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Thursday, November 15, 2012

Appropriations and Fund Transfers in the Patient Protection and Affordable Care Act (ACA)

C. Stephen Redhead
Specialist in Health Policy

Among its many provisions, the Patient Protection and Affordable Care Act (ACA) restructures the private health insurance market, sets minimum standards for health coverage, and, beginning in 2014, mandates that most U.S. residents obtain health insurance coverage or pay a penalty. The law provides for the establishment by 2014 of state-based health insurance exchanges for the purchase of private health insurance. Qualifying individuals and families will be able to receive federal subsidies to reduce the cost of purchasing coverage through the exchanges. ACA also expands eligibility for Medicaid; amends the Medicare program in ways that are intended to reduce the growth in spending; and makes other changes to the tax code, Medicare, Medicaid, and many other federal programs.

In addition, ACA appropriates billions of dollars to support new or existing grant programs and other activities. These mandatory appropriations include funds for a temporary insurance program for individuals who have been uninsured for several months and have a preexisting condition, as well as funding for states to plan and establish exchanges. ACA also provides funding for various Medicare and Medicaid demonstration programs, for the creation of a Center for Medicare and Medicaid Innovation to test and implement innovative payment and service delivery models, and for an independent board to provide Congress with proposals for reducing Medicare cost growth and improving quality of care for Medicare beneficiaries.

ACA provides funding for health workforce and maternal and child health programs, and establishes three multi-billion dollar funds. The first fund will provide a total of $11 billion over five years in funding for community health centers and the National Health Service Corps. (A separate appropriation provides $1.5 billion for health center construction and renovation.) The second fund will support comparative effectiveness research through FY2019 with a mixture of appropriations and transfers from the Medicare trust funds. The third fund, for which ACA provides a permanent annual appropriation, is intended to support prevention, wellness, and other public health-related programs and activities authorized under the Public Health Service Act (PHSA).

According to the Office of Management and Budget’s preliminary estimates, the FY2013 mandatory appropriations in ACA would, in general, be subject to a 7.6% reduction under a sequestration order triggered by the Budget Control Act.

Lawmakers opposed to ACA have introduced numerous bills in the 112th Congress, several of which have seen legislative action. They include measures to repeal ACA and replace it with new law; repeal or amend specific ACA provisions; eliminate certain mandatory appropriations and rescind all unobligated funds; and block or otherwise delay ACA implementation.

In addition to the mandatory appropriations discussed in this report, ACA authorizes new funding for numerous existing discretionary grant and other programs, primarily ones authorized under the PHSA. The law also creates a number of new discretionary grant programs and activities and provides for each an authorization of appropriations. Funding for all these discretionary programs and activities is subject to action by congressional appropriators. A companion product, CRS Report R41390, Discretionary Spending in the Patient Protection and Affordable Care Act (ACA), summarizes all the provisions in ACA that include an authorization of appropriations.

Date of Report: October 26, 2012
Number of Pages: 32
Order Number: R41301
Price: $29.95

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