The Unfinished Work of the Affordable Care Act

Dec 12, 2014, 8:45 AM, Posted by Brendan Saloner

The United States is the last remaining rich country in the world where a large percentage of the population lacks health insurance coverage. This situation is being improved under the Affordable Care Act (ACA), with recent estimates showing that from early 2013 to mid-2014 the uninsured rate dropped from 19 percent of adults to 14 percent. The uninsured rate will no doubt continue to fall in 2015, but the problem of the uninsured will not go away with the ACA. It will not go away even if all 50 states expand Medicaid for poor adults, and will not go away if the U.S. Supreme Court rules against the plaintiffs in a pending challenge to the power of the administration to provide subsidies in the federally facilitated insurance exchanges.

In its 2012 baseline estimate, the Congressional Budget Office (CBO) projected that by 2022 the ACA might cut the number of uninsured by half, but would still leave behind 30 million people without insurance. This projection assumed full implementation of the ACA provisions. We don’t yet have a clear sense of how much larger that number will be with incomplete implementation of the core ACA coverage provisions, but even an optimistic assessment is that tens of millions of Americans will continue to spend periods of time without health insurance.

Who does the ACA leave behind? By design, the ACA excludes undocumented immigrants, a group that numbers around 11 million today. Some undocumented immigrants purchase private insurance, receive coverage from an employer, or participate in public programs funded with non-federal dollars, but the majority have no insurance. Undocumented immigrants are prohibited from enrolling in Medicaid, receiving subsidies, and purchasing coverage on the exchanges. Although President Obama recently signed an executive order protecting many undocumented immigrants from immediate deportation, the ACA exclusion will continue in the foreseeable future, barring an act of Congress. 

As noted, there are also uninsured adults below the poverty line residing in states that are not expanding Medicaid. Under the ACA these individuals may not receive any subsidies to purchase coverage on the exchanges. These adults cannot afford full-price coverage in the individual market, and would need some other assistance to get insurance. This group includes many individuals with chronic illnesses and very spotty access to the medical system.

There are also individuals who are eligible for assistance under the ACA, but who will not enroll in subsidized health insurance. Their reasons are likely to be more complex. Some are between coverage—people changing jobs, recent retirees, and others undergoing life transitions. Although the ACA allows people to apply for subsidies outside of open enrollment under special circumstances, some people may not be motivated to seek coverage where they regard their lack of coverage as a temporary situation.

Other consumers not taking advantage of new coverage options are confused or overwhelmed. Poll after poll reveals that most Americans say that they do not know what assistance the ACA provides, how to access enrollment options, or they believe that the ACA includes restrictions that are not in the law (such as a requirement about which doctor a person may see). In Texas, a state at the top of the uninsured rankings, a 2013 poll demonstrated that only 44 percent of people knew about the existence of the exchanges. The doomed launch of healthcare.gov in late 2013 probably discouraged millions of individuals from seeking coverage last year, although enrollments picked up substantially by the end of the first open enrollment period.

Moreover, some individuals may remain uninsured because they feel that they cannot afford it. The issue of affordability has become a hot political topic, not least because the law has been staked on its ability to bring down prices for consumers. Undeniably, the ACA does bring down costs of buying coverage, and provides more comprehensive coverage to many than was available before the law. As an example, consider a single, 35-year-old adult earning $23,000 per year (about 200 percent of the federal poverty level) residing in Philadelphia. That person can purchase a typical silver plan for about $118 per month in premiums. This plan will carry an annual deductible of $150, and have an out-of-pocket maximum of $2,250. As with all ACA plans, this plan covers a regulated set of essential benefits and provide free preventive care.

In the pre-ACA world, it was very difficult for consumers to find plans of comparable quality and comprehensiveness to the current plans offered on the exchanges, and consumers were routinely turned away or restricted because of pre-existing conditions. Still, there are also some undeniable holes in the ACA system. With Norman Daniels, I have argued that the structure of the subsidies on the exchange leave consumers vulnerable to out-of-pocket costs that may stretch them beyond their resources, compromising the ability of low-income households to invest in their retirement or save for future purchases. The law also prevents individuals from seeking exchange coverage subsidies if their employer offers a plan that costs less than 10 percent of their income, an amount likely to still be burdensome for many workers.

A future Congress—one less politically polarized—might increase the subsidies to consumers or include more groups in public programs. For now, however, the ACA provides an incomplete realization of the goal of universal coverage. On universal coverage day it is appropriate to ask the philosophical question: How should society place a value on the coverage gained under the ACA, and how should society place a value on going beyond the ACA to achieve truly universal coverage?

Rather than attempt an answer, I will close with three comments. First, the research measuring the benefits and costs of coverage expansions is growing, but not complete. Several quasi-experimental studies from the last five years find that expanded access to private and public insurance coverage improves some measures of health status, reduces mortality, and may affect non-health outcomes including income and educational attainment. The evidence is compelling, but does not entirely speak to the question of how much a dollar of taxpayer dollars on health insurance buys in social benefits, all told. Second, moving toward universal coverage is only one of several dimensions of moving toward a more equitable society with better social protection. It is not obvious that health insurance is the best platform through which to promote a number of its purported social benefits including income redistribution (through subsidies), promotion of population health, or even the mitigation of health-related financial insecurity. Third, and relatedly, there is a reasonable debate about how much individual preferences for having insurance, and what type of insurance, should be accommodated. The complexity of the ACA—and the dissatisfaction and frustration felt by many—is ironically a consequence of a program designed to provide multiple pathways into health insurance coverage.

This commentary originally appeared on the RWJF Human Capital Blog. The views and opinions expressed here are those of the authors.