The Affordable Health Care Act (ACA) has been a bold undertaking intended to accomplish a widespread impact across U.S. society – providing affordable health care for every American. But has it lived up to its promises? Efforts are currently underway in Congress to repeal and replace it.
Bold Business spoke to Paul Howard, Senior Fellow and Director of Health Policy at the non-partisan think tank, The Manhattan Institute, about the ACA.
He highlighted that shifting more responsibility and funding to individual states is a core bold idea of replacing the Affordable Care Act, adding that this would lead to more accountability at the state level.
The states are then responsible for their healthcare insurance markets, which would invite more competition, thereby establishing a marketplace where healthcare insurance products and services are made more affordable.
Winding back – The original purpose of the ACA
Before the ACA’s effective date of January 2014, estimates of 41 to 47 million Americans lacked healthcare insurance coverage.
The intent of the ACA was to make health insurance more affordable for those with little or no coverage with affordable defined as costing 8% or less of annual income after subsidies. Included among the over 400 provisions of the ACA was the requirement that all Americans with access to affordable health insurance obtain “minimum essential coverage” by 2014 (or pay a penalty tax if they choose to opt out).
What difference has the ACA made?
The Department of Health and Human Services (DHHS) claims that 20 million people have gained health coverage since the inception of the Affordable Health Care Act (Obamacare) in 2010. Bold Business looks deeper into this number to find out who are the 20 million?
First of all, there doesn’t seem to be a consensus on that 20 million figure—even among government agencies.
The DHHS bases its estimate of 20 million on survey data and includes:
- 3 million young adults (ages 19 – 25) who, beginning in 2010, gained coverage through the provision allowing them to stay on their parents’ plan until age 26.
- 7 million who gained access through various marketplaces during the open enrollment period between October 2013 and early 2016.
In September 2016 the Census Bureau released its Current Population Survey’s Annual Social and Economic Supplement. Based on survey data, the report identifies 22 – 24 million with coverage enabled by the ACA, broken down this way:
- 12 million added to the Medicaid rolls through the ACA’s expanded eligibility requirements (people with income up to 138% of the poverty line qualify for coverage, including adults without dependent children)
- 8–9 million enrollees subsidized through the exchanges
- 2–3 million (aged 19–25) covered through parents’ plans
The Heritage Foundation, a conservative think tank, reports that neither of the government numbers is correct. Using real enrollment data available from Medicaid and private insurers, The Heritage Foundation calculates real gains in coverage to be 14 million. They also point out that most of those (12 million) gained coverage through Medicaid expansion. Only 2 million have private coverage.
Cost of the ACA
In 2016, the government spent $32.8 billion to subsidize premiums. The nonpartisan Center for Health and Economy anticipates federal spending to increase to $46.2 billion in 2017.
The Congressional Budget Office calculated the cost of Medicaid expansion for 2015 to be $68 billion (62% higher than projections). The Kaiser Commission estimates the cost of the expansion as $73 billion in 2016 and $76 billion in 2017. The federal government provided the states with 100% of the cost of expansion from calendar years 2014-2016 but is gradually phasing down to 90% of the cost by 2020.
Thus, the total federal cost (paid by the American taxpayer) for 2017 is an estimated $118 billion.
Private costs are increasing, as well. Obamacare premiums are expected to increase an average of 25% in 2017. 80% of Obamacare exchange ‘enrollees’ are subsidized, meaning 20% will bear the full cost of any premium increases.
The cost of employer provided healthcare insurance costs for both employers and employees has risen by 50% over the past eight years, and individuals are paying much higher deductibles.
In spite of the increasing costs, proponents of the ACA insist premium costs would be higher if not for the ACA.
Bottom line—the ACA has been costly, prices are continuing to rise, and we still have 12 to 33 million Americans uninsured.
The ACA is expensive. Both public and private costs are increasing beyond government estimates. Revenue-strapped states are taking on a higher share of the cost burden because most of the newly insured have joined the Medicaid rolls. Up to 33 million are still uninsured. Whether Obamacare is repealed or allowed to die from natural causes, as many as 47 million people are at risk of having no healthcare insurance coverage.
However, Paul Howard of The Manhattan Institute indicates that by delegating responsibility to individual states, they will be better able to provide a competitive range of healthcare insurance products and services suitable to their particular markets.
In conclusion, Paul Howard has introduced one bold alternative of how the Affordable Care Act could be replaced and how it could be implemented to the benefit of all. If individual states are responsible for establishing a healthcare insurance market, more and more options would become available to those currently covered by the ACA. As Mr Howard notes, “healthcare is in dire need of consumer-focused competition”.