Episode: 2395
Title: HPR2395: Obamacare
Source: https://hub.hackerpublicradio.org/ccdn.php?filename=/eps/hpr2395/hpr2395.mp3
Transcribed: 2025-10-19 02:15:05

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This in HPR episode 2,395 entitled Obamacare.
It is hosted by Ahuka and in about 16 minutes long and Karima Clean Flag.
The summary is, what did Obamacare do?
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Hello, this is Ahuka, welcoming you to Hacker Public Radio and another exciting episode
in our little mini series on healthcare policy in the United States.
What I want to do now with all the preliminaries taken care of is actually take a look at the so-called Obamacare and how it works.
We really did need the preliminaries if we were going to understand what was done and why.
As we saw from looking at trade-offs and competing interests, there's a lot of balancing going on here.
And now we're in a position to understand that balancing.
So what did Obamacare do?
Well, the first question involved politics, as you might expect.
Obamacare was designed to have as few enemies as possible.
To get that result, they started with a blueprint that takes some features from a plan that was designed by a conservative think tank, the Heritage Foundation in 1993.
This 1993 plan morphed into a plan implemented under Republican Governor Mitt Romney in Massachusetts.
And that Romney plan became the starting basis for Obamacare, though it is fair to note that things change at each step.
So it was more a question of general ideas than of exact specifics.
But some of the designers involved were continuing through all of these different stages.
And now the other way they reduced opposition was to carefully work out compromises that kept doctors, hospitals, and insurers happy.
To do that while reducing costs and increasing coverage required very careful balancing.
So here are some of the provisions.
First one, 85% of premium dollars need to go to actual health care services and health care improvement.
In other words, insurers could not spend more than 15% of the premium dollars on things like advertising and salaries.
So this is a kind of a negative feature to insurers and keeping them on board meant giving them something else later.
And we'll see that that happened.
The next provision in this legislation, young adults can remain on their parents policy until age 26.
So the idea here was that although a lot of people end up getting health insurance through their employer, you know, up to the age of 26, you might still be in college or just trying to get a start in employment, et cetera.
So, you know, this made it a lot easier for people to transition.
And it's something of a negative for insurers, but not a huge one because realistically most people 26 and under don't have a lot of medical needs.
This is mostly peace of mind for families.
No more pre-existing conditions.
This had been a feature of private insurance for a very long time.
Now insurers could no longer refuse to cover these conditions.
This was a big change and it proved to be very popular.
Most people thought it was very unfair to refuse coverage this way.
But another negative for insurers.
Funding maximum coverage limits.
Previously private plans frequently put in a maximum amount of coverage you could have either annually or over your lifetime or both in some cases.
Well, ending that is going to add to the cost of insurers.
Free preventive care.
A number of preventive care measures were required to be offered in all policies without charging anything to the consumer.
You know, from a controlling cost standpoint this makes abundant good sense.
A lot of health conditions cost much less to prevent than they do to treat.
But historically in this country insurance companies would not pay for preventive measures.
And I think the idea was, well, you know, we might pay for the prevention and then they change to another company that then gets the benefit of what we spent.
But with this legislation, you know, that's not an issue anymore.
They have to provide specified kinds of preventive care.
So we've just seen five things that seem to have some impact on insurance companies.
We should now expect to see something that's going to be good for insurance companies because remember they ended up in supporting this legislation.
So there has to be a balancing going on here.
Another criterion, Medicaid expansion.
This would allow more people to qualify for government-provided Medicaid.
This is good for the individuals involved, of course.
But it's a big plus for providers, for hospitals and doctors.
They would now be able to significantly reduce the amount of uncompensated care they provide since they could now build that to the government.
And since to some degree insurers pick up some of that cost either through higher prices or through some sort of cost sharing arrangement, whatever, this is actually going to help insurers as well.
Number seven.
Hospitals would be penalized for readmissions within 30 days.
So if the hospital had too many cases of patients being readmitted within a 30-day window, it would be taken as a sign of poor quality and Medicare reimbursements would be reduced.
Since Medicare covers nearly all older Americans, this could be a very significant deterrent.
And this would lead to measures like home health care follow-ups after discharge.
To hospitals that successfully change their practices to reduce 30-day readmissions, there would not really be too much financial impacts since the home care can be billed just like other care.
But you had to take it seriously.
And while it is the government mandating this through Medicare, again, if hospitals change their practice to cut this down, that's going to end up benefiting private insurers as well, because previously they would have been paying for these 30-day, you know, within 30-day readmissions.
So the idea of this, you know, from a quality standpoint is if you discharge someone and they're back in there a week later or two weeks later, maybe you didn't really deal with their problem.
So that is kind of a quality issue that isn't it.
Then there was something called the individual mandate to have health insurance.
This would require everyone to purchase health insurance, thus increasing the pool of insured people.
Now this is one of the more controversial aspects of the law, because a lot of Americans, you know, don't like to be told they have to do anything.
But it's a big plus to insurers because that increases the flow of premiums to the insurance companies, thus offsetting the negatives already mentioned.
And creation of insurance exchanges, in each state, and where there are 50 states in the United States, in each state insurance exchanges would be set up where companies could offer health insurance policies with largely matching features.
In other words, the government said these are what the things your policy must do.
And there'd be three levels of coverage, bronze, silver, and gold.
Bronze would be the cheapest, but would have the highest patients charges, copays, levied for services, while gold plans would cost more in monthly premiums, but cover more of the cost.
It was intended that each state was set up their own exchange, but the Supreme Court ruled that the federal government did not have the authority to mandate that.
So now if a state does not set up an exchange, residents of that state can purchase insurance on a federal exchange instead.
Finally, to pay for increased government spending, Medicaid expansion in particular, as an example of that, certain taxes were levied.
The largest of these is the tax on investment income received by wealthy families.
Now, a number of other options were ruled out at various stages in an attempt to get support from Republicans, such as the ability to purchase coverage directly from the federal government, which was referred to as the federal option.
Nevertheless, the Republicans decided to take a position of all-out opposition, and the measure finally passed without any Republican votes at all.
Obamacare, or to use its more formal title, the Affordable Care Act, passed in 2010, survived a number of court challenges, though with some changes,
most significantly a Supreme Court ruling that states could not be required to expand Medicaid coverage.
Providers got less uncompensated care, which was positive to them, but had to improve quality, which cost money.
Insurers got increased premiums, positive to them, but had to accept mandates on what they had to cover, that cost money to them.
Individuals got an end to pre-existing conditions, and mandates to provide coverage with certain features, very positive, but also a mandate to purchase insurance, which costs money.
So this is definitely a case of give-and-take that balances interests.
In the final analysis, providers and insurance companies supported the legislation.
A significant difference from 1993, when insurers and many doctors were opposed and helped to sink that attempt.
The only organized opposition in 2010 ultimately came from the Republican Party.
What were the results?
You know, the real test, how does it work in practice? And there's some pluses and minuses, okay? It did not all go smoothly.
The government website that people needed to go to and sign up crashed, and the government had to recruit a number of techies from Silicon Valley to straighten that one out.
And it did represent a massive change in the system, and that never happens without some bumps in the road.
But the number of people covered rose pretty significantly.
In terms of policies purchased on the exchange in 2016, the full figures are about 12.8 million people covered by policies purchased through one of these exchanges.
But Medicaid is a little more significant, and there was a 2010 actuarial report that noted that 50 million people were covered in 2009 for a total cost of, and this is divided between states and the federal government, but the total was about 510 billion dollars.
And it went on to note, over the next 10 years expenditures are projected to increase at an average annual rate of 8.3% and reach 840 billion by fiscal year 2019.
Now, you know, 8.3% is a lot at a time when price inflation is negligible.
And so that, you know, represents a pretty serious example of why it was thought something had to be done.
Now, this same actuarial report said average enrollment was expected to increase at a rate of 4.5% and reach 78 million in fiscal 2019.
Again, this was the 2010 report projecting over a decade.
And what they were looking at was they said this was represented a significant increase in Medicaid enrollment that will occur as a result of the Medicaid eligibility under the Affordable Care Act.
So they did this in 2010 trying to say, well, this is what we think is going to happen.
So that was their projection. In April of 2017, the measurement was 74 million people enrolled, and that represented an increase of 24 million, which is about twice the increase in people privately insured through the exchanges.
So of all the people who gained insurance since the Affordable Care Act was enacted, one third purchased insurance policies through the exchanges, two thirds were covered through an expansion of Medicaid.
So you should think these are mostly people with who are poorer, who have less resources, they might even have some fairly significant health issues.
Now, what happened to spending? The rate of increase has gone down. Now, this is one of those things, you know, no one ever said health care spending itself would actually fall.
The problem we were looking at was that it kept increasing every year at a higher and higher rate.
And so when you talk about reducing the rate of increase, that's what they talk about as bending the curve.
And there is evidence that that has happened. Is it perfect evidence now? There's, in fact, some of it looks like it might have started before the Obamacare Act was passed.
So it's a legitimate question how much of the improvement is due to this law and how much to other factors.
So the undeniable fact is that the rate of increase of health care spending has been lower over the last decade than previously and lower than we thought it was going to be.
So I've got a number of links to some of these documents that you can take a look at in the show notes, but I think for now this is Ahuka signing off.
And as always, urging you to support free software. Bye-bye.
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