Affordable Care Act

The Affordable Care Act (ACA) is a major piece of health care legislation that Congress passed in 2010. Its formal name is the Patient Protection and Affordable Care Act and colloquially has been called Obamacare. Some of the major components of the ACA included:

  • Reforms to insurance plans sold on the individual market, including prohibiting pre-existing condition exclusions, ending annual and lifetime benefit caps, preventing insurers from dropping coverage for those who become ill, and requiring coverage of a set of essential benefits in most cases;
  • Reforms to expand coverage and make coverage more affordable and accessible, including the creation of new health insurance marketplaces for consumers to compare and purchase coverage; premium subsidies and cost-sharing reductions to help cover the cost of insurance for those with incomes from 100 to 400 percent of the federal poverty level, and the expansion of Medicaid for adults with income below 133 percent of the poverty level;
  • Requirements that most individuals must have health coverage or be assessed an annual fee (the individual mandate) and that most employers with over 50 full-time employees must provide coverage or be assessed a per-employee fee (the employer mandate). Congress repealed the penalty associated with the individual mandate effective in 2019;
  • A series of initiatives aimed at reducing health care costs and improving health care quality, including bundled payments and Accountable Care Organizations.

To pay for the provisions that expanded coverage, the ACA reduced certain provider payments and imposed a set of new taxes, some of which Congress has since suspended or repealed (the medical device tax, “Cadillac tax” and health insurance tax, effective in 2021).

The ACA helped decrease the uninsured rate among the non-elderly population from 17.8 percent in 2010 to 10.0 percent in 2016, although the number and rate of uninsured have climbed back up since 2016.