The Affordable Care Act (ACA) has been a divisive piece of legislation since it was passed into law back in March of 2010. Now over five years later we thought we would take an objective look at the law to see if it accomplished its number one goal. Namely to make health insurance affordable. First of all let’s keep in mind that the health insurance system that was in place before the ACA had its own issues but we want to take a look at the ACA on its own merits.
For many people Obamacare really has made the cost of health insurance affordable. We have helped many clients sign up for coverage and have seen some premiums of less than twenty dollars per month! We also had clients whose premiums almost doubled. However these types of stories are anecdotal and don’t really give a clear picture of the how the law has affected premiums as a whole.
In general people who received subsidies ended up with lower premiums than what they were paying prior to the ACA. However people who did not receive a subsidy more often than not faced higher premium costs. So in essence the ACA’s, and its three thousand plus pages regulations, effectiveness may boil down to subsidies.
The issue with the subsidies is that they are a temporary band-aid for our health care issues. The ACA didn’t actually make the cost of insurance any less it simply allowed the Federal Government to pay a portion of the cost on behalf of some of its citizens in order to make the costs artificially lower. However it appears that we simply shifted the cost burden from individual citizens to taxpayers as a whole. This has hints of Universal Healthcare but it is actually less efficient. Modern universal health care systems limit the primary driver of the cost of health insurance namely the amount of money providers such as doctors and hospitals can charge for services.
It is amazing that more people don’t associate health insurance costs with the actual costs of medical care. Having a $450 per month premium is unacceptable but being charged $50,000 or more for three day hospital stay is “normal” . If our healthcare system is ever going to work in the long term we need to start working to lower the costs of medical care. That will in-turn lower our premiums and maybe make health insurance “affordable” once again.