The Affordable Care Act or Obamacare

Signed into law by President Barack Obama in 2010, the Patient Protection and Affordable Care Act is responsible for the most sweeping reforms of the United States’ healthcare system since the 1965 passage of Medicare and Medicaid.

Background

Hotly contested along party lines, Republicans opposed the Affordable Care Act, derisively using the term Obamacare to describe the Act.

By 2012, President Obama had embraced the term Obamacare, and it is now widely used by both supporters and opponents of the law. But controversy about the ACA continued after its passage, with numerous court challenges to the law; the legislation remains controversial under the Trump Administration.

What Are the Reforms?

Some of the reforms implemented by the Affordable Care Act include establishing Health Insurance Exchanges, or marketplaces, where individuals, families, and small businesses may purchase guaranteed issue qualified health insurance plans with affordable premiums. These plans satisfy the ACA’s individual mandate requiring those who don’t have health insurance buy a health insurance policy.

The ACA provides low and middle-income purchasers with subsidies to make buying health insurance more affordable (eligible enrollees cannot have income above 400 percent of the poverty level, or $98,400 for a family of four), and subsidies to reduce out-of-pocket costs for eligible enrollees (income cannot exceed 250 percent of the poverty level or $61,500 for a family of four in 2018).

At the same time, the law imposes a tax penalty on those who remain uninsured; the penalty took effect in 2014, and gradually ramped up to its maximum level by 2016. It will be adjusted for inflation going forward, but for 2017 and 2018, the inflation adjustment was $0, so the penalty has remained unchanged since 2016 (legislation passed the Senate in December 2017 that would repeal the individual mandate penalty, but differences with the House version needed to be reconciled, so for the time being, nothing has changed about the mandate penalty).

The ACA prevents insurers from refusing to cover people with a pre-existing condition, or from charging them higher premiums because of a pre-existing condition. This is true both on and off the exchanges  and represents a significant change from how the individual market functioned prior to 2014 in nearly every state. 

The ACA eliminated annual and lifetime caps on how much an insurance company will pay for an insured’s covered health care, and limits out-of-pocket maximums. 

The ACA requires health insurance plans in the individual and small group markets to cover ten essential health benefits. One of the essential health benefit categories is preventive care, and a wide range of preventive care services are required to be covered with no cost-sharing.

The ACA requires large employers—those with 50 or more full-time equivalent employees—to offer affordable, minimum value health insurance to all full-time (30+ hours per week) employees, or risk a penalty under the employer shared responsibility provision. Employers must ensure that the coverage is considered affordable for the employee, but there's no affordability test for the cost of covering family members under the plan. Because of how this works and how subsidy availability is determined in the exchanges, some people are unable to obtain affordable coverage due to what's referred to as the "family glitch."

[Most of the above provisions do not apply to grandmothered and grandfathered plans.]

Some Parts of the Affordable Care Act Have Been Delayed or Eliminated

Some parts of the ACA will never be implemented: The Supreme Court disallowed a provision that would have withdrawn federal Medicaid funding to states that didn’t offer Medicaid to more people. This has resulted in a coverage gap, whereby 2.4 million people in 18 states essentially have no realistic access to coverage.

Additionally, Congress repealed the long-term care provision of the ACA, known as the CLASS Act, in January 2013 after the Department of Health and Human Services determined it was unworkable.

Numerous aspects of the ACA were delayed, including the employer shared responsibility provision (it took effect in 2015, rather than 2014, and wasn't fully phased in until 2016), the Cadillac Tax (now set to take effect in 2020), and the termination of non-grandfathered, non-ACA-compliant plans that were issued prior to 2014 (these plans are transitional, or " grandmothered," and they're allowed to continue in force until the end of 2018, at the discretion of states and health insurers).

Sources:

Department of Health and Human Services, Compilation of Patient Protection and Affordable Care Act. 

Kaiser Family Foundation, A Guide to the Supreme Court's Ruling on the ACA's Medicaid Expansion, August 2012. 

Kaiser Family Foundation. The Coverage Gap: Uninsured Poor Adults in States That Do Not Expand Medicaid. November 1, 2017.

Lemieux, Jeff; and Moutray, Chad, About That Cadillac Tax, Health Affairs, April 25, 2016.