The future of the Affordable Care Act

This november the Affordable Care Act (ACA)—aka Obamacare—will face its next great test: Can it survive beyond its namesake’s time in office?

Further reading: Physicians demand answers from presidential candidates

Six years after the legislation was enacted, it faces an uncertain future as the presidential election looms. Candidates in both the Democratic and Republican parties have made bold promises to revise or repeal the hard-won healthcare reform law should they be elected, even though the Supreme Court upheld the legislation in 2012. Here, health economists weigh in on the fate of the ACA.

The realities of single-payer healthcare

Senator Bernie Sanders (D-Vermont) has taken the idea of single-payer healthcare out of its bottle in the form of an expanded “Medicare-for-all” plan, and it’s unlikely the idea will be easy to remove from voters’ minds.

Medicare for all would mean dismantling the ACA; there would be no more private insurance companies or healthcare exchanges. Instead the government would manage one fund that everyone pays into. Sanders suggests that once the system no longer depends on multiple insurance companies and their individual rules, the government could recapture that administrative spending and invest it in paying for healthcare for everyone, and broaden the scope of services.  Many praise this kind of plan because it would insure everyone equally and reduce insurance companies’ ability to jack up rates at will. But others worry about the ripples such a change would have on our economy. 

Senior health economist Farah Farahati, PhD, with the University of Maryland School of Public Health, does not believe single-payer healthcare will come to pass after the 2016 election, but she admires the model. “Most of the successful cost-effective healthcare systems around the world have single-payer healthcare systems,” she says. 

Next: Efforts to repeal

Putting single-payer into effect, however, would be “a fundamental change in healthcare financing,” according to Gerald Kominski, PhD, director of UCLA’s Center for Health Policy Research. “I genuinely believe a single-payer system is where we have to get to maximize the value of our healthcare system, and to end unnecessary waste in this current patchwork system.”

Even if Congress were to approve such a system, Kominski says it poses problems. “We have a lot of evidence from the past 30 years that doing away with cost sharing will result in an increased use of services. I’m not a big fan of high-deductible plans and significant cost sharing, but some cost sharing and some level of deductibles helps keep our spending from being even greater than it is,” he says. What’s clear is that we can’t have both the ACA and single payer. 

Further reading: Why are the 2016 presidential candidates ignoring healthcare?

Kominski does see one smaller-scale way to achieve single-payer insurance, however, which is at the state level. States could apply for a federal waiver where everyone hospitalized would be covered by Medicare Part A. “A system like that could pass nationally as hospitalization is one of the most expensive components of care, and it would stabilize the hospital industry,” he says. He imagines such a system could be paid for through an increase in payroll taxes, and says it’s much like what Senator John Kerry proposed when he ran for president in 2004. 

“I think it is stunningly unlikely to get radical change,” says Michael Chernew, PhD, professor of health economics at Harvard Medical School. “I don’t think you’re going to have a Congress that will be amenable to single-payer. We have a series of checks and balances in our system and the president doesn’t always get what they want.”

Real estate developer Donald Trump, the top contender for the Republican nomination, has said he would repeal the ACA outright.

Trump is promoting healthcare reform based on “free market principles.” He favors reducing barriers to purchasing insurance across state lines, making insurance premiums tax deductible. Fahrati doubts Trump’s plan to create competition among healthcare providers will be effective because it is not based on any other existing model, and is short on specifics.

Kominksi is more alarmed by Trump’s plan to allow purchasing of healthcare insurance across state lines.  “Under Trump’s plan, you could incorporate, say, in Nevada, and sell products in California, and California couldn’t regulate that. We’d sacrifice all those [individual state law] protections. The model for that is the banking laws. All the banks locate their headquarters in Delaware, because it has the least regulations of the industry.” 

Next: Staying the course

However, he understands why Trump’s plan appeals to some voters since the U.S. economy’s reliance on free markets is ingrained in the national consciousness. “Markets do work very well in many areas.”

But markets are also subject to severe dysfunction, Kominski points out. He feels there’s a “natural monopoly” in hospitals and among doctors that doesn’t always work in patients’ favor. “In what other market would you go and buy a service and be told, if you ask the cost, ‘We don’t know, but we’ll send you a bill.’ Can you imagine buying a car that way?” he asks.

However, wholesale revisions to repeal the ACA do not seem realistic. “Repealing the ACA is way easier said than done,” Anthony Lo Sasso, PhD, professor of health policy and administration at the University of Illinois at Chicago, says. “First it requires legislation. You can’t just executive order it away. Even assuming [the House] was inclined, in all likelihood it wouldn’t fly in the Senate.” 

Healthcare legislation action to watch this year

Chernew feels that efforts to dismantle parts of the ACA would have far-reaching fiscal repercussions, such as adding to the deficit. “Although it would lower taxes, some of the ACA is paid for by reforms in Medicare,” he says.  

Moreover, Chernew says Republicans might be surprised to find out how reluctant their own voters are to lose the benefits they acquired under the ACA. Seventy-four percent of newly-insured Republicans were happy with their insurance acquired under the ACA, according to a 2014 Commonwealth Fund report. Kominksi also cites the case of Kentucky, which implemented its own healthcare exchange under a Democratic governor after the ACA passed. “Now that a Republican has come into office who campaigned on a platform to roll back the Medicaid expansion, he’s finding it is not as easy to do,” he says. “It will be difficult to turn back the clock on the more than 20 million people who have insurance now than did back in 2013.”

“No matter whether you like or dislike the ACA, I think it’s relatively clear that there was a problem the ACA was trying to address,” says Chernew. However, as of yet, no candidate has provided a coherent, comprehensive alternative in the context of repealing the ACA.

Under a Democratic president, particularly if that is former Secretary of State Hillary Clinton, the most likely outcome is that the ACA will “stay the course,” Lo Sasso says, with some tweaks. Chernew agrees, “If the Democrats win, particularly if they pick up seats in Congress, the ACA will be much more about modifying and refining going forward.”

Next: Physicians sound off

Clinton championed a version of healthcare reform in the 1990s, which was quite a bit more ambitious than the ACA. 

Now, Clinton proposes to defend the Affordable Care Act and build on it to slow the growth of out-of-pocket costs.

One of the most burdensome of these out-of-pocket costs is prescription drugs. “There’s been a long, ongoing debate about prescription drug prices in a variety of ways, since there have been egregious examples of pricing that are hard to swallow. We really like our prescription drugs, we just want them cheaper,” says Chernew.

Despite mistrust of drug companies, Chernew says, profitability encourages innovation, though he doesn’t feel this means we should write blank checks to drug companies, but should consider the consequences to innovation to any policy changes.

Small changes may be the best either party can hope for, says Chernew. “Once regulations get set, those are hard to budge. Laws have to be rewritten.” 

Kominski agrees. “The conclusion I’ve drawn from 30 years of studying U.S. healthcare is that incremental change seems to be the fundamental strategy.” After all, even Medicare and Medicaid were built on incremental compromises to help people who were being left behind: namely the poor and elderly. “We have Medicare because we couldn’t get a single-payer system for everyone,” he says.

Ultimately, the next president must pay attention to the delicate balance of healthcare, and consider that the ACA helps support other aspects of the healthcare system. “This is not to say we should keep the ACA exactly as it is,” says Lo Sasso. “But people have to understand that what happens in the healthcare system in one area tends to reverberate through the system.” 

“No matter whether you like or dislike the ACA, I think it’s relatively clear that there was a problem the ACA was trying to address.”

— Michael Chernew, PhD, professor of health economics, Harvard Medical School

“I genuinely believe a single-payer system is where we have to get to maximize the value of our healthcare system, and to end unnecessary waste in this current patchwork system.”

— Gerald Kominski, PhD, director,
UCLA’s Center for Health Policy Research