CNBC Explains

Obamacare: CNBC Explains

President Obama discusses the Affordable Care Act in June in San Jose, Calif.
Jewel Samad | AFP | Getty Images

President Barack Obama's landmark health-care reform law is called several things—the Patient Protection and Affordable Care Act, or just the Affordable Care Act—but even he uses the name given to it by its critics: Obamacare.

It's a simple name for a complicated law that is trying to tackle both the problem of providing affordable health insurance to just about every American, while also aiming to slow down the rate of inflation of health-care costs, which account for nearly one-fifth of America's economy.

At the same time, the ACA will cost the government $1.36 trillion to implement over the next decade, according to estimates by the Congressional Budget Office.

Obama signed the law in 2010, and many of its features have already gone into effect since the U.S. Supreme Court decision in 2012 upholding its constitutionality.

(Read more: 8 things to know about Obamacare)

The most controversial aspect of Obamacare—the mandate that individuals obtain health insurance by 2014 or face a financial penalty when they file their year-end tax return—is only just taking full effect, with the opening of enrollment on government-run insurance exchanges in October. The tens of millions of people who don't already have insurance from their employer, a current individual plan, Medicare, or Medicaid will be able to buy insurance on those exchanges operating in each state—and many of those people will get government subsidies to help pay for it.

Under the new law, insurers will be barred from denying people coverage for pre-existing conditions, dropping them when they get sick, putting lifetime limits on benefits paid out, or charging different rates for men and women. The insurance plans also must cover certain minimum benefits, such as preventative care, breastfeeding services, child immunizations and adult vaccinations.

(Read more: Health exchanges: CNBC explains)

And people who are younger than age 26 can be covered by their parents' insurance plans.

Medicaid, the federal health program for poor people, is being expanded to cover lower-income people who weren't already covered. But the 2012 Supreme Court decision left it to individual states to decide whether to authorize the expansion within their boarders—and as of late September only about half of the states are doing so.

(Read more: Medicare and Medicaid: CNBC Explains)

The Obamacare mandate that companies with more than 50 full-time workers offer affordable health insurance plans to employees or face a fine has been delayed until 2015.

The law seeks to control health-care costs by penalizing hospitals who have patients re-admitted shortly after they are discharged and by requiring insurers who spend too much on overhead to reimburse a portion of premiums to customers. Obamacare also financially encourages doctors, hospitals and other health providers to use a team approach in treating Medicare patients.

—By CNBC.com's Dan Mangan. Follow him on Twitter @_DanMangan.

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