Update On The Affordable Care Act: Is It working?

​​​Since its enactment in 2010, the Patient Protection and Affordable Care Act (“PPACA”) has survived technical glitches in its online insurance exchanges, two Supreme Court challenges, and numerous efforts to repeal it. Despite the fact that PPACA currently has mediocre support and faces continuous opposition, the growing reality is that, love it or hate it, PPACA is here to stay. However, the pressing question is whether PPACA is working, and the answer to that question depends on how you measure and analyze its results thus far.

Supporters of PPACA emphasize the decreasing number of uninsured Americans, while PPACA opponents highlight the higher insurance premiums and health care costs. The answer to whether PPACA is working is thus dependent upon how one looks at the law. PPACA, like any other policy or law affecting numerous citizens, has both costs and benefits. Economically, PPACA is benefitting businesses within the healthcare industry. Of the 500 companies making up the Standard and Poor’s index, fifty-five of the top health care firms in the U.S. produced a return of 35%, which is 6% higher than their global peers. Additionally, prior to PPACA’s enactment, the U.S healthcare industry was the fourth “best performing group of companies” among the list of ten in the Russel 3000 (a stock market index of stocks). After PPACA’s enactment, the U.S. healthcare industry was ranked as the best performing group.

One negative effect of PPACA’s enactment was the price of an individual’s insurance premiums increasing as a result of PPACA. The main reason for the price increase is the combined effect of health insurance companies offering comprehensive healthcare coverage while being prohibited from rejecting applicants or dropping their coverage because of preexisting conditions. Between 2014 and 2015, some of these plans encountered  double digit increases, while other plans have already indicated single digit increases for 2016. Other plans, however, kept their monthly rates flat.  

The reality of increased premiums may not be felt by many insured under PPACA online exchange plans, because the cost of plans purchased through the online exchanges varies. Recent numbers indicate that of the 9 to 10 million individuals that have purchased insurance online, roughly 8 million receive government subsidies. For example, the average subsidy in 2015 was $272 a month. Individuals that are purchasing insurance on the exchanges can potentially benefit if the cost of their premiums does not exceed 9.6% of their income. Thus, even if insurance premiums increase under PPACA, many of the individuals buying healthcare plans on the online exchange are receiving subsidies to pay for healthcare offsetting the higher cost.

Along the lines of higher premiums, healthcare spending in the U.S. has also seen an overall increase under PPACA. The question is whether this increase results from the natural inflation of healthcare costs, or  if it is a direct effect of PPACA. Studies have found a 5.5% rise in health care spending last year, with an expected annual increase of 5.8% between 2014 and 2024. The last time the annual rate exceeded 5% was in 2007, indicating that the recent rise in health care spending may be due to PPACA. 

Despite the fact that health care spending has increased, this increase also indicates that our health system is now providing more services to more people. So, although spending has increased, it has been due to expanded utilization of healthcare services due to increased health care coverage to more people. Opponents of PPACA point out that the increase in coverage and expanded healthcare is being paid for by higher taxes. This increase amounts to an additional 0.9% Medicare tax and 3.8% levy on investment income, which apply only to individuals earning over $200,000 and couples earning over $250,000. These taxes alone will raise approximately $1.2 trillion in revenue over ten years. Higher taxes are not favorable to anyone, but supporters of PPACA argue that the increase in taxes is necessary to pay for the expansion of health insurance without increasing the national deficit.

PPACA has certainly expanded the availability and use of health insurance. In addition to the 9 to 10 million individuals that have received healthcare coverage through the online exchanges, fifteen million have received coverage under the expansion of Medicaid with ten of those fifteen million added due to the direct effect of the expansion of Medicaid. Furthermore, an estimated 1 million to 3 million of Americans between 19 and 25 years old are covered because they can remain under their parent’s health insurance. There are other areas of PPACA that have increased coverage and quality, such as prohibiting lifetime caps on insurance, prohibiting coverage being denied to patients with preexisting conditions, and increasing access and lowering fees for preventive services. Evaluating the costs and benefits of PPACA since its enactment illustrates the legislation as a vehicle for increasing access to care, coverage of health insurance, and improving quality, while adding to the growing problem of increased health care spending and premiums. When PPACA was enacted, its purposes were to provide health insurance to those who did not have it and  improve the quality of healthcare that people receive. When evaluated in terms of this specific goal, PPACA is working. When evaluated in terms of how the legislation addresses increased insurance premiums and overall healthcare spending, the law is not working.  

At the end of day, whether PPACA is viewed in a positive light or negative light, it is a law that has directly benefitted millions of Americans, which increases the difficulty of repealing the law. It seems that PPACA is here to stay, at least for now.


Faizan A. Khan is a second year law student at DePaul University College of Law. Mr. Khan graduated cum laude from DePaul University with a Bachelor of Arts in Political Science and minor In Economics. He is a fellow of The Jaharis Health Law Institute and will complete his J.D. in 2017.​​​