What is Obamacare anyway?

By Dana Beezley-Smith, Ph.D.
May 31, 2018 - Last updated: May 27, 2018

ObamacareIn reviewing “the state of Obamacare in 2018,” Vox policy reporter Dylan Scott wondered, “What even is Obamacare anyway?”

“It’s increasingly difficult to assess ‘Obamacare’ as if it is a single entity,” he wrote. “Because depending on how you look at it, the law might be a rousing success or it’s fallen far short of what it was hoped to be. In a sense, there are many Obamacares. Some of them are working; some of them aren’t.”

Scott noted that he – and most Americans – tend to equate the Affordable Care Act (ACA) with the insurance exchanges, overlooking provisions such as Medicaid expansion, the standardization of insurance policies and the drive to end fee-for-service reimbursement.
The ACA is a sprawling piece of legislation with the potential to affect every American and, throughout its evolution, has created a complex system of winners and losers.

Intended beneficiaries were exchange enrollees with expensive health conditions; the law caps yearly expenses and prevents insurers from charging them higher premiums. However, researchers at Harvard and the University of Texas-Austin discovered that insurers are learning to design drug formularies that discourage less-profitable individuals from enrolling.

The law has been effective in making “household income more evenly distributed,” according to a March Congressional Budget Office (CBO) analysis. The ACA’s provisions in 2014 “boosted household income, on average, for those in the lowest quintiles, and reduced income for households in the highest quintile.”

The ACA also allows for free or low-cost Medicaid coverage through expansion of the program to those earning up to 138 percent of the federal poverty level. Medicaid enrollment increased by 17.6 million through December 2017, with total enrollment of 67.6 million. The expansion represented “the largest change in means-tested transfers in 2014,” wrote CBO.

These gains, though, came at the expense of those on Medicaid community service waitlists. A recent 12-state analysis by the Foundation for Government Accountability finds that at least 21,904 Americans have died awaiting assistance. While the ACA didn’t create these waitlists, the authors note, it increases the likelihood that needy individuals are crowded out to fund services for the newly eligible.

Insurers are reporting profits and exchange plan signups appear steady, declining less than 4 percent in 2017. During this year’s Open Enrollment, 11.8 million individuals purchased plans, and according to Kaiser Health News correspondent Julie Rovner, 27 percent were new customers.

Paradoxically, the administration’s decision to halt “cost-sharing” subsidies to insurers may have encouraged enrollment, Rovner suggests. Carriers were able to offer zero-cost policies to many lower-income Americans, offloading the increased premium expense to taxpayers. Average subsidized premiums fell from $106 per month in 2017 to $89, and the average subsidy rose from $383 to $550.

Axios reporter Sam Baker says to expect this trend to continue: The law “doesn’t do much to bring in healthy people and instead replaces their premium dollars with tax dollars.”

“Its benefits are more concentrated on a smaller group of sicker, poorer people, while the middle class has gotten an increasingly bad deal.”

Although it was predicted that employers would shift workers to the exchanges, most are still offering health coverage, and with broader benefits. In preparation for the law’s excise tax on company policies, though, deductibles and copayments have risen and provider panels have narrowed.

ACA architects proposed new health care models, such as accountable care organizations, to reduce Medicare outlays. However, consulting firm Avalere reports that through 2016, ACOs “increased federal spending by $384 million.” Recent research “should be the final nail in the coffin of the current generation of P4P (pay for performance),” said economist Austin Frakt and physician Ashish Jha.

“Obamacare is both working and not working,” Scott said. “It’s mostly fine for many people and a borderline disaster for some others. The uninsured rate has hit record lows and yet one in 10 Americans still lack coverage and many who have an insurance card struggle to pay their share of the bills.”

Deficiencies in the ACA may have created increased zeal for a federally run single-payer program. In a June 2017 Pew poll, 60 percent viewed health coverage as a federal government responsibility and 33 percent supported a “single health insurance system run by the government, rather than through a mix of private companies and government.” Democrats’ support for a single-payer program stood at 52 percent, up 19 points from 2014.

But New York Times columnist Paul Krugman believes the ACA is already inching in that direction. The law is “looking more and more like stealth single-payer,” he tweeted.

“The majority of the newly insured under the ACA got their coverage through Medicaid, i.e., government insurance. And the great majority of those buying private insurance on the marketplaces are heavily subsidized – in effect insulated from premium increases.”

Veteran universal coverage advocate Henry Waxman recently cautioned that Medicare-for-All “is no policy panacea.” Writing in The Washington Post, the former California congressman says the idea has “never mustered majority support in Congress.”

Most Medicare beneficiaries, he noted, buy private supplemental insurance to reduce large out-of-pocket expenses. “The most prominent single-payer bill would eliminate all out-of-pocket costs for Medicare, a move whose astronomical costs would require tax increases at politically suicidal levels.”

Citing examples of successful health reform efforts, Waxman recommends that if Democrats recapture the House in this year’s elections, they should build “on what works rather than trying to blow it up.”

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Dana Beezley-Smith, Ph.D., is in private practice serving children, adults and families in Green, Ohio. Her email is: drdana@me.com.

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