TODAY MARKS THE Affordable Care Act’s 13th birthday since its signing by President Obama on March 23, 2020, a landmark moment that our current president famously noted at the time with colorful zeal.
Massachusetts has particular reason to take note of today’s anniversary, as our 2006 universal health insurance law was among the ACA’s most important predecessor models and the ACA legitimized and secured our state’s approach to affordable coverage.
Today, the ACA is as secure and popular as it has ever been, while still facing real challenges ahead. The 2020-21 COVID-driven economic downturn was a key test for the law because the number of uninsured Americans rose in every economic slowdown since the 1960s—until the recent downturn when the US uninsurance rate actually dropped. Right now, about 8 percent of Americans are uninsured, the lowest rate ever, down by half from 16 percent in 2010.
In recent years, the ACA’s two major components have experienced dramatic and unrecognized reversals of fortune, with implications for both. The ACA’s health insurance expansions have left the policy doghouse and become reliable and essential features of America’s coverage system. Meanwhile, the ACA’s ambitious efforts to make medical care less expensive and higher quality have produced mediocre to poor results, leaving their future open to question. Let’s look at both.
The ACA’s coverage provisions take two forms. First, all states are empowered to expand Medicaid to nearly all their lower income citizens, especially to poor and childless working adults who were left out until the ACA.
The federal government pays at least 90 percent of costs for the new enrollees with states paying the rest. Second, for households with incomes higher than Medicaid standards, federal and state health insurance exchanges (aka: marketplaces) offer affordable subsidized coverage based on family income. In Massachusetts, that’s the state’s highly-regarded Health Connector.
In the original ACA, all states were required to expand Medicaid. The US Supreme Court’s 2012 ruling that upheld the law’s constitutionality also ruled that the Medicaid expansion component of it had to be optional for states. That decision triggered state-by-state political warfare as all blue states quickly expanded and most red states initially declined.
As of today, 12 states have yet to expand Medicaid, though South Dakota is scheduled to open up in July and North Carolina is now moving quickly to expand this year. Of the nine states that expanded since 2017, seven did so using citizen ballot initiatives despite fierce objections from their Republican governors and/or legislatures.
Recent research shows that ACA expansions solidly improved the health status of new enrollees, the financial health of hospitals—especially rural ones–and state economies. Anti-expansion arguments have become lame. The only logical explanation for the 10 holdout states is political spite toward Barack Obama, Democrats, and their citizens.
In the 38—soon to be 40—expansion states, Medicaid has become non-controversial, accepted, and successful. Yet challenges continue. The end of the COVID-19 pandemic emergency order, coming on May 11, will trigger coverage losses for millions across the nation who were held harmless during the pandemic. Even though most losing Medicaid will be eligible for employer sponsored or subsidized exchange coverage, some millions will fall between the cracks and suffer losses.
Citizens with household incomes above the federal poverty line ($24,860 for a household of three in 2023) who can’t obtain Medicare, Medicaid, or employer-sponsored coverage can get covered through their federal or state health insurance exchange. After a calamitous start in the fall of 2013 due to a website implementation catastrophe, enrollment through the exchanges has climbed from about 8 million in 2014 to an estimated 16.3 million Americans in 2023, the highest number ever.
The ACA gives states right of first refusal to run their own exchanges. In 2017, only 11 states did so. In 2023, 18 states do so, including newbies such as Kentucky, Maine, Nevada, Pennsylvania, and New Jersey.
On this choice, the jury is in, and the verdict shows that state exchanges enroll more eligible households at lower premiums than does the one-size-fits-all federal site known as healthcare.gov. States that don’t participate have no more excuses. The Massachusetts Connector, which now boasts among the lowest cost individual health insurance premiums in the nation, is Exhibit A.
Both federal and state exchanges, in addition to seeing their highest enrollments ever, now offer the most affordable coverage in their histories. The 2021 American Rescue Plan Act (ARPA) and the 2022 Inflation Reduction Act (IRA) provide deeply enhanced subsidies through 2025 to make exchange premiums genuinely affordable for most Americans who need it.
Despite overall good news on coverage, challenges continue. High out-of-pocket charges paid by those with insurance is a daily threat for more than 100 million Americans, with an estimated $195 billion national burden of medical debt. Addressing pervasive health inequities for minorities and other disadvantaged Americans is an urgent, top priority. And the subsidy enhancements created in the federal ARPA and IRA laws will expire in December 2025 unless Congress reauthorizes them. No rest for the weary on coverage.
For most of its first decade, the ACA’s coverage provisions faced relentless political attacks from congressional Republicans, the Supreme Court, the Trump administration, and red states. At points, especially the 2013 website disaster, it seemed that coverage efforts might collapse. This was especially true during the Trump administration’s first year when repeal of all ACA coverage provisions was the president’s highest legislative priority. Ironically, public opinion on the ACA turned consistently favorable starting in early 2017 as Trump’s “repeal and replace” efforts became serious, though never law.
The ACA’s second major pillar seeks to reform and improve the cost and quality of US medical care delivery through “value-based” reform interventions. These include innovations such as accountable care organizations (ACOs), bundled payments to medical providers, penalties on acute care hospitals with high rates of preventable readmissions and hospital acquired conditions, electronic health records, and more.
In contrast with the coverage pillar, the ACA’s value-based health agenda experienced zero political attacks, enjoying quiet yet solid support from Democrats and Republicans. For example, the ACA’s value-based agenda was fully embedded in a 2015 Republican-authored law to reform Medicare Part B physician payment. Even during Donald Trump’s 2017 assault, repeal of the value-based provisions never became a goal.
Early studies offered promise based on rapid growth and spread of accountable care organizations and bundled payments. These two approaches seek to rein in costs by giving providers pre-set payments to incentivize better quality care for patients. While initial reports found dramatic reductions in preventable readmissions and hospital errors, these findings did not hold up to fuller scrutiny. And despite dramatic growth of ACOs and bundled payments, national research shows only marginal—if any—cost reductions or quality improvements.
A large recent study by Harvard researchers looking at the nation’s growing and dominant health care systems showed marginal improvements in quality at best from receiving care in a health care system and sizable cost increases as of 2018. Their conclusion follows years of smaller studies reaching similar conclusions.
The ACA’s coverage expansions offer solid proof of concept, while value-based reforms have underperformed. It’s time for serious conversation on where next for both foundational pillars of the landmark 2010 law. On the ACA’s value-based agenda, its inclusion in the law was a victory of hope over experience. The hope was that a non-price regulation effort would save money by improving medical care quality and efficiency.
Earlier this year, an expert panel assembled by the journal Health Affairs, the Council on Health Care Spending and Value, concluded that “in some settings, regulation of prices could be beneficial to slow price growth.” The non-price regulation value-based care agenda will continue for now largely because no politically viable replacement ideas are on the horizon—even Sen. Bernie Sanders admits that his “Medicare for All” scheme lacks sufficient support. Ultimately, however, price regulation, a treacherous path, may become the only viable and realistic way forward.
While the US is an extreme example, it’s true in all advanced societies that health system reform is never “one and done.” It is an ongoing, never-ending process of study, evaluation, and action – continuous policy improvement with endless steps forward and back. That has been the story of the Affordable Care Act for 13 years now. And it is far from over.
John E McDonough is a professor of practice at the Harvard T.H. Chan School of Public Health. He is a regular contributor to CommonWealth and co-hosts the “Health or Consequences” episodes of The Codcast.