Obamacare Explained (Like You're An Idiot)

Dec. 23, 2013— -- Turns out a wonky website and warp-speed policy changes are the least of Obamacare's problems. A big reason Americans have hesitated to sign up for health insurance is they don't understand it.

A survey of more than 12,000 people released earlier this week by the journal Health Affairs found that only 60 percent of the people who should be signing up for Obamacare understand all of its key concepts.

A Carnegie Mellon University study done earlier this year was even less optimistic. It found that 86 percent of Americans between the ages of 25 and 64 not only didn't have a grasp on Obamacare, they couldn't even wrap their heads around the fundamental concepts of any kind of health insurance.

Insurers are also reporting mass confusion.

"Our hot line reports that on pretty much every call, customers ask our agents the most basic questions about insurance, said Chini Krishnan, co-founder and president of GetInsured, an online insurance marketplace certified by the government to help enroll people in Obamacare plans. "Then add in premium tax credits and cost-sharing reductions -- it's a lot for them to process."

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So are you an idiot if you don't understand what the deal is with Obamacare? Karen Pollitz, health care policy expert and senior fellow at the Kaiser Family Foundation, doesn't think so. But she explained it as if you are.

Is it possible to explain Obamacare in 10 words or less?

No. But Pollitz at least provided a simple explanation.

Obamacare – also known as the Affordable Care Act, or the ACA – is a law enacted to ensure that all Americans have access to affordable health insurance. It does this by offering consumers discounts (known as tax credits) on government-sponsored health insurance plans, and by expanding the Medicaid assistance program to include more people who don't have it in their budgets to pay for health care.

The ACA also changed some of the rules insurance companies have to follow. For example, in the past if you had diabetes or some other preexisting medical condition, you could be turned down for insurance or your cost for coverage would be astronomical. Now you can't be turned down for any reason and the hope is that costs will be contained.

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You buy Obamacare plans on healthcare.gov if your state participates in the federal program or from your state's healthcare website if it isn't.

Also, if you get insurance through your employer, you don't have to worry about any of this. Obamacare is mainly for people and small groups who pay for their own insurance.

Wow. Everyone gets health insurance tax credits. That's fantastic.

No again. You only receive discounts to help offset health insurance costs if your household income is between one and four times the Federal Poverty Level, a number the government uses to determine the minimum amount of money needed for food, shelter and other basic needs. You can elect to apply these credits to your premiums to lower your monthly insurance bill or wait until the end of the year and declare them on your tax return.

Dozens of websites have simple calculators to help you determine whether or not you qualify for tax credits.

But my income doesn't fall into that range.

If you make too much money to qualify for credits, you can still buy a plan on the federal insurance marketplace or your state's exchange but you won't get any discounts, Pollitz said. However, you may still get a good deal, so it's worth checking out, she advised.