Patient Protection and Affordable Care Act

Patient Protection and Affordable Care Act is a major health insurance reform law that was passed by the United States Congress in 2010. The law seeks to improve Americans’ health coverage by expanding access to public health plans, by requiring individuals to purchase private insurance, and by reforming various practices in the insurance industry. President Barack Obama and Democratic legislators in Congress were the key supporters of the law. As a result, the law became commonly known as “Obamacare.” For background on how health insurance is provided, see Insurance (Health insurance).

The Patient Protection and Affordable Care Act (PPACA) generated much disagreement. Supporters praised the extension of insurance coverage to nearly all Americans. Opponents, including congressional Republicans, argued against the federal government’s increased involvement in health insurance matters. Many critics claimed that the law’s requirement that citizens purchase health coverage was unconstitutional. In a 2012 ruling, the Supreme Court of the United States upheld key provisions of the act.

Background. In 2009, Democrats in Congress, with the support of President Obama, introduced health care reform bills. The House of Representatives and the Senate each passed separate bills by the end of that year. Legislators worked on compromises to bridge the gap between the two bills. In March 2010, the House approved the Senate bill, and Obama signed the PPACA into law. Obama said the law reflected “the core principle that everybody should have security when it comes to their health care.”

Key provisions. The PPACA includes a wide range of provisions scheduled to take effect between 2010 and 2020.

The law provides subsidies (payments) for states to expand Medicaid coverage to Americans at or near the poverty line. Medicaid is a government program that helps finance medical assistance to needy people (see Medicaid). The poverty line is an income level the government uses as a standard for being poor.

The PPACA includes an individual mandate—that is, a requirement that nearly all U.S. citizens obtain some health coverage by 2014. Citizens refusing to do so would pay a penalty. The chief goal of the mandate is to increase the number of people with insurance. The law’s creators argued that such an increase would help make premiums (people’s regular payments for insurance) more affordable.

Under the PPACA, citizens can obtain health insurance through their employers or as individuals. Nearly all employers with more than 50 workers would be required to offer health insurance by 2014 or pay a fine. Subsidies, mainly in the form of tax credits, would become available to small employers and individuals to help cover the cost of insurance.

The PPACA provides for the creation of health insurance exchanges to make it easier for individuals and small businesses to obtain coverage. The exchanges are systems in which insurance companies offer a variety of competing health plans to people seeking coverage.

The law also addresses certain practices of the private health insurance industry. It seeks to prevent insurers from denying coverage for patients with preexisting medical conditions—that is, conditions that existed before a person gained insurance coverage. Previously, many insurance companies had refused to cover people who already had a health problem.

The PPACA prevents insurance companies from setting lifetime limits on a policyholder’s claims. It also allows parents to keep their sons and daughters on their insurance policies up to age 26.

Court challenges. A number of states and groups filed lawsuits to contest the new law. Opponents specifically challenged the law’s individual mandate. They argued that it is unconstitutional for the government to require people to buy health insurance.

In June 2012, the Supreme Court issued its ruling on the law. In National Federation of Independent Business v. Sebelius, Secretary of Health and Human Services, the court upheld the individual mandate in a 5-4 vote. Chief Justice John Roberts wrote the majority opinion. He wrote that the individual mandate was permissible under the authority of Congress to levy taxes.