The Known Unknowns
Here’s a scary sentence courtesy of the editorial writers at The New York Times, “The Affordable Care Act’s flaws are fixable, but only if politicians from both parties work together in good faith.” Translation: Don’t expect legislative action to address ACA shortcomings any time soon. Now, I’m not saying this kind of bipartisan cooperation never happens, but it is a rare event and especially unlikely on such a contentious issue where positions have been firmly entrenched.
There are two consequential questions that flow from the Times editorial. One, is the premise correct that the ACA’s flaws are really only correctable with bipartisan cooperation?; and two, just how serious are those flaws? And the answer to each question is, all spin aside, we still don’t really know. And we won’t really know until after next year’s open enrollment period, or perhaps a little longer.
It’s not until a year from now that consumers will be making their purchasing decisions in light of the fully phased-in penalty for failure to purchase coverage. We don’t yet know what effect the phase-out of “grandmothered” plans will have on rates. We also don’t know if this year’s rate adjustments in many Marketplace plans, so at odds with the experience of most other parts of the insurance industry, will stabilize premiums. Or instead, will the increases dissuade too many healthy people from buying coverage, touching off a cycle of rate increases chasing a deteriorating risk pool and continuously undermining the pool in the process (a.k.a. “death spiral”)?
Finally, we don’t know the outcome of the House versus Burwell lawsuit, which could make it harder for insurers to be made whole for the cost-sharing reductions they provide to lower-income enrollees. While the suit will probably be dismissed for lack of standing, “probably” is not the same thing as “definitely.” An adverse ruling could prompt more insurer exits from the Marketplace. The way in which these issues play out will determine whether only minor administrative tweaking – or more substantial reforms – are needed.
Place Matters
Of course the other big variable with respect to ACA performance is how different states respond. States that cover low-income adults though Medicaid, actively manage their Marketplaces, conduct aggressive outreach efforts and work to restrain underlying health care costs are likely to do much better than states that do not take these actions. Going forward, states will have more ability to use provisions in the ACA such as the Basic Health Plan and State Innovation Waiver sections to make coverage more available, affordable and comprehensive. There is already something of a geographic divide between have and have-not states with respect to coverage. If Congressional Republicans decide to continue to block any improvements in the ACA, that divide is likely to widen in the future.
(Past) Time to Replace ‘Repeal and Replace’ With a Real Reform Agenda
Although the Marketplace premium increases have attracted the biggest headlines this week, a lot of that attention is misplaced and may be misleading. Only about 6 percent of the U.S. population is covered by individual (non-group) insurance plans. Half of those people are insulated from premium increases by the tax-credits available to income-eligible Marketplace enrollees – a fact that has been obscured by much of the coverage. Many of the remaining 3 percent live in a state that did not experience a large premium spike (e.g. California), or that still have affordable options even without subsidies. Those most likely to have trouble finding affordable coverage are middle-aged or older and live in areas with few insurance options and with a single dominant health care system that tends to push costs up. The problems these people are facing are real and need to be addressed, but repealing the ACA is no kind of answer. (In fact, far from favoring repeal, the majority of the American public supports adding a public insurance option to the ACA.)
The American people are moving on from the ACA wars, and it is time to consign “repeal and replace” to the dustbin of history. The issues the American people really care about are rising out-of-pocket costs and, particularly, drug prices. These are the issues an incoming administration and new Congress and state governments should address.