What is the Affordable Care Act?

The Affordable Care Act is a United States federal law that was signed by President Barack Obama on March 23rd, 2010. Formally known as the Patient Protection and Affordable Care Act (ACA), it is often referred to as “Obamacare”. The 906 page law completely overhauled the health insurance industry and added protections for people with pre-existing medical conditions. The goal of the Affordable Care Act was to make affordable health insurances more accessible, expand Medicaid for low or no income families, and to guarantee coverage for pre-existing conditions.

Affordable Care Act health insurance policies will provide you coverage for pre-existing conditions. They will also provide coverage for things like pregnancy, mental health, and prescriptions; things that other non-ACA health insurance policies might not cover. The law guarantees ACA compliant policies in all 50 States, but it didn’t completely eliminate other insurance options. Depending on the State you live in, because States have their own insurance laws as well, you might have other health insurance options if the Affordable Care Act plans aren’t right for you.

Affordable Care Act Pro’s and Con’s

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  • Guaranteed coverage of pre-existing conditions
  • No charge for annual preventative care
  • Guaranteed maternity coverage
  • Lower prices for some that are in certain income ranges
  • Uniform coverage/policy structure
  • Guaranteed mental health coverage
  • expansion of Medicaid for no/low income households
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  • Not as many options for consumers
  • Increased prices because of adverse risk
  • Less doctors in networks
  • Plans offer only regional coverage
  • Complicated tax credit rules
  • More employer-sponsored group plans are ending.
  • Application prosses can be confusing without expert help.

Why is it Called Affordable Care Act?

price of affordable care act plans

Many people ask the question why is it called the Affordable Care Act when the prices of plans are so high. The prices have increased substantially because of the coverage requirements and pre-existing condition requirements. When the law was created, the goal was to provide more affordable health insurance options to some people.

If your household gross adjusted income is within a certain range and you don’t have other coverage available to you like through an employer, then you might qualify for an Advance Premium Tax Credit (APTC), commonly referred to as just a “tax credit”. If you qualify for the tax credit, you get to take advantage of it on a monthly basis to help lower the price of your health insurance. Since it’s a tax credit, the IRS oversees and enforces the the rules for this monthly savings. The amount of savings each month is based on income amount. When you file taxes for that year of insurance coverage, the tax credit will be reconciled. If your income is higher or lower than what was on your application, you might need to pay some back in taxes or get more back as a refund from the IRS.

Political History of the ACA

Obamacare Affordable Care Act

The Affordable Care Act law was and still is very controversial, which is understandable. Not only did the law completely change an entire industry, it was done by pretty much one political party. During the time the law was passed (2009-2010), the Democrats held the majority in both the house and the senate and held the presidency.

On November 7th, 2009 the house of representatives passed the bill 220 to 215. It barely passed with 84% of Democrats and only 1 republican supporting it.

The senate voted on December 24th, 2009 for their version of the bill. It passed with 100% of democrats voting for it and 100% of republican votes against it, The democrats had a “super majority”, so there was nothing the republicans could do to stop it from passing.

On March 21st, 2010 the senate’s version of the bill went back to the house of representatives for approval. It passed again 219 to 212, with 86% of democrats and 0 republicans supporting it.

Then on March 23rd, 2010 democrat President Barack Obama signed the Affordable Care Act into law.

Why is the Affordable Care Act so Controversial?

If we take the political bickering and opinions out of it and look at just the facts, it makes sense why there is so much controversy over the Affordable Care Act.

  • The final version of the law passed without a single vote from the republican party. Not even all democrats voted for it.
  • It completely overhauled and changed an entire industry that accounted for over 17% of the nations economic activity (GDP) in 2010, when the law was signed.
  • The law imposed a tax penalty if you chose to not have “qualifying” health insurance, as defined by the politicians who passed the bill. This penalty was later eliminated starting in 2019 under republican President Donald Trump.
  • It required the coverage of contraceptives, which conflicted with some religious beliefs.
  • Because of the requirement to cover pre-existing conditions, health insurance companies were then required to take on “adverse risk” which causes financial instability. Prices had to be increased to adjust for the unknown risk of covering pre-existing conditions.