The Health Care Reform Act of 2010

Abstract

The Patient Protection and Affordable Care Act (PPACA) of 2010 was an ambitious piece of public policy designed to lower costs, replace antiquated practices, and expand coverage to all citizens. The law was not passed in bipartisan manner, however, which set off a national debate over whether it would truly effect a change in the country's faltering health care system. This paper will review the PPACA, provide a brief history of the legislation, outline its components, and survey its reception.

Overview

One of the goals of any strong modern nation is to ensure that its people have access to a doctor and a health care system that is trustworthy and protects this relationship. Many modern nations have made health care part of the government infrastructure, annually appropriating state funds for health insurance. For other countries, like the United States, the chosen course of action has been to allow private insurers to provide that coverage at market rates, although the government provides coverage for those who are age sixty-five or older, live below the poverty line, or are disabled.

In the United States, the cost of private health insurance has increased steadily over the last several decades, causing political leaders, medical professionals, and interest groups to call for nationalized systems akin to those of Europe and Canada. A number of major attempts at health care reform have been offered since the Great Depression, but few have succeeded in making sweeping changes.

In 2010, however, a major piece of legislation, introduced by Congress but strongly advocated by President Barack Obama, succeeded where previous initiatives fell short. The Patient Protection and Affordable Care Act of 2010, also called the Affordable Care Act (ACA) or Obamacare, was an enormous piece of public policy designed to lower costs, replace antiquated practices, and expand coverage to all citizens. The law is controversial, however, and has set off a national debate over whether it can truly effect a change in the country's faltering health care system. This paper will review the PPACA, provide a brief history of the legislation, outline its components, and survey its reception.

A Brief History of Health Care Reform Proposals. The idea of ensuring that every American has access to affordable health care is one that has circulated throughout the twentieth and twenty-first centuries. In 1912, President Theodore Roosevelt and his Bull Moose Party proposed providing health care coverage for industry. In 1915, eight states pushed for mandatory health care, and shortly thereafter, the first proposals for "socialized medicine" (which entailed group medicine and voluntary insurance) began to surface (Hoffman, 2009).

While World War I effectively shelved Teddy Roosevelt's and other proposals, the use of the term “socialized medicine” was the primary element causing the demise of health care reform proposals by the administration of Franklin Delano Roosevelt. During the New Deal era of the 1930s, the term socialized appeared more than 700 times in just one newspaper, the New York Times, in reference to such reform efforts. Meanwhile, "socialized medicine" appeared 234 times when describing health care proposals (Greenberg, 2007). In light of the growing concern in the United States over communism, applying the word "socialized" to any proposal would in effect guarantee the bill's quick demise.

FDR's defeat on health care reform efforts in the 1930s was hardly the only one for supporters during the twentieth century. His successor, Harry Truman, offered a postwar proposal that was reviled by the American Medical Association and was called a "Communist plot" by a House subcommittee ("Healthcare crisis," 2010). As health care costs increased over the following decades, proposals to nationalize health care failed.

By 1992, the specter of communism had dissipated with the collapse of the Soviet Union. The faltering economy and other domestic matters were the most important issues on the minds of American voters. Soon after taking office in 1993, President Bill Clinton, an advocate of comprehensive health care reform, appointed First Lady Hillary Rodham Clinton to chair his Task Force on National Health Reform. At the time, 36 million Americans did not have health insurance (Friedman, 1993). Along with congressional Democrats, the task force offered bills to address the rising cost of health care. None of the bills succeeded, but Clinton's bill in particular suffered a dramatic defeat.

There were a wide range of factors that played a role in the failure of the Clinton proposal. In addition to the latent rhetorical designation of national health insurance (the centerpiece of the bill) as socialized medicine, congressional Republicans railed against it, while many business and medical organizations shied away from many of its key components. The measure was so modified during the legislative process (the result of compromises in order to gain support of moderates) that critics on both sides of the aisle saw the resulting bill as overly complex, costly, and muddled to the point of near incoherence (Starr, 1995).

Further Insights

The Road to Reform. Following the Clinton administration, the two terms of President George W. Bush saw little movement on the issue, as President Bush focused more on issues such as homeland security and economic recovery. In 2008, however, Senator Barack Obama was elected president, with comprehensive health care reform comprising a key part of his campaign platform.

The platform was based on figures that were generally accepted on a bipartisan level. In 2007, according to the US Census, 45.7 million Americans did not have health care insurance—a number that was down from the previous year but almost certainly rose again when the financial crisis of 2008 began to spread ("The uninsured," 2009). The figure included mostly individuals and families who lived below the poverty line, but also people from a wide range of socioeconomic backgrounds. The dearth of health care for these groups meant that a large percentage of them, instead of visiting a primary care physician, went to a hospital emergency room for non-emergency care. In a nation that spends only four percent of its economic output on Medicaid and Medicare and 16 percent overall on the health care system, such practices have added significantly to the growing issue ("Heading for," 2009).

In February 2009, President Obama, citing the "crushing cost of health care" suffered by Americans, used his State of the Union address to call upon Congress to pass health care reform (Martin, 2009). Over the course of 2009, scores of proposals of varying size and focus were introduced in the Legislature. By the fall of 2009, three major proposals were under consideration, adopting many of the principles for reform bills the president had proffered in his February speech. These principles were:

• Reducing long-term growth of health care costs
• Protecting families from bankruptcy due to health care costs
• Guaranteeing a choice of doctors and health plans for patients
• Investing in prevention practices
• Improving patient safety and care
• Securing affordable coverage for all Americans
• Maintaining coverage after job loss
• Ending barriers to coverage for people with pre-existing conditions ("Side-by-side Comparison," 2009)

The fall of 2009 was extremely challenging for Democrats. It was preceded by a summer of "town hall"–style forums led by Democratic Congressmen; many of these events were given national media exposure and were marked by strong and often confrontational situations between the legislators and their constituents. Additionally, the frequent Republican criticisms of many of the tenets of reform legislation made it clear that the final version of the health care reform bill would not be the result of bipartisan work (Galentine, 2009).

By the time President Obama made another address to a joint session of Congress in September of 2009, the partisan lines had been clearly drawn. House Republicans touted a bill that introduced many of the provisions that Democrats had in their bills. However, there was an ideological difference over how to lower insurance costs that remained unresolved: Democrats wanted the federal government to intervene, while Republicans favored a free-market approach. With both sides of the aisle fortifying their respective positions, moderates expressed frustration at Congress's inability to compromise. Senator Bob Corker (R-Tennessee), for example, lamented, "We've probably had the most selfish generation in Congress . . . in modern times" (cited in Connolly, et al., 2010, 3).

The hard-line partisanship of Congress continued when the House and Senate passed their own versions of health care reform. The House passed its version in November 2009, with a party-line vote of 220–215. The Senate followed suit with its own partisan vote of 60–39 (MacAskill, 2010). Over the next several months, House and Senate conferees (legislators assigned to hammer out differences between House and Senate bills of the same topic) forged a compromise version of the bill, with all votes along party lines. On March 23, 2010, President Obama signed the bill into law.

The Patient Protection and Affordable Care Act of 2010. President Obama signed the Patient Protection and Affordable Care Act of 2010 into law on March 23, 2010. The PPACA was amended by the Health Care and Education Reconciliation Act, and was signed into law on March 30, 2010 (Branigin, 2010). The PPACA is expected to cost $938 billion over a 10-year period and addresses most of the concerns President Obama and Democrats identified at the beginning of the tumultuous one-year period before passage.

Passage of the PPACA has resulted in significant changes to the health care industry. The law requires insurers to drop deductible charges, copayments, and other out-of-pocket-expenses for preventative care for many Americans; cover children with pre-existing medical conditions; cover young adults up to age twenty-six on their parents’ plans; justify increases in premium rates; and increase the amount spent on patient benefits versus administrative costs. Furthermore, beginning in 2014, insurance companies could not exclude patients based on their gender or pre-existing conditions, set lifetime limits for essential benefits, set annual limits on individual care coverage, or deny or limit coverage of individuals who participate in clinical trials (US Department of Health & Human Services, 2013), among other provisions.

Pre-existing Conditions. The PPACA has sought to provide insurance coverage to the millions of Americans who lack such care; according to the Henry J. Kaiser Family Foundation, forty-four million Americans did not have health care as of 2013, but by 2016, that number had decreased to twenty-eight million ("Key facts," 2017). One area in which this goal has been pursued was agreed upon by both Democrats and Republicans from the start. Many insurance companies have typically shied away from insuring new patients with pre-existing conditions, in light of the potentially high amounts they would likely have to pay for frequent trips to the hospital and/or doctor. The PPACA made such practices illegal and required insurers to extend coverage to children with pre-existing conditions.

Employer Mandates. While such measures enable some to obtain coverage, one of the act's major components is broader in scope. The law required that, by 2014, every American resident, with limited exceptions, had to obtain health insurance or face a $695 fine. This measure has had the most impact on employers, as most people receive their coverage through their jobs.

The "employer mandate" provision states that every business with 50 or more employees must provide coverage to their workers or face heavy fines (Pickert, 2010). This measure has been one of the most controversial of the law's provisions, prompting lawsuits from several states over its constitutionality and backlashes from business groups. Employer mandates were already in place in some places, most notably in Massachusetts (on which much of the health care reform law was based). However, in Massachusetts, the mandate is minimal, as it only requires employers to offer coverage in so-called "cafeteria plans" (selections of different coverage forms). The penalty in Massachusetts is also minimal—only $295 per uninsured worker per year (Pauly, 2008). The employer coverage requirement in the Obama plan, while technically not a mandate, carries a much more significant incentive for providing coverage to employees: a $2,000 fine per uninsured worker. The plan also provides tax credits for small businesses to help cover the cost of coverage for their employees (Battersby, 2010).

Fraud & Abuse Penalties. In addition to the employer and individual coverage requirements, the health care reform act of 2010 also takes aim at what is believed to be widespread abuse of the Medicaid and Medicare programs. Under the PPACA, a new set of health care fraud and abuse enforcement tools was established. For example, Title XI of the Social Security Act contains a number of criminal and civil penalties as well as exclusions from federal programs for those who engage in Medicaid and/or Medicare misconduct. The PPACA adds a number of new penalties for such behavior (Staman, 2010). Furthermore, by removing a number of evidentiary standards that have in the past hindered federal prosecutions against such fraudulence, the PPACA makes it easier for enforcement officials to prove their cases. These types of enforcement provisions, advocates claim, could save the Medicare and Medicaid programs billions of dollars annually.

Funding the Law. Proponents assert that the reforms contained in the PPACA and the Health Care and Reconciliation Act will generate billions in savings and ultimately lower the federal deficit, and the health care reform act does contain a number of revenue-generating measures to help pay for the expansions in Medicaid called for in the law. The federal government would be expected to fund state programs that create coverage packages, establish enrollment and coordination procedures, and work with providers. If they fail to do so, states must bear a large percentage of PPACA's financial cost (Ku, 2010).

In order to fund such provisions, the law applies new taxes to certain activities and insurance plans. For example, effective in 2018, the law places a 40 percent excise tax on so-called "Cadillac" medical plans—health insurance that exceeds $10,200 per year for individuals and $27,500 for family plans. In 2013, the law also increased the Medicare payroll tax on individuals earning more than $200,000 per year and couples earning more than $250,000 per year. Medical device manufacturers and pharmaceutical companies saw higher taxes. Overall, the new law has applied hundreds of millions of dollars in new taxes to the health care system.

Problems with Health Insurance Marketplace Enrollment Website. On October 1, 2013, the online Health Insurance Marketplace on HealthCare.gov, one of the provisions under PPACA, opened and began to enroll uninsured Americans, with the goal of enrolling 7 million individuals by March 31, 2014. The website however, initially operated only 43 percent of the time and crashed frequently, leading to frustration with and increased criticism of PPACA, including from former supporters. The Obama administration responded by setting a deadline of November 30, 2013, for improving the website’s performance so that most applicants would be able to successfully complete their enrollment. The administration claims that it has met the deadline and that the website is now operating more than 90 percent of the time (Somashkhar & Sun, 2013).

Conclusion

Efforts to institute health care reform in the United States have actually succeeded in dividing the country, with advocates of government-run health care and privatized health care on opposite ends of the spectrum. Although the Obama administration succeeded in establishing what many believe to be a significant move toward health care reform with the passage of the Patient Protection and Affordable Care Act of 2010, it remains controversial, especially with what many consider to be a problematic launch, and, while progress was made in terms of decreasing the number of uninsured Americans, it remained uncertain how successful the law would be in improving the American health care system.

Due to disagreements over the PPACA, with Republicans particularly denouncing it as a poor reform attempt, health care reform and the PPACA's possible replacement were topics at the forefront of the campaign season leading up to the 2016 presidential election. Upon the election of Republican candidate Donald Trump, it was announced in January 2017 that a new health care bill designed to repeal and replace the PPACA was at the top of the administration's agenda. However, after several months of back and forth and party infighting over the complexity of the issue, the administration's attempt to pass a new bill through Congress had stalled by July. Though the House of Representatives had passed a bill aimed at replacing major provisions of the PPACA in May, the Senate did not approve and subsequently could not agree upon its own measures, despite even a scaled-down proposal of repeals that had been put together in relative secrecy without bipartisan consultation (Litvan & Dennis, 2017).

At the same time, when the House and Senate passed a sweeping new tax bill in December of that year, which was then signed into law by President Trump, a crucial provision of the PPACA was brought to an end. The controversial individual mandate, which requires the majority of Americans to have health insurance or be hit with a fine, was officially repealed by part of the tax bill (Mukherjee, 2017).

Regardless of the mixed perceptions of the act, the passage of this law remains one of the most significant developments in a century-long effort to ensure quality health care for all.

Terms & Concepts

Cadillac Plan: High-cost health insurance plan with complete coverage and low copayments.

Employer Mandate: Provision that requires employers to offer health insurance plans to employees or face fines.

Health Care and Education Reconciliation Act: An act signed into law on March 30, 2010, which amended the PPACA.

Medicaid: Federal government health care program for the poor and handicapped.

Medicare: Federal government health care program for seniors and retirees.

Patient Protection and Affordable Care Act (PPACA): The health care reform act enacted on March 23, 2010.

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Suggested Reading

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