Health Insurance and the Affordable Care Act

By Alessandra Fodera (NHS ’16)

Before President Barack Obama assumed office in 2008, he promised the American people that, if elected, he would fight for health care reform to increase access to health insurance. In 2010, the Patient Protection and Affordable Care Act was passed in Congress and signed into law. This act became the most profound reform to the health care system in America since the implementation of Medicare in 1965, and like its predecessor has proved itself one of the most controversial laws in American history.

The Affordable Care Act contains a number of provisions, some already implemented, that have the potential to bring quality healthcare to Americans who currently have none. One of these, effective September 2010, eliminates lifetime limits on insurance coverage.  Under the law, insurance companies will be prohibited from imposing lifetime dollar limits on essential benefits, such as hospital stays and care for chronic conditions.

Insurance companies cannot limit lifetime coverage for “essential health benefits.” Under the Affordable Care Act, insurance companies cannot set a monetary limit on spending for a patient’s essential care while under that plan. Essential health benefits include ambulatory and emergency services, hospitalizations, maternity and newborn care, prescriptions, laboratory services, preventive care, pediatric services, and mental health services.  Annual and lifetime limits are prohibited only on essential medical care; insurance companies can still set limits on services considered “nonessential.”

By 2014, annual dollar limits on a health plan will be completely eliminated. Before the Affordable Care Act, most health plans had both annual and lifetime limits. Limits were dollar limits on insurance spending per year or throughout a patient’s lifetime. If a consumer surpassed this limit, they would pay out of pocket for additional costs. Lifetime limits were banned in 2010, restrictions were placed on annual dollar limits- and are being phased out; by 2014, they will be completely prohibited.

This provision addresses a major issue that some Americans face every day: For people who have chronic conditions, needing multiple surgeries, piling up doctors’ bills because of recurring illness – how do they pay? How does someone who has a child who is born handicapped pay for all those medical expenses? When a person is diagnosed with cancer, they should not have to fear about the burden of bills, but rather use their energies to focus on getting well. Aside from people with long-term conditions, eliminating limits helps ease the minds of all healthcare consumers.

Having annual or lifetime limits for people with conditions such as long-term disease, cancer, or chronic disability, adds unnecessary stress on a patient with no other real concerns.  Patients might refuse care that they don’t absolutely need but can greatly benefit from. For example, a patient with arthritis might refuse continuous physical therapy because the cost of constant doctor’s visits, labs and drugs is too expensive; they’ve already met their limit or need to cut costs.  A person with recurring cancer who has to decide which option of treatment to choose might consider going untreated because of the costs of medications, chemotherapy, or radiation. This provision saves lives.

The potential costs associated with this are high. Insurance companies set limits to minimize their own spending.  When consumers know they will have to pay out of pocket, they choose their health services with more thrift. However, consumers shouldn’t limit their care due to costs. Not being able to afford preventive care now will cause more expensive bills later.

In theory, insurance companies assume the penalty of these costs. However, in actuality, the insurance companies will not technically pay these costs. Insurance companies will effectively be neutral about this provision.  Insurance companies will raise premiums, deductibles, copays, etc. to compensate for their own increased costs. As long as there are for-profit companies in the mix, insurance companies will prioritize stockholders; the goal is always to make a profit. In other industries, taxes, tolls, and price increases are a few examples of how consumers bear the burden of cost shifting.

The Affordable Care Act has numerous provisions, all geared toward the main goal of making healthcare more accessible and affordable.  However, with many of the provisions, including eliminating lifetime limits, insurance companies are essentially just reallocating the costs back to the consumers. The law bans insurance companies from imposing lifetime dollar limits on essential benefits; insurance companies will now just raise costs to consumers in other ways, such as premiums, copays and deductibles. Insurance companies need to find a source of revenue from some avenue and, due to for-profit goals and stockholder needs, we will always pay in some form or another.  Multiple stakeholders with different priorities make it extremely difficult to find a solution that benefits all, or at least the majority, of stakeholders. Although the Affordable Care Act’s provisions were needed and are on the right path, we still have much further to go to truly make healthcare more accessible and affordable for all.

This entry was posted in Uncategorized and tagged , , . Bookmark the permalink.

Leave a Reply