Affordable Care Act

Introduction

The Patient Protection and Affordable Care Act (ACA) , enacted in 2010, is the most comprehensive healthcare reform legislation since Medicare and Medicaid. The ACA aimed to increase health insurance coverage, improve healthcare quality, and reduce healthcare costs. The statute has been the subject of extensive litigation, including two major Supreme Court decisions that shaped its implementation.

The Individual Mandate

The ACA required most Americans to maintain minimum essential health insurance coverage or pay a penalty —the individual mandate. Congress enacted the mandate to address adverse selection in insurance markets: without a mandate, healthy individuals would forgo insurance, raising premiums for those who remain.

In National Federation of Independent Business v. Sebelius (2012), the Supreme Court upheld the individual mandate as a valid exercise of Congress’s taxing power. Chief Justice Roberts held that the mandate could not be sustained under the Commerce Clause because it regulated inactivity rather than activity. However, the penalty could be construed as a tax, which Congress has the power to impose.

Medicaid Expansion

The ACA expanded Medicaid to cover all adults with incomes up to 138% of the federal poverty level. States that refused to expand faced the loss of all existing federal Medicaid funding. In NFIB v. Sebelius, the Court held that the threat to withdraw all Medicaid funding was unconstitutionally coercive. The Court held that the federal government could offer new Medicaid funding to states that expanded but could not penalize states that declined.

The decision effectively made Medicaid expansion optional for states. As of 2026, the majority of states have expanded Medicaid under the ACA, though some states continue to decline expansion.

The ACA’s Other Provisions

The ACA includes numerous other provisions designed to expand coverage and improve healthcare. Insurance market reforms prohibit preexisting condition exclusions, guarantee issue, and require coverage of essential health benefits. The ACA created health insurance marketplaces where individuals and small businesses can purchase coverage, with subsidies for low- and moderate-income individuals.

The ACA also included delivery system reforms, including accountable care organizations and value-based payment programs, and public health provisions addressing prevention and wellness.

King v. Burwell

In King v. Burwell (2015), the Supreme Court held that the ACA authorizes tax subsidies for health insurance purchased through any exchange, regardless of whether the exchange was established by the state or the federal government. The Court interpreted the statute to avoid what it characterized as a “death spiral” that would undermine the ACA’s central goals.

Conclusion

The Affordable Care Act significantly expanded health insurance coverage and reformed the healthcare system. The NFIB v. Sebelius decision limited the ACA by making Medicaid expansion optional, while King v. Burwell preserved subsidies for marketplace coverage. The ACA remains a foundational statute in American healthcare law.