Affordable Care Act

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 amendments made to it by the Health Care and Education Reconciliation Act of 2010, 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 remains 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 delivery system reforms intended to constrain healthcare costs and improve quality. After it came 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 changes to individual insurance markets. Both received new spending, funded by a combination of new taxes and cuts to Medicare provider rates and Medicare Advantage. Several Congressional Budget Office (CBO) reports stated that overall these provisions reduced the budget deficit, that repealing ACA would increase the deficit, and that the law reduced income inequality.

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 pre-existing 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". Young people were allowed to stay on their parents' insurance plans until they were 26 years old.

Before and after its enactment the ACA faced strong political opposition, calls for repeal, and legal challenges. In the Sebelius decision, the U.S. Supreme Court ruled that Congress cannot use the Commerce Clause to compel individuals to buy health insurance but upheld the individual mandate by recharacterizing the penalty as a tax. The Court also held that states could opt out of the ACA's Medicaid expansion without losing existing federal Medicaid funding, while otherwise upholding the law. This led Republican-controlled states to not participate in Medicaid expansion. Polls initially found that 43 percent of Americans wanted to see the law repealed or scaled back, while 49 percent wanted to see the law expanded or enacted as is. 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.