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Who Started Obamacare

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 12 minute read

The Patient Protection and Affordable Care Act, also known as Obamacare, was signed into law on March 23, 2010, after months of debate over President Obama’s ambitious plan to reform the United States’ antiquated health care system.

A hot mic captured former Vice President Joe Biden telling Obama that the signing was a “huge [expletive] deal.”

Excuse the strong language, but Biden made some valid points. The Centers for Medicare & Medicaid Services (CMS) estimate that health care spending ate up around 16% of U.S. GDP in 2010, and that percentage has only increased since then. The new health care bill has been one of the most significant pieces of federal legislation passed so far this century. 

Its provisions will have far-reaching effects on the health insurance sector and health care provision more generally.

What Is the Affordable Care Act (also known as Obamacare)?

The U.S. Department of Health and Human Services (HHS) identifies three overarching goals for the Affordable Care Act:

  1. To increase the availability of inexpensive private health insurance.
  2. To extend the Medicaid public health insurance program to include all people who earn less than 13.8 percent of the federal poverty level.
  3. To reduce the overall cost of providing health care.

To accomplish the former, the ACA established a system of federal and state health insurance exchanges, or marketplaces, to provide coverage to individuals who are not offered it through their employers, and it mandated that many employers (including some small businesses) offer affordable, ACA-compliant group health insurance plans to their employees (the “employer mandate”).

To achieve the latter, it supplied the bulk of the money needed for state-level Medicaid expansions and required the authorization of the balance from state legislatures and, in some cases, voters.

In order to get to goal three, the ACA enshrined some important — and popular — protections for American health care consumers, such as requiring that all ACA-compliant insurance plans provide free preventive care, offer coverage for several essential health benefits, and cover preexisting conditions without increasing insurance premiums. Premium tax credits were made possible by the ACA, essentially capping the cost of health care for poor and middle-income people and families.

After ten years in effect, Obamacare has had a tepid performance on all three fronts. According to the Kaiser Family Foundation, while the number of Americans with health insurance did climb significantly in the years after the ACA’s adoption, it has since declined due to the repeal of the individual mandate (KFF).

While the majority of states have adopted the Medicaid expansion, millions of low-income citizens are still being left behind in the roughly a dozen states that have not. Even while the CMS data indicates health care prices continue to creep upward, a KFF survey found that the ACA’s provisions of free preventive treatments and coverage for prior diseases were among the law’s most popular features.

Furthermore, despite its rising popularity, the ACA is still met with opposition from some areas. The legislation has been weakened over time by a number of legislative amendments, most notably the repeal of the individual mandate in the Tax Cuts and Jobs Act (TCJA) of 2017.

The Affordable Care Act (ACA) was still being challenged in court over a decade after it was first passed. The final one didn’t go down until June 2021, when the Supreme Court upheld the legitimacy of Obamacare in response to a broad challenge brought by the attorney general of Texas.

With the Affordable Care Act’s future secure, the next chapter in U.S. healthcare is being written. Knowing the history of Obamacare, its effects on the U.S. healthcare system after it was implemented, and the ways in which Congress and the courts have amended the Affordable Care Act (ACA) since its passage is essential to speculating about the future of U.S. health care policy and our own health care options as American consumers.

Precursor Laws and Negotiations Between the Legislative and Executive Branches in the Development of the Affordable Care Act

The ACA may be traced back to a similarly ambitious health care reform proposal put out by the Clinton administration in the early 1990s.

Clinton Plan

The so-called Clinton Plan, like the ACA, was a market-based compromise that sought to retain the core framework of America’s employer-based health care system while cutting health care costs and reducing the country’s uninsured rate. The White House had a significant hand in crafting and negotiating the legislation it believed would form the basis of its strategy, and future U.S. Senator and presidential contender Hillary Clinton was at the helm.

The Clinton Plan failed to become legislation due to substantial public skepticism and near-unanimous opposition from Republican members of Congress. Health Affairs concluded in 1995 that the failure of the plan was a major factor in the Democratic Party’s loss of the U.S. House of Representatives in the 1994 elections.

The political impact effectively ended the Clinton administration’s chances of passing any more comprehensive health care reform, although the approval of the Children’s Health Insurance Program in 1997 was a significant success for proponents of increased coverage.

Romneycare

With little action coming from the federal government, the focus on health care reform has shifted to the states. Obama’s adversary in the 2012 election, Mitt Romney, is ironically responsible for the most significant development in the years after the Clinton Plan.

As governor of Massachusetts, Romney signed a bill in 2006 that would later become the basis for Obamacare. Several major parts of the bill commonly referred to as “Romneycare” would have counterparts in Obamacare:

  • The majority of Massachusetts citizens must carry health insurance or face a penalty.
  • Employers with more than 10 full-time workers are required to offer their staff medical care via the company.
  • To those with incomes below 150% of the federal poverty threshold, free health insurance (in the form of tax credits known as cost-sharing reductions)
  • Health insurance premium, deductible, and copayment subsidies for individuals with incomes up to 300 percent of the federal poverty level

Romney obviously helped set the basis for the Affordable Care Act, while subsequently distancing himself from his namesake and publicly opposing Obamacare during the 2012 race.

According to NPR, Romney wrote in 2015 that “without Romneycare, I don’t think we would have Obamacare,” a bold remark for any prominent Republican seeking higher office at the time. (Romney was elected in 2018 to fill Utah’s vacant U.S. Senate seat.)

Obamacare’s Compromise

In his first term in office, President Obama prioritized health care reform above all else. Retrospectives by the Commonwealth Fund and The Atlantic suggest that Obama took some key lessons away from the Clinton Plan’s failure, including the importance of early engagement with Republican members of Congress, gaining support from health care industry stakeholders (such as health insurers, pharmaceutical companies, and providers), and giving their Democratic allies in Congress room to draft compromise legislation that would attract widespread support.

Obama’s attempts to reach out to Republicans fell flat. Democratic groups in the House and Senate engaged in extensive negotiation and compromise throughout the crafting of the measure that would become the Affordable Care Act.

Single-payer health care systems, like those in Canada and the United Kingdom, in which the federal government acts as the primary or exclusive insurer of its citizens, were advocated by one side of the discussion. Republicans who favor modest, market-based changes like Romneycare.

Those in the center argued for a compromise that included both parts similar to Romneycare and a “public option,” a government-run insurance alternative maybe based on Medicare for people who cannot or do not want to purchase private health insurance.

Obama pushed Congress to achieve a deal that might pass the U.S. House and Senate in the face of Republican resistance and growing mistrust from business stakeholders and the general public. The final settlement looked a lot like Romneycare, with no public option and a health insurance framework centered in a network of state and federal government “marketplaces.” This was a significant downgrade from the more ambitious ideas fashioned after the Canadian and European systems.

Obamacare Becomes Law: Adoption, Implementation, and Reaction

The Affordable Care Act (ACA) was signed into law in March of 2010. Many of the law’s most significant provisions were not scheduled to take effect until January 1, 2014, to give businesses, healthcare providers, and government agencies time to be ready.

According to a statement by the National Council of State Legislatures, the expansion of Medicaid, tax subsidies for individual market health insurance coverage, and the employer and individual mandates were among the aspects that were postponed.

Early Legal Challenges to Obamacare and the Individual Mandate’s Legality

After the enactment of Obamacare, critics filed a slew of lawsuits challenging the constitutionality of the program, casting doubt on when its postponed components would take effect.

At least twenty individual lawsuits were launched by critics during this time, according to a 2011 study by the New Jersey Hospital Association, but most of them were dismissed by lower courts. Among the successful challenges, district court judges ruled that the individual mandate under Obamacare was unconstitutional in both Florida, et al. v. Department of Health and Human Services, et al. and Virginia v. Sebelius.

During the 2011-12 term, the Supreme Court of the United States considered a group of cases challenging the constitutionality of the individual mandate. The requirement was found to be constitutional in a 5-4 verdict by the Supreme Court in late June of 2012. However, the court’s view of the individual mandate as a “tax” paved the way for future legal challenges, even if the judgment was a triumph for Obamacare’s proponents and ensured that the delayed elements would take effect.

A Scenic Ride

The Supreme Court’s decision to preserve the individual mandate did not ensure that Obamacare would be implemented without hiccups. Indeed, the federal Health Insurance Marketplace’s launch in late 2013 was plagued by technical glitches and policy cancellations, directly contradicting President Obama’s infamous promise that Americans wary of the Affordable Care Act would be able to keep their health insurance plans and doctors following its implementation.

According to PolitiFact, Obama and other high-ranking administration officials repeated this falsehood more than three dozen times between 2009 and 2013.

A Harvard Business Review retrospective on the marketplace rollout found the usual issues plaguing government-run IT projects, including a lack of experienced project management, ineffective leadership (evident in muddled communication and unclear roles), and time pressure to roll out the system by the required deadline. HBR reports that hundreds of thousands of customers who hoped to enroll in health insurance upon the marketplace’s opening were instead left frustrated.

More people were affected by the policy cancellation fiasco, and the reasons for it were more convoluted: CBS and NBC reports cited by Ballotpedia estimated that between 15 and 80 percent of the roughly 14 million consumers who had health insurance policies on the individual market when the rollout began would have to find new policies.

The Reactions That Followed

Together, the two problems exacerbated the broad belief among Americans that the Affordable Care Act had failed a major test. The public’s opinion of the legislation has deteriorated; between October 2013 and November 2016, support for the Affordable Care Act averaged below 40%, according to a HealthAffairs tracking survey published by The American Journal of Managed Care.

Obama’s detractors saw an opening in the months leading up to the 2014 midterms. After losing their majority in the Senate, Republicans campaigned on a platform that included the vow to “repeal and replace” Obamacare. The gamble paid off, as the Republican Party expanded its majority in the House of Representatives and took control of the Senate, thus killing Obama’s legislative priorities for a second term in office.

During the 2016 election campaign that took place in early 2015, almost all Republican contenders for U.S. president embraced the “repeal and replace” mantra. According to CNN, in the closing days of the campaign, future President Donald Trump maintained the promise to “quickly repeal and replace Obamacare” in an unusual Congressional special session front and center.

Obamacare Under Trump: Legislative Changes, Court Cases, and Resurgent Popularity

It’s debatable whether Trump’s victory in 2016 was helped or hurt by his campaign pledge to repeal and replace Obamacare. However, soon after he took office, he and fellow Republicans in Congress attempted to put their motto into action.

With Trump’s blessing, Republicans in Congress offered a “skinny repeal” of the ACA in 2017 that would have severely weakened the law without providing a complete replacement to cushion the blow to American health care consumers and providers. According to Kaiser Health News, the late Republican Senator John McCain was the deciding vote against the initiative in the United States Senate.

Individual Mandate Elimination and Other Obamacare Legislative Changes

Republicans’ attempts to legislatively kill the ACA were basically stopped by the rejection of “skinny repeal.” Republicans in Congress were able to repeal the individual mandate later the same year, despite the Supreme Court’s refusal to do so five years earlier.

In doing so, they successfully used the Supreme Court majority’s own reasoning for upholding the ACA as a weapon against it. The court’s decision to treat the individual mandate as a tax opens the door for its eventual repeal as part of a larger effort to reform the tax code in the United States. The Tax Cuts and Jobs Act (TCJA), the most significant change to the tax laws in the United States in a generation, offered a remarkable chance.

The individual mandate remains in effect under the TCJA that President Trump signed, but the penalty for failing to comply has been eliminated. People in the United States who forego health insurance coverage on their own (or who turn down employer-provided coverage) will no longer be penalized financially beginning with the 2019 tax filing season.

Though the TCJA does not do away with the employer mandate, Health Affairs concluded that without the individual mandate, fewer Americans would choose for employer-sponsored coverage.

The Center on Budget and Policy Priorities reports that the uninsured rate in the United States has increased gradually from 2016 when it hit a multi decade low to 9.2% in 2019.

Efforts by the Executive Branch to Weaken the Affordable Care Act

According to The New York Times and other outlets, once the TCJA was passed, Trump falsely claimed to have abolished Obamacare. Despite the fact that the individual requirement has been removed, this is not the case. In general, legal provisions were not altered.

It’s true that in the months and years that followed, the Trump administration did take concrete actions to undermine the ACA. Five of these phases are identified by research from the Brookings Institution:

  • Reducing marketing and logistical assistance for the Affordable Care Act’s health insurance exchanges, including a 50 percent decrease in the length of the open enrollment period.
  • Reducing subsidies to insurers delivering marketplace plans compliant with the Affordable Care Act
  • Facilitating insurers and employers in offering cheaper, less comprehensive health insurance policies that do not comply with the ACA.
  • Promoting waivers that might lower insurance coverage and enrollment
    preventing lawful immigrants from registering for Medicaid

The Current State of Medicaid Expansion

The continuing expansion of Medicaid coverage in the states is one qualified bright spot for the Affordable Care Act during the Trump Administration.

As of January 2020, the KFF reported that 36 states and the District of Columbia had expanded Medicaid, often by legislation but occasionally through public vote. However, due to state delay on the expansion, roughly 5 million customers remain uninsured despite meeting Medicaid’s eligibility requirements.

Two of the holdouts, Missouri and Oklahoma, joined the expansion states in 2021, reducing the total number of states to 36 (though a state judge later threw down Missouri’s expansion, casting doubt on the state’s expansion status). In other “non-expansion” states, however, access to coverage is less certain.

Bottom Line

Much like the United States itself, the healthcare system in the United States is continually developing and improving. Politicians at the federal and state levels have been trying for decades, with mixed results, to improve health care access, lower costs, and level the playing field for consumers.

Despite the Cheap Care Act’s (ACA) positive effects, achieving both universal coverage and really affordable care remains an impossible pipe dream. The number of uninsured Americans has remained much too high.

Those who are less fortunate have to deal with crippling medical costs that can eat away at their savings for years and even cause them to file for bankruptcy. There is a strong link between hospitalization and financial ruin, according to research published in the New England Journal of Medicine in 2018.

You can rest assured that the ACA isn’t the final time lawmakers will try to fix the health care system in the United States. Questions about the precise appearance of its successors and their implications for U.S. health care consumers are more difficult to answer.

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