In our previous blog post, we covered how Obamacare works. But we didn’t talk about the challenges that come with it.
That’s what we’re here to discuss. In this post, we’re looking at the top 11 reasons why critics wanted to replace Obamacare and the real issues people face when dealing with it.
Let’s jump right in.
Challenge 1: Tax Penalties Are Confusing
If you don’t have health insurance in Lakeland or elsewhere, calculating the Obamacare taxes you owe can be really tough.
In 2016, the penalty increased to about 2.5% of your adjusted gross income. The minimum penalty was $695, while the maximum was the cost of a Bronze Plan.
The exact cost of the minimum penalty depends on the number of family members you have.
Challenge 2: Plan Cancellations Hit Hard
President Obama promised that if you like your plan, you can keep it. But about 1 million people had their plans cancelled by health insurance companies.
Why did this happen? The plans didn’t comply with the ten essential health benefits required by the ACA.
Important distinction: This wasn’t Obama’s decision. It was a choice made by the health insurance companies themselves.
Challenge 3: Budget Impact Debates
Some experts disagree about whether the ACA actually reduces deficits. Originally, it was projected to save $143 billion. Others predicted it would add $1.76 trillion in debt.
This is disappointing because the ACA was passed by Congress specifically to reduce the cost of Medicaid and Medicare. The entire budget gets eaten up by federal payments for benefits.
Challenge 4: Computerized Records Create Headaches
Doctor’s offices are required to computerize their records, which sounds simple but creates real problems.
The mandate was first introduced in 2009 as part of the Economic Stimulus Act. It’s been frustrating for doctors ever since. It makes life a lot harder for employees at doctor’s offices.
Here’s how complicated it got:
- Since October 2013, doctors must choose from 140,000 codes when entering diagnosis data
- This is up from the previous 18,000 codes
- Hospital records must comply with Medicare value-based payment system policies
That’s a massive increase in administrative burden.
Challenge 5: Payment System Overhaul
The Affordable Care Act completely changes how Medicare reimburses hospitals.
It switched from fee-for-service to value-based payment. This means Medicare stopped paying for every single exam, test, and procedure. Instead, it provides base payments based on how well a patient does.
This will cut costs in the long run. But it’s a pain for hospitals to record all of these transactions and adjust their systems.
Challenge 6: Additional Medicare Taxes for High Earners
If you earn more than $200,000 individually or your family earns more than $250,000, you pay additional Medicare taxes.
Who got hit:
- About 1 million individuals
- 4 million couples
- Affected both capital gains taxes and income taxes
This was heart-breaking and came as a surprise to many people when they filed their tax returns.
Challenge 7: Short-Term Cost Increases
Healthcare became available for most people in the United States. However, that increased the cost of healthcare in the short term.
For the first time in a decade, many people received preventive care. Treatments and tests for cholesterol, cancer, and diabetes raised costs for insurance companies, which they passed along to consumers.
Challenge 8: Medical Expense Deductions Changed
Some families faced changes to tax deductions for uninsured medical costs.
The ACA raised the threshold from 7.5% to 10% of adjusted gross income. However, the deductible level for 2017 and 2018 was restored after Trump brought in his tax plan.
Challenge 9: Additional Industry Taxes
The Obamacare benefits had to be funded somehow. Most health insurance companies and healthcare providers paid additional taxes to cover the costs.
New taxes included:
- 10% excise tax on indoor tanning services
- $84.8 billion in fees for drug companies over ten years to cover Medicare Part D’s “Doughnut Hole”
- 2.3% excise tax on medical device manufacturers and importers starting in 2013 (suspended by Congress between 2016 and 2018)
These companies could have passed costs to consumers by asking for higher premiums.
Challenge 10: Employer Coverage Losses
Do you know how many people lost their company-sponsored health care plan? About 3 to 5 million people.
Many businesses thought they were better off paying penalties rather than providing their employees with health insurance benefits. Some business owners figured their workers could always find a better plan from the exchanges anyway.
Challenge 11: It’s Still Complicated
We all know how complicated buying health insurance in Jacksonville is. And honestly, it’s still the same after all these years.
The Health Insurance Marketplace has four policy levels:
- Bronze
- Silver
- Gold
- Platinum
Choosing one depends entirely on your personal health insurance needs and financial situation.
To make a smart decision, you need to look at the deductibles, copays, and co-insurance levels from different health insurance providers. Then you can compare and choose the best plan that fits your needs.
The Bottom Line
The Affordable Care Act comes with many challenges. However, we can’t ignore how it has completely revolutionized the health insurance industry.
Despite its problems, it expanded coverage to millions of Americans who previously had no access to healthcare. It protected people with pre-existing conditions. It allowed young adults to stay on their parents’ plans until age 26.
The system isn’t perfect, but it made healthcare more accessible for countless families across the country.
Need Help With Obamacare?
Star Nsurance + Tax would be glad to assist you anytime. Please reach out to our team today!
Open enrollment for Obamacare typically runs from November 1st through December 15th each year. We look forward to serving you.