Health insurance enrollment through the Affordable Care Act is plummeting.
Nearly 3 million fewer Americans now have insurance through the program, popularly known as Obamacare, compared to last year, according to federal data released in June. After congressional Republicans allowed enhanced subsidies for the program to expire in January, many Americans saw their health insurance premiums spike by an average of about 30 percent.
As a result, many Americans have been forced to drop their coverage entirely.
With affordability among the top concerns on voters’ minds heading into the midterms, healthcare costs have become a central issue for candidates.
“A lot of policy experts say, look, when you raise the price of something, demand goes down. And that’s what’s happening here,” KFF Health News senior correspondent Julie Appleby told Today, Explained. “It’s the prices — people are dropping out.”
Appleby has been reporting on healthcare policy for decades, and she joined Today, Explained co-host Noel King to break down the latest changes to the Affordable Care Act, why enrollment is plummeting, and how the ACA crisis is teeing up healthcare as a central issue in the upcoming midterms.
Below is an excerpt of their conversation, edited for length and clarity. There’s much more in the full podcast, so listen to Today, Explained wherever you get podcasts, including Apple Podcasts, Pandora, and Spotify.
Sixteen years ago, President Obama signed the Affordable Care Act into law. Julie, what was the situation at the time that made it feel so necessary? What did the Affordable Care Act aim to do?
There was a lot going on. We had a lot of people who were uninsured. We had premiums going up. Many times in the past there had been some effort to do some kind of health reform, but nothing ever really passed. We had Medicare and Medicaid in the ’60s, but no major legislation since then.
People had employer coverage, like they do now, but there were a lot of people who were on their own and buying in what’s called the individual market.
The individual market was really tough. They could tell people, “Hey, you’ve got a health condition, we’re not taking you.” They could you could sign up for an individual plan and later, if you did get some kind of health condition, they could go back through your medical records and see, “Hey, did they tell us about every single thing that had happened to them in the past five or ten years?” And if not, they could retroactively cancel your plan.
What did the Affordable Care Act do exactly?
It allowed young people to stay on their parents’ insurance plan up to age 26, and that was a really big deal and also a very popular provision in the Affordable Care Act.
It created these subsidies to help people purchase coverage on the individual market. It pays for part of your premium. After you pay a certain percentage of your household income, the subsidies kick in and it picks up the rest, up to a certain up to a certain income level.
“They used to be able to charge women more than men. They can’t do that anymore.”
It did some other things, like they can’t tell you, “You have a preexisting condition, so we’re not going to take you.” They’ve got to take you.
It created a benefit package that covers all these essential things like hospitalization and drug costs and maternity care, which might not have been in plans before. They used to be able to charge women more than men. They can’t do that anymore.
What was the conversation around passing the Affordable Care Act? Remind us how and why it got so toxic and pitched.
It was super polarized, kind of like what we have now. There was a lot of discussion around whether this is going to be too much government or if it was just the right amount. A lot of people thought, “No, this is terrible, it’s gonna destroy things.”
And I think polls reflected that for the first four or five years or more of the Affordable Care Act. It was pretty evenly divided, when you looked at opinion polls, between people who thought it was a good thing and people who didn’t think it was a good thing.
In more recent years, that has changed and the favorability ratings have gone up for the Affordable Care Act and now majorities do favor the Affordable Care Act.
If you had told me that 16 years ago, I would not have believed you. Here we are. And how is the Affordable Care Act doing?
To use medical terminology, is it on life support? No, it’s actually doing fairly well. But there are some symptoms that there are problems.
Remember at the end of last year, there was all the discussion about these things called enhanced premium tax credits and whether they were going to be extended or not. The government shut down over this. Those were not extended. As a result, it costs more this year for most people in the plan, and what we’ve seen is during open enrollment last year we had about a million people fewer sign up and that was about a five percent drop.
That was 5 percent just in signups at the end of last year. Since then, the first few months of the year, we’ve seen about 3 million people drop off. Some people are finding that they can’t afford it and they are not paying their bills and they are getting dropped. A 3-million-person drop-off is pretty substantial.
There’s also a group of folks, particularly conservatives and Republicans, who say, “You know what, the numbers were inflated.” There was all this improper enrollment. People were getting these zero-premium plans and so there was fraud, there was improper enrollment, the subsidies were too generous or there were other factors that led to some fraudulent activity. And so these drop-offs just represent people who were fraudulently enrolled dropping out for one reason or another.
There’s this real split right now between what are the reasons for the drop off. But most policy folks, most people who study the situation here say the main reason is people just aren’t able to afford it.
Why is it so expensive? Why are healthcare costs so high?
That’s the $64,000 question, right?
And if you get it right, you win. You’re in charge.
That’s been the question since I’ve been covering this debate. Look, it’s not just Affordable Care Act costs going up. Employer plans are going up. Everything’s going up.
Generally, healthcare costs go up faster than inflation and that’s driven by a lot of things. It’s driven by drug costs, it’s driven by hospital costs, it’s driven by labor costs. So all of those things go into the mix with the Affordable Care Act. But also this year, there’s this additional factor of the subsidies that went away.
Insurers were looking at that saying, “You know what, the subsidies are going down. We expect to have lower enrollments next year. The people most likely to stay enrolled are the ones who have health problems because they don’t want to take the risk of being uninsured.” So insurers were calculating that in when they set their premium rates for this year: We might have sicker people in our pool that we’re gonna have to cover.
That’s part of what we’ve seen with costs in the Affordable Care Act. But everybody is seeing health inflation go up right now and that’s affecting premiums.
Here we are 16 years after the passage of the Affordable Care Act. Has it accomplished what it set out to do?
You have to look at that in a number of ways. It aimed to expand coverage and reduce the uninsured. I think the answer there is yes, the number of uninsured has gone from 13 or 14 percent to as low as just under 8 percent a couple of years ago. It’s ticked up a little bit since then.
Did it control costs? That’s a harder one to answer. And it’s back to that $64,000 question. How do you do that? Costs have continued to go up. Premiums are definitely higher than they were pre-ACA. To be fair, the plans are very different. They cover more, they’re more generous, they’re better coverage, but they are more expensive.
The big question is: What is going to be put forward as an alternative and how palatable will that be to consumers, lawmakers, the healthcare industry? It’s going to be challenging, but I think we’re going to hear a lot more discussion this year. Whether or not we see actual proposals that could pass, I think that’s a little more questionable.
