US Economy

Obamacare Pros and Cons

Detailed Advantages and Disadvantages of the Affordable Care Act

The Patient Protection and Affordable Care Act of 2010, more popularly known as Obamacare, was highly controversial right from the beginning. That's partly because the Act is so complex, anyone can easily pick out whichever facts support their points of view. Furthermore, the advantages mostly accrue to those who don't have health insurance, whether it's because of cost, employer or pre-existing health conditions. The disadvantages accrue to those wealthy individuals and businesses who will pay more taxes, or incur higher operating costs. Find out How Much Will Obamacare Cost Me?

Obamacare Pros

The non-partisan Congressional Budget Office lists the advantages of Obamacare:

The Act was designed to reduce overall health care costs by making services available to the 32 million who currently can't get insurance. They often use a hospital emergency room as their primary care physician, increasing costs for everyone. This starts in 2014.
It requires that all plans cover 10 essential health benefits. Preventive services are free, which will lower health care costs by treating diseases before they reach an expensive crisis.
For people who can't afford health insurance, the Federal government will pay the states to add them to Medicaid. The income requirement is expanded up to 133% of the Federal poverty level - roughly $31,000 for a family of four.
Those who don't qualify for the expanded Medicaid will receive tax credits if their income is below 400% of the poverty level ($94,000 for a family of four). States are required to set up insurance exchanges, or allow the Federal government to do so, to make it easier to shop for insurance plans.
Insurance companies cannot deny children coverage for pre-existing conditions. This benefit applies to everyone in 2014. Insurance companies can no longer drop anyone from coverage once they get sick. If a company denies someone coverage, that person can go to an external appeals process.
Parents can put their children up to age 26 on their health insurance plans. This will bring more profit for health insurance companies, since they will receive more premiums without higher costs for these healthier individuals. As of 2012, more than three million previously uninsured young people were added. (Source: Department of Health and Human Services)
The Medicare "donut hole" gap in coverage will be eliminated by 2020.
People with existing health insurance will keep it. Businesses prefer to offer a tax-free benefit like health insurance to attract good workers. That won't change under Obamacare.
Obamacare does not apply to businesses with less than 50 employees. Larger businesses are required to offer health insurance, but receive tax credits to help employees pay premiums. In 2015, the tax credit increases to 50%.
The Act will lower the budget deficit by $143 billion over the next 10 years by raising some taxes and shifting more cost burdens. (Source: CBO CBO Report on Health Care Reform and the Budget; Wall Street Journal, What Health Insurance Ruling Means, June 28, 2012; NPR, Medicaid Expansion, June 27, 2012)

Obamacare Cons

The CBO (and other non-partisan groups, as cited below) point out these disadvantages of the Act.

Increased coverage may actually raise health care costs. That's because many people will receive preventive care and testing who, fortunately, find out they didn't have that critical illness. However, the CBO found that additional testing, such as cancer screening and cholesterol tests, will lead to higher net medical spending. (Source: CBO, 2009 Study on Preventive Health Care, August 7, 2009)
Those who don't purchase insurance, and don't qualify for Medicaid or subsidies, will be assessed a tax of $95 (or 1% of income, whichever is higher) in 2014. It increases to $325 (or 2% of income) in 2015, and $695 (or 2.5% of income) in 2016. (Find out how to calculate it in Obamacare Taxes)
About 4 million people, or 1.2% of the population, will wind up paying the tax rather than purchase health insurance. The CBO estimates this will total $54 billion.(Source: Washington Post Factchecker, Tax Breaks vs Tax Hikes, July 6, 2012)
Taxes will be raised in 2013 on one million individuals on incomes exceeding $200,000 and four million couples filing jointly on incomes exceeding $250,000. They would pay a total of 2.35% (up from 1.45%) Medicare taxes on income above the threshold. They will also pay an additional 3.8% Medicare taxes. This would apply to the lesser of income from dividends, capital gains, rent and royalties or income above the threshold. (Source: About.com, Tax Impacts of Supreme Court's Health Care Decision, July 3, 2012; Smart Money, What Obamacare Means for Taxes, June 28, 2012)
Pharmaceutical companies will pay an extra $84.8 billion in fees over the next ten years to pay for closing the "donut hole" in Medicare Part D. This could raise drug costs if they pass this onto consumers.
In 2018, insurance companies will be assessed a 40% excise tax on "Cadillac" health plans. These are plans with annual premiums exceeding $10,200 for individuals or $27,500 for families. Many of these plans are for people in high-risk pools, such as older workers or union workers in dangerous jobs. (Source: Kaiser, Cadillac Tax Explained, March 18, 2010)
In 2013, medical-device manufacturers and importers will pay a 2.3% excise tax. Indoor tanning services already pay a 10% excise tax. This could discourage those businesses from hiring new employees.
Between 3-5 million people could lose their company-sponsored health care plans. Many businesses will find it more cost-effective to pay the penalty and let their employees purchase their own insurance plans on the exchanges. Other small businesses might find they can get a better plan through the state-run exchanges. (Source: CBO, The Effects of the Affordable Care Act on Employment-Based Health Insurance, March 15, 2012)
There are 30.1 million people who currently buy their own private health insurance. Many of them may need to get another plan if their insurance doesn't meet the 10 essential health benefits. (Source: Factcheck.org, The Keep Your Plan Promise, June 28, 2012)
In 2013, families can only deduct medical expenses that exceed 10% of income. Previously, they could deduct expenses that exceeded 7.5% of income.

Even three years after it's been approved, 54% of Americans opposed the Act, and many groups are still working to repeal Obamacare For more cons, see conservative think tank The Heritage Foundation's analysis, Impact of Obamacare. Article updated September 9, 2013