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Everything You Should Know About the Affordable Care Act (ACA)

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By Erika John - - 5 Mins Read
Affordable Care Act (ACA) illustration; Medical practitioner
Featured Photo | Shutterstock

The Affordable Care Act (ACA) is a healthcare reform initiated by former President Barack Obama in March 2010.


It has significantly contributed to the development of America's healthcare system. Officially known as the Patient Protection and Affordable Care Act, it is commonly referred to as Obamacare.


The ACA represents a multifaceted framework aimed at expanding access to health insurance for millions of previously uninsured Americans. Its objective is to ensure that all Americans have access to affordable healthcare.


By redefining Medicaid eligibility, establishing health insurance exchanges, enforcing health insurance requirements, and prohibiting insurance companies from denying coverage based on preexisting conditions. 

Understanding the Pillars of ACA

The ACA was meticulously crafted to reform the health insurance sector and alleviate the financial burden of healthcare coverage for eligible individuals and families. It introduces premium tax credits and cost-sharing reductions, facilitating reduced expenses for those with lower incomes.


Moreover, the ACA mandates that most insurance plans, including those available on the Health Insurance Marketplace, cover various preventive services at no additional cost to policyholders.


These encompass vital health screenings, immunizations, patient counseling, and routine checkups.


The ACA requires every health insurance plan to offer comprehensive services known as 'essential health benefits.'


These services include emergency care, family planning, maternity care, hospitalization, prescription medications, mental health services, and pediatric care.


As of September 2022, 39 states and the District of Columbia (DC) have chosen to broaden Medicaid coverage to cover more people.

Enrollment Dynamics and Key Features

The Health Insurance Marketplace orchestrates an annual open enrollment phase, enabling individuals to purchase or transition between insurance plans.


A medical official talking to a patient
Health official advising a patient | Branislav Nenin/Shutterstock


Enrollment outside this period is sanctioned solely for those encountering life-altering circumstances like marriage, divorce, parenthood, or job loss, entailing health insurance coverage.


The ACA covers significant provisions aimed at broadening insurance access, fortifying consumer protections, prioritizing prevention and wellness, enhancing quality and system performance, expanding the healthcare workforce, and restraining escalating healthcare costs.

Expanding Insurance Access and Consumer Protections

The ACA mandates employers to provide coverage to their employees while extending tax credits to specific small businesses covering designated health insurance costs.


It birthed state- or multistate-based insurance exchanges, facilitating individuals and small enterprises in purchasing insurance.


Additionally, It broadened Medicaid coverage for low-income individuals and prolonged young adults' eligibility under parental policies until they reached 26.


The Act ushered in an individual mandate until 2017, compelling all Americans to possess healthcare coverage through an employer, the ACA, or an alternate source, with tax penalties for non-compliance.

Enhanced Consumer Insurance Protections and Emphasis on Prevention

Fundamentally, the Affordable Care Act (ACA) removes the limit on the amount of money an insurance policy will pay for an individual's healthcare, eliminating lifetime monetary caps and restricting the use of annual caps.


Additionally, it creates state-level assessments to control insurance premium increases and prohibits insurance policies from denying coverage to children with preexisting medical conditions or canceling existing coverage.


Furthermore, the ACA focuses on preventive healthcare, fostering the Prevention and Public Health Fund for state-directed prevention activities like disease screenings and immunizations.


The National Prevention, Health Promotion, and Public Health Council tackle critical concerns such as tobacco use, physical inactivity, and inadequate nutrition.

Quality Improvement, Cost Containment, and Oversight

The Act instigated investments in health information technology, aligning with guidelines to minimize medical errors and establishing payment mechanisms to enhance efficiency and outcomes.


It endeavors to improve care coordination among healthcare providers by incorporating oversight of health insurance premiums to mitigate fraud and uninsured care, encouraging competitive insurance exchanges and price transparency.

Obamacare: Pros and Cons


Subsidies Offer Financial Help: Subsidies make health insurance more affordable for those who qualify, with the 80/20 rule ensuring a significant portion of premiums goes directly toward healthcare costs.


  • Preventive Care Inclusions: ACA-compliant plans cover 10 essential health benefits, including preventive care and wellness visits, without additional costs.


  • No Pre-existing Condition Denials: Insurance companies are prohibited from denying coverage due to pre-existing conditions.


  • Expanded Medicaid Coverage: For states expanding Medicaid, coverage now extends to uninsured individuals below 138% of the federal poverty level.


  • Extended Coverage for Dependents: Children can remain under their parent's health plans until age 26.


  • Removal of Limits: Bans on lifetime benefits and phased-out annual limits ensure comprehensive coverage under ACA plans.



  • Unchanged Costs for Some: Individuals ineligible for subsidies might find marketplace insurance plans unaffordable, potentially paying more for benefits they don't require.


  • Loss of Employer-Sponsored Plans: Some businesses opt to discontinue employer-sponsored coverage in favor of employees purchasing individual insurance from exchanges.


  • Tax Penalties and State Mandates: Former tax penalties for being uninsured have been removed federally, but some states have enacted their mandates.


  • Reduced Provider Networks: Many insurers reduced networks to cut costs, leaving consumers with fewer in-network healthcare providers.


  • Complex Shopping Process: Enrollment complexities, limited periods, website issues, and multiple coverage options can make shopping for insurance daunting.


The Evolution of ACA: Reform, Challenges, and Adaptation

The political space has witnessed a tug-of-war concerning the ACA's fate. Efforts to repeal and replace the ACA initiated during President Donald Trump's tenure faced opposition and alterations.


The Tax Cuts and Jobs Act of 2017 notably rescinded penalties for uninsured individuals and curtailed outreach programs, leading to a decline in ACA coverage. 


President Biden's tenure ushered in a renewed focus on healthcare accessibility, culminating in the American Rescue Plan Act (ARPA) extending subsidies for ACA health insurance and broadening eligibility criteria.


The subsequent Inflation Reduction Act extended financial assistance for ACA enrollees until 2025, enlarging the scope for middle-class citizens to receive premium aid.

Debating ACA: Divided Views and Enrollment Dynamics

Critics argue that the ACA burdens small businesses, inflates healthcare costs, and fosters reliance on government services.


At the same time, proponents assert that insured individuals access prompt medical care, fostering healthier lifestyles and an efficient healthcare system.


The yearly Health Insurance Marketplace enrollment, commencing on November 1, provides a gateway for millions of Americans seeking coverage, with over 13 million enrolled as of 2021.

The Enduring Legacy of ACA

The Patient Protection and Affordable Care Act (ACA), an emblem of healthcare reform, has emerged as a linchpin in reshaping America's healthcare system.


Its establishment has expanded healthcare coverage for millions and heralded the inception of the Health Insurance Marketplace, revolutionizing how eligible individuals access and procure health insurance policies. 


Continuously evolving through successive administrations, the ACA remains a dynamic force shaping healthcare accessibility and inclusivity in America.