Supreme Court Decision and Patient Protection and Affordable Act

Introduction and Historical Background:

The Patient Protection and Affordable Care Act is one of the most debated issues in American History; it grew out of a long history of failed health insurance reform.  Very first, in 1990’s many states come with a different set of proposed reforms to figure out or expand the access to coverage. During this process, States imposed two requirements namely guaranteed issue requirements and Community rating requirements but these resulted of charging higher premiums so automatically it leads to the failure of the proposal.

 Both of the guaranteed issue and community rating requirements achieved their goal. But many consequences referred as adverse selection become typical to handle the situation. It encouraged people to wait until they got sick to buy insurance; this forced insurers to increase premiums to account for that. As the cost of insurance rose, even more people waited until they became ill to buy it.

For example, in 1993, the State of Washington reformed its individual insurance market by adopting the guaranteed issue and community rating requirements. Over the next three years, premiums rose by 78 percent, and the number of people enrolled fell by 25 percent. It is the same for the New York state, in 1993, New York adopted the guaranteed issue and community rating requirements. Over the next few years, some major insurers in the individual market raised premiums by roughly 40 percent.

In 2006, Massachusetts discovered ways to overcome the previous circumstances and make the guaranteed issues and community rating requirements work successfully. The main objective they discovered is proving tax credits to individuals to make the insurance more affordable; it helped to buy insurance more easily that 1990’s. The insured rate gradually increased in Massachusetts by implementing these discoveries. They combined three reforms including - insurance market regulations, a coverage mandate, and tax credits. These three reforms made the Massachusetts system successful and also a base for “The Affordable Care Act” to adopt these versions.

         The Patient Protection and Affordable Care Act adopts a series of interlocking reforms designed to expand coverage in the individual health insurance market. First, the Act adopts the guaranteed issue and community rating requirements. Second, the Act generally requires individuals to maintain health insurance coverage or make a payment to the IRS, unless the cost of buying insurance would exceed eight percent of that individual’s income. And third, the Act seeks to make insurance more affordable by giving refundable tax credits to individuals with household incomes between 100 percent and 400 percent of the federal poverty line.

Apart from all these reforms this act also requires the creation of an Exchange in each state. It means individual have a chance to compare and purchase insurance plans at the marketplace as they wish. And also The Act gives each State the opportunity to establish its own Exchange. If the state government not utilized this opportunity, the Federal Government will establish “such Exchange.” Relatedly, the Act provides that tax credits “shall be allowed” for any “applicable taxpayer,” but only if the taxpayer has enrolled in an insurance plan through “an Exchange established by the State.

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