President-elect Trump has characterized the Affordable Care Act (ACA) as a disaster and has promised to repeal it. He has partners in the Republican House and Senate, which are also pledged to repeal the ACA, although probably with some kind of a transition period. They are supported by conservative and libertarian commentators who join in characterizing the ACA as a failure.
On December 13, 2016 the Obama administration’s Council of Economic Advisors (CEA) issued a lengthy brief emphatically rejecting this characterization. The report was accompanied by a chart book and blog post summarizing the report. The Department of Health and Human Services simultaneously released a compilation of state and national level data on the uninsured, private market reforms, employer coverage, Medicaid, the individual market (including the Health Insurance Marketplace), and Medicare.
The releases compile data and research from dozens of sources. They reach the overwhelming conclusion that by many measures the ACA has been an outstanding success in addressing the key issues of our health care system — expanding access, lowering costs, and improving quality. The report also contends that the ACA has reduced the deficit, extended the solvency of the Medicare trust fund, and not interfered with continued job growth.
The Administration’s Case
Much of the information in the report is familiar: uninsured rates are at the lowest levels in history as 20 million Americans have gained coverage under the ACA. Other information is less familiar: improvements in hospital care leading to fewer hospital-acquired infections have saved 125,000 lives since the ACA was adopted and expanded coverage is preventing 24,000 deaths per year; national health expenditures over the 2010 to 2019 period are projected to be $2.6 trillion less than projected just before the ACA became law; the share of national income of the bottom fifth of the income distribution has risen by 18 percent while the share of the top 1 percent has fallen 7 percent because of the ACA and the administration’s tax policy.
Coverage has risen for children, young adults, and all age levels, income levels, and ethnic and racial groups. Expanded coverage has resulted in improved access to care, with the share of Americans who report not having received medical care due to cost dropping by one third since 2010. The burden of uncompensated care borne by hospitals has declined by one quarter since 2013.
The ACA has helped Americans with employer-based coverage as well, according to the CEA report. The number of employees with an annual cap on their out-of-pocket costs has increased by 22 million since the ACA was adopted. Growth in per-employee costs of employer-based coverage has fallen to 5.6 percent from the decade before the ACA to 3.1 percent since the ACA was adopted, while the growth in the total of employee premiums plus out-of-pocket costs has fallen from 5.2 percent to 1.5 percent. Had pre-ACA trends continued, average per-employee expenditures for premiums and cost-sharing would be $4,400 higher than they are today. Private sector employment has grown continuously since the ACA and the fall in the uninsured rate has not negatively influenced job growth.
Health care prices have grown at a rate of 1.7 percent since the ACA was adopted, down from 3.2 percent for the preceding decade. Growth in real per-enrollee spending has fallen dramatically for private insurance enrollees and has actually been negative for Medicare and Medicaid enrollees. Aggregate health care expenditures have risen recently, but this increase has largely been driven by increased coverage resulting in increased use of health care services. The CEA report argues that the ACA is responsible for much of the reduction in spending growth, particularly in Medicare, and rejects alternative explanations for the spending slowdown, such as the recession, growth in cost sharing, or demographic changes.
The ACA has had a correspondingly positive effect on federal spending, according to the report. At the time the ACA was adopted, the Medicare trust fund was slated to be exhausted by 2017; now it is projected to last until 2028. The ACA is projected to reduce the federal deficit by over $300 billion over the next decade and $3.5 trillion over the following decade. Spending reductions under the ACA will save the average Medicare beneficiary $708 in premiums and cost-sharing for 2016.
The CEA report notes dramatic increases in the quality of care under the ACA, focusing on declines in hospital-acquired conditions and hospital readmissions. The spread of electronic health records under the ACA should also improve quality.
The released material documents conditions before the ACA, when many people were denied coverage or uprated because of preexisting conditions, individual insurance policies often failed to cover basic services like maternity and mental health care, most policies had lifetime limits, and half of individual market policies had coverage with an actuarial value lower than the 60 percent minimum required today. The report also rebuts common arguments against the ACA, such as that the marketplaces are in a death spiral, that part-time employment has increased under the employer mandate, and that Medicaid coverage does not improve health outcomes.
The ACA’s Future Remains Bleak
In sum, the CEA report and other administration documents make an impressive case that the ACA has in fact largely succeeded in its goals and has had on the whole a very positive effect on the American health care system and economy. However, the reports are unlikely to affect the fate of the ACA. Opponents of the ACA are fixed in their belief that it is a disaster and will not be swayed by this brief to the contrary; they are supported in their belief by data and research generated by Republicans and conservative and libertarian advocacy groups, and I expect these groups to produce responses in coming days taking issue with the administration’s reports. Congress and the incoming administration are likely to rely on these sources rather than the administration’s reports as they attempt to repeal the ACA.
The administration’s reports, however, do help lay down a baseline. Four or eight years from now, Americans can look back at this material, along with other evidence, and see where we were before the ACA, where the ACA brought us, and where we went from there. We will see whether we move forwards or backwards.
On December 14, 2016, CMS released its third biweekly snapshot of 2017 enrollment. As of December 10, 2016, 4,015,709 individuals had selected plans in the 39 states covered by HealthCare.gov, including 1,103,507 new consumers and 2,912,202 returning consumers. These numbers do not include auto-enrollments of returning consumers, which will be added at the end of December. There were over 250,000 more plan selections during the first 40 days of open enrollment this year than there were last year.
In addition, more than 700,000 signed up on Monday and Tuesday, December 12 and 13 ahead of the December 15 deadline for January 1 coverage. Nearly 6.4 million consumers have submitted applications to Healthcare.gov, but not yet selected plans. California reported that 139,000 consumers have signed up for coverage through the California state marketplace and 1.2 million have had their coverage renewed. These enrollment numbers indicate that Americans still need coverage and are signing up for ACA marketplace insurance even under the threat of repeal.