JONATHAN COHN MAY 21, 2012
The Affordable Care Act is full of compromises—the subsidies aren’t as generous as they could be, for example, and there’s no public plan. But, for those of us who believe in the law, no compromise may be more threatening to the law’s success than its timing.
In 2014, everybody making less than 133 percent of poverty becomes eligible for Medicaid, while people at higher incomes get the chance to buy comprehensive, subsidized insurance regardless of pre-existing medical conditions. The combined effect will be a dramatic, visible change for people who don’t have insurance and those at risk of losing it—two groups that, together, constitute a significant chunk of the population. But few of these people are aware of these benefits, because they haven’t seen them yet. (My colleague Alec MacGillis picked this up during interviews for his new story about politics in Ohio.)
That is one reason, although not the only one, the public remains ambivalent about Obamacare. It could also embolden conservatives on the Supreme Court; if the law were fully functioning and more people were relying on it, those justices might think harder before striking part or all of it down.
But we can imagine what the world would be like if the new law were already in place. One way is to go back through the data, and figure out what would have happened over the last decade if the Affordable Care Act, or something like it, had been in place. Steven Hill, a senior economist at the Agency for Healthcare Research and Quality, did just that. And he's published his findings in Health Affairs:
If adults who had individual insurance during 2001–08 had instead had benefits similar to those under the Affordable Care Act, their average annual out-of-pocket spending on medical care and drugs might have been $280 less. The near-elderly and people with low incomes might have saved $589 and $535, respectively. An important improvement would have been the reduced probability of incurring very high out-of-pocket spending. The likelihood of having out-of-pocket expenditures on care exceeding $6,000 would have been reduced for all adults with individual insurance, and the likelihood of having expenditures exceeding $4,000 would have been reduced for many.
Another way to imagine the impact of health care reform is to look at the one state that has tried it. That’s Massachusetts, of course, and I happen to be spending the week there, on a research visit for journalists sponsored and organized by the Kaiser Family Foundation. You’d think the Massachusetts story would be the focus of a lot of debate right now, given that Mitt Romney signed these reforms into law while he was governor and President Obama used the Massachusetts scheme as a model for what became the Affordable Care Act. But Romney hasn’t talked much about what’s actually happened in Massachusetts, because he’s too busy arguing that the idea he once promoted so enthusiastically is a terrible idea for the rest of the country.
That's too bad, because Romneycare’s record is genuinely impressive. The main goal of the reforms was to make sure more people have access to health care and fewer people struggle with the costs of care bills. The evidence suggests it has accomplished both goals. Nearly everybody in the state has health insurance, while data suggest more people have regular access to care and fewer people face crushing health care costs. The improvement has been incremental—too incremental, for my taste. Plenty of people still struggle. But the program has certainly alleviated hardship, at a time when rising health care costs and a sluggish economy have been increasing hardship in the rest of the country.
The usual rap on the Massachusetts health reforms is that they haven’t controlled medical costs. And it’s true: Romneycare hasn’t slowed the growth in health care spending. But that was never its goal. The idea was to expand coverage and then, hopefully, address costs later. This is precisely what the state is doing right now: Lawmakers and stakeholders are hammering out a law that, they hope, will blaze a trail for cost containment just as the previous reforms blazed a trail for coverage expansion. (For more on these efforts, see this great primer from Sarah Kliff of the Washington Post.)
In the meantime, keep in mind that Romneycare hasn’t reduced costs but it hasn’t increased costs, either. As you can see in the graph below, which comes from the Massachusetts Blue Cross-Blue Shield Foundation, health insurance premiums for families haven’t increased faster than those nationally. (Enlarged view here.) Meanwhile, rates for the non-group market—that is, for people buying insurance on their own—have come way down. That’s no accident. The non-group market is the most dysfunctional part of our health insruance market. It’s the place where insurers scrutinize buyers, denying coverage, reducing benefits or charging higher premiums to applicants that pose higher risks – and where overhead or marketing expenses are particularly high. Merely organizing those insurers and buyers into a single, regulated market can yield enormous gains. And it has.
I’ll have more to say about Massachusetts and, in particular, the cost control efforts later in the week. But for now I’ll leave you with the verdict of Jonathan Gruber, the MIT economist who was a key architect of both Romneycare and Obamacare: The Massachusetts law, he says, “did what it meant to do and didn’t do what it didn’t mean to do.” That seems about right. If the Affordable Care Act takes effect—that is, if neither the Supreme Court nor the Republicans repeal it—we could see a similar effect in other states and, ideally, the nation as a whole.
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