What is the Affordable Care Act, and how does it affect me?
The Patient Protection and Affordable Care Act (ACA) is a 2,800 plus page federal law that fundamentally changes the way payers (insurance companies) can structure their policies and provides new ways to help U.S. citizens pay for healthcare insurance. According to Casale, et al. (2011), about two-thirds of Americans currently have health insurance, with the majority of those from employer plans. Approximately 98% of businesses with over 200 employees offer health insurance to their employees. The other third will be expected to purchase insurance or become eligible for Medicare or Medicaid.
The traditional method of paying for medical care is known as Fee-For-Service (FFS), an insurance payment model that is the most common payment model in the U.S. (Casale, et al., 2011). This means that insurance pays for each procedure performed. There aren’t any quality checks, so unneeded procedures could be billed.
With the ACA, quality is a key to reduced healthcare costs. The ACA started linking payments to quality outcomes October 1, 2012. In FY 2013, the Hospital Value-Based Purchasing program distributed an estimated $850 million to hospitals based on their overall performance on a set of quality measures that have been linked to improved clinical processes of care and patient satisfaction. (Healthcare.gov, 2012). The ACA quality measures how well hospitals adhere to best clinical practice guidelines. These guidelines include heart attacks, heart failure, pneumonia, surgery, and patient experience of care.
For individuals who purchase health insurance, the most significant parts of the ACA took effect in 2014. Changes that affected the insurance industry included:
- Insurance companies cannot deny coverage to a person under the age of 19 who has a pre-existing condition.
- Coverage cannot be rescinded. In the past, insurance companies could search for any technicality, and use it to deny coverage for a catastrophic illness.
- No lifetime benefit cap on essential benefits.
- Annual dollar limits disappear completely by 2014.
- Must justify premium increases or they cannot participate in the state exchanges starting in 2014.
- Payers must spend 80% of premiums on benefits and quality improvement.
Heathcare.gov. (2012). Administration implements new health reform provision to improve care quality, lower costs. (Fact Sheet). https://www.healthcare.gov/news/factsheets/2011/04/valuebasedpurchasing04292011a.html
Healthcare.gov. (2012). Key features of the affordable care act, by year. Retrieved from https://www.healthcare.gov/law/timeline/full.html