The Affordable Care Act (ACA) significantly changed the United States health care landscape, expanding Medicaid to people with incomes up to 138% of the poverty level and creating new health insurance exchange markets through which individuals could purchase coverage. The ACA also included several consumer protections and market rules, including prohibitions on denial of coverage based on preexisting conditions and limiting the amount of money individuals and families must pay out-of-pocket each year for covered services.

The ACA also set requirements for the benchmark benefit packages that ACA-compliant plans must offer. Those packages must include essential health benefits, such as hospitalization, prescription drug coverage and outpatient care, as well as certain preventive services. Plans may also choose to provide additional health benefits, such as dental and vision coverage or medical management programs for weight loss or substance use disorder. However, the ACA prohibits the use of premium subsidies for non-essential health benefits.

For the small business and individual markets, the ACA established risk corridors and shared responsibility payments to help offset the risks of insurers losing money in those markets. The ACA also required employers to offer their employees health coverage or pay penalties. These provisions led to a significant increase in the number of people with health coverage. The ACA was largely responsible for the decline in the uninsured rate, which reached its lowest point in 2023.

Despite initial volatility, the ACA marketplaces have stabilized and are expected to continue to grow. Moreover, the ACA’s consumer protections and market rules are widely popular. For example, a recent poll found that 93% of Americans supported the ban on denials of coverage based on preexisting conditions. In addition, the majority of Americans support the ACA’s Medicaid expansion and oppose repeal efforts.

A major challenge for the ACA is that it relies on substantial public assistance to make coverage affordable for millions of Americans, including taxpayer-funded subsidies in the individual and small group markets, as well as reduced cost-sharing in the Marketplaces. Without those subsides, ACA-compliant plan premiums are projected to rise by about 5% in 2024.

While Congress has passed legislation to address some of the ACA’s challenges, other issues remain unresolved. In particular, a court ruling could change the underlying structure of the health insurance marketplaces and jeopardize coverage for millions of people. Moreover, the current political climate makes it difficult to predict how the federal budget will be affected in the future and what the impact might be on ACA-related funding.