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What Defunding Really Means

Learn more about the consequences of defunding the Affordable Care Act

The Affordable Care Act is already strengthening our health care system for Americans across the country, but some opponents of reform are determined to take us backwards. From the moment the law was signed by President Obama, some called for repealing the new law. And in recent days, some Members of Congress have discussed their plans to “defund” the law if they get the chance. 

Make no mistake: defunding the Affordable Care Act is just Washington-speak for taking us back to the days when insurance companies – not you and your doctor – were in control of your care. If the new law was defunded, the new Patient’s Bill of Rights would be an empty promise, seniors’ costs for their prescription drugs would increase, and small businesses offering health insurance would pay higher taxes.

Here’s a look at just some of the effects of defunding the Affordable Care Act.

Patient’s Bill of Rights in Peril: After decades of insurance company abuses, the new law implements a real patient’s bill of right and bans some of the worst insurance company practices. Under the new law:

  • All insurance plans will be prohibited from putting lifetime caps on the dollar amount that they will spend on benefits, like cancer treatment, or canceling, or rescinding your coverage because you get sick, or you made an unintentional mistake on your application.
  • Young adults will be allowed to remain on their parent’s plan until their 26th birthday, unless they are offered coverage at work.
  • Most insurance companies will have restrictions on their ability to place annual limits on care. 
  • New rules will prevent most insurance companies from denying coverage to children under the age of 19 due to a pre-existing condition. 
  • And if you purchase or join a new plan after September 23:
    • Insurance companies must cover recommended preventive services, including mammograms, colonoscopies, immunizations, pre-natal and new baby care without charging deductibles, co-payments or co-insurance.
    • Insurance companies will be prohibited from denying coverage for needed care without a chance to appeal to an independent third party. 
    • You will be guaranteed your choice of  primary care provider within your plan’s network of doctors, including OB-GYNs and pediatricians, without a referral, as well as out-of-network emergency care.

If the Affordable Care Act is defunded, there will be no federal oversight of insurance companies’ compliance with the Patients’ Bill of Rights, leaving consumers at risk of future insurance industry abuses.

Tax Hikes for Small Businesses: The Affordable Care Act includes tax credits for small businesses that provide health care to their workers. If Affordable Care Act was defunded, the tax credits could not be administered and small businesses across the country would be left with higher taxes.

More Expensive Prescription Drugs for Seniors: Today, senior citizens who reach the prescription drug coverage gap known as the donut hole receive a $250 rebate check. Next year, seniors in the donut hole will receive a 50 percent discount on their prescription drugs and the donut hole will be closed completely by 2020. If the new law was defunded, the rebate checks would stop being delivered to seniors, next year’s discounts would not materialize and the donut hole would remain, leaving millions of seniors choosing between paying higher prescription drug costs, or changing the medicines their doctors recommend they take.

No Protection for Your Premium Dollars: In 2011, insurance companies will be required to spend at least 80 percent of premium dollars on health care instead of overhead, salaries or administrative expenses. If they fail to do so, they will be required to provide a rebate to consumers. But if the Affordable Care Act is defunded, there will be less money for enforcement, no rebates for consumers and insurance companies will once again have free reign to unjustifiably hike premiums and pad their bottom line.
No Safeguards Against Premium Hikes: Under the Affordable Care Act, states are eligible for $250 million to help strengthen their oversight of premium increases – 46 states are already using these resources to increase insurance company oversight. Defunding the law means states are left on their own and insurance companies are put back in control.

Seniors Pay for Prevention: Under the Affordable Care Act, starting in January, seniors on Medicare can’t be charged a deductible or co-payment for preventive services like mammograms and colonoscopies. If the new law is defunded, seniors’ costs will increase for the critical services that help stop disease and illness before they start. 

And That’s Not All: This is just a partial list of the consequences of defunding the Affordable Care Act and going back to our old broken insurance system, and they illustrate why President Obama and his team are committed to moving forward. In the days ahead, we’ll post more information about what’s at stake if the new law is defunded and why families and businesses can’t afford a return to the bad old days.  
Stephanie Cutter is Assistant to the President for Special Projects