Two months after open enrollment began for the Affordable Care Act, there is still a massive onslaught of misinformation coming from Republican politicians and media outlets promoting their agenda. If you are confused about the specifics of the Affordable Care Act, you are not alone – as recently as October, a significant proportion of Americans reported being unsure about how the Affordable Care Act would affect them, and most Americans were not aware of all of the major provisions in the law. In an effort to clear up the confusion, I am continuing my series Mythbusters: Affordable Care Act Edition (click to read Part 1 and Part 2 of the series) by debunking 10 of the most common myths about the Affordable Care Act:
Myth # 1: Starting in 2014, everyone must either have health insurance or pay a penalty, with no exceptions.
The Facts: The individual responsibility provision of the Affordable Care Act, also known as the individual mandate, requires people who can afford to buy health insurance to do so, or else they must pay a penalty.
Contrary to popular belief, the vast majority of Americans will not have to pay a penalty. First of all, the most common kinds of coverage will fulfill the requirement to have insurance–public or private coverage, job-based coverage, military coverage, and coverage through veterans’ plans.
Second, there are several kinds of exemptions to this requirement, including the following:
- People who are not required to file taxes are exempt. Generally, this will apply to people with very low incomes that fall below the federal poverty level, which is currently about $23,050 for a family of four.
- People with a legitimate religious reason for not believing in insurance are exempt.
- Members of Indian tribes are exempt.
- People who go without coverage for less than three months are exempt.
- People who truly cannot afford to purchase coverage are exempt. Health insurance premiums cannot cost more than 8 percent of a family’s income to be considered “affordable.”
- There is also a general hardship exemption that covers unusual circumstances. For example, a family with unexpected costs associated with a natural disaster could be exempt.
For people who can afford to buy coverage but choose not to do so, the maximum penalty in 2014 will be $95 for an adult and $285 for a family. In 2016, the maximum penalty will rise to $695 per adult and $2,085 per family.
The Urban Institute and others have estimated that only about 2 percent of Americans will potentially be subject to the penalty, and the Congressional Budget Office estimated that only 1.2 percent will actually pay the penalty in 2016. Everyone else either will have insurance or will fall under an exemption.
The bottom line is that the penalty is designed to encourage healthy people who can afford to buy insurance to be responsible instead of shifting costs to the rest of us when they get sick and get health care that they can’t pay for.
Myth # 2. If you’re insured through your employer, health reform won’t help you.
The Facts: The health care law provides many new protections to those who have health insurance through their jobs, and it provides employers with incentives to offer better coverage. In fact, most of these new consumer protections will benefit people with job-based coverage. Some of these protections apply when an employer buys a new health plan or makes major changes to employee coverage, and others apply to everyone in job-based health plans.
The new protections include the following:
- Better access to out-of-network services in an emergency.
- No annual or lifetime limits on the dollar amount your plan will pay for medical care.
- Access to preventive health services with no cost-sharing.
- Coverage for dependents under the age of 26.
- The right to choose your primary health care provider and to see pediatricians and ob/gyns without a referral.
- The right to appeal coverage denials to an independent reviewer outside your plan.
- Protection against unfair premium increases, and rebates to you or your employer if your health plan spends less than 80 percent of premium dollars on health care services.
- Access to simple, plain language summaries of health plan benefits and costs to help you understand your coverage and compare coverage options (beginning in September 2012).
The health care law has also begun expanding opportunities for small businesses to provide coverage. Small businesses are already eligible to receive tax credits to help them buy health insurance for their workers. Beginning in 2014, small businesses will be able to shop for coverage in new health insurance marketplaces called exchanges, and small businesses with sicker workers will no longer face price discrimination.
All of these new protections will help ensure that job-based coverage provides affordable access to health care services for American workers and their families.
Myth # 3. The Affordable Care Act creates a new government-run insurance plan.
The Facts: The Affordable Care Act does not create a new government-run insurance plan. Instead, it builds on existing coverage options, and makes them more accessible and affordable. Beginning in 2014, it will provide tax credits so that people can buy health insurance from private companies through their state’s exchange at more affordable rates. It will also expand Medicaid so that the lowest-income people can have coverage, too. Finally, it has already made health care more affordable for people in Medicare by gradually closing the prescription drug doughnut hole and eliminating cost-sharing for most preventive care.
Myth # 4. All businesses will be required to provide health insurance to their employees.
The Facts: This is not true. The “shared responsibility” requirements in the Affordable Care Act apply to large employers—those with at least 50 full-time employees. These large employers may have to pay a penalty if they don’t offer coverage to their full-time employees.
Smaller employers will have new opportunities to purchase health insurance for their workers, but they are not required to provide this coverage. Under the Affordable Care Act, businesses with fewer than 25 full-time employees may already qualify for a health care tax credit to help them with the cost of health insurance for their workers. For more information on the small business health care tax credit, click here.
Beginning in 2014, small employers will be able to buy health insurance in new marketplaces called exchanges, which will help them join with other small businesses to create larger pools that increase their buying power and reduce administrative costs.
Myth # 5. Undocumented immigrants will receive federal aid to purchase health insurance.
The Facts: This is simply not true. Undocumented immigrants are not eligible for either Medicaid or the new tax credits that will help pay for private insurance.
Myth # 6. Health reform creates a panel to make decisions about end-of-life care for seniors.
The Facts: This is not true. The health care law did not create any panel that will make end-of-life care decisions for anyone.
This myth was invented by opponents of health reform, based on a provision that would have allowed Medicare to pay health care providers for the time they spend talking with Medicare beneficiaries about what kind of care those beneficiaries would prefer at the end of life. This kind of discussion is called advanced care planning, and it actually gives patients more control over their health care, not less. These conversations are completely voluntary and are solely between health care providers and their patients. This measure would have helped people make better-informed decisions about how they wanted to be cared for at the end of life to ensure that their wishes were followed. Unfortunately, because of the massive, widespread distortions of this measure, it was not included in the final law.
Despite all the controversy and rumors, people with Medicare have always been able to talk to their health care provider about end of life care. In fact, in 2003, President George W. Bush signed into law the Medicare Modernization Act, which allows Medicare to cover advanced care planning as part of the Welcome to Medicare physical exam. Also, if a beneficiary visits her doctor to check her diabetes, for example, and she also discusses her end of life care preferences during that visit, Medicare will cover the cost of the appointment.
Myth # 7. Health reform will reduce Medicare benefits for all seniors.
The Facts: This is not true. The health care law makes no reductions in the Medicare benefits that are guaranteed to all seniors, including hospital care, outpatient care, and lab services. In fact, the law improves benefits in at least two ways: 1) it improves prescription drug coverage for people with Medicare Part D by gradually closing the coverage gap or doughnut hole; and 2) as of January 2011, it eliminated cost-sharing for most preventive care.
Seniors and other beneficiaries with high drug costs who fall into the doughnut hole are now receiving 50 percent discounts on their brand-name drugs, as well as other discounts on generics. These discounts will increase each year until the gap is completely closed in 2020. Seniors and other beneficiaries can now also get many preventive services, such as mammograms and colonoscopies, without having to pay a copayment.
One reduction that the law does make is cutting the overpayments to private insurance companies that provide Medicare Advantage plans to some seniors. Before the law was passed, these private insurance companies were paid about 14 percent more than the traditional Medicare program, and there was no evidence that they were providing better care. Reducing these overpayments will bring payments to private insurance companies more in line with the rest of Medicare. These reductions are being phased in gradually, and so far, there has been no drop-off in the availability or quality of Medicare Advantage plans. In fact, while some plans may have left some markets, others have entered new markets. Enrollment in Medicare Advantage plans has increased since the law was passed, and the average quality of the plans has increased as well.
Myth # 8. States that don’t set up their own health exchanges will be exempt from the Affordable Care Act.
The Facts: If a state doesn’t set up its own health exchange to provide quality, affordable coverage to its residents, the federal government will ensure that consumers in that state still have a place to get insurance by setting up an exchange for that state. All of the other important consumer protections in the Affordable Care Act, like the prohibition on discrimination based on pre-existing conditions, the option for young adults to stay on their parents’ plans until they turn 26, and access to recommended preventive services with no co-payments, will still apply to that state.
Myth # 9. Insurers were forced to cancel policies and drop people from their insurance plans because of the Affordable Care Act.
The Facts: I covered this one a few times already in previous articles, but thanks to the onslaught of misinformation and misleading media coverage of the issue, many people are still confused about it.
Let’s start with an explanation of what did happen: people did receive cancellation letters, and insurance companies did cancel some of their current policies. That much is true. However, the Affordable Care Act did not make insurers cancel consumers’ policies or drop coverage for any of their customers.
These plans are being cancelled because of decisions made by insurance companies, not because the ACA is forcing them to stop offering these plans. Back in the early days of the ACA, all insurance companies were given the option of “grandfathering” their current insurance plans, which meant that they could keep offering the old plans as long as they did not make any significant changes after the deadline. These grandfathered plans were largely exempt from the new minimum standards of coverage under the ACA, as long as insurance companies did not make any major changes to the coverage they offered after the deadline set in. They did have to abide by a few conditions: all insurance plans had to end arbitrary cancellations and lifetime limits on benefits, extend the age of coverage for dependents to 26, and enact consumer-protection plans to ensure that your premiums went to cover health care instead of administrative costs and bonuses for insurance companies and their employees. Sounds fair, right? Well, insurance companies are not in the business of fairness; they are in the business of making money.
So, many insurance companies chose not to grandfather their plans. Others did choose to grandfather their existing plans, but did not abide by the rules and tried to change their plans, which automatically ends their grandfathered status. The rules of grandfathering plans were not a big secret. Starting in 2010, this was pretty extensively covered in the media, and all insurance companies knew what they had to do if they wanted to grandfather their existing plans. But insurance companies like to make changes to their plans – it’s part of how they make money.
Instead of choosing to continue offering the same plans to consumers, they chose to drop those policies to create new, more expensive plans. In other words, they put profit ahead of consumer protections – which is exactly the type of behavior that contributed to the destruction of our health care system and created the need for health care reform. The Affordable Care Act did not force insurance companies to make these harmful decisions – but it will help to bring an end to some of the worst insurance industry practices that have kept affordable health coverage out of reach for millions of Americans.
Myth # 10. The Affordable Care Act will increase the deficit.
The Facts: The Congressional Budget Office estimates that, over the next decade, the health-care law will reduce the deficit by $109 billion. That’s because the Affordable Care Act includes new spending cuts and tax increases, which more than offset the cost of expanding health insurance to millions of Americans.
The law’s new revenue sources fall into three main categories. First are cuts to Medicare providers, such as hospitals and doctors. Under the Affordable Care Act, the federal government will pay slightly lower rates.
Second are cuts to private health insurance plans, known as Medicare Advantage plans, that cover Medicare patients. The federal government has, in recent years, paid these private plans more to cover Medicare beneficiaries than it has spent on seniors who sign up for the traditional public program. The health law aims to reduce those differences by cutting Medicare Advantage payments. Importantly, the Affordable Care Act is not reducing the quality or scope of services available for Medicare recipients; it is only reducing wasteful spending on private insurance plans, but will not take away services for Medicare recipients.
Lastly, the law includes new taxes on a number of health-care industries, including hospitals, medical-device makers, insurers and pharmaceutical companies.
And today, we learned that the projected cost of the ACA is even lower than initial estimates, leading to billions of dollars in savings over the next several years. Further, the ACA has contributed to the slowest growth in health care spending in our nation’s history and the lowest health care price inflation in over 50 years.
If you want to avoid becoming a victim of the misinformation campaign, check out this post on the sources of and motivation for the misinformation surrounding the ACA, read these tips for spotting media scare tactics , or click here for a comprehensive overview of the Insurance Marketplace and helpful links to reliable resources to find additional information.
Be Well, my friends!
- Last-Ditch, Desperate Effort to Undermine the Affordable Care Act Should Face Dim Prospects in Court (publichealthwatch.wordpress.com)
- Cost of Affordable Care Act Projected To Be Even Lower Than Expected (publichealthwatch.wordpress.com)