Discussion: Function of PPACA

Patient Protection and Affordable Care Act

The first part of the comprehensive health care reform law enacted on March 23, 2010.

The law was amended by the Health Care and Education Reconciliation Act on March 30, 2010. The name “” is usually used to refer to the final, amended version of the law. (It’s sometimes known as “PPACA,” “ACA,” or “Obamacare.”)

The law provides numerous rights and protections that make health coverage more fair and easy to understand, along with subsidies (through “premium tax credits” and “cost-sharing reductions”) to make it more affordable.

The law also expands the Medicaid program to cover more people with low incomes.

The Patient Protection and Affordable Care Act of 2010, more commonly known simply as the Affordable Care Act (ACA), is intended to expand access to health insurance coverage primarily for those who fall through the cracks of the private and public insurance mechanisms in the United States. The law targets primarily low- and middle-income individuals and families because they constitute the vast majority of the uninsured (, ). The ACA uses two primary approaches to increase access to health insurance: It expands access to Medicaid, based solely on income, for those with incomes up to 138% of the federal poverty level (FPL), and creates eligibility for those with incomes from 139% to 400% FPL to apply for subsidies [in the form of advance payment tax credits (APTCs)] to purchase qualified health plans (QHPs) in state Marketplaces known as health insurance exchanges. When the law was enacted in 2010, almost 50 million Americans were uninsured—about 19% of the nonelderly population—and among the uninsured, an estimated 91% had incomes below 400% FPL and thus were potentially eligible for benefits under the ACA (52% for expanded Medicaid and 39% for exchange subsidies) (). As a result, the ACA has great potential to improve access to health insurance for low-income populations. However, the ACA’s two primary methods for expanding coverage are quite different and, thus, have faced different barriers to implementation that have affected either access to health insurance or access to services once insured. These barriers, in turn, may reduce the potential health benefits of expanded coverage.

With regard to the state Marketplaces, the ACA introduced a much greater degree of standardization of benefits and cost-sharing levels for QHPs than existed in all but a few states prior to 2010. QHPs must provide essential health benefits in 10 categories of health services and must be designed according to 4 standard metal tiers based on cost-sharing levels. Bronze plans are designed to require 40% of spending, on average across all policy holders, to come from out-of-pocket (OOP) cost sharing; Silver plans, 30%; Gold plans, 20%; and Platinum plans, 10%. Metal tiers, therefore, allow purchasers a choice of trade-offs between lower monthly premiums with higher OOP spending at the low end (i.e., Bronze plans) and higher monthly premiums with lower OOP spending at the high end (i.e., Platinum plans). In addition to subsidies, low-income individuals and families with incomes from 139% FPL to 250% FPL can qualify for additional cost-sharing reductions but only if they choose a Silver plan.

Despite the availability of subsidies and cost-sharing reductions, the reliance of the ACA on health insurance exchanges may both increase access to health insurance and simultaneously pose unintended barriers to access, particularly for low-income populations. These barriers can arise in two ways. The most publicized method is through the creation of narrow networks, where insurers offer plans and policies with fewer doctors and hospitals in an effort to keep premiums as competitive as possible. Whether narrow networks create actual, rather than perceived, barriers to care has not been well established yet through research. Nevertheless, the existence of narrow networks has created the perception that exchange-based QHPs are limiting access to a greater extent than did pre-ACA policies, despite the absence of adequate baseline data from pre-ACA years.

The second way that exchanges may create unintended barriers to access to care, particularly for low-income populations, is through the existence of high-deductible Bronze plans. Despite the availability of cost-sharing reductions for those who choose Silver plans, Bronze plans are still the second most popular choice; of the 12.7 million people who enrolled in exchange plans as of March 2016, 68% selected Silver plans while 23% selected Bronze plans (). Because the deductibles for Bronze plans generally exceed $5,000 for an individual and $10,000 for a family, they effectively serve as catastrophic insurance and, thus, may create barriers to access for most services except preventive services, which are exempt from deductibles and copayments under the ACA.