Updated on 08.28.15

Separating Obamacare Facts From Fiction

Chances are you already have a strong opinion about Obamacare — and you’re not alone. The one consistent factor since Obamacare was passed and signed into law is that most people find the law confusing.

Much of that confusion is driven by misinformation and misunderstanding. We’ve gathered some of the most common ones here. I’ll explain what the facts are and, when possible, how the rumors got started.

What’s in a Name?

The term Obamacare refers to the Patient Protection and Affordable Care Act, which was signed into law in March 2010. Most of the time the law’s name is mentioned in the media, it’s shortened as the Affordable Care Act, ACA, or healthcare reform.

Adding to the confusion are the state-administered Obamacare plans in 18 states. For example, in Kentucky, where Obamacare is called Kynect, an overwhelming majority of people doesn’t like Obamacare. A smaller percentage dislikes the Affordable Care Act. However, a significant portion of Kentuckians love Kynect — which is Obamacare.

Related: How to Find Affordable Health Insurance

So What Is Obamacare?

There is no such thing as Obamacare, the law. There is no such thing as Obamacare Insurance. Obamacare does not exist.

The term was coined because it was an easy way to associate the law with the President. After the name took hold in the media, people started believing that it was a new kind of health insurance. Insurance that everyone had to buy. The name is used throughout this article for the same reason it is used elsewhere: familiarity.

What About the Government Takeover of Health Care?

There hasn’t been a government takeover of health care. Health care continues as it always has, as a business run by private companies and non-profit organizations. With the exception of Medicare for senior citizens and Medicaid for the poor, health insurance can only be purchased from insurance companies.

Insurance companies operate in the same way as they always have: as privately or publicly owned corporations. Insurance companies are regulated in the same way they were before the law, mostly by state laws along with some federal statutes. The only thing the Affordable Care Act did was to change some of the rules to give consumers and patients greater rights and more protections.

Related: The Best Health Insurance Companies

The Website

Now let’s discuss the Obamacare website healthcare.gov. The federal site acts as a marketplace for individuals, families, and small businesses to comparison shop for healthcare insurance. Eighteen states and Washington, D.C. run their own exchanges or healthcare marketplaces operating under the same guidelines as the federal site.

What About the Problems With the Website?

The federal healthcare exchange healthcare.gov “failed to perform as expected” when it was launched in October 2013. That is bureaucratic speak for: It didn’t work.

It’s true; when the site first came online, it was plagued with problems, despite the millions of dollars spent on it and months of preparations. The government was forced to hire a new contractor to oversee repair of the site.

The result? Most of the fixes were completed by January 2014 and are all done now. Healthcare.gov and each of the 18 independent state exchanges are now all working fine.

I Heard the Website Is Not Secure?

This is both true and false. The healthcare.gov website, like most e-commerce websites, is secure. However, like all websites, there is always the possibility that it can be hacked.

Human ingenuity and greed will always mean there is someone somewhere who will try to break in. What is not true is that the site has been breached repeatedly or that identify theft is rampant.

If I Don’t Use the Site, Will I Be Fined?

No one is required to use either healthcare.gov or any of the state sites to shop for or buy insurance. The healthcare marketplace websites are there for people who want to compare plans from multiple companies or want to apply for a government subsidy.

Those who are not comfortable using the website can call a toll-free number or visit a service center to apply — though, as you might expect, not everyone has a great experience on the phone with a government agency. There are no fines or penalties for not using healthcare.gov or a state exchange.

Public Opinion Polls

News organizations, particularly cable news channels, love public opinion polls because they help them create stories on slow news days. The problem with poll results and the news is they can sometimes be mistaken for facts as opposed to people’s perceptions. This next group addresses some rumors that resulted from polls.

Is It True That a Third of People Who Signed Up Never Paid?

When open enrollment ended in March 2014, about 80% of applicants on the website paid their first premium. Of the 20% who did not, many got health insurance elsewhere, such as through their employer or by direct purchase from an insurance company. According to a Gallup poll in April 2014, just under 10 million people got insurance through an Obamacare website.

What Happened to People Who Wanted to Keep Their Old Insurance?

In most cases, those who wanted to keep their old insurance could. However, it’s true that some health insurance plans were cancelled because they did not meet the new standards for coverage.

Some low-cost policies that did not meet the minimum standards, as defined by the law, were taken off the market. This forced some people who were content with their existing plans to find different insurance, thus breaking one of President Obama’s most repeated promises about the law. However, most of those whose plans were cancelled found better coverage for a similar cost.

Are Women Being Forced to Use Birth Control?

The law does not require anyone to use birth control. It does require all health insurance plans to offer access to birth control at no cost.

Another side of this controversy is whether religious organizations that are opposed to birth control are being forced to provide it. As of June 2013, all religious employers are exempt from having to pay for contraceptives as a part of their healthcare plan. The rules defining what constitutes a religious organization were later expanded and simplified, allowing more organizations to qualify for the exemption.

For instance, religious nonprofits such as hospitals or universities, and for-profit companies with religious leadership, can opt out of paying for contraceptive coverage by notifying their insurer. The insurance company can then provide the coverage independently to employees or students at those institutions who do wish to receive it.

The IRS and Taxes

Next we’ll discuss everyone’s favorite villains and least-liked subjects: the IRS and taxes.

Obamacare Is the Largest Tax Increase in History

There are kernels of truth at the core of this rumor.

One comes in the form of a small tax increase for high earners, which applies to individuals making more than $200,000 per year and families earning more than $250,000. Taxes were also increased on the health care industry, including physicians, hospitals, and pharmaceutical companies. However, the majority of taxpayers and businesses are unaffected by the tax-rate increases.

Meanwhile, the Supreme Court in 2010 upheld the constitutionality of the law by determining that the penalty for not having insurance was in fact a tax, which Congress has authority to legislate. And so in that sense, another tax was levied, though it was not the largest in history.

What About the New Tax on Sporting Goods?

This one probably began like the childhood game of telephone, where a message is whispered from one person to another and comes out the other end as something completely different.

The rumor started when the 2.3% tax on medical devices made its rounds in emails and was eventually picked up by some media outlets. The logic behind it was that exercise has health benefits, so exercise equipment can be considered a medical device.

While it’s true that exercise is good for you, treadmills and soccer balls are not medical devices and are not subject to the tax. The medical device excise tax only applies to manufacturers, not consumers.

Is the IRS Keeping a Medical Database?

Minnesota Congresswoman Michelle Bachmann is personally responsible for getting this one going. She started it during a television interview in May 2013, when she conflated the IRS and insurance companies by way of the tax subsidies some Americans receive.

The only actual involvement the IRS has with health care are the tax credits. The IRS sends insurance companies the tax credits for qualifying individuals and families. The flow is one-way, and the IRS does not have access to any of your health care information. There is no IRS database, and they are no more able to see your health records than the cashier at the supermarket.

Business and Employment

On both sides of the same coin, business and employment are discussed in this section. While rumors about mass job losses and businesses being driven into bankruptcy are less common, they still persist.

My Small Business Can’t Afford to Provide Health Care Insurance

Most small businesses are exempt from having to provide health insurance to employees. The employer mandate, which was delayed a year, begins in January 2015 for businesses with more than 100 full-time employees (30 hours a week or more). They will have to start providing employer-sponsored health insurance plans or face penalties. Companies that employ more than 50 full-timers start in 2016.

However, the more than 96% of small businesses that have fewer than 50 full-time employees are eligible for tax credits and do not have to provide insurance for their employees.

How Many People Are Losing Their Jobs Because of Obamacare?

According to the non-partisan Congressional Budget Office, no one is expected to lose their job because of Obamacare. The rumor first came to life in the North Carolina Senate race, when Thom Tillis made the claim in a TV ad that 2 million jobs would be lost.

The ad misstates the findings of a February 2014 CBO report, which estimated that between 1.5% and 2% of workers will voluntarily reduce their hours. The reason being is they will no longer need the extra income to pay for health insurance. A quick check of the math shows that 2% of the U.S. workforce is about 2.25 million Americans, and the root of the rumor.

Another side to this story gained prominence thanks to a 2013 interview with Florida Senator Marco Rubio. He said that up to three-quarters of small businesses planned to lay off workers to avoid having to comply with the law.

The claim was debunked by the U.S. Chamber of Commerce in a study that showed that less than 10% of businesses with 50 or more full-time employees were considering cutting their workforce. That translates to less than one-half of 1% of all businesses.

It is true, however, that some companies have threatened to cut their workers’ shifts to fewer than 30 hours per week to avoid having to provide them with health insurance. Whether or not they follow through once the employer mandate takes effect remains to be seen.

The Law

The items here are mostly nuts-and-bolts issues about the law. Most of them are complete fiction rooted in one part of the statute or another. Others are related to how the law is treated and who is treated differently.

You Can Go to Jail for Not Paying

There are many stories circulating about potential prison time if you don’t buy insurance. Other stories send people to prison for not paying the penalty assessed for not having insurance.

None of them are true.

The IRS, which is the agency responsible for collecting the fees and taxes, does not have police authority. That means they can’t arrest anyone. In fact, they can’t even ask that another agency make an arrest for them.

The only authority the IRS has for collecting the health care-associated taxes and fees is to withhold it from refunds. They are not even allowed to levy wages or assets to collect outstanding penalties.

Non-Citizens Get Free Health Care

There are no provisions in Obamacare that offer free health care for anyone. This includes citizens and non-citizens, legal and undocumented alike. Undocumented individuals are not allowed to apply for Medicaid or Medicare.

Will I Be Forced to Allow the Government to Inspect My Home?

This provision of the law is for an optional program that sends nurses on house calls to check on pregnant and poor women. The rumor started when the South Carolina legislature decided to address a problem that did not exist. The program is entirely voluntary and does not involve inspections of any kind.

Why Is Congress Exempt From the Law?

While it is true that Congress regularly exempts its members from all sorts of laws and rules, this is not one of them. Members of the House and Senate, along with their staff, are required to have health insurance or pay a fine, just like everyone else. As employees of the federal government, they do receive employer-sponsored health insurance, just as other federal employees do.

Death Panels

The most famous progenitor of this rumor is former Alaska governor and vice presidential candidate Sarah Palin. She started the ball rolling with an August 2009 Facebook post.

The misunderstanding comes from the law’s requirement that Medicare pay for doctor’s visits to discuss end-of-life issues. Before Obamacare, Medicare did not cover patients discussing living wills, do-not-resuscitate, and other end-of-life decisions with doctors.

Governor Palin transformed that into the idea of death panels. Despite being widely debunked and the butt of countless jokes, this absolutely bogus story still manages to rear its ugly head every few months.

The Law Is Unconstitutional!

This is a popular battle cry of opponents of the law who continue to fight it at every opportunity. They do so in spite of a Supreme Court ruling in 2010 that found the law constitutional.

The crux of the constitutionality argument is the individual mandate, which is the requirement that individuals buy insurance or face a penalty. The constitutionality issue was resolved when the penalty was determined to be a tax. The court said the Constitution grants the federal government the authority to levy taxes.

No One Has Ever Read the Whole Law

This claim comes in a couple of parts. First, there’s the notion that the law is 2,000 pages or more long. It is not. It is 974 pages, including the extensive table of contents and even more extensive footnotes. The pages also have excessively wide margins, making it appear longer than it is. While it’s not a Ray Bradbury short story, it is readable and has been read by countless people, including me.

Cost and Quality of Care

This final group addresses concerns that are at the core of the law, the cost, and quality of care.

The Cost of Insurance Has Increased Since the Law Passed

True! The cost of health insurance has increased since Obamacare was passed into law.

Equally true is the fact that healthcare premiums and costs have risen every year since World War II. This includes many years where costs rose by double digits, especially in the past two decades.

Preliminary estimates from the CBO and the Kaiser Family Foundation point to a slower rate of increase since the law has passed. Many economists and healthcare experts suspect it will take at least a few years to determine if the slowing is permanent or just a hiccup.

Will I Have to Change Doctors?

Much was made of President Obama’s oft-repeated claim that, “If you like your doctor, you can keep your doctor.” This was proven to be not entirely true, when some low-cost policies that did not meet minimum coverage standards as defined by the law — for example, not offering maternity care — were taken off the market.

There are also some cases where switching insurance will mean moving to a plan that your doctor does not accept. However, doctors are also business people, and they make money based on being able to see as many patients as possible. That means that most doctors make great efforts to accept as many insurance plans as possible. So, in most cases, you will be able to keep your doctor.

I Heard There Will Be Healthcare Rationing

The theory here is that once everyone has insurance there won’t be enough healthcare providers to go around, resulting in months-long waits for appointments and procedures or limits to coverage.

The bottom line on this one is the bottom line itself — meaning health care in the United States is a for-profit business (and a very profitable one at that).

The greater the demand for health care services, the more providers there will be to meet the need. Contrary to what some detractors say, Obamacare is not government controlled or socialized health care. That means the marketplace will always rise to meet demand.

What About Medicare?!

Seniors have been subjected to an onslaught of rumors and misinformation regarding the effect of Obamacare on Medicare. From the fabled death panels and rationing to cuts in reimbursements and increases in out-of-pocket costs, Medicare is rumored to be under assault.

The fact is that the only changes to Medicare under Obamacare have been to increase and improve benefits. The best example of this is closing the prescription drug doughnut hole.

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  1. Big-D says:

    While I agree with many of your points, you are mistaken on the “keeping their old plans” piece. Many people lost their old plans and were converted over to new plans because it did not meet the requirements for the government tiered system. While you might say they are better plans, they were plans that required people to pay for a lot more things than they ever are going to use.

    The example of this would have been my parents loosing their medicare gap insurance. They lost it because the plan did not cover birth control. Lets see my parents are both in their 70’s and sterile. They both lost their insurance, had to find new (for over $50 more a month) to get the basics, to pay for stuff they will not use.

    While I understand the concept of insurance, and spreading risk, and don’t really think this is a bad thing, don’t make the claim that it is “keeping their existing coverage”. Tell it like it is, all plans will be converted over to the tiered structure and you will have to re-enroll with a new plan. If they sold it properly, there would have been less resistance.

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