The Impact of Federal and State Healthcare Policies on Consumer Costs
When it comes to Federal and State policies, many Americans, especially in low or middle America, choose not to keep up due to mundane policies, or (more likely of recent) the inflammatory political climate. Many middle or low-income Americans believe that the government policies will not affect them in their average daily life, however, that cannot be more wrong. Especially in health care. This decade has seen an explosive political climate surrounding healthcare, and even healthcare reform.
Since the inception of the Patient Protection and Affordable Care Act (ACA) in 2010, the way that we access health insurance and healthcare, as well as the way we pay for said insurance and healthcare, has completely changed. This reform of our healthcare system is a hot topic of debate even ten years later. The ACA aimed to expand access to insurance (thereby increasing one's access to healthcare), limit rising health costs, increase patient and consumer protections, emphasize wellness/ prevention, and improve the system as a whole (“The Affordable Care Act”, 2011). Though most agree with these provisions and the need for protections, many do not believe that the ACA’s radical changes were a step in the right direction fiscally. Workers and employers saw increased taxes, and some saw increased premiums or increased medical costs as a result of the new policies. On the other hand, many had access to insurance and life-saving treatment that would have normally not been possible (chronically ill, low wage workers, etc). Some now had help with insurance premiums or were newly qualified as low-income under Medicaid with very little to no medical costs ahead. No matter where your opinion lies on the subject of the ACA and healthcare reform, undoubtedly if you live in this country, your healthcare or your finances were affected by this policy- in a good way or a bad way. The purpose of this article is to talk about the ACA’s impact on the American citizen.
During the first 5 years of the ACA, more than 16 million Americans obtained health insurance coverage, which accomplished the first goal of the act by increasing access to health coverage and healthcare (Roland, 2019). Many Americans that were newly insured were people with pre-existing health conditions that were previously denied private payer coverage under a pre-existing clause. The patient protections under the ACA made this practice illegal. Many young college-aged Americans were newly covered as well, as one provision allowed coverage of children under their parents’ plan up to age 26. Along with keeping adult children healthier, the ACA provided full coverage of routine preventive services, aiming to get Americans in to see the doctor before a problem presented itself; thereby preventing the development of a chronic illness, or even providing early detection of one. This provision leads to decreased healthcare costs nationally, as preventive measures are much less costly than catastrophic services resulting from avoidance of regular screenings.
The ACA is regularly referred to as Healthcare Reform, and the changes mentioned previously are not some of the more radical. One way that the ACA majorly reformed the way the average citizen approaches healthcare is through healthcare consumerism. As we are a highly capitalistic society with free-market healthcare, this is not a new idea. However, the inception of the ACA made the practice of consumerism in healthcare a necessity in many homes. Many people obtaining insurance through their employers or the healthcare marketplace had new High Deductible Health Plans (HDHP). With a HDHP, in exchange for tax breaks on health spending via a Health Savings Account, the subscriber has a high deductible in excess of $2500 that they are responsible for paying before insurance begins paying non-routine claims. This made the average American into a health consumer. As they were now responsible for paying a large portion of their healthcare, they needed to educate themselves on available services, providers, and “shop” for healthcare. Some think of this as a positive impact, as patients are empowered into taking ownership of their own healthcare. They are more active with their providers and in their treatment decisions. Some, however, think this is a negative, one of many criticisms against the ACA, some of which we will now delve into.
Many Americans complain about the burden of healthcare consumerism and high costs due to high deductible health plans the most. In 2016, 39.3% of Americans had HDHPs as their primary insurance (Thorpe et al, 2019). Though those with this type of plan have the option to make tax free contributions to a Health Savings Account (HSA), many Americans cannot afford to contribute enough to cover the costs of their deductible. This causes many who are chronically ill and need a lot of non-routine care to limit or even forego care, risking severe long-term health consequences. As about 60% of Americans have at least one chronic condition, the odds are that many Americans that need consistent care are not following through due to the costs associated (Thorpe et al, 2019). Though they have insurance, they cannot use it unless they can afford to foot a large part of the bill.
The cost of the ACA does not stop with high deductibles. Many Americans complain about new taxes that were passed into law to help pay for the ACA. Businesses are highly taxed and are also now obligated to cover 95% of their full-time employees and pay a larger portion of premiums (IRS, nd). Many of those opposed to the ACA believe that this decreases American jobs, as employers are cutting hours to avoid the obligation to pay for insurance for full-time employees. Employers are obligated to provide affordable coverage, which is defined as costing an employee no more than 9.78% of their household income in 2020 (“2020 Affordable Percentage”, 2020). If an employer does not comply with these two requirements, they must pay a penalty to the IRS, with an exception for some small businesses (IRS, nd).
For the early years of the ACA, up to 2019, businesses were not the only ones that were penalized for not complying. As health insurance was now a requirement, Americans were penalized when filing taxes if they did not have coverage for the majority of the year. For many Americans who paid for their own coverage, their premiums went up as a result of the increased liability of insurance payers, as they were now required to cover those with chronic illness. Some Americans opted out of paying sky-high premium payments and instead paid a penalty on their taxes. For these Americans, it was a lose-lose situation. President Trump repealed this tax penalty and it was foregone in 2019.
Each state had its own role in ACA roll out, and perhaps their largest and most controversial role included their responsibility in Medicaid expansion. Though the ACA was signed into law in 2010, Medicaid expansion was not required until January of 2014. Prior to the ACA, each state chose its own Medicaid eligibility requirements for the standard coverage categories of low-income families, children, pregnant women, the disabled, and the elderly (“Medicaid and the ACA”, 2011). The ACA’s Medicaid required expanded coverage to include anyone under 65 who falls at or below 133% of federal poverty guidelines ($14,484 for an individual and $29,726 for a family of four at its inception) (“Medicaid and the ACA”, 2011). The Federal Government would be fully financing those that fall under this expansion from 2014-2016, then federal assistance falls as time goes on- 95% in 2017, 94% in 2018, 93% in 2019, 90% in 2020- and then the State is responsible fully for funding their Medicaid program (“Medicaid and the ACA”, 2011).
Many states went along with the Medicaid expansion with no issue, eager for reform. However, some states appealed to the Supreme Court to retain control of State Medicaid jurisdiction. In 2012, the Supreme Court ruled that states could opt out of the ACA Medicaid Expansion, as Federal Law should not mandate State Medicaid ("Where the States Stand", 2020). This Supreme Court decision left the decision in the Governor’s hands. As of this year, 14 states opted out of Medicaid expansion- WY, SD, KS, OK, TX, MO, WI, TN, MS, AL, GA, SC, NC, and FL refused to expand Medicaid, and NE opted to adopt Medicaid expansion at the inception of the ACA but still has not implemented it (“Status of State Medicaid Expansion”, 2020). The main reason for states opting out of Medicaid expansion is the fact that the state budget would be footing the bill, therefore requiring more taxpayer money. It is easily seen how State Medicaid expansion would also have positive and negative effects on State residents.
The federal and state health care policies discussed above have an impact on consumer costs in more ways than one. First, both federal and state policies require tax payments for funding. Secondly, the success or failure of the policy may have a positive or negative impact financially on the consumer. As we discussed previously, the ACA aimed to reduce healthcare costs by promoting wellness and routine services. Expansion of coverage to less healthy persons had a negative effect on consumer costs, as in the pre-existing clause example. This article was written on very well known legislation, and many Americans can easily voice an opinion on the ACA and Medicaid expansion when asked; however, there is legislation that goes through routinely that is not so public that also affects consumer costs. It is important for all Americans to keep up with public policy and be active in voting to ensure that their opinion is considered. Legislation can change with changes in the field and changes in political administration, which makes it even more important that consumers stay current on healthcare policy.
2020 Affordable Percentage for Employer Health Coverage Shrinks. (2020). Mercer Law. Retrieved from: https://www.mercer.com/our-thinking/law-and-policy-group/affordable-percentage-for-employer-health-coverage-shrinks.html#:~:text=The%20Affordable%20Care%20Act%20(ACA,%25%2C%20according%20to%20IRS%20Rev.
Medicaid and the Affordable Care Act. (2011). National Conference of State Legislatures. Retrieved from: https://www.ncsl.org/research/health/states-implement-health-reform-medicaid-and-the.aspx
Roland, J. (2019). The Pros and Cons of Obamacare. Healthline. Retrieved from: https://www.healthline.com/health/consumer-healthcare-guide/pros-and-cons-obamacare
Status of State Medicaid Expansion Decisions: Interactive Map. (2020). Kaiser Family Foundation. Retrieved from: https://www.kff.org/medicaid/issue-brief/status-of-state-medicaid-expansion-decisions-interactive-map/
The Affordable Care Act: A Brief Summary. (2011). National Conference of State Legislatures. Retrieved from: https://www.ncsl.org/research/health/the-affordable-care-act-brief-summary.aspx
Thorpe, K. Calder, K. Hyde, A. Weidner, L. (2019). The Challenges Of High-Deductible Plans For Chronically Ill People. Health Affairs. Retrieved from: https://www.healthaffairs.org/do/10.1377/hblog20190416.47741/full/
US Internal Revenue Service (IRS). (nd). Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act. IRS Official Website. Retrieved from: https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act#Affordability
Where the states stand on Medicaid expansion. (2020). Advisory Board Daily Briefing. Retrieved from: https://www.advisory.com/daily-briefing/resources/primers/medicaidmap?wt.ac=slideshow_spc_tool_revcycle__medicaidmap_2
