Components of the ACA

What components of the ACA do you think will have a positive effect on improving health care outcomes and decreasing costs?

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components of the ACA

The Affordable Care Act (ACA), enacted in 2010, brought numerous reforms to the U.S. healthcare system with the goals of expanding access to health insurance, improving the quality of care, and reducing healthcare costs. Several components of the ACA are likely to have a positive effect on improving health care outcomes and decreasing costs.

1. Expansion of Medicaid

The ACA expanded Medicaid eligibility to individuals and families with incomes up to 138% of the federal poverty level. This expansion has allowed millions of low-income Americans to gain access to healthcare services that they previously could not afford. Research shows that states that expanded Medicaid saw significant reductions in uninsured rates and improvements in access to care, preventive services, and financial security for low-income populations (Sommers, Gawande, & Baicker, 2017). Additionally, Medicaid expansion has been associated with better health outcomes, including reductions in mortality rates, particularly among adults aged 20 to 64 (Miller, Johnson, & Wherry, 2021).

2. Individual Mandate

The individual mandate, which required most Americans to have health insurance or pay a penalty, was designed to reduce the number of uninsured individuals and spread the risk across a larger pool, thereby lowering costs. While the penalty was reduced to zero in 2019, its initial implementation significantly increased the number of insured individuals, which helped to stabilize the insurance markets and reduce uncompensated care costs that are often passed on to insured individuals and taxpayers.

3. Insurance Marketplaces and Subsidies

The creation of state and federal insurance marketplaces has made it easier for individuals to compare and purchase health insurance plans. The ACA also provides subsidies to low- and middle-income individuals and families to help them afford insurance coverage. These subsidies have made health insurance more affordable and accessible, contributing to a reduction in the uninsured rate and improvements in access to care (Blumberg, Holahan, & Buettgens, 2020). By increasing the number of insured individuals, the ACA has helped to distribute healthcare costs more evenly and reduce the financial burden on healthcare providers and the overall system.

4. Preventive Care Services

The ACA requires most insurance plans to cover a range of preventive services without cost-sharing. These services include screenings, vaccinations, and counseling for various health conditions. By promoting preventive care, the ACA aims to catch health issues early, when they are often easier and less expensive to treat. Studies have shown that increased access to preventive services can lead to better health outcomes and cost savings by reducing the need for more expensive treatments later on (Maciosek et al., 2010).

5. Accountable Care Organizations (ACOs)

The ACA established the Medicare Shared Savings Program, which encourages the formation of Accountable Care Organizations (ACOs). ACOs are groups of healthcare providers that voluntarily come together to provide coordinated, high-quality care to Medicare patients. The goal of ACOs is to ensure that patients receive the right care at the right time while avoiding unnecessary duplication of services and preventing medical errors. By focusing on coordinated care and shared savings, ACOs have the potential to improve health outcomes and reduce healthcare costs (McWilliams, Hatfield, Chernew, Landon, & Schwartz, 2016).

6. Value-Based Purchasing

The ACA introduced several value-based purchasing programs that tie provider reimbursements to the quality of care they provide rather than the quantity of services delivered. These programs, including the Hospital Readmissions Reduction Program and the Hospital Value-Based Purchasing Program, incentivize hospitals to improve care quality and patient outcomes. By linking payments to performance, these initiatives aim to reduce healthcare costs by encouraging more efficient and effective care delivery (Ryan, Burgess, Pesko, Borden, & Dimick, 2015).


The ACA’s components, including Medicaid expansion, the individual mandate, insurance marketplaces and subsidies, preventive care services, ACOs, and value-based purchasing, have shown promise in improving health care outcomes and decreasing costs. By expanding access to care, promoting preventive services, and incentivizing high-quality care, the ACA has made significant strides in transforming the U.S. healthcare system. Continued evaluation and refinement of these components will be essential to ensure their sustained impact on health outcomes and cost reduction.


  • Blumberg, L. J., Holahan, J., & Buettgens, M. (2020). The implications of the AHCA and BCRA for coverage and premiums: The importance of non-group market stabilization. Health Affairs, 36(1), 30-36.
  • Maciosek, M. V., Coffield, A. B., Flottemesch, T. J., Edwards, N. M., & Solberg, L. I. (2010). Greater use of preventive services in U.S. health care could save lives at little or no cost. Health Affairs, 29(9), 1656-1660.
  • McWilliams, J. M., Hatfield, L. A., Chernew, M. E., Landon, B. E., & Schwartz, A. L. (2016). Early performance of accountable care organizations in Medicare. New England Journal of Medicine, 374(24), 2357-2366.
  • Miller, S., Johnson, N., & Wherry, L. R. (2021). Medicaid and mortality: New evidence from linked survey and administrative data. Quarterly Journal of Economics, 136(3), 1783-1829.
  • Ryan, A. M., Burgess, J. F., Pesko, M. F., Borden, W. B., & Dimick, J. B. (2015). The early effects of Medicare’s mandatory hospital pay-for-performance program. Health Services Research, 50(1), 81-97.
  • Sommers, B. D., Gawande, A. A., & Baicker, K. (2017). Health insurance coverage and health—What the recent evidence tells us. New England Journal of Medicine, 377(6), 586-593.
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