President Barack Obama signed the Affordable Care Act into law five years ago Monday, March 23. In the preceding months, the health care reform had been hotly debated in both houses of Congress, passing the Senate and House of Representatives without single vote from a Republican lawmaker. “The American people are angry,” Republican John Boehner, then House Minority Leader, said after the tight 219-212 vote. “This body moves forward against their will.” The fact that Affordable Care Act passed into law without a single Republican vote was seen as proof the Obama administration intended to freeze the GOP out of the legislative process. And when software glitches and design flaws disrupted the rollout of the technical infrastructure designed by federal contractors, including the federally facilitated exchanges created in states that chose to not participate in design of their own marketplaces, the GOP saw evidence that the reform was flawed to its very core. And the party took more than 50 subsequent votes to try to dismantle the law in some way or other.
The technical problems that derailed the implementation of Obamacare’s key provision, the individual insurance exchanges, were not even close to the most concerning element of the reform to Republican lawmakers and pundits. In an opinion editorial published by Fox News on the fifth anniversary, Sen. Marco Rubio (R-Fla.) recounted how “President Obama and Congressional Democrats disregarded both the Constitution and the opinion of the American people when they enacted ObamaCare.” Sure, the problems that plagued the launch of the insurance marketplaces seem far distant now that more than a year has passed and 16.4 million more Americans have coverage as a result of the reform, according to government figures. However, Rubio argues that as the law has transition from a political question to a personal reality, the public has become truly cognizant of the reform’s side effects: the loss of access to a longtime physician, the cancellation of an “insurance plan they were happy with,” higher premiums and higher deductibles, and the possible loss of employment or hours at work. Republicans fear of Obamacare’s detrimental impact on the federal government could be included in this list.
In his own memorial to the day the American health care system was remade, House Majority Leader Kevin McCarthy circulated a similar list titled “5 Years and 5 Broken Promises,” in which he claimed the “law is wreaking havoc on millions of Americans.” And a press release from John McCain noted that the senator has heard “firsthand from Arizonans throughout our state who have seen their health care options shrink, and from small business owners who are terrified of the job-killing employer mandate that threatens the engine of our economy by forcing them to comply with costly regulations or close their doors.”
It is no surprise that Obama marked the passage of the fifth anniversary by highlighting the “actual facts” that show “the Affordable Care Act is good for economy” and telling his critics to “embrace reality.” His evidence was the 16.4 million Americans who received coverage as a result of the provisions of the Affordable Care Act, an expansion that has lowered the uninsured rate by approximately one third to the lowest level ever recorded. “Instead of trying yet again to repeal the Affordable Care Act and allowing special interests to write their own rules, we should work together to keep improving our healthcare system for everybody,” he added. “Instead of kicking millions off their insurance and doubling the number of uninsured Americans, as the House Republican budget would do, we should work together to make sure every American has a chance to get covered.”
So who is right? Anniversaries are the appropriate time to take stock; a number of predictions Republicans made about the success of the Affordable Care Act can be deemed incorrect, but neither is it right for the Obama administration to call the reform an unmitigated success.
1. Did the Affordable Care Act really hurt employment?
As can be seen for McCain and McCarthy’s statements alone, a major theme of the opposition to the Affordable Care Act is jobs, or more precisely, how the implementation of the health care reform championed by President Barack Obama will result in massive job losses and a widespread efforts to limit employees to fewer than 30 hours per week as companies attempt to mitigate the costs of the law’s employer mandate.
But for all this negative press, it is actually “hard to evaluate the impact of the ACA on overall employment or on employee work schedules because the health law was passed in the middle of the worst downturn since the Great Depression,” as a recent analysis from Gary Burtless, a senior fellow in economics studies at Brookings, noted. How job creation has accelerated over the past five years can be cataloged. Since March 2010, when the law was passed, the unemployment rate has fallen from 9.9% to 5.5%. It could be argued that the drop in unemployment and the increase in jobs could have been stronger had the reform not been passed, but “it is not easy to make a convincing case that job gains have lagged since the President signed the health insurance law.”
Republicans also claim that Obamacare’s employer mandate, which requires larger companies with 50 or more full-time workers to provide coverage, is pushing employers to either limit workers’ hours to fewer than the 30-hour-per-week cap or hire more part-time workers. Again, Burtless sees little conclusive evidence. It is true that by making insurance more affordable, workers are not necessarily dependent on employer-sponsored insurance, meaning the individual mandate “may have encouraged some workers to accept part-time jobs and give up employer provided insurance.” But while the severity of the Great Recession again makes it hard to answer “with much confidence” if the law increased part-time work among people who would prefer full-time employment, the number of involuntary part-time workers has decreased in recent months, even as the employer penalties have gone into effect.
“The claim that the Affordable Care Act is a job-killer is just factually untrue,” explained Bob Kocher, a doctor and former Obama adviser who is now a partner at venture capital firm Venrock Associates, in an interview with Bloomberg. Rather, the reform “created the most enormous opportunity to build health-care companies ever,” he added. As many as 90 new companies providing health care services, employing as many as 6,200 people, have been created in the United States since the passage of the Affordable Care Act, as Bloomberg’s Alex Wayne reported
But still, 54% of Americans believe businesses are decreasing their employees’ hours so they can dodge Obamacare’s employer mandate, according to a recent Vox poll.
2. Has Obamacare caused premiums to skyrocket?
Conservative publication Breitbart claimed in its commentary on why Obamacare still “sucks” that “those in the individual ObamaCare market who are not covered through their employers or another form of group insurance … are getting killed with premium increases.” The hikes have pushed the average premium 24.4% higher than they would have been had the reform never been implemented, Breitbart reported. And as further evidence of how the Affordable Care Act has completely destroyed the insurance system, the publication also noted that millions of Americans were forced into the Obamacare insurance markets because their policies were canceled — an incident that both violated one of the president’s main promises and serves, in the words of Breitbart, effectively as a massive redistribution of wealth.
In a short segment, Breitbart managed to say a great deal about Obamacare’s negatives, real or imagined. Yes, Premiums across all states did rise nearly 25% higher in 2014 than would have “had they simply followed state-level seasonally adjusted trends,” according to a working paper authored by Yale University’s Amanda E. Kowalski for the National Bureau of Economic Research, a non-profit headed by George W. Bush’s top economic adviser, Martin Feldstein. There is a caveat; Kowalski’s calculations do not reflect subsidies, meaning these increases are not what all consumers experience. Numbers from the Department of Health and Human Services show that in the 37 states using the federal healthcare.gov platform more than 8 in 10 individuals qualified for an advance premium tax credit, the amount of which averages $105 per month. After applying that tax credit, around 80% of consumers had the option of selecting a plan costing $100 or less per month.
Other data tells a far different story than that of Kowalski’s. Vox reported that “the best evidence we have” shows the reform’s mandates have had a “negligible effect” on insurance premiums for those covered through employer-sponsored plans and that premiums for those insured through plans purchased on the individual market have grown more slowly. An analysis conducted by McKinsey Center for U.S. Health System Reform supports that conclusion: Premiums for 65% of existing plans have been rising, with a median increase of 4%. A second study from the same institution again noted that in 2015 “gross premiums,” or the amount charged by carriers before the subsidies are considered, increased by an average of 6% among the lowest-priced plans on the exchanges, across all tiers. Premiums of individual insurance policies typically increase annually, and an 6% increase is well below the 20-25% annual increases implemented before the reform. McKinsey also discovered that if insurance customers shop for a new plan instead of renewing their current plan premiums will drop. “We estimate that close to three-quarters of 2014 exchange enrollees have access this year to a product that is within the same metal tier as the product they bought last year but priced below the 2015 premium of last year’s plan,” the analysis noted. “For about 55 percent, the gross premium decrease is likely to be more than 5 percent; for close to 40 percent, the decrease could be above 10 percent.”
So why the difference between the two narratives? The two studies have very different parameters. The first compared actual 2014 rates to what they would have been had the exchanges not been implemented, while the second measured 2015 rates with 2014 rates. Averages do belie a great deal of reality, but so does political rhetoric. And while that 25% jump between pre- and post-Obamacare premiums is painful, it is important to note that the figure is in fact an average of rates in fifty states plus Washington D.C. Before the Affordable Care Act was implemented, insurance markets varied dramatically between states because the insurance market was regulated at the state level for more than one hundred years, leading insurers to develop different standards for different states. Some states prevented insurers from selling so-called bare bones plans, meaning that to adjust their plans to comply with Obamacare standards, which require insurance to cover a minimum set of benefits like maternity leave and mental health, insurers had fewer changes and fewer costs to add. Plus, price increases in the post-Obamacare world vary not only from state to state, but from insurer to insurer and between individuals of different ages and health. And these differences make the data easy to exploit by politicians in favor or against the health care.
Data shows just how much premiums can vary across the United States. Generally, 2014 saw across-the-board premium increases, with women experiencing rate hikes in 82% of U.S. counties and men a jump in 91%. Premium price changes ranged from an increase of 271% for men in Buchanan County, Missouri to a 70% decrease in northern New York state, and on average, premiums rose 49%. Comparing that to Kowalski’s 25% figure shows that premium increases are in fact decreasing. Kaiser Family Foundation tracking poll showed most Americans report the law has little to no direct impact on their lives, and it can be argued that fact proves the rhetorical debate over the law has little basis in Obamacare realities. The problem is that rhetorical debate informs public opinion, and creates the fear that premium hikes will continue to grow as the law becomes more entrenched.
“Overall, the 2015 premiums increases will not be significantly worse than they were in the past,” noted The New Republic’s Jonathan Cohn. While that is evidence that Obamacare has not lowered premiums across-the-board, which was never the reform’s primary goal (even though Obama so-erroneously promised the $2,500 annual premium-decrease for a typical family), it is also evidence that Obamacare has not jacked premiums either.
However, it is true that a new report from Commonwealth Fund shown that those with employer-based coverage are shouldering more of the out-of-pocket expenses, which comes as wages continue to stagnate. Another, yet-to-be answered question is whether insurers, in an attempt to minimize costs, have created too restrictive doctor and hospital networks. About half of the plans offered through healthcare.gov are either health maintenance organizations (HMO) or exclusive provider organizations (EPO), which do not allow customers to go out of network, except in emergencies or through an appeals process.
Still, Gallup reported in November of last year that seven in 10 Americans who purchased insurance policies through the government exchanges in 2014 rate the quality of their health care and their coverage as “excellent” or “good,” marks that generally match the evaluations all insured Americans give their coverage.
3. Has Obamacare hurt the deficit?
Forty-two percent of Americans think the cost of Obamacare has grown over the past five years. And there is a reason for that misconception. Providing insurance subsidies to millions of American and expanding Medicaid comes with a hefty price tag. Written into the Affordable Care Act were a number of new taxes (like the medical device tax) to offset these subsidies, along with the penalties charged to those who do not purchase insurance and hundreds of billions of dollars in Medicare cuts. Of course, these measures do not fund the entire program, and when the Congressional Budget Office made its initial calculations during the debate over the health care reform Republicans argued the nonpartisan agency was grossly underestimating the expense. However, the CBO actually significantly overestimated the amount of money that would be spent on Obamacare, and estimates have been decreased twice. “Estimates of the net budgetary impact of the ACA’s insurance coverage provisions have decreased, on balance, over the past four years,” the budget experts at CBO have noted.
In April 2014, the CBO lowered its Obamacare projection by more than $100 billion to $659 billion. Much of that downward revision was the due to the slower-than-average growth of health care costs since 2009. That means it’s less expensive for the government to subsidize insurance premiums for millions of Americans. Now the government is spending less on health care than the CBO had estimated back in 2010, a projection that did not include any spending on the Affordable Care Act.
Furthermore, on March 9, the agency released calculations showing that the federal government will spend 20% less than expected on subsidizing health insurance premiums for low- and middle-income Americans who purchase coverage through the marketplaces. This downward revision was attributed to to “slower growth in premiums and, to a lesser extent, slightly lower exchange enrollment,” by the CBO. On Medicaid, the government will also spend $73 billion less than expected between 2016 and 2024.
Whether Obamacare has played a role in the slowing of health care spending is a subject of much debate in the health policy field. The truth is complicated; Obamacare cannot take full credit for this decline, but it is clear the reform hasn’t interrupted it either.
4. Has the Affordable Care Act made the insurance market less competitive?
“Keep in mind, the cost of premiums and deductibles have increased as choice and competition collapsed,” reads another of Breitbart’s complaints. The argument is that insurers do not want to offer their products on the exchanges because of the burden of increased regulation. But contrary to what conservative publications like Breitbart and think tanks like the Heritage Foundation claim, data shows carriers find the marketplaces attractive; more are offering policies through the online exchanges. For example, UnitedHealth Group, the for-profit company that operates the largest carrier in the United States, chose only to offer individual plans through the exchanges of only a couple states. This year the company expects to offer plans in as many as two dozen states. Plus, the McKinsey Center for U.S. Health System Reform has found that 56 new insurers have entered the market so far in 2015.
“The ACA has created the possibility of genuine competition in the individual insurance market,” noted a Brookings analysis. “It creates health insurance exchanges that can structure insurance offerings and present information in a clear and comprehensible fashion. Nothing like this existed in the past, with the exception of the Federal Employees Health Benefit Program for federal civil servants and their families.”
5. Is Obamacare really drawing down the uninsured rate?
“You keep hearing about how ObamaCare is covering millions, when it really isn’t. A huge majority of those the White House [is] … advertising as ‘newly-insured’ are in fact victims of cancelled policies who were forced into the ObamaCare exchanges.” Again, this statement from Breitbart needs to be unpacked. In the fall of 2013, at least 4.7 million people lost coverage as insurers sent out cancellation notices for policies that did not comply with new Obamacare regulations, according to a tally made by the Associated Press in a December 2013 article. And this figure represented numbers from only the 32 states able to give estimates.
The cancellation of those policies was a clear violation of Obama’s “if you like your plan, you can keep your plan” promise. But the debate on that issue should be closed; Obama promised more than was possible, and Politifact has already deemed it the biggest lie of 2013. And that criticism is more a reflection on the president’s errors than of the reform’s ultimate viability. Still, because such a large number of people lost coverage and then bought insurance through the new marketplaces, it is important to examine these numbers. The fall of 2013 and the winter of 2014 was a hectic time for the insurance industry, and the numbers that emerged did not always tell a clear story or the full story. First, Politifact discovered the AP’s list may not be completely accurate. That tally claimed 333,000 notices were sent to Blue Cross/Blue Shield customers in Florida, but a company spokesman said it mailed only 44,000 cancellation letters. In Washington, the AP reported that 290,000 consumers received cancellation notices, but the state’s insurance commissioner called that figure “inaccurate” several weeks later. Plus, Obama allowed states’ insurance commissions to postpone the new requirements for one year, if the insurers agreed. As many as 2.3 million were able to keep the same plan, according to the Washington Post.
By comparison, a survey conducted by analysts at the Urban Institute calculated that only about 2.6 million people had lost their coverage as a result of the Affordable Care Act, a figure representing about 20% of the insured population before the Obamacare expansion. Even more importantly, the analysts reported that the routine insurance market churn is not much different, finding that less than 20% of the customers polled kept a plan for more than two years. “It appears that the number of people that lost coverage from 2013 to 2014 is similar or less than the number of people who lost coverage in previous years,” added Rand Corporation’s Christine Eibner in an interview with Politifact. And that hints at the broader problems with the thesis of the AP story and the Republican critique of the Affordable Care Act.
That AP list led to many Republicans and conservative pundits to complain that the reform caused Americans to lose insurance, and they did. During a debate late last year, conservative talk show host said “4.7 million people have lost their insurance in 32 states.” However, not only is that 4.7 million figure a misleading estimation, but also it is misleading to suggest that the Affordable Care Act caused all those people to be without health insurance. The Rand corporation calculated that the flux in the insurance market from 2013 to 2014, the first year of exchange enrollments, caused 1 million people to be “transitioned to being uninsured,” either because of policy cancellations or because the cost of coverage was too high. The Rand report noted that the overall number is very small, representing less than 1% of people between the ages of 18 and 64, the age when Medicare becomes available. Most Americans who left the individual insurance market moved into employer-sponsored coverage, qualified for the newly expanded Medicaid program, or purchased coverage through the exchanges.
It is correct to argue that the Affordable Care Act’s enrollment numbers were pushed higher because of a fairly large share of Americans who choose (for a variety of reasons) to leave the individual insurance market and purchase coverage through the exchanges. The Rand Corporation estimated that only one-third of 2014’s 6.7 million marketplace enrollees were previously uninsured. However, this represents only a subset of the overall growth of insured Americans. Of the 40.7 million people in the United States without insurance in 2013, 14.5 million gained coverage thanks to the exchanges and expansions of Medicaid and employer-sponsored coverage. And by March of this year, more than 21 million people had enrolled through the online marketplaces or Medicaid, of which more than 16 million were previously uninsured. That has lowered Gallup’s measure of Americans without coverage to 12.3%, from the 18% peak recorded in the third quarter of 2013, on the eve of the exchanges’ launch. Meanwhile, the Congressional Budget Office estimates that Obamacare will cut the ranks of the uninsured by 17 million in 2015.
It seems necessary to also address the concern for what Republicans call a government takeover of medicine. Here is one alternate view for consideration. In the words of the Los Angeles Times editorial board, calling the Affordable Care Act a government takeover is inaccurate. The federal government did not so much take over health care, but “instead, it used government healthcare programs as laboratories to seek improvements in cost control and quality that could be mimicked in the private sector. The law set tough new rules on insurers, but guaranteed them a huge influx of customers. It also gave states the chance to lead efforts to expand coverage and to reform their insurance markets, although partisan backlash against the law prompted many state legislatures to remain on the sidelines — or, worse, to try to undermine the law and discourage people from obtaining coverage.”
But still the public’s view of the Affordable Care Act remains largely negative, likely because the law continues to be so politicized and such a relatively small share of American adults have benefited from it, at this point.
Follow Meghan on Twitter @MFoley_WSCS