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Korinne Narog

Professor Myers

English 1201

26 March 2020

The Three-Legged Stool That Wobbles

On September 9, 2009, less than a year after his election, President Obama made his pitch

for healthcare reform to Congress. In his speech, the President outlined the lofty goals that soon

became codified into law as the Affordable Care Act (ACT) just over six months later. He

addressed his hopes of providing care for the uninsured, end purported discrimination based on

preexisting conditions, and lower insurance prices for all. One of Obama’s most famous quotes

regarding this topic promised that “[i]f you like your doctor, you can keep your doctor. If you

like your health care plan, you can keep your health care plan.” But the promise went wide of

that mark in practice. Although Obamacare had achieved its original goal of decreasing the

number of uninsured, the legislation’s overwhelmingly negative side effect-increasing both

premiums and deductibles for all-has rendered the program a net failure.

The Affordable Care Act was passed on March 23, 2010, by President Barack Obama.

Though the act was signed into law in 2010, coverage didn’t start until January 1, 2014

(Amadeo). This is due in part to the fact that it takes quite a long time to switch providers or get

new insurance altogether. The act is most commonly known by its unofficial term, Obamacare.

The ACA has many provisions aimed at making the healthcare system better as a whole. It works

by providing consumers tax credits, or discounts, for insurance plans sponsored by the

government (Neporent). It is widely known Obamacare allows lower-income individuals and

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families the ability to purchase affordable healthcare, but there is a lot more nuance to the

program. Any person who is an American citizen whose income is 400% or less than that of the

federal poverty level qualifies for Obamacare. The federal poverty level is an amount the

government determines is the absolute minimum cost for basic needs such as shelter, food,

transportation, etc. Of course, this number increases for each additional person in a single

household. For reference, 400% of the federal poverty level for an average four-person

household is a joint income of $104,800 per year, or $6,550 per month. If a family of four were

to make more than this, they would not qualify for any kind of government subsidy.

Obamacare also does not allow insurance companies to turn individuals down for

coverage due to preexisting conditions. This means no matter the condition one may have, they

cannot be refused coverage or have premiums increased. Although it was repealed in 2018, for

the entirety of Obamacare, if someone qualified yet chose not to purchase insurance they would

actually be penalized on his or her tax returns, with each year increasing in the severity of

penalty. Obamacare requires large companies to supply insurance for all full-time employees.

This is to guarantee that enough healthy, low-cost people are a part of the insurance pool to help

pay for those who may be unhealthy and at a higher cost to providers.

Before the act was ever considered by Congress, President Obama had three major goals

in mind that he hoped would be achieved. The most important, and most widely known, would

be to significantly decrease the rates of uninsured individuals. The second goal was to decrease

the overall cost of healthcare for everyone. The final goal was to improve the quality of care each

patient would receive. As it stands right now, there are four levels of care that can be chosen

from, depending on how much one can afford. The bronze level covers 60% of expenses, with

the lowest premiums and highest deductibles. The silver level covers 70%, gold level covers
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80%, and the platinum level covers 90% of all expenses (Osborne). Each plan covers, at

minimum the “ten essential benefits” such as emergency services, hospitalizations, prescription

drugs, and more. While price is one thing to consider when choosing the best plan, it helps to

consider how often a person may need to visit the doctor, if they are on medications, or how

many people are under the plan. If a person were to visit the doctor frequently, then they would

want to choose a plan that has a lower deductible but higher premiums, and vice versa.

The 4th Circuit, in its majority opinion in the case King v. Burwell, noted that Congress

undertook the task of drafting the ACA to “increase the number of Americans covered by health

insurance and decrease the cost of health care” (King v. Burwell). To achieve that lofty goal, the

Congress enacted a lengthy piece of legislation that consists of three provisions that together are

intended to make health insurance widely available to the public and affordable for all.  The

ACA mandates a price control scheme, called “community rating,” that requires all insurance

carriers to charge a flat rate to all individuals of the same age, regardless of previous or current

health history. Such premiums are only possible if enough individuals are purchasing policies

within the insurance market to offset the increased costs incurred by expensive medical

treatments, because healthy individuals pay the same premiums as individuals with pre-existing,

serious, or chronic medical conditions.  To ensure a large enough pool of purchasers, the ACA

imposed an individual mandate, requiring nearly all Americans to purchase health insurance with

a minimum level of coverage. Any person that failed to purchase insurance was subject to a tax

penalty payable to the IRS. This both served to ensure a sufficient consumer pool while at the

same time forcing low risk individuals to purchase health insurance they may have forgone prior

to the ACA. The ACA also addresses businesses and corporate entities and creates

responsibilities for such entities within the Act. Like the individual mandate, the employer
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mandate creates a tax penalty scheme to incentivize large employers to provide a full-time

employee with health insurance. Specifically, the ACA penalizes any large employer that fails to

offer suitable coverage under the Act to its full-time employees if one or more employees

“enroll[s] . . . in a qualified health plan with respect to which an applicable tax credit . . . is

allowed or paid with respect to the employee” (26 U.S Code).

In order to require nearly all Americans to purchase insurance, the ACA provides that

those eligible for coverage will receive “cost sharing” subsidies for insurance purchased through

a healthcare exchange. The tax subsidies defray the cost of premiums for low income individuals

and allow for those same persons to procure more than the minimum essential coverage required

by the ACA should they wish or need to do so.

One controversial topic surrounding Obamacare has to deal with the increase in costs

overall. Before the act was passed, Obama promised the overall prices for insurance would go

down for everyone, this is far from the truth. While those covered under Obamacare may be

paying less, everyone else is suffering. A 2018 study determined that premium prices have more

than doubled from “$2,784 per year in 2013 to $5,712 on HealthCare.gov in 2017” (McCarthy).

This means that average private market premiums have increased by 105%. Employer based

insurance plans have also increase in price. In 2017, The Department of Health and Human

Services reported that premiums have doubled since before Obamacare in 2013 (Moore).

Regardless of group or non-group insurance, type of plan, income, or age; premium prices have

increased, on average, 60% (Figure 1). This is due, in part, to the removal of the individual

mandate.
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Fig. 1 A study demonstrated the increase in premium prices during the four years before
implementing the Affordable Care Act compared to the four years after implementation. The
chart displays increase per age group as well as individual and multi-person households across
all insurance plans (HMO, POS, PPO)
Although getting rid of the individual mandate may seem like a good thing, it doesn’t

work with the way Obamacare functions. The individual mandate required everyone to purchase

health insurance in order to keep prices lower. Now that there is no requirement, healthy people,

for the most part, see no need in purchasing healthcare. This then causes the dilemma of only

sick people purchasing insurance with no way to afford it all. Healthcare providers have to

increase the prices of the insurance being offered in order to supply for all the needs of those

who require care. The system needs enough people who don’t need care that often to continue
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paying for those who really need it but cannot afford it. This has become quite difficult with

ACA plans.

The plans within the ACA are not as good as they may seem. With the way Obamacare

runs, individuals are practically forced to switch his or her health plan each year. The choices for

care an individual can receive has also diminished each year. To avoid steep prices, plans need to

be changed often. This means changing what gets covered. So even if someone finds a plan they

love, they won’t be able to keep it for very long, unless they can afford to do so. Changing plans

up also means changing doctor’s and the hospitals available.

Since ACA plans are offered at a discount, it becomes harder to fund the care for

everyone. This results in frequent narrow network plans which house a smaller pool of doctors,

hospitals, and treatment centers available to those under the plans. Among the plans offered

through Obamacare, 72% of them are considered narrow (Livingston). This means it can be

difficult for people to find the specialized care they need. This also means that people may not be

able to keep their current doctor when going to sign up for a plan. A 2019 study has found that

Health Maintenance Plans (HMO), which offer a wide range of healthcare services through a

large network of doctors and hospitals, have consistently decreased in popularity while Exclusive

Provider Organizations (EPO), which only allow individuals to get coverage from doctors and

providers within a specific network, have grown. HMO plans went down 4 percentage points

from 2018 to 2019, while EPO plans increased 4 points in the same period (Murphy). The main

reason more and more providers are switching to EPO plans is in the hopes of curbing the costs

for those under the ACA.

Ever since the implementation of Obamacare, premiums and deductibles have increased

significantly for those who have private insurance. While cost is the big issue, there is more to it
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than meets the eye. A 2016 study compared the differences between High-Deductible Health

Plans (HDHP) and traditional HMO plans and how they affect outpatient visits and various

diagnostic tests (Reddy et al.). The experiment consisted of 7,953 adults who switched from an

HMO plan to an HDHP’s and 7,953 adults who remained with the traditional plan. The results

showed a clear correlation between higher deductibles and fewer outpatient visits. The HDHP

group showed a 9% reduction in visits for both higher and lower priority chronic conditions.

HDHP groups also showed reduced use of laboratory tests. The experiment concluded that

“chronic outpatient visits declined among HDHP members” (Reddy et al.). This study goes to

show that higher deductibles are encouraging people to refrain from going to the doctor as much

as possible. This leaves people missing out on essential treatments needed to maintain adequate

health. The fewer doctor visits in turn lead to less money going towards paying deductibles. This

means people with HDHP’s may never reach their deductibles and never get the chance to reap

the rewards of their insurance. Most of these plans exclude “primary care visits, preventive

screening, and prescription drugs” (Reddy et al.) making it that much harder for individuals and

families to reach their deductible each year.

Deductibles have not only been increased for those who are on private insurances, but

also for those on Obamacare. A recent study found that nearly 90% of ACA plans have

deductibles over $1,300, which the IRS defines as a high deductible plan (Avalere). For the 2020

plan year, the maximum out of pocket for an individual is $8,150 and $16,300 for a family

(Healthcare.gov). Though most plans aren’t maxed out in terms of deductible pricing, they often

come close. These so-called “affordable” healthcare plans should be taken with a grain of salt.

Individuals and families under ACA still have to pay 100% of their deductibles before being able

to obtain the benefits of their insurance. Even after an individual meets the deductible, they still
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don’t have 100% coverage. Once a deductible is met, enrollees then have copays and

coinsurance, which are fixed amounts or percentages that they still have to pay to receive care.

Perhaps the so-called greatest achievement of Obamacare would be the overall decrease

in uninsured individuals. The ACA did a great job decreasing that percentage; in 2013 it was

roughly 18% and in 2018 it was a mere 12% (Fig. 2). What most fail to notice is the rate of

underinsured, which increased proportionaly to the decrease in uninsured. An individual who is

underinsured has health coverage, but the costs are too high in relation to his or her income. The

number of individuals underinsured increased from 16% in 2013 to 23% in 2018 (Fig. 2). While

roughly 11.5 million people now have insurance, 13.5 million are underinsured. People aren’t

any better off with inadequate insurance that doesn’t cover the medical needs of a household.

Fig. 2 A study by Commonwealth Fund illustrates the change in percentage of adults ages 19-64
who were insured, uninsured, underinsured, or experienced a coverage gap from 2003-2018.
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For the ACA to operate effectively, all three parts of the Act must have been

implemented together and function as designed.  The three provisions—the community rating,

the individual mandate, and the subsidies—are interdependent.  If one of the provisions cannot

function, the system will fail.  It is like a three-legged stool: remove a single leg and the stool

will collapse (Alder et al.). This was bound to happen when the courts ruled to remove the

individual mandate. When industries do not require the young, healthy individuals to be a part of

the insurance pool, the costs move down the line. This causes prices to increase for everyone,

and when the government goes further and decreases prices for those under Obamacare,

enrollees in the private market and under employer plans have to pay inflated prices.

While Obama’s signature legislation started out with laudable goals, it has failed to meet

its stated purpose and has cost Americans much more than its backers ever said that it would.

That failure is even more pronounced without the individual mandate, a necessary feature of its

design. Obama’s assurances aside, what was promised and reality are unrecognizable to each

other. What was once a promise to fix our system has made healthcare so much more costly to us

all. Just as removing a leg will cause a stool to collapse, eliminating the individual mandate has

caused the Obamacare system to fail; not just a failure in goals, but one leaving American lives

far worse than before.

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Works Cited

“26 U.S. Code § 4980H - Shared Responsibility for Employers Regarding Health

Coverage.” Legal Information Institute, Legal Information Institute,

www.law.cornell.edu/uscode/text/26/4980H.

Amadeo, Kimberly. “Pros and Cons of Obamacare.” The Balance, 16 Dec. 2019,

www.thebalance.com/obamacare-pros-and-cons-3306059.

Amadeo, Kimberly. “A Timeline of How Obamacare Has Impacted Americans.” The Balance,

The Balance, 13 Mar. 2019, www.thebalance.com/what-is-the-obamacare-timeline-

3305756.

Avalere. “Higher Premiums, Higher Deductibles, and Narrower Networks in Exchange

Markets.” PNHP, pnhp.org/news/higher-premiums-higher-deductibles-and-narrower-

networks-in-exchange-markets/.

Commonwealth Fund. “Who's Underinsured in America, in 4 Charts.” Who's Underinsured in

America, in 4 Charts, 8 Feb. 2019, https://www.advisory.com/daily-

briefing/2019/02/08/underinsured.

Conover, Chris. “Now There Can Be No Doubt: Obamacare Has Increased Non-Group

Premiums In Nearly All States.” Now There Can Be No Doubt: Obamacare Has

Increased Non-Group Premiums In Nearly All States, 23 Oct. 2014,

https://www.forbes.com/sites/theapothecary/2014/10/23/now-there-can-be-no-doubt-

obamacare-will-increase-non-group-premiums-in-nearly-all-states/#28dbe834149a.
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eHealth Insurance. “Understanding Obamacare Subsidies.” Understanding Obamacare

Subsidies, EHealth Insurance, 12 Feb. 2020,

www.ehealthinsurance.com/resources/affordable-care-act/aca-obamacare-subsidies.

Goodman, John C. “High-Deductible Health Insurance: The Good, The Bad And The

Ugly.” Forbes, Forbes Magazine, 11 May 2018,

www.forbes.com/sites/johngoodman/2018/05/11/high-deductible-health-insurance-the-

good-the-bad-and-the-ugly/#470475ff7b18.

“How the Affordable Care Act Changed the Face of Health Insurance.” Edited by Vera

Gruessner, HealthPayerIntelligence, 17 Oct. 2016,

healthpayerintelligence.com/features/how-the-affordable-care-act-changed-the-face-of-

health-insurance.

Livingston, Shelby. “Most ACA Exchange Plans Feature a Narrow Network.” Modern

Healthcare, 4 Dec. 2018,

www.modernhealthcare.com/article/20181204/NEWS/181209976/most-aca-exchange-

plans-feature-a-narrow-network.

Neporent, Liz. “Obamacare Explained (Like You're An Idiot).” ABC News, ABC News Network,

23 Dec. 2013, abcnews.go.com/Health/obamacare-explained-idiot/story?id=21292932.

Osborne, Michael. “Levels of Obamacare Health Insurance Plans.” Osborne Insurance Services,

Inc., www.northcarolinahealth.org/blog/affordable-care-act/levels-obamacare-health-

insurance-plans/.

“Out-of-Pocket Maximum/Limit - HealthCare.gov Glossary.” HealthCare.gov,

www.healthcare.gov/glossary/out-of-pocket-maximum-limit/.
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Reddy, Sheila R, et al. “Impact of a High-Deductible Health Plan on Outpatient Visits and

Associated Diagnostic Tests.” Medical Care, U.S. National Library of Medicine, Jan.

2014, www.ncbi.nlm.nih.gov/pmc/articles/PMC5147026/.