Health care reform (HCR) in the United States refers to comprehensive legislative changes intended to reshape the nation’s medical system by addressing issues of access, cost, and quality. HCR is most often associated with the Patient Protection and Affordable Care Act (ACA), a federal statute enacted in 2010. This legislation marked the largest governmental intervention in the healthcare sector since the creation of Medicare and Medicaid in 1965. The reform was motivated by the high rate of uninsured Americans and the acceleration of national healthcare spending.
Defining Health Care Reform
The ACA represents the core of modern health care reform efforts, built around a three-part framework aimed at achieving near-universal coverage. The goals included making affordable health insurance widely available, improving the quality of medical care, and slowing the growth of national health care expenditures. (55 words)
The law sought to expand coverage for millions previously excluded from the insurance market due to cost or medical history. The reform shifted responsibility for health coverage across individuals, employers, and the government to ensure a shared commitment. By setting new standards and creating new marketplaces, the legislation fundamentally altered how health insurance operates. (55 words)
Mechanisms for Expanding Coverage
The reform expanded insurance coverage through several distinct mechanisms designed to reach different income levels. A primary avenue is the Health Insurance Marketplace, where consumers compare and purchase private plans. Eligibility for financial assistance, such as Premium Tax Credits, is based on a sliding income scale, limiting the cost of premiums for households earning up to 400% of the federal poverty level. (69 words)
The law also contained Cost-Sharing Reductions, which lower out-of-pocket costs like deductibles and copayments for low-income Marketplace enrollees. For the poorest adults, the ACA offered states the option to expand Medicaid eligibility to nearly all non-elderly adults with incomes up to 138% of the federal poverty level. States choosing this expansion receive substantial federal funding. (75 words)
The employer mandate, known as the Employer Shared Responsibility Provision, requires larger companies to provide coverage. Applicable Large Employers (50 or more full-time employees) must offer minimum essential coverage to at least 95% of their full-time workforce or face a financial penalty. The employee’s contribution for self-only coverage must not exceed a certain percentage of household income to be deemed “affordable.” (83 words)
Core Consumer Protections and Market Rules
The reform established strict new rules for insurance companies to protect consumers and standardize coverage. The primary protection is the prohibition against denying coverage or charging higher premiums based on a pre-existing medical condition. This rule ensures that health history no longer prevents individuals from obtaining insurance. (58 words)
New plans must cover a comprehensive set of Essential Health Benefits (EHBs) across ten categories, including prescription drugs, mental health services, and preventive care. Insurers are barred from imposing annual or lifetime dollar limits on coverage for these benefits. This prevents individuals with serious or chronic illnesses from depleting their insurance benefits. (65 words)
Young adults are allowed to remain on a parent’s health insurance plan until they reach the age of 26. This provision provides a coverage bridge for young people transitioning into the workforce. Additionally, all plans must meet a Minimum Value standard, meaning the plan must cover at least 60% of the total average cost of covered benefits. (75 words)
Funding and Strategies for Cost Reduction
Financing for the expanded coverage and subsidies is generated through a combination of taxes and fees, alongside projected savings from system efficiencies. New funding streams included an excise tax on certain medical devices and annual fees levied on health insurance providers based on their market share. (55 words)
Beyond raising revenue, the reform introduced strategies to shift the system from a volume-based model to a value-based model to control costs. The Centers for Medicare & Medicaid Services (CMS) launched the Center for Medicare and Medicaid Innovation (CMMI) to test new payment and service delivery models. One prominent example is Accountable Care Organizations (ACOs), which are networks of doctors and hospitals financially accountable for the quality and cost of care for a defined patient population. (90 words)
The Hospital Readmissions Reduction Program (HRRP) was implemented to discourage expensive and avoidable hospital stays. This program financially penalizes hospitals with higher-than-expected readmission rates for specific conditions within 30 days of discharge. These structural changes incentivize providers to improve care coordination and patient follow-up to reduce unnecessary spending. (70 words)