Patient Protection and Affordable Care Act: Overview

Introduction

The Patient Protection and Affordable Care Act (PPACA or ACA) is the name of a law that was signed in March 2010. It was an effort to reform the American health care system, provide health insurance to millions of uninsured Americans, and lower costs associated with health care. The PPACA was one of two bills that emerged in early 2010—the other component was the Health Care and Education Reconciliation Act, which also passed in March 2010.

The PPACA and related legislation was part of a decades-long effort to reform the nation’s health care system and ensure that more Americans had adequate and affordable health care coverage. It was one of the most prominent issues of the 2008, 2012, 2016, and 2020 presidential campaigns. The development of this legislation sparked a national debate, further polarized Congress, and touched off a major movement against incumbent legislators. The constitutionality of the program has been challenged on numerous fronts, but a June 2012 Supreme Court ruling upheld the constitutionality of most of the law’s provisions. In June 2015, the Supreme Court again upheld a key portion of the Affordable Care Act, which provides health insurance to all qualifying American citizens. Three years later, a federal judge in a district court in Texas found that the law was unconstitutional, a ruling that was challenged in an appeals court in 2019 before the Supreme Court upheld the law for a third time, in 2021. By August 2023, the Department of Justice under the Biden administration was appealing a federal injunction against the preventive services requirement of the law. The appellate court issued a temporary stay against the injunction. The case took another turn in July 2024, when the Fifth Circuit Court of Appeals issued a mixed ruling regarding enforcement of the PPACA's preventive health service mandates. The Fifth Circuit blocked enforcement of the mandates against the plaintiffs in Braidwood Mgmt., Inc. v. Becerra

Understanding the Discussion

Affordable Health Care for America Act: A 2009 precursor to the PPACA, sponsored by the House, this legislation was far more comprehensive and expensive than PPACA.

Medicaid: Government-sponsored health care program for individuals and families with low-incomes and disabilities.

Medicare: Government-sponsored health insurance program for residents who are sixty-five and older and/or meet certain special criteria.

Recession: Period of economic decline lasting for two or more consecutive quarters.

Reconciliation: US Senate process that allows for a limitation of twenty hours for debate on controversial spending bills.

History

Insurance used for health care traces its roots back to medieval Germany. During the fifth century CE, members of craft guilds, such as carpenters, blacksmiths, bakers, and goldsmiths, joined together to protect their interests. They also agreed to pay into a fund that would be used to support families of fellow members who became sick or who were killed during the course of their work. These “sickness funds” survived for centuries and would become the model for health insurance networks. In 1883, following his efforts to meld together a disjointed group of Germanic nations into one empire, Chancellor Otto von Bismarck took notice of the success of sickness funds and persuaded the fledgling parliament to adopt a national system based on those funds. His reasoning was simple—by offering a national system of health insurance, he and the German leaders were offering the people an incentive and reward for their loyalty to the new German state.

The earliest manifestations of health insurance were not entirely localized in Germany. In fact, Bismarck’s insurance plan was predated by insurance plans offered in the United States when the Massachusetts Health Insurance of Boston plan first offered benefits to members in 1847. Two decades later, during the US Civil War, other types of insurance programs were introduced. While these programs at first applied only to steamboat or rail travelers, they paved the way for more comprehensive illness and injury insurance plans. Following the Civil War, the government created a health care program designed to aid veterans, their widows, and orphans of the conflict.

Throughout the early twentieth century, the rising cost of health care led to the creation of a market for health insurance plans. However, through the end of the nineteenth century, the United States maintained a general attitude that people should take care of themselves without the help of government. This perspective changed significantly in 1935 while the world was mired in the Great Depression. Few social services existed prior to 1935 with the exception of veterans programs. However, President Franklin D. Roosevelt introduced the Social Security Act, which provided retirement benefits for workers.

Social Security would be the foundation on which future social entitlement programs would be based. In the 1950s, for example, the program’s beneficiaries were expanded and a disability insurance program was added. In 1965, President Lyndon Johnson, under the Medicare Act, charged the Social Security Administration (SSA) with providing health care to individuals sixty-five years and older.

The market continued to allow for a growing number of private citizens to obtain commercial health insurance. In 1958, for example, 75 percent of Americans had some form of medical coverage. However, the country’s poor still could not afford such programs, a fact that captured the attention of the Johnson administration. President Johnson therefore secured passage of Title IX of the Social Security Act (the Medicare Act was introduced under Title VIII). Medicaid was a federal-state program designed to provide coverage to the nation’s poorest residents. The costs associated with the new Medicare and Medicaid programs would increase steadily as more and more people qualified for them—by 2001, both programs combined to account for 32 percent of the total in American health care expenditures. By 2014 and as coverage expansions under the Affordable Care Act were put into place primarily for Medicaid coverage, Medicare and Medicaid programs combined were approximately 36 percent of the total US health care budget.

By the 1990s, the rising cost of private health care and the tremendous sums expended by the federal government to cover Medicare and Medicaid made universal health care a popular cry among liberals, moderates, and conservatives alike. In 1993, President Bill Clinton attempted to push through Congress an ambitious, expansive proposal to reform the health care system and provide coverage to the uninsured. The president and congressional leaders failed to reach a consensus due to Republican opposition, a disjointed Democratic party, and a lack of true support from the public. Advocates did not lose sight of their perceived mandate, however, particularly as health care costs continued to rise.

During the 2008 presidential election, the issue of health care reform once again became a pressing one, particularly among Democrats. Advocates cited the fact that nearly 46 million Americans were uninsured, while 25 million others did not have adequate coverage. The high price of insurance led many to rely on government entitlement programs for their health care needs. By 2007, the total amount spent on health care in the US was $2.4 trillion, or $7,900 per person (Cohen 2009).

Upon taking office in 2009, President Obama made health care reform the centerpiece of his agenda during his first year. He charged Congress with crafting a comprehensive bill that would provide coverage to all Americans, lower health care costs, and improve the quality of health care for the entire country. The Democratic majority embraced the ideal but had considerable difficulty in embracing a single package that satisfied liberals, moderates, and conservatives alike. The Democrats were also divided on proposals to create a public option, a government-run health insurance program that would compete with private insurers.

Adding to the difficulties President Obama’s agenda would experience was the staunch opposition to the Democrats’ proposals. Although they were in the congressional minority, Republicans were able to generate significant public opposition to the Democrats’ effort and, in general, create a wave of dissent among voters.

In light of the major controversy that surrounded the reform effort, the president and Congress repeatedly pared down the bill, removing sticking points underscored by moderates and conservatives (such as the public option). By March 2010, the bill had been significantly modified to make it palatable to enough moderate and conservative lawmakers to gain passage. President Obama and Democratic leaders touted the bill’s passage as a landmark victory to savor, while Republicans and a growing number of voters immediately pushed for the law’s repeal, as well as the defeat of Democratic leaders in the 2010 congressional campaign.

The passage of the Patient Protection and Affordable Care Act into law was heralded by advocates as a major victory. However, the slim Democratic margin by which it passed touched off a nationwide backlash against those Democrats. The first taste of this backlash came only a few months before the bill was passed, when the open seat of the late senator Edward “Ted” Kennedy (D-Massachusetts), a fervent health care reform advocate and icon among Democrats, was filled by Republican Scott Brown. Brown seized upon the Democrats’ efforts to push through the unpopular bill and rode a wave of popular discontent against the measure to win the election handily, giving greater strength to the Republicans (who, until Brown was elected, could not filibuster because of the size of their minority).

When Brown was elected, Democrats used a procedural tactic known as “reconciliation” to limit debate on the bill when it came to a vote. Republicans, who had been known to use reconciliation when they were in the majority, derided the reconciliation effort as a blatant attempt to hammer through a bill that was unpopular among the general public. Democratic leaders, on the other hand, noted that, when the Social Security Act passed in 1935, it too was initially greeted with skepticism and opposition, but later embraced by members of both parties as well as the electorate.

There were ten main components to the Patient Protection and Affordable Care Act. First, it prohibited insurance companies from excluding coverage for people with preexisting conditions. Second, it prohibited insurers from rescinding coverage of any enrollee, except in the case of fraudulent clients. Third, the law required states to establish an American Health Benefit Exchange for individuals and businesses to purchase health insurance plans (as well a similar exchange for small businesses). Fourth, the act required that states establish at least one reinsurance (a program in which an insurer transfers a portion of its risks to a third party) entity, which helps expand the availability of coverage plans. Fifth, by 2014, individuals were required to obtain at least a minimal form of health insurance, or risk a fine. Sixth, employers with fifty or more employees were required to offer insurance for staff or risk a fine of $750 per worker. Seventh, beginning in 2010, small businesses (with twenty-five or fewer employees) were able to receive a tax credit to cover 50 percent of their health care coverage expenses. Eighth, states were allowed to prohibit qualified insurance plans from covering abortions, and no federal funds were allowed to be used to cover abortions. Ninth, beginning in 2014, states were allowed to expand Medicaid coverage to certain low-income residents under the age of sixty-five. Finally, the act expanded coverage for seniors and low-income residents through Medicaid, while reforming reimbursement plans, curbing fraud, and seeking to control rising prescription medication prices.

In order to fund the act’s coverage expansions and reforms, a series of taxes and fees were instituted, though some were postponed. An excise tax of up to 40 percent on high-premium health insurance plans (those that cost a family more than $23,000 per year and an individual more than $8,500 per year) was scheduled to take effect in 2020 instead of 2018. On January 1, 2013, the Additional Medicare Tax went into effect, taxing individuals earning more than $200,000 per year and married joint tax-filers earning $250,000 or more to fund Medicare programs. Additionally, in 2013 annual fees were applied to medical device manufacturers until a two-year moratorium on the tax was passed in 2015. Brand-name prescription drug manufacturers have also paid annual fees since 2011. Furthermore, for 2013 the medical tax deduction on a tax return was raised from 7.5 percent to 10 percent of gross adjusted income. Finally, an excise tax of 10 percent on certain indoor tanning expenses was levied as of July 1, 2010.

The law faced a formidable onslaught of suits alleging its unconstitutionality. In June 2012, the Supreme Court found the major provisions of the act to be constitutional in their ruling on National Federation of Independent Business v. Sibelius. In November 2014, the Supreme Court agreed to hear another challenge, this one requesting the enforcement of an interpretation of ambiguous wording in the text of the ACA, which would deny its benefits to anyone living in a state that refused to set up its own health insurance marketplace. Disagreement over funding for the ACA was also one of the main causes of the 2013 government shutdown, in which all nonessential functions of the federal government were suspended for sixteen days because Congress could not reach an agreement regarding the allotment of funds for fiscal year 2014. Various bills have also been introduced in hopes of repealing the law.

In October 2016, the federal government reported that premiums for midlevel PPACA health plans were increasing by an average of 25 percent in 2017, and that in some states, fewer insurance companies would continue to offer coverage. Individuals would have to pay $700 per person or more in tax penalties if they did not sign up for coverage for 2017. According to the Obama administration, however, about 75 percent of consumers would be able to find PPACA plans for less than $100 per month once federal subsidies are applied.

In 2016 the major party presidential candidates agreed that PPACA’s increasing costs were problematic but proposed different ways to reduce them. Donald J. Trump, the Republican nominee, advocated repealing PPACA and creating a new system for buying and selling health insurance. Hillary Clinton, the Democratic nominee, wanted to keep PPACA and build upon it by adding a government-run insurer, or public option, in health insurance marketplaces where choices are limited. She also advocated allowing middle-aged Americans to purchase Medicare instead of marketplace plans and extending the availability of subsidies to more middle-income consumers.

Following the election of President Trump and Republican majorities in both houses of Congress, Republican lawmakers set out to repeal and replace the PPACA. In March 2017, House Republicans introduced the American Health Care Act (AHCA), a budget reconciliation bill to repeal provisions of the PPACA that fell within the scope of the federal budget, including individual mandates, employer mandates, and various taxes to support funding of the law. The AHCA narrowly passed the House in May 2017 with a vote of 217 to 213. The AHCA drew criticism from the AARP (formerly the American Association of Retired Persons), the American Medical Association, the American Academy of Pediatrics, the American Hospital Association, and America's Health Insurance Plans, the largest trade association for the insurance industry. The Congressional Budget Office released a report estimating that the AHCA would reduce the federal deficit by $119 billion over a decade but cause 23 million Americans to lose health insurance coverage.

In July 2017, led largely by Senator Mitch McConnell, Republicans in the Senate attempted to pass a slimmed-down version of the AHCA, called the Health Care Freedom Act, that was often referred to by the media and opponents as the "skinny repeal" bill. While it was reported that the Republicans hoped that the passing of the bill could open further negotiations with the House, the bill was defeated in the Senate with a vote of 49–51; three Republicans, including Senator John McCain, voted against it. However, that December, the House and Senate passed a tax reform bill that effectively eliminated the PPACA's provision requiring most Americans to have health insurance or face a penalty.

In 2019, the Trump administration submitted an appeals court filing backing a lawsuit brought by a group of Republican-led states arguing that the PPACA should be declared unconstitutional. They argued that because the individual mandates had been so integral to the law, the entire law should be struck down. The Supreme Court reversed a lower court's ruling that the PPACA was unconstitutional in mid-2021 by a vote of 7–2, holding that the plaintiffs did not have a legal right to bring the suit. The decision allowed millions of Americans to keep their insurance coverage during the coronavirus pandemic. The Court did not issue an opinion about whether the individual mandate was inseparable from the law, however, which left the law open to further legal challenges.

By mid-2023, plaintiffs had filed over 2,000 state and federal lawsuits contesting the Affordable Care Act, and had become the most challenged law in US history, despite the fact that the law had succeeded in providing health care coverage to millions of Americans through ACA marketplaces, saved Medicare recipients billions of dollars in prescription costs, and enjoyed popular support for provisions such as pre-existing coverage protections, preventive services coverage, and coverage for pregnant people.

In September 2022, federal district court judge Reed O'Connor ruled in Braidwood, Inc. v. Becerra that the ACA's preventive care requirement was unconstitutional because it violated the Appointments Clause. He also found that the ACA's coverage of pre-exposure prophylaxis to prevent HIV transmission violated employer rights under the Religious Freedom Restoration Act. The following March, Judge O'Connor issued a nationwide injunction in Braidwood that blocked the administration of President Joe Biden, a Democrat, from enforcing the preventive care requirement, which had allowed patients to receive free services such as screenings for cancer, depression, diabetes, and HIV. The Biden administration appealed the decision in the case, and in May 2023, a judge for the Fifth US Circuit Court of Appeals issued a temporary administrative stay on O'Connor's decision. The following month, the appellate court approved the parties' agreement on a stay of remedy during the appeals process. The stay ensured patient access to zero-cost preventive services across the nation, while also preventing the government from enforcing the preventive services requirement against the plaintiffs. In July 2024, the Fifth Circuit issued a ruling in Braidwood that blocked enforcement of the preventive services requirement against the original plaintiffs in the case, but lifted the nationwide injunction against enforcement.

The Patient Protection and Affordable Care Act Today

With the re-election of Trump in 2024, the second Trump administration picked up on its previous efforts to dismantle the Affordable Care Act. In 2025, the Centers for Medicare and Medicaid Services (CMS) proposed reversals of enrollment flexibility policies instituted by the Biden administration, saying the changes would save $11 billion in federal spending and strengthen the integrity of the ACA. The CMS proposed ending monthly enrollment in marketplace coverage for low-income Americans, shortening the annual enrollment period by one month, and limiting coverage of gender-affirming care, among other changes. CMS noted that between 750,000 and 2 million people would lose their health coverage if its plans go forward as proposed.

In 2026, more than 24 million people were enrolled in ACA market plans. Changes in ACA policies included the official end of enhanced premium tax credits, initially enacted in 2021, that had expanded the number of households eligible to receive the premium subsidies and increased their amount. Without the enhanced subsidies, 2026 annual ACA marketplace premium costs were expected to rise for all enrollees. According to a poll by KFF, the increased premium costs forced 9 percent of those enrolled in 2025 to drop their health insurance coverage and put a further 17 percent of enrollees at risk of dropping it. More than 50 percent of 2026 ACA marketplace re-enrollees reported that they had reduced or were planning to reduce their basic household spending in order to pay for their health care.

These essays and any opinions, information, or representations contained therein are the creation of the particular author and do not necessarily reflect the opinion of EBSCO Information Services.

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