By 2010, nearly 50 million Americans were uninsured, despite the fact that 17% of the economy was (and is) spent on healthcare. The U.S. has easily become the world’s greatest spender, in both per capita and absolute terms, on healthcare. However, according to the World Health Organization, the U.S. healthcare system is ranked 37th globally in terms of outcomes. As a nation, we underperform in such basic measures as life expectancy and neonatal mortality. Incidentally, despite a still increasing healthcare spend, U.S. life expectancy has actually decreased in the U.S. for the past two consecutive years where data is available (2015 & 2016), the first such downturn in two decades.
Against this backdrop, the Patient Protection and Affordable Care Act, often shortened to the Affordable Care Act (ACA), or even better known as Obamacare, became law in 2010. It contains some very reformist provisions, including some that took effect right away:
- Insurance plans could no longer deny coverage of preexisting conditions in children. People who were uninsured because of preexisting conditions could get insurance through a temporary high-risk pool;
- Insurance providers could no longer place a lifetime limit on payouts;
- All existing health plans and any new ones were required to cover dependent children until age 26.
Several additional changes were slated to take effect in 2014, including:
- Most Americans would be required to have a minimum level of health insurance or pay a penalty (AKA the Individual Mandate);
- States would have until 2014 to create health insurance exchanges that would be open to people who did not have coverage through their jobs and to employers with 100 or fewer workers;
- Eligibility requirements for Medicaid would be revised to cover anyone earning less than 133 percent of the poverty level, eventually resulting in an estimated 16 million new beneficiaries.
- Businesses with 50 or more workers would be assessed a penalty starting in 2014 if they did not offer benefits and if any of their workers bought subsidized coverage through the new exchanges.
Physicians also became subject to a new model. In 2015, President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), changing the healthcare financing system in the most significant and far reaching way since the Program’s inception in 1965.
MACRA repealed the flawed Sustainable Growth Rate (SGR) payment system which governed how physicians and other clinicians were paid under Part B of the Medicare program. It replaced the SGR, and its fee-for-service (FFS) reimbursement model, with a new two-track system that requires physicians and clinicians to accept downside risk: Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). Physicians would now have their payment amounts modified up or down by such measures as patient satisfaction, the provision of preventive care, and the ability to provide good outcomes. On the 9th attempt, a U.S. President finally made substantive reform to the healthcare system.
As you would imagine, many of these changes were controversial, and in 2017 Donald Trump assumed the Presidency with one of his key objectives being to “repeal and replace Obamacare”. By late 2018, most of the ACA provisions remained in place, although the President was successful in rolling back the Individual Mandate, which in 2020 will no longer be enforced.
By 2018, things have not gotten much better. Annual premiums for employer-provided health insurance hit an average of $19,616 for a family this year, a rise of 5 percent over 2017, according to a new survey by the Kaiser Family Foundation. Employees paid an average of $5,547 for their coverage, with employers covering the rest.
The average premium for family coverage has risen 55 percent since 2008 — about twice as fast as wages, which are up 26 percent, and three times as fast as inflation, up 17 percent over a decade. Among workers who have a deductible — about 85 percent of insured workers — the average deductible amount has risen to $1,573, a 212 percent increase since 2008. Deductibles have risen eight times faster than wages over the last 10 years. According to Milliman, in the last 5 years alone, employer cost has gone up 22%, and additional cost has been shifted to employees, who have seen their premiums go up 38% in the same time period.
What the future holds is still quite uncertain, but what is clear that that the path we have been on for much of the past 75 years is not sustainable.