Healthcare Reforms

One of President Obama's most notable accomplishments during his two terms in office was his comprehensive healthcare reform, which had been a platform during his campaign. Many of his supporters assumed such reforms would move quickly through Congress, since Democrats had comfortable majorities in both houses, and both Obama and McCain had campaigned on healthcare reform. However, as had occurred years before during President Clinton’s first term, opposition groups saw attempts at reform as an opportunity to put the political brakes on the Obama presidency. After months of political wrangling and condemnations of the healthcare reform plan, the Patient Protection and Affordable Care Act was passed and signed into law on March 23, 2010.

The Affordable Care Act

President Obama signs the Patient Protection and Affordable Care Act into law on March 23, 2010, as Vice President Biden, Speaker of the House Nancy Pelosi, Senate Majority Leader Harry Reid, and others look on. 

The act, which created the program known as Obamacare, represented the first significant overhaul of the American healthcare system since the passage of Medicaid in 1965. Its goals were to provide all Americans with access to affordable health insurance, to require that everyone in the United States acquire some form of health insurance, and to lower the costs of healthcare. The plan, which made use of government funding, created private insurance company exchanges to market various insurance packages to enrollees.

Specifics of the Plan

Obama proposed an expansion of health insurance coverage to cover the uninsured, to cap premium increases, and to allow people to retain their coverage when they leave or change jobs. His proposal was to spend $900 billion over 10 years and include a government insurance plan, also known as the public option, to compete with the corporate insurance sector as a main component to lowering costs and improving quality of health care. It would also make it illegal for insurers to drop sick people or deny them coverage for pre-existing conditions, and require every American to carry health coverage. The plan also includes medical spending cuts and taxes on insurance companies that offer expensive plans.

The final version of the Affordable Care Act includes health-related provisions to take effect over four years, including expanding Medicaid eligibility for people making up to 133% of the federal poverty level (FPL) starting in 2014; subsidizing insurance premiums for people making up to 400% of the FPL ($88,000 for family of four in 2010) so their maximum out-of-pocket payment for annual premiums will be from 2 to 9.5% of income; providing incentives for businesses to provide health care benefits; prohibiting denial of coverage and denial of claims based on pre-existing conditions; establishing health insurance exchanges; prohibiting annual coverage caps; and support for medical research. According to White House and Congressional Budget Office figures, the maximum share of income that enrollees would have to pay would vary depending on their income relative to the federal poverty level.

The costs of these provisions are offset by taxes, fees, and cost-saving measures, such as new Medicare taxes for those in high-income brackets, taxes on indoor tanning, cuts to the Medicare Advantage program in favor of traditional Medicare, and fees on medical devices and pharmaceutical companies. There is also a tax penalty for those who do not obtain health insurance, unless they are exempt due to low income or other reasons. In March of 2010, the Congressional Budget Office estimated that the net effect of both laws will be a reduction in the federal deficit by $143 billion over the first decade.

Controversy

Although the plan implemented the market-based reforms that Republicans had supported for years, Republicans refused to vote for it. Following its passage, they called numerous times for its repeal, and more than 24 states sued the federal government to stop its implementation. Discontent over the Affordable Care Act helped the Republicans capture the majority in the House of Representatives in the 2010 midterm elections. It also helped spawn the Tea Party, a conservative movement focused primarily on limiting government spending and the size of the federal government.

The Tea Party movement

Tea Party protesters at the Taxpayer March on Washington, September 12, 2009

The law faced several legal challenges, primarily based on the argument that an individual mandate requiring Americans to buy health insurance was unconstitutional. On June 28, 2012, the Supreme Court ruled by a 5–4 vote in National Federation of Independent Business v. Sebelius that the mandate was constitutional under the U.S. Congress's taxing authority. In Burwell v. Hobby Lobby, the Court ruled that "closely-held" for-profit corporations could be exempt on religious grounds under the Religious Freedom Restoration Act from regulations adopted under the Affordable Care Act that would have required them to pay for insurance that covered certain contraceptives. In June of 2015, the Court ruled 6-3 in King v. Burwell that subsidies to help individuals and families purchase health insurance were authorized for those doing so on both the federal exchange and state exchanges, not only those purchasing plans "established by the State."