At the core of the Affordable Care Act (ACA) is the three-legged stool: (1) insurance reforms; (2) the individual mandate; and (3) premium and cost-sharing subsidies. Removal of any one of these legs could destabilize the ACA. The ACA established insurance marketplaces in every state to provide access to ACA compliant private health insurance coverage (Qualified Health Plans) in the individual and small group markets. The ACA provides premium subsidies on a sliding scale for persons with incomes up to 400% FPL for the purchase of an individual policy on the marketplace exchange. It also provides cost-sharing subsidies for persons with incomes below 250% FPL. Prior to the implementation of the ACA, manual rating was typically used by insurers for rate-making in the individual and small group markets and exclusions from coverage for pre-existing conditions were common. Age-based rates were typically 5:1. The insurance reforms in the ACA are largely directed at the small group and individual markets (e.g., guaranteed issue/renewal, no preexisting condition limitations, adjusted community rating capped at a 3:1 ratio for age). Standardization of benefits is achieved by requiring coverage for ten essential health benefits (EHBs) and certain preventive services which in the latter case services must be provided without cost-sharing.
There are winners and losers under the ACA. Relatively unhealthy people that qualify for premium subsidies are the winners. Relatively healthy people that do not qualify for subsidies are the losers. Thus while the ACA has successfully expanded access to health care coverage, it has also resulted in higher premiums and a shift to policies with higher deductibles. There has also been ongoing concern about the withdrawal of insurers from the marketplace exchanges and the resulting lack of competition.
During his campaign President Trump promised to "repeal and replace" Obamacare, but in 2017 Congress rejected a Republican plan that would have repealed much of the ACA. Several recent developments could, however, destabilize the ACA: (1) zeroing out of the individual mandate penalty; (2) failure to fund cost-sharing subsidies; (3) increased access to Association Health plan for small employers; and (4) increasing the coverage period for short- term plans from three months to twelve months.
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