Three and half years after passage of President Obama’s Patient Protection and Affordable Care Act (ACA), the law is about to reach an important milestone. On January 1, 2014, millions of Americans will no longer be uninsured and a new system for obtaining coverage will be put in place throughout the country. Yet controversy remains about how the law will impact individuals, businesses, and the US health system. Opponents call it revolutionary. They declare it “socialized medicine” and a “government takeover of the health care system.”
The truth is the law will have limited impact on how most Americans receive medical care and pay for it. Far from a radical change, the ACA (or “Obamacare”) builds on parts of our health care system that have evolved over the last half-century.
As the law was being debated, approximately 47 million Americans were uninsured, with millions more having limited coverage against the high costs of care. It was expected that the ACA would reduce the numbers of uninsured by over 30 million. The Supreme Court ruling that allows states to opt out of expanding their respective Medicaid programs will reduce the number obtaining coverage to 23 million. That millions of Americans will now have access to good and comprehensive health care is something we should all be proud of.
Much criticism has been directed against the requirements that all Americans must have acceptable insurance coverage and that businesses with over 50 full-time employees must provide insurance and pay a portion of their workers’ coverage. Without such requirements, millions more Americans would remain uninsured and those of us who are insured would continue to pay for much of the care that these uninsured people do receive.
The ACA added new measures to improve the private health insurance system, including the establishment of state-based “Health Insurance Exchanges.” These exchanges are designed to simplify and improve the way individuals and small businesses purchase health insurance. Although simple in concept, insurance exchanges are complex to construct and initial glitches were inevitable. But such obstacles can be overcome, and will not have a meaningful long-term impact on the health system.
Much has been made of the cost of adding so many to the insurance rolls. Initial estimates put the costs of the added coverage at about $1 billion per year. A large number, yes, but not in comparison to the $4.5 trillion that is expected to be spent for health care in 2019. To pay for the added spending, most sectors of the health system that will see sizeable increases in revenue from the newly insured will be required to accept some lowering of future payments, and some will pay higher fees or taxes. High-income individuals and families will pay a somewhat higher Medicare tax and have their non-wage income subject to this tax.
Some of this new revenue will extend the life of the Medicare trust fund to help secure the future of the program. Medicare beneficiaries will also see an added benefit of the gradual elimination of the lack of coverage (the “doughnut hole”) for moderate drug expenditures.
With health care spending already exceeding $2.7 trillion and consuming more than 17 percent of the US GDP, many believed health reform needed to include a plan to reduce future spending growth. Instead Obama and the Democratic leadership followed the plan adopted by Massachusetts that focused initially on expanding access rather than controlling costs. It was in later legislation that Massachusetts made controlling costs a top priority. The ACA does, however, include opportunities for experiments with new approaches to delivering care in a more efficient manner.
The US has embarked on a unique experiment in how to create a universal health insurance system while preserving a dominant employer-supported private insurance system. Obamacare will reduce the numbers of uninsured and underinsured by half. It will require some to pay more for expanded coverage, and it will add a mandate for individuals and large firms to obtain and pay for insurance. Far from a revolution, under Obamacare most Americans will not experience any change in their health insurance; they will continue to receive coverage through their job and visit a physician or hospital as they have in the past.