Many eyes were on Congress last Thursday as legislators grilled the CEOs of the largest health coverage payors in the country. And “grilling” was the right word — the exchanges were heated, and at times became downright brutal, a tone reflected in media coverage that didn’t pull any punches.
The message was clear: people are fed up with the way health coverage works in this country. At best, the system feels expensive, opaque, and unresponsive. At its worst? The opinions are unrepeatable in polite company — and often for good, justifiable reasons.
There are any number of ways to unpack the Congressional testimony — and any number of pundits out there unpacking it — but one thing that’s important to understand is that, when evaluated by the issues it was attempting to address, the Affordable Care Act has been successful.
Yes, I mean that seriously: premium increases were curtailed; the number of uninsured dropped dramatically; and numerous problematic practices were abolished. The problem isn’t the ACA itself; the problem is that it was never the all-purpose “fix” it was touted to be.
Premiums went up. But less than they otherwise would have.
One of the more lurid headlines about the Congressional testimony notes a 90% increase in premiums since the ACA went into effect. That figure sounds staggering, but a critical piece of context is missing: that 90% increase occurred across fifteen years. In other words, it represents an average annual growth rate of about 4.4% once compounding is taken into account (premium growth compounds year over year; it is not linear).
By comparison, a Kaiser Family Foundation analysis found that during the ten years prior to the ACA’s passage, premium increases averaged 8.7% per year. At that rate, we would have expected premiums to rise by roughly 249% in fifteen years — nearly three times the increase implied by the headline figure.
This is not the only evidence suggesting that the ACA significantly flattened premium growth. In 2017, the Congressional Budget Office projected that average premiums in 2018 and 2019 would have been 15% to 20% higher than they actually were if the ACA’s market reforms had not been in place.
The Commonwealth Fund also found that average premium increases for employer-sponsored coverage — which is by far the way the majority of Americans get their health coverage today — slowed significantly after the ACA was enacted.
In other words: yes, premiums did rise, and they did so faster than inflation. But while it’s impossible to prove a negative, available evidence consistently supports the conclusion that premium increases trended well below where they would have been. Given that “flattening the curve” was an explicitly stated, central policy goal of the ACA, by this measure it has been extremely successful.
The number of insured Americans went way up, especially in vulnerable groups.
Another explicit goal of the ACA was to increase the number of insured Americans. At the time the legislation was passed, approximately 50 million Americans — or about one in six — were uninsured. Uninsured rates were especially high among young adults, those with low incomes, and those with greater health needs.
These vulnerable groups were the ones that saw the largest coverage gains after the ACA took effect, whether through Medicaid expansion, subsidies and tax credits, or the broader effects of more stable and moderated premium growth. According to the State Health Access Data Assistance Center, young adult uninsured rates dropped from 25.2% to 12.8%; the number of uninsured in households with income below $25,000 went from 25.4% to 13.3%; and the rate among non-working adults dropped from 14.2% to 6.7%. Similar drops were documented in nearly every other income and socioeconomic category.
Numerically, that’s the difference between 50 million uninsured Americans and about 26 million today — a drop of 48% even as the population itself has increased by about 7% (or about 20 million people) over the same period. That’s a significant figure both statistically and in human terms, and it clearly demonstrates that, on this measure, the ACA achieved its stated goal.
Numerous problematic insurance practices were abolished or restricted.
While this goal is less amenable to before-and-after statistical analyses, it was no less significant — and no less explicit. The following common health insurance practices were expressly prohibited:
- Individual insurance premiums could no longer be based on medical condition. This meant that numerous people who had been “priced out” of the individual market, or even flat-out deemed uninsurable, were now able to access coverage, even if it wasn’t available through a job. An estimated 50-54 million Americans were thus able to gain coverage without being “locked” to a specific job for health coverage alone.
- Lifetime limits were abolished, and annual limits were severely restricted. This meant that individuals with extremely high-cost conditions didn’t face a point where their medical care simply stopped being covered, even though they had been paying their insurance premiums. While comprehensive data on the exact number of people who actually hit lifetime limits pre-ACA aren’t available, 105 million Americans benefited from the removal of this “sword of Damocles” in their coverage.
This one is personal for me, as my father — who had better-than-average health coverage since he was a federal employee — hit his lifetime limit in the late 1980s. My family was effectively driven into poverty as a result. - Policy rescissions were restricted to cases of fraud or intentional misrepresentation. A 2009 report by congressional investigators showed that this practice — the retroactive cancellation of health coverage after an individual became seriously ill — was “fairly common” in the insurance industry. Today, policy rescissions are uncommon and face tight scrutiny, with covered individuals afforded advance notice, appeal rights, and multiple consumer protections. For many patients, this meant their coverage could no longer disappear at the very moment their care became most expensive.
- Dependent coverage eligibility was extended to age 26 and, critically, was no longer contingent on student or marital status after age 18. As noted above, one of the largest declines in uninsured rates occurred among young adults. Estimates suggest that approximately 2.5 million of these young adults gained coverage after the ACA took effect, with follow-up analyses showing that the extension of dependent eligibility accounted for the majority of those gains.
This provision affected me personally as well. I lost parental coverage at age 19 when I dropped to part-time student status so I could work full time, and I went without coverage until I landed a job with benefits at age 21. - Medical loss ratio restrictions. By restricting loss ratios (the amount of insurance premiums used for non-claims purposes) to 80% or 85%, depending on plan type, and requiring rebates whenever plans exceeded these ratios, these profit margins and administrative overhead costs were limited, which in turn changed carriers’ pricing approaches. They now had to be justified in a manner that’s similar, though not identical, to utility rate increases — and nearly $12 billion in rebates had been issued by 2024.
The impact of these changes, alongside several others, has had profound implications for health insurance coverage today. As a professional who worked in the field both before and after the ACA, I can personally testify that the industry is almost completely different than it was before the legislation went into effect — and that the effects of these mandates have overwhelmingly been positive for consumers. Thus, when viewed from this standpoint, the ACA was extremely successful.
What the ACA was never designed to fix
Much of the perception that the ACA “failed” is based on a false assumption: that it would fix all of the problems related to rising medical costs in this country. It was never designed to do that. Even at the time, it was intended to be a first step toward policy fixes and updates, which is why it primarily focused on the costs of health coverage as opposed to the costs of health care.
If the costs of health care keep increasing, the costs of health coverage will too. That’s inherent in the design of insurance itself — and it’s not something that just happens in health insurance. All insurance premiums go up whenever the cost of indemnification (making whole/covering damage) goes up. More expensive cars mean more expensive car insurance; and more expensive houses mean more expensive homeowners’ insurance; and so on.
This is why the ACA didn’t solve “the health coverage problem” in the United States. It couldn’t have done so by itself, and it never tried. By its own stated goals, however, it was wildly successful — and it was, in fact, a step in the overall right direction. But just as a single step only begins a journey, a single step can never be the extent of a journey.
Truly fixing the problem will require much more comprehensive legislation that impacts multiple sectors — not just health insurance.