Is the Affordable Care Act Still Affordable?

I was out with friends the other night when the conversation turned to the ever-scintillating topic of health insurance. A Swiss woman turned to me and said, “Oh, I hear that Obamacare is really bad now.” A few others guests—mostly self-employed—joined in with woeful tales of rising premiums and deductibles so high in New York’s marketplace plans that they can’t afford to get sick or injured.

Many of these disaffected folks had, like me, signed up in 2015 with Health Republic, a new non-profit consumer operated and oriented plan (CO-OP) that offered reasonable premiums, moderate deductibles and a wide choice of providers. All seemed good with the world. But in late 2015, Health Republic, like many other CO-OPs nationwide, suddenly went belly-up, leaving 209,000 New Yorkers scrambling to find a new insurance plan that offered anywhere near the same choice of doctors and hospitals, low premiums, and a moderate deductible.

A review of the Obamacare landscape indicates that residents of my state are hardly alone in their concern. A recent New York Times survey found that “more than half the plans offered for sale through HealthCare.gov, the federal online marketplace, have a deductible of $3,000 or more.” In Miami, the Times continues, “the median deductible, according to HealthCare.gov, is $5,000. (Half of the plans are above the median, and half below it.) In Jackson, Miss., the comparable figure is $5,500. In Chicago, the median deductible is $3,400. In Phoenix, it is $4,000; in Houston and Des Moines, $3,000.”

A recent study by the Kaiser Family Foundation and the Peterson Center on Healthcare found that health insurance deductibles overall rose about eight times faster than wages over the past 10 years. In an NPR piece looking at how rising healthcare costs “weigh on voters”  an Oklahoma woman recounts how her family’s only option was to buy an insurance plan on the state exchange with a deductible of $3,000 per family member. Trudy Lieberman, writing at the Center for Health Journalism, recently highlighted another vexing—and costly—problem with the ACA marketplace; “as many as four million people caught in what has become known as the ‘family glitch.’” This “glitch” affects the spouse and children of a family breadwinner who is covered by an employer-provided individual plan costing less than 9.5% of his or her income. Under the ACA, even though the employer does not cover the rest of the family, they cannot receive premium subsidies if they buy coverage on the state or federal marketplace.

All this begs the question, after three years has the ACA become less affordable? Early projections indicate that premiums will likely increase in 2017—into the double digits in some markets. Several large insurers, including Blue Cross and Blue Shield, Aetna and UnitedHealthcare, have lost money selling plans on the exchanges, mainly due to lower-than-expected enrollment overall and higher-than-expected enrollment of sicker subscribers who use more services.  A risk adjustment payment feature built into the ACA was expected to help stabilize the insurance market by redistributing funds from plans with lower-risk enrollees to those with a disproportionate share of higher-risk enrollees. So far, insurers report difficulty projecting how a particular plan’s enrollees will compare with the entire pool of people enrolled in the non-group market—limiting the impact of the risk adjustment payments. Two other provisions of the ACA (reinsurance and risk corridors) that were also expected to promote insurance market stability are scheduled to expire at the end of this year.

In April, UnitedHealthcare announced it was withdrawing from the marketplaces in “all but a handful of states” in 2017, leaving pockets of the country with fewer choices and higher premiums. According to a Kaiser Family Foundation (KFF) study, in 29% of the counties where UHC participates, its withdrawal would leave just one insurer, and in an additional 29% of counties only two insurers would remain. Overall, there are 1.8 million marketplace enrollees who would be left with a choice of two insurers and 1.1 million who would have just one insurer available.

Still, it’s not time to write off the ACA. In a recent post in JAMA Forum, Kaiser Foundation’s Larry Levitt writes that the impact of UnitedHealthcare’s exit from the ACA’s marketplaces is “greatly overstated.” The nation’s largest insurer was unable to compete on price, says Levitt, and was often not among the lowest cost options in most areas. Furthermore, he reminds us that some 20 million Americans were able to obtain coverage this year under the law’s expansion of Medicaid and through the state and federal marketplaces. Only 10% of people under 65 remain uninsured, down from 18% in 2010. Furthermore, most people buying insurance on the state marketplaces qualify for subsidies to help defray the cost of premiums—some 83% of enrollees in states using healthcare.gov received financial assistance to pay their 2016 premiums. Some of those lower-income enrollees also have limits on out-of-pocket spending.

I agree with Levitt that demise is far too strong a word. But I can’t help worrying that we are moving in the wrong direction in terms of access to care and affordability. John McDonough, professor at Harvard’s School of Public Health, says that the ACA—like all groundbreaking legislation—needs “continuous policy improvement.” “Some things go right, and you celebrate and expand those things,” say McDonough. “Some things go poorly, get rid of them; toss them out. Some things are mixed and need some fixing and correcting.”

Unfortunately, continuous policy improvement has been all but impossible—a victim of the political polarization that keeps Congress from seriously considering any action (other than repeal) for optimizing the ACA. Although 56% of Republicans still want the health law repealed, some 51% of Democrats want to see the ACA expanded—an increase of 13% over the last year.  Perhaps even more surprising, more Americans (39%) support a single-payer or “Medicare for all” plan to replace private insurance than oppose (33%) the idea. Choice and competition were supposed to keep insurance plans affordable on the exchanges. The non-profit CO-Ops were included in the ACA, for example, “to address the lack of affordable health plan alternatives in many state and regional markets and to counter a trend toward market concentration.” A recent report from the Department of Health and Human Services shows that in markets where there are choices, consumers find savings. During the 2016 open enrollment, for example, 60 percent of Marketplace enrollees switched plans, saving on average $43 per month.

The problem comes in markets where there are few choices. Even if premiums don’t rise as sharply as feared, in a growing number of markets the high deductibles, co-insurance requirements for expensive new drugs, and unexpected co-payments for specialists and hospitalization, threaten to make obtaining care out of reach for some enrollees. Improvements may come with regime change. Hillary Clinton has updated her website to reflect the incremental changes her campaign is proposing to lessen the burden of out-of-pocket health spending for individuals and families buying plans off the exchanges. She is also reasserting her support for the popular but ultimately nixed “public option;” a government-run health plan that would compete on price with private insurers selling policies in the non-group market. Yesterday, Clinton said she was in favor of “allowing people 55 or 50 and up” to buy into the Medicare program, a move that might help in reducing insurance costs for younger enrollees.

Of course we know that the ACA is far more than a health insurance program. But providing affordable coverage for millions of Americans is the most public measure of its success. Expanding that coverage and ensuring it stays affordable will require refining and reworking policy. We knew that change would be incremental and we knew that it would be a hard fought battle with so much of the country opposing change. Now is the perfect time to start that process.