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date: 23 October 2017

Affordable Care Act

Abstract and Keywords

This entry describes the development and key provisions of the Patient Protection and Affordable Care Act (ACA), which instituted a major overhaul of the U.S. health system, much of which took effect in 2014. The key provisions of the ACA included an individual mandate to purchase insurance, an employer mandate to offer coverage to most workers, an expansion of Medicaid to all persons below 138 percent of the federal poverty level (FPL), minimum benefit standards, elimination of preexisting condition exclusions, and reforms to improve health-care quality and lower costs. This historic legislation has deep roots in U.S. history and represents the culmination of a century-long effort to expand health care and mental health coverage to all citizens.

Keywords: Medicare, Medicaid, Health care, Chronic illness, Health care social work, Employee benefits

Background to the ACA

Federal efforts to address the health of the population date back to at least 1798, when President John Adams signed into law an Act for the Relief of Sick and Disabled Seamen, which gave rise to a broad network of hospitals that played a critical role in the economic development of the early republic (Rao, 2008). Several decades later, in 1854, Congress passed legislation giving the states 10 million acres of public land, proceeds from the sale of which would be used to build institutions for “the benefit of indigent insane persons (http://www.presidency.ucsb.edu/ws/?pid=67850). President Franklin Pierce vetoed this bill, arguing that it would “open” the “whole field of public beneficence . . . to the care and culture of the Federal Government.”

During the early years of the twentieth century, reformers, inspired by the experience of the United Kingdom and Germany, began advocating for the adoption of social insurance programs in the United States. In 1912, Theodore Roosevelt’s Progressive Party called for the “protection of home life against the hazards of sickness . . . through . . . a system of social insurance adapted to American use” (Platform of the Progressive Party, 1912). Jane Addams, an NASW Social Work Pioneer, played a critical role in the development of this platform (http://sswr.confex.com/sswr/2006/techprogram/P4817.HTM).

The Roosevelt Era

The issue of national health insurance (NHI) arose again during the 1930s. In an effort to deal with the Great Depression, President Franklin D. Roosevelt appointed a Committee on Economic Security (CES) under the leadership of Frances Perkins and Harry Hopkins, both veterans of the settlement houses and NASW pioneers. Roosevelt charged the committee with developing legislation to protect “the men, women, and children of the Nation against certain hazards and vicissitudes of life” (President Roosevelt’s Message to Congress on the Economic Program, 1935). The proposals from this committee provided the basis for Social Security.

Although Perkins and Hopkins, as well as Roosevelt, wanted to include national health insurance as part of Social Security, they faced fierce opposition, particularly from the American Medical Association (AMA). Roosevelt took some steps to placate opponents, but his decision to include NHI in the final report of the CES provoked “great furor in medical circles” (Corning, 1969). The White House and the Capitol were deluged with letters and telegrams from angry physicians. The editor of the Journal of the American Medical Association attacked the proposal as “‘socialized medicine’” and asserted that the “the profession would decide on its own how care should be provided” (Downey, 2010, p. 243). In the face of such opposition, Roosevelt backed down and removed NHI from the final bill.

By the end of the 1930s, a coalition of conservative (often southern) Democrats and Republicans had emerged to block, and where possible roll back, many New Deal policies and programs (Katznelson, Geiger, & Kryder, 1993). At the same time, with the intensification of international tensions as the prelude to World War II, Roosevelt became increasingly reluctant to use his limited political capital to try to expand government programs.

Nonetheless, in 1939, Senator Robert Wagner (D-NY), a leading liberal of the time, introduced legislation to provide funding for a “litany” of health-related services to be administered by the states (Doherty and Jenkins, 2009). In 1943, Wagner, along with Senator James Murray (D-MT) and Representative John Dingell (D-MI), introduced legislation that would have essentially incorporated health insurance into Social Security and “bring about a system of ‘cradle-to-grave’ social insurance” (Starr, 1982, p. 280). A year later, Roosevelt, who had expressed interest in pursuing NHI once the war ended, included a right to “‘adequate medical care’ in his economic bill of rights” (;http://www.fdrheritage.org/bill_of_rights.htm).

The Path to Medicare

Upon Roosevelt’s death in 1945, Harry S. Truman became president. In November, Truman “proposed a single health insurance that would include all classes of the society” (Starr, 1982, p. 281). The AMA strongly opposed this plan, charging that it would turn physicians into “slaves” (Starr, 1982, p. 282). In 1948, Truman made NHI a centerpiece of his campaign. Truman later described the failure of his proposal as the defeat that “troubled” him “most, in a personal way” (cited in Corning, 1969).

After several supporters of NHI were defeated in the 1950 elections, many advocates felt a need to compromise was called for. In 1952, Murray and Dingell proposed legislation to provide health-care services to people 65 and older (Gorin & Moniz, 2014). Six years later, Representative Aime Forand (D-RI) introduced a bill to provide hospital insurance to Social Security beneficiaries. According to Ball (1995), this was seen as a “fallback position,” a first step toward “universal health insurance” (pp. 62–63).

After winning the presidency in 1960, John F. Kennedy worked with Wilbur Cohen, an NASW pioneer, to develop a plan to add hospital and nursing home coverage for older people as part of Social Security. Following Kennedy’s assassination, Lyndon B. Johnson “took up the mantle of health care reform” (Gorin & Moniz, 2014).

After Johnson was elected in a landslide in 1964, Wilbur Mills, the chair of the House Ways and Means Committee and a legislator who had originally opposed Medicare, a national health insurance coverage program for older people, became a strong supporter of that program. He advocated not only mandatory insurance for hospital, nursing home, and home health care for retirees—what became known as Medicare Part A—but also voluntary insurance for doctor’s visits for retirees—what became known as Medicare Part B. In addition, he supported the implementation of a means-tested program for individuals with low incomes called Medicaid (Gorin & Moniz, 2014). In 1965, Medicare and Medicaid were enacted.

Nixon and NHI

Despite the enactment of Medicare and Medicaid, health care remained a point of contention. In the late 1960s, national health spending accelerated, due primarily to Johnson’s agreement to reimburse hospitals and physicians for essentially whatever they charged as the price of winning support for Medicare. In short, “Congress surrendered to the providers the keys to the United States Treasury,” a deal that could not help but be “inherently inflationary” (Reinhardt, 2014).

In response to growing health-care costs, and pressure from Democrats for enactment of NHI, President Richard Nixon proposed his own national health plan (http://www.presidency.ucsb.edu/ws/?pid=3757). Nixon’s plan required employers to offer coverage to their employees and promoted the development of prepaid group practices or health maintenance organizations. Although the AMA, which supported Nixon for president in 1968, had long opposed prepaid group practices, Nixon was convinced by Dr. Paul Ellwood, an advocate of prepaid group plans, that a system built on competition between Health Maintenance Organizations (HMOs) would bring health-care inflation under control (Gorin & Moniz, 2014).

The proposal requiring employers to insure their workers failed, but in 1973, Congress enacted the Health Maintenance Organization (HMO) Act, which helped open the door to the “managed care revolution” of the 1980s and 1990s (Agrawal & Veit, 2002). Although the original managed care organizations had been structured as staff model, nonprofit organizations in which providers worked on a salaried basis, the for-profit organizations soon came to dominate the field (Gruber, Shadle, & Polich, 198).

The Health Security Act

NHI became an issue again during the late 1980s, as health-care inflation continued to accelerate and the number of individuals without coverage grew. In 1990, the U.S. Bipartisan Commission on Comprehensive Health Care—or the Pepper Commission, named after its first chair, Representative Claude Pepper (D-FL), a veteran of the health care battle of the 1930s and 1940s—issued a report depicting a “‘health care system . . . approaching a breaking point’” (cited in Gorin & Moniz, 2014, p. 411).

During the 1992 presidential primary campaign, several of the Democratic Party candidates developed proposals for reform. During the presidential campaign, Bill Clinton advocated a middle ground between a single-payer system, which many social workers supported, and the relatively unregulated market-based approach, which conservatives advocated. According to exit polls, voters supported Clinton’s plan over George Bush’s approach, which relied on tax incentives and health maintenance organizations, by a wide margin. A quarter of those voting for Clinton identified his views on health care as the major reason they had supported him (Moniz & Gorin, 2014).

In September 1993, Clinton introduced his proposed Health Security Act (HSA). The bill would have required employers to contribute to the cost of providing insurance to their employees, with the government providing coverage to unemployed people (Moniz & Gorin, 2014). As a way of reining in accelerating inflation, Clinton advocated “‘competition within a budget’” (cited in Moniz & Gorin, 2014, p. 5). As a backstop, the government would have imposed limits on the rate of growth of insurance premiums. Individual parts of the HSA enjoyed wide support; however, the bill itself became caught up in the various controversies—many lacking substance—surrounding the Clintons together with the failure of the White House to separate myth from reality (Bok, 1998). The bill died without coming to a vote.

Despite the failure of the HSA, Congress did go on to enact other reform legislation. In 1996, the Health Insurance Portability and Accountability Act (HIPAA), which sought to protect individuals in the small-group market from exclusions from coverage due to preexisting conditions, became law. The bill additionally took steps to promote long-term care insurance and protect the rights of patients (Gorin & Moniz, 2014). However, HIPAA did nothing to prevent insurance companies from charging high premiums, which effectively priced many people out of the market.

The Clinton administration also supported the Mental Health Parity Act of 1996, which aimed at preventing group health plans from imposing “annual or life-time dollar limits on mental health benefits that are lower than . . . limits for medical and surgical benefits” (Gorin & Moniz, 2014, p. 412). While this law represented a step toward mental health parity, it only applied to individuals with policies that included mental health benefits. It “did not require employers to offer mental health care benefits, but if such benefits were provided, they had to have been equal to those offered for medical and surgical care” (http://www.socialworkers.org/advocacy/updates/2003/021103_mental.asp).

In 1997, again with strong support from the Clinton administration, as part of the Balanced Budget Amendment, Congress added a State Children’s Health Insurance Program as Title XXI of the Social Security Act. CHIP, as it is called, provides funds to states for millions of otherwise uninsured children with incomes too high for Medicaid (Children’s Health Insurance Program, n.d.).

Six years later, with support from George W. Bush, Congress passed the Medicare Prescription Drug Improvement and Modernization Act of 2002 (MMA) (Moniz & Gorin, 2014). Although progressive groups, including NASW, had long advocated adding prescription drug coverage to Medicare, many were concerned that the MMA undermined cost control efforts by barring Medicare from negotiating with pharmaceutical companies over the cost of medications.

In 2008, Congress enacted the Mental Health Parity and Addiction Equity Act (MHPAEA), which built on the Mental Health Parity Act of 1996. The MHPAEA requires insurers that provide mental health and substance abuse benefits “to provide the same level of benefits that they do for general medical treatment” (http://beta.samhsa.gov/health-reform/parity). The ACA would take this a step further. Beginning in 2014, small group and individual market plans created after the enactment of the ACA (i.e., March 23, 2010) “are required to adhere to parity requirements” (http://beta.samhsa.gov/health-reform/parity).

The ACA

Health care reform became an issue during the 2008 presidential campaign, with both John McCain (R-AZ) and Barack Obama (D-IL) taking positions on the issue. Obama advocated “a plan for universal coverage” that built on the existing system of private and public coverage (http://www.commonwealthfund.org/Publications/Fund-Reports/2008/Oct/The-2008-Presidential-Candidates-Health-Reform-Proposals-Choices-for-America.aspx). He advocated a “pay or play” approach, requiring employers to provide coverage to their employees or pay a tax “to help subsidize government coverage for the uninsured” (http://elections.nytimes.com/2008/president/issues/health.html). He also pledged to expand coverage though public programs and create “a new federal health plan for the uninsured.”

Following more than a year of contentious debate, in March 2010, Congress enacted the Patient Protection and Affordable Care Act, often referred to simply as the Affordable Care Act, or Obamacare. Although progressives, including NASW, advocated including a so-called public option, or government-sponsored plan, which would compete with private insurers on the basis of cost and quality, the final version of the ACA did not include this option (Gorin, 2009). The ACA makes significant changes in the nation’s health care system. In particular, it brings the United States a step closer to achieving what Berwick et al. (2008) refer to as the “’Triple Aim,” which they argue is necessary for the creation of a “high-value healthcare” system (p. 760). The components of the Triple Aim are “improving the individual experience of care; improving the health of populations; and reducing the per capita costs of care.” An implied aspect of the Triple Aim is universal health care coverage, which Berwick et al. (2008) refer to as “the Holy Grail.”

The ACA and Universal Coverage

For years, health-care advocates have focused on the lack of universal coverage in the United States and the growing number of individuals without health-care coverage. Health insurance is an important factor in determining whether one has access to needed health care (Institute of Medicine, 2003). In 2012, nearly 48 million Americans did not have health insurance (U.S. Census Bureau, 2013) and an estimated 30 million were “underinsured,” with coverage that provided inadequate protection from health-care costs (Collins et al., 2013). The Congressional Budget Office has estimated that by 2024 the ACA will provide new insurance coverage to 26 million nonelderly individuals, leaving 31 million uninsured. At full implementation, it is projected that 89 percent (including all U.S. residents) or 92 percent (excluding undocumented immigrants) of the U.S. population will be covered (Congressional Budget Office, 2014).

Enrollment Assistance

One measure of success of the ACA will be how many uninsured individuals ultimately gain health insurance coverage. The ACA creates or expands several consumer assistance programs, including navigators, in-person assisters, certified application counselors, and consumer assistance program (CAP) workers, designed to help people enroll in the new ACA coverage options.

Reforming Insurance

In a sense, the heart of the coverage problem has been the individual insurance market. Although employer coverage remains the predominant means of insurance in the United States, rising costs have led to a notable reduction in the number of employers offering comprehensive coverage for employees and their families (Towers Watson, 2013). Moreover, for many employees, even if available, employer-sponsored insurance (ESI) is unaffordable because many employers have shifted costs to employees in the form of higher monthly premiums and other forms of cost-sharing, such as copayments and coinsurance (Claxton et al., 2013).

Previous government efforts to address the uninsured have expanded coverage for individuals who meet certain eligibility categories. Categorically eligible populations include low-income children and, to some extent, low-income mothers or mothers-to-be (Medicaid and CHIP), the elderly and low-income elderly (Medicare and dual program participation with Medicaid), and low-income adults with disabilities or who are pregnant (Medicaid and CHIP). Individuals who are transitioning between jobs are eligible for COBRA, which temporarily maintains employer-sponsored insurance without the employer subsidy; however, COBRA is often unaffordable for unemployed individuals between jobs (Doty et al., 2009). Without ESI or categorical eligibility for one of the government programs, the remaining option for the uninsured was to seek coverage on the individual market.

In contrast to the ESI market, where the cost of coverage is calculated on the basis of a community risk rating, which spreads and balances the risk between high-cost sick and low-cost healthy employees in the individual market, people purchase their own coverage for themselves or their families. In this market, insurers calculated the premium on the basis of “individual rating,” that is, the health of the individuals themselves. Insurers in the individual market were risk averse—they did not want to charge less than the cost of the services the individuals would use. Consequently, people with a history of health conditions requiring costly and frequent health-care use were often denied coverage outright. When they were offered coverage, it was often very expensive and likely contained exclusions based on categories of care for which the person was deemed to be at higher risk of using, related to preexisting conditions or familial risk. The costs of coverage in the individual market also led people to purchase plans that offer very limited coverage, such as catastrophic plans with high deductibles and limits on annual or lifetime benefits. For these reasons, and for the tendency of insurance companies to drop sick enrollees during the yearly renewal period, the individual market was not a viable option for expanding coverage for the uninsured.

The ACA introduced several reforms aimed at the individual insurance market. First, and most controversially, the law created an “individual mandate,” requiring almost everyone not already covered to buy insurance or pay a penalty. Since most individuals with coverage receive it through an employer, the burden of the mandate necessarily falls on people entering the individual insurance market. Some critics of the ACA have argued that the mandate violates individual liberty; however, this view was rejected by a majority of the Supreme Court. It also overlooks the necessity of the mandate. Healthier and more affluent people would be tempted to opt out if individuals had the choice of whether or not to buy insurance. This would leave relatively poorer and sicker individuals in the risk pool and could lead to “an adverse-selection death spiral” (Krugman, 2010). As a means of guaranteeing that no one is left out, the ACA makes it illegal for insurers to refuse to sell insurance to higher-risk individuals or those with preexisting conditions.

Expanding Private Coverage

The law also creates new insurance exchanges. Operated at either the federal or state level, these marketplaces offer “one-stop shopping” to address the limitations of the individual market for those not eligible for Medicaid with no access to ESI, including community rating. For individuals and families purchasing insurance through the exchanges, income-related premium and cost-sharing credits are available to help purchase affordable coverage.

To reduce the variation in coverage across health insurance plans and address concerns about the failures of plans to provide access to key benefits, such as maternity care and behavioral health treatment, the ACA set forth a minimum package of benefits—called “essential health benefits”—that health insurance plans must “cover.” “Covered” benefits are included in the insurance plan and count toward the deductible. By contrast, an individual is 100 percent responsible for paying out of pocket for any “uncovered” service or item. The essential health benefits package must include benefits within each of the following ten broad categories of items and services: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services, laboratory services, preventive and wellness services and chronic disease management, and pediatric dental and vision care. The essential health benefits provision guarantees a standard set of services for anyone purchasing health insurance plans in the individual and small group insurance markets, including plans purchased both inside and outside the marketplace, as well as to Medicare beneficiaries and to newly eligible Medicaid beneficiaries living in states that have expanded Medicaid. In implementing the essential health benefits provision, states were asked to identify a “benchmark plan” or default to the largest small group plan, to represent a reference point for coverage of the essential health benefits. The benchmark plan must include all ten benefit categories.

The ACA also requires health plans that offer coverage to dependents to allow children up to age 26 years to remain on or join their parents’ policies. As a result, an estimated 3.1 million young adults have gained coverage (U.S. Department of Health and Human Services, 2012).

Expanding Medicaid Coverage

Under the ACA, Medicaid plays a major role by extending coverage to millions of low-income Americans. The ACA legislation removed categorical eligibility other than income, expanding Medicaid eligibility to nearly all residents under age 65 with incomes at or below 138 percent of the FPL. With the expansion, Medicaid would cover millions of previously uninsured low-income adults. Additionally, the law requires states to implement eligibility and enrollment outreach efforts, so many low-income families and children currently eligible but not enrolled could come into the program. Last, the law protects current Medicaid beneficiaries against the loss of coverage through the requirement that states maintain stable Medicaid eligibility and standards.

However, limitations to the law’s potential effects for reducing the number of uninsured low-income Americans have emerged since it was enacted. In June 2012, the Supreme Court ruled the federal government could not force states to expand Medicaid with the threat of otherwise defunding the program, rendering expansion voluntary. While federal funding will cover 100 percent of the costs for the first several years of coverage expansions, several states, many of which have conservative governors and congressional leadership, have opted out. As of March 2014, twenty-six states plus the District of Columbia had started their expansions. In the other states, debate is currently ongoing (five states) or the state is not participating in the ACA Medicaid expansion (nineteen states). In some cases, states are pursing alternative Medicaid expansion plans (http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/).

Consequences for Persons Living in States Not Expanding Medicaid

Persons earning below 138 percent of the FPL and residing in states that are not participating in the Medicaid expansion face unique challenges in finding affordable coverage. Specifically, those earning below 100 percent of the FPL are not eligible for the premium and cost-sharing subsidies on coverage purchased in the marketplace—the only subsidized non-employer-based coverage available to them absent Medicaid. (Since it was assumed that those earning less than 100 percent of the FPL would have access to the Medicaid expansion coverage, the ACA did not provide for premium and cost-sharing subsidies for these individuals.) As a result, this population must bear the full cost of the premiums and cost sharing in the marketplace. Recognizing the difficulty in finding affordable coverage, Congress did, however, exempt this population from the penalties associated with failing to purchase insurance coverage. Another group, composed of persons with incomes between 100 and 138 percent of the FPL, are eligible for subsidized coverage through the marketplace but are subject to the penalties for failing to enroll in a plan. For this group, premiums apply and cost sharing is higher than what it would have been under Medicaid if the state had elected to participate in the expansion. Therefore, many low-income individuals and families living in states that do not participate in the expansion will likely remain uninsured. As many of the states that are opting not to expand Medicaid have higher percentages of low-income minorities, it is possible that there will be increases in health disparities within states, between higher and lower income residents, and between states, some of which expand while others do not.

While making health coverage more available to low-income individuals and families is critical, the ACA’s Medicaid expansion is not sufficient to guarantee access to high-quality care for low-income populations since other barriers to coverage and care will likely persist. For instance, due to reasons such as lack of knowledge, administrative complexity, and stigma, there will be people who are eligible for Medicaid but do not enroll. It is difficult to predict the size of this group, but previous studies suggest that between 32 percent and 81 percent of eligible people do not enroll in Medicaid (Sommers et al., 2012; U.S. Government Accountability Office, 2005). Once covered, Medicaid beneficiaries may then face challenges in finding a provider that accepts new patients in light of the overall projected shortage of primary care physicians (Dill and Salsberg, 2008) and the historically low participation rates in Medicaid among physicians (Baugh and Berghese, 2012). To help ensure that newly insured individuals have access to care, the ACA contains several provisions designed to expand the availability of primary care providers. It offers a 10 percent Medicare payment bonus to primary care providers who charge at least 60 percent of their services in primary care codes. To induce greater participation in the Medicaid program, primary care providers’ reimbursement rates were raised temporarily (2013–2014) to the Medicare rate. The most significant investment that the ACA makes in expanding primary care is through the federal community health center program. Health centers operated under this federal program provide comprehensive and affordable primary care to all patients regardless of their ability to pay. Health centers were launched in 1965 as part of President Johnson’s War on Poverty, and today they number 1,200, with nearly 9,000 delivery sites across all fifty states. Collectively they serve more than 21 million patients, the majority of whom are low-income individuals (U.S. Department of Health and Human Services Health Resources and Services Administration, n.d.). The ACA appropriated $11 billion for the operation, expansion, and construction of health centers.

Evidence shows that Medicaid expansions will improve access to quality health care, improve mental health, and reduce financial strain among low-income adults. The Oregon Health Insurance Experiment, a randomized evaluation of an Oregon Medicaid expansion for low-income uninsured adults, provided the first causal evidence of some of the potential short-term impacts of new Medicaid coverage. The study found that in one to two years after gaining coverage, Medicaid increased access to and use of health-care services, reduced medical debt and spending, decreased depression, and improved well-being and self-reported health. However, the study found no evidence of measurable improvements in physical health or in participation in the labor market.

Expanding Benefits under Medicare

Although the ACA does not make fundamental changes to Medicare coverage, the ACA includes provisions that make Medicare benefits more comprehensive and help to ensure better financial protection from costs of care. First, the ACA addresses financial barriers related to preventive care for Medicare beneficiaries. The ACA prohibits Medicare from cost sharing (co-insurance, deductibles, and copayments) for approved preventive services. Generally, preventive immunizations, screening tests (e.g., mammography and colorectal cancer screening), and appropriate therapy for beneficiaries are covered. In addition to eliminating cost sharing for approved preventive services, the ACA requires Medicare to cover a free annual wellness visit during which a beneficiary will receive a personalized assessment, prevention plan, screening, advice, and referrals.

Controlling Costs

In additional to lack of coverage, a second critical problem for the U.S. health-care system has been the growing cost of care. Between 1970 and 2012, national health expenditures per capita increased from $356 to $8,915 (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/tables.pdf). Americans spend more than twice as much per capita as other industrialized nations and health outcomes in the United States are often no better (Peter G. Peterson Foundation, 2013).

Key Provisions Making Coverage More Affordable

To make coverage more affordable for individuals, the ACA defines four tiers of coverage—platinum, gold, silver, and bronze—for health insurance plans. Each tier corresponds to a different actuarial value, or generosity of benefits, with a platinum plan at 90 percent actuarial value, gold at 80 percent, silver at 70 percent, and bronze at 60percent. “Actuarial value is a concept that refers to how much of an average consumer’s expected medical expenses the plan will actually cover. In general, the higher the actuarial value, the more the plan pays toward the consumer’s medical expenses and, usually, the higher the monthly premium. For example, under a bronze plan a consumer would have, on average, 60 percent of their health-care costs paid for by the plan, while a platinum plan would cover, on average, 90 percent. This means that a consumer’s out-of-pocket costs (i.e., deductibles, copayments, co-insurance) would be higher in a bronze plan than in a platinum plan but the monthly premium payments would be lower. In this way, the legislation seeks to balance risk. Healthy individuals pay lower monthly premiums but assume greater risk if an unexpected problem arises. People knowing that they will need a greater amount of care will pay higher monthly premiums but these will be predictable and these individuals can save money through lower point-of-contact cost sharing.

The ACA also takes steps to limit insurance premium increases. Any proposal to increase premiums in the individual or small group market by 10 percent or more is subject to federal or state scrutiny “to make sure it is justified” (http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/rate_review_fact_sheet.html). In addition, insurers must provide clear explanations for why they are seeking the increases.

In addition, to rein in allegedly boated administrative costs, the ACA requires insurers to spend “a minimum percentage (80 percent in the individual and small group market and 85 percent in the large group market) of their adjusted premium revenues on health care claims and quality improvement expenses” (Jost, 2012). Insurance companies that fail to do this must reimburse “enrollees (individuals for nongroup plans and employers for group plans) based on the extent to which the insurer’s actual medical loss ratio (MLR) falls short of the statutory minimum MLR.” According to Kathleen Sebelius, then secretary of health and human services, in a May 2012 memo, this 80/20 rule, as it is called, has led some insurers to reduce premiums (cited in http://thepage.time.com/2012/05/11/sebelius-forthcoming-blog-post/).

The ACA also impacts Medicare Advantage (MA) plans. The origin of these plans lies in the Medicare+Choice program, which in 1997 introduced private insurance plans into Medicare (http://kff.org/medicare/fact-sheet/medicare-advantage-fact-sheet/). As part of the Medicare Modernization Act of 2003, Medicare+Choice became Medicare Advantage. For several years MA plans were paid more than it would have cost traditional, or fee-for-service, Medicare to care for the same patients (Berenson, 2004). In a change long advocated by MedPAC, which advises Congress on matters related to Medicare, the ACA phases out the excess reimbursement to MA plans (MedPAC, 2012).

In addition, the ACA will close the Medicare Part D “doughnut hole” (i.e., the existing gap in drug coverage for which Medicare beneficiaries must pay the full cost of prescriptions out of pocket) completely by 2020. Beginning in 2011, Medicare beneficiaries experiencing the gap began receiving a 50 percent discount when purchasing Part D-covered brand-name prescription drugs.

The legislation also created an Independent Payment Advisory Board (IPAB) to oversee Medicare’s fiscal status and recommend ways of controlling the program’s costs. Because the board cannot make proposals that would increase costs to beneficiaries or limit benefits, supporters assumed that the IPAB would focus on reducing payments to providers (Oberlander & Morrison, 2013). Despite this, critics have claimed it would restrict care to beneficiaries. Due to the recent moderation in the growth of Medicare spending, the IPAB is unlikely to play as important a role in cost control as its advocates and opponents assumed (Oberlander & Morrison, 2013).

Addressing Health-Care Costs

The ACA takes several steps to address the problem of health-care inflation (Affordable Care Act Overview, 2012). Importantly, the ACA creates an employer mandate, which requires large employers with more than fifty full-time employees to offer affordable health coverage to employees or pay penalties. Requiring large employers to provide coverage will help prevent “crowd-out” (i.e., where coverage shifts from the private market to public programs) and potentially bring healthier people into health insurance risk pools as well as expand coverage to the working uninsured. To slow growth in costs and to finance expanded coverage, the law also implements an excise tax on those health plans offered through employer-based coverage that have the most generous health benefits with premiums paid for mostly by employers and low, if any, deductibles and little cost sharing for employees. Such benefit-rich plans protect workers from facing costs of care, but this also creates incentives for employees to overuse care, likely raising overall health-care costs. Therefore, the purpose behind the excise tax is to lower the potential “overuse” of health care that may be driven by such adverse economic incentives and, in turn, to slow health care costs.

A central point of contention over the ACA has been its cost, with critics of the law arguing that it will cause the deficit to explode. This claim is questionable, however. The nonpartisan CBO projected that the ACA will reduce the federal deficit (https://www.cbo.gov/publication/45159). According to Gruber (2012), a leading architect of both the Massachusetts health plan and the ACA, “the multiple initiatives in the ACA will kick in to help “bend the cost curve” through increasing consumer incentives to shop for low-cost insurance, moving towards prospective payment methodologies that reward value rather than treatment intensity, and assessing which strategies are cost effective for managing illness.”

Improving Quality through Pilot Programs in Payment Reforms and New Delivery Models

The ACA seeks to transform the health-care delivery system by encouraging the adoption of innovative delivery models and introducing various kinds of payment reforms. Patient-centered medical homes and accountable care organizations are among the most significant. These initiatives are expected to improve health outcomes and reduce health-care costs. A new $10 billion Center for Medicare and Medicaid Innovation (CMMI) within the Centers for Medicare and Medicaid Services will maintain the ACA’s focus on innovative payment and delivery system models by testing and spreading the most promising new models.

Medical Home

The term medical home long predates the ACA as it first appeared in the 1960s when it was used in relation to children with special needs who needed an actual place where all information was kept (Sia, Tonniges, Osterhus, & Taba, 2004). The concept has evolved since that time, and today the patient-centered medical home model is generally understood to denote a “personal physician, physician-directed team, whole-person orientation, coordination of care, quality and safety, and enhanced access” (Ferrante, Balasubramanian, Hudson, & Crabtree, 2010).). The ACA contains several provisions designed to encourage broad adoption of these medical home principles. Most significantly, the ACA creates a new optional Medicaid benefit to establish health homes for beneficiaries with complex health conditions. Participating states are eligible for an enhanced Medicaid rate or federal matching funds for expenditures at 90 percent, for two years. As of March 2014, twenty-four states had taken advantage of these federal incentives to create home health programs for those with complex health conditions. (http://www.medicaid.gov/State-Resource-Center/Medicaid-State-Technical-Assistance/Health-Homes-Technical-Assistance/Downloads/HH-MAP_v31.pdf). In addition, the ACA supports two demonstration programs to test the effectiveness of medical homes under the auspices of the newly established CMMI. The Federally-Qualified Health Center (FHQC) Advanced Primary Care Demonstration Project will evaluate the effectiveness of teams of physicians and other health professionals treating as many as 195,000 low-income patients at up to 500 community health centers. The Multi-Payer Advanced Primary Care Practice Demonstration is supporting three-year-long initiatives in eight states (Maine, Vermont, Rhode Island, New York, Pennsylvania, North Carolina, Michigan, and Minnesota) to test the effectiveness of physicians and other health professionals working in a more integrated fashion and receiving more coordinated payment from Medicare, Medicaid, and private health plans. Altogether, it is expected to reach 900,000 Medicare beneficiaries across 1,200 medical homes (http://www.cms.gov/apps/media/press/release.asp?Counter=3871).

Accountable Care Organizations

An Accountable Care Organization, known perhaps more widely by its acronym ACO, is an evolving model of care that is generally understood to signify a group of health-care providers, including primary care professionals, specialists, and hospitals, that collectively share responsibility for the “quality, cost, and overall care” provided to a defined population of patients (section 3022 of the Affordable Care Act). By making the providers accountable for managing their patients through a combination of quality targets and financial incentives to keep costs down, ACOs are expected to improve the quality of care and reduce health-care expenditures. Though ACOs came into existence a few years before the ACA, the ACA has greatly spurred the development of ACOs through its demonstration program, the Medicare Shared Saving Program. Under this program, an ACO has the opportunity to share in any cost savings that result from the coordinated care provided to a specified group of Medicare beneficiaries. As of December 2013, more than 360 ACOs have been created under the Shared Savings Program. Together they serve over 5 million Medicare beneficiaries in the traditional fee-for-service program (http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-Releases/2013-Press-Releases-Items/2013-12-23.html).

Roles for Social Workers as a Result of the ACA

The sweeping changes imagined by the ACA offer a promise of lower health-care costs, improved access to care, and better health outcomes. Active participation by social workers in the implementation of the ACA can help fulfill this promise. Social workers can facilitate enrollment in the new coverage options by serving as navigators, assisters, certified application counselors, or ombudsmen. The success of the innovative payment and delivery models, medical homes, and ACOs, as well as the integration of physical and mental health, necessitates effective care coordination. Social workers can point to their specialized education and training and to the research evidence to demonstrate their potential to improve care coordination over time and across multiple settings (Golden, 2011). The expansion of insurance coverage of mental health and substance abuse services will significantly increase demand for behavioral health services and thus require an expanded behavioral health workforce. Social workers will be needed to fill these new jobs in the behavioral health sector.

Shortcomings of the ACA

Though bold and far-reaching, the ACA is not without its shortcomings. These shortcomings suggest opportunities for social work advocacy. Chief among the shortcomings are gaps in coverage. First, as a result of the Supreme Court ruling on the constitutionality of the ACA, National Federation of Independent Business v. Sebelius, states were given the option to expand Medicaid. Following this ruling, nineteen states have elected not to expand Medicaid and debate is ongoing in five states as of March 2014 (cite http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/). Because subsidies to purchase insurance are not available to persons with incomes below 100 percent of the FPL, low-income individuals who live in these non-Medicaid expansion states likely will be unable to find affordable coverage. Second, “unauthorized persons” (i.e., undocumented immigrants) residing in the United States, estimated at 11 million, are ineligible for coverage. Third, legal immigrants during the first five years after entry into the United States are barred from participating in any public programs, including Medicaid. As advocates for the nation’s poor and most vulnerable, social workers can work to extend coverage to excluded groups or support state efforts, such as those in California and Illinois (Gusmano, 2012), to pay for Medicaid coverage for the undocumented population.

Another major shortcoming in the ACA pertains to coverage of dental services. While the essential health benefits package includes children’s dental services, it does not mandate coverage of adult dental services. In addition, though pediatric dental coverage is included as a mandatory category of essential health benefits, such coverage is in jeopardy because it can be provided through stand-alone dental plans, which do not qualify for subsidies. In light of the growing evidence connecting oral health to overall health (Naito et al., 2006; Lamster et al., 2008; Williams et al., 1635–1643), promoting improved access to dental coverage for both children and adults seems worthwhile.

Conclusion

The enactment of the ACA marks a turning point in social welfare history in the United States. The legislation extends health insurance to millions of our citizens and makes unprecedented efforts to rein in health-care inflation and improve the quality of our health care. It also may reduce class, racial, and ethnic disparities and inequalities (Gorin, Gehlert, & Washington, 2010). The ACA is a work in progress. It lays the basis for future efforts to improve the health and well-being of our population. There are multiple opportunities for the social work profession to engage in constructing this new landscape of U.S. health care through practice innovation, research, and engagement in the policy process.

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