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.