The Patient Protection and Affordable Care Act (PPACA), often shortened to the Affordable Care Act (ACA) or nicknamed Obamacare, is the federal statute enacted by the United States Congress and signed into law by then President Barack Obama in March of 2010. Coupled with the Health Care and Education Reconciliation Act of 2010 amendment, the ACA represents the federal healthcare system’s most significant regulatory overhaul and expansion of coverage since the passage of Medicare and Medicaid in 1965.
The ACA is quite broad, having far-reaching effects on insurance companies, hospitals, individuals, and employers. Many segments of the ACA have different effective dates, including the individual mandate, the part that requires individuals to obtain a level of health coverage known as “minimum essential coverage” or face a tax penalty, which went into effect in 2014. The rules that require employers to provide certain levels of coverage, also known as employer mandates, went into effect in 2015.
“Healthcare reform is nothing new to the United States, with shifting views of healthcare policy arriving with each new President and each new Congressional majority,” notes Galen Sylk, Associate at Genova Burns. “While the federal government continues its quest and search for strong and lasting healthcare policy, coverage, and plan design, the Affordable Care Act stands as one of the strongest efforts towards universal healthcare and coverage parity for all Americans.”
When the Affordable Care Act (ACA) was enacted on March 23, 2010, it issued new rules and guidelines on the provision, the operations and administration, and access to healthcare coverage in the United States. The ACA, which was amended slightly with the passage of the Health Care and Education Reconciliation Act just seven days later, directly regulates healthcare providers, insurance companies, individuals, and employers.
The Patient Protection and Affordable Care Act contains nine titles, each addressing an essential component of reform:
- Quality, affordable health care for all Americans;
- The role of public programs;
- Improving the quality and efficiency of health care;
- Prevention of chronic disease and improving public health ;
- Health care workforce;
- Transparency and program integrity;
- Improving access to innovative medical therapies;
- Community living assistance services and supports; and
- Revenue provisions.
Since the ACA involves these controls regarding healthcare coverage, the provisions above have associated regulations that offer further guidance, and are generally controlled by three main federal departments: the Internal Revenue Service (IRS), the Department of Labor (DOL), and the Department of Health and Human Services (HHS).
Major ACA provisions came into force in 2014. By 2016, the uninsured share of the population had been reduced by 50 percent, with estimates ranging from 20 to 24 million additional people covered in 2016. Experts attribute some of the growth in the insured population to an expansion of Medicaid eligibility and to major changes to individual insurance markets. Both initiatives involved new spending, funded through a combination of new taxes and cuts to Medicare provider rates and Medicare Advantage. The Congressional Budget Office also confirmed that the provisions reduced the budget deficit and that the ACA reduced income inequality by taxing the top 1% to fund roughly $600 in benefits on average to families in the bottom 40% of the income distribution.
The ACA also set in place a host of delivery reforms geared towards controlling healthcare costs and raising the level of quality. Following enactment of the ACA, increases in overall healthcare spending slowed, including the policy premiums for employer-based health plans.
The ACA, in large part, retains the established structure of Medicare, Medicaid, and previous employer health requirements, but the individual health plan markets were significantly restructured into a three-legged program:
- Insurers in these markets were mandated to accept any and all applicants, charging the same premium rates regardless of gender or pre-existing conditions.
- The ACA mandated that individuals buy insurance, and insurers cover a list of “essential benefits.” If individuals failed to purchase coverage, they were penalized on their income tax returns (a provision that was struck down in 2019).
- To allow households from 100–400% of the Federal Poverty Line to afford these compulsory policies, the ACA made provisions for subsidiaries.
Since 2010, the ACA has faced strong political opposition, calls for repeal, and numerous legal challenges, and its enactment is considered a major motivation for the establishment of the Tea Party movement.
In National Federation of Independent Business v. Sebelius, the most significant legal challenge to date, the U.S. Supreme Court ruled that individual states could elect not to participate in the ACA’s Medicaid expansion, although it upheld the ACA as a whole. 567 U.S. 519 (U.S. 2012). In 2017, a unified Republican-based government attempted, yet failed to pass a number of partial repeals to the ACA. In several subsequent years, through polling, the ACA has been opposed by a slim majority of Americans, although its individual provisions have been more popular than the ACA in its totality.