Ensuring access to healthcare for citizens is one of the most important responsibilities of the government. Given the high cost of healthcare and increasing unemployment around 2008-2010, it was imperative that the government offered a solution. I can only imagine the effort and thought policy makers would have been required to put in to come up with a policy that has such far reaching implications. Having said that, we still must analyse whether it was a success or not so that any future course corrections can be made, if required.
Whether ACA is a success?
To know whether this is a success or not, we must go back to what was the problems they were trying to solve and analyse if they have really been solved.
Things that did not work (in my opinion) –
- Healthcare has become more expensive – (Per-capita expenditure on health increased from $8,380 in 2010 to $12,530 in 2020)
- Health prices are 27% higher in US than OECD avg. This holds true even as one may compare US’s spend with the highest per capita income as well as ageing countries.
- Workforce – Consider that OECD estimates suggest that the annual remuneration of a GP in the United States is more than 60% above the average of other G7 countries, and 80% more for a specialist.
- Pharmaceuticals – Additionally, there is a significant need to rationalize the pricing of services, goods. Common medicines for cough cost almost 2.5-3 times in US than Germany.
- Administrative – Admin costs in healthcare are 5 times other G7 countries
- Health prices are 27% higher in US than OECD avg. This holds true even as one may compare US’s spend with the highest per capita income as well as ageing countries.
(https://www.oecd.org/health/Health-expenditure-differences-USA-OECD-countries-Brief-July-2022.pdf )
- Insurance premiums cost –
- With an increased base and even with additional expense on Covid tests premium rates fell 1-4% in 2021. But these are set to rise again in 2023 with increasing prices and utilization / consumption. https://www.healthsystemtracker.org/brief/an-early-look-at-what-is-driving-health-costs-in-2023-aca-markets/#Distribution%20of%20proposed%202023%20rate%20changes%20among%2072%20reviewed%20ACA%20marketplace%20insurers
- Each state has a insurance marketplace but many states just have 1-2 providers. (May lead to monopolistic behaviour although I think this is quite regulated so might not be so as well. I am wondering if we can analyse where we observe more cases of claim denials.) – Insurer Participation on the ACA Marketplaces, 2014-2021 | KFF
Things that seem to have worked / improved –
- Number of uninsured has gone down. So people who have access to healthcare services has increased. Need to further analyse the break up of how really accessible the services are for each level (bronze, silver etc.).
- Insurance covers people with pre-existing conditions – children and adults. This is a significant improvement over previous scenario.
- Insurance covers preventative services.
- People with critical illnesses like cancer etc. would spend lesser on their treatment form their pockets, if at all.
It safe to say the number of insured, coverage has increased or rather improved with the ACA. But does just registering more people or increasing the number of insured solve the real issues with the healthcare system. The answer, in my opinion, is no.
It proves quite insufficient on the ground without solving for the real infrastructural, capacity, administrative and cost issues. Let me try to substantiate –
- Consider the preventative services inclusion. It is a welcome improvement. But while this has improved access, it also resulted in non-federally qualified healthcare centres denying to accept Medicaid covered people into their centres. This increased demand at the FQHCs and resulted in capacity constraints and therefore ability to timely provided preventative services. (https://bmchealthservres.biomedcentral.com/articles/10.1186/s12913-021-06961-9 Pg 5)
- Even with preventive services being included in the ACA, US has the highest obesity and diabetes rates. (https://www.oecd.org/health/Health-expenditure-differences-USA-OECD-countries-Brief-July-2022.pdf Table 2)
- Even as the base of insured has increased, given the ever-increasing costs of goods, services, workforce insurers are set to increase their premiums.
- From a buyer’s perspective, there is still a significant chunk of out-of-pocket expenses even after getting insured. Considering the deductibles, there is large number of healthy insured people who may not be consuming any of the insurance amounts. To them it is just a cost.
- I feel penalty wasn’t a good way to mandate buying of health insurance for all. As there are people who cannot afford insurance but do not qualify for Medicaid and still cannot bear the cost of an insurance. Thankfully, it has been done away with.
- Nearly 17% of in-network claims were denied in 2021. Insurer denial rates varied widely around this average, ranging from 2% to 49%. So one cannot be sure if they are really covered and their expenditures will be paid for. Claims Denials and Appeals in ACA Marketplace Plans in 2021 | KFF
In conclusion, the ACA has improved access to healthcare but there is a long way to go.
Will ACA succeed in the second decade –
I am not too positive on this one. It can but my guess is that it will not.
- The ACA has been around for a decade now but the real problem of cost has not been addressed and there does not seem to be a concrete plan to do so. Let us analyse this further –
- Pharmaceuticals – US is a net importer. It imports $196bn work of pharmaceuticals largely from China and India. Given the worsening trade relations with China and the fact that even India sources most of the ingredients from China, this is not likely to improve. Even if a federal policy to boost domestic production is promulgated, its dependence on active ingredients will remain. Further, it is difficult for US to compete with the cheap workforce from these countries even as they are now fast industrializing. https://prosperousamerica.org/skyrocketing-pharmaceutical-imports-to-the-u-s-endanger-national-security/#:~:text=Driven%20by%20rising%20prices%20and,pharmaceutical%20trade%20was%20%2496.2%20billion
- Workforce – While the spend on workforce is already high, there are still capacity constraints. I do not see how the spend on workforce will be reduced.
- Ambulatory services – There is a global trend in reducing the need for hospital beds. Spend on ambulatory services is one third of the overall spend. Its 2.5 times higher than other G7 countries. But given the already lower number of hospital beds this may not be reduced. Adding hospital beds may be even more expensive.
- Administrative costs – Unless the complexity of organization, financing is dealt with, I am not sure how these will be brought down.
- COVID pandemic has worsened the situation. Any plans on reductions in the above will have been put on hold.
- Healthcare insurers do not seem to be held to account for claim denials. A fraction of a percentage of denied claims go to appeals and even then 60% of the appeals are also turned down. If the looming recession does hit the economy and increases unemployment, the number of insured might even reduce, at least for some time.
- In case of a slowdown, there is uncertainty of the levels of subsidies the government may be able to provide.
- There is a lot of political baggage as well to this act and there is uncertainty with respect to policies in case the regime changes. A drop in the rate of people opting for insurance, number of insurers in the marketplaces was observed in 2017. It took a few years to recover to 2015 levels.
I am all for healthcare safety net for the entire population but there are some major inefficiencies that need to dealt with while providing for this.
- There should be simpler policy plans that are easier to understand. There should be transparency (information) for the users while buying the policy especially with regards to the rate of claims denials (hidden actions) and the reasons.
- There should be optimization of capacity considering demand and supply. Once there is a clear idea of the real capacity, there should be planning for supplying, production, imports etc. Not saying that they aren’t doing it but there was a research paper https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9140785/ that still talks about an approach to capacity optimization for hospitals. It suggests to me that this project is long pending as the technology for this has existing for several years.
- Get more federally qualified healthcare centres in place so that Medicaid covered people are accepted at more centres.
While 52% population supported ACA in 2020, one cannot be certain that it is a rational choice made during a survey.