What, exactly, would the courts destroy if they ripped apart the Affordable Care Act? A shaky system that may well fail? A health-care reform policy that is working?
After months of mostly encouraging news, many analysts have been upbeat about the law. Enrollment in private insurance and in Medicaid is up significantly. Nearly all of those buying private coverage are receiving tax credits, dropping their premiums by 76 percent, on average. Despite predictions to the contrary, a huge chunk — maybe something like half — of the newly insured lacked coverage before signing up, so the law isn’t just forcing people to move from one plan onto another whether they want to or not. The law is instead pushing the proportion of Americans without insurance down significantly. Given these things have happened despite a troubled rollout, it’s fair to be optimistic about year two.
But Reason Magazine’s Peter Suderman makes the case for pessimism. In a thorough new piece in the libertarian magazine, Suderman charges that the Obama administration has sold a “phony success story” when the ACA is really “struggling out of the gate,” and perhaps the best thing that can be said is that “it could have been worse.” Suderman’s narrative is ultimately too negative. But, unlike some criticisms of the law, his points are worth taking seriously.
Suderman first picks at the Obama administration’s claim that 8 million people signed up for private health insurance during the ACA’s first enrollment period. Just because 8 million people chose a plan, he points out, does not mean all of them completed their enrollments. Fine, but his back-of-the-envelope, utterly unofficial estimate of how many are fully enrolled — 6.8 million — is not far from the administration’s original goal of 7 million. That’s hardly “struggling.”
Much more concerning, Suderman admits, is the mix of people who signed up. There are some initial indications that the enrollees are sicker than the administration had hoped. For example, the proportion of young people signed up is smaller than the administration’s goal, and older people tend to be sicker. Many sick people and few healthy ones in the mix could drive up costs and maybe even exhaust a price stabilization system built into the law.
The health profile of the law’s enrollees won’t be known well until they have had a lot of time to file claims with their insurers, which means this criticism is difficult to counter — and, by the same logic, difficult for Suderman to back up. Even so, looking at the sorts of numbers he uses, a Kaiser Family Foundation analysis projects that the system can handle the balance of enrollees it seems to have, particularly in the initial years of phase-in, when there are several policy backstops to address this very issue. Though he speculates about integrity of one of those backstops, Suderman doesn’t contend with these projections, which have helped quiet worries about an insurance industry “death spiral.”
Still, Suderman notes, the enrollment story — and the health of the law’s marketplaces — differs greatly from state to state. Some states, such as California, vastly exceeded their targets. Others, such as West Virginia, are lagging badly. So the aggregate national numbers hide that the law is struggling to take hold in some places. The laggard states could see much higher premium hikes than others.
The general answer to all of these criticisms is that the law isn’t done phasing in. It was unrealistic to expect an immaculately functional, well-balanced system at this point in the process, but it is reasonable to expect it to improve in years two and three. Success is contingent on the policy continuing to do what it has done pretty well so far: signing up a lot of people. Next year, the penalties for going without health insurance will come into force, which will help drive up enrollment. Nevertheless, Suderman’s piece is a reminder that the Obama administration has a lot of work left to do to get the system to take — and that Republican state leaders should stop obstructing Obamacare implementation.
Several of Suderman’s remaining criticisms are less potent. Among other things, he points out that the law is not widely popular, which says little about its inherent merits. He explains that some important federal technical systems remain non-functional, which is a frustrating management challenge but no longer a fatal flaw. And Suderman notes that the ACA may not be containing the general rise in health-care costs to the degree its backers promised, but this was never its primary purpose. It is first and foremost a coverage-expansion policy.
For those of us encouraged by the news of the last few months, that is the key point. President Obama and his staff oversold the law, promising coverage expansion, cost containment and unrealistic levels of consumer choice. But that is not reason to undersell the results so far. Several large challenges remain, and the Obama administration would do the country another disservice if it responded to them with the complacency and incompetence it displayed before last year’s rollout. But the picture so far is one of a big policy finding its footing and working largely within the boundaries of fair expectation.
Those hoping that the courts will undo the law’s progress would not see the country saved from a doomed social experiment. They would stunt a far-reaching reform just as it is growing up.