Has the Affordable Care Act Actually Lowered Premiums for the U.S.?

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By Cody Traffanstedt

It’s been eleven years since the Patient Protection and Affordable Care Act, or otherwise simply known as the Affordable Care Act, was signed into law by former president Barack Obama on March 23rd, 2010. The Affordable Care Act set out to accomplish many goals and has seen some changes as it has aged over the years as it celebrates its eleventh birthday. Initially, one of the main goals touted by supporters of the Affordable Care Act (ACA) was to increase the number of insured Americans thereby decreasing the number of Americans that have no health insurance while lowering premiums for many Americans. Most will agree that the overall goal of increasing the number of insured Americans has seen success seeing that the number of uninsured Americans has gone from 16% to 9.1% since the passage of the ACA (Friedan, 2020). It is clear the number of uninsured has steadily declined. It is the method with which we have arrived at the goal of lowering the number of uninsured that is worth taking note of, and whether we have seen any actual lowering of premiums for the lower or middle-class income groups within the United States.

In order to increase the number of insured Americans, the ACA employed the use of subsidies through the Healthcare.gov marketplace. The marketplace has allowed those in a state that chose not to expand Medicaid or those in a lower income family that may not qualify for Medicaid to access federally subsidized health insurance cheaper that they would otherwise be unable to access, thereby lowering premiums for those that were eligible. While evident that the premiums for lower income adults and families would be lower as a result of Medicaid expansion and federal subsidies, what have we seen in regard to the effects of the ACA on middle income adults and families?

In 2019, the average monthly premium per enrollee in the individual insurance market was $515, up from $217 in 2011 (Antos, 2020). This dramatic increase more than likely is the result of the ACA’s banning of excluding those with preexisting conditions from purchasing health insurance. With more frequent users of health services and more individuals with more chronic health conditions entering the health insurance market, it’s no surprise we have seen costs increase for those that are unable to qualify for Medicaid or subsidies. Costs have increased for insurance companies and they have passed this cost along to those purchasing health insurance in the market. While the subsidies may mask the increased premiums for those in lower income groups, those in middle income groups have seen no such masking of their increased premiums. According to a study done by Health Affairs, as a result of subsidy implementation, lower income adults have seen 17 percent lower out-of-pocket spending and a 30 percent lower probability of catastrophic health expenditures. On the other hand, middle income adults have not seen reduced financial burden by either measure (Health Affairs, 2021). Many in the middle-income group simply make too much or are offered insurance through their employer, thereby making them ineligible for the subsidies offered by the ACA according to the criteria set by the ACA.

While it is evident that the ACA has seen some successes, one promise made over ten years ago has not fully come to fruition. Many middle-income Americans and families have not seen their premiums decrease and have actually seen their health insurance premiums rise at a rate faster than that of inflation (Blase, 2016). The ACA has helped many lower-income Americans lower their out-of-pocket spending, as was greatly needed, but unfortunately has done so at the expense of those Americans offered insurance through their employer or those that don’t meet the income criteria set in place by the passage of the ACA (Healthcare.gov, 2021). The U.S. should now look to a model of subsidies specifically targeting those that have severe, chronic conditions that require frequent use of the healthcare system rather than targeting someone specifically from an income perspective. Instead of subsidizing an otherwise extremely healthy individual, we should look to the probability of someone becoming a high user of health insurance or the healthcare system as a whole. In this way, middle income earners of the U.S. don’t have to sacrifice a higher percentage of their already modest income for a system that can be altered to help others without placing such an ever-increasing, large burden on the shoulders of middle-class America.

References

Antos, Joseph R. & Capretta, James C. (2020, April 10). The ACA: Trillions? Yes. A Revolution? No. Health Affairs. https://www.healthaffairs.org/do/10.1377/hblog20200406.93812/full/

Blase, Brian. (2016, July 28). Overwhelming Evidence That Obamacare Caused Premiums To Increase Substantially. Forbes. https://www.forbes.com/sites/theapothecary/ 2016/07/28/overwhelming-evit-obamacare-caused-premiums-to-increase-substantially/?sh=27fcc6bd15be    

Health Affairs. (2021 March). The Affordable Care Act’s Insurance Marketplace Subsidies Were Associated With Reduced Financial Burden for US Adults. Health Affairs. https://www.healthaffairs.org/doi/10.1377/hlthaff.2020.01106

Healthcare.gov. (2021). Healthcare.gov. https://www.healthcare.gov/have-job-based-coverage/change-to-marketplace-plan/

Frieden, Joyce. (2020, March 23). The ACA at 10: Some Successes, Some Problems. MedPage Today. https://www.medpagetoday.com/publichealthpolicy/healthpolicy/85571

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