were a relatively straightforward fix. The following three problems are far more deep-rooted — and far from an easy fix.

1. No universal Medicaid expansion
One of the critical puzzle pieces designed to really put a dent into the uninsured rate in the United States is the expansion of the Medicaid program.

Prior to Obamacare’s official implementation on Jan. 1, 2014, Medicaid covered those individuals who made 100% or less of the federal poverty level in income per year. For added context, this works out to $11,770 in income (or less) in 2015 for an individual, with $4,160 added to the $11,770 for each additional family member. If your income was below this level, you received fully subsidized health insurance via Medicaid.

Under the Affordable Care Act, all 50 states were offered billions of dollars in federal financial aid to expand their Medicaid program to cover individuals making up to 138% of the federal poverty level. Beginning in 2016 and running through 2022, the federal government would then begin to scale back its federal aid to the point where it was covering 90% of its original commitment, thus putting more of the onus of covering Medicaid-eligible Americans on the states.

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