U.S. federal statute also known as Obamacare
The Affordable Care Act (ACA), formally known as the Patient Protection and Affordable Care Act (PPACA) and informally as Obamacare, is a landmark U.S. federal statute enacted by the 111th United States Congress and signed into law by President Barack Obama on March 23, 2010. Together with the Health Care and Education Reconciliation Act of 2010 amendment, it represents the U.S. healthcare system's most significant regulatory overhaul and expansion of coverage since the enactment of Medicare and Medicaid in 1965. Most of the act's provisions are still in effect.
The ACA's major provisions came into force in 2014. By 2016, the uninsured share of the population had roughly halved, with estimates ranging from 20 to 24 million additional people covered. The law also enacted a host of delivery system reforms intended to constrain healthcare costs and improve quality. After it went into effect, increases in overall healthcare spending slowed, including premiums for employer-based insurance plans.
The increased coverage was due, roughly equally, to an expansion of Medicaid eligibility and to changes to individual insurance markets. Both received new spending, funded through a combination of new taxes and cuts to Medicare provider rates and Medicare Advantage. Several Congressional Budget Office (CBO) reports said that overall these provisions reduced the budget deficit, that repealing ACA would increase the deficit, and that the law reduced income inequality by taxing primarily the top 1% to fund roughly $600 in benefits on average to families in the bottom 40% of the income distribution.
The act largely retained the existing structure of Medicare, Medicaid, and the employer market, but individual markets were radically overhauled. Insurers were made to accept all applicants without charging based on preexisting conditions or demographic status (except age). To combat the resultant adverse selection, the act mandated that individuals buy insurance (or pay a monetary penalty) and that insurers cover a list of "essential health benefits".
Before and after enactment the ACA faced strong political opposition, calls for repeal and legal challenges. In "National Federation of Independent Business v. Sebelius", the Supreme Court ruled that states could choose not to participate in the law's Medicaid expansion, but upheld the law as a whole. The federal health insurance exchange, HealthCare.gov, faced major technical problems at the beginning of its rollout in 2013. Polls initially found that a plurality of Americans opposed the act, although its individual provisions were generally more popular. By 2017, the law had majority support. The Tax Cuts and Jobs Act of 2017 set the individual mandate penalty at $0 starting in 2019 due to its overall unpopularity and to reduce the federal budget deficit.
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Provisions.
ACA amended the Public Health Service Act of 1944 and inserted new provisions on affordable care into Title 42 of the United States Code. The individual insurance market was radically overhauled, and many of the law's regulations applied specifically to this market, while the structure of Medicare, Medicaid, and the employer market were largely retained. Some regulations applied to the employer market, and the law also made delivery system changes that affected most of the health care system.
Insurance regulations: individual policies.
All new individual major medical health insurance policies sold to individuals and families faced new requirements. The requirements took effect on January 1, 2014. They include:
Individual mandate.
The individual mandate required everyone to have insurance or pay a penalty. The mandate and limits on open enrollment were designed to avoid the insurance death spiral, minimize the free rider problem and prevent the healthcare system from succumbing to adverse selection.
The mandate was intended to increase the size and diversity of the insured population, including more young and healthy participants to broaden the risk pool, spreading costs.
Among the groups who were not subject to the individual mandate are:
The Tax Cuts and Jobs Act of 2017, set to $0 the penalty for not complying with the individual mandate, starting in 2019.
Exchanges.
ACA mandated that health insurance exchanges be provided for each state. The exchanges are regulated, largely online marketplaces, administered by either federal or state governments, where individuals, families and small businesses can purchase private insurance plans. Exchanges first offered insurance for 2014. Some exchanges also provide access to Medicaid.
States that set up their own exchanges have some discretion on standards and prices. For example, states approve plans for sale, and thereby influence (through negotiations) prices. They can impose additional coverage requirements—such as abortion. Alternatively, states can make the federal government responsible for operating their exchanges.
Premium subsidies.
Individuals whose household incomes are between 100% and 400% of the federal poverty level (FPL) are eligible to receive federal subsidies for premiums for policies purchased on an ACA exchange, provided they are not eligible for Medicare, Medicaid, the Children's Health Insurance Program, or other forms of public assistance health coverage, and do not have access to affordable coverage (no more than 9.86% of income for the employee's coverage) through their own or a family member's employer. Households below the federal poverty level are not eligible to receive these subsidies. Lawful Residents and some other legally present immigrants whose household income is below 100% FPL and are not otherwise eligible for Medicaid are eligible for subsidies if they meet all other eligibility requirements. Married people must file taxes jointly to receive subsidies. Enrollees must have U.S. citizenship or proof of legal residency to obtain a subsidy.
The subsidies for an ACA plan purchased on an exchange stop at 400% of the federal poverty level (FPL). According to the Kaiser Foundation, this results in a sharp "discontinuity of treatment" at 400% FPL, which is sometimes called the "subsidy cliff". After-subsidy premiums for the second lowest cost silver plan (SCLSP) just below the cliff are 9.86% of income in 2019.
Subsidies are provided as an advanceable, refundable tax credit.
The amount of subsidy is sufficient to reduce the premium for the second-lowest-cost silver plan (SCLSP) on an exchange to a sliding-scale percentage of income. The percentage is based on the percent of federal poverty level (FPL) for the household, and varies slightly from year to year. In 2019, it ranged from 2.08% of income (100%-133% FPL) to 9.86% of income (300%-400% FPL). The subsidy can be used for any plan available on the exchange, but not catastrophic plans. The subsidy may not exceed the premium for the purchased plan.
Small businesses are eligible for a tax credit provided they enroll in the SHOP Marketplace. 
Cost-sharing reduction subsidies.
As written, ACA mandated that insurers reduce copayments and deductibles for ACA exchange enrollees earning less than 250% of the FPL. Medicaid recipients were not eligible for the reductions.
So-called cost-sharing reduction (CSR) subsidies were to be paid to insurance companies to fund the reductions. During 2017, approximately $7 billion in CSR subsidies were to be paid, versus $34 billion for premium tax credits.
The latter was defined as mandatory spending that does not require an annual Congressional appropriation. CSR payments were not explicitly defined as mandatory. This led to litigation and disruption later.
Risk management.
ACA implemented multiple approaches to helping mitigate the disruptions to insurers that came with its many changes.
Risk corridors.
The risk-corridor program was a temporary risk management device. It was intended to encourage reluctant insurers into ACA insurance market from 2014 to 2016. For those years the Department of Health and Human Services (DHHS) would cover some of the losses for insurers whose plans performed worse than they expected. Loss-making insurers would receive payments paid for in part by profit-making insurers. Similar risk corridors had been established for the Medicare prescription drug benefit.
While many insurers initially offered exchange plans, the program did not pay for itself as planned, losing up to $8.3 billion for 2014 and 2015. Authorization had to be given so DHHS could pay insurers from "general government revenues". However, the Consolidated Appropriations Act, 2014 (H.R. 3547) stated that no funds "could be used for risk-corridor payments". leaving the government in a potential breach of contract with insurers who offered qualified health plans.
Several insurers sued the government at the United States Court of Federal Claims to recover the funds believed owed to them under the Risk Corridors program. While several were summarily closed, in the case of "Moda Health v the United States", Moda Health won a $214-million judgment in February 2017. Federal Claims judge Thomas C. Wheeler stated, "the Government made a promise in the risk corridors program that it has yet to fulfill. Today, the court directs the Government to fulfill that promise. After all, to say to [Moda], 'The joke is on you. You shouldn't have trusted us,' is hardly worthy of our great government." Moda Health's case was appealed by the government to the United States Court of Appeals for the Federal Circuit along with the appeals of the other insurers; here, the Federal Circuit reversed the Moda Health ruling and ruled across all the cases in favor of the government, that the appropriations riders ceded the government from paying out remain money due to the insurers. The Supreme Court reversed this ruling in the consolidated case, "Maine Community Health Options v. United States", reaffirming as with Judge Wheeler that the government had a responsibility to pay those funds under the ACA and the use of riders to de-obligate its from those payments was illegal.
Reinsurance.
The temporary reinsurance program is meant to stabilize premiums by reducing the incentive for insurers to raise premiums due to concerns about higher-risk enrollees. Reinsurance was based on retrospective costs rather than prospective risk evaluations. Reinsurance was available from 2014 through 2016.
Risk adjustment.
Risk adjustment involves transferring funds from plans with lower-risk enrollees to plans with higher-risk enrollees. It was intended to encourage insurers to compete based on value and efficiency rather than by attracting healthier enrollees. Of the three risk management programs, only risk adjustment was permanent. Plans with low actuarial risk compensate plans with high actuarial risk.
Medicaid expansion.
ACA revised and expanded Medicaid eligibility starting in 2014. All U.S. citizens and legal residents with income up to 133% of the poverty line would qualify for coverage in any state that participated in the Medicaid program. Previously, states could set various lower thresholds for certain groups and were not required to cover adults without dependent children. The federal government was to pay 100% of the increased cost in 2014, 2015 and 2016; 95% in 2017, 94% in 2018, 93% in 2019, and 90% in 2020 and all subsequent years. A 5% "income disregard" made the effective income eligibility limit for Medicaid 138% of the poverty level. However, the Supreme Court ruled in "NFIB v. Sebelius" that this provision of ACA was coercive, and that states could choose to continue at pre-ACA eligibility levels.
Medicare savings.
Medicare reimbursements were reduced to insurers and drug companies for private Medicare Advantage policies that the Government Accountability Office and Medicare Payment Advisory Commission found to be excessively costly relative to standard Medicare; and to hospitals that failed standards of efficiency and care.
Taxes.
Medicare taxes.
Income from self-employment and wages of single individuals in excess of $200,000 annually are subjected to an additional tax of 0.9%. The threshold amount is $250,000 for a married couple filing jointly (threshold applies to their total compensation), or $125,000 for a married person filing separately.
In ACA's companion legislation, the Health Care and Education Reconciliation Act of 2010, an additional tax of 3.8% was applied to unearned income, specifically the lesser of net investment income and the amount by which adjusted gross income exceeds the above income limits.
Excise taxes.
ACA included an excise tax of 40% ("Cadillac tax") on total employer premium spending in excess of specified dollar amounts (initially $10,200 for single coverage and $27,500 for family coverage) indexed to inflation. This tax was originally scheduled to take effect in 2018, but was delayed until 2020 by the Consolidated Appropriations Act, 2016 and again to 2022. The excise tax on high-cost health plans was completely repealed as part of H.R.1865 - Further Consolidated Appropriations Act, 2020.
Excise taxes totaling $3 billion were levied on importers and manufacturers of prescription drugs. An excise tax of 2.3% on medical devices and a 10% excise tax on indoor tanning services were applied as well. The tax was repealed in late 2019.
SCHIP.
The State Children's Health Insurance Program (CHIP) enrollment process was simplified.
Dependents.
Beginning September 23, 2010, dependents were permitted to remain on their parents' insurance plan until their 26th birthday, including dependents who no longer lived with