The editors of the Wall Street Journal look at the rising healthcare insurance premiums and see an Affordable Care Act that is failing at its notional objective, reducing the cost of healthcare:
In a study across 45 states, the research outfit Health Pocket reports that mid-level Exclusive Provider Organization plans are 20% more expensive in 2016 on average. HMOs are 19% more expensive, and for all plan types the average is 14%.
President Obama dropped by Nashville last week to claim Tennessee as a state where “the law has worked better than we expected†and “actually ended up costing less than people expected,†so let’s test the reality of those claims. As a baseline, in 2015 premium increases for Tennessee plans ranged from 7.5% to 19.1%.
Meanwhile, the president and the supporters of the PPACA see it as a success:
The Affordable Care Act is now in its second year of full operation; how’s it doing?
The answer is, better than even many supporters realize.
Start with the act’s most basic purpose, to cover the previously uninsured. Opponents of the law insisted that it would actually reduce coverage; in reality, around 15 million Americans have gained insurance.
But isn’t that a very partial success, with millions still uncovered? Well, many of those still uninsured are in that position because their state governments have refused to let the federal government enroll them in Medicaid.
Beyond that, you need to realize that the law was never intended or expected to cover everyone. Undocumented immigrants aren’t eligible, and any system that doesn’t enroll people automatically will see some of the population fall through the cracks. Massachusetts has had guaranteed health coverage for almost a decade, but 5 percent of its nonelderly adult population remains uninsured.
Suppose we use 5 percent uninsured as a benchmark. How much progress have we made toward getting there? In states that have implemented the act in full and expanded Medicaid, data from the Urban Institute show the uninsured falling from more than 16 percent to just 7.5 percent — that is, in year two we’re already around 80 percent of the way there. Most of the way with the A.C.A.!
But how good is that coverage? Cheaper plans under the law do have relatively large deductibles and impose significant out-of-pocket costs. Still, the plans are vastly better than no coverage at all, or the bare-bones plans that the act made illegal. The newly insured have seen a sharp drop in health-related financial distress, and report a high degree of satisfaction with their coverage.
What about costs? In 2013 there were dire warnings about a looming “rate shockâ€; instead, premiums came in well below expectations. In 2014 the usual suspects declared that huge premium increases were looming for 2015; the actual rise was just 2 percent. There was another flurry of scare stories about rate hikes earlier this year, but as more information comes in it looks as if premium increases for 2016 will be bigger than for this year but still modest by historical standards — which means that premiums remain much lower than expected.
Obviously, there’s a difference of opinion. The late Sen. Daniel Patrick Moynihan famously wisecracked that everyone is entitled to his or her own opinion but not her or his own facts. He was wrong. Everybody has their own facts now.
Site?
Thanks. Corrected.
Moving the goalposts. The primary purpose of the ACA was to increase coverage. Its secondary goals were to improve quality and cut costs. It is pushing hospitals to improve quality, so that is definitely happening. As to costs we know that right wing groups predicted major cost increases last year and there were none. I would wait to see what happens before I got outraged.
Steve
Yeah, that’s why it was called the “Increased Coverage Act”.
IMO they were operating under the incorrect assumption that increasing the number of people with healthcare insurance would actually reduce healthcare spending.
“Yeah, that’s why it was called the “Increased Coverage Actâ€.”
We stopped at our neighbor’s garage sale on the way home to chat. They did not have a garage for sale. Bummer. Anyway, leaving aside nonsense about titles, it was well understood at the time that the primary goal was increasing the number covered. This was acknowledged by every left of center (and those in the middle) health care economist and policy writer in the country. As a secondary goal, still a goal, it was hoped costs could be cut. It was acknowledged by the aforementioned group that it was weak in this area. Quality was also an issue, though it was also secondary to coverage.
There was some thought that getting more people under coverage might help reduce costs. Indeed every other country in the world with quality health care pays less than we do and has nearly universal health care. However, it was thought that the mechanisms most likely to lower costs were increased competition via the exchanges, the death panel, ACOs, PCORI (cost-effectiveness research in particular), a number of quality improvement programs like readmissions and bundled Medicare (already underway).
This is really basic stuff. Iron triangle of medicine and all that. If you followed the health care debate every day while the bill was being developed, or started following health care policy in the years before that, this would not even be brought up.
Steve
You’re not a stupid person, steve, but that comment is about as stupid as anything that’s been written here. You know as well as I do that the Congress was attempting to sell a massive new entitlement program by emphasizing that it would improve the quality (“Patient Protection”) and lower the cost (“Affordable Care”) of healthcare.
Don’t revise history. Just acknowledge that increasing coverage, improving quality, and lowering costs were all objectives and hard to disaggregate. The bill has been pretty successful at increasing coverage, predictably unsuccessful at improving quality, and whether it has or will lower costs remains an open question.
As has been the case for the six years since the enactment of the PPACA, I’m unenthusiastic about it largely because I think it’s a distraction from the vitally important business of a major restructuring of the healthcare system which anyone with a lick of sense, which I assume includes you, knows is the only way we’ll be able to achieve the objectives we must in anything less than geological time. I’m beginning to think that a major meltdown of the healthcare system is about as likely as significant reform.
Slate has an article with a similar take on the PPACA, in pointing out it’s failure to control costs, especially when future premiums come due.
Steve,
Here’s what Senate Democrats put out. Note the use of “Quality, affordable health care for all Americans” as the main theme which became their main slogan for the bill. Read the opening paragraph in that PDF and it’s pretty clear that quality and costs were not secondary in the sales pitch.
And here’s the Whitehouse Blog where “quality” and “affordability” is also front and center.
As for healthcare economists, what about this guy?
So I guess it depends on how you look at it – perhaps to you, a stakeholder in the debate who was undoubtedly much better read than the average American, it might seem obvious that quality and costs were secondary, but I don’t think your perception is representative of what most people think was the case and it certainly is far different from how the law was described by advocates to the general public.
At the end of the day, I do think it’s pretty clear the law was primarily designed to increase coverage. But increasing coverage is something only the loony are against – the dispute is not about increasing coverage, but how to increase coverage. It’s for that reason the sales pitch (including from certain healthcare economists/WH consultants) had to give quality and costs at least equal billing.
Yes. Quality, affordable care for all. The triangle. (Quality, cost and increasing coverage.) Everyone knew then, and knows now, that you can’t really do all 3 at the same time, but you don’t say that when you are pushing the bill. What was done was to prioritize coverage, which everyone knew was the priority at the time. There was, in fact, a lot of effort to make sure it would be affordable for those signing up, which was accomplished for the most part with subsidies and expanding Medicaid. So in that sense, affordable was true. Same with quality. While the ACA has a number of provisions requiring improvements in quality, it is not the focus of the bill. (Note that it says quality just as often as affordable, yet you are only talking about costs.)
As to Jon Gruber, here is what he said, which reflects what everyone else thought.
Gruber In 2009 Warned That Obamacare Was Not Designed To Reduce Costs As Opposed To Guarantee Coverage
1, December 31, 2014 jonathanturley Congress, Politics, Society
screen-shot-2014-11-13-at-8-45-49-amMIT professor Jonathan Gruber has produced a firestorm of controversy over remarks made in various settings about the Affordable Care Act (“Obamacareâ€) and how drafters like himself relied on the “stupidity†of voters in passing the legislation. It appears that the Gruber hits keep coming, even as he prepares for another round of questioning in Congress. The latest comments from 2009 reveal Gruber saying that Obamacare would not produce affordable health care for many citizens since its focus is coverage not costs. This statement made five months before the passage of the Act from a key architect is in stark contrast to President Obama’s repeated assertions that premiums would go down dramatically. The latest statement will fuel questioning before Congress on whether the White House knew that premiums were unlikely to do down and that people would not be able to keep their current policies as promised by President Obama in selling the program.
Gruber stated in 2009 that Obamacare lacked cost controls in it and would not be affordable for many:
“The problem is it starts to go hand in hand with the mandate; you can’t mandate insurance that’s not affordable. This is going to be a major issue . . . So what’s different this time? Why are we closer than we’ve ever been before? Because there are no cost controls in these proposals. Because this bill’s about coverage. Which is good! Why should we hold 48 million uninsured people hostage to the fact that we don’t yet know how to control costs in a politically acceptable way? Let’s get the people covered and then let’s do cost control.â€
The primary objective of the Massachusetts reform, again Gruber, was coverage, at which it has been successful. It has has had less success at controlling costs, but that was a secondary objective.
Anyway, you can find the same sort of comments from people like Reinhardt, Aaron, Frakt or Carroll who wrote frequently at the time. The mechanisms for increasing coverage were easy and success was assumed. The methods used to control costs were either new and unproven, or relied upon markets and the insurance industry, i.e. dicey. No one knew if they would work. Same with the quality stuff.
Steve
The President told me my family’s premiums were going to come down a lot. Instead, they’ve gone up a lot. I guess the President was too stupid to know that was impossible.