What is the Affordable Care Act?

The Patient Protection and Affordable Care Act (PPACA), or simply the Affordable Care Act (ACA), is the new healthcare reform law. The Affordable Care Act represents the most profound regulatory change to the federal healthcare system in the United States since Medicaid and Medicare.

The Affordable Care Act was signed into law by President Obama on March 23rd of 2010. In fact, the Patient Protection and Affordable Care Act (HR3590) is comprised of the Patient Protection Act and Affordable Health Care for America Act.

Parts of the Affordable Care Act also draw from the healthcare-related sections of the Student Aid and Fiscal Responsibility Act and the Health Care and Education Reconciliation Act. In addition, the Affordable Care Act entails smaller amendments to the Food, Drug and Cosmetics Act as well as the Health and Public Services Act.

Purpose Behind the Affordable Care Act 

The Affordable Care Act represents a significant improvement to America’s federal healthcare delivery system. The Patient Protection and Affordable Care Act, colloquially known as “ObamaCare,” seeks to increase Americans’ access to quality and reasonably priced insurance options while decreasing the overarching uninsured rate in the United States.

The introduction of online insurance exchanges, subsidies, mandates and tax breaks for small businesses also helps to control excess spending in national healthcare spending. The Affordable Care Act, additionally, compels insurance companies to offer the same rates to every applicant without discriminating based on preexisting conditions or gender.

The Affordable Care Act has been a contentious piece of legislation that nonetheless has shown real-world benefits for millions of Americans. The Centers for Disease Control and Prevention (CDC) found that more than 10 million Americans had become insured since the ACA was signed into law by President Obama in 2010.

The Affordable Care Act is the largest regulatory change to America’s federal healthcare system over the last half-century. As such, the Affordable Care Act contains sections ensuring quality and affordable healthcare for all Americans as well as changes in the delivery of healthcare in the community and workplace.

Sections of the Patient Protection and Affordable Care Act also challenge the operation of the healthcare workforce itself with special attention paid to revenue provisions and overall transparency. The role that public programs have in curbing chronic disease and improving public health outcomes is also discussed in the Affordable Care Act.

Quick Synopsis of the Affordable Care Act 

The overarching aim of the Affordable Care Act is to overhaul the U.S. healthcare delivery system to ensure that more Americans have access to quality and affordable health insurance options.

Bringing down healthcare spending as a percentage of GDP in the United States is also a core initiative explicitly outlined in the Patient Protection and Affordable Care Act. What’s more, the Affordable Care Act aims to do the following:

  • Ensure that more Americans enjoy a host of new benefits and protections, including timely treatment and protection against losing coverage because of a preexisting health condition.
  • The Affordable Care Act also makes health insurance more affordable for millions of Americans by lowering premium costs and simultaneously reducing out-of-pocket expenses. Still, as of 2013, more than 15 percent of Americans went without any kind of health insurance coverage.
  • Ending all forms of discrimination in the delivery of healthcare is also a major priority behind the passage of the Affordable Care Act. Previously, Americans would have faced discrimination based on gender, age or a preexisting health condition, but the Affordable Care Act limits discrimination and offers Minimum Essential Coverage for millions of Americans.
  • The online insurance exchanges present new competitive forces that provide millions of Americans greater access to group coverage and allow Americans to compare similar plans and cost assistance opportunities side-by-side for the best options.
  • Lastly, and perhaps most importantly for America’s long-term fiscal stability, the Affordable Care Act puts the overall U.S. budget and healthcare spending as a percentage of GDP on a more sustainable path. It’s estimated that the changes to the delivery of healthcare ushered in by the Affordable Care Act will lead to savings of $1 trillion over the next generation.
  • These savings are attributable to curbing waste, fraud and abuse within the healthcare system. All the while more Americans are given access to quality and affordable healthcare and the government spends less on healthcare through increasing the efficiency of healthcare delivery in the United States.

Grasping the ACA’s Ten Titles 

The Affordable Care Act includes ten titles or sections that address different facets of the American healthcare system.

In fact, the very first title – Quality, Affordable Health Care for All Americans – includes most of the novel benefits and rights for regular Americans as well as new rules that insurance companies must obey to remain compliant with the Affordable Care Act.

Title I – Quality, Affordable Health Care for All Americans 

The first title of the Affordable Care Act largely deals with changes in the private health insurance system and how those changes enhance healthcare options for millions of Americans from around the country.

  • Protection for Policy Holders

Specifically, the opening title of the Affordable Care Act makes it so that private insurance companies cannot sell or rate coverage predicated on an applicant’s prior medical history. The first ACA title also requires that all Americans obtain health insurance and provides significant subsidies for low-income or high-risk Americans.

The first title also goes over the ways in which Americans and small businesses can navigate the health insurance exchanges to locate the best individual or group plans for their needs. Eliminating annual benefit limits and lifetime benefit limits is also a core feature of the ACA’s first title.

In addition to these benefits, the first ACA title promises that Americans won’t be dropped from health insurance coverage for any reason save fraud. The first title also requires insurance companies to provide some preventative services and immunizations that bolster public health outcomes. These preventative services are provided without any out-of-pocket costs to insurance policy holders as long as those plans started after 2014 and weren’t grandfathered into effect.

  • Dependent Coverage and Caps on Non-Medical Expenses

The first title has two more features that significantly change healthcare in the United States – the ACA’s first title extends the dependent coverage age to 26 and puts a cap on insurance companies’ non-medical, administrative expenditures.

The former provision ensures that young people can remain on their parents’ policy longer while the latter ensures that insurance companies cannot spend more than 80 percent of premium expenses – or 85 percent of one’s premium dollar in large group markets – on non-medical expenditures. Rebates are given whenever insurance companies go over these limits.

  • Improved Coverage Through Online Marketplaces

The first title also gives Americans access to better coverage options. Healthcare.gov, aside from being a valuable resource for attaining affordable coverage, provides accurate and timely information on the Affordable Care Act while furnishing Americans with more information on state-based insurance marketplaces.


  • Implications for Employees and Small Businesses

Starting last year the ACA required Americans to maintain Minimum Essential Coverage and, beginning in 2015, small businesses have been required to insure full-time workers.

Rules enshrined in the first title of the ACA also ensure workplace equality vis-a-vis healthcare options. For instance, the first title ensures that employers can’t demand higher premiums for a preexisting condition, higher salary or gender difference.

While small business owners can purchase their own health insurance coverage, they may also receive tax credits for up to half the total cost associated with insuring their employee base.

This provision protected under Title I of the Affordable Care Act guarantees that employers have an easier time providing healthcare benefits to their employees.

Title II – The Role of Public Programs

The second title of the Affordable Care Act makes significant changes to Medicaid and CHIP. Medicaid is the state-based program that helps millions of low-income Americans from around the country access affordable healthcare while CHIP (Children’s Health Insurance Program) provides matching funds to children and their families through the states.

Title II makes it so that low-income Americans can qualify for Medicaid in their state irrespective of whether they have a disability. In other words, Title II significantly expands Medicaid coverage for low-income Americans from coast to coast. At the same time, Title II retains CHIP and makes enrollment simpler for needy families.

The second title of the Affordable Care Act, moreover, enhances community-based healthcare for disabled Americans. How? Individual states will be compelled to coordinate more closely with beneficiaries of Medicaid and Medicare and tend to the needs of the long-term disabled.

Title III – Improving the Quality and Efficiency of Health Care 

The third overarching title of the ACA improves the delivery of healthcare in the United States and renders care more patient-centric. Fresh preventative care measures are also umbrelled under the third title of the Affordable Care Act.

Title III also takes significant steps towards improving the efficiency and cost savings associated with Medicare. In particular, the part of Medicare that deals with prescription drug coverage – Medicare Part D – is now more affordable than ever thanks to recent measures to close the coverage gap (a.k.a., Medicare’s “donut hole”).

These changes to Medicare are so important because it is estimated that from 2010 to 2020 the Affordable Care Act will receive nearly half its total funding thanks to the aforementioned means of reforming Medicare.

Through improving medical care and streamlining Medicare, in fact, approximately $500 billion will be saved over the next decade.

Title IV – Prevention of Chronic Disease and the Improvement of Public Health 

Title IV might be the most crucial for America’s healthcare future since it concerns the prevention of chronic diseases and wellness programs across populations.

This section of the Affordable Care Act also creates a National Prevention, Health Promotion and Public Health Council that is tasked with orchestrating a national prevention strategy to keep the vast majority of Americans healthy and thriving.

Nutritional information will be made more available to consumers and restaurants will be compelled to post caloric information to ensure that Americans can make empowered food and wellness decisions. Title IV additionally eases co-payments for older populations while creating fewer barriers for females looking to receive preventative services.

In short, Title IV shifts the conversation from treating disease and symptoms to creating healthy lifestyles, preventing disease and engendering wellness through widely available community health initiatives.

Title V – Health Care Workforce

The Affordable Health Care Act funds numerous scholarships while offering generous loan repayment programs. These measures are designed to assist healthcare professionals working their way through school and looking to make a difference in their communities.

More specifically, the Affordable Health Care Act facilities more jobs in the healthcare industry and empowers individual states to recruit healthcare workers to fill the labor gap. Title IV and Title V of the Patient Protection and Affordable Care Act also help fund community health centers and proactively work to eradicate preventable diseases.

Title VI – Transparency and Program Integrity

Fraud has historically been rampant in the healthcare industry, especially in terms of billing for Medicare and Medicaid.

The private insurance industry, though, has also been open to fraud allegations. Title IV of the Affordable Care Act, therefore, creates more checks and balances for federal and state-based agencies to root out fraud and ensure an efficient healthcare system.

Drug companies will also be compelled to report any gratuities on a federal website. The greater transparency ushered in by the Affordable Care Act also means keeping Americans informed on cutting-edge advances in modern medicine and changes in the healthcare system itself.

Even nursing homes are being improved through a tougher set of regulations and incentive programs designed to improve care.

Title VII – Improving Access to Innovative Medical Therapies 

This part of the Affordable Care Act aims to make pharmaceutical drugs more readily available for cost-conscious Americans. Title VII extends discounts of drugs while ending anti-competitive practices within the pharmaceutical industry that rendered drugs less affordable for Americans.

Title VII forces the Food and Drug Administration (FDA) to create a simplified regulatory pathway promoting biologic products and affordable over-the-counter iterations of pharmaceutical drugs.

The end goal is bolstering public health by increasing access to previously prohibitively expensive pharmaceutical drugs and prescription medications.

Title VIII – Community Living Assistance Services and Supports Act (CLASS Act) 

Through paying premiums for five years or longer, workers can receive cash payments should they become permanently injured later in life.

The CLASS program is entirely voluntary and self-funding to ensure its long-term sustainability. The CLASS Act provides an ingenious way for disabled persons and their families to finance disability services far into the future.

(The CLASS Act was ultimately repealed in 2013 as part of the American Taxpayer Relief Act of 2012.)

Title IX – Revenue Provisions 

Whereas Title III closes the “donut hole” in Medicaid Part D and saves nearly a half-trillion dollars over the next decade, Title IX addresses funding approximately half of the Affordable Care Act.

This is accomplished through closing tax loopholes and compelling those with very high incomes to pay a Medicare tax. New taxes for pharmaceutical manufacturers also help to ensure the Affordable Care Act’s long-term financial stability.

Title X – Re-authorization of the Indian Health Care Improvement Act 

The final title of the Affordable Care Act seeks to provide quality and affordable care to all Americans, including Native Americans and Alaskan Inuit peoples.

Reauthorizing the Indian Health Care Improvement Act (IHCIA) will provide nearly two million Native Americans and Alaskan Inuit with improved healthcare options.

Affordable Care Act Glossary