Ten Questions About Obamacare You Were Too Embarrassed to Ask

1. I heard that Obamacare starts on Tuesday. What is Obamacare, anyway?

Passed in 2010, Obamacare is a national law with two goals: making health insurance better for people who already have it and getting health insurance for more of the 60 million people who are uninsured. To do this, the law makes a bunch of new rules for private insurers (like Aetna and BlueCross/BlueShield), public insurers (like Medicaid), employers, and everyday citizens. This concept was piloted by Massachusetts in 2006 under then-Gov. Mitt Romney.

Here’s the upshot: About half of all Americans—about 160 million people—already have private health insurance, mostly bought by employers. If this applies to you, Obamacare matters only if your plan was stingy. Under the law, insurers must now pay for many things that used to be optional, like prescription drugs, having a baby, and mental health care, among other services. The law also blocks any extra charges for routine checkups, cancer screening, and some other stuff. Obamacare also limits your yearly out-of-pocket fees, such as co-pays for going to the hospital. It also forbids insurers from kicking you out if you get sick. One other thing: Starting in 2015, workplaces with more than 50 people must provide insurance to full-time workers. Another change: Your paycheck must show how much your boss pays for your health coverage, which may shock you.

Moving on to the roughly one-third of Americans on Medicare (mostly for seniors) and Medicaid (for the poor and disabled): Life won’t change much for seniors on Medicare, other than having an easier time getting prescription drugs. However, Obamacare includes a big expansion of free health care for the poor, through Medicaid. Starting now, nearly all families making less than $31,000 yearly could get free Medicaid, which means 17 million of the 60 million uninsured could be covered.

Everybody else—the remaining 20 percent who don’t have private insurance and don’t qualify for Medicare or Medicaid—has to go  buy health insurance from an online government superstore called an exchange. That’s what is opening today. You cannot be turned away, and depending on how much money you make, the government kicks in anywhere from nothing to a lot to help you out. Experts think 22 million people of the 60 million uninsured will comply.

In the end, 20 million Americans still won’t have insurance, though.

All this isn’t cheap, so Obamacare cut payments to hospitals and created new taxes for rich people, medical device makers, and health insurers, among many other tweaks to fund the law. According to the Congressional Budget Office, these revenues plus projected savings in Medicare in the next few years should balance out Obamacare’s cost. 

The fine print: Obamacare is a gigantic law made of 10 separate titles, with hundreds of other provisions. Less-publicized sections deal with childhood obesity, drug development, special pilot programs, nursing home care, and much more. If you would like to know more, this book by John McDonough will satiate your deepest desires.

2. That answer was too long, so I didn’t read it. Can you just show me some cartoons instead?

The Kaiser Family Foundation, in partnership with Free Range Studios, created this seven- minute cartoon video explaining Obamacare. Narrated by Charlie Gibson, a former anchor of ABC’s Good Morning America, it features the YouToons, who have won rock-star level fame among health policy wonks.

3. Why did we need to change things in the first place? I was perfectly happy with the old system.

You weren’t the only one. According to Gallup, 82 percent of Americans were quite pleased with their health care. The problem really was with the other 18 percent. People routinely got kicked off their plans for getting pregnant, having a pre-existing condition, or losing their job. Afterward, no one would sell them insurance, which pretty much screwed them. Many people also had bad health plans that imposed all kinds of restrictions. In addition, 60 million Americans had no health insurance at all, and as a result, many people lost their homes, endured bankruptcy, and suffered other hardships trying to pay for treatment for their illness. Among industrialized nations, the United States was an outlier in having no basic guarantee of health care.

4. Why are some people so mad about Obamacare?

Obamacare isn’t perfect by any means. But there are two groups that really hate it: those who wanted a single-payer, fully socialized system, and those who claim to be free-market zealots.

Single payer folks think private insurance is wasteful, and they prefer the government to just pay for medical care and eliminate bills, as in England. (Some people called this a “Medicare for All” option.) They dislike investing additional money in a patchwork of private insurers. But such a plan is politically impossible in the foreseeable future.

The angriest people—those looking to provoke a national economic default over Obamacare, comparing the law to the Fugitive Slave Act, or calling it the “the most dangerous piece of legislation ever passed”—are worried Obamacare will cost too much and also harm the quality of doctors’ care. They believe the existing system had problems but worked well enough for most people. Unfortunately, many vocal Obamacare opponents regularly misstate facts. Their vitriol is best understood not as based on rational policy disagreement but as political theater.

Still, it’s true most Americans don’t like being forced to buy insurance, though paradoxically they also hate excluding people who are already sick from buying insurance. Obamacare supporters counter the “mandate” spreads risk more widely and thus allows insurers to stop discriminating based on pre-existing conditions.

5. So the insurance marketplace opens on Tuesday. Got it. What do I need to do?

If you already have health insurance, Medicare, or Medicaid, you don’t need to do anything. If you don’t, go to www.healthcare.gov and follow the directions. You’ll end up getting various choices with prices adjusted for your age and income, typically separated into platinum, gold, silver, and bronze options. If your income falls between 100 and 400 percent of the poverty line (between $23,550 and $94,200 for a family of four), you’ll get a subsidy so your actual cost will be anywhere from 2 to 9.5 percent of your gross pay. This calculator helps estimate your subsidy. One more thing to keep in mind: If you’re up to age 26 and don’t have insurance through an employer, your parents’ insurance can cover you.

One unfortunate quirk: If you make less than the poverty level and live in a state that refused to expand Medicaid, you’re pretty much out of luck. Because of an infuriating shortcoming in the law, you must pay full price on the exchanges.

If you need to learn more, go to LocalHelp.HealthCare.gov to find help in your area. Typically, people window-shop more than a dozen times before buying. If you buy, the policy kicks in on January 1, 2014.

6. Whatever. I hate Obamacare and refuse to move a finger. What can they do to me?

To be honest, not much, though you should at least browse the exchange and see what you’re turning down. In deeply Republican Oklahoma, for example, the cheapest policy is only $96 per month. Still, if you blow off Obamacare and don’t get insured by April next year, your grand total fine is only about $100 (though it will increase over the years). And there’s another loophole: If the policy costs more than 10 percent of your annual income or you don’t pay any federal taxes, you won’t have to pay a penalty anyway. (In Massachusetts, less than 0.3 percent of people paid any penalty.) In short, if you don’t participate in Obamacare, the government won’t send black helicopters after you.

7. Unlike that other person, I am psyched about signing up for health insurance. Once I do, am I all set if I end up in a hospital or get really sick with cancer?

Sadly, the answer isn’t simple. It’s true that you wouldn’t have to mortgage your house and lose everything since you’re insured. But just as with auto insurance if you get in an accident, different policies have different deductibles.  If you gambled and bought the cheapest bronze insurance, for example, you may have to cover the first $2,000 of any hospital bill before your insurance starts covering some of the costs. After that, you still pay a share of the bills until you hit the “out of pocket maximum.” Obamacare limited that to $6,350—above and beyond what you pay in premiums—but then delayed that maximum. (This is why the cheapest policies may not be the best.)

Worse, some insurance policies may recommend a hospital, but not all the doctors in that hospital may participate in the insurance network. So you can get in the weird situation where you go to an in-network hospital for a complex medical problem, but the specialists (like pathologists) who treat you but don’t participate in the network. Bam!—You’re stuck with their huge bills with no help from your insurer since the doctors are “out of network.”  (This is the case for many current insurance policies as well and is not a direct consequence of Obamacare.) Worst of all, Obamacare imposes no limit on charges from out-of-network doctors, so you could still lose your house.

Bottom line: Over time, further regulations may fill in these gaps. For now, be very careful when you buy your plan—and be sure to understand the benefits.

8. I’m 27 and make about $35,000 a year. According to my paycheck, I pay only $150 dollars per month for my health care plan, which is less than my cable bill. Why are people so worked up about health care costs?

For now, you’re shielded from the actual cost. The amount taken out of your paycheck is just your small share of the premium. Your employer in fact is kicking in hundreds and hundreds of dollars each month as well—big money that could have ended up in your pocket if premiums were lower. Plus, a large portion of your federal and state taxes pay for health care for the poor and elderly. According to one estimate, you’re actually paying $10,000 per year for health care—more than a quarter of your earnings—and workers with families pay even more.  

Though Obamacare may lead to lower premiums for many people who are sick and hard to insure (mostly by bringing more healthy people into the system), it doesn’t aggressively attack the bigger problem of rising costs. The law does fund some experiments for cheaper and better health care, but the data so far is underwhelming. Obamacare is best understood as a plan to improve health insurance access, but not as a plan to lower the existing costs much. On the bright side, some private insurers, like Blue Cross Blue Shield, are pioneering new approaches. But health care still will be a huge drain on take-home pay and the national economy.

9.  What was that whole thing with the Supreme Court and Obamacare last year?

To get people insured, Obamacare sat on a “three-legged stool.” It includes a mandate for people to buy insurance if affordable, a prohibition on insurers from barring any buyers regardless of health status, and a huge expansion of free health care for the poor through Medicaid. Because states have to pay for part of Medicaid, several strongly opposed expansion, and Florida and other states filed a lawsuit to stop Obamacare. (To be honest, however, Obamacare promised to give states almost all the extra money.)

In the end, the 2012 case was a mixed victory for Obamacare. The Supreme Court upheld the law broadly and the mandate (the first two legs of the stool), but it made the Medicaid expansion optional for states (cutting out the third leg). Though extending free care to the poor would cost states quite little, 22 mostly Republican states have refused to take the money and insure more poor people. This is a major problem for Obamacare’s central goal and likely will leave millions more people uninsured. If you live in one of these states, are poor, and don’t have Medicaid, you are out of luck.

10. Is Obamacare here to stay, or could it be repealed?

Once Obamacare starts working and delivering insurance, it will become practically impossible to repeal as more and more people get covered. So opponents are trying to kill it before it gets started. Even in the face of a government shutdown, Obamacare funding is considered “mandatory” and will continue unaffected.

Thus far, the U.S. House of Representatives has voted to repeal Obamacare more than 40 times since passage, but it has been blocked by the Senate. Despite the drama surrounding the pending government shut-down and debt-ceiling limit, the law is almost certainly here to stay.

Still, Obamacare will require many changes over time. Numerous problems remain regarding the insurance provisions (for example, there is no limit on out-of-pocket costs for out-of-network doctors). Additionally, the employer mandate might be better structured as based on payroll rather than number of workers. However, these tweaks will require legislators to work together—a problem when Congress is at a historically low level of productivity.