The Affordable Care Act has caused and continues to cause sweeping changes throughout the health system in the United States. Poorly explained, complex, controversial, confusing, and subject to continuous legal and regulatory definition, the law stands as a hallmark piece of legislation that will change the health sector in America forever. This article summarizes the Affordable Care Act with a focus on children, families, and disparities. Also provided is the context of the current system of health care coverage in the United States.
Key points
- •
The impact of the Affordable Care Act (ACA) will be far-reaching for children and families, and has the potential to significantly decrease disparities.
- •
The ACA aims to improve Access to coverage, provide Better care, and ensure Consumer protections (ABC).
- •
The ACA faces multiple challenges to come, including a Congress whose leaders have repeatedly stated their intention to alter or repeal the legislation.
The Affordable Care Act (ACA; “Obamacare”) “has the potential to do more to meet the health needs of America’s racial and ethnic minorities, and more to reduce racial and ethnic health disparities, than any other law in living memory,” wrote Dr John McDonough, former Senior Advisor on National Health Reform to the US Senate Committee on Health, Education, Labor, and Pensions. Indeed, US Representative James Clyburn (D-SC) called the ACA “the civil rights act of the 21st century.” Others have challenged the constitutionality of the ACA and have been concerned about its implementation. The ACA has caused and continues to catalyze sweeping changes throughout the health system in the United States. Poorly explained, complex, controversial, confusing, and subject to continuous legal challenge and regulatory definition, the law stands as a hallmark piece of legislation that will change the health sector in America for decades. What is the ACA, and how does it affect children and families? This article summarizes this significant law, with a focus on children, families, and disparities. Also provided is the context of the current system of health care coverage in the United States.
Setting the stage: a review of Children’s Health Insurance Programs
In the United States in 2011, 18% of the total population younger than 65 (Medicare noneligible) was uninsured; within this group, 16% were children, 25% were parents, and 59% were adults without dependent children. As outlined next, children in the United States have various primary health insurance options (whose scope and provisions are changing with implementation of the ACA, as later described).
Private Insurance
Private insurance is available to children and families through employer-based insurance and through buying insurance on one’s own (in the individual market). In 2011, 49% of all Americans were covered through employer-sponsored insurance, and 5% had private nongroup insurance. In 2009, 51% of children ages birth to 18 in the United States had employer-sponsored insurance, 33% had Medicaid or Children’s Health Insurance Program (CHIP), 4% had individual coverage, 1% had other public insurance, and 10% were uninsured.
The growth of employer-sponsored insurance in the United States emerged after World War II. Price controls limited the amount of wages that employers could provide; thus, such benefits as health care became the incentives that lured workers to jobs. Over the decades, employer-sponsored insurance has become a standard in the United States. Covered benefits, cost sharing, and treatment limitations/exclusions tend to be at the discretion of insurers, under applicable state and/or federal law.
Historically, when parents have enrolled in private insurance, either through their employer or in the individual market, children have also been covered according to plan specifications as dependents. Before the ACA, children aged out of parents’ private insurance plans at age 19, or possibly age 22 if they were full-time students.
Medicaid
Established in 1965, Medicaid has historically covered pregnant women, low- and middle-income children, and poor elderly and disabled people in the United States. In 2011, 68 million people were enrolled in Medicaid, including 48% children, 27% adults, 9% elderly, and 15% disabled. In general, only citizens and lawfully residing residents in the United States for 5 years are eligible. Medicaid is a joint federal-state program, with states with lower incomes receiving a higher percentage of federal payments in what is called the Federal Matching Assistance Percentage (FMAP).
Contrary to common public understanding, Medicaid has not historically covered all people below the federal poverty level (FPL; $11,670 per year for individuals and $23,850 per year for a family of four in 2014). Federal law establishes minimum federal eligibility criteria, which states may choose to exceed at their option. These minimum criteria include coverage of all pregnant women under 133% FPL, all children up to 6 years old under 133% FPL, and all children aged 6 to 18 under 100% FPL. However, state-by-state variations in Medicaid coverage thresholds make the current system patchy and inconsistent. One saying goes, “If you’ve seen one Medicaid program, you’ve seen one Medicaid program.” Medicaid programs in different states may also have different names (ie, MediCal in California), and/or may be combined with their CHIP program. Additionally, many children and their parents may be eligible but not enrolled, or may “churn” between Medicaid and other insurance coverage because of eligibility changes. By statute, Medicaid covers the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) program, considered a comprehensive standard of benefits for pediatric care.
Children’s Health Insurance Program
Established in 1997 as part of the Balanced Budget Act, CHIP covers children in low- and middle-income households who are not eligible for Medicaid as another joint federal-state program (with higher federal reimbursement than Medicaid). States have flexibility to design their CHIP programs. For example, states can use CHIP funds to expand their Medicaid programs, create separate CHIP programs, or offer a mix of both types. In separate CHIP programs, states have flexibility, within federal rules and guidelines, to determine benefit packages and cost-sharing requirements. CHIP covers nearly 8 million children, and has helped to protect children against declining private coverage that has left many adults without adequate insurance in the past two decades. Indeed, since the enactment of CHIP in 1997, the share of children who are uninsured has fallen by half—from 13.9% to 6.6%.
The CHIP Reauthorization Act in 2009 increased appropriations for the program and included funding to encourage enrollment of children eligible but not enrolled, such as Express Lane eligibility (whereby states can use administrative data from other programs, such as Supplemental Nutrition Assistance Program or food stamps, to enroll individuals in Medicaid), 12-month continuous eligibility, and state bonuses for reaching enrollment goals. It also improved benefits, enhanced data collection, and created a new emphasis on measuring the quality of care that children received.
Military
TRICARE, which provides health benefits for eligible uniformed service members and dependents, covers unmarried children of active duty service members and eligible other members up to age 21, or 23 if in college. TRICARE serves 9.7 million Active Duty Service members, National Guard and Reserve members, retirees, their families, survivors, and certain former spouses worldwide, including approximately 2 million children. The program provides direct care through military treatment facilities and also incorporates network and non-network participating civilian health care professionals, institutions, pharmacies, and suppliers. TRICARE offers three primary options of health plans: (1) TRICARE Standard (the non-network benefit), (2) TRICARE Extra (a preferred provider organization–type benefit), and (3) TRICARE Prime (a health maintenance organization–type option). Other plan options may include dental or pharmacy benefits. The basic TRICARE package includes a well-baby and well-child care benefit modeled after the basic CHIP requirements for children, and includes routine newborn care, health supervision examinations, routine immunizations, periodic health screenings, and developmental assessments delivered in accordance with the American Academy of Pediatrics guidelines. Medicaid covers 1 in 12 military children, and also serves as an important supplemental insurer for one in nine military children with special health care needs.
Indian Health Service
The Indian Health Service (IHS) provides health care and disease prevention services to approximately 2.2 million American Indians (IA) and Alaska Natives (AN) through a network of hospitals, clinics, and health stations. It is not a portable insurance system. IHS provides direct services through IHS-operated and tribally operated facilities that are generally limited to members or descendents of members of federally recognized tribes who live on or near federal reservations. Medicaid is also an important source of health insurance coverage for AIs and ANs.
Setting the stage: a review of Children’s Health Insurance Programs
In the United States in 2011, 18% of the total population younger than 65 (Medicare noneligible) was uninsured; within this group, 16% were children, 25% were parents, and 59% were adults without dependent children. As outlined next, children in the United States have various primary health insurance options (whose scope and provisions are changing with implementation of the ACA, as later described).
Private Insurance
Private insurance is available to children and families through employer-based insurance and through buying insurance on one’s own (in the individual market). In 2011, 49% of all Americans were covered through employer-sponsored insurance, and 5% had private nongroup insurance. In 2009, 51% of children ages birth to 18 in the United States had employer-sponsored insurance, 33% had Medicaid or Children’s Health Insurance Program (CHIP), 4% had individual coverage, 1% had other public insurance, and 10% were uninsured.
The growth of employer-sponsored insurance in the United States emerged after World War II. Price controls limited the amount of wages that employers could provide; thus, such benefits as health care became the incentives that lured workers to jobs. Over the decades, employer-sponsored insurance has become a standard in the United States. Covered benefits, cost sharing, and treatment limitations/exclusions tend to be at the discretion of insurers, under applicable state and/or federal law.
Historically, when parents have enrolled in private insurance, either through their employer or in the individual market, children have also been covered according to plan specifications as dependents. Before the ACA, children aged out of parents’ private insurance plans at age 19, or possibly age 22 if they were full-time students.
Medicaid
Established in 1965, Medicaid has historically covered pregnant women, low- and middle-income children, and poor elderly and disabled people in the United States. In 2011, 68 million people were enrolled in Medicaid, including 48% children, 27% adults, 9% elderly, and 15% disabled. In general, only citizens and lawfully residing residents in the United States for 5 years are eligible. Medicaid is a joint federal-state program, with states with lower incomes receiving a higher percentage of federal payments in what is called the Federal Matching Assistance Percentage (FMAP).
Contrary to common public understanding, Medicaid has not historically covered all people below the federal poverty level (FPL; $11,670 per year for individuals and $23,850 per year for a family of four in 2014). Federal law establishes minimum federal eligibility criteria, which states may choose to exceed at their option. These minimum criteria include coverage of all pregnant women under 133% FPL, all children up to 6 years old under 133% FPL, and all children aged 6 to 18 under 100% FPL. However, state-by-state variations in Medicaid coverage thresholds make the current system patchy and inconsistent. One saying goes, “If you’ve seen one Medicaid program, you’ve seen one Medicaid program.” Medicaid programs in different states may also have different names (ie, MediCal in California), and/or may be combined with their CHIP program. Additionally, many children and their parents may be eligible but not enrolled, or may “churn” between Medicaid and other insurance coverage because of eligibility changes. By statute, Medicaid covers the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) program, considered a comprehensive standard of benefits for pediatric care.
Children’s Health Insurance Program
Established in 1997 as part of the Balanced Budget Act, CHIP covers children in low- and middle-income households who are not eligible for Medicaid as another joint federal-state program (with higher federal reimbursement than Medicaid). States have flexibility to design their CHIP programs. For example, states can use CHIP funds to expand their Medicaid programs, create separate CHIP programs, or offer a mix of both types. In separate CHIP programs, states have flexibility, within federal rules and guidelines, to determine benefit packages and cost-sharing requirements. CHIP covers nearly 8 million children, and has helped to protect children against declining private coverage that has left many adults without adequate insurance in the past two decades. Indeed, since the enactment of CHIP in 1997, the share of children who are uninsured has fallen by half—from 13.9% to 6.6%.
The CHIP Reauthorization Act in 2009 increased appropriations for the program and included funding to encourage enrollment of children eligible but not enrolled, such as Express Lane eligibility (whereby states can use administrative data from other programs, such as Supplemental Nutrition Assistance Program or food stamps, to enroll individuals in Medicaid), 12-month continuous eligibility, and state bonuses for reaching enrollment goals. It also improved benefits, enhanced data collection, and created a new emphasis on measuring the quality of care that children received.
Military
TRICARE, which provides health benefits for eligible uniformed service members and dependents, covers unmarried children of active duty service members and eligible other members up to age 21, or 23 if in college. TRICARE serves 9.7 million Active Duty Service members, National Guard and Reserve members, retirees, their families, survivors, and certain former spouses worldwide, including approximately 2 million children. The program provides direct care through military treatment facilities and also incorporates network and non-network participating civilian health care professionals, institutions, pharmacies, and suppliers. TRICARE offers three primary options of health plans: (1) TRICARE Standard (the non-network benefit), (2) TRICARE Extra (a preferred provider organization–type benefit), and (3) TRICARE Prime (a health maintenance organization–type option). Other plan options may include dental or pharmacy benefits. The basic TRICARE package includes a well-baby and well-child care benefit modeled after the basic CHIP requirements for children, and includes routine newborn care, health supervision examinations, routine immunizations, periodic health screenings, and developmental assessments delivered in accordance with the American Academy of Pediatrics guidelines. Medicaid covers 1 in 12 military children, and also serves as an important supplemental insurer for one in nine military children with special health care needs.
Indian Health Service
The Indian Health Service (IHS) provides health care and disease prevention services to approximately 2.2 million American Indians (IA) and Alaska Natives (AN) through a network of hospitals, clinics, and health stations. It is not a portable insurance system. IHS provides direct services through IHS-operated and tribally operated facilities that are generally limited to members or descendents of members of federally recognized tribes who live on or near federal reservations. Medicaid is also an important source of health insurance coverage for AIs and ANs.
A brief history of health reform
Medicare and Medicaid were enacted in 1965 under President Lyndon B. Johnson, and were the largest sweeping changes to the health sector in US history. In the 1970s, efforts by Senator Ted Kennedy to establish a national health insurance program, and by President Richard Nixon to establish universal coverage, were ultimately unsuccessful. President Bill and First Lady Hillary Clinton in the 1990s also worked for health reform; however, their efforts also eventually failed. In 2006, Massachusetts passed significant health reform under Governor Mitt Romney, designed to provide near-universal health insurance coverage for the state’s residents.
President Barack Obama made health reform a large part of his 2008 presidential campaign. An early victory for President Obama was the passage of the CHIP Reauthorization Act in 2009. After tremendous Congressional efforts, the Patient Protection and Affordable Care Act was signed into law on March 23, 2010. It was further amended by the Health Care and Education Reconciliation Act (also known as the reconciliation sidecar) on March 30, 2010, and this amended law is referred to as the Affordable Care Act.
Although the ACA has faced numerous legal challenges since its enactment, its constitutionality was most directly challenged in the Supreme Court case of National Federation of Independent Business v Sebelius . In 2012, the Supreme Court ruled that the ACA was indeed constitutional, because it determined that the penalty for not having insurance (the “individual mandate”) was within the government’s ability to tax. However, it ruled that mandatory Medicaid expansion (to be addressed later) was unconstitutional because it was overly coercive to states. As such, most provisions of the ACA stood, other than a significant crux of the law’s design: Medicaid expansion to the poorest of the poor in America. A second Supreme Court challenge in King v Burwell , decided in June 2015, upheld the legality of federal subsidies regardless of whether the insurance Marketplace is run by the state or the federal government.
An overview of the Affordable Care Act
The ACA’s 900+ pages, not including its amendments and implementing regulations, create legislation that is complex, powerful, and at times overwhelming. The ACA has 10 parts, or titles, and each is packed with numerous reforms. An excellent, comprehensive overview of each title and its reforms is found elsewhere. Notably, Title I changes insurance rules and sets up Marketplaces (“Exchanges”, see later). Title II modifies public programs, focusing on Medicaid. Title III focuses on quality improvement across the health system, modifies Medicare’s drug benefit, and creates a new preventive benefit in the program. Title IV focuses on prevention, establishes a prevention and public health trust fund, and establishes new menu labeling rules. Title V creates a significant investment in the health care workforce. Title VI invests in program integrity, with strategies to decrease so-called “fraud and abuse,” and modifies a patient-centered outcomes research body. The sidecar legislation added important improvements that addressed access in Medicaid by funding states to improve Medicaid payments for primary care services to Medicare levels, and also smoothed income and tax credit rules while closing the Medicare Part D “donut hole.”
Many of the ACA’s provisions work to address racial/ethnic and socioeconomic status disparities in the United States. The “ABC’s” of the ACA include A ccess to coverage, B etter insurance, and C onsumer protections ( Table 1 ).
| Keywords | Description | Details | |
|---|---|---|---|
| A | A ccess to coverage | More individuals with insurance coverage | Expansion of health insurance to cover nearly 32 million more children, parents, and other individuals. Creation of health insurance marketplaces (“exchanges”) for individuals to shop for affordable health insurance. Expansion of Medicaid to those up to 138% FPL, with strengthening of both Medicaid and CHIP. Provision of insurance subsidies on a sliding scale for those with incomes up to 400% FPL. Individual mandate to purchase health insurance, or pay a small penalty. Young adults can stay on their parents’ plans until age 26. |
| B | B etter insurance | Higher quality, lower cost | Preventive care covered with no cost sharing. Essential health benefits requirements. Medical loss ratio requirements: insurance companies must spend at least 80%–85% of beneficiaries’ premiums on medical care (not administrative costs), or else pay a rebate. Decrease fraud and abuse. |
| C | C onsumer protections | Beneficial market reforms | No pre-existing condition exclusions. No annual or lifetime limits on insurance coverage. |
Stay updated, free articles. Join our Telegram channel
Full access? Get Clinical Tree
