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ACA: Time for a Checkup

In the recent federal elections, health care reform was essentially a nonissue. To be fair, most actual policies were not topics of debate.

However, behind the scenes, the Affordable Care Act (ACA) is at a crisis point. No, it is not failing or destined to fail, as many opponents claim. Nor is it a smashing success, as its proponents believe.

The ACA is achieving some major successes, such as its primary goal of reducing the number of uninsured Americans. But the central component of the law, the marketplaces (or exchanges) it established, is in danger of needing life support. The marketplaces were supposed to enroll a large and growing segment of the population by this point. Instead, last year there were 12.7 million enrollees, far short of the 21 million the Congressional Budget Office predicted in 2015.

In states across the country, insurers have been exiting the marketplaces, leaving many states with little or no competition for plans. The fact that insurers are leaving the marketplaces isn’t a failure, but rather an indicator that something more fundamental is broken. Four things happened on the way to the ACA marketplace that have prevented the law from being a resounding success.


1. The marketplace enrollees have been sicker than originally predicted.

The good news here is that people with serious medical conditions are getting needed medical treatment. The downside is that it costs a lot to treat sick people, and when people with serious conditions comprise a disproportionately large share of the risk pool, everyone pays more.

In many states, the marketplace population resembles the Medicaid population more closely than was predicted. This is partly a result of too many states refusing to accept federal funds to expand their Medicaid programs. As a result, many low-income individuals were forced either to forgo insurance altogether or to enroll in a qualified health plan through the marketplace.

But too few people signed up for coverage. Getting nearly 13 million people to enroll in something that was brand-new a few years ago and began with a failed website launch is incredible enough. But we need 25 million people — including healthier and younger individuals — enrolled so that there is a large enough risk pool to make the program work.


2. The law centers on choice: the consumers choose, and insurers can choose not to participate.

For all the partisan babble about the ACA depriving everyone of choice when it comes to their health care, the law itself actually relies a great deal on the freedom of choice and free markets. That’s the thing about free markets — nobody can force you to buy or sell something. With the ACA, there are tax consequences for not purchasing coverage, but nobody is out there actually making anyone enroll or making anyone choose a plan that makes sense for their specific circumstances.

Many consumers considered a plan with a very high deductible and chose to take the risk of lacking coverage. Many insurers looked at the risk pools and threats to their bottom lines and simply passed on participating. Congress and the administration can take action to make universal health coverage a reality, but as long as the private sector is a key player, the ball really is in the insurers' court right now.


3. Congressional intransigence is a real problem that is hurting both insurers and consumers.

If the private sector will not react the way the marketplace needs, then it is up to Congress to try to do something — literally anything — because it has not meaningfully weighed in on the ACA since its passage. There is no such thing as a perfect law. But the ACA was a monstrosity of a law that, while virtuous on many accounts, was flawed in ways that even proponents could identify from its earliest days.

The problem was that nobody could do anything about it. The law barely passed as it was. Then Congress refused to touch it for years thereafter, largely because one party would only vote to repeal it, rather than to reform it. In the next Congress, with President Obama no longer in office, there may be an opportunity to make commonsense changes to the weaker points of the law.

Congress should enact risk corridors for the exchanges (much like it has  already done for Medicare Advantage plans), extend the reinsurance program and encourage multistate exchanges. These are relatively simple fixes that should win bipartisan appeal and make for good policy. These changes would provide health insurers with a safety net and some encouragement to get back into the marketplace.


4. Payment models must change.

Health care continues to be far too expensive at every level. The ACA has taken steps to reform payment models and encourage more competition on price and quality, but more needs to happen. Much of that must come from the private sector and medical providers themselves. This poses a challenge when many health insurers are publicly traded companies with a responsibility to increase profits, and medical providers exist in a market that demands high compensation.

The political and economic obstacles are steep, but other industrialized nations have achieved universal health care without sacrificing quality of care. Accountable care organizations are a start, but a more comprehensive approach is needed to help us pay less for medical care, instead of shifting the cost to a different payer.


Adam Beck, Esq., is assistant professor of health insurance and interim director of The American College MassMutual Center for Special Needs. Adam may be contacted at [email protected].

Adam Beck, Esq., is assistant professor of health insurance and interim director of The American College MassMutual Center for Special Needs. Adam may be contacted at [email protected] .

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