Main article: Health care reform in the United States
Photograph
Obama signs the Patient Protection and Affordable Care Act at the White House, March 23, 2010

Obama called for Congress to pass legislation reforming health care in the United States, a key campaign promise and a top legislative goal.[213] He proposed an expansion of health insurance coverage to cover the uninsured, to cap premium increases, and to allow people to retain their coverage when they leave or change jobs. His proposal was to spend $900 billion over 10 years and include a government insurance plan, also known as the public option, to compete with the corporate insurance sector as a main component to lowering costs and improving quality of health care. It would also make it illegal for insurers to drop sick people or deny them coverage for pre-existing conditions, and require every American to carry health coverage. The plan also includes medical spending cuts and taxes on insurance companies that offer expensive plans.[214][215]

On July 14, 2009, House Democratic leaders introduced a 1,017-page plan for overhauling the U.S. health care system, which Obama wanted Congress to approve by the end of 2009.[213] After much public debate during the Congressional summer recess of 2009, Obama delivered a speech to a joint session of Congress on September 9 where he addressed concerns over the proposals.[216] In March 2009, Obama lifted a ban on using federal funds for stem cell research.[217]

Maximum Out-of-Pocket Premium as Percentage of Family Income and federal poverty level, under Patient Protection and Affordable Care Act, starting in 2014 (Source: CRS)[218]

On November 7, 2009, a health care bill featuring the public option was passed in the House.[219][220] On December 24, 2009, the Senate passed its own bill—without a public option—on a party-line vote of 60–39.[221] On March 21, 2010, the Patient Protection and Affordable Care Act (ACA) passed by the Senate in December was passed in the House by a vote of 219 to 212.[222] Obama signed the bill into law on March 23, 2010.[223]

The ACA includes health-related provisions to take effect over four years, including expanding Medicaid eligibility for people making up to 133 percent of the federal poverty level (FPL) starting in 2014,[224] subsidizing insurance premiums for people making up to 400 percent of the FPL ($88,000 for family of four in 2010) so their maximum "out-of-pocket" payment for annual premiums will be from 2 to 9.5 percent of income,[225][226] providing incentives for businesses to provide health care benefits, prohibiting denial of coverage and denial of claims based on pre-existing conditions, establishing health insurance exchanges, prohibiting annual coverage caps, and support for medical research. According to White House and Congressional Budget Office figures, the maximum share of income that enrollees would have to pay would vary depending on their income relative to the federal poverty level.[225][227]

The costs of these provisions are offset by taxes, fees, and cost-saving measures, such as new Medicare taxes for those in high-income brackets, taxes on indoor tanning, cuts to the Medicare Advantage program in favor of traditional Medicare, and fees on medical devices and pharmaceutical companies;[228] there is also a tax penalty for those who do not obtain health insurance, unless they are exempt due to low income or other reasons.[229] In March 2010, the Congressional Budget Office estimated that the net effect of both laws will be a reduction in the federal deficit by $143 billion over the first decade.[230]

The law faced several legal challenges, primarily based on the argument that an individual mandate requiring Americans to buy health insurance was unconstitutional. On June 28, 2012, the Supreme Court ruled by a 5–4 vote in National Federation of Independent Business v. Sebelius that the Commerce Clause does not allow the government to require people to buy health insurance, but the mandate was constitutional under the US Congress's taxing authority.[231] In Burwell v. Hobby Lobby the Court ruled that "closely-held" for-profit corporations could be exempt on religious grounds under the Religious Freedom Restoration Act from regulations adopted under the ACA that would have required them to pay for insurance that covered certain contraceptives.