Winners and Losers of the ACA
Empowering Vulnerable Families with Insights from a Decade of Post-ACA Data
The Affordable Care Act (“ACA”) had laudable goals, but also left vulnerable a significant demographic who were subjected to inflated premiums, narrow networks, and top-down mandates that required individuals to purchase products that violate their moral consciences. Private market solutions co-existing alongside ACA markets can alleviate pressures without destabilizing ACA risk-pools, and state and federal legislatures should expand these markets by relaxing stifling regulations.
How Has the ACA Hurt Families?
- The ACA created winners and losers. The winners get access to Medicaid expansion or receive federal subsidies (for families making less than 400% of the federal poverty level “FPL”) to help purchase ACA coverage. The losers do not receive federal assistance but must pay the full cost of premiums, which rose 121% (17% year-over-year) for the first five years of the ACA. 
- Many American families were hurt by the rising costs of health insurance due to the ACA and are not properly served by the options developed by the private market and allowed by policymakers.
- The following lists the main gaps in value for the segment of the population that do not receive employer-based coverage or adequate federal subsidies to purchase ACA coverage:
- Unaffordable Premiums – The ACA market is “guaranteed issue”, which means individuals with pre-existing conditions are guaranteed coverage, and their health cannot be considered in determining their premiums. While this is an important feature for those with pre-existing conditions, the existing framework shifts costs, resulting in higher premiums for healthy, unsubsidized families.
- Limited Networks – The ACA markets have resulted in a “race to the bottom” with many carriers offering only narrow networks and no preferred provider organization (“PPO”) products. Exhibit 1 shows the number of states with varying PPO product availability between the individual and small group markets. Looking at individual ACA markets, a whopping 15 states (including Texas) have zero available PPOs. Contrast that to only 3 states in the small group ACA markets that are without a PPO plan. This means that families with individual market ACA plans often have limited options to see their desired physicians and hospitals. This is the direct result of regulations that perversely incentivize carriers to develop the cheapest products possible, forcing carriers to cut costs, often resulting in limited patient choice.
Exhibit 1 
- Lack of a Pro-life and Financially Secure Insurance Option – Christian families in this population must compromise between 1) ACA products that offer benefits contrary to the Christian faith, and 2) Health Sharing Ministry products that are not legally insurance and are not required to pay medical bills.
- A decade of ACA implementation data and trends demonstrate that subsidies – not punitive mandates or limiting alternatives – are the primary drivers of increased enrollment. Implementing alternative risk pool options within the existing ecosystem (i.e., alongside guaranteed issue and subsidized options) will alleviate the burden with minimal impact to ACA risk pools. Here, we note that the penalty for violating the individual mandate was reduced to $0 in 2018 with no correlating increase to average premium prices, as seen in Exhibit 2.
- Exhibit 2 shows the changes in Bronze ACA premiums for subsidized ACA coverage, unsubsidized ACA coverage and average costs for alternative non-ACA coverage. Increased access to non-ACA alternative risk pools (blue line) would be attractive to those having to pay the full premium (grey line), creating up to 25% savings for those individuals. At the same time, subsidies preserve the relative value for those receiving assistance (orange line).
- The subsidized proportion of on-exchange enrollment has grown to over 90% (See Exhibit 3) while premiums have remained flat since 2018, indicating a stable risk pool that has not worsened with declining unsubsidized enrollment.
- Christian families are increasingly enrolling in health sharing ministry products, with approximately 1.5 million individuals enrolled in 2021 (an estimated ninefold increase from 2014). Federal control of benefits in ACA markets, limited networks and unaffordable premiums in ACA markets are driving this increase. Meanwhile, some health shares have run into liquidity issues due to having no regulatory oversight, leaving many families at risk for medical debt.
How Can We Improve This?
- Policymakers at the federal and state levels should work to make available more affordable options outside of the ACA. This can be accomplished by allowing alternative marketplaces to exist with less restrictions. These marketplaces should:
- allow for healthier risk pools (pre-existing condition exclusions and policy underwriting) outside of the ACA;
- allow for benefit flexibility so that options aligned with Christian values can be readily available, along with higher deductibles and out-of-pocket maximums to reduce costs; and
- efficiently spend federal ACA dollars to maintain stability in the ACA markets.
- Lawmakers significantly increased subsidies compared to original ACA subsidy designs, only to enroll less than half of the expected number of enrollees. ACA enrollment is driven by subsidies. The fear of alternative risk pools hurting the ACA is unsubstantiated and has resulted in an unnecessary limitation of options for healthy families making over 400% of the FPL.
- Private companies can innovate in current and future regulatory environments. Companies like USHealth Group have pioneered cost-effective options through innovation. Faith-based organizations like Presidio will do the same to meet the needs of unsubsidized Americans, and in a way that honors God’s creative order.
The American health insurance industry is large and complex. We have suffered from an increasingly “one size fits all” approach that leaves major gaps in access to health care that families can trust. The principle of subsidiarity should compel Christians to creatively implement a health care system that solves problems at the state level with private companies facilitating innovation. The majority of Americans are subsidized either by federal programs or through their employers (who receive tax incentives to cover their employees). Currently, families hit the hardest by the regulatory system are those who do not receive employer-based coverage or federal assistance. Federal rules have also squeezed out health insurance options that are compatible with the Christian faith. While private companies can innovate within the current regulatory environment, further expanded access to faith-based, financially-secure insurance options can be facilitated through federal and state policy changes that would be minimally disruptive to ACA markets.
- Rate Review Data (cms.gov)
- ACA Metal-Tier Mispricing: Improving Affordability By Solving An Actuarial Mystery (healthaffairs.org)
- Rate Review Data (cms.gov)
- The 2018 drop in net premiums for subsidized enrollment was due to both high premium increases correcting for underpricing in 2014-2016 and the impact of “Silver-loading”. The second drop in 2022 reflects the enhanced subsidies introduced by the American Rescue Plan. While the detailed explanation of subsidy dynamics is beyond the scope of this blog post, it’s important to understand that per capita subsidy levels have significantly increased beyond the original design of the ACA subsidy structure.
- Health Care Sharing Ministries: What are these cost-sharing products in the individual health care market? (theactuarymagazine.org)
- See, e.g., Health Care Sharing Ministry Sharity Leaves 10K Families with Millions in Unpaid Bills (christianitytoday.com); and A Christian Health Nonprofit Saddled Thousands With Debt as It Built a Family Empire Including a Pot Farm, a Bank and an Airline (propublica.org); and Solidarity Health fails federal disclosure requirements, despite promising change (pillarcatholic.com)
- Note that a few states, including Texas, are successfully navigating efficient spending of ACA dollars to increase enrollment. See, e.g., How the Texas Legislature Learned to Stop Worrying and Love the ACA Marketplace (prospect.org)
- The Disappointing Affordable Care Act (forbes.com)