I call it the “law with nine lives.” The Affordable Care Act (ACA) has faced multiple constitutional challenges, an uncountable number of repeal attempts and a botched roll out. Each time, pundits have predicted that the law would fail. This latest round of news about insurer withdrawals and premium increases in the ACA’s marketplaces is no different, as prognosticators engage in yet another round of doom and gloom about the law’s future.
To be sure, these recent reports point to a market that is still evolving and continues to face challenges. In 2017, an estimated 19 percent of people will live in counties with only one choice of insurer, up from 2 percent this year. And many will face price hikes – an estimated national average 11.2 percent increase in premiums for silver level plans. But to truly assess where we are in this post-ACA world and where we’re likely headed, it’s helpful to take a look at where we’ve been.
On the eve of the ACA’s market reforms in 2013, approximately 48 million non-elderly Americans were uninsured. Approximately 11 million Americans were insured through the individual market. And that market was an inhospitable place, especially if you had any kind of health condition.
Lack of access to coverage
As we consider the reduction in insurance choices in some of the marketplaces today, it’s important to remember that, before the ACA, many people couldn’t buy health insurance at any price. Health insurers were allowed to use aggressive underwriting practices to deny coverage to people with pre-existing conditions. In order to buy coverage, you had to fill out and submit a voluminous application with detailed information about your health history and status. People with even minor health conditions, such as hay fever, could be turned down. In fact, insurers maintained a list of as many as 400 health conditions that could trigger a denial. The U.S. Government Accountability Office (GAO) found that as many as one in five people had their health insurance applications denied, and some insurers rejected as many as 40 percent of applicants.
Lack of affordable coverage
Without doubt, many marketplace insurers are readjusting premiums this year, in part to correct for lower-than-expected pricing 2014-2016. But with all the hand-wringing over premium increases, let’s remember that, before the ACA, the cost of coverage caused many people to forgo it completely. A national survey found that nearly three-quarters (73%) of people seeking coverage in the individual market did not end up buying a plan, most often because the premium was too high. Coverage was the least affordable for people who needed it the most – those with pre-existing conditions. The same national survey found that 70 percent of people with health problems reported it “very difficult” or “impossible” to find an affordable plan.
Further, many people who initially were able to pass health insurance underwriting and obtain a policy were later effectively locked into their plan, even when facing dramatic annual premium hikes. Any health conditions acquired after enrolling in their plan could trigger a denial by other insurers, making it impossible to shop around for a more affordable policy.
Is the ACA perfect? By no means. Is it facing some challenges? Yes – and policymakers need to start talking about pragmatic fixes that can help stabilize and sustain these nascent insurance markets (some ideas on that, here). But today the number of uninsured has dropped to the lowest rate in recorded history (8.6 percent), consumer satisfaction with their marketplace plans is high (and comparable to satisfaction rates for employer-sponsored coverage), and health care costs are growing at a historically slow rate. In fact, the average family premium is $3,600 lower than if pre-ACA trends continued.
The ACA may well be on its fourth or fifth life, but it is here to stay. And, with some thoughtful technical and policy improvements, it will continue to improve people’s access to affordable, quality health coverage for a long time to come.