Insurance 101: Obamacare and Insurance Regulation

The Patient Protection and Affordable Care Act, more commonly referred to as the ACA or “Obamacare” is a law passed in 2010. It was (and still is) the single largest change to healthcare regulations since Medicare and Medicaid were enacted in 1965. 

As we often discuss, most insurance regulations happen at the state level. However, the federal government can, and does, step into the insurance regulation game when it needs to. Some early examples of federal insurance regulations include The National Flood Insurance Act of 1968 and The Employee Retirement Income Security Act of 1974 (ERISA). The feds have only become more involved in insurance regulation over the past few decades. 

So, what is the Affordable Care Act? 

By now, the ACA has been around for over 10 years. It was signed into law in March of 2010, while some provisions didn’t take effect until 2014. In fact, some parts of the law have never been implemented, including Medicaid expansion in certain states and the “individual mandate” that every person in the U.S. be covered by insurance or pay a penalty (which was stripped under the Trump administration). 

As for the parts of the ACA that did take effect, and are currently standing, the basic idea behind Obamacare is to make affordable healthcare accessible to as many people in the U.S. as possible. Most people can agree this is an ambitious and worthy goal; though many don’t agree with the specifics of the law itself. 

How does Obamacare attempt to make healthcare affordable? 

Within its 906 pages, which you can read for yourself here, the ACA has a few key provisions that dramatically changed the face of healthcare in the U.S. These include:

Requiring insurance companies to insure people with pre-existing conditions: Prior to the enactment of the ACA, private insurance companies selling policies outside of group/employer-sponsored plans could deny coverage to someone based on a large number of “pre-existing conditions.” This left many people unable to obtain insurance coverage at all, or subject to extremely high premium costs just to be covered. 

Removing lifetime caps on benefits: Insurance companies used to have lifetime limits on how much care you could receive. If someone got cancer and needed a one million dollar treatment, they could say goodbye to ever being covered for any health needs in the future. Obamacare changed all this by prohibiting insurance policies from putting a lifetime maximum on coverage. 

Requiring “minimum essential coverage”: Before the ACA, insurance companies could sell health plans that really didn’t cover much of anything. Some plans were specifically marketed as catastrophic insurance – with high deductibles and coverage only for very serious accidents or illnesses. Obamacare made it law that insurance plans had to cover a number of essential types of care in order to qualify as ACA compliant. These items are known as minimum essential coverage (MEC) and include preventive care and mental health services, among others. 

Premium subsidies or tax credits to individuals: Increasing the quality of healthcare coverage is great, but on its own doesn’t solve the problem of affordability for many people. For those covered by an employer health plan, and for those shopping on the “marketplace,” premium costs can be a real financial burden. The ACA made rules about how much an employee’s portion of healthcare premiums could be when on an employer-sponsored plan. For individuals, Obamacare implemented premium tax credits to offset the cost of plans for those buying their insurance on the healthcare marketplace. 

The battle over healthcare reform regulations 

If you’ve read this far, you might think Obamacare sounds awesome, and wonder how anyone could question that. If so, you also must have been living under a rock for the past 10+ years! While it sounds great in theory, change is never easy. And it’s certainly not cheap! Even before it was signed into law, the ACA faced major pushback and obstacles from those within the Democratic Party and especially those outside of it.  

Just a few examples of the ongoing challenges that have happened since President Obama signed the ACA into law include: 

• A Florida judge ruling parts of the ACA are unconstitutional
• 26 states suing over Obamacare
• The U.S. Supreme Court striking down the individual mandate as unconstituional 

Not to mention, even with Obamacare in place, healthcare costs continue to rise at a rate well over the GDP, and at twice the rate of workers’ wages. This leaves healthcare largely unaffordable for many, and the U.S. still has 28.9 million uninsured people (as of 2019). The numbers are likely higher now after many have left jobs, either by choice or as a result of the pandemic. 

What is the future of Obamacare? 

We misplaced our crystal ball, so it’s impossible to say for sure, but the future of the ACA seems pretty secure for the moment. With President Biden in office, there are unlikely to be any major, negative changes to the law, for example a complete repeal. That doesn’t mean the law is perfect and should be left alone. 

There are still a large number of uninsured Americans, and healthcare spending continues to rise to unaffordable levels for many people. It remains to be seen whether the federal government will undertake another massive healthcare reform law, or if individual states will try to do it themselves. Currently, many states have single-payer (Medicare for all) legislation in the works. While Obamacare was a massive law, and an overhaul to the way the U.S. healthcare system worked for decades, it is not without problems and has not proven to be the panacea to the country’s crisis of healthcare access and affordability. 

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