Last week I wrote on the key points of the Affordable Care Act (also known as the ACA or Obamacare) along with major court cases and legislative changes to the ACA. On November 10, 2020, the Supreme Court of the United States heard oral arguments regarding the Affordable Care Act’s constitutionality. 

In that article, I talk about how the ACA was signed into law on March 23, 2010. We are now only four and a half months shy of the ACA being 11 years old. Because the Affordable Care Act has been in place so long, there has been ample time to research the effectiveness and weaknesses in the law. 

My Personal Experience Learning About the Affordable Care Act

I completed my MBA through Arizona State University. As part of the program, I was able to take a Public Policy course that was based in Washington D.C. I spent a week in Washington D.C. with students from my program and other academic programs across the country.

We sat in a room off of K Street and learned about Public Policy from a number of different angles. Not to date myself, but this was in June of 2015. Somehow that is over five years ago. During the week we had roundtable discussions and projects, we met with politicians (Senators and Representatives), and we had speakers from a number of different Think Tanks. 

To say it was interesting to me would be an understatement. During that in-person experience we had a speaker from a bi-partisan Think Tank come and speak with us about the Affordable Care Act. I wish I had my notes or the agenda from the experience to remember who it was that spoke with us. 

Interestingly, in 2015, the research from the Think Tank indicated that the best way to solve issues with the Affordable Care Act was to have a public option for health care. Basically, if any individual did not have an employer sponsored plan, they could choose to enroll in a government sponsored plan on an individual basis or could choose from medical plans offered on an exchange. 

This is different from Medicare for All, as under Medicare for All there would be not private insurance. Every American would have the public option. What the individual was saying is that people would keep their insurance; however, there would be a public option that individuals could enroll in. By having a public option it would lower insurance costs (premiums, deductibles), because there would be a threshold and insurance companies would have to compete with it. 

What the Research Says Today with Regards to The Affordable Care Act

That information was in 2015, and because I can’t remember any specifics on the individual or the Think Tank, it’s not really reliable information at this point. So, this article will detail six facts supported by research on the Affordable Care Act. 

  1. The Affordable Care Act not only increased medical insurance coverage, but it also decreased socioeconomic disparities in access to health care. 

Both the CDC, the Congressional Budget Office (CBO), and the US Department of Health and Human Services have found that insurance coverage has increased. While their figures vary, they estimate that between 20 and 22 million additional people are covered because of the Affordable Care Act. 

While the increased coverage is important, a 2017 study conducted by Professors at Boston University School of Public Health found that the ACA has decreased socioeconomic disparities in access to health care. To quote the research abstract, “Health care access for people in lower socioeconomic strata improved in both states that did expand eligibility for Medicaid under the ACA and states that did not.”

Minimizing the socioeconomic gap is important because those in lower socioeconomic groups are less likely to be insured and avoid getting medical care when needed because they cannot afford to pay for the care. Because they financially cannot afford preventative care or basic necessary care, individuals are likely to need more emergent care. So, by minimizing the gap in access to health care, Americans in lower socioeconomic situations are able to take care of their health more proactively because of the Affordable Care Act. 

  1. States that expanded Medicare coverage have fewer uninsured individuals and had lower mortality rates. 

Under the Affordable Care Act states had the option to expand providing Medicare plans to individuals near the poverty line. Not all states chose to expand Medicare. However, for those states that did, their volume of uninsured individuals has increased more than those that did not choose to expand it. Additionally, expansion states have lower mortality rates because of it.

In September 2019, the Census Bureau reported that states which expanded Medicaid under the ACA had considerably lower uninsured rates than states that did not. For example, for adults between 100% and 399% of poverty level, the uninsured rate in 2018 was 12.7% in expansion states and 21.2% in non-expansion states. Of the 14 states with uninsured rates of 10% or greater, 11 had not expanded Medicaid.

A July 2019 study by the National Bureau of Economic Research (NBER) indicated that states enacting Medicaid expansion exhibited statistically significant reductions in mortality rates. From that study, states that took Medicaid expansion “saved the lives of at least 19,200 adults aged 55 to 64 over the four-year period from 2014 to 2017.” Further, 15,600 older adults died prematurely in the states that did not enact Medicaid expansion in those years according to the NBER research. “The lifesaving impacts of Medicaid expansion are large: an estimated 39 to 64 percent reduction in annual mortality rates for older adults gaining coverage.”

  1. Insurance premiums rose before and after enactment of the Affordable Care Act; however, tax subsidies after the ACA offset the increase in premiums.

Let’s be careful here. I think it’s easy to say we have all seen our insurance premiums rise since 2010. However, there are a number of different features that our policies are mandated to have that they did not prior to 2010. 

I want to take a moment to give an analogy. In 2010 it was not required that all automobiles have back-up cameras. Now, they are required to along with other safety features. This means that the base price of cars have increased due to the required technology. Just like this, it makes sense our insurance has increased. 

What the data does show though, is that for those who have obtained insurance as an individual through an exchange, the research has shown that because of tax subsidies for obtaining insurance, the insurance coverage has not actually increased. This is the purpose of the tax subsidy. 

More specifically, the Kaiser Family Foundation reported that for the second-lowest cost “Silver plan”, a 40-year old non-smoker making $30,000 per year would pay effectively the same amount in 2017 as they did in 2016 (about $208/month) after the tax credit, despite a large increase in the list price. This was consistent nationally. In other words, the subsidies increased along with the premium price, fully offsetting the increases for subsidy-eligible enrollees.

  1. The ACA reduces the national deficit. 

The CBO in June 2015 forecast that repeal of ACA would increase the deficit between $137 billion and $353 billion over the 2016–2025 period, depending on the impact of macroeconomic feedback effects. The CBO also forecast that repeal of ACA would likely cause an increase in GDP by an average of 0.7% in the period from 2021 to 2025, mainly by boosting the supply of labor.

In 2017 the CBO estimated that repealing the individual mandate alone would reduce the 10-year deficit by $338 billion.

5. The number of full-time employees was not negatively affected by the Affordable Care Act. 

Because of the mandate that employers with more than 50 full-time employees provide health care to their workers, critics of the ACA believed this incentivized hiring part-time employment. However, the Bureau of Labor Statistics indicated   that between March 2010 and 2014, the number of part-time employment declined by 230,000 while the amount of full-time employment increased by two million.

  1. A majority of Americans view the Affordable Care Act as favorable.

While it is not an overwhelming majority, 55% of respondents to an October 2020 health care pulse survey conducted by the Kaiser Family Foundation indicated they viewed the ACA as favorable. Only 39% of respondents said they viewed the law as unfavorable.  Interestingly, in the same survey, 58% of individuals responded that they did not want the Supreme Court to overturn the law by deeming it unconstitutional. 

Affordable Care Act Summary of Events Continued

I reviewed current thoughts on a public option or Medicare for All proposals from a number of Think Tanks; however, the information widely varied on a solution to “fixing” the rising costs of health care in America.

Some still called for a public option and others thought providing subsidies to states was a more appropriate way to handle the solution. The information from the Think Tanks appeared to fall on a partisan basis. It is a reminder that information constantly changes. 

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MPower Co is a mother-daughter owned and operated financial education company that works to provide research-based and informative education in the areas of personal finance and positive psychology. If you enjoyed reading this article or found it helpful, follow MPower Co on Facebook or Instagram. MPower Co posts current financial and positive psychology information and shares new blog posts like this one once regularly. As the Supreme Court rules on the ACA in the coming months and if ACA changes are made due to changing political leaders, MPower Co will post articles to Facebook.