The Affordable Care Act Nine Years Later: What Have we Learned?

This Saturday, March 23, marks the 9th anniversary of the passage of the Patient Protection and Affordable Care Act (Public Law 111-148) by the 111th Congress. Accompanied by the Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), the ACA represents the U.S. Health System's most consequential overhaul since the passage of Medicare and Medicaid as part of LBJ’s Great Society program in 1965.

No legislation in modern history has been as divisive, misrepresented and misunderstood as the ACA. As 15 Democratic candidates launch their campaigns for the White House, it will once again be in the spotlight.

THREE GOALS OF THE ACA:

To increase access to health insurance for the uninsured

The major levers to increase coverage were these:

  • Creation of state-run marketplaces wherein low-income individuals could purchase private coverage with federal subsidies and small employers could offer coverage with tax credits.

  • Expansion of Medicaid with the federal government guaranteeing 90% of the cost for the expanded enrollment population.

  • Provisions to allow young adults under 26 to stay on their parents’ policy.

  • Administrative changes in the ways private insurers operate their businesses i.e. standardization of benefits (essential health benefits, et al), mandated medical loss ratio’s, coverage for pre-existing conditions and others.

  • Individual and employer mandates to purchase health insurance so as to stabilize the risk pools and constrain premiums.

The results to date have been mixed: the uninsured rate in 2010 when the ACA passed was 17.4% (46.5 million). It shrank to 10% in 2016 (26.7million) and increased slightly to 10.2% (27.4%) in 2017 as certain provisions of the ACA were relaxed by the new administration. The primary target of these efforts was the private insurance market for individuals and the state-run marketplaces their primary access channel.  After a rocky start in October 2013, enrollment through the marketplaces peaked at 12.7 million in 2016 and decreased to 8.4 million in 2018.  In the same time frame, health insurance coverage offered by employers showed a slight dip: from 2010-2018, large employers coverage shrank from 99% to 96%, mid-size employers (50-99 workers) decreased from 93% to 89% and small employers (3-49 workers) fell from 66% to 54%.

Enrollment in Medicaid and the Children’s Health Insurance Program has stabilized but remains controversial. Total enrollment increased to 72.4 million in 2018 from 54.5 million in 2010.  The expansion provision of the ACA spiked enrollment and spending growth from 2014-2016 but both have stabilized since.  In FY2018, Medicaid spending grew by 4.2% similar to the previous year’s growth; states project an average 5.3% increase in Medicaid spending in FY 2019 due to increased enrollment. Which is estimated to reach 82 million by 2026. Currently, 36 states have expanded their Medicaid programs vis a vis the provisions of the ACA. But Governors and state legislators, anticipating an economic slowdown in 2020, are caught between a rock and hard place—the public supports increased coverage and in some red states expanded Medicaid coverage but they do not want to pay higher taxes or divert funds from education and public safety.

So, access to insurance coverage in the individual market, for those eligible for Medicaid and the working population aged 19-64 has increased as a result of the ACA, but its affordability remains problematic as premium costs have increased faster than wages.

To reduce healthcare costs

Average annual health spending in the United States had increased from 5.4% 1990-1999 to 5.7% in the 2000s primarily due to increased enrollment in Medicare and rising prices for prescription drugs, specialty care and hospitals. In the ACA, the major strategies whereby the spending spiral was addressed were five:

  • Increased spending in primary care and preventive health (community health centers, public health programs, et al) to reduce demand for specialized care

  • Increased use of health information technologies to reduce waste and coordinate care more effectively (the ACA built on mandates that providers implement electronic health records and pursue interoperability)

  • Increased penalties for hospitals for avoidable hospital complications, readmissions, et al.

  • Increased use of alternative payment models to incentivize hospitals and physicians to manage the costs of care effectively while meeting quality requirements (accountable care organizations, bundled payment programs, primary care medical homes, et al)

  • Increased transparency to equip consumers to understand treatment options, compare providers and insurance plans, et al

The results to date are mixed: Average annual health spending in the United States slowed from 5.7% in the 2000s to 3.7% from 2000-2017. Utilization rates have stabilized: the numbers of unnecessary tests, procedures and visits have been minimized but the unit costs for drugs, devices, hospital admissions, and specialty care from physicians has pushed costs up. But the majority of these increases have been passed through disproportionately to working adults whose employers/insurers use health savings accounts, high deductible plans, and other cost-sharing requirements to shift health costs to employees/enrollees. In 2017, the latest year for which government data is available, U.S. health care spending grew 3.9% in 2017, reaching $3.5 trillion or $10,739 per person and 17.9% of the nation's Gross Domestic Product. Under current law including the ACA, national health spending is projected to grow at an average rate of 5.5% per year for 2018-27 reaching nearly $6.0 trillion (19.4% of GDP) by 2027 per CMS. The affordability of health insurance is problematic to consumers: premiums have increased faster than wages, and 23% of the working population 19-64 who have coverage spend more than 10% of their income on out of pocket costs for healthcare excluding their premium.

Thus, the costs of healthcare continue to be problematic and do not appear to have been constrained by the ACA. The Congressional Budget Office’ score for the ACA (March 2010) said that the ACA would reduce the budget deficit by $143 billion between 2010 and 2019 and cost $940 billion to implement. Their assessment presumed that 95% of U.S. citizens would have health insurance coverage with no out of pocket costs for preventive health care driving down utilization. It also assumed Medicare payment cuts ($335 billion savings including $155 billion to hospitals and $136 billion to Medicare Advantage plans), industry excise taxes (prescription drugs $85 billion, Cadillac insurance plans $32 billion, medical devices $19 billion et al), income from the individual and employer mandate penalties, a new tax on high income households (1 million people who make more than $200,000 and 4 million couples filing jointly who make more than $250,000 who pay 3.8% in Medicare taxes on dividends, capital gains, rent, and royalties and pay 2.35% in Medicare income taxes, up from 1.45%).

Much has changed since this forecast: no one knows for sure if the ACA has reduced costs compared to what they might have been. That’s the rub: those opposed say it escalated costs. Proponents say it didn’t. And both groups can point to complicated studies by well-funded think tanks to buttress their positions.

To improve the quality and safety of care

Improvements to the effectiveness of the system did not get the attention given increased access and lower costs. Nonetheless, in its formulation, improvements to the efficacy and effectiveness of healthcare were primary aims. The primary strategies were four:

  • Improvements in the overall performance of the healthcare workforce to upgrade skills, optimize the use of technologies and attract talent.

  • Creation of new programs like the Patient Centered Outcome Research Institute to implement comparative effectiveness research facilitating access by scientists, providers, payers and consumers.

  • Public reporting (transparency) and, in some cases, penalties for providers (hospitals, post-acute providers, health insurers, et al) where their performance is substandard.

  • The Secretary of Health and Human Services’ mandate to submit an annual Healthcare Quality report to Congress outlining accomplishments and needs.

Like increased access and lower costs, the results have been mixed. The implementation of Star Ratings for hospitals and post-acute providers, improvements in patient safety and growing public attention to provider report cards are positives. But notable gaps exist largely because the system is structurally and politically paralyzed by inaction in areas like opioid addiction, veterans health, Indian Health services, prison health, the pandemics of obesity and social isolation, embarrassing gaps in rural health and others. And beyond elements included in the ACA, notable facets of healthcare were not adequately addressed, such as medical education and the integration social services programs (nutrition, housing, others) in the scheme of health delivery and financing.

MY TAKE

Reflecting on the ACA nine years later, the lessons are clear:

Healthcare is deeply personal and complicated so the public’s opinion can be easily swayed

Though the platitudes in the ACA (like lower costs, increased coverage) and specific features (like guaranteed issue and transparency) are widely popular, a gestalt view of the ACA prevailed. To the ACA’s supporters, healthcare is a right, not a privilege and the law it is a needed step toward reigning in a system that puts its profits ahead of anything else. To its critics, the ACA represents an overreach by the federal government that is prone to mismanagement and waste. From the fall of 2009 to the present, these views are unchanged. Thus, soundbites and symbolism matter more than substance. The majority of voters and many elected officials remain ignorant about the actual elements of the ACA. But decrying corporate greed and price gauging on one side or labeling it “Obamacare” or “government run healthcare” on the other works.

The ACA’s big bet was only a partial solution

The big bet in the ACA was the premise that increasing access to health insurance would reduce costs by limiting unnecessary emergency room visits and hospital stays. But the affordability of insurance premiums plus growing out of pocket costs was under- estimated nor were the persistent price increases (medical inflation) for drugs, devices, technologies and facilities appropriately considered. The ACA’s big bet about increased coverage was right in reducing utilization but wrong in assuming it alone would reduce costs.

I was in the House gallery on March 21, 2010 when it voted to approve the Senate version of the ACA. I was on the steps of the Supreme Court when the ACA was upheld June 28, 2012. I have read the ACA many times, musing about its disconnect from the way things actually operate in our health system.

With Campaign 2020 underway and every state legislature grappling with fiscal and social issues, healthcare looms as perhaps the most difficult. In all likelihood, the ACA will be part of the discussion.


Paul