Although the Affordable Care Act was signed into law by President Obama five years ago and the major provisions of the legislation took effect at the beginning of 2014, health care reform remains a highly contentious work in progress.
Two recent reports provide some indications about the ACA’s success to date in achieving its primary objectives — increasing the number of Americans with access to insurance coverage and reining in rising health care costs.
In “How Will the Affordable Care Act Affect the Use of Health Care Services?” the Commonwealth Fund notes that since January 2014 roughly 11 million people who formerly lacked health insurance have obtained coverage through federal and state exchanges, where individuals whose income is up to 400% of the federal poverty line can qualify for subsidies. Millions more have qualified through the expansion of state Medicaid programs.
While those numbers fall short of the total of 30 million originally envisioned by the ACA’s proponents, they represent a significant achievement in reducing a population of uninsured in this country that exceeded 40 million before the law was implemented.
The issue brief concludes that the ranks of the newly insured will bring about only a modest increase in utilization of medical services, one which the health care system should be able to absorb without much difficulty. It predicts a moderate increase in the use of prescription drugs of less than 2.5%.
So far, so good.
Lasting progress is proving harder to come by in the realm of health care costs. After several years of decelerating growth, a period that coincided with the Great Recession, it appears that expenditures for treating health problems are once again advancing at unsustainable levels.
An analysis by the Altarum Institute finds that, based on preliminary figures from the Department of Health and Human Services, health care spending rose 5% in 2014, up from 3.6% a year earlier, much faster than the expansion of the economy as a whole. The growth rate in health care expenditures was even higher in December, 5.6%, compared to a 3.8% increase in gross domestic product.
Spending on prescription drugs rose 13% for the month, the biggest gain for any major category, driven in large part by the introduction of breakthrough therapies developed to treat such diseases as hepatitis C. Even with the increase, medications accounted for just 10% of total health care expenditures.
The figures show a return to the familiar pattern of rapidly accelerating health care costs accounting for an ever higher percentage of GDP. That number stood at 17.8% at the end of last year, according to Altarum, up from 16% at the start of the recession. Such a trajectory is clearly unsustainable over the long term.
The ACA now faces a serious legal hurdle. The Supreme Court earlier this month heard oral arguments in King v. Burwell, in which conservative groups are contesting the federal government’s right to provide insurance subsidies to people who obtained coverage through HealthCare.gov, as opposed to a state exchange. Those challenging the ACA want a narrow reading of the portion of the legislation that states subsidies are available only to those who enroll “through an exchange established by the state.”
If the High Court, which upheld the bulk of the ACA in a 5-4 decision in 2012, invalidates the way subsidies are delivered, coverage for as many as 7.5 million people in 34 states would be disrupted, if not, at least in some instances, ended entirely. Moreover, striking down the subsidies could threaten the financial underpinning of the entire reform process that the ACA put in motion.
Whatever the Supreme Court ultimately decides in King v. Burwell, it is clear that much work remains to be done if the U.S. health care system is to become as efficient and equitable as it is, when functioning at its best, innovative and effective. Members of Congress and the administration need to put partisanship aside and, by harnessing the power of the new health care delivery models emerging in the private sector, find the means to provide Americans with the care they deserve at a price the country can afford.