Last week, Barack Obama joined President Biden at the White House to mark the 12th anniversary of the Affordable Care Act, also known as Obamacare. Yet, we did not know what there was to celebrate. The ACA failed to increase insurance coverage as much as expected, imposed mandates that increased costs, reduced choice, and forced people to buy insurance that many neither wanted nor needed. while doing little to improve health.
Obamacare has increased health insurance coverage through heavily subsidized individual plans on state insurance exchanges and by expanding Medicaid eligibility. The percentage of uninsured Americans rose from 15% before the ACA’s move to 9.7% in 2020. That gain, however — about 16 million Americans — was far lower than the 25 million planned by the Congressional Budget Office. And nearly all of the ACA’s net coverage gains came from increased Medicaid coverage, which offers small, uncertain benefits and limited access to care.
Alone 10.7 million were listed on the ACA exchanges in 2020. This increase in coverage was offset by losses in the over-the-counter, non-group and employer-provided insurance. On 15.5 million more people enrolled in Medicaid.
Enrollment in exchanges and Medicaid increased about 20% after pandemic legislation removed income eligibility caps, increased grants for people receiving ACA exchange grants and raised the percentage of Federal Medicaid Medical Assistance (FMAP) states receive. But increases in pandemic coverage will evaporate when programs expire at the end of 2022 and when the declaration of a public health emergency ends, respectively.
The temporary increase in Medicaid has led to a tripling of the national irregular payment rate for Medicaid over the past two years – for 22 percentprimarily due to eligibility errors, which states were prohibited from correcting. Estimates from the Urban Institute that 14 million people may not be eligible for continued Medicaid coverage once PHE ends and states resume their normal procedures for determining eligibility for the ongoing program.
Obama was also not satisfied promise that the ACA would reduce annual premiums by $2,500 and reduce expenses. National health expenditure Data show spending grew from $2.60 trillion in 2010 to $4.1 trillion in 2020. Nor did the ACA “bend the cost curve” to slow spending growth – spending Inflation-adjusted annual per capita health costs increased after the passage of the ACA.
Premiums and deductibles in the individual market which includes exchanges have skyrocketed. Between 2011 and 2020, the average monthly premium per member on the retail market double. the average deductible for a silver plan offered on Healthcare.gov in 2020 was $4,500, down from $2,425 in 2014. The average premium and deductible for exchange plans in 2021 for an unsubsidized family of four was approximately $25,000.
ACA plans are so expensive that few unsubsidized people buy them. And the ACA’s mandates and minimum benefits prohibited cheaper and less comprehensive insurance than many would have preferred. The young and healthy have rejected overpriced all-inclusive insurance coverage that forces them to subsidize premiums for older, sicker patients. As a result, many insurers fled the stock exchanges and more than half the counties did not one or two packages to choose from.
Health insurance provides significant financial protection and peace of mind in the event of a serious illness. It reduces unpaid bills and debts sent for collection and reduces bankruptcies. Yet, while insured people use health services more, insurance has little impact on health or mortality.
The gold standard study of the effect of insurance was the Oregon Medicaid Expansion Experiment, which compared people randomly selected for Medicaid coverage with those who were not selected. The covered group had less medical debt and fewer missed payments. They increased their use of all types of medical care and reported improved feelings of physical and mental health. Yet, aside from improving depression outcomes, they showed no improvement in objective health outcomes.
There are three reasons why the ACA has had less of an effect on health than its proponents expected. First, many uninsured people were already receiving substantial health care despite the lack of insurance. Obamacare coverage paid providers who would otherwise provide care for free.
Second, the increase in coverage came largely from Medicaid, an insurance associated with below-market reimbursement rates, few providers willing to accept those rates, and poor access to care. Medicaid-expanding states experienced greater care delays because no appointments were available or wait times were too long.
Finally, the ACA imposed low-value care that increased costs. Preventive care and annual office visits, for example, were provided free of charge. Yet screening is done much more commonly in the United States than elsewhere, and is often overly intensive, of little value, and potentially dangerous. Routine annual medical examinations do not reduce mortality, waste resources and sometimes lead to harmful tests and unnecessary treatments.
For all the cost and controversy surrounding it, the ACA never covered more than 6% of Americans and suppressed the competition, choice, and innovation that would have more effectively expanded coverage, lowered costs, and improved results. Barack Obama may want to celebrate his namesake program, but the rest of us have little reason to.
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