The 2010 health care law, officially known as the Patient Protection and Affordable Care Act, recently survived a tangle with the Supreme Court relatively unscathed. This has unleashed a torrent of new and old claims regarding the law. Even the most patently ridiculous claims like the idea of death panels or data-storing microchips being implanted in patients are gaining traction.
In the interest of addressing these and many other misconceptions, it seems like a good idea to summarize what exactly the law does. While this is by no means a completely comprehensive description, it should give most people a general idea of the nature of the law.
First and foremost, the most controversial part of the law: the individual mandate. This essentially requires everyone to have some form of health insurance and imposes a small tax on those who choose not to acquire insurance. There are a few exceptions of course. Those whose premiums exceed eight percent of their income and those under the income threshold for filing taxes are excluded from the mandate. Those with religious objections to receiving health care are also exempt.
There are several reasons for the individual mandate, but the primary justification is the law’s removal of policies regarding pre-existing conditions. All too often, insurance agencies use the excuse of a pre-existing condition to refuse to cover expenses. The law does away with this excuse, requiring insurance companies to offer coverage regardless of pre-existing conditions. To stop people from abusing the system by only buying insurance once after they come down with a serious illness, the individual mandate was introduced.
Several measures were then put into place to stop insurance companies from inflating their prices and taking advantage of the individual mandate. These include the 80/20 rule, which requires insurance companies to spend 80 percent of their income on providing health care and allows only 20 percent for administration. This has already caused over $1 billion in rebates nationwide according to www.healthcare.gov. There are also limits on ratios between highest and lowest premiums a company can offer.
The law also takes action to reduce the burden of purchasing insurance on the lower class, including offering sliding-scale subsidies to those near the poverty level, as well as expanding Medicaid and covering the expansion entirely through federal funding for the first two years. It also requires businesses with 50 or more employees to provide insurance, a welcome benefit.
Finally, the law introduces important cost-containment and financing measures. It lowers Medicare costs and authorizes the Food and Drug Administration to approve generic versions of certain drugs, making prescriptions cheaper. It also imposes taxes on drugmakers, device manufacturers, health insurers, and indoor-tanning services.
In fact, two of the most common claims about the law, that it will increase taxes on the middle class or that it will increase the deficit, are unfounded and baseless.
The Congressional Budget Office predicted the law will actually reduce the deficit by $124 billion and generate close to $525 billion in revenue by 2019.
While there are many valid criticisms of the health care law, far too many people on both sides of the political aisle are spreading outright lies regarding its nature. Unfortunately, many of these lies are holding more sway than they should, as a good portion of the country doesn’t truly know what the law does.