In 2010, the Obama administration signed the Affordable Care Act (ACA), enacting several important health reforms. A key provision of the act is an individual mandate that will come into effect in 2014. The individual mandate is a law that would require all legal residents of the United States to have health insurance. Individuals who fail to secure coverage will be taxed a penalty that would depend on their income level, with exemptions for those experiencing financial hardship.
The individual mandate has been a very contentious part of the ACA; consequently, a majority of states collectively challenged the constitutionality of the act in federal court. On Thursday, June 28th, the Supreme Court upheld the ACA, with one significant caveat. The Supreme Court ruled that while the ACA was constitutional, the federal government could not penalize states by withholding Medicaid funds if they didn’t comply with the individual mandate provision of the law. With the penalty for non-compliance removed, individual states may decide whether or not they will respond to the numerous financial incentives provided by the Federal government to expand Medicaid coverage in their state.
It is important to note that the ACA contains numerous provisions, including linking Medicaid reimbursement rates to quality measures, prescription discounts for Medicare enrollees and providing generous incentives to providers for the adoption of electronic health records. However, each provision of the ACA warrants an article of its own, so for the purposes of this article, I will be limiting the discussion to the individual mandate.
In order to better understand the individual mandate, here is a brief overview of its provisions:
Medicaid Expansion: A central goal of the ACA is to make health insurance available and affordable to more people. This will be achieved, in part, by expanding Medicaid to include more low-income residents. However, many uninsured people will not qualify for public health insurance coverage and will be required to seek private health insurance.
Health Insurance Exchanges: Buying insurance as an individual is much more expensive than buying it as a group. For example, the rates offered to individuals are typically higher than the rates offered to organizations purchasing insurance for many employees. To help overcome this problem, states will create insurance exchanges, a ‘one-stop shop’, where individuals can compare health insurance rates for different companies and buy as a group for even better rates. In addition, enrollees will get tax credits for purchasing insurance through these exchanges.
Preexisting Conditions: Private insurers will not be able to reject people or limit benefits based on pre-existing conditions.
Employer assistance: Most large employers will be required to provide health insurance to their workers and smaller employers will receive financial incentives to encourage them to provide coverage to their employees.
A key aspect of the status quo that the ACA does not change is that Medicare and Medicaid will continue to be accessible only to those people who are either American citizens, or have been legal residents of the United States for the last 5 years.
It is clearly a transformative era in the healthcare world and healthcare advocates across the nation are elated about the potential that the ACA has to improve the healthcare delivery system. It is now up to the states to decide if and when they adopt the individual mandate provisions, and as such, implementation of the ACA is going to look very different from state to state.
As the ACA is likely to impact a significant proportion of US residents, it is important to understand its provisions. Providers can benefit greatly from taking part in the information technology incentive programs. Employers should find out about the incentives they can secure for providing coverage for their employees and be aware of penalties that may occur for having uninsured employees. Medicare recipients should find out about the enhancements to their coverage. Finally, those who are working with the uninsured or are themselves uninsured should familiarize themselves with the individual mandate and how it is being implemented in their state.
Khadija Gurnah, MPH has worked on Medicaid retention and enrollment for the last three years. Currently she works as a consultant who works primarily on developing IT infrastructure for public health organizations. She can be reached at firstname.lastname@example.org or at www.zanoorablog.com.