To read the press accounts, you would think the Affordable Care Act is nothing but a string of failures. Large premium hikes, insurers pulling out of markets, and policies with shrinking coverage.
But the full story is very different. The ACA has achieved impressive success — for patients and employers alike.
First, let’s look at the patients. Before the law took effect, almost 50 million Americans, more than 16% of the population, were uninsured. Many had preexisting medical conditions that prevented them from finding policies in the individual insurance market, and they had nowhere else to turn.
The fundamental goal of the ACA was to close that hole in the coverage, and the results have been remarkable. More than 20 million Americans have gained coverage, and the rate of uninsurance is now below 9%, the lowest level ever recorded.
Of course, many of the policies offered on the exchanges are limited, with high deductibles and narrow provider networks. But they still provide catastrophic coverage, which can be lifesaving. While substantial costs may remain uncovered for routine care, the policies protect against financial ruin should a major illness strike.
What about the supposedly large premium hikes that make many of those policies difficult to afford? The reality is that individual coverage is actually cheaper today than it was before the ACA.
A recent study published in the journal Health Affairs found that individual premiums dropped dramatically when the ACA exchanges opened and were 20% lower in 2016 than the Congressional Budget Office had projected. They remain lower today than they would have been had the former market structure stayed in effect. And the majority of exchange customers experience little or no effect from premium hikes because they receive subsidies.
The exchanges are only part of the story. Most of the newly insured receive coverage through the expansion of Medicaid, so even without the exchanges, the ACA would still have achieved much of its primary goal.
Now, what about employers? Beyond its success in expanding coverage, the ACA has coincided with a notable moderation in the rate of medical-cost inflation. According to a recent PricewaterhouseCoopers report, the rate has stabilized at about 6.5% since the ACA went into effect, with employer costs rising at a modest rate of just under 4%.
A report by the Kaiser Family Foundation found that between 2011 and 2016, premiums for employer-sponsored coverage rose by a total of 20%, as compared to 31% between 2006 and 2011 and 63% between 2001 and 2006.
Some of this moderation may reflect a decline in the overall rate of inflation, and some of it may reflect the use of policies that shift growing shares of costs to workers. Nonetheless, it is clear that the ACA has not spurred the employer cost escalation that some had predicted.
And most large employers have responded by retaining coverage. Contrary to some initial predictions, the ACA has not led to a drop-off in employer-sponsored insurance. It is still an essential recruiting tool.
Of course, the ACA is hardly problem-free. High on the list of needed fixes is the coverage mandate for smaller companies that imposes penalties for those with more than 50 full-time workers, a significant burden for many firms just above the threshold. And reforms to the system of subsidies and insurer risk corridors could help maintain the stability of the exchanges.
Nevertheless, on balance, the ACA has been an extremely positive force for the country. Congress should certainly look for ways to improve it, but throwing the baby out with the bathwater would be a significant loss.
Robert I. Field, JD, MPH, PhD, is a professor at Drexel University’s Kline School of Law and also the university’s Dornsife School of Public Health.