Is it working?
After six months of partisan drama over the Affordable Care Act, there’s finally enough reliable information to assess whether the law is doing what it was supposed to do. The qualified answer seems to be yes.
There have been too many controversies over the ACA to count, and it will be a long time before it becomes clear whether Obamacare, as it’s known, is smart, cost-effective policy. But the law is fulfilling its main purpose: To provide health care for more people and reduce the portion of Americans without health insurance. “What’s pretty amazing is the number of people who seem to have gotten coverage, even with all the problems,” says analyst Gary Claxton of the nonprofit Kaiser Family Foundation.
Most of the attention has been focused on the politically charged question of whether enrollment through one of the exchanges created by the law would hit thresholds predicted before the ACA went into effect. So it was a victory of sorts for President Obama when he was able to announce recently that 8 million people have enrolled in Obamacare, considerably more than earlier predictions of 6 million to 7 million.
What has gotten less attention, but is equally important, is a surge in the number of people who have gotten insurance through a source other than Obamacare so far in 2014. The upshot is that the number of uninsured Americans--which totaled around 47 million in 2013--is likely to drop sharply this year. The data is still incomplete, but there are three credible sources that all show the same trend, more or less:
Gallup. The polling firm found that the percentage of adults lacking health insurance—the uninsured rate— fell from 18% right before Obamacare went into effect last year to 15.6% so far this year.
Rand. The nonprofit research group estimates there was a net gain of 9.3 million people having health insurance from September 2013 to mid-March 2014.
The Urban Institute. This think tank has conducted polls showing the number of nonelderly adults lacking health insurance shrank by 5.4 million from September 2013 to mid March 2014.
All of this data was gathered before the surge of Obamacare enrollment that occurred right before the April 1 deadline. So the number of people with insurance is probably higher than these estimates suggest, and the uninsured rate lower.
Subsidized insurance offered through the online exchanges explains only part of the increase. Medicaid expansion also has something to do with it. In 25 states that expanded Medicaid eligibility under the ACA, as they were allowed but not required to do, the uninsured rate is 5.7 percentage points lower on average than in states that didn’t expand Medicaid. So Medicaid expansion also accounts for some of the net gain in the number of people with coverage.
There also seems to have been an increase in the number of people getting coverage on their own, without any government subsidies, in the private sector. That suggests the individual mandate requiring all Americans to have health insurance probably compelled at least a couple million previously uninsured people to pay for their own health insurance, to avoid paying a penalty fee.
Some of those people undoubtedly purchased an individual policy in the so-called non-group market, because they couldn’t get coverage through an employer. But others who had passed up employer-provided coverage before—most likely because they didn’t want to pay their share of the premium--probably decided to take the plunge and get covered through their company. “Some people who are uninsured can get coverage through an employer,” says Genevieve Kenney of the Urban Institute. “The individual mandate may have led to an uptick in takeup rates among workers or their spouses.”
It also helps that overall employment has ticked up by about 1.1 million since last fall. Some of those people got jobs that include health insurance, pushing down the uninsured rate even more.
It will still take a long time for the dust to settle and the full effects of Obamacare to come into focus. Some people still aren’t aware the ACA requires them to have coverage. Others know what’s required but haven’t purchased insurance anyway, because it’s too expensive. And it’s still not clear if Obamacare will do anything to reduce medical costs and make healthcare itself more affordable. Some analysts think the opposite could happen, with more people demanding healthcare pushing doctors’ fees and other costs up, not down.
Nonetheless, the implementation of the ACA will trigger a sharp reversal in the 25-year trend of rising uninsured rates and more people going without healthcare coverage. Whether that’s happening in the right way, for the right reasons, will be hotly debated for years. But whether it’s happening won’t be.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.