Is the Affordable Care Act Working? –

Is the Affordable Care Act Working?

After a year fully in place, the Affordable Care Act has largely succeeded in delivering on President Obama’s main promises, an analysis by a team of reporters and data researchers shows. But it has also fallen short in some ways and given rise to a powerful conservative backlash.

1Has the percentage of uninsured people been reduced?

Yes, the number of uninsured has fallen significantly.

2Has insurance under the law been affordable?

For many, yes, but not for all.

3Did the Affordable Care Act improve health outcomes?

Data remains sparse except for one group, the young.

4Will the online exchanges work better this year than last?

Most experts expect they will, but they will be tested by new challenges.

5Has the health care industry been helped or hurt by the law?

The law mostly helped, by providing new paying patients and insurance customers.

6How has the expansion of Medicaid fared?

Twenty-three states have opposed expansion, though several of them are reconsidering.

7Has the law contributed to a slowdown in health care spending?

Perhaps, but mainly around the edges.


Has the percentage of uninsured people been reduced?

The Number of Americans Without Health Insurance Is Down by About 25 Percent


The number of uninsured Americans has fallen by about 25 percent this year, or about eight million to 11 million people.

At least as many people have enrolled in Medicaid, the government health care program for lower-income people, as have signed up for private insurance through the new online marketplaces.

Several million more are expected to sign up in the coming year, but the total number of uninsured is projected to remain around 30 million for years to come.

Whether the uninsured population is further reduced significantly will depend in part on whether more states opt to expand Medicaid. So far, 23 states have declined to do so.

At its most basic level, the Affordable Care Act was intended to reduce the number of Americans without health insurance. Measured against that goal, it has made considerable progress.

A perfect measurement of the numbers of people affected by the law is still difficult, but a series of private sector surveys and a government report reach the same basic estimates: The number of Americans without health insurance has been reduced by about 25 percent this year — or eight million to 11 million people.

Of that total, it appears that more than half of people who are newly insured signed up for Medicaid, especially in the states that opted to broaden eligibility for the program to low-income residents. Most of the rest enrolled in private health plans through the new state insurance marketplaces.


In addition to the recent changes, three million to four million people, mostly young adults, became newly insured through provisions of the law that kicked in before this year.


“There’s no question it’s come down,” Dan Witters said of the uninsured rate. Mr. Witters is the research director of the Gallup-Healthways Well-Being Index, which has been surveying Americans about their health insurance status since 2008.



Five key surveys show that the percentage of uninsured Americans has declined.





















Note: For C.D.C., the “before” number is for all of 2013 and the “after” number is for the first three months of 2014. For all other surveys, the “before” numbers are for on or near the third quarter of 2013 and the “after” numbers are for the first six months of 2014.

Sources: Commonwealth Fund’s Affordable Care Act Tracking Survey; RAND Health Reform Opinion Study; Urban Institute Health Reform Monitoring Survey; Gallup-Healthways Well-Being Index; Centers for Disease Control and Prevention’s National Health Interview Survey

Gallup has recorded a drop in the percentage of American adults without insurance from 18 percent in mid-2013 to 13.4 percent by the end of May. Those results roughly mirror other polls. The Commonwealth Fund, a health research group in New York, has commissioned a quarterly telephone poll that found a five percentage point reduction in uninsured adults under 65. A government survey from the Centers for Disease Control and Prevention covered only the first three months of the year, but its results are also roughly consistent with the other studies for that period.


Whether the reduction is a success or a disappointment depends on one’s perspective. When the health care law passed in 2010, the Congressional Budget Office estimated that by 2017 about 32 million more Americans would get insurance through the law.



Biggest drops were in states that expanded Medicaid.

% uninsured, 2014





















Note: Data are for midyear 2013 and midyear 2014.

Source: Gallup-Healthways Well-Being Index

Because of policy changes — most notably, the Supreme Court decision that made state Medicaid expansion optional — the budget office’s current estimate is now lower, about 26 million people. The nation appears to be at least a third of the way to that target.


It is still early to say with much certainty who gained coverage. The large government surveys that are generally considered the most reliable on detailed demographic data lag behind the private surveys. But a few trends are clear. Most notably, Medicaid expansion really mattered. States that expanded their programs saw a substantially larger reduction in their uninsured population than states that did not expand.


Asking whether people have insurance is a good first question when it comes to evaluating the law, but it should not be the final one. Critics worry that some people may have signed up and then cycled out of coverage quickly when they failed to pay premiums. Others worry that many of the health plans people bought covered too few doctors or required too high a payment out of pocket to provide meaningful access to coverage.


Over the next four years, the law is projected to expand coverage to millions more Americans. That will be a big change, but it will not eliminate the problem of the uninsured. About 30 million people are expected to remain uninsured even after several years, according to the Congressional Budget Office. Some of that is by design: people in the country illegally, for example, are excluded from coverage under the law.


About four million low-income Americans are caught in a policy gap in those states that have not expanded Medicaid. Some may be difficult to reach — because of mental illness, language barriers or other isolating factors. Others may still find insurance coverage undesirable or unaffordable. The Affordable Care Act will never bring the country universal health insurance coverage, but it is starting to close the gap.


“I’m sure there would be plans out there that would be perfectly acceptable in terms of what I would have to pay. It’s just the idea of me or anyone being forced by the government.”

Sharon Tomalavage






Has insurance under the law been affordable?

Subsidies Lower Costs for Most People, but Some See Their Premiums Rise



Of the 7.3 million people who signed up for private insurance through online exchanges during the first enrollment period, 85 percent qualified for federal subsidies that decreased the cost of their premiums.


Though many people have found policies with affordable premiums, high deductibles and other out-of-pocket costs have discouraged some people from using their insurance.


Early rate filings by insurers in 21 states suggest that rates will vary widely, but the median premium increases for 2015 for silver plans will be around 4 percent and there will be more insurers in the market. But consumers will need to shop around to keep their costs down.


Insurers are expected to continue trying to control costs by restricting consumers from using doctors out of their network.


The goal is right there in the name: the Affordable Care Act. When President Obama signed the measure in 2010, he pledged that it would protect Americans from ruinously high medical bills by guaranteeing them access to comprehensive — and affordable — coverage. For millions of people who gained insurance through the law, this has proved true.


About 7.3 million people, including many who might otherwise be shut out of the market because of costly medical conditions, remain enrolled in private coverage through the law’s online marketplaces. Eighty-five percent of those who signed up during the enrollment period qualified for federal subsidies to help pay premiums. For those who qualified for subsidies through the federal exchange, the subsidies lowered the cost by 76 percent on average, according to the Obama administration.


But the law — by requiring insurers to provide a broader array of benefits and to cover people with pre-existing conditions — caused premiums to rise for some who already had insurance. Many of those people were young and in good health, had plans that offered sharply limited benefits that were canceled because of the law, or were not eligible for subsidies.


For now, dire warnings that the law would cause premiums for most people to rise sharply have proved unfounded. The law has spurred competition, with new companies entering the market. And early indications are that premium increases next year will be relatively modest. One analysis of early regulatory filings by the McKinsey Center for U.S. Health System Reform found that insurers are proposing a median increase of 4 percent in 21 states for silver plans, although people should consider switching plans to find the lowest price.


Another McKinsey analysis found that in 43 states that have released information, there has been a 22 percent increase in the number of insurers for 2015. Many of the new insurers are in markets where competition was already flourishing. But it also appears there will be fewer places with little or no competition: In 21 states, McKinsey found, the number of markets with just one or two carriers fell to 10, from 41.



How premiums will change in 21 states

For people renewing the cheapest silver plan. States () where rates have been proposed or approved.

Decrease in 17 markets.

Increase less than 10 percent in 87 markets.

Increase more than 10 percent in 58 markets.

Note: Premium changes are shown for a 40-year-old, before tax subsidies.

Source: McKinsey Center for U.S. Health System Reform

But for some consumers who bought plans with affordable premiums, high deductibles and other out-of-pocket costs have discouraged them from seeking care. Another major question is whether insurers, in trying to keep costs down, have been too restrictive about allowing consumers to use doctors outside their company’s network.


In New York, New Jersey and Georgia, the vast majority of exchange plans allow only in-network care. Nationally, roughly half of the plans offered through, the federal exchange, are either health maintenance organizations or exclusive provider organizations, which do not allow their customers to go out of network, except in emergencies or through an often arduous appeals process.


The limited selection has helped keep premiums down, but also made “surprise balance billing” — or high bills that are not covered — more likely, experts say. New York recently passed a law to prevent such billings.


There are also wide variations in prices within states, as insurers pursue different strategies and struggle to determine how much they need to charge to cover their costs. Someone in Dalton, Ga., for example, will see the cost of a midlevel silver plan from WellPoint’s Blue Cross Blue Shield decline by 12 percent, according to 2015 rate filings. But in Dublin, Ga., three and a half hours away, a person who bought a silver plan from Humana could see the price rise by nearly a third.


With such variability, it is hard to know who will find the plans unaffordable this time around. For now, the evidence suggests that middle-income people who don’t qualify for subsidies, or who qualify only for small ones, are most likely to struggle with the cost. In a Commonwealth Fund survey conducted this spring, 44 percent of adults with incomes above 250 percent of the poverty level, or $29,175 for individuals, found it difficult to pay their premiums for marketplace plans, compared with 33 percent of those with incomes below that level.


For that reason, experts say it is critical that consumers shop around when enrollment begins on Nov. 15, since their current insurer may be raising rates even as other companies lower theirs.


In places where the law is already achieving its goal of fostering additional competition — Maine, for instance — consumers appear to be less likely to feel “rate shock,” where premiums go up by double digits. But in states where there is less competition, residents appear more likely to have to pay higher prices next year, unless they qualify for a higher subsidy. And those larger rate increases are fodder for political attacks against the law, particularly in states with closely contested Senate races this fall, like Louisiana or Iowa.


In one state with minimal competition, Vermont, the biggest insurer, Blue Cross Blue Shield of Vermont, will be increasing the price of its lowest-cost silver plan by about 9 percent.


For Jessica Porter, a psychiatric nurse practitioner from South Burlington, that is a problem. Her family of six is paying $1,637 a month for a platinum plan, which comes with relatively generous coverage but high premiums. But their income is too high to qualify for a subsidy, she said, so she and her husband have put off saving for retirement to pay their premiums.


“Blue Cross is basically the only player in town,” she said.


“The insurers are going to charge what the market can bear and keep pushing the envelope until it collapses.”

Mark Segina






Did the Affordable Care Act improve health outcomes?

To Gauge Impact on Nation’s Health, More Time Will Be Needed



Most experts say there is not enough data yet on the entire population to determine whether the law is improving the nation’s health.


The best early data is on young people, and it suggests that the law is benefiting that group by allowing them to stay on their parents’ insurance. The share of 19- to 25-year-olds without health insurance declined to 21 percent in the first quarter of this year, from 34 percent in 2010, a reduction of about four million people.


Young college graduates were far more likely to report excellent health, to have a primary care doctor and to go to the doctor regularly than before the law.


Indicators for how well the law is working for older people are few, but one – screenings for colon cancer – shows marked growth, as screening rates for people with private insurance rose to 56 percent in 2012, from 48 percent in 2010.


Of all the pledges made for the Affordable Care Act — that it would reduce the number of uninsured or make insurance more affordable, for instance — perhaps the loftiest and hardest to demonstrate was that it would make the nation healthier.


A year later, most experts say it is too soon to tell whether the ability of more people to get mammograms, colonoscopies or just routine checkups will, as President Obama and other supporters promised, eventually prevent chronic diseases in many more people.


But some early data suggests that in one population, young people, the law is having a positive impact.


The law permits young Americans to remain on their parents’ insurance plans until their 26th birthday, a major shift from past practice, in which insurance plans could remove dependents when they turned 19. It was one of the first changes to happen under the 2010 law, giving researchers more data and turning the young into a kind of natural experiment.


The most basic measure, the share of young people without insurance, shows sharp improvement. The share of 19- to 25-year-olds without health insurance declined to 21 percent in the first quarter of this year, from 34 percent in 2010. That is a decline of about four million people. The current uninsured percentage for that age group is the lowest since the National Health Interview Survey — a large federal survey considered to be a gold standard by researchers — started tracking it in 1997.


Researchers also delved deeper. An analysis in Health Affairs in August found that mental health treatment among 18- to 25-year-olds who said they had a mental health disorder had increased by more than five percentage points compared with a similar group ages 26 to 35, a significant increase for a particularly vulnerable group. Young people experience mental health problems at much higher rates than the rest of the population.


That pattern was consistent with a jump in health care spending for young adults. During the first two years after the passage of the law, spending by 19- to 25-year-olds who were on employer-sponsored insurance plans rose at nearly double the rate of other adults on employee-sponsored plans, driven in part by greater use of mental health services, according to a report by the Health Care Cost Institute.


On broader measures of health for young people, findings were mixed. A study published in JAMA Pediatrics in September found no change in the share of 19- to 25-year-olds who reported receiving a routine checkup in the past year between 2009 and 2012, compared with 26- to 34-year-olds. (It also found no change in health status, but health researchers said that did not mean none would occur, as health changes take years.)


However, a group of economists using the same federal survey — the Behavioral Risk Factor Surveillance System, a self-reported, nationally representative sample — found that among young adults ages 23 to 25, more said they had a regular primary care doctor than before the law, and fewer said they had to forgo medical treatment because they could not afford it. A similar control group, ages 27 to 29, had no change.


Most striking, however, was the effect on young college graduates. They were far more likely to report excellent health (an important indicator of future sickness and mortality, experts say), to have a primary care doctor, and to go to the doctor regularly than before the law.


Outside the young adult age group, changes were more muted. An early look in September at the first quarter of 2014 found very little change in a dozen or so measures for the population at large, including the number of flu shots received, whether people had a regular place to go for medical care, and whether people had to forgo medical care because of cost.


A few benefits, however, came early under the law, and some seemed to make a difference. Starting in 2010, the law required that insurance plans cover preventive screenings without charge to patients. One screening that has jumped is the colonoscopy. Screening rates for people with private insurance went from 48 percent in 2010 to 56 percent in 2012, according to the National Committee for Quality Assurance, a health research nonprofit organization that collects data from the majority of health plans in the country.


Policy experts at the American Cancer Society Cancer Action Network said the law was partly responsible, similar to what happened in Massachusetts, where rates of colorectal screening rose sharply after that state carried out its health overhaul in 2006.


“It has changed the trajectory of my life for the next 10 years. I feel very, very blessed.”

JoAnna James







Will the online exchanges work better this year than last?

No More ‘Blue Screens of Death,’ Perhaps, but Exchanges Will Face New Challenges



Federal and state officials say that the online health care marketplaces that performed so badly last fall have been upgraded to ensure smoother service when they reopen Nov. 15.


But both new and old customers are expected to flood onto the exchanges, testing their capacities, and the “back end” of the federal system, where insurers receive applications and bill the government for subsidy payments, is not completed.


Though many of the 14 state-run exchanges are fine, several remain question marks, including those in Maryland, Massachusetts, Hawaii and Vermont.


President Obama promised that buying health insurance on the online health care exchanges would be as easy as buying plane tickets on Kayak. Instead, most Americans were essentially locked out of, the federal online insurance marketplace that served 36 states, for two crucial months last fall. Many of the 14 state-run marketplaces also malfunctioned, and millions of tax dollars have been spent fixing all the defects.


Now a question looms over the second enrollment period, which starts Nov. 15: Will the system work better this time around? Federal and state officials, and a number of outside experts, say they think it will.


“You’re not going to get those blue screens of death anymore,” said Dan Schuyler, senior director for exchange technology at Leavitt Partners, a consulting firm.


But several significant new challenges will test the exchanges this time. Even as millions of new customers are expected to use the exchanges this fall, many of the 7.3 million who bought private marketplace plans last year will return to update information or seek better deals from different companies. Moreover, the “back end” of the federal exchange, which the government uses to enroll consumers in health plans and to send subsidy payments to insurers, remains unfinished.


Nevada and Oregon have also given up on their botched state-run websites, which are now targets of lawsuits and investigations, and will use the federal marketplace instead. And Maryland and Massachusetts are scrambling to rebuild their sites with new software before open enrollment.


The Congressional Budget Office predicts that total enrollment will grow to 13 million in 2015. Those already enrolled will need to renew their coverage by Dec. 15, and while they can do so automatically by taking no action, many may return to to shop around.


“That’s a lot of demand to handle,” Mr. Schuyler said. “It doesn’t matter how well you plan and how many servers you have at the ready to take on this type of volume; at some point, things are going to slow down.”


The federal exchange is trying to make things easier with a shorter and simpler application. The exchange also started testing earlier than last year.


“I’m a realist, and we will not get it perfect,” said Andrew Slavitt, principal deputy administrator at the Centers for Medicare and Medicaid Services, at a congressional hearing in September. “But we have, I think, the right processes in place to make it as good as it should be.”


Although most state-based exchanges are operating quite well at this point, a few are struggling. In Maryland, where at least $40 million has been spent rebuilding the exchange using technology from Connecticut’s more successful version, tens of thousands of people who signed up for private coverage during the first enrollment period will have to re-enroll by mid-December if they want to keep their subsidy. The state will introduce its revamped website in phases, not opening it for general use until the fifth day of open enrollment.


In Massachusetts, where the state and federal government are spending at least $80 million to fix its website with new software, officials promise it will work this fall.


The future of troubled exchanges in Hawaii and Vermont is also in question. Vermont took its exchange offline last month to complete a number of repairs, although state officials say it will be working by Nov. 15. The Hawaii exchange, which just hired its third director, still has operational problems and is struggling more than most to stay afloat financially.


Mr. Schuyler said the Obama administration “is not going to give a state-based marketplace a green light unless they are completely confident it can make it.”


“They don’t want a similar situation to last year,” he added.


“When we had a million questions, we called and someone answered all of them, and they were knowledgeable.”

Jeanne Naft






Has the health care industry been helped or hurt by the law?

Wall Street Analysts See Financial Boon Across the Health Care Spectrum



Wall Street analysts and health care experts say the law helped the industry financially by providing new customers to insurers and new paying patients to hospitals.


The most direct beneficiary of the law is the insurance industry, which is now experiencing growth in the demand for private insurance.


The number of insurers participating in the online health exchanges is projected to grow in 2015, an indication of the anticipated profitability of the marketplace.


From the beginning, opponents of the Affordable Care Act have warned that it represented a “government takeover” of the health care system that would lead to crippling regulations on both for-profit companies and nonprofit players. But to the contrary, Wall Street analysts and health care experts say, the industry appears to be largely flourishing, in part because of the additional business the law created.


Health care accounts for roughly $3 trillion in spending in the United States so it is difficult to tease out the law’s impact. The online exchanges have also been open for only a year. But analysts and policy experts who watch the industry closely agree that in the first year, the nation’s health care system mostly benefited from the law, which brought new customers to insurers, new paying patients to hospitals and new prescription users to the pharmaceutical industry.


“The irony is if you look sector by sector, the A.C.A. has resulted in pretty substantial earnings across the board,” said Paul H. Keckley, managing director of the Navigant Center for Healthcare Research and Policy Analysis, a consulting firm unit.


By one measure, the stock market, for-profit health insurers, hospitals and drug companies did well. One index that includes those companies, the S & P 500 Health Care Index, rose by 24 percent over the last year, outperforming the overall stock market.


The health insurers are the most direct beneficiaries of the law. In recent years, the private insurance market for adults under 65 has steadily declined as more companies stopped offering insurance to employees and more individuals became unable to afford coverage, a trend expected to continue. But the Affordable Care Act has provided subsidies that have helped millions afford coverage. For the insurers, the health care exchanges are now “really the only game in town in terms of growth” for private insurance, said John F. Holahan, a policy expert from the Urban Institute.






The S.& P. 500 health care index

has beaten the S.& P. 500-stock

index since last year …











… and most health care companies have

posted healthy profits so far this year.







Hospital companies



Health Systems

Health Mgmt.







Health Services








Health insurance companies


United Health















Pharmaceutical companies


& Johnson





Eli Lilly









Source: Bloomberg

One clear sign that the carriers find the market attractive is the decision by more of them to offer policies through the online health exchanges. UnitedHealth Group, a for-profit company that operates one of the nation’s largest insurers, originally chose to offer individual plans through the exchanges in only a handful of states. But in 2015, the company says, it plans to offer plans in as many as two dozen. There are 56 new insurers entering the market so far this year, according to a count by the McKinsey Center for U.S. Health System Reform.


But contrary to what some liberals predicted, the law has not been a boon in every way for the insurance industry. State and federal officials are much more closely dictating what the insurers can do, and the marketplace had also encouraged more competition for the plans. “It’s going to be a more pressured environment,” said Vishnu Lekraj, a senior health care analyst who follows the area for Morningstar Inc.


Insurers are also limited on how much money they can make on an individual’s coverage, and some insurers may lose money as they try to gain customers with low-priced policies. Insurers are also expecting payment cuts for the private Medicare plans they operate. But, on the other hand, the government “won’t let you lose your shirt,” said Ana Gupte, a health care analyst for Leerink Partners, noting provisions in the law to protect insurers if they guess wrong about costs. Over all, she said, most insurers “sound more and more optimistic that they will have positive margin on their book” in 2015.


Hospitals are being hurt by a provision of the law that cuts their Medicare payments by $260 billion over 10 years. But they have benefited from having more insured customers who can pay their bills. That has been especially true in the states that expanded Medicaid to more people, as was allowed under the law.


The Department of Health and Human Services estimates that hospitals will save $5.7 billion in so-called uncompensated care costs this year because more people have insurance. And nearly three-quarters of those savings, $4.2 billion, has gone to the 25 states and the District of Columbia that expanded Medicaid at the beginning of 2014.


Whether such benefits continue remains unclear. But for now, the law is providing a “tail wind” to hospitals, said Michael D. Gregory, a portfolio manager for Highland Capital who invests in health care.




How has the expansion of Medicaid fared?

Some States Balked at What They Believed Would Be Hidden Costs



The Affordable Care Act allows states to expand Medicaid to people not previously eligible, including some people above the poverty level – but the United States Supreme Court in 2012 ruled that expansion was optional for states.


As a result, only 27 states and the District of Columbia have expanded, while Republican opposition in other states has blocked expansion.


In states without expanded Medicaid, a coverage gap exists for people who earn too much to receive Medicaid, but too little to receive federal subsidies to reduce insurance premiums. About half of the people who fall in that gap nationally live in Texas, Florida or Georgia.


Under pressure from hospitals that stand to gain federal funds from Medicaid expansion, Republican governors in several states are now moving toward expansion, some through so-called private option plans.


Architects of the Affordable Care Act saw the expansion of Medicaid, the government health care program for low-income people, as a crucial step toward President Obama’s goal of reducing the number of uninsured. And in states that have expanded eligibility — to include people with incomes up to 138 percent of the poverty level (up to $16,105 for an individual) — Medicaid appears to be achieving that goal.


Since last October, federal officials say, 8.7 million people have been added to the Medicaid rolls, 7.5 million of them in the 27 states that have expanded Medicaid eligibility. That is comparable to the 7.3 million people who obtained private insurance through the exchanges in all 50 states and the District of Columbia.


“States that expanded Medicaid have seen a remarkable reduction in the number of uninsured, a drop of nearly 40 percent,” said Stan Dorn, a health policy expert at the Urban Institute, a nonprofit research group. “That compares with a reduction of less than 10 percent in states that have not expanded.”


Not all states have expanded Medicaid, because the Supreme Court ruled in 2012 that the expansion was optional. So governments in 23 states, most of them Republican-controlled, have blocked expansion, asserting that the cost could eventually become a state responsibility.


But proponents of expansion say that will not be the case: Under the Affordable Care Act, the federal government pays all costs for newly eligible Medicaid beneficiaries through 2016, and after that the federal share never goes below 90 percent. Under traditional Medicaid, states pay a higher share — 26 percent to 50 percent.



How Medicaid enrollment has changed in each state

States that expanded their programs under the law are shown in



35% of













Ohio, Ill.














Pa.*, N.C.



S.C., Iowa

Ind., Ala.


Ga., Idaho,






Kan., S.D.



Wyo., Utah




Va., N.H.*



+5 or more

+2.5 to 5

+1 to 2.5

–1 to +1



Note: Includes Children’s Health Insurance Program. “Before” figures represent the average enrollment for the months of July 2013 through Sept. 2013 and are not available for Maine and Connecticut. “After” figures are from August 2014, the latest month available.


*Pennsylvania’s expansion will be carried out in January 2015. The expansion in New Hampshire took effect on August 15.

Source: Centers for Medicare and Medicaid Services

The government does not know for sure how many of the people gaining coverage under the Affordable Care Act were previously insured or uninsured.


Supporters of Medicaid assert that nonexpansion states are passing up hundreds of millions of federal dollars that could help offset cuts in aid to hospitals that will occur under other provisions of the health care law.


Moreover, sizable numbers of residents in those states, including childless adults and the working poor, fall into a coverage gap: They make too much for traditional Medicaid and too little to qualify for subsidies in the insurance exchanges.


Researchers at the Urban Institute estimate that 6.3 million uninsured adults fall into that coverage gap, with about half living in three states: Texas (1.5 million), Florida (1 million) and Georgia (570,000). The group includes 1.6 million blacks, 1.3 million Latinos and 1.5 million people under the age of 25.


Opposition to the expansion of Medicaid appears to be softening in some states, partly because of pressure from hospitals. Nine states with Republican governors, including Michigan, Ohio and Pennsylvania, are expanding Medicaid. Republican governors in Indiana and Utah are negotiating with the Obama administration on possible expansion. And in Tennessee, the Republican governor is trying to find a way to expand Medicaid despite skepticism among Republican lawmakers.


With so many new people in the expanded program, another question has emerged: Are there enough doctors to serve them? Many urban and rural areas were already struggling with shortages of doctors willing to take Medicaid patients before the law took effect, experts say.


“Beneficiaries have reported serious problems obtaining the care they need, particularly specialty care,” said Sarah Somers, who represents poor people as a lawyer at the National Health Law Program.


“My heart specialist told me that I needed surgery real quick to save my life.”

Gary D. Wood






Has the law contributed to a slowdown in health care spending?

Trajectory of Costs Levels Off, but There Are Many Reasons






Health care spending had begun slowing even before the Affordable Care Act was signed into law.


The reasons included recession, higher-deductible policies that discourage people from seeking health care services, and a decline in the development of new, costly prescription drugs.


But reductions in wasteful or unneeded care may also be factors in the slowdown, and experts say the Affordable Care Act may help reinforce those changes.


In the short term, the law could actually drive up health care spending by bringing more insured people into the system.


For decades, health care costs have been rising much faster than the rest of the American economy, outrunning inflation and wages and driving a growing imbalance in the federal budget. With the Affordable Care Act, President Obama promised to slow it all down. The law, he said often, would “bend the cost curve,” flattening health spending’s precipitous rise and making health care more affordable for the country.


The last few years have seen a significant slowdown in the growth of health spending. Across nearly every measure — medical price growth, employer insurance premiums, per capita Medicare spending — the amounts the country spends on health care have increased by much smaller margins than the nation is used to.


But it is hard to make a case that the Affordable Care Act deserves substantial credit for the recent trend — though it may be helping to nudge it along. The spending slowdown began before the law was even written. The major provisions of the law intended to slow down spending growth have mostly come in the form of small-scale experiments, and studies of those programs have shown mixed results.


The law’s signature Medicare initiative, the Accountable Care Organization, has yet to demonstrate the savings its authors promised; recent results from the Department of Health and Human Services show that only a fraction of participating systems have succeeded in saving money.


Meanwhile, the growth in health spending has been slowing down around the world, suggesting that the cause may not be something special happening in this country.



National health care

spending per person …





Law passes






… and the change

from the previous year.










*Projection. Note: Figures are adjusted for inflation.

Source: Bureau of Economic Analysis; Centers for Medicare and Medicaid Services; U.S. Census

Health economists have been alternately celebrating the slowdown and puzzling over it. A series of studies have tried to examine what factors have caused it, with an eye to determining whether the trend is here to stay. The typical answer includes the recession (individuals and hospitals, facing financial stresses, reduced their health care spending); the rise of high-deductible health insurance plans; the loss of patent protection for many blockbuster drugs, leading to the use of more low-cost generics; and changes in the way medical care is being delivered.


Those changes in health care delivery are the most likely among all the factors to be related to health policy. The authors of the Affordable Care Act believed that the key to wringing dollars out of the health care system was reducing unnecessary and wasteful care that cost money without helping patients. If the health care system is starting to do that, and new policy helps reward the welcome change, then there is a chance that the trend could hold.


Optimists about the Affordable Care Act tend to point to hospital readmissions — when a patient leaves the hospital only to bounce back within a month — as an example of how policy is helping medical care become cheaper and better. Historically, hospitals had little financial incentive to prevent readmissions since they got paid for both visits. The Affordable Care Act began imposing penalties on hospitals with a lot of readmissions, and in just a few years the number declined. But readmissions represented only a tiny fraction of medical spending, so they cannot explain too much of the overall slowdown.


For that reason, Peter R. Orszag, the former Obama administration budget director and now a vice chairman at Citigroup, thinks that the Affordable Care Act should get only partial credit for the slowdown. “I view it as kind of an accelerant and reinforcement,” he said of the law.


In the short term, the health law could actually increase health care spending. Recent measures of the gross domestic product already show an uptick in the use of health care services this year, the expected effect of expanding health insurance coverage to millions of Americans who did not have it before. Even if the price of services is not going up and medical practice is less wasteful, more people seeing doctors and filling prescriptions is going to cost more money.


But the real long-term test of the health law will be whether, once those new people are absorbed into the system, the current downward trend in spending growth can be sustained.


“The experiment is on, and everyone knows they’re a lab rat,” said Douglas J. Holtz-Eakin, the president of the right-leaning American Action Forum and a former director of the Congressional Budget Office. “Now we’ll see if it sticks.”via Is the Affordable Care Act Working? –

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