Affordable Care Act

Some provisions give people more options, but the law decides what every plan must cover and removed the cheapest option many people would choose for themselves.

• +§1001 (PHSA §2714)Young adults may stay on a parent’s plan until age 26.
• +§1201 (PHSA §2704)Bans pre-existing condition exclusions, so coverage no longer ties people to one employer.
• +§1332State innovation waivers let states try alternatives to some federal rules.
• −§1501 (IRC §5000A)Individual mandate: everyone must carry approved coverage or pay a penalty (penalty set to $0 from 2019; the mandate remains in law).
• −§1302(a)–(b)Essential health benefits: every individual and small-group plan must cover ten federally defined categories, whether you need them or not.
• −§1302(e)Catastrophic plans are limited to people under 30 or with a hardship exemption.
• −§9005Caps contributions to health flexible spending accounts.

The law raises the cost of hiring and growing, and its rules reward size, pushing insurers and providers to consolidate and leaving consumers with fewer competitors.

• +§1401 (IRC §36B)Premium tax credits let people buy coverage outside a job, making it easier to leave an employer to start a business.
• −§1513 (IRC §4980H)Employer mandate: businesses with 50 or more full-time employees (30+ hours a week) must offer approved coverage or pay a penalty, a disincentive to grow past 49 and to offer full-time hours.
• −§1302(e)Eliminates low-cost, high-deductible catastrophic coverage for most buyers by mandating richer coverage.
• −§1001 (PHSA §2718)Medical loss ratio rules cap administrative margins, favoring large insurers with scale.
• −§3022Medicare accountable care organizations reward large, integrated provider systems, encouraging consolidation.
• −§6001Restricts new and expanded physician-owned hospitals, protecting incumbents from competition.

A gross expansion of the federal government into one-sixth of the economy: new federal markets, open-ended entitlements and broad rule-writing power handed to agencies.

• −§1311, §1321Creates government-run health insurance exchanges, with a federal exchange where states decline.
• −§2001Expands Medicaid to adults up to 133% of the poverty level, largely federally funded.
• −§1401, §1402Open-ended premium tax credits and cost-sharing subsidies, a new permanent federal spending commitment.
• −Throughout (e.g. §1302, §1311, §1321)Directs the Secretary of HHS to define benefits, certify plans and write the rules, delegating broad lawmaking power to an agency.
• −§3403Created the Independent Payment Advisory Board, an unelected panel with power to cut Medicare payments (repealed in 2018).
• −§1411Requires federal verification of income, citizenship and coverage across HHS, IRS, DHS and the Social Security Administration.

The same rules don’t mean the same outcome. The law moves costs from young to old and from healthy to unhealthy, reversing the reward for healthy habits, and it widens the gap between those who can buy care outside insurance and those who can’t.

• +§1201 (PHSA §2702, §2704)Guaranteed issue: insurers must sell to every applicant on the same terms.
• −§1201 (PHSA §2701)Adjusted community rating caps age-based premiums at 3 to 1, so younger buyers pay more than their own cost to subsidize older buyers.
• −§1201 (PHSA §2701)Bans pricing for health status; only tobacco use may be rated, so people who keep healthy habits subsidize those who don’t.
• −§1302, §1311Narrow-network exchange plans leave many people with more limited care, while those who can afford it go outside insurance to concierge practices.
• −§1251Grandfathered plans are exempt from many rules, so similar people face different requirements.
• −§1513The 50-employee line treats businesses and their workers differently by size.

The law funds itself with new taxes on income and investment and gives the IRS a central role in reporting and enforcing personal health coverage.

• −HCERA §1402 (IRC §1411)3.8% net investment income tax on interest, dividends, capital gains and rents for higher earners (enacted in the companion reconciliation law).
• −§9015, §10906Additional 0.9% Medicare tax on wages above a threshold.
• −§1502 (IRC §6055), §1514 (IRC §6056)Insurers and employers must report each person’s coverage to the IRS.
• −§1411, §1414Shares personal tax and income data among federal agencies and exchanges to determine eligibility.
• −§9010Annual fee on health insurers, passed on to premiums (repealed from 2021).
• −§900140% excise tax on high-cost employer health plans (repealed in 2019 before it took effect).