Patient Protection and Affordable Care Act

Patient Protection and Affordable Care Act

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Encyclopedia
The Patient Protection and Affordable Care Act (PPACA) is a United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 federal statute signed into law by President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....

 Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

 on March 23, 2010. The law (along with the Health Care and Education Reconciliation Act of 2010
Health Care and Education Reconciliation Act of 2010
The Health Care and Education Reconciliation Act of 2010 is a law that was enacted by the 111th United States Congress, by means of the reconciliation process, in order to amend the Patient Protection and Affordable Care Act...

) is the principal health care reform
Health care reform in the United States
Health care reform in the United States has a long history, of which the most recent results were two federal statutes enacted in 2010: the Patient Protection and Affordable Care Act , signed March 23, 2010, and the Health Care and Education Reconciliation Act of 2010 , which amended the PPACA and...

 legislation of the 111th United States Congress
111th United States Congress
The One Hundred Eleventh United States Congress was the meeting of the legislative branch of the United States federal government from January 3, 2009 until January 3, 2011. It began during the last two weeks of the George W. Bush administration, with the remainder spanning the first two years of...

. PPACA reforms certain aspects of the private health insurance
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...

 industry and public health insurance programs, increases insurance coverage of pre-existing conditions, expands access to insurance to over 30 million Americans, and increases projected national medical spending despite lowering projected Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...

 spending under previous law.

PPACA passed the Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...

 on December 24, 2009, by a vote of 60–39 with all Democrats
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...

 and two Independents voting for, and all Republicans
Republican Party (United States)
The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...

 voting against. It passed the House of Representatives
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...

 on March 21, 2010, by a vote of 219–212, with 34 Democrats and all 178 Republicans voting against the bill.

A majority of the states, and numerous organizations and individual persons, have filed actions in federal court challenging the constitutionality of PPACA. As of October 2011, the constitutionality of PPACA has been upheld by three out of four federal appellate courts
United States courts of appeals
The United States courts of appeals are the intermediate appellate courts of the United States federal court system...

, with the fourth declaring the law's individual mandate alone as unconstitutional. The Supreme Court has agreed to review the suits, and has scheduled over five hours for oral arguments on the matter in March 2012.

Overview of provisions


PPACA includes numerous provisions to take effect over several years beginning in 2010. Policies issued before the law was promulgated are grandfathered
Grandfather clause
Grandfather clause is a legal term used to describe a situation in which an old rule continues to apply to some existing situations, while a new rule will apply to all future situations. It is often used as a verb: to grandfather means to grant such an exemption...

 from most federal regulations.
  • Guaranteed issue
    Guaranteed issue
    Guaranteed issue is a term used in health insurance to describe a situation where a policy is offered to all applicants, regardless of the health status of the applicant...

     and partial community rating
    Community rating
    Community rating is a concept usually associated with health insurance, which requires health insurance providers to offer health insurance policies within a given territory at the same price to all persons without medical underwriting, regardless of their health status.Pure community rating...

     will require insurers to offer the same premium to all applicants of the same age and geographical location without regard to most pre-existing condition
    Pre-existing condition
    A pre-existing condition is a risk with extant causes that is not readily compensated by standard, affordable insurance premiums. Pre-existing condition exclusions by the insurance industry are meant to cope with adverse selection by potential customers. Such exclusions have become a topic in the...

    s (excluding tobacco
    Tobacco
    Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...

     use).
  • A shared responsibility requirement, commonly called an individual mandate
    Health insurance mandate
    A health insurance mandate is either an employer or individual mandate to obtain private health insurance, instead of a National Health Service or National Health Insurance.-United States:...

    , requires that nearly all persons not covered by Medicaid
    Medicaid
    Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...

    , Medicare
    Medicare (United States)
    Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...

    , or other public insurance programs purchase an approved private insurance policy or pay a penalty, unless the applicable individual is a member of a recognized religious sect, exempted by the Internal Revenue Service
    Internal Revenue Service
    The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...

    , or waived in cases of financial hardship.
  • Medicaid eligibility is expanded to include all individuals and families with incomes up to 133% of the poverty level along with a simplified CHIP
    State Children's Health Insurance Program
    The State Children's Health Insurance Program – later known more simply as the Children's Health Insurance Program – is a program administered by the United States Department of Health and Human Services that provides matching funds to states for health insurance to families with children...

     enrollment process.
  • Health insurance exchanges
    Health insurance exchange
    A health insurance exchange is a set of state-regulated and standardized health care plans in the United States, from which individuals may purchase health insurance that is eligible for Federal subsidies...

     will commence operation in each state, offering a marketplace where individuals and small businesses can compare policies and premiums, and buy insurance (with a government subsidy if eligible).
  • Low income persons and families above the Medicaid level and up to 400% of the federal poverty level will receive federal subsidies
    Subsidy
    A subsidy is an assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more labor A subsidy (also...

     on a sliding scale if they choose to purchase insurance via an exchange (persons at 150% of the poverty level would be subsidized such that their premium cost would be of 2% of income or $50 a month for a family of 4).
  • Minimum standards for health insurance policies are to be established and annual and lifetime coverage caps will be prohibited.
  • Firms employing 50 or more people but not offering health insurance will also pay a shared responsibility requirement if the government has had to subsidize an employee's health care.
  • Very small businesses will be able to get subsidies if they purchase insurance through an exchange.
  • Insurance companies are required to spend a certain percent of premium dollars on medical care improvement; if an insurer fails to meet this requirement, a rebate must be issued to the policy holder.
  • Co-payments
    Copayment
    In the United States, the copayment or copay is a payment defined in the insurance policy and paid by the insured person each time a medical service is accessed. It is technically a form of coinsurance, but is defined differently in health insurance where a coinsurance is a percentage payment after...

    , co-insurance, and deductibles
    Deductible
    In an insurance policy, the deductible is the amount of expenses that must be paid out of pocket before an insurer will pay any expenses. It is normally quoted as a fixed quantity and is a part of most policies covering losses to the policy holder. The deductible must be paid by the insured,...

     are to be eliminated for select health care insurance benefits considered to be part of an "essential benefits package" for Level A or Level B preventive care.
  • Changes are enacted that allow a restructuring of Medicare reimbursement from "fee-for-service" to "bundled payments."
  • Additional support is provided for medical research and the National Institutes of Health
    National Institutes of Health
    The National Institutes of Health are an agency of the United States Department of Health and Human Services and are the primary agency of the United States government responsible for biomedical and health-related research. Its science and engineering counterpart is the National Science Foundation...

    .

Summary of funding


The Act's provisions are intended to be funded by a variety of taxes and offsets. Major sources of new revenue include a much-broadened Medicare tax on incomes over $200,000 and $250,000, for individual and joint filers respectively, an annual fee on insurance providers, and a 40% tax on "Cadillac" insurance policies
Cadillac insurance plan
A Cadillac plan is an informal term for any unusually expensive health insurance plan, usually arising in discussions of medical-cost control measures in the United States. The term derives from the Cadillac automobile, which has represented American luxury since its introduction in 1902, and as a...

. There are also taxes on pharmaceuticals, high-cost diagnostic equipment, and a 10% federal sales tax
Sales tax
A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....

 on indoor tanning services. Offsets are from intended cost savings such as improved fairness in the Medicare Advantage program relative to traditional Medicare.

Total new tax revenue from the Act will amount to $409.2 billion over the next 10 years. $78 billion will be realized before the end of fiscal 2014. Summary of revenue sources:
  • Broaden Medicare tax base for high-income taxpayers: $210.2 billion
  • Annual fee on health insurance providers: $60 billion
  • 40% excise tax on health coverage in excess of $10,200/$27,500: $32 billion
  • Impose annual fee on manufacturers and importers of branded drugs: $27 billion
  • Impose 2.3% excise tax on manufacturers and importers of certain medical devices: $20 billion
  • Require information reporting on payments to corporations: $17.1 billion
  • Raise 7.5% Adjusted Gross Income
    Adjusted Gross Income
    For United States individual income tax, taxable income is adjusted gross income less allowances for personal exemptions and itemized deductions. Adjusted gross income is total gross income minus specific items laid out in the tax code...

     floor on medical expenses deduction to 10%: 15.2 billion
  • Limit contributions to flexible spending arrangements
    Flexible spending account
    A flexible spending account , also known as a flexible spending arrangement, is one of a number of tax-advantaged financial accounts that can be set up through a cafeteria plan of an employer in the United States...

     in cafeteria plan
    Cafeteria plan
    A cafeteria plan is a type of employee benefit plan offered in the United States pursuant to Section 125 of the Internal Revenue Code. Its name comes from the earliest such plans that allowed employees to choose between different types of benefits, similar to the ability of a customer to choose...

    s to $2,500: $13 billion
  • All other revenue sources: $14.9 billion


Provisions


The Act is divided into 10 titles and contains provisions that became effective immediately, 90 days after enactment, and six months after enactment, as well as provisions that will become effective in 2014.

Below are some of the key provisions of the Act. For simplicity, the amendments in the Health Care and Education Reconciliation Act of 2010 are integrated into this timeline.

Effective at enactment

  • The Food and Drug Administration
    Food and Drug Administration
    The Food and Drug Administration is an agency of the United States Department of Health and Human Services, one of the United States federal executive departments...

     is now authorized to approve generic versions of biologic drugs and grant biologics manufacturers 12 years of exclusive use before generics can be developed.
  • The Medicaid drug rebate
    Rebate (marketing)
    A rebate is an amount paid by way of reduction, return, or refund on what has already been paid or contributed. It is a type of sales promotion marketers use primarily as incentives or supplements to product sales. The mail-in rebate is the most common...

     for brand name drugs is increased to 23.1% (except the rebate for clotting factors and drugs approved exclusively for pediatric use increases to 17.1%), and the rebate is extended to Medicaid managed care plans; the Medicaid rebate for non-innovator, multiple source drugs is increased to 13% of average manufacturer price.
  • A non-profit Patient-Centered Outcomes Research Institute
    Patient-Centered Outcomes Research Institute
    The Patient-Centered Outcomes Research Institute is a United States based non-governmental institute created as part of a modification to the Social Security Act by clauses in the Patient Protection and Affordable Care Act....

     is established, independent from government, to undertake comparative effectiveness research. This is charged with examining the "relative health outcomes, clinical effectiveness, and appropriateness" of different medical treatments by evaluating existing studies and conducting its own. Its 19-member board is to include patients, doctors, hospitals, drug makers, device manufacturers, insurers, payers, government officials and health experts. It will not have the power to mandate or even endorse coverage rules or reimbursement for any particular treatment. Medicare may take the Institute’s research into account when deciding what procedures it will cover, so long as the new research is not the sole justification and the agency allows for public input. The bill forbids the Institute to develop or employ "a dollars per quality adjusted life year" (or similar measure that discounts the value of a life because of an individual’s disability) as a threshold to establish what type of health care is cost effective or recommended. This makes it different from the UK's National Institute for Health and Clinical Excellence
    National Institute for Health and Clinical Excellence
    The National Institute for Health and Clinical Excellence is a special health authority of the English National Health Service , serving both English NHS and the Welsh NHS...

    .
  • Creation of task forces on Preventive Services and Community Preventive Services to develop, update, and disseminate evidenced-based recommendations on the use of clinical and community prevention services.
  • The Indian Health Care Improvement Act is reauthorized and amended.

Effective June 21, 2010

  • Adults with pre-existing conditions became eligible to join a temporary high-risk pool, which will be superseded by the health care exchange in 2014. To qualify for coverage, applicants must have a pre-existing health condition and have been uninsured for at least the past six months. There is no age requirement. The new program sets premiums as if for a standard population and not for a population with a higher health risk. Allows premiums to vary by age (4:1), geographic area, and family composition. Limit out-of-pocket spending to $5,950 for individuals and $11,900 for families, excluding premiums.

Effective July 1, 2010

  • The President established, within the Department of Health and Human Services (HHS), a council to be known as the National Prevention, Health Promotion and Public Health Council to help begin to develop a National Prevention and Health Promotion Strategy. The Surgeon General
    Surgeon General of the United States
    The Surgeon General of the United States is the operational head of the Public Health Service Commissioned Corps and thus the leading spokesperson on matters of public health in the federal government...

     shall serve as the Chairperson of the new Council.
  • A 10% tax on indoor tanning took effect.

Effective September 23, 2010

  • Insurers are prohibited from imposing lifetime dollar limits on essential benefits, like hospital stays, in new policies issued.
  • Dependents (children) will be permitted to remain on their parents' insurance plan until their 26th birthday, and regulations implemented under the Act include dependents that no longer live with their parents, are not a dependent on a parent’s tax return, are no longer a student, or are married.
  • Insurers are prohibited from excluding pre-existing medical conditions (except in grandfathered
    Grandfather clause
    Grandfather clause is a legal term used to describe a situation in which an old rule continues to apply to some existing situations, while a new rule will apply to all future situations. It is often used as a verb: to grandfather means to grant such an exemption...

     individual health insurance plans) for children under the age of 19.
  • Insurers are prohibited from charging co-payments, co-insurance, or deductibles for Level A or Level B preventive care and medical screenings on all new insurance plans.
  • Individuals affected by the Medicare Part D coverage gap will receive a $250 rebate, and 50% of the gap will be eliminated in 2011. The gap will be eliminated by 2020.
  • Insurers' abilities to enforce annual spending caps will be restricted, and completely prohibited by 2014.
  • Insurers are prohibited from dropping policyholders when they get sick.
  • Insurers are required to reveal details about administrative and executive expenditures.
  • Insurers are required to implement an appeal
    Appeal
    An appeal is a petition for review of a case that has been decided by a court of law. The petition is made to a higher court for the purpose of overturning the lower court's decision....

    s process for coverage determination and claims on all new plans.
  • Enhanced methods of fraud
    Insurance fraud
    Insurance fraud is any act committed with the intent to fraudulently obtain payment from an insurer.Insurance fraud has existed ever since the beginning of insurance as a commercial enterprise. Fraudulent claims account for a significant portion of all claims received by insurers, and cost billions...

     detection are implemented.
  • Medicare is expanded to small, rural hospitals and facilities.
  • Medicare patients with chronic illnesses must be monitored/evaluated on a 3 month basis for coverage of the medications for treatment of such illnesses.
  • Non-profit Blue Cross insurers are required to maintain a loss ratio
    Loss ratio
    In insurance, the loss ratio is the ratio of total losses paid out in claims plus adjustment expenses divided by the total earned premiums. For example, if an insurance company pays out $60 in claims for every $100 in collected premiums, then its loss ratio is 60%.Loss ratios for property and...

     (money spent on procedures over money incoming) of 85% or higher to take advantage of IRS tax benefits.
  • Companies which provide early retiree benefits for individuals aged 55–64 are eligible to participate in a temporary program which reduces premium costs.
  • A new website installed by the Secretary of Health and Human Services will provide consumer insurance information for individuals and small businesses in all states.
  • A temporary credit program is established to encourage private investment in new therapies for disease treatment and prevention.

Effective by January 1, 2011

  • Insurers will be required to spend 85% of large-group and 80% of small-group and individual plan premiums (with certain adjustments) on healthcare or to improve healthcare quality, or return the difference to the customer as a rebate.
  • The Centers for Medicare and Medicaid Services
    Centers for Medicare and Medicaid Services
    The Centers for Medicare & Medicaid Services , previously known as the Health Care Financing Administration , is a federal agency within the United States Department of Health and Human Services that administers the Medicare program and works in partnership with state governments to administer...

     is responsible for developing the Center for Medicare and Medicaid Innovation and overseeing the testing of innovative payment and delivery models.
  • Flexible spending account
    Flexible spending account
    A flexible spending account , also known as a flexible spending arrangement, is one of a number of tax-advantaged financial accounts that can be set up through a cafeteria plan of an employer in the United States...

    s, Health reimbursement account
    Health Reimbursement Account
    Health Reimbursement Accounts or Health Reimbursement Arrangements are Internal Revenue Service -sanctioned programs that allow an employer to set aside funds to reimburse medical expenses paid by participating employees...

    s and health savings account
    Health savings account
    A health savings account is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan . The funds contributed to an account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account...

    s cannot be used to pay for over-the-counter drugs, purchased without a prescription, except insulin
    Insulin
    Insulin is a hormone central to regulating carbohydrate and fat metabolism in the body. Insulin causes cells in the liver, muscle, and fat tissue to take up glucose from the blood, storing it as glycogen in the liver and muscle....

    .

Effective by January 1, 2012

  • Employers must disclose the value of the benefits they provided beginning in 2012 for each employee's health insurance coverage on the employees' annual Form W-2's. This requirement was originally to be effective January 1, 2011 but was postponed by IRS Notice 2010-69 on October 23, 2010.

  • New tax reporting changes were to come in effect to prevent tax evasion by corporations and individuals. However, in April 2011, Congress passed and President Obama signed the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 repealing this provision, because it was burdensome to small businesses. Under the repealed law, businesses would have been required to notify the IRS on form 1099 of certain payments to individuals for certain services or property over a reporting threshold of $600. Reporting of payments to corporations and individuals would also be required. Originally it was expected to raise $17 billion over 10 years. The amendments made by Section 9006 of the Act were designed to apply to payments made by businesses after December 31, 2011, but will no longer apply because of the repeal of the section.

Effective by January 1, 2013

  • Income from self-employment and wages of single individuals in excess $200,000 annually will be 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 addition, an additional tax of 3.8% will apply to 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.)

Effective by January 1, 2014


  • Insurers are prohibited from discriminating against or charging higher rates for any individuals based on pre-existing medical conditions.
  • Impose an annual penalty of $95, or up to 1% of income, whichever is greater, on individuals who do not secure insurance; this will rise to $695, or 2.5% of income, by 2016. This is an individual limit; families have a limit of $2,085. Exemptions to the fine in cases of financial hardship or religious beliefs are permitted.
  • Insurers are prohibited from establishing annual spending caps.
  • Expand Medicaid eligibility; all individuals with income up to 133% of the poverty line qualify for coverage, including adults without dependent children.
  • Two years of tax credits will be offered to qualified small businesses. In order to receive the full benefit of a 50% premium subsidy, the small business must have an average payroll per full time equivalent ("FTE") employee, excluding the owner of the business, of less than $25,000 and have fewer than 11 FTEs. The subsidy is reduced by 6.7% per additional employee and 4% per additional $1,000 of average compensation. As an example, a 16 FTE firm with a $35,000 average salary would be entitled to a 10% premium subsidy.
  • Impose a $2,000 per employee tax penalty on employers with more than 50 employees who do not offer health insurance to their full-time workers (as amended by the reconciliation bill).
  • Set a maximum of $2,000 annual deductible for a plan covering a single individual or $4,000 annual deductible for any other plan (see 111HR3590ENR, section 1302). These limits can be increased under rules set in section 1302.
  • The CLASS Act provision would have created a voluntary long-term care insurance program, but in October 2011 the Department of Health and Human Services announced that the provision was unworkable and would be dropped, although an Obama administration official later said the President does not support repealing this provision.

  • Pay for new spending, in part, through spending and coverage cuts in Medicare Advantage, slowing the growth of Medicare provider payments (in part through the creation of a new Independent Payment Advisory Board
    Independent Payment Advisory Board
    The Independent Payment Advisory Board, or IPAB, is a fifteen-member, unelected United States Government agency created in 2010 by sections 3403 and 10320 of the Patient Protection and Affordable Care Act which has the explicit task of reducing the rate of growth in Medicare without affecting...

    ), reducing Medicare and Medicaid drug reimbursement rate, cutting other Medicare and Medicaid spending.
  • Revenue increases from a new $2,500 limit on tax-free contributions to flexible spending account
    Flexible spending account
    A flexible spending account , also known as a flexible spending arrangement, is one of a number of tax-advantaged financial accounts that can be set up through a cafeteria plan of an employer in the United States...

    s (FSAs), which allow for payment of health costs.
  • Chain
    Chain store
    Chain stores are retail outlets that share a brand and central management, and usually have standardized business methods and practices. These characteristics also apply to chain restaurants and some service-oriented chain businesses. In retail, dining and many service categories, chain businesses...

     restaurants and food vendors with 20 or more locations are required to display the caloric content
    Calorie
    The calorie is a pre-SI metric unit of energy. It was first defined by Nicolas Clément in 1824 as a unit of heat, entering French and English dictionaries between 1841 and 1867. In most fields its use is archaic, having been replaced by the SI unit of energy, the joule...

     of their foods on menus, drive-through menus, and vending machines. Additional information, such as saturated fat
    Saturated fat
    Saturated fat is fat that consists of triglycerides containing only saturated fatty acids. Saturated fatty acids have no double bonds between the individual carbon atoms of the fatty acid chain. That is, the chain of carbon atoms is fully "saturated" with hydrogen atoms...

    , carbohydrate
    Carbohydrate
    A carbohydrate is an organic compound with the empirical formula ; that is, consists only of carbon, hydrogen, and oxygen, with a hydrogen:oxygen atom ratio of 2:1 . However, there are exceptions to this. One common example would be deoxyribose, a component of DNA, which has the empirical...

    , and sodium
    Sodium
    Sodium is a chemical element with the symbol Na and atomic number 11. It is a soft, silvery-white, highly reactive metal and is a member of the alkali metals; its only stable isotope is 23Na. It is an abundant element that exists in numerous minerals, most commonly as sodium chloride...

     content, must also be made available upon request.
  • Establish health insurance exchange
    Health insurance exchange
    A health insurance exchange is a set of state-regulated and standardized health care plans in the United States, from which individuals may purchase health insurance that is eligible for Federal subsidies...

    s, and subsidization of insurance premiums for individuals with income up to 400% of the poverty line, as well as single adults. Section 1401(36B) of PPACA explains that the subsidy will be provided as an advanceable, refundable tax credit and gives a formula for its calculation. Refundable tax credit is a way to provide government benefit to people even with no tax liability (example: Earned Income Credit). The formula was changed in the amendments (HR 4872) passed March 23, 2010, in section 1001. According to DHHS and CRS
    Congressional Research Service
    The Congressional Research Service , known as "Congress's think tank", is the public policy research arm of the United States Congress. As a legislative branch agency within the Library of Congress, CRS works exclusively and directly for Members of Congress, their Committees and staff on a...

    , in 2014 the income-based premium caps for a "silver" healthcare plan for family of four would be the following:
    Health Insurance Premiums and Cost Sharing under PPACA for average family of 4.
    Income % of federal poverty level Premium Cap as a Share of Income Max Annual Out-of-Pocket Premium Additional Cost-Sharing Subsidy
    133% 3% of income $31,900 $992 $10,345 $5,040
    150% 4% of income $33,075 $1,323 $9,918 $5,040
    200% 6.3% of income $44,100 $2,778 $8,366 $4,000
    250% 8.05% of income $55,125 $4,438 $6,597 $1,930
    300% 9.5% of income $66,150 $6,284 $4,628 $1,480
    350% 9.5% of income $77,175 $7,332 $3,512 $1,480
    400% 9.5% of income $88,200 $8,379 $2,395 $1,480

The U.S. Department of Health and Human Services
United States Department of Health and Human Services
The United States Department of Health and Human Services is a Cabinet department of the United States government with the goal of protecting the health of all Americans and providing essential human services. Its motto is "Improving the health, safety, and well-being of America"...

 (DHHS) and Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...

 (IRS) on August 12, 2011, issued joint proposed rules regarding implementation of new state-based health insurance exchanges to cover how the exchanges will determine eligibility for uninsured individuals and employees of small businesses seeking to buy insurance on the exchanges, as well as how the exchanges will handle eligibility determinations for low-income individuals applying for newly expanded Medicaid benefits.
  • Members of Congress and their staff will only be offered health care plans through the exchange or plans otherwise established by the bill (instead of the Federal Employees Health Benefits Program that they currently use).
  • A new excise tax goes into effect that is applicable to pharmaceutical companies and is based on the market share of the company; it is expected to create $2.5 billion in annual revenue.
  • Most medical devices become subject to a 2.3% excise tax collected at the time of purchase. (Reduced by the reconciliation act to 2.3% from 2.6%)
  • Health insurance companies become subject to a new excise tax based on their market share; the rate gradually raises between 2014 and 2018 and thereafter increases at the rate of inflation. The tax is expected to yield up to $14.3 billion in annual revenue.
  • The qualifying medical expenses deduction for Schedule A tax filings increases from 7.5% to 10% of earned income.

Effective by January 1, 2017

  • A state may apply to the Secretary of Health & Human Services for a "waiver for state innovation" provided that the state passes legislation implementing an alternative health care plan meeting certain criteria. The decision of whether to grant the waiver is up to the Secretary (who must annually report to Congress on the waiver process) after a public comment period.
A state receiving the waiver would be exempt from some of the central requirements of the ACA, including the individual mandate, the creation by the state of an insurance exchange, and the penalty for certain employers not providing coverage. The state would also 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 the ACA plan, but which cannot be paid out due to the structure of the state plan.
In order to qualify for the waiver, the state plan must provide insurance at least as comprehensive and as affordable as that required by the ACA, must cover at least as many residents as the ACA plan would, and cannot increase the federal deficit. The coverage must continue to meet the consumer protection requirements of the ACA, such as the prohibition on increasing premiums because of pre-existing conditions.
A bipartisan bill sponsored by Senators Ron Wyden
Ron Wyden
Ronald Lee "Ron" Wyden is the senior U.S. Senator for Oregon, serving since 1996, and a member of the Democratic Party. He previously served in the United States House of Representatives from 1981 to 1996....

 and Scott Brown
Scott Brown
Scott Brown is a United States senator.Scott Brown may also refer to:-Sportsmen:*Scott Brown , American college football coach of Kentucky State...

, and supported by President Obama, proposes making waivers available in 2014 rather than 2017, so that, for example, states that wish to implement an alternative plan need not set up an insurance exchange only to dismantle it a short time later.
Vermont
Vermont
Vermont is a state in the New England region of the northeastern United States of America. The state ranks 43rd in land area, , and 45th in total area. Its population according to the 2010 census, 630,337, is the second smallest in the country, larger only than Wyoming. It is the only New England...

 has announced its intention to pursue a waiver in order to implement the single-payer system enacted in May 2011. Oregon
Oregon
Oregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...

 is also expected to request a waiver.

Effective by 2018

  • All existing health insurance plans must cover approved preventive care and checkups without co-payment.
  • A new 40% excise tax on high cost ("Cadillac") insurance plans
    Cadillac insurance plan
    A Cadillac plan is an informal term for any unusually expensive health insurance plan, usually arising in discussions of medical-cost control measures in the United States. The term derives from the Cadillac automobile, which has represented American luxury since its introduction in 1902, and as a...

     is introduced. The tax (as amended by the reconciliation bill) is on the cost of coverage in excess of $27,500 (family coverage) and $10,200 (individual coverage), and it is increased to $30,950 (family) and $11,850 (individual) for retirees and employees in high risk professions. The dollar thresholds are indexed with inflation; employers with higher costs on account of the age or gender demographics of their employees may value their coverage using the age and gender demographics of a national risk pool.


Deficit impact


As of the bill's passage into law, the Congressional Budget Office
Congressional Budget Office
The Congressional Budget Office is a federal agency within the legislative branch of the United States government that provides economic data to Congress....

 (CBO) estimated the legislation would reduce the deficit by $143 billion over the first decade, but half of that was due to expected premiums for the C.L.A.S.S. Act, which has since been abandoned. Although the CBO generally does not provide cost estimates beyond the 10-year budget projection period (because of the great degree of uncertainty involved in the data) it decided to do so in this case at the request of lawmakers, and estimated a second decade deficit reduction of $1.2 trillion.
CBO predicted deficit reduction around a broad range of one-half percent of GDP over the 2020s while cautioning that "a wide range of changes could occur".

The Congressional Budget Office (CBO) also initially stated that the bill would "substantially reduce the growth of Medicare's payment rates for most services; impose an excise tax on insurance plans with relatively high premiums; and make various other changes to the federal tax code, Medicare, Medicaid, and other programs;" However, CBO was required to exclude from its initial estimates the effects of concurrent "doc fix" legislation that would increase Medicare payments by more than $200 billion from 2010-2019. The "doc fix" legislation—separate from Patient Protection and Affordable Care Act—was enacted to permanently replace annual "fixes" that had been enacted since 1997. Subject to the same exclusion, the CBO initially estimated the federal government's share of the cost during the first decade at $940 billion, $923 billion of which takes place during the final six years (2014–2019) when the spending kicks in; with revenue exceeding spending during these six years.

There was mixed opinion about the CBO estimates from others.

Uwe Reinhardt
Uwe Reinhardt
Uwe E. Reinhardt is a professor of political economy at Princeton University and holds several positions in the healthcare industry. Reinhardt is a prominent scholar in health care economics and a frequent speaker and author on subjects ranging from the war in Iraq to the future of Medicare.-...

, a Health economist at Princeton, wrote that "The rigid, artificial rules under which the Congressional Budget Office must score proposed legislation unfortunately cannot produce the best unbiased forecasts of the likely fiscal impact of any legislation", but went on to say "But even if the budget office errs significantly in its conclusion that the bill would actually help reduce the future federal deficit, I doubt that the financing of this bill will be anywhere near as fiscally irresponsible as was the financing of the Medicare Modernization Act of 2003
Medicare Prescription Drug, Improvement, and Modernization Act
The Medicare Prescription Drug, Improvement, and Modernization Act is a federal law of the United States, enacted in 2003. It produced the largest overhaul of Medicare in the public health program's 38-year history.The MMA was signed by President George W...

."

Douglas Holtz-Eakin
Douglas Holtz-Eakin
Douglas J. "Doug" Holtz-Eakin is an American economist, former professor, former Director of the Congressional Budget Office and former chief economic policy adviser to U.S...

, a former CBO director who served during the George W. Bush administration, opined that the bill would increase the deficit by $562 billion.

Republican House
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...

 leadership and the Republican majority on the House Budget Committee
United States House Committee on the Budget
The U.S. House Committee on the Budget, commonly known as the House Budget Committee, is a standing committee of the United States House of Representatives, the lower house of Congress...

 estimate the law would increase the deficit by more than $700 billion in its first 10 years.

Democratic House
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...

 leadership and the Democratic minority on the House Budget Committee
United States House Committee on the Budget
The U.S. House Committee on the Budget, commonly known as the House Budget Committee, is a standing committee of the United States House of Representatives, the lower house of Congress...

 say the claims of budget gimmickry are false and that repeal of the legislation would increase the deficit by $230 billion over the same period, pointing to the CBO's 2011 analysis of the impact of repeal.

The New Republic
The New Republic
The magazine has also published two articles concerning income inequality, largely criticizing conservative economists for their attempts to deny the existence or negative effect increasing income inequality is having on the United States...

 editors Noam Scheiber
Noam Scheiber
Noam Scheiber is a senior editor for The New Republic. He is a Rhodes Scholar and he holds a masters degree in economics from Oxford University and a bachelors degree in mathematics from Tulane University. He has contributed to numerous other news sources including The New York Times, The...

 (an economist) and Jonathan Cohn
Jonathan Cohn
Jonathan Cohn is an American author and journalist who writes mainly on United States public policy and political issues. Formerly the executive editor of The American Prospect, Cohn is currently a senior editor at The New Republic magazine and a senior fellow at Demos.-Works:Cohn's writings have...

 (a noted health care policy analyst), countered critical assessments of the law's deficit impact, arguing that it is as likely, if not more so, for predictions to have underestimated deficit reduction than to have overestimated it. They noted that it is easier, for example, to account for the cost of definite levels of subsidies to specified numbers of people than account for savings from preventive health care
Preventive medicine
Preventive medicine or preventive care refers to measures taken to prevent diseases, rather than curing them or treating their symptoms...

, and that the CBO
CBO
CBO is a three letter abbreviation which may mean:* CBO-FM, a CBC Radio One station in Ottawa, Ontario, Canada* Central Bank of Oman* Central Boycott Office, a specialized agency of the Arab League based in Damascus...

 has a track record of consistently overestimating the costs of, and underestimating the savings of health legislation; "innovations in the delivery of medical care, like greater use of electronic medical records
Electronic medical record
An electronic medical record is a computerized medical record created in an organization that delivers care, such as a hospital or physician's office...

 and financial incentives for more coordination of care among doctors, would produce substantial savings while also slowing the relentless climb of medical expenses... But the CBO would not consider such savings in its calculations, because the innovations hadn’t really been tried on such large scale or in concert with one another--and that meant there wasn’t much hard data to prove the savings would materialize."

David Walker
David M. Walker (U.S. Comptroller General)
David M. Walker served as United States Comptroller General from 1998 to 2008, and is now the Founder and CEO of the Comeback America Initiative.- Career as Comptroller General :...

, former U.S. Comptroller General
Comptroller General of the United States
The Comptroller General of the United States is the director of the Government Accountability Office , a legislative branch agency established by Congress in 1921 to ensure the fiscal and managerial accountability of the federal government...

 now working for The Peter G. Peterson Foundation
The Peter G. Peterson Foundation
The Peter G. Peterson Foundation is an American foundation established in 2008 by Peter G. Peterson, a co-founder of the Blackstone Group – an American-based financial-services company...

, has stated that the CBO estimates are not likely to be accurate, because it is based on the assumption that Congress is going to do everything they say they're going to do. On the other hand, a Center on Budget and Policy Priorities
Center on Budget and Policy Priorities
The Center on Budget and Policy Priorities is a non-profit think tank that describes itself as a "policy organization ... working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals."The Center examines the short- and...

 analysis said that Congress has a good record of implementing Medicare savings. According to their study, Congress implemented the vast majority of the provisions enacted in the past 20 years to produce Medicare savings.

Change in number of uninsured


According to Congressional Budget Office estimates, the legislation will reduce the number of uninsured residents by 32 million, leaving 23 million uninsured residents in 2019 after the bill's provisions have all taken effect. Among the people in this group will be:
  • Illegal immigrants, estimated at almost a third of the 23 million, will be ineligible for insurance subsidies and Medicaid. They will also be exempt from the health insurance mandate
    Health insurance mandate
    A health insurance mandate is either an employer or individual mandate to obtain private health insurance, instead of a National Health Service or National Health Insurance.-United States:...

    , but will remain eligible for emergency services under the 1986 Emergency Medical Treatment and Active Labor Act
    Emergency Medical Treatment and Active Labor Act
    The Emergency Medical Treatment and Active Labor Act is a U.S. Act of Congress passed in 1986 as part of the Consolidated Omnibus Budget Reconciliation Act . It requires hospitals to provide care to anyone needing emergency healthcare treatment regardless of citizenship, legal status or ability to...

     (EMTALA).
  • Those who do not enroll in Medicaid despite being eligible.
  • Those who are not otherwise covered and opt to pay the annual penalty (2.5% of income, $695 for individuals, or a maximum of $2,250 per family) instead of purchasing (presumably more expensive) insurance; this might be mostly younger and single Americans.
  • Those whose insurance coverage would cost more than 8% of household income; they are exempt from paying the annual penalty.


Early experience under the Act was that, as a result of the tax credit for small businesses, many of them offered health insurance to their employees for the first time.

On September 13, 2011, the Census Bureau released a report showing that the number of uninsured 19-25 year olds (now eligible to stay on their parents' policies) had declined by 393,000, or 1.6%, both statistically significant.

Effect on national spending


The United States Department of Health and Human Services
United States Department of Health and Human Services
The United States Department of Health and Human Services is a Cabinet department of the United States government with the goal of protecting the health of all Americans and providing essential human services. Its motto is "Improving the health, safety, and well-being of America"...

 reported that the bill would increase "total national health expenditures" by more than $200 billion from 2010-2019. Looking at the federal budget implications, in a May 2010 presentation on "Health Costs and the Federal Budget," CBO stated:
Rising health costs will put tremendous pressure on the federal budget during the next few decades and beyond. In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure.


CBO further observed that "a substantial share of current spending on health care contributes little if anything to people’s health" and concluded, "Putting the federal budget on a sustainable path would almost certainly require a significant reduction in the growth of federal health spending relative to current law (including this year’s health legislation)."

For the effect on health insurance premiums, the CBO referred to its November 2009 analysis and stated that the effects would "probably be quite similar" to that earlier analysis. That analysis forecasted that by 2016: for the non-group market comprising 17% of the market, premiums per person would increase by 10 to 13% but that over half of these insureds would receive subsidies which would decrease the premium paid to "well below" premiums charged under current law; for the small group market 13% of the market, premiums would be impacted 1 to −3% and −8 to −11% for those receiving subsidies; for the large group market comprising 70% of the market, premiums would be impacted 0 to −3%, with insureds under high premium plans subject to excise taxes being charged −9 to −12%. The analysis was affected by various factors including increased benefits particularly for the nongroup markets, more healthy insureds due to the mandate, administrative efficiencies related to the health exchanges, and insureds under high premium plans reducing benefits in response to the tax.

Surgeon Atul Gawande
Atul Gawande
Atul Gawande is an American physician and journalist. He serves as a general and endocrine surgeon at Brigham and Women's Hospital in Boston, Massachusetts and associate director of their Center for Surgery and Public Health...

 has noted that bill contains a variety of pilot programs that may have a significant impact on cost and quality over the long-run, although these have not been factored into CBO cost estimates. He stated these pilot programs cover nearly every idea healthcare experts advocate, except malpractice/tort reform
Tort reform
Tort reform refers to proposed changes in common law civil justice systems that would reduce tort litigation or damages. Tort actions are civil common law claims first created in the English commonwealth system as a non-legislative means for compensating wrongs and harm done by one party to...

. He argued that a trial and error
Trial and error
Trial and error, or trial by error, is a general method of problem solving, fixing things, or for obtaining knowledge."Learning doesn't happen from failure itself but rather from analyzing the failure, making a change, and then trying again."...

 strategy, combined with industry and government partnership, is how the U.S. overcame a similar challenge in the agriculture industry in the early 20th century.

The Business Roundtable
Business Roundtable
The Business Roundtable is a politically conservative group of chief executive officers of major U.S. corporations formed to promote pro-business public policy.-History:...

, an association of CEOs, commissioned a report from the consulting company
Consultant
A consultant is a professional who provides professional or expert advice in a particular area such as management, accountancy, the environment, entertainment, technology, law , human resources, marketing, emergency management, food production, medicine, finance, life management, economics, public...

 Hewitt Associates
Hewitt Associates
Hewitt Associates , based in Lincolnshire, Illinois, United States was a global human resources outsourcing and consulting firm delivering a complete range of integrated services to help companies manage their total HR and employee costs, enhance HR services, and improve their workforces.Hewitt...

 that found that the legislation "could potentially reduce that trend line by more than $3,000 per employee, to $25,435" with respect to insurance premiums. It also stated that the legislation "could potentially reduce the rate of future health care cost increases by 15% to 20% when fully phased in by 2019". The group cautioned that this is all assuming that the cost-saving government pilot programs both succeed and then are wholly copied by the private market, which is uncertain.

The Office of the Actuary at the Centers for Medicare and Medicaid Services
Centers for Medicare and Medicaid Services
The Centers for Medicare & Medicaid Services , previously known as the Health Care Financing Administration , is a federal agency within the United States Department of Health and Human Services that administers the Medicare program and works in partnership with state governments to administer...

 released a report in April 2010 saying that the PPACA would increase the number of Americans with health insurance coverage but would also increase projected spending by approximately 1% over 10 years. The report also cautioned that the increases could be larger, because the Medicare cuts in the law may be unrealistic and unsustainable, forcing lawmakers to roll them back. The report projected that Medicare cuts could put nearly 15% of hospitals and other institutional providers into debt, "possibly jeopardizing access" to care for seniors. The Bill was described as "the federal government’s biggest attack on economic inequality since inequality began rising more than three decades ago".

After the bill was signed, AT&T
AT&T
AT&T Inc. is an American multinational telecommunications corporation headquartered in Whitacre Tower, Dallas, Texas, United States. It is the largest provider of mobile telephony and fixed telephony in the United States, and is also a provider of broadband and subscription television services...

, Caterpillar
Caterpillar Inc.
Caterpillar Inc. , also known as "CAT", designs, manufactures, markets and sells machinery and engines and sells financial products and insurance to customers via a worldwide dealer network. Caterpillar is the world's largest manufacturer of construction and mining equipment, diesel and natural gas...

, Verizon, and John Deere
Deere & Company
Deere & Company, usually known by its brand name John Deere , is an American corporation based in Moline, Illinois, and the leading manufacturer of agricultural machinery in the world. In 2010, it was listed as 107th in the Fortune 500 ranking...

 issued financial reports showing large current charges against earnings, up to 1 billion in the case of AT&T, attributing the additional expenses to tax changes in the new health care law. Under the new law as of 2013 companies can no longer deduct a subsidy for prescription drug benefits granted under Medicare Part D.

Political impact


Public opinion


Public opinion supported healthcare reform proposals in 2008, but turned negative when the plan changed in 2009, and remains opposed to the final version that was signed in 2010. Though in 2008 then-Senators Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

 and Joseph Biden campaigned against requiring adults to buy insurance; in 2009 President Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

 reportedly "changed his mind" and agreed with insurance industry and Democratic Congressional proposals to include an individual mandate
Health insurance mandate
A health insurance mandate is either an employer or individual mandate to obtain private health insurance, instead of a National Health Service or National Health Insurance.-United States:...

. Public opinion of the legislation turned negative when the individual mandate proposal was announced, and remains opposed by a margin of 10 percentage points. Specific ideas that showed majority support, such as purchasing drugs from Canada, limiting malpractice awards, and reducing the age to qualify for Medicare, were not enacted.

In March 2010, pollsters probed the reasons for opposition. In a CNN
CNN
Cable News Network is a U.S. cable news channel founded in 1980 by Ted Turner. Upon its launch, CNN was the first channel to provide 24-hour television news coverage, and the first all-news television channel in the United States...

 poll
Opinion poll
An opinion poll, sometimes simply referred to as a poll is a survey of public opinion from a particular sample. Opinion polls are usually designed to represent the opinions of a population by conducting a series of questions and then extrapolating generalities in ratio or within confidence...

, 62% of respondents said the Act would "increase the amount of money they personally spend on health care," 56% said the bill "gives the government too much involvement in health care," and only 19% said they and their families would be better off with the legislation. In The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....

, pollsters Scott Rasmussen
Scott Rasmussen
Scott W. Rasmussen is the founder and president of Rasmussen Reports. He is an American political analyst, author, speaker, and public opinion pollster...

 and Doug Schoen wrote, "One of the more amazing aspects of the health-care debate is how steady public opinion has remained... 81% of voters say it's likely the plan will end up costing more than projected [and 59%] say that the biggest problem with the health-care system is the cost: They want reform that will bring down the cost of care. For these voters, the notion that you need to spend an additional trillion dollars doesn't make sense." USA Today
USA Today
USA Today is a national American daily newspaper published by the Gannett Company. It was founded by Al Neuharth. The newspaper vies with The Wall Street Journal for the position of having the widest circulation of any newspaper in the United States, something it previously held since 2003...

 found opinions were starkly divided by age, with a solid majority of seniors opposing the bill and a solid majority of those younger than 40 in favor.

In the November 2010 midterm election, Democrats lost more seats in Congress than any party in any midterm in more than 70 years. Politico reported that five House Democrats had run political ads highlighting their "no" votes on the bill, while there had not been any political ads highlighting a "yes" vote since April, when Harry Reid ran one.

The Act is often referred to by the nickname "Obamacare", which has been characterized as pejorative
Pejorative
Pejoratives , including name slurs, are words or grammatical forms that connote negativity and express contempt or distaste. A term can be regarded as pejorative in some social groups but not in others, e.g., hacker is a term used for computer criminals as well as quick and clever computer experts...

 but continues to be widely used to refer to the legislation, largely by its opponents. Use of the term in a positive sense has however been suggested by Democratic politicians such as John Conyers (D-MI)
John Conyers
John Conyers, Jr. is the U.S. Representative for , serving since 1965 . He is a member of the Democratic Party...

. President Obama said subsequently, "I have no problem with people saying Obama cares. I do care." Because of the number of "Obamacare" search engine queries, the Department of Health and Human Services purchased Google
Google
Google Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...

 advertisements
AdWords
Google AdWords is Google's main advertising product and main source of revenue. Google's total advertising revenues were USD$28 billion in 2010. AdWords offers pay-per-click advertising, cost-per-thousand advertising, and site-targeted advertising for text, banner, and rich-media ads. The AdWords...

, triggered by the term, to direct people to the official HHS site.

Impact on child-only policies


In September 2010, some insurance companies announced that in response to the law, they would end the issuance of new child-only policies. Kentucky Insurance Commissioner Sharon Clark said the decision by insurers to stop offering such policies was a violation of state law and ordered insurers to offer an open enrollment period in January 2011 for Kentuckians under 19.
An August 2011 Congressional report found that passage of the health care law prompted health insurance carriers to stop selling new child-only health plans in many states. Of the 50 states, 17 reported that there were currently no carriers selling child only health plans to new enrollees. Thirty-nine states indicated at least one insurance carrier exited the child-only market following enactment of the health care laws.

Challenges by states


Organizations and lawmakers who opposed the passage of the bill threatened to take legal action against it upon its passage and several court challenges are currently at various stages of development. The target of the threatened lawsuits were several key provisions of the bill. Some claimed that fining individuals for failing to buy insurance is not within the scope of Congress's taxing powers. Idaho legislators passed a law that directed its attorney general to sue if mandatory insurance becomes federal law, which he duly did. A total of 28 states have filed joint or individual lawsuits (including 26 states engaged in a joint action
Florida et al v. United States Department of Health and Human Services
Florida et al v. United States Department of Health and Human Services is a lawsuit filed in the United States District Court for the Northern District of Florida by the State of Florida against the United States Department of Health and Human Services seeking to nullify the Patient Protection and...

) to overturn the individual mandate portions of the law. In a press release, the Attorneys General for several states indicated their primary basis for the challenge was a violation of state sovereignty. Their release repeated the claim challenging the federal requirement under threat of penalty, that all citizens and legal residents have qualifying health care coverage. It also claimed that the law puts an unfair financial burden on state governments. The lawsuit states the following legal rationale:

Other states were either expected to join the multi-state lawsuit or are considering filing additional independent suits. Members of several state legislatures are attempting to counteract and prevent elements of the bill within their states. Legislators in 29 states have introduced measures to amend their constitutions to nullify portions of the health care reform law. Thirteen state statutes have been introduced to prohibit portions of the law; two states have already enacted statutory bans. Six legislatures had attempts to enact bans, but the measures were unsuccessful. In August 2010, a ballot initiative passed overwhelmingly in Missouri that would exempt the state from some provisions of the bill. Most legal analysts expect that the measure will be struck down if challenged in Federal court.

Reactions from legal experts


In February 2011, Alexander Bolton wrote in The Hill
The Hill (newspaper)
The Hill, a subsidiary of News Communications Inc., is a newspaper published in Washington, D.C. since 1994.Its first editor was Martin Tolchin, a veteran correspondent in the Washington bureau of The New York Times....

that consensus among legal experts largely changed following Judge Roger Vinson
Roger Vinson
Clyde Roger Vinson is a senior federal judge of the United States District Court for the Northern District of Florida.-Life and career:...

's decision in Florida et al v. United States Department of Health and Human Services
Florida et al v. United States Department of Health and Human Services
Florida et al v. United States Department of Health and Human Services is a lawsuit filed in the United States District Court for the Northern District of Florida by the State of Florida against the United States Department of Health and Human Services seeking to nullify the Patient Protection and...

. He said that prior to the ruling, it was widely felt that the Supreme Court would uphold the law by a comfortable margin, but now legal scholars generally feel it would be a 5–4 decision. Georgetown University Law Center
Georgetown University Law Center
Georgetown University Law Center is the law school of Georgetown University, located in Washington, D.C.. Established in 1870, the Law Center offers J.D., LL.M., and S.J.D. degrees in law...

 professor Randy Barnett
Randy Barnett
Randy E. Barnett is a lawyer, a law professor at Georgetown University Law Center, where he teaches constitutional law and contracts, and a legal theorist in the United States...

 said, "There's been a big change in the conventional wisdom ... the temperature of law professors has changed considerably," and describing the Florida decision as "extremely deep in its discussion of principles and constitutional doctrine".

Federal District Court ruling from United States District Court for the Northern District of Florida



On January 31, 2011, Judge Roger Vinson
Roger Vinson
Clyde Roger Vinson is a senior federal judge of the United States District Court for the Northern District of Florida.-Life and career:...

 in Florida et al v. United States Department of Health and Human Services
Florida et al v. United States Department of Health and Human Services
Florida et al v. United States Department of Health and Human Services is a lawsuit filed in the United States District Court for the Northern District of Florida by the State of Florida against the United States Department of Health and Human Services seeking to nullify the Patient Protection and...

declared the law unconstitutional in an action brought by 26 states, on the grounds that the individual mandate
Health insurance mandate
A health insurance mandate is either an employer or individual mandate to obtain private health insurance, instead of a National Health Service or National Health Insurance.-United States:...

 to purchase insurance exceeds the authority of Congress to regulate interstate commerce. Vinson further ruled the clause was not severable, which had the effect of striking down the entire law.

On August 12, 2011, a divided three-judge panel of the 11th Circuit Court of Appeals affirmed Judge Vinson's decision in part: the court agreed that the mandate was unconstitutional, but held that it could be severed, allowing the rest of the PPACA to remain.

In September 2011, the Department of Justice decided not to ask for an en banc
En banc
En banc, in banc, in banco or in bank is a French term used to refer to the hearing of a legal case where all judges of a court will hear the case , rather than a panel of them. It is often used for unusually complex cases or cases considered to be of greater importance...

 review by the 11th Circuit, and instead asked the U.S. Supreme Court to hear the case. On November 14, 2011, the Supreme Court agreed to hear the case, with oral arguments expected in March 2012 and a decision expected by June 2012. However, "Conservative interest groups and Republican lawmakers want Justice Elena Kagan
Elena Kagan
Elena Kagan is an Associate Justice of the Supreme Court of the United States, serving since August 7, 2010. Kagan is the Court's 112th justice and fourth female justice....

 off the health care case. Liberals and Democrats in Congress say it's Justice Clarence Thomas
Clarence Thomas
Clarence Thomas is an Associate Justice of the Supreme Court of the United States. Succeeding Thurgood Marshall, Thomas is the second African American to serve on the Court....

 who should sit out....", though this is considered by many legal and ethical experts to be a questionable approach that is highly unlikely to occur.

Commonwealth of Virginia v. Kathleen Sebelius



The first federal court ruling in the legal challenges to the health care act came on August 2, 2010, in response to the suit brought by Virginia's attorney general
Commonwealth of Virginia v. Sebelius
Commonwealth of Virginia, Ex Rel. Kenneth T. Cuccinelli, II v. Sebelius is a court case in which Virginia attorney general Ken Cuccinelli sued Secretary of Health and Human Services Kathleen Sebelius over the implementation of the Patient Protection and Affordable Care Act...

. U.S. District Judge Henry E. Hudson
Henry E. Hudson
Henry E. Hudson is a United States federal judge on the United States District Court for the Eastern District of Virginia.-Early life and education:...

 denied the Justice Department's request to have the suit dismissed, citing the complex constitutional questions the law raises and writing that the PPACA "radically changes the landscape of health insurance coverage in America."

On December 12, 2010, in the first case rejecting the law's constitutionality, Judge Hudson ruled that the individual mandate was unconstitutional, and that the "tax" imposed on people who choose not to have a "minimum essential coverage plan" was in practice a "penalty" outside the federal government's constitutional authority to raise revenues. Judge Hudson stated he could find no precedent for extending either Commerce Clause
Commerce Clause
The Commerce Clause is an enumerated power listed in the United States Constitution . The clause states that the United States Congress shall have power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." Courts and commentators have tended to...

 or the General Welfare Clause
Taxing and Spending Clause
Article I, Section 8, Clause 1 of the United States Constitution, is known as the Taxing and Spending Clause. It is the clause that gives the federal government of the United States its power of taxation...

 to encompass regulation of a person’s decision not to purchase a product. He ruled the provision to be beyond the power given to Congress under the Commerce Clause. His ruling covered only Section 1501 of the Act, and severed that requirement without discussing the rest of the law.

A three-judge panel from the 4th Circuit Court of Appeals unanimously ruled on September 8, 2011, that the state did not have the authority to challenge the law, saying "... we vacate the judgment of the district court and remand with instructions to dismiss the case for lack of subject-matter jurisdiction." The state's attorney general said they planned to appeal the decision.

Appeals Court ruling from DC Court of Appeals


In Seven-Sky v. Holder, the U.S. Court of Appeals for the District of Columbia ruled that the law is Constitutional. The Constitutional Accountability Center remarked that this court consists of many conservative judges and they found the law constitutional. Specifically, Senior Judge Lawrence Silberman, well known in conservative circles as a conservative intellectual, and who ruled that the District of Columbia's handgun law was unconstitutional, ruled that the law is constitutional. Silberman said "the right to be free from federal regulation is not absolute and yields to the imperative that Congress be free to forge national solutions to national problems".

Federal District Court ruling from United States District Court for the Western District of Virginia


On November 30, 2010, U.S. District Court Judge Norman K. Moon
Norman K. Moon
Norman K. Moon is a United States federal judge.Born in Lynchburg, Virginia, Moon received a B.A. from the University of Virginia in 1959 and a J.D. from the University of Virginia School of Law in 1962. He was in private practice in Lynchburg, Virginia from 1962 to 1974. He was a judge on the...

, who sits in Virginia, also declared the individual mandate constitutional in Liberty University v. Geithner. He also declared the employer mandate constitutional. He rejected two other arguments that government lawyers have made in cases across the country in defending the new law: first, that no one has legal standing to bring challenges at this point to the 2014 mandates, and second that any such challenge is premature. He rejected the challengers' basic argument that Congress had no authority to order someone to give up their own desire not to buy a commercial product and force them into a market they do not want to enter. He said:

Federal District Court ruling from the United States District of Columbia


On February 22, 2011, Judge Gladys Kessler
Gladys Kessler
Gladys Kessler is an American jurist who sits on the U.S. District Court for the District of Columbia. She was nominated to the court by President Bill Clinton, and confirmed in July 1994....

 of the U.S. District Court for the District of Columbia, rejected a challenge to the law in Meade v. Holder by five individuals who argued, among other things, that the Affordable Care Act violated the Religious Freedom Restoration Act
Religious Freedom Restoration Act
The Religious Freedom Restoration Act of 1993, Pub. L. No. 103-141, 107 Stat. 1488 , codified at through , is a 1993 United States federal law aimed at preventing laws that substantially burden a person's free exercise of their religion. The bill was introduced by Howard McKeon of California and...

, and that the individual mandate exceeded Congress's power under the Interstate Commerce Clause. Kessler rejected as "pure semantics" plaintiffs' argument that failing to acquire insurance was the regulation of inactivity, noting that "those who choose not to purchase health insurance will ultimately get a 'free ride' on the backs of those Americans who have made responsible choices to provide for the illness we all must face at some point in our lives." Kessler ruled that individual mandate was a valid exercise of Congress's power to regulate interstate commerce.

Federal District Court ruling by the United States District Court for the Eastern District of Michigan


On October 8, 2010, U.S. District Court Judge George Caram Steeh
George Caram Steeh III
George Caram Steeh III is a United States federal judge.Born in Ann Arbor, Michigan, Steeh received a B.A. from the University of Michigan in 1969 and a J.D. from the University of Michigan Law School in 1973. He was a Genesee County Prosecutor's Office from 1973 to 1980. He was an Assistant...

 in Thomas More Law Center v. Obama wrote that in his view the PPACA, including the individual mandate, was constitutional. He rejected a private suit filed by Michigan's Thomas More Law Center
Thomas More Law Center
The Thomas More Law Center is a prominent conservative Christian, not-for-profit law center based in Ann Arbor, Michigan, and is active throughout the United States. Its stated goals are defending the religious freedom of Christians, restoring "time honored values" and protecting the sanctity of...

 and several state residents that focused on the Commerce Clause
Commerce Clause
The Commerce Clause is an enumerated power listed in the United States Constitution . The clause states that the United States Congress shall have power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." Courts and commentators have tended to...

, deciding that Congress had the power to pass the law because it affected interstate commerce and was part of a broader regulatory scheme.

On June 29, 2011, a divided three-judge panel of the Sixth Circuit Court of Appeals affirmed the decision. Judge Jeffrey Sutton, a member of the three judge panel appointed by George W. Bush, was the first Republican-appointed judge to rule that the law is constitutional.

111th Congress


Reps. Steve King
Steve King
Steven Arnold "Steve" King is the U.S. Representative for , serving since 2003. He is a member of the Republican Party.The district is located in the western part of the state and includes Sioux City and Council Bluffs....

 of Iowa
Iowa
Iowa is a state located in the Midwestern United States, an area often referred to as the "American Heartland". It derives its name from the Ioway people, one of the many American Indian tribes that occupied the state at the time of European exploration. Iowa was a part of the French colony of New...

 and Michele Bachmann
Michele Bachmann
Michele Marie Bachmann is a Republican member of the United States House of Representatives, representing , a post she has held since 2007. The district includes several of the northern suburbs of the Twin Cities, such as Woodbury, and Blaine as well as Stillwater and St. Cloud.She is currently a...

 of Minnesota
Minnesota
Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...

, both Republicans, introduced bills in the House to repeal the Act shortly after it was passed, as did Sen. Jim DeMint
Jim DeMint
James Warren "Jim" DeMint is the junior U.S. Senator from South Carolina, serving since 2005. He is a member of the Republican Party and a leader in the Tea Party movement. He previously served as the U.S. Representative for from 1999 to 2005.-Early life and education:DeMint was born in...

 in the Senate. None of the three bills was considered by either body.

112th Congress


In 2011, the Republican-controlled House of Representatives voted 245–189 to approve a bill entitled "Repealing the Job-Killing Health Care Law Act" (H.R.2), which, if enacted, would repeal the Patient Protection and Affordable Care Act and the health care-related text of the Health Care and Education Reconciliation Act of 2010. All Republicans and 3 Democrats voted for repeal. In the Senate, the bill was offered as an amendment to an unrelated bill, and was subsequently voted down. Before votes in both houses of the Congress took place, president Obama stated that he would veto the bill should it pass both chambers. Democrats in the House proposed that repeal not take effect until a majority of the Senators and Representatives had opted out of the Federal Employees Health Benefits Program. The Republicans voted down this measure.

Job consequences of repeal


A spokesman for Republican Majority Leader Eric Cantor
Eric Cantor
Eric Ivan Cantor is the U.S. Representative for Virginia's 7th congressional district, serving since 2001. A member of the Republican Party, he became House Majority Leader when the 112th Congress convened on January 3, 2011...

 stated, "This is a job-killing law, period. Anyone who argues otherwise is ignoring the construct of the health care law and the widely accepted facts." The House Republican leadership justified its use of the term "job killing" by contending that the PPACA would lead to a loss of 650,000 jobs, and attributing that figure to a report by the Congressional Budget Office. However, the CBO report specifically stated that the negative effect on jobs was because people would voluntarily choose to work less once they have health insurance outside of their jobs. FactCheck
FactCheck
FactCheck.org is a non-partisan, nonprofit website that describes itself as a consumer advocate' for voters that aims to reduce the level of deception and confusion in U.S. politics." It is a project of the Annenberg Public Policy Center of the Annenberg School for Communication at the University...

 noted that the 650,000 figure was not in the CBO report, and said that the Republican statement "badly misrepresents what the Congressional Budget Office has said about the law. In fact, CBO is among those saying the effect 'will probably be small.'" The Republicans also cited a study by the National Federation of Independent Businesses, but PolitiFact.com
PolitiFact.com
PolitiFact.com is a project that is operated by the St. Petersburg Times, a project in which its reporters and editors "fact-check statements by members of Congress, the White House, lobbyists and interest groups...." They publish original statements and their evaluations on the PolitiFact.com...

 said that the 2009 NFIB study had concerned an earlier version of the bill that differed significantly from what was enacted. PolitiFact rated the Republican statement as False.

Effect of repeal proposals on federal budget projections


The CBO estimated that repealing the entire PPACA (including both its taxing and spending provisions) would increase the net 2011-2021 federal deficit projections by $210 billion. Others disagree, arguing that estimate was based on unrealistic assumptions; House Speaker John Boehner
John Boehner
John Andrew Boehner is the 61st and current Speaker of the United States House of Representatives. A member of the Republican Party, he is the U.S. Representative from , serving since 1991...

 said, "I don't think anyone in this town believes that repealing Obamacare is going to increase the deficit." In May 2011, CBO analyzed proposals to prevent the use of appropriated funds to implement the legislation, and wrote that "a temporary prohibition, extending through the remainder of fiscal year 2011, would reduce the budget deficit by about $1.4 billion in 2011 but would increase deficits by almost $6 billion over the 2011-2021 period... CBO cannot determine whether changes in spending under a permanent prohibition would produce net costs or net savings relative to its baseline projection, which assumes full implementation."

Temporary waivers


Interim regulations have been put in place for a specific type of employer funded insurance, the so-called "mini-med" or limited benefit plans, which are low-cost to employers who buy them for their employees, but which cap coverage at a very low level. Such plans are sometimes offered to low-paid and part-time workers, for example in fast food restaurants or purchased direct from an insurer. Most company provided health insurance from September 23, 2010, may not set an annual coverage cap lower than $750,000, a lower limit that is raised in stages until 2014, by which time no insurance caps are allowed at all. By 2014, no health insurance, whether sold in the individual or group market, will be allowed to place an annual cap on coverage. The waivers have been put in place to encourage employers and insurers offering mini-med plans not to withdraw medical coverage before the full regulations come into force (by which time small employers and individuals will be able to buy non-capped coverage through the exchanges) and are granted only if the employer can show that complying with the limit would mean a significant decrease in employees' benefits coverage or a significant increase in employees' premiums.

Among those receiving waivers were employers, large insurers, such as Aetna
Aetna
Aetna, Inc. is an American health insurance company, providing a range of traditional and consumer directed health care insurance products and related services, including medical, pharmaceutical, dental, behavioral health, group life, long-term care, and disability plans, and medical management...

 and Cigna
CIGNA
Cigna , headquartered in Bloomfield, Connecticut, is a global health services company, owing to its expanding international footprint and the fact that it provides administrative services only to approximately 80 percent of its clients...

, and union plans, covering about one million employees; McDonald's
McDonald's
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 64 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by the eponymous Richard and Maurice McDonald; in 1948...

, one of the employers which received a waiver, has 30,000 hourly employees whose plans have annual caps of $10,000. The waivers are issued for one year and can be reapplied for. Referring to the adjustments as "a balancing act", Nancy-Ann DeParle, director of the Office of Health Reform at the White House, said, "The president wants to have a smooth glide path to 2014." On January 26, 2011 HHS said it had to date granted a total of 733 waivers for 2011, covering 2.1 million people, or about 1% of the privately insured population. In June 2011, the Obama Administration announced that all applications for new waivers and renewals of existing ones have to be filed by September 22 of that year, and no new waivers would be approved after this date.

See also


  • Comparison of Canadian and American health care systems
  • Universal health care
    Universal health care
    Universal health care is a term referring to organized health care systems built around the principle of universal coverage for all members of society, combining mechanisms for health financing and service provision.-History:...

  • U.S. health care compared with 8 other countries in tabular form
  • Massachusetts health care reform law
    Massachusetts health care reform
    The Massachusetts health care insurance reform law, enacted in 2006, mandates that nearly every resident of Massachusetts obtain a state-government-regulated minimum level of healthcare insurance coverage and provides free health care insurance for residents earning less than 150% of the federal...

     ("Romneycare"), which served as a model for the Patient Protection and Affordable Care Act


Further reading

  • John E. McDonough. Inside National Health Reform (University of California Press; 2011) 339 pages; scholarly study of the crafting, passage, and implementation of the Act.

Preliminary CBO documents
  • Patient Protection and Affordable Care Act, Incorporation of the Manager's Amendment, SA 3276December 19, 2009
  • Base Analysis – H.R. 3590, Patient Protection and Affordable Care Act, − November 18, 2009.
    (The Additional and/or Related CBO reporting that follows can be accessed from the above link)
    • Budgetary Treatment of Proposals to Regulate Medical Loss Ratios − Dec. 13
    • Additional Information about Employment-Based Coverage − Dec. 7
    • Estimated Average Premiums Under Current Law − Dec. 5
    • An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act − Nov. 30
    • Additional Information on CLASS Program Proposals − Nov. 25
    • Estimated Effects on the Status of the Hospital Insurance Trust Fund − Nov. 21
    • Estimated Effects on Medicare Advantage Enrollment and Benefits Not Covered by Medicare − Nov. 21
    • Estimated Distribution of Individual Mandate Penalties − Nov. 20
    • Analysis of Subsidies and Payments at Different Income Levels − Nov. 20


Centers for Medicare and Medicaid Services
Centers for Medicare and Medicaid Services
The Centers for Medicare & Medicaid Services , previously known as the Health Care Financing Administration , is a federal agency within the United States Department of Health and Human Services that administers the Medicare program and works in partnership with state governments to administer...

 Estimates of the impact of P.L. 111-148

Centers for Medicare and Medicaid Services
Centers for Medicare and Medicaid Services
The Centers for Medicare & Medicaid Services , previously known as the Health Care Financing Administration , is a federal agency within the United States Department of Health and Human Services that administers the Medicare program and works in partnership with state governments to administer...

 Estimates of the impact of H.R. 3590

External links



Copies of the proposed bill hosted online or readily downloadable
  • PDF of the Patient Protection and Affordable Care Act ("PPACA"; Public Law 111–148) after consolidating the amendments made by Title X of the Act itself and by the Health Care and Education Reconciliation Act of 2010 ("HCERA"; Public Law 111–152) into one revision.
  • Plain Text or PDF formats of H. R. 3590 (Public Law 111-148), as engrossed or passed by the Senate and printed via FDsys
    Federal Digital System
    The Federal Digital System replaces GPOAccess, an information storage system to house electronic government documents, from 1994 with a modern information management system. FDsys authenticates, preserves, versions, and provides permanent public access to federal government information...

    .
  • The Patient Protection and Affordable Care Act, full text, summary, background, provisions and more, via Democratic Policy Committee (Senate.gov)
  • Summary of H.R. 3590 (March 23, 2010) via THOMAS
    THOMAS
    THOMAS is the database of United States Congress legislative information. It is operated by the Library of Congress and was launched in January 1995 at the inception of the 104th Congress...

    .
  • Entry for H.R. 3590 at GovTrack
    GovTrack
    GovTrack.us is a website developed by then-student Joshua Tauberer who launched it as a hobby. It enables its users to track the bills and members of the United States Congress. Users can add trackers to certain bills. The website collects data on Congress members, allowing the users to check...

  • The law as published by the U.S. Government Printing Office