The Supreme Court endorsement of the Patient Protection and Affordable Care Act, better known as Affordable Care Act (ACA) or “Obamacare”, on Thursday is a watershed in America’s move towards universal healthcare, and an example of public health taking political centrestage.
In simple terms, the Supreme Court (SC) ruling upholds Obama’s poll commitment to provide healthcare to everybody, which his Republican rival Mitt Romney promises to roll back if he comes to power.
Strangely, the country and its politicians are bitterly divided on protecting vulnerable people from health catastrophes.
The law, passed in March 2010, will expand health coverage to 16.7 percent of the American population who live dangerously without any form of health insurance and will also improve the quality of coverage for the insured. Over the years, the number of people outside health coverage has been steadily rising. Between 2008 and 2010, it rose by four million.
Here are the salient features of the law, which now has no obstacle for implementation unless Obama loses his next presidential elections:
1. All those without health cover will have to now mandatorily buy insurance. At present, Americans have three types of health coverage — Medicaid, Medicare and private insurance. Medicaid and Medicare are state sponsored schemes aimed at poor and old people (and children and the disabled) respectively, who cannot buy private insurance. Private insurance are either bought by individuals directly or by their employers.
Without insurance, a single episode of bad health can bankrupt a person in America; however at least 50 million people live such dangerous lives. Some studies have in fact shown that many of them can afford to buy health insurance, but don’t do it either voluntarily or involuntarily.
The ACA makes it mandatory for everyone, without cover, to buy insurance. If one cannot afford, the government will give “stipends”. If one doesn’t buy health insurance, there will be a penalty.
Called “individual mandate”, this was in fact the central and most contentious part of the ACA. Despite fears of it failing judicial scrutiny, the SC ruled in its favour terming the penalty as a tax.
Given the extreme sensitivity of American people to the word “tax”, Obama didn’t want to use it for political reasons, but would be happy that the court has used it and his problem has been solved.
2. Besides insisting on “individual mandate”, the law will also ensure expansion of coverage by health insurance companies. For instance, American health insurance companies are notorious for denying coverage for pre-existing conditions. The new law will ensure that the companies are unable to do that any more.
For Obama, insisting on everybody buying health insurance is a pre-requisite for him to ask the companies not to omit people with pre-existing conditions. The logic is that if the uninsured people are given a choice, they will not buy insurance unless they have some health problem, which will give the companies a chance to omit them for pre-existing conditions.
More people on healthcare will also give the insurance companies additional numbers for improving their bottomline. Proposed “insurance exchanges” will offer people a competitive and transparent marketplace to buy their insurance cover.
3. Additionally, the insurance companies cannot refuse to keep people up to 26 years of age under their parents’ insurance. This move will again reduce the burden of healthcare on people, or rather young people.
4. ACA also will expand the coverage of Medicare and Medicaid. Both are federally funded, but executed by the states. Medicaid covers 50 million poor people and a third of all children in America. The new law will raise the eligibility bar for Medicaid so that people with incomes that are considered ineligible now will be covered by the free scheme.
The additional cost for this expansion will be initially paid for by the federal government, but will have to be picked up by the states by 2020. The states are mostly unhappy because this move will put enormous strain on their budgets. Twenty six of them went to court.
The ACA had provision to penalise the states by withdrawing Medicaid and Medicare funds if they do not comply with the expansion. The Supreme Court however didn’t agree with this and now the fate of the expansion of coverage beyond 2020 purely depends on the willingness of the states to bear the extra burden. Experts feel that political pressure will compel the states to fall in line.