Impact of Obamacare on International Students Studying in The US

“Patient Protection and Affordable Care Act” (PPACA) also called the “Affordable Care Act” (ACA) and popularly referred to as “Obamacare” is a US law aimed at providing US citizens with affordable health insurance protection against illness or disease. This law came into effect in the year 2010 when the then President of the United States, Barack Obama signed the bill on March 23rd that same year. Due to this, it is referred to both its supporters and critics as Obamacare. However, it took another 4 years for major provisions of the Act to be actually implemented.

In this blog, Student Cover provides you an insight into the bill, its history as well as its impact on the insurance sector in the US, and how it affected International Students going for higher studies in that country.

Background

While countries like the United Kingdom have had programs like the National Health Service to take care of the health care concerns of its citizens, in the US, there was no such universal health care program or legislation ensuring inclusive, if not universal, health care. In addition to that, the high cost of medical treatment as well as the unregulated nature of the insurance industry left people with very limited options.

The Medicare and Medicaid programs which have been there in the US since the 60s covered a limited number of people. Medicare provided some relief to senior citizens (above 65 years of age) and also to those with disabilities whereas Medicaid was directed towards very low-income groups. Both Medicare and Medicaid were schemes fully funded by the government. For the rest, buying medical insurance was the only option. As a result, a large section of people who could not afford to buy health insurance from private vendors were left with no health insurance coverage.

The high cost of medical treatment in the country led many private health insurance providers to charge high premiums. This led people to avoid buying student medical insurance unless they fell sick. This increased risk to insurance companies. To mitigate this risk, they further increased the premium which further made purchasing insurance less affordable.

However, many people who purchased medical insurance hoping to get medical coverage got a rude shock when their insurance claims were rejected by insurance providers either due to existing pre-conditions or due to the increased likelihood of them falling sick in the future.

All this eventually led various sections of society to demand legislation that regulated the insurance industry as well as provided opportunities for low-income families to avail the benefits of health insurance coverage.

OBAMACARE (Also called the Affordable Care Act)

During the 2008 Presidential elections in the US, a law to cover all American citizens was one of the poll promises made by President Barack Obama. After winning an election, he set out to convince the US Congress to pass the Patient Protection and Affordable Care Bill. After much debate in public, media, and in the US Congress, the bill was passed which Obama eventually signed into law on 23rd March 2010.

The bill is quite extensive and covers a wide range of areas from Medicaid and Medicare expansion to regulation of premiums, health coverage,e and other mandatory requirements. Some of the salient features of Obamacare (Affordable Care Act) are as follows:

• Guaranteed Insurance – The act makes it mandatory for insurance companies to provide insurance coverage to those who seek it. Insurance companies are forbidden from denying insurance coverage on grounds of pre-existing conditions. For those children who are either orphans or whose family members are too poor to provide them with insurance coverage, it requires the government to make provisions to secure health coverage for such children.
• Non-Rejection on grounds of sickness – As mentioned earlier in the blog, due to the high cost of insurance, people often delayed buying until they fell sick. Due to this, health insurance companies often use to reject the insurance claims of such people. However, the Affordable Care Act bans companies from not providing insurance to such people.
• Essential benefits – One of the most significant provisions of the Affordable Care Act was that it made it mandatory for medical insurance for students providers to not deny services like Ambulatory patient services; emergency services; hospitalization; maternity and newborn care as well as prescription drugs laboratory services etc. These were standard benefits that each and every health insurance plan was required to provide.
• Free Preventive Care– Prior to Obama care, preventive care procedures, which included medical screenings such as mammograms, colonoscopies, etc., or vaccinations were either not covered or included provisions for co-payments and deductibles. This discouraged people from undertaking procedures aimed at the detection or prevention of disease. Obamacare has made it mandatory to provide coverage for preventive care without requiring the insured to pay any money in the form of co-payments or deductibles.
• No more caps on annual/lifetime essential coverage benefits – The Affordable Care Act bans insurance companies from putting any cap on providing those benefits that come under essential coverage benefits. This means that an insurance company can no longer deny benefits to its clients if they seek benefits such as Ambulatory patient services; emergency services; hospitalization; maternity and newborn care as well as prescription drugs, and laboratory services multiple times in a year or within their lifetime.
• Individual Mandate – Although a bit contentious, this provision was inserted in the Act in order to reduce the financial risks that insurance companies could face due to the inclusion of the above-mentioned provisions. The individual mandate clause makes it mandatory for every person living in the US who is not covered by employer-sponsored health plans, Medicaid, Medicare, or other public insurance programs to either purchase health insurance or pay a financial penalty. This was done to bring more people, including healthy people who might not require health insurance, under the insurance umbrella. This reduced the risk facing health insurance companies. An individual, at best can avoid taking health insurance for only 90 days in a calendar year without having to pay a penalty.
• Standardization of Insurance Plans – The Affordable Care Act also resulted in the establishment of 4 tiers of health insurance plans namely Bronze, Silver, Gold, and Platinum. These plans varied in the degree of out-of-pocket requirements for benefits availed by the insured. For example, the bronze plans have a very low premium but have higher out-of-pocket payment requirements whereas the Platinum has the highest premium but has a very low out-of-pocket payment requirement.

Impact of Obamacare on International Students

As mentioned in the earlier paragraph, the Individual Mandate clause was one of the contentious provisions of the Affordable Care Act that made it mandatory for people living in the US to purchase student health insurance. However, it was felt that it would be unfair to subject resident aliens (non-US citizens living in the US), which included international students, to the individual mandate. This was because most international students, who came to the US to pursue higher education in its universities, did not enjoy the facilities that US citizens enjoyed. Therefore, it was decided to give a waiver of 5 years to international students before they are required to comply with the individual mandate clause.

The other significant impact that Obamacare had on international students was on the international insurance companies providing health insurance to international students in US universities. The law gave universities the option to demand international health insurance companies to provide student health insurance plans that either comply with or are comparable to the provisions of the Affordable Care Act. As a result, many Indian companies operating in the US and providing health insurance to students could no longer provide cheaper alternatives to students against university-sponsored plans which are costlier.

However, Indian students can avail the benefits of Indian student health insurance plans in addition to US plans through dual insurance. These plans have lower premiums and do not have co-payment and co-insurance requirements. Students can contact Student Cover at info@studentcover.in or call us at 96501 66773.