Access, Affordability, and the American Health Reform Dilemma, Part II: The Affordable Care Act’s First Seven Years
The Patient Protection and Affordable Care Act of 2010 (ACA) turned seven last week, with a proposed legislative effort to gut many of its core protections looming. Then, in a dramatic turn on Friday afternoon, the proponents of the repeal abandoned their effort for lack of majority support, leaving the ACA as the “law of the land” in the United States “for the foreseeable future.” The ACA, as a set of comprehensive, system-wide legal reforms, represents a departure from the tradition of piecemeal health reforms that predated it. Yet the ACA’s approach to reform is best described as evolutionary, rather than revolutionary. It did not attempt to rebuild the health care system, but instead maintained the existing structures and added federal law to each component.
As a comprehensive reform statute aimed at reducing health care spending, the ACA wove together moderate reforms across the different pieces of the patchwork. The ACA tackled the affordability of care largely by engaging third-party payors (insurers) and expanding access to care, rather than directly addressing the price of care. For this reason, the ACA is fairly characterized as primarily a health insurance reform statute.
Most significantly, the ACA aimed to increase the number of Americans covered by health insurance to near universal coverage. It did so by making federal law to address each slice of the health-insurance picture: requiring individuals to have insurance or else pay a tax, giving them easier access to various sources of insurance, and regulating the coverage insurers offer. The ACA’s individual mandate requires individuals to prove health insurance coverage, or pay a tax. The individual mandate provided the mechanism for bringing healthy folks into the insurance pool, thus evening out the risk and preventing the “death spiral” of premium increases. This cornerstone of the ACA withstood constitutional challenge as a proper exercise of Congress’s taxing power.
To help individuals fulfill the individual mandate, the ACA reformed health insurance availability across the three main sources of third-party payment: employer-sponsored insurance, individual commercial policies, and government insurance programs. For employed individuals, the statute pushes employers with more than 50 employees to provide health-insurance benefits or else pay a tax through the employer mandate. Smaller employers received incentives to offer insurance through their own exchanges and tax breaks.
For those without employer-sponsored health insurance (folks in the “individual market” who are not employed or whose employer does not offer insurance benefits), the ACA created new ways to access individual health insurance coverage and extended the reach of government insurance programs. The ACA established health insurance exchanges to bring individuals into a broader purchasing pool and provided subsidies to make individual and family coverage more affordable for moderate-income folks.
For very low income folks (below 138% of the federal poverty level), the ACA expanded the government-sponsored Medicaid program to cover childless, non-disabled adults. While the statute made the Medicaid expansion mandatory for all states participating in Medicaid (which is all 50 states), the Supreme Court determined that requirement was too “coercive” on the states and could not be enforced. In response, 32 states opted for the Medicaid Expansion and 19 rejected it. By rejecting the Medicaid Expansion program, those 19 states created a coverage gap where some childless, non-disabled adults qualified neither for Medicaid nor for subsidies to make insurance more affordable on the exchanges. This gap accounts for some of the uninsured population today.
After the first full year of the ACA’s implementation, the health insurance coverage picture looked like this:
Beyond access to insurance, the ACA regulates the contents and issuance of health insurance policies. Before the ACA, states generally regulated health insurance coverage. Crucially, most state laws permitted insurers to use medical underwriting to account for health status in several ways: refusing to issue policies to individuals with pre-existing conditions, charging higher premiums to sicker individuals, and excluding pre-existing conditions from coverage under those expensive policies.
The ACA enacted the first comprehensive set of regulations for commercial health insurance plans on issuance, coverage, and administration. It prohibits insurers from denying insurance based on a pre-existing condition and from varying its premium prices based on health status or gender. Under the ACA, insurers may charge different premiums based only on four factors: age, geography, household size, and tobacco use. It also requires that insurance policies cover certain aspects of care, such as preventive care.
Under the ACA a person’s ability to pay still determines whether care is accessible and the source of payment still determines the nature and extent of regulation. Overall, the ACA maintained much of the pre-existing distribution of health care coverage, but decreased the percentage of uninsured from 18% in 2008 to 11% in 2014. Had all States participated in the Medicaid Expansion program, as the statute intended, an additional 2.6 million people (about 1%) would move from the uninsured category to the insured.
The ACA has myriad other provisions addressing quality of care, the cost of government insurance programs, and other determinants of health. But all provisions trace back to the goals in the ACA’s title: patient protection and affordable care. These are still relatively early days in the ACA’s lifetime. Its major provisions have been in place only two years and several have been substantially weakened by legal and legislative challenges, which continue to the present day. Although the pre-ACA days should be fresh in memory, efforts to improve on the ACA must not lose sight of the crises that prompted it, or how fragile the patchwork was before the ACA’s reforms.
This is Part 2 of a three part series on healthcare in the USA. Part 1, also by Elizabeth McCuskey, is here. Part 3 will be on the Blog tomorrow.