The Affordable Care Act, also known as Obamacare, prohibits insurance companies from denying coverage to people with preexisting conditions or charging them more for their plans. The act also requires insurers to cover certain basic services like preventative care and prescription drugs. It creates new exchange markets through which individuals can purchase coverage and receive financial assistance to help pay premiums and cost-sharing. It also imposes penalties on individuals who don’t have coverage or don’t comply with the individual mandate and requires employers to offer affordable healthcare options to their employees.

Before the ACA, many people with chronic health problems ran out of insurance coverage. Others faced expensive coverage with exclusions, copays, and deductibles. The ACA eliminated these problems by expanding coverage to everyone and prohibiting insurers from denying a person’s coverage based on a preexisting condition. In addition, it allows parents to keep children on their own plans until age 26, and requires that insurance companies cover a range of essential benefits.

ACA reforms made the individual and small group markets more competitive. It limited how much premiums could increase, required insurers to spend 80 percent of their revenue on medical care and improvements, and prohibited discrimination based on age, gender, and tobacco use. It also required individual and small group insurers to disclose information about their plans’ financial stability and performance. The ACA also created exchanges for individuals and small businesses to purchase healthcare coverage.

Although some feared the ACA would kill jobs, it has actually helped to create a more stable job market and improved the economic well-being of many Americans. It has also reduced the number of uninsured people in America by expanding Medicaid and creating the exchanges. In 2023, the uninsured rate was 7.7%, down from a peak of 16.1% in 2013.

The ACA has been funded through a variety of taxes and fees on individuals, insurers, and some businesses in the healthcare industry. It has also included savings from the Medicare program. However, some of these tax provisions have been repealed or reduced since the ACA’s passage, including the individual mandate penalty and the so-called Cadillac Tax.

While the ACA continues to improve coverage and affordability in the marketplaces, the government needs to address remaining challenges. For example, some people in nonexpansion states still don’t qualify for a pathway to affordable coverage through the marketplaces because their incomes are too low to receive financial help with their insurance premiums and cost-sharing. In addition, more action is needed to close the “coverage gap” for people whose incomes are too high to qualify for Medicaid but not yet enough to afford marketplace coverage. Also, it is important to ensure that the ACA’s marketplaces continue to function smoothly and efficiently. The ACA includes measures to strengthen the exchanges’ technical support functions and promote best practices. It also includes a series of grants to improve the quality of state review programs for insurance marketplaces. This will ensure that the ACA continues to provide the best possible care for Americans.