Two Cheers for Obamacare
Obamacare is having its moment. Fourteen years after the passage of the Affordable Care Act, almost ten years after the troubled kickoff of the state marketplaces, at least two near-death experiences before the Supreme Court, and front-row prominence in six political cycles, the health insurance program is more popular and more widely used than ever.
Former president Donald Trump recently said he was “seriously looking” at alternatives to Obamacare. It’s not clear whether he was, in fact, serious, or just replaying a greatest hit as a trial balloon. The remainder of the GOP field, during earlier debates, appeared resigned to the reality that the ACA was here to stay.
The economist Brad DeLong titled his recent book on the growth of the U.S. economy “Slouching Toward Utopia.” The growth of health insurance coverage richly deserves this title. The main purpose of the ACA was to expand health insurance coverage to more Americans. It has succeeded. Universal coverage remains an elusive goal, but the country is moving by fits and starts toward that goal, in piecemeal fashion. In 2008, uninsurance nationally was over seventeen percent, and it has fallen now to just over eight percent. In California, which embraced the ACA aggressively, the percentage of uninsured has fallen from over twenty percent in the early 2000s to just to just 7 percent from roughly one quarter just fifteen years ago.
In the most recent ACA enrollment cycle, over 21 million Americans purchased subsidized plans on the state and federal marketplaces, a record and up nearly 5 million from year earlier. This growth continued a steady upward trend and helped offset the decline in Medicaid rolls, principally in Republican-run states like Florida and Texas, brought about by the end of Covid-19 emergency rules. More than ten percent of the population in Florida and Texas now receive coverage through ACA marketplaces. The popularity of the ACA is at or near all-time highs. While the potential rollback of enhanced subsidies in 2025 may dent these numbers, there is little question that the trajectory of improved insurance coverage since the ACA seems here to stay. The moniker of Obamacare (still written as ObamaCare in The Wall Street Journal op-ed page), introduced as a derisive jibe by Republicans, now figures as a compliment.
And notwithstanding the push of GOP-run states to reduce Medicaid coverage when rule changes allowed, there has been a slow but steady trend of state holdouts to commit to Medicaid expansion, either through the legislature or through ballot referendums.
This recent history brings back memories of the five consecutive political cycles in which the ACA played a dominant role, mostly to the detriment of Democrats--especially in 2010 and 2014, when the GOP fanned doubts about the program, obscured its genesis in Republican policy genes (that Mitt Romney had used the same chassis to remake health care when Governor of Massachusetts) and capitalized on the glitch-plagued rollout of federal and state enrollment websites. And the pre-election announcement of higher ACA premiums in 2016, just before the November election, remains an underrated factor in the defeat of Hillary Clinton by Donald Trump.
One of the ironies of history is that Barack Obama, on the 2008 campaign trail, wasn’t focused on health care reform though he shared the longstanding Democratic goal of universal insurance coverage. He dismissed the individual mandate that was at the core of the ACA, saw health care through the prism of deficit reduction (then still a “thing”), and self-consciously embraced what had been a generally Republican-backed policy approach. President Obama hoped to score a quick bipartisan win and to move on to other things, notably climate change. Then Senate Minority Leader Mitch McConnell’s vow not to cooperate with Obama had enormous repercussions, in health reform and all else. Even as in retrospect the Kabuki theater of bipartisan discussion over the bill that became the ACA, which then seemed like the height of partisan division, now seems like a highwater mark of comity.
While the political debate may be largely settled, the substantive debate over the legislation needs to be rejoined. Ten years after the marketplaces were rolled out is a good time to do it. And while the overall verdict on the ACA should be highly positive, based on its principal success in expanding insurance access, the law has not changed the status quo in the broader health care system, as many of its proponents hoped. It has been complementary, not transformative.
Expanding coverage was the principal goal of the ACA. But ensuring affordability of health care—both at the national level and for households—was a close second. A related and underlying goal was to reshape how health care was delivered, in ways that would make the outsized American investment in health care align more closely with health outcomes.
At the aggregate level, there is little question that the introduction of the ACA has coincided with the gradual levelling of health expenditures as a proportion of the national economy. This has lowered its salience as a top-level political issue.
To what extent the ACA has been responsible for this is the subject of a lively debate among analysts. It seems likely that the main vehicle for savings have been more traditional cuts to Medicare providers than through the innovations introduced by the ACA, such as accountable care organizations (ACOs). These are virtual organizations of physicians grouped together to receive value-based payments—and bundled payments for specific medical procedures. Such experiments have had encouraging results in particular health systems and in limited fashion, but mostly at the margins. U.S. health costs have remained steady and not risen rapidly as a percentage of GDP but have returned to their extremely high pre-Covid “normal.””
Despite access to coverage the affordability of health care remains a persistent problem. The single biggest cause of bankruptcy in the United States remains out-of-pocket medical costs. Reformers hoped that the marketplaces would allow entrepreneurs to escape “job lock” and to eschew employer-based coverage, forming a large enough bloc of customers to induce competition in the health sector. In general, this hope has not materialized. For most, ACA premiums for subsidized care are far too expensive for most people, even though they are generally lower than COBRA policies for laid-off workers.
Rather than competition helping reshape the health care system, the system has absorbed the changes and governments have ponied up more money for subsidies, while employers have absorbed the annual increases and passed them on to workers.
The economics of scale have triumphed, but not in the way that reformers envisioned or intended. Hospitals and physician health groups have consolidated and driven a harder bargain on health care prices, partly in response to unintended incentives in the ACA and partly because of broader market trends. In this consolidation, most of the elite multispecialty groups that were envisioned as the model for value-based care have in fact been swallowed up by bigger competitors.
As with these flagship proposals under the ACA, most of the “little bets” in the bill that were intended to provide better outcomes for spending have not panned out. The institute that was supposed to provide data on the comparative effectiveness of treatments never got off the ground. The expected outlay for public health and “upstream” determinants of health was redirected—though largely forgotten, this was. supposed to buttress the public health system in advance of a pandemic such as Covid-19. No one truly expected all or many of these proposals to hit their marks, but the across-the-board demise or downgrade of most is disheartening.
The Affordable Care Act, then, has become another essential government-run program that has made at best a modest dent in the persistent and dubious characteristics of the U.S. health system: high costs, an overreliance on fee-for-service medicine, uneven quality, fragmentation, and disparate outcomes based on race, education, and income.
The spark that ignites a full-fledged transformation, whether the long-predicted, but never quite materializing employer revolt, the advent of personalized medicine, demands by doctors and professionals for greater autonomy, or an end-around run by non-traditional industry players like chain drugstores—or some combination of these—remains to be lit.