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

34 Pages·2017·0.82 MB·English

Appropriations and Fund Transfers in the
Affordable Care Act (ACA)
C. Stephen Redhead
Specialist in Health Policy
February 7, 2017
Congressional Research Service
7-5700
www.crs.gov
R41301
Appropriations and Fund Transfers in the Affordable Care Act (ACA)

Summary
Implementation of the Patient Protection and Affordable Care Act (Affordable Care Act, or ACA)
is having a significant impact on federal mandatory—also known as direct—spending. Most of
the projected spending under the law is for expanding health insurance coverage. This spending
includes premium tax credits and other subsidies for individuals and families that purchase
private insurance coverage through the health insurance exchanges established under the ACA, as
well as federal matching funds for states that have expanded their Medicaid programs.
In addition, the ACA included numerous appropriations that have provided billions of dollars in
mandatory funds to support new and existing grant programs and other activities. Other ACA
provisions require the Secretary of Health and Human Services (HHS) to transfer amounts from
the Medicare Part A and Part B trust funds for specified purposes. The law appropriated
significant amounts to support short-term health care programs for targeted groups prior to the
health insurance exchanges becoming operational in 2014. It also created a Center for Medicare
and Medicaid Innovation (CMMI) within the Centers for Medicare and Medicaid Services (CMS)
and appropriated $10 billion for the FY2011-FY2019 period—and $10 billion for each
subsequent 10-year period—for CMMI to test and implement innovative payment and service
delivery models.
The ACA established four special funds and appropriated substantial amounts to each one. First,
the Community Health Center Fund, to which the ACA appropriated a total of $11 billion over the
five-year period FY2011-FY2015, has helped support the federal health centers program and the
National Health Service Corps. Second, the Prevention and Public Health Fund, for which the
ACA provided a permanent annual appropriation, is supporting prevention, wellness, and other
programs authorized under the Public Health Service Act. Third, the Patient-Centered Outcomes
Research Trust Fund is supporting comparative effectiveness research through FY2019 with a
mix of annual appropriations, fees assessed on private health insurance, and Medicare trust fund
transfers. Finally, the Health Insurance Reform Implementation Fund, to which the ACA
appropriated $1 billion, helped pay for implementing the law. Overall, the ACA included more
than $100 billion in appropriations over the 10-year period FY2010-FY2019, including $40
billion to fund the State Children’s Health Insurance Program (CHIP) for FY2014 and FY2015.
In subsequent legislative actions, Congress has extended funding through FY2017 for several
programs whose ACA appropriations were about to expire, and reduced or rescinded ACA
funding other some other activities.
Federal outlays on insurance expansion coverage under the ACA, which constitutes most of the
law’s mandatory spending, are almost entirely exempt from sequestration. However, the
mandatory appropriations in the ACA are, in general, fully sequestrable at the percentage rate
applicable to nonexempt nondefense mandatory spending.
Besides the mandatory appropriations discussed in this report, the ACA also is having an effect on
federal discretionary spending, which is controlled by the annual appropriations acts. A
companion report, CRS Report R41390, Discretionary Spending Under the Affordable Care Act
(ACA), discusses the law’s impact on discretionary spending.
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Appropriations and Fund Transfers in the Affordable Care Act (ACA)

Contents
Introduction ..................................................................................................................................... 1
ACA Appropriations and Fund Transfers ........................................................................................ 2
Appropriations Vary by Duration and Amount ......................................................................... 3
Numerous Programs Are Funded .............................................................................................. 3
Some Funding Has Been Extended or Rescinded ..................................................................... 5
Impact of Sequestration ............................................................................................................. 5
Key Takeaways ................................................................................................................................ 6

Tables
Table 1. Sequestration of Nonexempt Nondefense Mandatory Spending ....................................... 6
Table 2. Mandatory Appropriations and Medicare Trust Fund Transfers in the Affordable
Care Act ........................................................................................................................................ 8
Table 3. ACA Appropriations and Fund Transfers by Fiscal Year in Which Funds Become
Available for Obligation ............................................................................................................. 22

Appendixes
Appendix A. Acronyms Used in the Report .................................................................................. 28
Appendix B. Annual Spending Reductions Under the Budget Control Act .................................. 30

Contacts
Author Contact Information .......................................................................................................... 31
Acknowledgments ......................................................................................................................... 31

Congressional Research Service
Appropriations and Fund Transfers in the Affordable Care Act (ACA)

Introduction
Implementation of the Patient Protection and Affordable Care Act (Affordable Care Act, or
ACA)1 is having a significant impact on federal mandatory—also known as direct—spending.2
Most of the projected spending under the law is for expanding health insurance coverage. This
includes premium tax credits and cost-sharing reduction payments for individuals and families
who purchase private insurance coverage through the health insurance exchanges established
under the ACA, as well as federal matching funds for states that choose to expand their Medicaid
programs.3
The Internal Revenue Service (IRS) reports that spending on the premium tax credits and cost-
sharing reductions totaled $79.2 billion for first three fiscal years (i.e., FY2014-FY2016) in which
the ACA exchanges were operational.4
An analysis of preliminary data from the Medicaid Budget and Expenditure System (MBES)
released by the Centers for Medicare and Medicaid Services (CMS) provides some insight into
the initial impact of the Medicaid expansion on spending.5 For calendar year 2014, the 27 states
that implemented the expansion reported spending a total of $36.7 billion on newly eligible
adults, which under the ACA was paid for entirely with federal funds (i.e., 100% federal match).
The same states spent an additional $10.5 billion on adults that were previously eligible at
traditional federal match rates or subject to technical adjustments. Expenditures for these
individuals were subject to a higher rate than the traditional match rate, but not 100%.
In its March 2016 baseline budget projections, the Congressional Budget Office (CBO) estimates
that gross spending on insurance coverage expansion under the ACA will total $1.938 trillion
over the 10-year period FY2017 through FY2026.6 That total includes $866 billion on exchanges
subsidies—premium tax credits and cost-sharing reductions—and related spending, and $1.063
trillion on Medicaid and the State Children’s Health Insurance Program (CHIP). CBO projects
that these costs will be offset by revenues from the ACA’s taxes and fees, and by savings from the

1 The ACA was signed into law on March 23, 2010 (P.L. 111-148, 124 Stat. 119). A week later, on March 30, 2010, the
President signed the Health Care and Education Reconciliation Act (HCERA; P.L. 111-152, 124 Stat. 1029), which
amended numerous health care and revenue provisions in the ACA and added multiple new stand-alone provisions.
Congress and the President have since enacted several other bills that have made targeted changes to specific ACA
provisions. All references to the ACA in this report refer, collectively, to the law as amended and to the related
HCERA provisions.
2 Mandatory, or direct, spending generally refers to outlays from budget authority (i.e., the authority to incur financial
obligations that result in government expenditures such as paying salaries, purchasing services, or awarding grants) that
is provided in authorizing laws, as opposed to annual appropriations acts. It includes spending on entitlement programs
(e.g., Medicare, Social Security).
3 While a detailed examination of the ACA is beyond the scope of this report, numerous CRS products that provide
more in-depth information on the many new programs and activities authorized and funded by the law are available at
http://www.crs.loc.gov (see under “Issue Areas: Health Care”).
4 Email from Patrick Kenney, Office of Financial Reports, IRS, November 10, 2016. The premium tax credit covers a
portion of health insurance premiums. Individuals can choose to receive the subsidy immediately to reduce their
monthly premium payments or wait until they file taxes the following year to claim the subsidy as a refundable tax
credit. The cost-sharing subsidy reduces out-of-pocket costs (e.g., deductibles, copays) when receiving health care.
5 Laura Snyder, Katherine Young, and Robin Rudowitz et al., Medicaid Expansion Spending and Enrollment in
Context: An Early Look at CMS Claims Data for 2014, The Henry J. Kaiser Family Foundation, Issue Brief, January
2016, http://files.kff.org/attachment/issue-brief-medicaid-expansion-spending-and-enrollment-in-context-an-early-look-
at-cms-claims-data-for-2014.
6 CBO, Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026, March 2016,
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51385-HealthInsuranceBaseline.pdf.
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law’s changes to the Medicare program that are designed to slow the rate of growth of Medicare
payments to certain health care providers.
The ACA also included numerous appropriations that are providing billions of dollars in
mandatory funds to support new and existing grant programs and other activities. Several other
provisions in the law require the Secretary of Health and Human Services (HHS) to transfer
amounts from the Medicare Part A and Part B trust funds for specified purposes.
This report summarizes all the mandatory appropriations and Medicare trust fund transfers in the
ACA and provides details, where publicly available, on the status of obligation of these funds.
The information is presented in two tables. The report also includes a brief discussion of the
impact that sequestration is having on ACA mandatory spending. This report is periodically
revised and updated to reflect important legislative and other developments.
A companion CRS report discusses the ACA’s impact on discretionary spending, which is
controlled by the annual appropriations process.7 Discretionary spending under the ACA falls into
two broad categories. First, there are the amounts provided in appropriations acts for specific
grant and other programs pursuant to explicit authorizations of appropriations in the ACA.
Second, there are the costs incurred by the federal agencies that are responsible for administering
and enforcing the ACA’s core provisions to expand insurance coverage.
ACA Appropriations and Fund Transfers
Table 2 summarizes all the ACA provisions that include an appropriation of funds or a transfer of
amounts from the Medicare trust funds. The provisions are grouped under the following headings:
(1) Private Health Insurance; (2) Medicaid and the State Children’s Health Insurance Program
(CHIP); (3) Medicare; (4) Fraud and Abuse; (5) Health Centers; (6) Health Workforce and the
National Health Service Corps; (7) Community-Based Prevention and Wellness; (8) Maternal and
Child Health; (9) Long-Term Care; (10) Comparative Effectiveness Research; (11) Biomedical
Research; and (12) ACA Implementation: Administrative Expenses.
Each table row provides information on a specific ACA provision, organized across four columns.
The first column shows the ACA section or subsection number. The second column indicates
whether the provision is freestanding (i.e., statutory authority that is not amending an existing
statute) or amendatory (i.e., amends an existing statute, typically the Social Security Act).
Amendatory provisions either add a new program to the statute or modify an existing one. The
third column gives a brief description of the program or activity, including details of the
appropriation or fund transfer. The entry also includes the name of the administering agency
within HHS and, if applicable, the Catalog of Federal Domestic Assistance (CFDA) number for
the grant program.8 The fourth column shows how much funding has been obligated to date. An
agency incurs an obligation, for example, by placing an order, signing a contract, awarding a
grant, purchasing a service, or taking other actions that require the government to make
payments.

7 CRS Report R41390, Discretionary Spending Under the Affordable Care Act (ACA), coordinated by C. Stephen
Redhead.
8 CFDA is a government-wide compendium of federal grant and other assistance programs. Each program is assigned a
unique five-digit number, XX.XXX, where the first two digits represent the funding agency and the second three digits
represent the program. Programs funded by the Department of Health and Human Services begin with the number 93.
For more information, see https://www.cfda.gov.
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The obligation amounts are based on information in the HHS Tracking Accountability in
Government Grants System (TAGGS) unless specified otherwise. The TAGGS database is a
central repository for grants awarded by all the HHS operating divisions (agencies) and several
offices within the Office of the Secretary. It is updated daily with new data provided by these
entities.9
Appropriations Vary by Duration and Amount
In many instances the ACA provided annual appropriations of specified amounts for one or more
fiscal years. Generally, these funds must be obligated during the fiscal year in which the funds
become available for obligation. A few provisions are multiple-year appropriations, in which the
amount appropriated is available for obligation for a period of time in excess of one fiscal year
(e.g., for the period FY2011 through FY2014). Often the provision includes additional language
stating that the funds are to remain available “until expended” or “without fiscal year limitation.”
Most ACA appropriations and fund transfers are temporary (i.e., time-limited). Often they end in
FY2014 or FY2015, though in a handful of instances they extend until FY2019. The law included
four provisions (i.e., Sections 3021(a), 3403, 10323(b), and 4002) that continue to provide annual
or multiple-year appropriations in perpetuity.
The ACA also included three indefinite appropriations that provide an unspecified amount of
funding as indicated by the phrase “such sums as may be necessary,” or SSAN. One such
provision (i.e., Section 1311) appropriated SSAN and authorized the HHS Secretary to determine
the specific amount necessary for the grant program.10
Table 3 provides additional details on each of the appropriations (and fund transfers) summarized
in Table 2. It shows the amount available for obligation in each fiscal year (or multi-year period)
over the 10-year period FY2010 through FY2019. Note that the provisions are organized and
grouped under the same headings used in Table 2. The final column in Table 3 (“Total”) shows
for each provision the total amount of appropriations or fund transfers. Note that in several cases
the total amount has yet to be determined (see table entries for Sections 1311, 3403, 6301(d) &
(e), 9023(e), and 10323(a)). For three of the provisions that continue to provide funding beyond
FY2019, the amount in the total column represents the cumulative amount appropriated through
FY2019 (see table entries for Sections 3021(a), 4002, and 10323(b)). Unless otherwise stated,
references to the Secretary in both tables refer to the HHS Secretary. A list of the federal laws,
agencies, programs, and funds referred to in this report by their acronym is provided in
Appendix A.
Numerous Programs Are Funded
As summarized in the tables, the ACA funded a broad range of new and existing programs. The
law appropriated significant amounts to support the following short-term health care programs for
targeted groups prior to the health insurance exchanges becoming operational in 2014: (1) $5
billion for the Pre-Existing Condition Insurance Plan (PCIP), a temporary insurance program that
provided health insurance coverage for uninsured individuals with a pre-existing condition; (2)

9 To access and search the TAGGS database, go to http://www.taggs.hhs.gov/.
10 The two other indefinite appropriations (i.e., Sections 5508(c), and 9023(e)) provide SSAN to carry out a program,
but in each case there is an upper limit on the amount that may be appropriated. Note that a fourth provision (i.e.,
Section 10323(a)) requires the HHS Secretary to transfer SSAN from the Medicare trust funds to carry out a pilot
program.
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$5 billion for a temporary reinsurance program to reimburse employers for a portion of the costs
of providing health benefits to early retirees aged 55-64; and (3) $6 billion for the Consumer
Operated and Oriented Plan (CO-OP) program, to support temporary health insurance
cooperatives. The ACA appropriated $2.4 billion for maternal and child health programs and
provided an unspecified amount of funding for state grants to plan and establish health insurance
exchanges.11
The law established the Center for Medicare and Medicaid Innovation (CMMI) within CMS and
appropriated $10 billion for the FY2011-FY2019 period—and $10 billion for each subsequent
10-year period—for CMMI to test and implement innovative payment and service delivery
models. It also established and funded an Independent Payment Advisory Board (IPAB) to make
recommendations to Congress for achieving specific Medicare spending reductions if costs
exceed a target growth rate. IPAB’s recommendations are to take effect unless Congress overrides
them, in which case Congress would be responsible for achieving the same level of savings.
The ACA created four special funds and appropriated substantial amounts to each one:
 The Community Health Center Fund (CHCF), to which the ACA appropriated
a total of $11 billion in annual appropriations over the five-year period FY2011-
FY2015, has helped support the federal health centers program and the National
Health Service Corps (NHSC). (Note: A separate ACA appropriation provided
$1.5 billion for health center construction and renovation.) Congress has since
appropriated two additional years of funding for the CHCF (see below). While
CHCF funding may have been intended to supplement annual discretionary
appropriations for the health centers program and the NHSC, the funds have
partially supplanted (i.e., replaced) discretionary health center funding and have
become the sole source of funding for the NHSC program, which has not
received an annual discretionary appropriation since FY2011.12
 The Prevention and Public Health Fund (PPHF), for which the ACA provided
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). In two separate legislative actions, Congress
has reduced the ACA’s annual appropriation to the PPHF for each of FY2013
through FY2024 by a total of $9.75 billion.13 PPHF funds have been used to
support several new discretionary grant programs authorized by the ACA. The
funds are also supplementing, and in some cases supplanting, annual
discretionary appropriations for a number of established programs, including
ones that were reauthorized by the ACA. In FY2013, almost half of the PPHF
funds were used to help pay for CMS’s administrative costs associated with
exchange operations.14

11 For a state-by-state breakdown of ACA exchange planning and establishment grants, see CRS Report R43066,
Federal Funding for Health Insurance Exchanges, by Annie L. Mach and C. Stephen Redhead.
12 For more information, see CRS Report R42433, Federal Health Centers, by Elayne J. Heisler; and CRS Report
R41390, Discretionary Spending Under the Affordable Care Act (ACA), coordinated by C. Stephen Redhead.
13 Section 3205 of the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96, 126 Stat. 156) reduced the
ACA’s annual appropriations to the PPHF for each of FY2013 through FY2021 by a total of $6.25 billion. Section
5009 of the 21st Century Cures Act (P.L. 114-255, 130 Stat. 1033) further reduced the annual appropriations to the
PPHF for each of FY2018 through FY2024 by a total of $3.5 billion. See Table 2.
14 For more information, see CRS Report R41390, Discretionary Spending Under the Affordable Care Act (ACA),
coordinated by C. Stephen Redhead.
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 The Patient-Centered Outcomes Research Trust Fund (PCORTF) is
supporting comparative effectiveness research with a mix of annual
appropriations—some of which are offset by revenues from a fee imposed on
private health plans—and transfers from the Medicare Part A and Part B trust
funds through FY2019.
 The Health Insurance Reform Implementation Fund (HIRIF), to which the
ACA appropriated $1 billion, has helped cover the administrative costs of
implementing the law.
Some Funding Has Been Extended or Rescinded
As already noted, most of the ACA appropriations are temporary. The following laws enacted
since 2012 have extended funding for several programs funded by the ACA:
 American Taxpayer Relief Act of 2012 (ATRA);15
 Pathway for SGR Reform Act of 2013 (PSGRRA);16
 Protecting Access to Medicare Act of 2014 (PAMA);17 and
 Medicare Access and CHIP Reauthorization Act of 2015.18
Lawmakers opposed to specific ACA provisions also have succeeded in getting some ACA
funding reduced or rescinded. ATRA, the Middle Class Tax Relief and Job Creation Act of 2012,
the 21st Century Cures Act, and enacted appropriations acts for each of the past six fiscal years
(i.e., FY2011-FY2016) all included ACA funding reductions or rescissions.19
The ACA funding extensions, reductions, and rescissions are summarized in Table 2 and Table 3.
Impact of Sequestration
While the federal spending on insurance expansion coverage under the ACA is almost entirely
exempt from annual sequestration, the ACA appropriations discussed in this report are, in general,
fully sequestrable at the percentage rate applicable to nonexempt nondefense mandatory spending
(see Table 1). Under the sequestration general rules, cuts in CHCF funding for community health
centers and migrant health centers are capped at 2%. See Appendix B for more background on
the annual spending reductions triggered by the Budget Control Act of 2011.20
Importantly, only new budget authority for nondefense programs is sequestrable in any given
fiscal year. That includes advance appropriations that first become available for obligation in that
year. Unobligated balances carried over from previous fiscal years are exempt from sequestration.

15 P.L. 112-240, 126 Stat. 2313.
16 P.L. 113-67, Division B, 127 Stat. 1195.
17 P.L. 113-93, 128 Stat. 1040.
18 P.L. 114-10, 129 Stat. 87.
19 See CRS Report R43289, Legislative Actions in the 112th, 113th, and 114th Congresses to Repeal, Defund, or Delay
the Affordable Care Act, by C. Stephen Redhead and Janet Kinzer, and a companion product, CRS Report R44100, Use
of the Annual Appropriations Process to Block Implementation of the Affordable Care Act (FY2011-FY2017), by C.
Stephen Redhead and Ada S. Cornell.
20 P.L. 112-25, 125 Stat. 240.
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Table 1. Sequestration of Nonexempt Nondefense Mandatory Spending
Fiscal Year Percent Reduction
2013 5.1%a
2014 7.2%
2015 7.3%
2016 6.8%
2017 6.9%
Source: Office of Management and Budget annual reports to Congress on the Joint Committee reductions
(FY2013-FY2017).
a. This percentage reflects adjustments made by ATRA; see Appendix B.
Key Takeaways
Overall, the ACA provided more than $100 billion in mandatory appropriations and Medicare
fund transfers over the 10-year period FY2010-FY2019. As enacted, the law included the
following amounts:
 $40 billion for CHIP (FY2014 and FY2015);
 $15 billion for the PPHF through FY2019 (and $2 billion for each year
thereafter);
 $11 billion for the CHCF;
 $10 billion for CMMI through FY2019 (and $10 billion for each 10-year period
thereafter);
 $6 billion for the CO-OP program;
 $5 billion for PCIP;
 $5 billion for the Early Retiree Reinsurance program
 $4 billion (projected) for the PCORTF;
 $2.25 billion for the Medicaid Money Follows the Person (MFP) demonstration;
and
 $1.5 billion for the maternal, infant, and early childhood visitation program.
Only four of the ACA appropriations are permanent (i.e., CMMI, IPAB, PPHF, and environmental
health screening). All the other appropriations were temporary.
In a series of legislative actions (described in more detail in Table 2 and Table 3), Congress
extended funding for several programs whose ACA appropriations were about to expire. The
following programs are now funded through FY2017:
 health centers (CHCF funding);
 National Health Service Corps (CHCF funding);
 graduate medical education (GME) payments for teaching health centers;
 maternal, infant, and early childhood home visiting program;
 personal responsibility education program (PREP);
 health workforce demonstration programs;
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 abstinence education grants;
 family-to-family health information centers; and
 outreach and assistance for low-income programs.
Congress has also provided two more years of funding (FY2016-FY2017) for CHIP.
Finally, Congress has partially reduced or rescinded ACA funding for IPAB, PPHF, and the CO-
OP program.

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