A Simple, Clear, Practical Explanation of Obamacare. With a Cartoon.

Health and medicine explained.
Sept. 30 2013 3:44 PM

Ten Questions About Obamacare You Were Too Embarrassed to Ask

The health care exchanges open Tuesday. Don’t worry! We have you covered.

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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?

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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.

Kavita Patel, a former White House policy adviser, is a fellow of the Brookings Institution and a primary care doctor. Follow her on Twitter.

Darshak Sanghavi, a pediatric cardiologist, is a fellow of the Brookings Institution and Slate’s health care columnist. Follow him on Twitter.