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What Does the Affordable Care Act Do?

The Affordable Care Act (ACA) is the wide-ranging healthcare reform signed into law by President Barack Obama in March 2010. Formally called the Patient Protection and Affordable Care Act—and simply Obamacare—the law comprises a list of health-related provisions intended to extend health-insurance coverage to millions of uninsured U.S. citizens.

The Affordable Care Act expanded Medicaid eligibility, created health insurance exchanges, and prevented insurance companies from denying coverage (or charging more) because of pre-existing conditions. It also enables children to remain on their parents’ insurance plans until age 26.

Understanding the Affordable Care Act

The ACA was designed to reduce the cost of health insurance coverage for individuals who qualify. The law comprises premium tax credits and cost-sharing reductions to aid lower costs for lower-income people and families.

Premium tax credits lower your health insurance bill every month. Cost-sharing reductions lower your out-of-pocket expenses for deductibles, copays, and coinsurance. Besides, they lower your out-of-pocket maximum—the total amount you pay annually for covered health costs.

All ACA-compliant health insurance policies—with every plan that’s sold on the Health Insurance Marketplace—must cover specific “essential health benefits,” which includes:

• Rehabilitative and habilitative services
• Preventive and wellness services and chronic disease management
• Prescription medications
• Pregnancy, maternity, and newborn care
• Pediatric services
• Mental health and substance use disorder services
• Laboratory services
• Hospitalization
• Family planning
• Emergency services
• Breastfeeding
• Ambulatory patient services

Additionally, the ACA necessitates most insurance plans (including those sold on the Marketplace) to cover at no cost to policyholders a list of preventive services. These comprise checkups, patient counseling, immunizations, and numerous health screenings. It also allowed states that chose to extend Medicaid coverage to a wider range of people.

Special Considerations

A notable part of the ACA was the individual mandate, a provision necessitating all Americans to have healthcare coverage—either from an employer or through the Affordable Care Act or another source—or face progressively stiff tax penalties. This mandate served the double purpose of extending healthcare to uninsured U.S. residents and ensuring that there was a sufficiently broad pool of insured persons to support health-insurance payouts.

On January 20, 2017, in his first executive order after taking office, President Donald Trump signaled his intention to defund the ACA, saying executive agency heads should “delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State.”

This order’s intention signaled the first phase of Republican efforts to repeal and change the Affordable Care Act. Rolling back the regulation was one of Trump’s central campaign promises to lower the financial burden on the government.

Government attempts to repeal the law altogether in 2017 were not successful. Nevertheless, the government substantially scaled back its outreach program to help Americans enroll for the ACA and cut the enrollment period in half.

Changes have been made to the law that has addressed some of the issues raised by opponents, while still keeping the Marketplace open active for users. For instance, as part of the Tax Cuts and Jobs Act, Congress in December 2017 eliminated the penalty for not having health insurance. Beginning with 2019 taxes, the individual mandate was reduced to zero dollars, basically removing the requirement that many Republicans had opposed. By 2018, the number of U.S. residents covered under the Affordable Care Act had dropped from 17.8 in 2015 to 13.8 in 2015, based on a report from healthcare research organization KFF.

In March 2019, the Trump government revealed it would seek to repeal the whole ACA. The Justice Department, in a letter to a federal appeals court, said it agreed with a federal judge in Texas who declared the healthcare act unconstitutional and added that it would support the judgment on appeal.

The case is expected to go to the Supreme Court with a coalition of 21 lawyers general defending the ACA. Meanwhile, in March 2019, House Democrats unveiled legislation to shore up the Affordable Care Act and expand coverage.

Resources and References:

• Preventative Services
• Medicaid Expansion