How has the ACA strategy for expanding coverage worked out? It has been largely a success. Between 2010 and 2016, the number of uninsured fell from 48.6 million to 28 million. The rate of uninsured fell from about 16 percent in 2010 to 9 percent in 2016. Although marketplace enrollment has fallen short of original predictions (as discussed below), Medicaid enrollment has exceeded projections, growing by over 16 million since 2013. About 2.5 million remain in the Medicaid gap, however, in the 19 states that have not expanded Medicaid, which was made possible by the Supreme Court’s 2012 decision making the Medicaid expansion optional.
While the Medicaid expansion remains controversial, a large and growing body of evidence demonstrates that it has accomplished its goals. Numerous analyses show that states that have expanded Medicaid have seen dramatic reductions in their uninsured rates compared to non-expansion states. Medicaid enrollment has grown not just for individuals in the expansion population, but also in the traditional Medicaid categories, where ACA simplification of eligibility determinations has contributed to the “woodwork” or “welcome mat” effect (an effect also experienced to some extent in non-expansion states). Expansion has resulted specifically in large coverage gains among vulnerable groups and in rural areas, and has generally reduced coverage disparities, particularly by income and age.
Many studies have shown that Medicaid expansions have improved access to and utilization of care. This has in turn led to increases in and earlier diagnoses of conditions, such as cancer, and more consistent treatment of chronic diseases. In particular, expansion has resulted in improved access to medications and services for behavioral and mental health conditions, including opioid abuse treatment. Several studies document improvements in self-reported health among expansion enrollees, and there is some evidence that Medicaid expansion has resulted in improved quality of care and care outcomes. Other studies have not found measurable outcome effects, but it may take time for these changes to become evident.
A number of studies have demonstrated that Medicaid expansions have resulted in reduction of medical debt, out-of-pocket medical expenditures, and cost-based unmet medical need for Medicaid enrollees. Hospitals in Medicaid expansion states have experienced dramatic reductions in uncompensated care burdens and improved financial performance compared to hospitals in non-expansion states. Expansion has significantly reduced the likelihood of hospital closure, especially in rural areas.
States that have expanded Medicaid have seen budget savings, increased revenue, and economic growth. Because the federal government paid for 100 percent of the cost of the expansion from 2014 to 2017, phasing down to 90 percent by 2020, and because expanded Medicaid can result in reduction of state expenditures for behavioral health, criminal justice, and uncompensated care programs, Medicaid expansion has often resulted in decreases rather than increases in state spending. State-specific studies have also shown significant job growth.
Finally, Medicaid expansion reduces the cost of coverage in the individual market because Medicaid picks up the cost of individuals with incomes between 100 and 138 percent of the federal poverty level—a relatively high cost group—who would otherwise be part of the individual market risk pool, driving up premiums for all. Moreover, the decision of the Trump administration to stop reimbursing insurers for ACA cost-sharing reductions for low-income marketplace enrollees has meant that insurers in non-expansion states have had to increase their premiums to cover the cost of cost-sharing reductions for the expansion eligible population with incomes between 100 and 138 percent of the poverty level, who qualify for the highest cost-sharing reductions but who could be receiving Medicaid. This has, again, raised premiums for many individuals who purchase individual coverage.
The success of the Medicaid expansion may be tempered by waivers granted by the Trump administration under section 1115 of the Social Security Act to allow states to impose premiums, increased cost-sharing, or other new requirements on Medicaid expansion enrollees. Particularly problematic are work requirements, which the Trump administration stated in early 2018 that it would approve. Since that time, the Centers for Medicare and Medicaid Services (CMS) has approved work requirements in Kentucky, Arkansas, and Indiana, and a number of other states have proposed work requirements. The president has issued an executive order calling for more work requirements.
There are a number of reasons why Medicaid work requirements are problematic. First, most Medicaid adults are working—almost 80 percent live in working families—and those who are not working are either ill or disabled (36 percent), in school (15 percent), taking care of home or family (30 percent), or are otherwise unable to work. It is not clear, therefore, that work requirements are needed to encourage employment. Second, the way in which work requirements are structured does not recognize the reality of low-income work. Approved waivers require beneficiaries to work 80 to 120 hours a month. But many employed Medicaid beneficiaries work at jobs where hours are irregular, such as fast food or construction. A recent study found that 46 percent of all beneficiaries, and one-quarter of beneficiaries who worked 1,000 hours a year, would fail to meet the 80-hour requirement at least one month a year.
Medicaid enrollees work at jobs with little security and may lose their job because of car trouble, a sick child, or having to make a doctor’s appointment. Although work requirement programs often allow Medicaid beneficiaries the alternative of volunteer work, this may not be a viable alternative for employees whose employers require them to be continuously ready to be called up for work. Many enrollees are also likely to lose coverage because of paperwork problems—Arkansas requires that beneficiaries report hours worked online within five days of the end of each month, but many beneficiaries do not have access to a computer or to broadband. Moreover, loss of Medicaid by people who don’t meet the requirements will likely make it harder for them to find work in the future, as many have chronic conditions that require continued medical treatment. No federal Medicaid funds are available to help people prepare for or find work.
Most 1115 waiver work proposals have not quantified the reduction in enrollment expected due to work requirements, but a number have lockout requirements that will certainly reduce program participation. Based on the experiences of other public programs with work requirements, losses could be as high as 50 to 85 percent. Finally, some states are considering even more draconian waiver programs that would limit the amount of time an individual could remain on Medicaid. In June 2018, Judge James Boasberg of the District of Columbia federal court held that the CMS approval of the Kentucky work requirement was arbitrary and capricious because CMS had failed to consider its effect on access to medical care, a core purpose of the Medicaid statute. Judge Boasberg vacated CMS’s approval of Kentucky’s waiver.
While the Medicaid expansions that the ACA offered the lowest-income Americans has been largely successful in the states where it has been implemented, the coverage offered moderate-income Americans through the marketplaces has been more problematic. Marketplace enrollment has been far smaller than originally projected, and after growing between 2014 and 2016 from 8 to 12.7 million fell to 11.8 million by 2018. The average number of marketplace insurers per state grew from 5 in 2014 to 6 in 2015 and then fell to 3.5 by 2018, with only one insurer available in 8 entire states and in 52 percent of counties containing 26 percent of the population. Most marketplace enrollees have incomes below 250 percent of the federal poverty level, and few higher-income individuals have enrolled. Marketplace plans tend to have narrow provider networks and high cost-sharing obligations for those who do not qualify for cost-sharing reductions. Most marketplace enrollees report being satisfied with their coverage (over 80 percent by one survey), but about 6 in 10 report believing that the marketplaces are “collapsing.”
While initial marketplace premiums were lower than those initially projected by the Congressional budget office and premiums grew slowly for 2015 and 2016, premiums increased steeply for 2017 and 2018 in many states and are likely to increase significantly again in many states for 2019. The decision of the Obama administration to allow ACA noncompliant plans to continue past 2013 and congressional action to defund one of the ACA’s premium stabilization programs undermined the stability of the ACA marketplaces. Decisions by the Trump administration to end payment of the cost-sharing reduction payments, to reduce the marketplace open enrollment period and cut enrollment outreach funding, and to make available alternative forms of coverage for young and healthy individuals who do not comply with the ACA individual market consumer protections, as well as the termination by the individual mandate by Congress and the general market uncertainty created by repeated efforts to repeal the ACA, have further undermined the risk pool and driven up premiums.
Because premium tax credits increase in tandem with premiums, the marketplaces will continue to provide affordable coverage for individuals and families who qualify for tax credits. About half of the remaining uninsured would be eligible for premium tax credits, but about 40 percent of these remain unaware of the marketplaces and about 60 percent of those who are uninsured and aware of the marketplaces assume they cannot afford coverage. Unless Congress and the administration take action to stabilize the markets and expand outreach, however, an individual insurance market where all who do not qualify for employer coverage or government programs can find affordable insurance does not seem likely anytime soon.
In sum, the ACA has significantly expanded coverage for individuals with incomes below 138 percent of the federal poverty level in states that have expanded Medicaid, but many individuals remain uninsured in states that have not expanded Medicaid, while many who do not qualify for Medicaid coverage continue to have difficulties affording coverage. The ACA has also made coverage available to individuals with preexisting conditions that might have not been available at any cost before the ACA, but for those who do not qualify for federal assistance, this coverage often remains costly. Actions by the Trump administration seem likely to make this situation worse rather than better.
One important result of the ACA that has not received sufficient attention should also be mentioned—its effect on the distribution of income in the United States. That distribution is heavily skewed toward the top 1 percent, a tendency that is becoming more pronounced. The ACA expanded benefits for the bottom quintile of the population, financed to a considerable degree by taxes on the wealthiest Americans and on corporations. Together, changes in tax policy under the Obama administration and the ACA’s coverage provisions by 2017 had increased the share of after-tax income received by the bottom quintile of the population by 18 percent while reducing the share received by the top 1 percent by 6 percent. Of course, the tax legislation adopted at the end of 2017 will likely reverse these gains in equality.
The United States does not recognize a basic human right to health care and is unlikely to do so anytime soon. The 2010 Affordable Care Act, however, brought us one step closer to actually providing federal assistance for those who need health care. It had a dramatic effect on improving access to care for many low-income Americans. Some of the progress that was made is being reversed by the Trump administration. Real progress has been made, however, and much of this is likely to remain.
Timothy Stoltzfus Jost is an emeritus professor at the Washington and Lee University College of Law. He has followed the Affordable Care Act since its inception at Health Affairs and elsewhere.