Patient Protection and Affordable Care Act
•
•
•
•
The Patient Protection and Affordable Health Care Act was enacted on March 23,
2010 with the main goals being: bringing down the number of uninsured individuals
in the US and by providing affordable health care to individuals; cover individuals
lacking health insurance (the act never intended to fully cover all uninsured; the
goal was to reduce the number of insured); and to bring down the cost of health
care expenditures.
It was never anticipated that the act would provide healthcare coverage to the
entire population but bring down the number of uninsured.
When the act was enacted there were 46.5 million uninsured in the US. After
initially declining the number of uninsured has increased from 27.4 million in 2017
to approximately 30.0 million in 2020.
While the number of uninsured has come down, the cost of healthcare has
continued to increase.
2010
National Health Expenditures ($ Billions)
Percentage Change
Percent of GDP
Individual Health Expenditures (Actual Dollars)
Percentage Change
2011
2012
2013
2014
2015
2016
2017
2018
$2,593.2 $2,682.6 $2,791.1 $2,875.0 $3,025.4 $3,199.6 $3,347.4 $3,487.3 $3,649.4
4.1%
3.4%
4.0%
3.0%
5.2%
5.8%
4.6%
4.2%
4.6%
17.3%
17.3%
17.2%
17.1%
17.3%
17.6%
17.9%
17.9%
17.7%
$8,394
$8,625
2.8%
$8,908
3.3%
$9,113
2.3%
$9,518
4.4%
$9,995
5.0%
$10,379
3.8%
$10,742
3.5%
$11,172
4.0%
Uninsured
Comparative Health Care Spending per the Commonwealth Fund
Patient Protection and Affordable Care Act
• Based on three main principles:
– Mandate: as initially established all individuals were required to obtain
insurance or be subject to a tax. In addition to individuals, employers
with at least 50 full time workers were required to offer health
insurance to its employees or face a $2,000 per employee fine.
Employees did not have to enroll in the insurance plan. (The
mandate was eliminated in 2019.)
– Subsidies: for individuals that cannot afford coverage government
assistance is to be provided. For those individuals falling below
minimum income levels coverage would be provided via the expansion
of Medicaid.
– Existing conditions: an insurance company cannot deny coverage due
to pre-existing conditions
Patient Protection and Affordable Care Act
• Increased health care coverage was to come from the
following:
– Employers: Assess employers with 50 or more full time employees that do no
offer health insurance a fee of $2,000 per full time employee. Businesses with
fewer than 50 full time employees are not required to obtain health care
insurance for their employees. Require employers with more than 200
employees to automatically enroll employees into health insurance plans
offered by the employer. Employees may opt out of insurance (it may be too
expensive).
– Expand Medicaid to all non Medicare eligible individuals under the age of 65
with incomes up to 138% of the Federal Poverty Limit.
– Starting in 2014 a family of four making $29,327 or less became eligible, adding
16 million new recipients.
– As Medicaid is jointly funded by the federal and state government, for new
recipients under the Affordable Care Act the federal government paid 100% of
the cost from 2014 – 2016, 95% in 2017, 94% in 2018, and will pay 93% in 2019
and 90% in 2020 and thereafter. Under a 2012 Supreme Court ruling Medicaid
expansion is optional for states.
Patient Protection and Affordable Care Act
– Create state based American Health Benefit Exchanges and Small Business Health Options
Program through which individuals and small businesses with less than 100 employees can
shop for health insurance at competitive rates.
– Insurance companies were provided with “risk corridors” funded by $12 billion in promised
government funds to provide an incentive for insurance companies to enter unprofitable
markets. In 2016 payments to the insurance companies stopped. Insurers sued the
government for the $12 billion in owed money and won an 8 – 1 Supreme Court decision in
April 2020.
– In 2012 the Supreme Court ruled Medicaid expansion is up to individual states – 14 states
opted not to expand Medicaid.
– Provide dependent coverage for children up to the age of 26.
– Prohibit individual and group health plans from placing lifetime limits on the dollar value of
coverage.
– Require guaranty issue and renewability (subject to rates).
– Insurers must adhere to a medical loss ratio: the ratio of payment for medical services
relative to premiums. If an insurer pays less than 85% in the large group market, or 80% in
the small market they have to provide a rebate to the insured. Designed to prohibit
insurers from spending too much on general and administrative (salary) expenses.
– Pre existing conditions must be covered starting in 2014.
– Minimum services must be provided. Potentially lower costing plans with less services may
be sold in some states.
– Premiums for older people cannot exceed those of younger people by more than 3 times.
– Insurance coverage cannot be banned over an individuals lifetime.
Patient Protection and Affordable Care Act
•
•
•
•
•
Cap on Out-of-Pocket Cost Sharing
– All non-grandfathered private health plans must limit cost sharing for essential
health benefits covered in network
– The annual maximum for 2020 is $8,150 for an individual; $16,300 for family
coverage
Essential health benefits covered
– All ACA compliant health plans in the individual and small group market must
cover 10 categories of essential health benefits (EHB), including: hospitalization,
outpatient medical care, maternity care, mental health and substance abuse
treatment, prescription drugs, habilitative and rehabilitative services, and pediatric
dental and vision services
Patient Protection and Affordable Care Act
• Funding in part came from the following:
• Impose fees to insurance companies and the pharmaceutical industry.
• Pharmaceutical companies pay $2.8 billion annually while insurance
companies pay amounts that increase annually in line with premium growth
and was $14.3 billion in 2018.
• There is a 2.3% tax on the sale of medical devises.
• Fees. The health care industry (drug companies, medical device
manufacturers and insurance companies) will pay billion in fees.
• There was to be a 40% tax on generous employer provided health care
plans ($11,200 for individual plans and $30,150 for family plans). The tax
was never implemented and the provision was eliminated in 2019.
• To a lesser extent individuals who sign up for the Affordable Care Act have
to pay a fee, dependent on income levels.
Patient Protection and Affordable Care Act
•
•
Problem – hospitals are charged 2.5 times as much as Medicare for the same procedures.
Key elements:
– Individual mandate (eliminated)
– Essential benefits
– Health insurance marketplaces (state or federal)
– Expansion of Medicaid (138% of the Federal Poverty level)
– Preexisting conditions
– Age 26
– Supreme Court case – 2020
• ACA has been under constant attack
• In 2012 the Supreme Court upheld the law due to the taxing power of Congress (there
was a tax penalty if an individual did not have insurance)
• In 2017 Congress eliminated the tax penalty
• The federal government is arguing that as there is no tax the entire law should be
stuck down. The case now before the Supreme Court
• Justices Roberts and Kavanaugh have questioned the validity of striking down the
entire law due to the elimination of the tax penalty