OBAMA CARE (The Patient Protection and Affordable Care Act)
The Patient Protection and Affordable Care Act, often shortened to the Affordable Care Act (ACA) or nicknamed Obamacare, is a United States
federal statute enacted by the 111th United States Congress and signed into law by President Barack Obama on March 23, 2010. The term “Obamacare” was first used by opponents, then reappropriated by supporters, and eventually used by President Obama himself. Together with the Health Care and Education Reconciliation Act of 2010 amendment, it represents the U.S. healthcare system ‘s most significant regulatory overhaul and expansion of coverage since the passage of Medicare and Medicaid in 1965.
The ACA’s major provisions came into force in 2014. By 2016, the uninsured share of the population had roughly halved, with estimates ranging from 20–24 million additional people covered during 2016. The increased coverage was due, roughly equally, to an expansion of Medicaid eligibility and to major changes to individual insurance markets. Both involved new spending, funded through a combination of new taxes and cuts to Medicare provider rates and Medicare Advantage. Several Congressional Budget Office reports said that overall these provisions reduced the budget deficit and that repealing the ACA would increase the deficit. The law also enacted a host of delivery system reforms intended to constrain healthcare costs and improve quality. After the law went into effect, increases in overall healthcare spending slowed, including premiums for employer-based insurance plans.
The act largely retains the existing structure of Medicare, Medicaid, and the employer market, but individual markets were radically overhauled around a three-legged scheme. Insurers in these markets are made to accept all applicants and charge the same rates regardless of pre-existing conditions or sex. However, a repeal of the tax mandate passed as part of the Tax Cuts and Jobs Act of 2017, will become effective in 2019. To help households between 100–400% of the Federal Poverty Line afford these compulsory policies, the law provides insurance premium subsidies. Other individual market changes include health marketplaces and risk adjustment programs.
The act has also faced challenges and opposition. In 2009, Senator Ted Kennedy died, and the resultant special election cost the Democrats their 60-seat filibuster-proof Senate majority before the ACA had been fully passed by Congress. The Supreme Court ruled 5 to 4 in 2012 that states could choose not to participate in the ACA’s Medicaid expansion, although it upheld the law as a whole. The federal health exchange, HealthCare.go, initially faced major technical problems during its rollout in 2013. In 2017, a unified Republican government failed to pass several different partial repeals of the ACA. The law spent several years opposed by a slim plurality of Americans polled, although its provisions were generally more popular than the law as a whole, and the law gained majority support by 2017.
The ACA includes provisions to take effect between 2010 and 2020, although most took effect on January 1, 2014. It amended the Public Health Service Act of 1944 and inserted new provisions on affordable care into Title 42 of the United States Code. Few areas of the US health care system were left untouched, making it the most sweeping health care reform since the enactment of Medicare and
Medicaid in 1965. However, some areas were more affected than others. The individual insurance market was radically overhauled, and many of the law’s regulations applied specifically to this market, while the structure of Medicare, Medicaid, and the employer market was largely retained. Most of the coverage gains were made through the expansion of Medicaid, and the biggest cost savings were made in Medicare. Some regulations applied to the employer market and the law also made delivery system changes that affected most of the health care system. Not all provisions took full effect. Some were made discretionary, some were deferred, and others were repealed before implementation.
Guaranteed issue prohibits insurers from denying coverage to individuals due to pre-existing conditions. States were required to ensure the availability of insurance for individual children who did not have coverage via their families.
Premiums must be the same for everyone of a given age, regardless of preexisting conditions. Premiums are allowed to vary by enrollee age, but those for the oldest enrollees (age 45–64 average expenses $5,542) can only be three times as large as those for adults (18–24 $1,836).
Essential health benefits must be provided. The National Academy of Medicine defines the law’s “essential health benefits” as “ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care” and others rated Level A or B by the U.S. Preventive Services Task Force . In determining what would qualify as an essential benefit, the law required that standard benefits should offer at least that of a “typical employer plan”. States may require additional services, Additional preventive care and screenings for women. The guidelines issued by the Health Resources and Services Administration to implement this provision mandate “all Food and Drug Administration approved Contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity”. This mandate applies to all employers and educational institutions except for religious organizations. These regulations were included on the recommendations of the Institute of Medicine.
In 2012 Senator Sheldon Whitehouse created this summary to explain his view on the act.
Annual and lifetime coverage caps on essential benefits were banned.
Prohibits insurers from dropping policyholders when they get sick.
All health policies sold in the United States must provide an annual maximum out of pocket (MOOP) payment cap for an individual’s or family’s medical expenses (excluding premiums). After the MOOP payment cap is reached, all remaining costs must be paid by the insurer.
A partial community rating requires insurers to offer the same premium to all applicants of the same age and location without regard to gender or most pre-existing conditions (excluding tobacco use). Premiums for older applicants can be no more than three times those for the youngest.
Preventive care, vaccinations, and medical screenings cannot be subject to co-payments, co-insurance or deductibles. Specific examples of covered services include mammograms and colonoscopies, wellness visits, gestational diabetes screening, HPV testing, STI counseling, HIV screening and counseling, contraceptive methods, breastfeeding support/supplies, and domestic violence screening and counseling.
The law established four tiers of coverage: bronze, silver, gold, and platinum. All categories offer essential health benefits. The categories vary in their division of premiums and out-of-pocket costs: bronze plans have the lowest monthly premiums and highest out-of-pocket costs, while platinum plans are the reverse. The percentages of health care costs that plans are expected to cover through premiums (as opposed to out-of-pocket costs) are, on average: 60% (bronze), 70% (silver), 80% (gold), and 90% (platinum).
Insurers are required to implement an appeals process for coverage determination and claims on all new plans. Insurers must spend at least 80–85% of premium dollars on health costs; rebates must be issued to policyholders if this is violated.
Risk corridor program
The risk-corridor program was a temporary risk management device defined under the PPACA section 1342:1 to encourage reluctant insurers into the “new and untested” [attribution needed] ACA insurance market during the first three years that ACA was implemented (2014–2016). For those years the Department of Health and Human Services (HHS) “would cover some of the losses for insurers whose plans performed worse than they expected. Insurers that were especially profitable, for their part, would have to return to HHS some of the money they earned on the exchanges”
Temporary reinsurance for insurance for insurers against unexpectedly high claims was a program that ran from 2014 through 2016. It was intended to limit insurer losses. 
Of the three risk management programs, only risk adjustment was permanent. Risk adjustment attempts to spread risk among insurers to prevent purchasers with good knowledge of their medical needs from using insurance to cover their costs (adverse selection). Plans with low actuarial risk compensate plans with high actuarial risk.
ACA revised and expanded Medicaid eligibility starting in 2014. Under the law as written, all U.S. citizens and legal residents with income up to 133% of the poverty line, including adults without dependent children, would qualify for coverage in any state that participated in the Medicaid program. The federal government paid 100% of the cost of Medicaid eligibility expansion in participating states in 2014, 2015, and 2016; and will pay 95% in 2017, 94% in 2018, 93% in 2019, and 90% in 2020 and all subsequent years.
The law provides a 5% “income disregard”, making the effective income eligibility limit for Medicaid 138% of the poverty level.
However, the Supreme Court ruled in NFIB v. Sebelius that this provision of the ACA was coercive and that the federal government must allow states to continue at pre-ACA levels of funding and eligibility if they chose.
Spending reductions included a reduction in Medicare reimbursements to insurers and drug companies for private Medicare Advantage policies that the Government Accountability Office and Medicare Payment Advisory Commission found to be excessively costly relative to government Medicare; and reductions in Medicare reimbursements to hospitals that failed standards of efficiency and care.
Income from self-employment and wages of single individuals in excess of $200,000 annually are subject to an additional tax of 0.9%. The threshold amount is $250,000 for a married couple filing jointly (threshold applies to joint compensation of the two spouses), or $125,000 for a married person filing separately.
In ACA’s sister act, the Health Care and Education Reconciliation Act of 2010, an additional Medicare tax of 3.8% was applied to unearned income, specifically the lesser of net investment income or the amount by which adjusted gross income exceeds $200,000 ($250,000 for a married couple filing jointly; $125,000 for a married person filing separately.)
Excise taxes for the Affordable Care Act raised $16.3 billion in the fiscal year 2015 (17% of all excise taxes collected by the Federal Government). $11.3 billion was raised by an excise tax placed directly on health insurers based on their market share. The ACA also includes an excise tax of 40% (“Cadillac tax”) on total employer premium spending in excess of specified dollar amounts ($10,200 for single coverage and $27,500 for family coverage) indexed to inflation, originally scheduled to take effect in 2018, but delayed until 2020 by the Consolidated Appropriations Act, 2016. Annual excise taxes totaling $3 billion were levied on importers and manufacturers of prescription drugs. An excise tax of 2.3% on medical devices and a 10% excise tax on indoor tanning services were applied as well.
The State Children’s Health Insurance Program (CHIP) enrollment process was simplified.
Dependent’s Health Insurance
Dependents were permitted to remain on their parents’ insurance plan until their 26th birthday, including dependents who no longer live with their parents, are not dependent on a parent’s tax return, are no longer a student, or are married.
Businesses that employ 50 or more people but do not offer health insurance to their full-time employees pay a tax penalty if the government has subsidized a full-time employee’s healthcare through tax deductions or other means. This is commonly known as the employer mandate. This provision was included to encourage employers to continue providing insurance once the exchanges began operating. Approximately 44% of the population was covered directly or indirectly through an employer.
Delivery system reforms
The act includes a host of delivery system reforms intended to constrain healthcare costs and improve quality. These include Medicare payment changes to discourage hospital-acquired conditions and readmissions, bundled payment initiatives, the Center for Medicare and Medicaid Innovation, the Independent Payment Advisory Board, and the creation of Accountable care organizations.
Health care cost/quality initiatives including incentives to reduce hospital infections, to adopt electronic medical records, and to coordinate care and prioritize quality over quantity.
The Hospital Readmissions Reduction Program (HRPP) was established as an addition to the Social Security Act, in an effort to reduce hospital readmissions. This program penalizes hospitals with higher than expected readmission rates by decreasing their Medicare reimbursement rate.
The Medicare payment system switched from fee-for-service to bundled payments. A single payment was to be paid to a hospital and a physician group for a defined episode of care (such as a hip replacement ) rather than individual payments to individual service providers. In addition, the Medicare Part D coverage gap (commonly called the “donut hole”) was to shrink incrementally, closing completely by January 1, 2020.
Accountable Care Organizations
The Act allowed the creation of Accountable Care Organizations (ACOs), which are groups of doctors, hospitals and other providers that commit to giving coordinated, high-quality care to Medicare patients. ACOs were allowed to continue using a fee for service billing approach. They receive bonus payments from the government for minimizing costs while achieving quality benchmarks that emphasize prevention and mitigation of chronic disease. If they fail to do so, they are subject to penalties.
Unlike Health Maintenance Organizations, ACO patients are not required to obtain all care from the ACO. Also, unlike HMOs, ACOs must achieve the quality of care goals.
Medicare donut hole
Medicare Part D participants received a 50% discount on brand-name drugs purchased after exhausting their initial coverage and before reaching the catastrophic-coverage threshold. The United States Department of Health and Human Services began mailing rebate checks in 2010. By the year 2020, the donut hole will be completely phased out.
From 2017 onwards, states can apply for a “waiver for state innovation” that allows them to conduct experiments that meet certain criteria. To obtain a waiver, a state must pass legislation setting up an alternative health system that provides insurance at least as comprehensive and as affordable as ACA, covers at least as many residents and does not increase the federal deficit. These states can be exempt from some of ACA’s central requirements, including the individual and employer mandates and the provision of an insurance exchange. The state would receive compensation equal to the aggregate amount of any federal subsidies and tax credits for which its residents and employers would have been eligible under ACA plan if they cannot be paid under the state plan.
In May 2011, Vermont enacted Green Mountain Care, a state-based single-payer system for which they intended to pursue a waiver to implement. In December 2014, Vermont decided not to continue due to high expected costs.
The Community Living Assistance Services and Supports Act (or CLASS Act) established a voluntary and public long-term care insurance option for employees, Consumer Operated and Oriented Plans (CO-OP), member-governed non-profit insurers, could start providing health care coverage, based on a 5-year federal loan.
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To combat resultant adverse selection, the act (The Patient Protection and Affordable Care Act) mandates that individuals buy insurance and insurers cover a list of “essential health benefits”.