The ACA is working. Or so Robert Pear and Margot Sanger-Katz suggest in the opening paragraph of a NYT news piece on ACA subsidies. The piece points out that more than seven million Americans have enrolled in the ACA, and 87 percent of them use subsidies. Many lower-income Americans who previously could not afford or did not have insurance now have it. And, apparently, enough young people have signed up for the ACA to “stabilize” premiums. But read further down into the piece and this victory lap seems to slowly turn into something much more…complicated:
By some other measures, the subsidies have not lived up to expectations.
Although they reduce the direct cost of buying insurance for many consumers, the subsidies do not by themselves hold down the overall cost of insurance, which is driven in part by health care costs […]
Many insurers have sought rate increases of more than 15 percent for 2016, saying that the cost of claims substantially exceeded what they expected when they set premiums. The rate increases are likely to be scaled back after reviews by federal and state officials. Health policy experts say the rates might have been even higher if the subsidies had not drawn in younger consumers […]
Though the NYT tries to put a brave face on the it, noting that increases probably won’t ultimately be as high as the insurers have requested, the fact is that we are dealing with large numbers here. One insurer in New Mexico, admittedly an outlier, requested a hike of 50 percent, and other insurers in other states also asked for quite large increases of around 25-40 percent. Even if those get “scaled back,” we’re still likely looking at serious inflation here. And that’s not all:
The marketplace plans have proved less popular among higher earners, raising questions for some experts about whether the subsidies are adequate.
“People are still expected to pay quite a bit,” said John F. Holahan, a fellow at the Urban Institute, which has developed detailed estimates on the effect of the subsidies. He said that the current sign-up and renewal numbers made him worry that the marketplaces might not provide a good enough deal to keep people insured.
“After people pay a fairly significant amount of money and then go to the doctor once, twice, three times, and it’s always on the deductible, at what point do they say it’s just not worth it?” Mr. Holahan asked.
In other words, the NYT ultimately reaches the same conclusion we have, though they might put it differently. Subsidies have been good for people priced out of the system in the short-term, but overall the system is expensive and dysfunctional, and is only getting more so.
That means that even with subsidies some people are priced out of getting care routinely, and rising premiums will mean that subsidies will be stretched even thinner in coming years—unless, of course, subsidies continue to increase to meet rising premiums, in an inflationary process that has no immediate or obvious end in sight. The ACA is a bandaid solution at best, but the fundamental forces pushing our health care system towards bankruptcy are still at work. And unless those forces are addressed, even a short-term solution like giving people subsidies is going to yield diminishing returns. If you understand the ACA to be a modest attempt to give people some degree of better access to health care, it seems to be working. If you understand the ACA to be a law that will ensure Americans have access to good health care in the long term, it is nowhere near the mark.