Affordable Care Act's Obstacles to Eliminate the 'Uninsured'

April 14, 2013

The year 2014 was supposed to be the year the "uninsured" became a thing of the past under healthcare reform. That may not be the case now, however.

At its core, "Obamacare" is designed to accomplish one thing: eliminate the term "uninsured" from the national health vocabulary. First the individual mandate under the Affordable Care Act forces those who are "bulletproof" - young, healthy, and less likely to become ill - to contribute to enter the system. This should have the effect of making coverage more affordable for the rest of us. Second, the insurance industry will no longer be able to cherry pick policy holders, rejecting all but the healthiest Americans. Finally, the practice of "post-claims underwriting" will be gone. This is the practice of waiting until a policy holder needs coverage, then searching the application for any undisclosed condition, (a cold 10 years prior) as an excuse to rescind the policy.

This is good news for the healthcare industry, if all goes to plan. The individual mandate does not simply force uninsured Americans to pay whatever the insurance industry demands for a policy. For many, insurance will be provided through expansion of Medicaid to 133 percent of the federal poverty level (FPL.) For a family of four, those earning less than approximately $29,500 will qualify. Those with incomes too great to qualify for Medicaid will nonetheless qualify for subsidized plans through health insurance exchanges. Finally, small businesses will be incentivized through tax credits to provide coverage for employees. In fact, the only "uninsured" persons contemplated by the ACA are illegal aliens, who will likely continue to use the emergency room as their sole source of healthcare.

Now for the bad news. The expansion of Medicaid shares the same flaw as any income-based government program: It pays a person to be "a failure." This is the argument used by many of the states who vow to opt out of the expansion of Medicaid. If the threat by many states to opt out persists, this will throw most low-wage earners into the subsidized exchanges. Trouble is - they don’t exist.

According to a report by Jenny Gold staff writer for Kaiser Health News, enrollment in insurance exchanges is scheduled to open October 1, 2013, with coverage to begin January 1, 2014. "The law’s framers gave states broad financial assistance to set up their online marketplaces. They also required the federal government to set up the exchanges if states failed to do so but didn’t create a separate pot of money for that effort. The assumption was that most states would step up. According to the Kaiser report, "in the end, however, only 17 states and the District of Columbia did. Resources for the federal effort may also be constrained because of the spending cuts imposed by budget sequestration."

Finally, people simply don’t understand the law. Even those who are set to receive free care through Medicaid simply do not realize the program exists. The problem is worse when it comes to creating exchanges For now, Gold notes, "Private foundations, health industry groups, and advocacy groups on the state and national level say they are determined to fill the gaps in states like Texas and Florida, but how successful they’ll be remains to be seen."