Patient Protection and Affordable Care Act is a comprehensive health care reform law that was passed by the United States Congress in 2010. The law sought to improve Americans’ health insurance coverage by expanding access to public health plans, by requiring individuals to have health insurance, by providing subsidies (payments) to help low- and middle-income Americans purchase private insurance, and by reforming various practices in the insurance industry. President Barack Obama and Democratic legislators in Congress were the key supporters of the law. As a result, the law became commonly known as Obamacare. It is also known simply as the Affordable Care Act, or ACA. For background on how health insurance is provided, see Insurance (Health insurance).
The Patient Protection and Affordable Care Act (PPACA) generated much disagreement. Supporters praised the extension of insurance coverage to nearly all Americans. Opponents, including congressional Republicans, argued against the federal government’s increased involvement in health insurance matters. Many critics claimed that the law’s requirement that citizens purchase health coverage was unconstitutional. In a 2012 ruling, the Supreme Court of the United States upheld key provisions of the act. In 2017, however, a Republican-led Congress passed a tax bill that eliminated the PPACA’s requirement that most citizens obtain health insurance.
Background.
In 2009, Democrats in Congress, with the support of President Obama, introduced health care reform bills. The House of Representatives and the Senate each passed separate bills by the end of that year. Legislators worked on compromises to bridge the gap between the two bills. In March 2010, the House approved the Senate bill, and Obama signed the PPACA into law. Obama said the law reflected “the core principle that everybody should have security when it comes to their health care.”
Key provisions.
The PPACA includes a wide range of provisions. The law provides subsidies for states to expand Medicaid coverage to Americans at or near the poverty line. Medicaid is a government program that helps finance medical assistance to needy people (see Medicaid ). The poverty line is an income level the government uses as a standard for being poor.
The PPACA, as passed, included an individual mandate—that is, a requirement that nearly all U.S. citizens obtain some health coverage. Citizens refusing to do so were to pay a penalty. The chief goal of the mandate, which went into effect in 2014, was to increase the number of people with insurance. The law’s creators argued that such an increase would help make premiums (people’s regular payments for insurance) more affordable by spreading costs among both healthy and sick people. In 2017, however, Republicans in Congress passed a tax overhaul bill that included a provision to eliminate the individual mandate—and its accompanying penalty.
Under the PPACA, citizens can obtain health insurance through their employers or as individuals. Nearly all employers with 50 workers or more are required to offer health insurance or pay a fine. This requirement is called the employer mandate. Subsidies, mainly in the form of tax credits, became available to small employers and individuals to help cover the cost of insurance. The deadline for the employer mandate was first set for 2014 and later extended to 2016.
The PPACA provides for the creation of health insurance exchanges to make it easier for individuals and small businesses to obtain coverage. The exchanges are systems in which insurance companies offer a variety of competing health plans to people seeking coverage.
The law also addresses certain practices of the private health insurance industry. It seeks to prevent insurers from denying coverage for patients with preexisting medical conditions—that is, conditions that existed before a person gained insurance coverage. Previously, many insurance companies had refused to cover people who already had a health problem.
The PPACA prevents insurance companies from setting lifetime limits on a policyholder’s claims. It also allows parents to keep their sons and daughters on their insurance policies up to age 26.
Court challenges.
A number of states and groups filed lawsuits to contest the new law. Opponents specifically challenged the law’s individual mandate. They argued that it is unconstitutional for the government to require people to buy health insurance.
In June 2012, the Supreme Court issued its ruling on the law. In National Federation of Independent Business v. Sebelius, Secretary of Health and Human Services, the court upheld the individual mandate in a 5-4 vote. Chief Justice John Roberts wrote the majority opinion. He wrote that the individual mandate was permissible under the authority of Congress to levy taxes.
In June 2015, the U.S. Supreme Court upheld a key component of the health care law. Challengers had claimed that according to the law, only people living in states that had created their own insurance marketplaces are eligible for federal tax credits to pay for their coverage. Yet, people living in states that relied on the federal insurance marketplace were receiving subsidies as well. The justices’ 6-3 decision in King v. Burwell allowed people who had purchased coverage through the federal exchange to keep the tax subsidies that helped them afford insurance.
Later developments.
In July 2013, Obama administration officials announced a one-year delay, to Jan. 1, 2015, of the PPACA’s employer mandate. The deadline was later extended to Jan. 1, 2016.
By Oct. 1, 2013, the opening day for consumers to seek insurance coverage, about half the states had formed their own marketplaces or created state-federal partnerships. In states where authorities did not set up state exchanges, individuals were to use the federal insurance marketplace. Users of healthcare.gov, the website for the federal exchanges, soon encountered serious glitches, however, and the website’s problems made national headlines.
In November 2013, Obama offered a one-year reprieve to individuals who faced cancellation of health insurance policies that failed to meet the law’s requirements. Under the directive, policy owners were allowed to keep such plans until the end of 2014.
In April 2014, administration officials announced that more than 7 million people had signed up for health insurance under the law. The figure surpassed the administration’s goal for the initial sign-up period. The number of uninsured nonelderly Americans without health insurance dropped from 44 million in 2013 to 27 million in 2016.
In November 2016, Donald J. Trump was elected president of the United States. President Trump and a Republican-led Congress made repeal of the PPACA a priority for the new administration. In March 2017, the leadership of the U.S. House of Representatives, with the support of President Trump, introduced a bill that would repeal parts of the PPACA and change other parts. Conservative representatives objected to aspects of the bill, however, and Republican leaders pulled the bill from consideration. In December 2017, Congress passed a tax bill that eliminated, by 2019, the mandate that most people buy health insurance or pay a penalty.
In early 2018, Texas and a group of Republican-led states filed a lawsuit aiming to invalidate the PPACA. In December, a federal judge accepted their claim and ruled that the PPACA had become unconstitutional after Congress eliminated the law’s individual mandate. After the Trump administration refused to defend the law, a group of Democratic-led states joined to appeal the judge’s decision. In March 2019, the Democratic-led U.S. House also joined the effort to defend the PPACA in court. In 2021, the Supreme Court ruled that the plaintiffs lacked standing in the case—that is, none of the suing states had proved that they had suffered the injuries necessary to initiate the lawsuit.
See also Obama, Barack (Domestic issues).
