The History of the Affordable Care Act

American health care reform efforts reach back at least as far as Theodore Roosevelt's 1912 presidential campaign promises, which included national health insurance, women's suffrage, industrial worker safety and social reforms [source: The New York Times]. Roosevelt was defeated by Woodrow Wilson that year, but the ugly fact that millions of Americans could not afford adequate health care, and that the health of the nation was suffering as a consequence, would not be ignored. By 1930, small groups were pioneering health insurance, but more clearly needed to be done -- particularly as the Great Depression deepened [sources: Goodridge and Arnquist; The New York Times].

In 1931, a 48-member committee led by Interior Secretary Ray Lyman Wilbur recommended that communities spread medical costs by establishing medical centers funded by membership fees and supplemented with tax dollars. Advocates argued that such a system would be better for both consumers and providers. But opponents, most notably the American Medical Association (AMA), denounced the plan as socialist, arguing that "state medicine," handled wrongly, could drive the best and brightest from the medical field, increase bureaucracy and harm the existing relationships between private physicians and their clients [source: The New York Times].

Such counterarguments, and the strong opposing influence of the AMA, would echo throughout future reform attempt. This resistance partly explains why the same Congress that passed the New Deal, which instituted Social Security and unemployment insurance, refused to seriously entertain health insurance legislation [source: The New York Times]. It also played a role in later congressional pushback against Truman's long fight for health reform, which included an attempt at creating compulsory national health insurance. Funded by a 3 percent payroll tax, Truman's plan essentially would have nationalized the medical profession [source: Phillips].

Meanwhile, the idea of prepaid hospital insurance had increasingly caught on in the 1930s, and coverage continued to spread well into the1950s. Labor unions won court cases enabling them to make health coverage part of collective bargaining. In 1954, the Internal Revenue Act added it as a tax-exempt employee benefit [source: Goodridge and Arnquist].

John F. Kennedy took up the cause in 1962, but powerful medical lobbies again saw to it that Congress kiboshed his attempt. But obstruction had finally faltered by July 1965 when, fueled by a post-1964 Democratic dominance in Congress, strengthening labor unions and rising civil rights movements, President Lyndon Johnson signed Medicare and Medicaid into law, providing health care coverage to people 65 and older, as well as to low-income and disabled citizens. In 2014, around 53.8 million Americans are on Medicare and 63 million are on Medicaid [sources: Goodridge and Arnquist; CMS].

By 1968, rising health care costs had become a hot political topic and, by 1971, Sen. Edward Kennedy had begun his lifelong efforts to reform health care by backing a universal single-payer plan [source: Schmeck]. President Nixon countered with a plan that would require employers to offer a minimum level of coverage but also mandated protecting competition for private insurers [source: Goodridge and Arnquist]. The struggle between these two options dominated the debate for years to come.

Meanwhile, in December 1973, Nixon signed the Health Maintenance Organization Act to help fund the establishment of HMOs. The following year, Congress passed the still-controversial Employee Retirement Income Security Act (ERISA), which sets minimum standards for pension plans in private industry but also exempts the self-insured health plans of large corporations from state regulations [source: Goodridge and Arnquist].

Presidents and candidates continued to push for health care reform. Some progress was made in 1986, when Congress passed the Emergency Medical Treatment and Active Labor Act, which mandated that nearly all hospitals examine and stabilize all emergency room patients, regardless of citizenship, legal status or ability to pay. This act was part of the Consolidated Omnibus Budget Reconciliation Act (COBRA), which allows an unemployed worker to remain on an employer's group plan for 18 months.

In 1994, President Bill Clinton's attempt to push through universal coverage based on managed competition in a closely regulated private marketplace died in Congress. Clinton was successful in closing another insurance gap, however, when in 1997 he signed the State Children's Health Insurance Program (SCHIP, now known as CHIP) into law. CHIP helps insure children of families that make too much to qualify for Medicaid but not enough to afford private medical insurance.

Under his successor, President George W. Bush, Congress passed Medicare Part D in 2003, which partly covers prescriptions for Medicare subscribers but also famously left a "doughnut hole" of no coverage during which beneficiaries must pay all prescription costs.

By the early 2000s, health care costs were soaring amid a bumpy economy, driving employers to offload more costs onto workers. As news coverage in 2006 looked toward the 2008 election, health care spending exceeded $2.2 trillion, or roughly $7,421 per person, and accounted for 16.2 percent of the economy [source: Goodridge and Arnquist]. And so the stage was set for presidential candidate Barack Obama in May 2007 to announce to an Iowa City audience his plan for "affordable, universal health care in America" [source: Herszenhorn and Pear].

If history was any indication, a bumpy road lay ahead.

If none of this sounds familiar, it's probably because HMOs quickly expanded from local nonprofits to gargantuan, influential, for-profit insurers. From 1970 to 1999 alone, the HMO industry expanded from 3 million to more than 80 million members [source: Markovich].

History had by now set the battle lines for the political debate over health care. The old arguments would play out repeatedly in the year following President Obama's February 2009 address urging a joint session of Congress to pass affordable universal health care. The philosophical divide made itself most clearly known during the debate over the public option, which would have created a new government-run insurance program similar to Medicare.

This was the approach favored by liberal Democrats, who argued that true health care reform depended on such a system [source: Stolberg]. But it threatened to alienate moderate Democrats -- a party division that supporters could ill afford, in light of Republicans' staunch resistance to Obama's health care reform plans and to the public option. Republicans argued that such a system would kill competition, drive private insurers out of business and push consumers into the government program. Obama meanwhile downplayed the public option's importance, possibly viewing it as a bone he might throw to Republicans if needed [sources: Pear and Calmes; Stolberg].

By September 2009, the public option was on life support and fading fast. Democrats knew they needed to jettison it if they were to hold on to any hope of the 60 votes needed to overcome a Republican filibuster [source: Pear and Calmes]. A deal struck in early December nearly saved it, but when Sen. Joseph Lieberman, independent of Connecticut, threatened to vote against the compromise all momentum was lost[source: Herszenhorn and Kirkpatrick]. After losing the supermajority in January 2010, the Democrats finally abandoned the public option.

The essence of the administration's health care reform plan, which included creating a system that forced insurers to compete in the marketplace and exchanges that enabled consumers to find affordable plans, survived. By February 2010, the Obama administration was pushing a revised plan with better chances, and House Minority Leader Nancy Pelosi was gathering votes to support it. On March 21, 2010, House Democrats passed the Senate bill against unanimous Republican opposition [source: Goodridge and Arnquist].

On March 23, President Obama signed the Patient Protection and Affordable Care Act of 2010 into law. Two days later, the budget reconciliation measure containing the final ACA changes was approved by Congress, again over united Republican opposition [source: Herszenhorn and Pear].

The battle was far from over. In 2011, 26 states, a number of individuals and the National Federation of Independent Business sued in federal district court over the constitutionality of two major aspects of the ACA: the individual mandate, which requires nonexempt Americans to buy health insurance or pay a penalty, and the Medicaid expansion, which states must accept or face a cutoff of federal contributions to their Medicaid programs.

In 2012, the U.S. Supreme Court heard the case of National Federation of Independent Business v. Sebelius. In a narrow decision, the court upheld the individual mandate, but not for the reasons the administration argued. According to the justices, the requirement was not valid under the Commerce Clause and the Necessary and Proper Clause, but rather was a reasonable application of the Taxing Clause. As for Medicaid expansion, the majority held that Congress could not hold Medicaid funding hostage to ensure compliance, and that states could continue to receive funding whether they participated in the expansion or not. Nonparticipation would now merely mean that they would not receive extra funding [sources: Liptak; Smith; U.S. Supreme Court].

Although some elements of the ACA went into effect immediately, the law properly went into force in 2014. In response, 14 states and the District of Columbia opted to create self-run marketplaces, while the remaining states worked with, or ceded responsibility to, the federal government. The first open enrollment kicked off on March 31, 2014. Despite a rocky launch for insurance exchange portal Healthcare.gov, it ended with 8 million enrollees, outpacing Congressional Budget Office forecasts [source: Blumenthal and Collins]. The next round of open enrollment runs from Nov. 15, 2014, through Feb. 15, 2015 [source: Sanger-Katz].

Meanwhile, the political and legal struggle over health care reform continues. Between assuming control of the House in 2011 and the fourth anniversary of the signing in 2014, Republicans have voted 54 times to repeal, overhaul or fiddle with the ACA [source: O'Keefe]. The Supreme Court will hear petitions to review its ruling in 2015, this time potentially examining the constitutionality of federal government subsidies paid to states that depend on the federal insurance exchange. Because such subsidies are essential to the success of the ACA, the future of health care reform could hinge on the court's interpretation of a few brief words [source: Pear].

The ACA is a far-reaching health care overhaul that seeks to provide a route to insurance for the uninsured while also better protecting the insured from potential abuses. This cannot be done piecemeal -- it requires widespread participation by individuals, businesses and states.

Under the ACA, individuals and small businesses compare and choose private health plans on health exchanges. People also can use the federal marketplace to determine if they qualify for Medicaid or CHIP. To keep premiums and out-of-pocket costs down, federal subsidies -- based on household income and family size -- are available as tax credits to anyone who buys insurance through the exchanges (but see sidebar). To keep lower program costs, the law includes an individual mandate, requiring that most Americans have health coverage or pay a fee equal to (as of 2015) 2 percent of household income or $325 per adult ($162.50 per child), whichever is higher [sources: HealthCare.gov; Hossain and Quealy].

Those already insured by a plan that existed as of March 23, 2010, could see their plans grandfathered in, at least temporarily, as long as the insurers in question haven't greatly cut benefits or raised subscriber costs. Job-based plans can enroll new clients, but individual plans can only keep whatever subscribers they had as of March 23, 2010. Grandfathered plans must meet some but not all ACA reforms. To qualify, they must no longer have lifetime limits or arbitrary cancellations, must allow adult children up to age 26 to remain on parents' plans, and must meet standards of transparency and health-care-related spending (as opposed to administrative costs). In practice, these rules are more complicated than they sound, and are further affected by, for example, whether the companies' will comply with ACA standards or simply cancel the policies [sources: HealthCare.gov; Hossain and Quealy].

Regarding Medicare, the ACA will close the prescription "doughnut hole" by 2020 and offer savings in the meantime through limited discounts and drug coverage [sources: Bash et al.; Desjardins, Keck and Silverleib; Medicare.gov].

The ACA also includes a controversial business mandate, which requires some companies to provide employee coverage or face fines of $2,000 to $3,000 per employee [sources: Bash et al.; Desjardins, Keck and Silverleib; Somashekhar]. But complications arising from required record-keeping have obliged the administration to grant deadline extensions to businesses. Moreover, many such companies are in the process of limiting worker hours or reducing new and seasonal hires to avoid having to offer the insurance -- a problem that has critics on both sides arguing that the business mandate be dropped. Doing so could cost an estimated $150 billion in expected fines over the next decade, money earmarked to help pay for individual subsidies [source: Somashekhar].

Meanwhile, businesses with fewer than 25 full-time employees who average about $50,000 a year or less in salary can qualify for a health care tax credit if they pay at least 50 percent of employee premiums [source: HealthCare.gov].

As Americans head into the Nov. 15, 2014, open enrollment period, many details, including the tax structure that will partially fund the ACA, are still being hammered out. Further technical trials await the exchanges, along with court challenges and continued political opposition. Thanks to the first round of enrollment, 8 million Americans have insurance now who did not have it before, but only time will tell if the trend continues, or if the ACA ultimately succeeds.