How the Affordable Care Act Affects You in 2014 and Beyond

The creation and initial implementation of the Affordable Care Act has resulted in more than its fair share of confusion and controversy, which may have contributed to the slower than expected uptake of the new services since their introduction in October, although some success has been achieved. Coverage has been expanded by reaching out to people newly eligible for Medicaid or subsidized insurance, but many individuals and employers remain unclear about what the act means for them.

The Affordable Care Act

The Affordable Care Act was created to increase the affordability and quality of health insurance, to expand both public and private coverage, and to introduce minimum standards for medical insurance. The Act introduced an individual mandate that requires everyone to receive some form of coverage or face a fine, and an employer mandate that requires businesses employing more than 50 people to pay a tax penalty if they do not offer an appropriate health insurance policy.

The act has created as much debate during its implementation as its creation. Variations between states, difficulties accessing the marketplace websites, and misunderstandings of claims about the changes have made it difficult for many consumers to understand what the act means for them. For example, an individual’s state of residence will determine whether or not they have expanded access to Medicaid, while Arkansas has introduced the private option, subsidizing private insurance for low income individuals using the funding that is elsewhere used to increase Medicaid coverage. Further confusion has arisen due to the misinterpretation of assurances that no one would be forced to change their preexisting policies as meaning that insurers would not stop providing any existing policies, regardless of whether they met the new minimum standards. This resulted in an extension allowing current policyholders to renew their coverage for 2014.

Affordable Care for Individuals

Individuals will now be required to obtain some form of public or private coverage, whether it is through Medicaid, Medicare, or any form of private or employment based insurance. Failing to do so will generally result in a fine. The expansion of Medicaid and creation of state and federal marketplaces have expanded the range of options available to fulfill this requirement, with subsidies available for individuals on lower incomes, benefiting those who previously struggled to obtain or afford coverage. Previously uninsured young people, seniors and individuals living with chronic conditions or mental illnesses will now find it easier to obtain suitable coverage, since insurers cannot reject applicants on the basis of pre-existing conditions, or fail to provide coverage for mental health conditions. Individuals who were previously insured may also experience changes, since better options may appear on the marketplace, and their existing policies may cease to be available, if they do not meet the minimum standards. The impact for currently uninsured individuals will be felt in the coming year as their options increase and they are required to obtain coverage, but those who already have insurance may not have to make any changes, at least until the end of 2014, and even then, it will depend on how well their existing policies meet the required standards.

Employment-based Health Insurance

Employers will need to be aware of their new responsibilities in 2014 and beyond. Businesses with more than 50 full time employees will be required to offer affordable health insurance from 2015 in order to avoid an Employer Shared Responsibility Payment on their tax return. Smaller employers will not have to pay penalties, but may be able to access tax credits or subsidies if they provide health insurance and have fewer than 25 employees. Employers will also be able to shop for better health insurance rates on the marketplaces. It will become more affordable for small businesses to provide health insurance, and easier for employees to obtain coverage elsewhere if they work part time, are self employed, or cannot access it through a small employer. However, there is a risk that some employees will have their work hours cut by larger businesses seeking to avoid the full time employee threshold.

Early Responses and Predictions for 2014

Uptake of the new services has been slower than expected, with just 106,000 people enrolling in the first month, rather than the predicted 500,000, and a large proportion of those taking action being eligible for expanded Medicaid or having pre-existing medical conditions that previously made private insurance inaccessible or unaffordable.

Demand for the expanded Medicaid where it is available has been matched by interest in the private option in Arkansas. Only 250 people from the state have signed up for private coverage through the federal marketplace, although another 6000 have applied, but are yet to select their insurance plan and more than 7000 applicants were referred to the private option instead. The private option has attracted 73,807 applications, with 49,787 individuals having already selected or been assigned to a plan, and 4638 being directed to Medicaid. Almost 14% of the 500,000 previously uninsured individuals in Arkansas have now found coverage, but it is estimated that about 60% of the uninsured population will not qualify for the private option and will need to go through the federal marketplace instead. It is these individuals, who have been slowest to take up the new insurance options, that will need to be targeted in the coming months.

Reaching individuals whose income disqualifies them from Medicaid or the private option, and those without preexisting conditions, will be essential for the success of the new system, since it will reduce the burden on insurers, ensuring that lower premiums can be sustained. The slow uptake of insurance by these groups has created a significant disparity between the public and private parts of the new system, but it may be reduced as the marketplace website is improved and slower actors begin to make their moves. It is expected that there will be 9 million new enrollments in the expanded Medicaid in 2014, but these should occur alongside 7 million new private insurance policies.