Families & the ACA: What the Affordable Care Act Means

8/7/2013, noon
Families & the ACA: What the Affordable Care Act Means For Families
Courtesy of the White House

Health care has always been a huge priority for the American family, so it comes as no surprise that many are now wondering how the Patient Protection and Affordable Care Act (ACA) will impact their lives. In America, the average family consists of two parents, along with approximately two children. Incomes vary, of course, with the average income for a household being $50,500.

Coverage before the ACA

The number one concern for most families is simply obtaining health care coverage. Before the ACA, it was estimated that 40.3 million Americans lacked health insurance; nearly one-in-five Americans under the age of 65 did not carry health care insurance.

The coverage problem was caused by a number of factors, according to a Kaiser Foundation study.

First, health care costs were skyrocketing before the ACA, which made premiums unaffordable for millions of Americans. Many families went uninsured because they were not wealthy enough to afford premiums on their own, but had incomes that were too high to qualify for Medicaid.

Second, those who could not obtain health insurance from an employer often struggled to get insurance in the private market due to pre-existing condition exclusions used by health care insurance companies.

This problem grew worse after the recession of 2007. Many unemployed parents lost their health care coverage, a problem that cascaded down to their children. Those who lacked insurance could still obtain some care, but the care was inadequate and often costly. For example, an uninsured child or parent who got sick would have to be stabilized in the emergency room, but an uninsured person who came down with cancer would not typically have their chemotherapy provided. An uninsured family who was injured in a car accident would be treated for their immediate injuries in an emergency room, but not receive any covered necessary physical rehabilitation afterwards.

Coverage after the ACA

The ACA attempts to increase the health care insurance coverage for families in a number of ways.

First, the ACA aims to increase coverage by making it illegal for insurance companies to “rescind” the policy of a family member who is costing the company too much. Before the ACA, it would not be uncommon for a health insurance company to drop coverage once the claims for one family member reached a high level.

Second, the ACA makes it illegal for health insurance companies to exclude families on the basis of pre-existing conditions. With this provision, millions of American families with pre-existing conditions, such as asthma or diabetes, are now be able to purchase insurance on the private market.

Third, the ACA provides support to poorer families, including those who do not qualify for Medicaid. Under the ACA, unemployed families or families who cannot receive insurance through their employers and make less than 400 percent of the Federal Poverty Level receive tax credits to offset their insurance premiums, so that no household pays more than a certain percentage (no more than 10 percent) of annual income on health insurance. The family receives, in effect, premium support payments from the government. The lowest income families have nearly all of their premiums paid for in the form of a tax credit.