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Checking up on the Affordable Care Act

Total spending on health care will amount to $3.4 trillion, an average of more than $10,000 per person. But experts at a SIEPR Policy Forum said a third of those costs go to waste.

The number of uninsured Americans has dropped to a historic 9.1 percent since the enactment of the Affordable Care Act six years ago.

According to the U.S. Department of Health & Human Services, an estimated 20 million people have gained health insurance coverage between the passage of the law in 2010 and March of this year.

“Our country has made undeniable and historic strides thanks to the Affordable Care Act,” HHS Secretary Sylvia M. Burwell said earlier this month, noting that for the first time in our history, fewer than one in 10 Americans lacked health insurance.

“Our country ought to be proud of how far we’ve come and where we’re going.”

But 19 states still refuse to expand Medicaid for the poorest of the uninsured. And many low- and middle-income families still find that participating in state exchanges is out of their reach or that the process is just too complex.

Stanford health policy experts, state government officials, mobile health and private health-care executives recently gathered on campus to look at the impact of the Affordable Care Act, six years after its adoption.

The consensus was the Act has done more to grant access to health care for Americans than any other government program since Medicaid was adopted in 1965 to help the poor, and Medicare to subsidize the elderly in 1985.

Yet the law’s initial technical missteps, continuing red tape and opposing provisions — as well as the lack of support by so many states and members of Congress — continue to undermine the Act.

“As most of you know, the heath-care sector in the U.S. is large and extremely complex,” said Mark Duggan, director of the Stanford Institute for Economic Policy Research, which sponsored the conference. He said total health-care spending in 2016 would amount to $3.4 trillion, an average of more than $10,000 per person.

Yet one-third of those health-care costs go to waste, said Thomas Goetz, co-founder and CEO of the health-care startup Iodine, which uses apps and data visualization to better inform consumers about their health-care and drug choices.

Goetz told the audience of faculty and students that medication — for depression and anxiety, chronic pain and autoimmune diseases — are typically ineffective up to 50 percent of the time.

“The solution isn’t more randomized clinical trials,” said Goetz, whose company recently launched an app that allows users to take a depression test and decide which antidepressant might work best for them. “The goal is to look at patients as consumers and catalysts — versus patients as passive.”

But has the ACA been effective? It seems the reviews are still mixed.

Kate Bundorf, associate professor of health research and policy at the School of Medicine, noted that this an exciting time for policymakers because the evidence on the effects of the Affordable Care Act is starting to emerge.

She said the Congressional Budget Office estimates that the coverage provisions of the ACA increased government spending by $110 billion and reduced the number of uninsured by 22 million in 2016.

While many analysts were concerned that employers might drop health insurance for workers in response to the subsidies for coverage available through the exchanges, employment-based coverage has remained stable.

Whether the ACA has slowed the rate of growth of health-care spending is still up for debate.

While spending did slow down around the time of the Act’s implementation, it is difficult to determine whether the lag was caused by the ACA’s provisions or other factors such as the recession or increases in cost-sharing for private insurance. And the most recent estimates indicate the rates of growth in spending have begun to increase, possibly signaling a return to historical levels, Bundorf said.

“The big surprise was that not all states expanded Medicaid, with the Court ruling allowing states to opt out,” said Bundorf, who is also a senior SIEPR fellow.

The Supreme Court ruled in 2012 that states could decide individually whether to expand the Medicaid insurance program for the poor.

John Bertko, chief actuary for California’s health exchange, Covered California, describes the Affordable Care Act “as actuarial puzzle to work on every day.”

He should know. Bertko worked on the Obamacare actuarial tables for three years.

One of the most significant changes to the American health-insurance system, he said, are those 32 states that expanded Medicaid under the the ACA. Americans who earn less than 138 percent of the federal poverty level now qualified for Medicaid and the Children’s Health Insurance Program.

Just as the Medicaid expansion went into effect in 2014, a provision of ACA also increased payments for primary care physicians who accepted Medicaid. However, for budgetary reasons, those increased payments only lasted for two years.

“So you have this huge expansion of the number of people qualifying for Medicaid and at the same time payments for suppliers dropped down,” he said. “So lots of Medicaid card carriers were left floating around looking for providers.”

Jay Bhattacharya, a Stanford professor of medicine and a health economist, recently studied the economic impact of the Act’s dependent care mandate, which requires that employer-based insurance cover children who are 26 years old or younger. He found that workers at firms with insurance — whether or not they have dependent children — experience an annual reduction in wages of about $1,200.

“When you insure people, you’re going to increase costs and the costs have gone up,” said Bhattacharya, a core faculty member of Stanford Health Policy and senior fellow at SIEPR and the Freeman Spogli Institute for International Studies.

“The total expenditure on the poor, the costs have gone up,” Bhattacharya said. He added here has been no change in the mortality rate of Americans since adoption of the Act. “It’s difficult to find mortality benefits from the social benefits.

Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation, reminded the audience the main goal of the ACA was to expand insurance coverage for Americans.

“And it certainly has been a success at doing that,” he said.

Still, Levitt added, roughly 30 million non-elderly Americans remain uninsured. And many of those who are insured are opting for high-deductible plans to keep their monthly premiums down.

“Twenty percent of people who are insured say they have a problem paying their medical bills because they don’t have a lot of money in the bank and have large deductibles,” he said.

If the other states would follow the lead of the top 10 states leading the way on ACA enrollment, Levitt said, there would be a great improvement overall.

Bundorf said the so-called Cadillac Tax would raise some revenue and the incentive to create more employee-sponsored insurance plans.

But the highly contentious levy that was supposed to go into effect in 2018 has bene delayed to 2020 while Congress, the IRS, unions and big business debate its fairness.

The provision of Obamacare would impose a 40 percent excise tax on the portion of most employer-sponsored health coverage that exceed $10,200 a year and $27,500 for families. The goal is to control the growth of health-care spending by eliminating pricier benefit plans and curtail excessive health-care use.

“The problem with the Cadillac Tax is that, with time, it becomes the Chevy tax,” said Levitt. “I don’t think it will ever go into effect — but it will precipitate something that can replace it.”

Watch the videos from the event

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