The Patient Protection and Affordable Care Act (ACA), popularly known as Obamacare, has entered a new enrollment season with advocates singing its praises.
This is understandable. In 5½ years of existence, the landmark law has survived two narrow U.S. Supreme Court rulings, a disastrous website rollout and redundant calls for repeal from Republicans, including the current GOP presidential candidates.
Largely because of the ACA, the number of Americans without health insurance has dropped to historically low levels, according to the Census Bureau. Nearly 90 percent of Americans now have health insurance.
President Barack Obama’s administration claims the ACA has become a permanent feature of the nation’s social safety net, even as Republicans in Congress are trying to eviscerate it.
Boosters and critics give selective evaluations.
Opponents belittle the subsidized health insurance plans offered online by the ACA by pointing out that a majority of those who sign up for policies fail to qualify and are instead enrolled in Medicaid, the federal-state health program for the poor and disabled.
ACA supporters often cite the number of applicants for coverage rather than the smaller number who purchase policies. In 2015, according to the Centers for Medicare & Medicaid Services, 11.7 million signed up for coverage on ACA marketplaces and 9.9 million were enrolled as of September.
A RAND study in May provided a useful overview of what the Affordable Care Act has accomplished. The study estimated that 22.8 million Americans received coverage while 5.9 million lost coverage for a net of 16.9 million newly insured.
The largest number of the newly enrolled were in employer-sponsored health plans (9.6 million) followed by Medicaid (6.5 million) and ACA online marketplaces (4.1 million). Another 6.7 million were enrolled in a variety of individual plans.
RAND found that the ACA made no difference in the source of health care for 125 million Americans, about 80 percent of the nonelderly population, a majority of whom hold a negative view of the law.
Gallup reported this month that 52 percent of Americans oppose the ACA while only 44 percent approve of it.
It’s another story for those on the economic margins, for whom the ACA fulfills a basic need. More than 80 percent of those covered for health insurance under the ACA are happy with their plans, according to a Kaiser Family Foundation survey.
This is true everywhere even though the percentage of those covered varies from state to state.
According to Census Bureau data, the percentage of those without health insurance in 2014 ranged from 3.3 percent in Massachusetts to 19.1 percent in Texas. Massachusetts pioneered state health insurance that became the basis for the ACA, while Texas is one of a score of states that has declined to expand Medicaid.
The intent of Congress when it passed the ACA in 2010 was to expand Medicaid to anyone with income up to 138 percent above the poverty line.
But the Supreme Court ruling upholding the constitutionality of the law left decisions on Medicaid expansion to the states. Eighteen Republican governors rejected expansion on grounds that Medicaid would eventually become too expensive for the states.
In Missouri and Virginia, GOP-controlled legislatures have prevented Democratic governors from extending Medicaid.
Expansion has made a difference. In states that expanded Medicaid the average rate of those without health insurance is 9.8 percent; in states that did not it is 13.5 percent.
The Kaiser Family Foundation found that 3.1 million Americans in the nonexpansion states are in a “coverage gap:” They can’t afford to buy health insurance but make too much to qualify for Medicaid.
Medicaid aside, this is a testing time for Obamacare on several fronts.
The most immediate threat is a House-passed budget reconciliation bill that would remove requirements that Americans have health insurance and that large employers offer an insurance plan. The bill would also eliminate the excise tax on high-cost employer insurance policies, often called “Cadillac plans,” as well as a tax on medical devices.
The tax on the Cadillac plans, which raise $87 billion in revenue, has been called by Obama’s economic adviser Jason Furman “perhaps the single biggest leverage we have on health costs in the private sector.”
The fate of the bill, which the Senate is scheduled to take up after Thanksgiving, is uncertain. Some liberal senators think the House bill goes too far in the changes it would make to the ACA; some conservative senators think it does not go far enough.
In its current form, the measure would face a likely presidential veto.
Obamacare, meanwhile, is reeling from the collapse of 12 of the 23 nonprofit cooperatives created by the ACA to increase competition.
As Robert Pear of The New York Times put it: “The financial failure of more than half the nonprofit health insurance companies created under the Affordable Care Act has handed Republicans a new weapon in their campaign against the health law, thrown the Obama administration on the defensive once again and left more than a half-million consumers in the cold.”
Another Pear story reported that some of those who have purchased policies through the ACA are “feeling nearly as vulnerable as they were before they had coverage” because of high deductibles, $3,000 or more in many states.
These come atop premium increases. The Health and Human Services Department predicts that premiums for the most popular “silver” plan will rise 7.5 percent in 2016 in the 37 states using the federal Obamacare exchange.
Premiums will decline in a few states, notably Indiana, but will increase 37 percent in Oklahoma and more than 25 percent in Alaska, Montana and New Mexico.
Premiums have also increased by double digits in some of the 13 states that operate their own exchanges.
In Minnesota, officials approved increases averaging 49 percent for the market’s largest insurer. In Hawaii, the insurance commissioner approved 27 percent to 34 percent hikes for the two insurers in the market.
In contrast, rates will rise only 4 percent in California, one of the few states that actively negotiates prices.
Experts say the combination of premium increases and high deductibles could prompt people to opt-out of coverage and pay the federal tax penalty, often called a mandate, imposed on those without health insurance.
In 2015, those who did not buy insurance were required to pay a $325 tax penalty or 2 percent of their income, whichever was greater. In 2016, this fine will rise to either $695 or 2.5 percent of taxable income.
The ACA is also involved in the tangled debate about economic inequality.
Writing in The New York Times, economist Tyler Cowen praised the ACA for reducing the number of uninsured at relatively low cost but said the law had exacerbated inequality.
Cowen said the “losers” from Obamacare were those making 250 percent above the poverty line, an annual income of about $30,000. Individuals in the $30,000-$35,000 income bracket in most cases do not qualify for tax-credit subsidies but may not have enough money to purchase health insurance.
Viewed through a nonpartisan lens, Obamacare has accomplished much while falling short of its lofty goal of providing affordable health care for most U.S. citizens.
Some 32 million Americans still lack health insurance, according to a Kaiser Family Foundation analysis. Seven million of these are unauthorized immigrants who are not covered by Obamacare. (California has begun a limited program to help some of these immigrants.)
Of the rest, according to Health and Human Services Secretary Sylvia Mathews Burwell, about 10.5 million would qualify for subsidized policies under Obamacare.
Burwell acknowledges that the pace of ACA sign-ups is likely to decrease in the current enrollment period, which began Nov. 1 and lasts until Jan. 31. In a recent speech, she said that many of the uninsured are younger, live in underserved communities and have less than $100 in savings.
“People are worried about fitting premiums into their budget,” Burwell said. “Almost 60 percent of people who are uninsured are either confused about how the tax credits work or don’t know they are available.”
Obamacare is ill-served by supporters who fail to recognize its imperfections. The ACA is ripe for deft reforms, assuming it survives the meat-ax of the pending budget reconciliation bill.
Proposals have been advanced to broaden the ACA’s funding base, increase and extend subsidies or convert them to tax credits, and revise (or eliminate) the tax penalty for those who don’t sign up for health insurance. Such proposals, many of which would require a tax increase, are unlikely to make headway in an election year.
But something will have to be done in 2016 to repair the ACA, especially if UnitedHealth Group, the nation’s largest health insurer, follows through on its announcement last Thursday that it will cut back on policies offered on the federal exchange.
The fundamental obstacle to fixing the Affordable Care Act is that it is a partisan accomplishment, passed on a party-line vote by Democrats and opposed almost entirely by Republicans.
Reform won’t come until Democrats admit that changes are necessary and Republicans acknowledge that the ACA is here to stay.
— Lou Cannon, a Summerland resident, is a longtime national political writer and acclaimed presidential biographer. His most recent book — co-authored with his son, Carl — is Reagan’s Disciple: George W. Bush’s Troubled Quest for a Presidential Legacy. Cannon also is an editorial adviser to State Net Capitol Journal, which published this column originally. Click here to read previous columns. The opinions expressed are his own.
