The Affordable Care Act: Setting the Record Straight
As we continue to implement the Affordable Care Act, it’s important to separate fact from fiction.
MYTH: Members of Congress and their staff are exempt from the Affordable Care Act.
FACT: Absolutely false. The ACA requires Members of Congress and their staff to obtain insurance through the Exchanges by Jan. 1, 2014. That requirement was authored by Sen. Charles Grassley, R-Iowa.
· According to a proposed rule issued recently by the U.S. Office of Personnel Management (OPM), Members of Congress and congressional staff must be enrolled in Exchange plans as of January 1, 2014. Members of Congress and their staff will no longer be eligible for Federal Employee Health Benefits coverage as of Jan. 1, 2014.
· Members of Congress and congressional staff are prohibited from receiving premium tax credits or cost-sharing subsidies that will be provided to all other eligible citizens under the Affordable Care Act.
· Employer contributions for Members of Congress and congressional staff will be maintained. “The ruling by the OPM means that government will contribute to those plans – just as it does now, and just as most private-sector employees have their health insurance paid for, in part or in whole, by their employers.” [Wall Street Journal, 8/2/13]
MYTH: The Affordable Care Act is a “job-killer.”
FACT: The economy has grown post-passage of the ACA and unemployment is declining.
· Since the passage of the ACA in March 2010, private employers have added 6.7 million jobs and the health sector has added 808,400 jobs.
· CBO and the Business Roundtable found that employers will benefit from lower health care costs, freeing funds to hire more workers. According to CBO, employer premiums will fall by as much as 3 percent in the large group market and 2 percent in the small group market.
· This claim was independently debunked by factcheck.org. What CBO actually said was “the legislation, on net, will reduce the amount of labor used in the economy by a small amount – roughly half a percent – primarily by reducing the amount of labor that workers choose to supply.” Essentially, the ACA ends job-lock by giving people the option to pursue entrepreneurial ideas, stay home with their children or retire early rather than being tied to their jobs for health insurance.
MYTH: The ACA is a massive tax increase on the American people.
FACT: The tax credits in the ACA amount to a tremendous tax cut for millions of families.
· The ACA is a tax CUT, and NOT a tax increase for middle-class families. This scare tactic was debunked by the Washington Post Factchecker (7/6/12).
· Individuals who can afford to purchase insurance, but choose not to do so, pay a penalty to help offset their inevitable costs to the system. Only 2.1 percent of non-elderly Americans are projected to be affected by the individual responsibility penalty.
· The ACA delivers $1.7 trillion in new benefits over 10 years, including more than $700 billion to help states pay for Medicaid coverage expansions for lower income families, $14 billion in tax credits for small businesses that provide employee health coverage, and more than $1 trillion in tax credits and other assistance to help individuals and families purchase affordable coverage.
· The ACA is crafted so that the health care sectors most likely to benefit from 27 million newly insured individuals – medical device manufactures, the pharmaceutical industry, health insurance companies, providers – contribute to the cost of providing this coverage. Even with these contributions, these sectors are expected to see significant growth in business in the coming years due to 27 million new customers.
· While the ACA does increase taxes for households earning more than $250,000 ($200,000 for individuals) per year (through an additional 0.9 percent tax on earned income and a 3.8 percent tax on unearned income), only 3 percent of American families are affected by this provision.
MYTH: By delaying employer responsibility provisions for one year, the Obama Administration gave relief to big businesses but not individuals.
FACT: The Administration’s action was designed to make it easier for businesses and workers to comply with the new requirements.
· The law already provides for a phase-in period for the individual responsibility requirement, with the first year penalty being $95 per person (less than $8 per month), capped at $285 per family, with hardship exemptions for those in need. The decision to delay the employer reporting requirements (while asking organizations to voluntarily begin reporting) allows a similar phase-in of the employer responsibility provisions.
· Additionally, middle-class individuals and families without access to affordable employer coverage can qualify for premium tax credits and other subsidies to afford coverage in the exchanges.
· The vast majority of large businesses (95 percent of employers with 50+ employees) already offer coverage to their workers, even without the requirement to offer coverage or contribute to the cost of care. Delaying these provisions shouldn’t change that.
MYTH: The Affordable Care Act hurts small businesses.
FACT: Small businesses are exempt from the ACA’s requirements, though the law has a number of provisions that help small businesses who choose to offer coverage, including tax credits to support coverage and new Marketplaces that give them greater purchasing power and options.
· Businesses with fewer than 50 employees are not required to contribute to or offer insurance to their employees. However, for those that choose to do so, the ACA offers a targeted tax credit to help some small businesses pay for their workers’ coverage.
· Thanks to the ACA, 360,000 small businesses are already receiving tax credits to help with the cost of providing coverage to their workers.
· Small businesses will also benefit from the Marketplace reforms that come into effect in 2014. These exchanges will reduce premiums for small businesses through lower administrative costs, increased competition among insurers, increased transparency of costs, and better risk pools.
· Small businesses also benefit from the non-discrimination provisions. Prior to the ACA, premiums for the entire small business could rise exponentially simply because one worker got cancer or gave birth to a premature child.
MYTH: The Affordable Care Act adds trillions to our deficits and our national debt.
FACT: The law was fully paid for. In fact, its savings are projected to substantially reduce the deficit over the near- and long-term.
· Under the July 2012 CBO estimate, health care reform will reduce the deficit by $109 billion over the next 10 years.
MYTH: The IRS will be “in charge of your health care.”
FACT: This is another scare tactic to raise unnecessary fears about the IRS handling people’s health care.
· The IRS will NOT be in charge of anyone’s health care. This is nothing more than another scare tactic, and it was debunked by the Washington Post Factchecker (5/29/13).
· The IRS will only collect data it routinely receives in the context of tax administration (e.g., name, address, family size, income, etc.) and information about whether an individual or family was covered by insurance.
MYTH: The IRS will pursue and jail Americans who do not purchase insurance.
FACT: This is fearmongering, plain and simple.
· The ACA explicitly prohibits the IRS from seizing property or putting anyone in jail for failure to meet the individual responsibility requirement.
MYTH: The IRS will have access to personal health information.
FACT: The IRS will not have access to personal health information at all. The only information that the IRS will have is the same type of information that is currently used to process tax returns – e.g., name, taxpayer ID number, address, family size, etc. – and whether the individual or family is covered by insurance.
· Contrary to today’s market, in which people applying for health insurance have to provide countless personal details of previous or current health conditions and treatments, none of that information is necessary to enroll in a plan.
· In fact, because the ACA prohibits discrimination on the basis of pre-existing conditions, personal health data is not required. Neither IRS nor HHS will have access to medical records or other personal health history.
MYTH: This is government taking over the entire health insurance industry.
FACT: In fact, the ACA is built largely on current private sector coverage (along with Medicaid coverage for those with very low incomes).
· Under the ACA, coverage will continue to be provided by private insurers, and most people will continue to get their coverage through employers. People will continue to get items and services from private doctors, private hospitals, private medical device companies, private pharmaceutical manufacturers, and other private-sector companies. That’s hardly a government takeover.
MYTH: Undocumented immigrants will receive ACA-sponsored health care.
FACT: The law is clear that assistance is only available to persons who are “lawfully present” in the United States.
· Every application will be screened against the Homeland Security database to ensure that only eligible citizens or others who are lawfully present obtain tax credits or other assistance under the ACA.
Source: House Committee on Ways and Means