The Affordable Care Act (ACA) is the comprehensive healthcare reform signed by President Barack Obama in March 2010. Officially known as the Patient Protection and Affordable Care Act – but often referred to simply as Obamacare – the law includes a list of health care policies aimed at extending health insurance coverage to millions of uninsured Americans.
This law expanded Medicaid eligibility, created health insurance exchanges, and prevented insurance companies from denying coverage (or charging more) because of pre-existing conditions. It also allows children to continue to benefit from the insurance plan of their parents until the age of 26.
Key points to remember
- The Affordable Care Act – also known as Obamacare – was signed into law in March 2010. It was designed to extend health insurance coverage to millions of uninsured Americans.
- The law expanded Medicaid eligibility and created a market for health insurance. It prevents insurance companies from denying coverage due to pre-existing conditions and requires plans to cover a list of essential health benefits.
- Low-income families can benefit from additional savings on health insurance plans through premium tax credits and cost-sharing discounts.
Understanding the Affordable Care Act (ACA)
The Affordable Care Act was designed to reduce the cost of health insurance coverage for people who qualify for it. The law provides premium tax credits and cost-sharing reductions to help reduce costs for low-income individuals and families.
The premium tax credit reduces your health insurance bill each month. Co-payment reductions reduce your deductible, co-pay, and coinsurance costs. They also reduce the maximum amount you can pay out of pocket, ie the total amount you pay in a year for covered healthcare expenses.
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All ACA-compliant health insurance plans — including all plans sold on the health insurance market — must cover specific “essential health benefits,” including .
- Ambulatory patient services
- Breastfeeding
- Emergency services
- Family planning
- Hospitalization
- Laboratory services
- Mental health and substance abuse treatment services
- Pregnancy, maternity and newborn care
- Prescription drugs
- Prevention and wellness services and chronic disease management
- Pediatric services
- Rehabilitation and adaptation services
In addition, the Affordable Care Act requires most insurance plans (including those sold on the market) to cover a list of preventative services free of charge for policyholders. These services include health check-ups, patient counseling, vaccinations and many health examinations.
Special Considerations
A notable part of the Affordable Care Act was the Individual Mandate, a provision requiring all Americans to have health coverage — either from an employer or through the ACA or other source — or be facing increasingly severe tax penalties. This mandate had a dual purpose: to extend health care to uninsured Americans and to ensure that there were a large enough number of insured people to support health insurance payments.
On January 20, 2017, in his first executive order after taking office, President Donald Trump signaled his intention to defray the Affordable Care Act, saying that heads of executive agencies should “delay implementation of any provision or requirement of law that would impose a tax burden on any state”.
The intent of this order marked the first phase of Republican efforts to repeal and replace the ACA. Repealing the law was one of Trump’s central campaign promises to reduce the government’s tax burden.
Attempts by the government in 2017 to repeal the law altogether were unsuccessful. However, the government drastically reduced its outreach program to help Americans enroll in the ACA and cut the enrollment period in half.
Changes were made to the law that addressed some of the objections raised by opponents, while keeping the Marketplace open to users. For example, as part of the Tax Cuts and Jobs Act , Congress in December 2017 removed the penalty for not having health insurance. Starting with taxes 2019, the individual mandate was reduced to zero dollars, essentially removing the requirement that many Republicans had opposed. By 2018, the number of Americans covered by the ACA had fallen from 17.4 in 2015 to 13.8, according to a report by healthcare research organization KFF.
In March 2019, the Trump administration revealed that it would seek to repeal the entire Affordable Care Act. In a letter to a federal appeals court, the Justice Department said it agreed with a Texas federal judge who declared the health care law unconstitutional and added that it would support the judgment on appeal.