The Failures and Successes of the ACA

The ACA is not perfect; It has flaws but I argue the benefits have made passing the legislation worthwhile. Most people I have engaged with who make the claim “Obamacare is failing” are repeating 7 years of GOP rhetoric (“repeal and replace”) and are buying into Trump’s repeated insistence that the “failing” claim is true. A “death spiral” would involve too many people joining the marketplace and enough insurers leaving the market so that the whole thing collapses. That is not what is happening.

I will judge the success of the ACA based on a few criteria.

Do more people have access to healthcare?
Yes

Is the quality of that healthcare better than pre-ACA?
Yes

What kind of economic impact has the ACA created?
Uncertain. Premiums for some plans have increased at a slower rate than before the ACA.   Individual plans have increased in cost as more individuals are forced into the market.  Prescription drug prices are still prohibitively high. Insurance companies are guaranteed customers.

Has the ACA caused an increase in premiums?
Premiums have increased despite the implementation of the ACA.  Some analysis have argued the acceleration of premium prices has been slowed by the ACA.

 


The following is my analysis of these criteria concerning the failures and successes of the ACA, otherwise called “Obamacare”.


 

“If you like your doctor/plan, you can keep…”
I would like to address this immediately because it is the most common criticism of the ACA.  Yes, the president made this statement and when the final bill passed, the promise was not kept.  He may have intended it at the time, but ultimately did not keep his promise.  If lawmakers could have kept everyone who liked their plan on it, they would have.  But, it was impossible to keep all plans the same while at the same time revamping the entire health care system (1/6th of the economy) with so much money shifting around and 20 million people joining the market.  Most young people do not care if they have to see another doctor; I’ve rarely seen the same doctor twice.  However, for older people who spend increasingly more time and money at the doctor’s office, this disrupted their lives.  But lambasting over this claim made in 2009, eight years later is tiring to hear because it adds nothing to the discussion of health care.  It’s okay to feel wronged, but please leave this useless complaint in the past, where it belongs.

Coverage
The ACA was designed as a market-driven plan that would increase the number of people who could afford health insurance and prevent insurance companies from denying health insurance to people with pre-existing conditions. In these regards it has succeeded; pre-ACA, about 15% of the population did not have health insurance, peaking at 17.3% when the ACA was implemented. Currently, about 11% of the population lacks health insurance. Increasing coverage of 20 million people is no failure of policy.

Another analysis: https://time.com/money/4503325/obama-health-care-costs-obamacare/

Costs
That said, the success or failure of ACA cannot be solely based on health coverage, it is also an economic policy (health care is 1/6th of the US economy) designed to reduce health care costs.  It is arguable whether this has occurred as premiums have continued to rise.  Some make claims the rate of premium increase has slowed, but that claim depends which data is analyzed.  Are individual plans a better indicator of “success” than employer based plans?  49% of Americans have employer based coverage.  Is family coverage more representative of overall health care costs than individual?

There is also evidence that some health care costs have risen.  The majority of provisions in the ACA took effect at the end of 2013.  The spikes in 2014 are theorized to be adjustment spikes as the market absorbs 20 million new customers: the invisible hand.  Whether or not one considers this a success or failure depends on your moral views associated with health care and personal responsibility for public welfare.

Forbes criticizes the Health Affairs’s analysis of the data.  I agree they used a smaller portion of data to represent their perspective, instead of a more objective view.  Regardless, premiums have risen drastically for individual plans, potentially seen as a mark of failure.

The actual costs of the 2nd-lowest cost silver plan were less than the lowest estimates, one mark of success (but a very limited point of view).

Premium increases for employer-based family plans has decreased in the latest polling period; granted, it only includes 1 year of ACA.

However, later data has indicates employer-sponsored family premiums have decreased in their growth rate.

 

Costs: Taxes, Who Ends Up With The Bill? (it’s always taxpayers)
The ACA taxed money from the most wealthy and used it to provide coverage for the poor. You may feel this is morally wrong; I do not. It is, however, a moral question regarding the ACA.

This seems necessary to mention: excessive CEO pay does not improve the economic status for the middle class (trickle-down politics does not work on a massive scale). Taxing the people with the majority of the capital (the richest) will help the poor more than the taxes detract from the rich. A healthy society benefits everyone, rich and poor.

If people cannot afford health care, they will go to the ER and the bill will eventually be passed on to taxpayers. In addition, taxes pay for judicial and incarceration costs associated with people who goes bankrupt because they cannot afford their medical bills. It is only logical to ensure everyone has adequate health insurance. But is it moral?

Personally, I think access to healthcare should be a right guaranteed by civil society and would prefer a single-payer system for simplicity.  I think it’s morally wrong to profit off sick people.  In order to meet the goal of universal coverage (through single-payer or market-driven), every citizen must contribute. This is a fact about universal coverage, in the same way car insurance is mandatory when traveling on public roads. The analogy will break down at some point, but it is in everyone’s interest to have a certain minimum amount of coverage so I’m going to continue to use it.

The GOP argument is people should not be forced to have health care, they should opt-in of their own volition. But this is not how we treat car insurance: the persons affected in car accidents tend to number more than just the individual paying for said insurance. Opting in when you need health insurance is like buying a fire extinguisher as your house burns—unhelpful. Therefore it is in the best interest of everyone for everyone to have health coverage.

Essential Health Benefits
It is a fact that everyone needs health care at some point in their lives to remain healthy. Therefore there should be a certain minimum level of coverage insurance companies provide.  The ACA did this, a great success of the bill, by establishing “essential health benefits” including:

-Ambulatory patient services
-Emergency services
-Hospitalization
-Pregnancy-related care
-Mental health and substance abuse services
-Prescription drugs
-Rehabilitative services
-Laboratory services
-Preventive and wellness services
-Pediatric services

https://www.healthcare.gov/coverage/what-marketplace-plans-cover/

Of course, more catastrophic health insurance is available, but insurance companies can no longer scam people for practically useless health insurance.

The moral question here is: do we want to allow people to make the mistake of not purchasing health insurance, with the rest of the population footing the bill when they need it? If people always made the best decisions for themselves in the future, there would be no cause for debate. But people tend to do what is in their best interest in the present, and if a healthy person had to decide on spending money on healthcare or paying rent, rent will win. To me, it is obvious that health care coverage should be mandatory.

 


Pre-Election article on why the ACA is a failure:

http://www.chicagotribune.com/news/opinion/editorials/ct-obamacare-fail-health-care-insurance-medicine-0911-jm-20160909-story.html

“Obamacare failed because insurance is based on risk-pools – the lucky subsidize the unlucky.”
-This is how insurance works. The author makes the claim that there are too many sick people for healthy people to cover, and that healthy people pay more than sick people to offset the cost. The author claims the downside of the law was “[insurance companies] can’t exclude people for pre-existing conditions, and can’t charge older customers more than three times the young.” I don’t see why this constitutes a failure of the ACA, if anything it is a mark of it success that insurance companies cannot discriminate based on age or pre-existing conditions.  It will obviously cost more to insure these people but society will benefit from being healthier.

“Obamacare failed because it allowed Americans to sign up after they got sick and needed help paying all those medical bills.”
– This criticism is somewhat vague, and could be addressing two topics.

  1. Before the ACA, if someone had a pre-existing conditions they often could not afford health care. So, yes, with the ACA they were allowed to sign up even if they were sick.
  2. If the author is referring to “gaming the system”, see my comment below.

“Obamacare failed because it hasn’t tamed US medical costs.”
-The author is correct in that the ACA has not tamed medical costs, but this is a case of moving goalposts during a game.  Health care has become affordable for millions of people, instead of being financially crippling when an accident strikes.  Healthcare was expensive before the ACA and it is expensive after.  The rate of increase might have slowed, but overall health care premiums are still rising.  The ACA cannot honestly take all the blame, but it will nonetheless.

http://www.factcheck.org/2015/02/slower-premium-growth-under-obama/

https://www.dailykos.com/story/2017/3/19/1643727/-DC-journalists-Don-t-let-Republicans-get-away-with-the-failing-Obamacare-lie-Lives-are-at-stake

 

FAILURES: Summary

The following are aspects where I believe the ACA failed:

“Gaming the system”
Some special-enrollment rules allowed people to buy insurance when they needed it, make use of it, then drop it when they got the care they needed. These “special enrollment periods” are obviously abused and should be fixed, but this does not necessitate complete destruction of the ACA. Returning the sickest citizens to “high risk pools” will lower costs for the majority of Americans, but this will return us to pre-ACA era where those who were born with pre-existing conditions are discriminated against for simply being born with a sick body.

Simply stated, high-risk pools in a marketplace do not work because their prices are not moderated by the large majority of healthy people. The HRP either have to be subsidized by the taxpayers or blended with the rest of the population to be affordable.  This is why I do not believe a market solution to health care is moral.  People do not consider only what is best for their own health when purchasing health insurance, so the “invisible hand” does not function properly.

Adding to the problem, some states have refused to expand Medicaid to cover more of their citizens and thereby accept funding from the federal government. Why would some governors decide against freely available money and increased health coverage? Because keeping people from accessing insurance helps continue the lie that “Obamacare is failing”, when in reality the governors are failing their citizens.

“The states that rejected Medicaid expansion for their poorest (19 or the 20 states who rejected Medicaid expansion are “red states”, the other is Maine) and those states that erected barriers to enrollment and refused to move health plans into the Obamacare marketplaces (again, mostly red states)… are now faced with poorer, sicker customers than they otherwise might have had… and this is driving up the price of coverage in their regions.”

https://obamacarefacts.com/2016/09/12/states-who-embraced-the-aca-are-having-more-success/

High Costs
The ACA, while potentially slowing the increase in costs of premiums, has not countered the high expense of medicine and general health care expenses. This would be better accomplished through separate legislation and negotiation with drug companies. The US has much higher drug prices in part due to the fact that there are no price controls on prescription drugs, as there are in other countries. Reducing regulation, as proposed by the GOP, will not lower these costs.

Although it takes the blame, the ACA is not responsible for every problem with the current health care market but it certainly has flaws. What can be done to incentive insurers to stay in the market and join new ones? How can we ensure premiums in places with limited health care providers do not become too expensive? When will Congress put caps on the prices of prescription drugs?

Insurance Companies Pulling Out of the Market
Some insurance companies have pulled out of the market lately, citing a number of reasons.  Initially, some could not contain the influx of new patients.  This is still a problem in more rural areas that needs to be addressed.

Sabotage
In recent years, insistent claims from the White House and the GOP that the ACA is in “a death spiral”, is “dead” and “failing” have caused uncertainty in the health care market.  Uncertainty is not an element that insurers desire, and the current administration has caused mass uncertainty in the market.

 

“Publicly traded companies invoked President Donald Trump in nearly 700 annual and quarterly reports to investors during his first hundred days in office, more than triple the number of times firms cited Barack Obama at the beginning of his administration. The citings reflect in part the heightened expectations for changes to tax laws, trade policies and corporate performance in the wake of November’s presidential and congressional elections.”

Screen Shot 2017-05-15 at 8.48.40 PM.png

Screen Shot 2017-05-15 at 8.48.02 PM.png

Source: https://www.wsj.com/graphics/donald-trump-companies-assess-the-risks/

While the ACA has been doing well in urban areas with a large population of people, in rural areas with smaller more dispersed populations have seen difficulty in affordable coverage.  Their markets may include only one or two insurance providers.  This is a problem that needs to be fixed.

This analysis naturally leads to a discussion of the GOP plan, “AHCA”, that Republicans claim will fix the problems associated with the ACA. It will not.

My analysis of AHCA will be coming soon.

Further Reading:

https://www.vox.com/2017/5/8/15563448/trump-insurance-premiums-2018

http://www.baltimoresun.com/news/opinion/editorial/bs-ed-trumpcare-rates-20170505-story.html

Say something, I guess.

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