Obamacare is not popular. In the latest tracking poll from the Kaiser Family Foundation, 47 percent of respondents said they have an unfavorable opinion of the law, while just 35 percent said they view it favorably. The numbers haven’t changed that much over time and they’re pretty similar to what other surveys have found. The polls are a little deceiving: People don't want to repeal the Affordable Care Act and, by and large, they like the component pieces. But the overall public reaction has been something less than enthusiastic.
One reason is that the program got off to such a dreadful start. It was exactly a year ago this Wednesday, on October 1, that the Administration launched healthcare.gov—and then watched, helplessly, as it failed. It would take officials nearly two months before they got the site working. The same was true in many states. During this time, insurers were cancelling expiring policies that didn’t comply with the Affordable Care Act’s new standards, forcing somewhere between a few hundred thousand and a few million Americans to search for new coverage. The law’s political opponents seized on the stories of disruption, real and imagined, to argue that the law was a debacle.
Today they make the same argument. In the right-wing press, and among Republican politicians, Obamacare hasn’t simply failed. It’s been a catastrophe. Senator Ted Cruz regularly calls it “the disaster that is Obamacare” Wall Street Journal editorial writer Holman Jenkins, Jr., compares it to the crisis in the Ukraine. The New York Post editorial page just gave the law an "F." Its logic: "About the best thing that can be said about ObamaCare’s first year is that it wasn’t quite as bad as some critics predicted. But it isn’t even close to what we were promised — and nowhere near a passing grade."
The data tell a different story. The Affordable Care Act has real flaws and shortcomings, and pretty much any week you can find a new story about one of them. On Monday, for example, the New York Times had an article about people discovering they owe large medical bills because, during an emergency, they received care from a physician who wasn't part of their insurance network. The next open enrollment period begins in just a few weeks and, already, advocates are bracing for new glitches. But if you focus on the big picture, the available evidence suggests that the Affordable Care Act is working pretty much as its designers envisioned it would.
Critics can legitimately take issue with the law's goals and principles. That's a matter of philosophical preference, after all. Performance is another matter.
1. More people have health insurance.
Everybody knows that covering large numbers of the uninsured was Obamacare’s primary goal. And, for a while, it looked as if the law might not accomplish that. We now have overwhelming evidence that it has. The most complete data comes from a series of surveys from independent research organizations—the Commonwealth Fund, Gallup, the Rand Corporation, and the Urban Institute. Their numbers do not match up precisely, but all of them have found that, as a result of the law’s coverage expansion, the number of people without insurance fell by something like 10 to 12 million, once you add in the young adult who got coverage because of the law's under-26 provision. Meanwhile, hospitals are reporting that they are seeing fewer and fewer uninsured patients.
Those findings are not definitive and it may yet turn out that the actual reduction in coverage was higher or lower than those surveys found. The available government data, though broadly consistent with these findings, is not yet current enough to capture the 2014 expansion. But it’s impossible to argue, seriously, that the law has not meant many more people have insurance. The only question is how many and what happens in the years to come.
2. People who are getting health insurance are almost certainly better off.
It seems intuitive that people who have insurance are better off than those without. But every now and then people question it. Two recent studies should put those doubts mostly to rest. The first was a major study of Medicaid, based on data from Oregon. The authors determined that people who get health insurance from the program were significantly less likely to experience financial distress and significantly more likely to report better mental health. The one unknown from that study was whether people who get Medicaid also ended up healthier. The researchers coudn't come up with evidence to substantiate that claim.
The results set off a furious debate over how much good health insurance, or at least Medicaid, did. A subsequent study, using data from Massachusetts and its expansion of health insurance, went a long way towards settling the question. The study found improvements not just in economic security and mental health, as the Oregon study did, but also in physical health. People were less likely to have severe health problems and were more likely to avoid premature death. In fact, researchers calculated, for every 846 people who got insurance, one person was likely to live longer.
That kind of evidence of the Affordable Care Act's impact won't be available for a long time. But a survey from the Commonwealth Fund found that 60 percent of people who got new coverage on the marketplaces had used their insurance to pay for services—and 62 percent of that group said they could not have paid for such care previously. It's one more sign that people are better off.
3. “Winners” probably outnumbered “losers” in the new marketplaces.
The most disruptive part of Obamacare’s launch wasn’t the website. It was the plan cancellations and “rate shock,” as insurers raised premiums in order to provide more comprehensive benefits and coverage that was available even to people with pre-existing conditions. This was a surprise to many people, not least because Obama had vowed that people who liked their insurance could keep it. And it led to a flood of stories about how the law was actually making people pay more for their coverage.
But the law also provides tax credits, which offset part or all of the increase for most people, and it actually reduces the price of coverage for people who once higher rates because they were relatively old or in poor health. As a result, many people paid less for their insurance in 2014 than they had in 2013.
It’s been difficult to assess how this shift affected different people and, truth is, we may never know for sure how many people were “winners” and how many were “losers” in this transition from the old to new system. Affordable Care Act critics like Avik Roy and Yevgeniy Feyman, of the Manhattan Institute, have insisted the net change was for the worst. But most of the experts I know and trust disagree.
Some of the best evidence I've seen comes from a survey, by the Kaiser Foundation, of people who had previously bought their own, individual insurance policies and had to switch plans because those old plans were not compliant with Obamacare regulations. Of those people, 46 percent of respondents said they ended up paying less, while just 39 percent said they were paying more and 15 percent said they were paying the same. Throw in the fact that most of these people were also getting more comprehensive benefits—and that the survey didn’t even include people who, because of their low incomes, were able to qualify for Medicaid—it seems very likely that there were more winners than losers.
Oh, and don't forget that, in Commonwealth Fund surveys, 68 percent of the people buying marketplace plans rated them as either "good," "very good," or "excellent."
4. Premiums in the marketplaces aren't rising quickly, and more insurers are jumping in to compete.
Once the websites were working and enrollment in the new marketplaces increased dramatically, some of the law’s critics fell back on a different argument: Only older and sicker people were signing up for coverage. Carriers would jack up premiums or abandon the marketplaces altogether. Both predictions have proven spectacularly untrue.
Multiple studies have shown that, between 2013 and 2014, premiums inside the marketplaces are barely rising. There’s a lot of variation, even within states, and in order to save money some consumers will have to switch plans. (Hence, the aforementioned issues with reenrollment.) But in some places the price of the benchmark silver plan is actually declining, something that Larry Levitt, senior vice president at Kaiser, has likened to “defying the law of physics.” It just doesn’t happen.
As for competition, HHS has announced that overall participation in the marketplaces will increase next year, by 15 percent overall, based on information from 44 states who have made the data available. Virtually every state will have more insurers. The only state that’s reporting a slight decline is California, which already has a multitude.
5. Employer premiums also aren't rising quickly.
With all of the attention on the marketplaces, it’s easy to forget that the vast majority of people don’t use them. Most working-age Americans get health insurance through their employers. The law’s critics had predicted Obamacare would disrupt their coverage, too, by causing premiums to skyrocket. Once again, that prediction turned out to be dead wrong. According to the Kaiser/HRET Survey of Employer-Sponsored Health Benefits, this year employer premiums rose by just 3 percent, which is barely above worker wages and inflation. Coverage is still expensive ($16,800 for a family policy) and employers have held down costs, in part, by asking employees to pay more in out-of-pocket costs. But the inflation critics confidently predicted simply has not materialized.
6. Overall health care costs are rising at historically low rates.
When people talk about the “cost” of health care, they frequently mean different things. Economists mostly care about national health expenditures—what the U.S., as a nation, spends on medical care through private and public insurance, as well as through individual out-of-pocket expenses. It rises pretty much every year. But for the last years, it’s been rising very slowly. The latest ten year projections, from the Center for Medicare and Medicaid Services, suggest that trend is likely to continue.
Several factors seem to be at play, including the recession. For that reason, it’s likely that spending will start to accelerate a bit as the economy recovers. But most experts now think the “new normal” is lower inflation, because the health care industry is becoming more efficient—at least partly in reaction to new incentives that the Affordable Care Act introduced.
One sign that those incentives is working is a dramatic decline in the number of hospital readmissions. The decline began just as hospitals started facing new financial penalties, enacted as part of Obamacare, for high readmission rates. Whatever the cause, it’s clear that health care spending isn’t accelerating rapidly, as critics predicted would happen once Obamacare became law.
7. The net effect on the budget has been to reduce the deficit.
Say what you will about Obamacare’s architects, but they took their fiscal responsibilities seriously. The law calls for new spending, since the government now has to underwrite the costs of both an expanded Medicaid program and all those subsidies for people buying health insurance. But for every dollar in new spending, there is at least one dollar in either new revenue or new spending cuts. The net effect, according to the Congressional Budget Office, is to reduce the deficit.
And the more information we get, the more it seems that the CBO underestimated the savings. According to the Committee for a Responsible Federal Budget, the total bill for federal health care programs in the near future is likely to be lower than experts had predicted when Obamacare first became law. Some of that reflects factors unrelated to the Affordable Care Act. It's still a remarkable feat.
Update: I've rewritten the final passage to clarify what the CFRB report shows. (My original phrasing suggested total health care spending in 2020 would be lower than it was in 2010, which isn't the case.) Thanks to Patrick Brennan for pointing that out.