In March 2010, President Barack Obama signed the Patient Protection and Affordable Care Act, the most dramatic overhaul to U.S. healthcare law in more than a generation. The law’s passage came after decades of proposals by both parties attempting to slow the acceleration of healthcare costs in the United States and expand coverage to millions of uninsured Americans – all without reducing benefits.
To be certain, it was a tall order.
In the end, even the 2010 law’s most ardent supporters conceded it was a messy effort. Coming in at more than 900 pages, the ACA enacted vast modifications to the U.S. tax code and beyond. Even before the bill passed, then-Speaker Nancy Pelosi (Calif.) famously told a crowded room, “We have to pass the bill so that you can find out what is in it.” And just this month, the Supreme Court heard oral arguments in King v. Burwell, a case that could limit federal subsidies to lower-income Americans who purchase insurance policies on the new state-based federal exchanges – and perhaps undo the law altogether.
While it remains to be seen how the nation’s high court rules, half a decade later nearly all of the ACA’s major provisions are firmly in place. As a result, the healthcare industry is rapidly changing to reflect the new realities of the post-ACA era: lower reimbursements, higher volume, and increased emphasis on patient satisfaction and cost sharing.
But five years on, how do the original ACA projections compare with what we’re seeing in the industry? Here’s a snapshot based on publicly available information:
Original projections
• Insurance exchanges: In March 2010, the nonpartisan Congressional Budget Office estimated that participation in the state-based insurance exchanges would rise dramatically during its first six years, from 8 million during the 2014 launch year to 24 million in 2019. In 2015, the CBO estimated that 13 million Americans would obtain health insurance through the state-based exchanges.
• Uninsured rate: In 2010, the CBO estimated that 50 million Americans were uninsured. CBO economists also projected that the new law would reduce that figure to 26 million in 2015 and 23 million in 2019. All told, the CBO expected that the ACA would increase the nonelderly insured rate in the United States to 91 percent in 2015, up from 81 percent when the law passed.
• Healthcare spending: In July 2011, Centers for Medicare and Medicaid Services economists projected in a report published in Health Affairs that the surge of new enrollees resulting from the ACA would “contribute to a significant acceleration in the national health spending growth rate in 2014,” resulting in an 8.3 percent increase in 2014 and a 5.5 percent increase in 2013.
Latest Figures
• Insurance exchanges: The U.S. Dept. of Health and Human Services reports that 11.4 million individuals signed up for health insurance in 2015 through state-based insurance exchanges. Of this total, 87 percent of enrollees qualified for subsidies to offset monthly premiums, according to DHS.
• Uninsured rate: In a recent budget outlook, the CBO published estimates that in 2015 about “36 million nonelderly people will be uninsured—about 19 million fewer than would have been uninsured in the absence of the ACA.”
• Healthcare spending: CMS estimates that U.S. healthcare spending increased 3.6 percent in 2013, the latest full year of data available. According to CMS, this tally marks “the fifth consecutive year of slow growth in the range of 3.6 percent and 4.1 percent” and that “the share of the economy devoted to health spending has remained at 17.4 percent since 2009, as health spending and the gross domestic product increased at similar rates for 2010 – 2013.”
Other metrics
Up until now, all indications suggest that the ACA also has avoided one of its major initial hurdles: convincing enough young, healthy people to participate in state-based exchanges to avoid an insurance “death spiral” among one or more of the 50 state-based insurance pools.
In late 2013, a Henry J. Kaiser Family Foundation report suggested that this worst-case scenario for the exchange risk pools is unlikely because the new statewide insurance pools were designed to spread risk across a broad population and charge higher premiums based on age. Reinsurance programs, too, likely limit the threat of widespread collapse of the individual state exchanges, according to Kaiser. From its report:
“Achieving a balanced risk pool in the individual insurance market will help to make it an attractive market for insurers and keep premiums down over time. Conversely, enrollment of a disproportionate share of older and sicker people will tend to drive premiums up. However, premiums are not as sensitive to the mix of enrollment as fears about a ‘death spiral’ suggest, particularly with respect to age. It is important to attract the ‘young invincibles,’ but maybe with a greater focus on the ‘invincible’ part.”
After the close of last year’s first open enrollment period, DHS issued the following specific details about young adult participation in the new insurance exchanges:
• 2.2 million (28 percent) of the people who selected an exchange plan during the initial open enrollment period were young adults between the ages of 18 and 34.
• A total of 2.7 million (34 percent) of the people who selected an exchange plan during the initial open enrollment period were between the ages of 0 and 34.
As this year’s open enrollment period only recently closed, it may be until the summer before we have a full understanding of what the 2015 exchange risk pools look like – and what that could mean for next year’s premiums. Even more, the Supreme Court in June is expected to issue its King v. Burwell decision, which may make monthly insurance premiums unaffordable for many exchange customers across the nation.