	Introduction

Implementation of the Patient Protection and Affordable Care Act (Affordable Care Act, or ACA) is having a significan t impact on federal mandatory—also known as direct—spending. 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. 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. A companion CRS report discusses the ACA's impact on discretionary spending, which is controlled by the annual appropriations process. 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) $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 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. 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). 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). 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. 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 ). Key Takeaways

Overall, the ACA provided more than $100 billion in mandatory appropriations and Medicare fund transfers over the 10-year period FY2010-FY2019. 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.
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.