Where Next for Health Policy?

After a series of near-death experiences and 1-vote reprieves, the Affordable Care Act (ACA), now 15 years old, looks to be seriously imperiled once more. Republican legislation to impose “community engagement requirements” (known as work requirements) and to end the enhanced premium tax credits, adopted during the COVID-19 pandemic for the purchase of ACA marketplace insurance plans may, in combination, reduce coverage for as many as 30 million Americans. The failure to extend enhanced tax credits has already generated eye-popping premium increases for many Marketplace enrollees.

For many conservatives, such erosion is the next best alternative to outright repeal of the ACA. That option remains off the table because, despite 10 years of effort, Republicans have not yet put forward a plan that would cover a substantial share of the population, protect people with pre-existing conditions from excessively high premium costs, and avoid busting the federal budget. As President Trump memorably put it after the failure of repeal attempts during his first Administration “Nobody knew that health care could be so complicated.” Consistent with the harrowingly narrow margins by which it was enacted, the ACA may, in fact, be the most free-market incarnation of near-universal health insurance possible.

Meanwhile some progressives, never entirely reconciled to the patchwork, gap-filling character of the ACA, now see in its vulnerabilities a crisis that could open a window of opportunity to do what, they believe, should have happened long ago, namely, replacement of the collapsing US health care system with a single payer scheme, perhaps some version of Medicare for All.

The wisest policy, we argue here, is to stay the course with a vigorous defense of the ACA. Despite all the criticism, the ACA has had notable success in achieving its objectives. The uninsurance rate at the end of the Biden administration was at record low levels. Middle- and lower-income Americans have seen marked declines in out-of-pocket costs since implementation of the coverage expansions. Low-income families, particularly in Medicaid expansion states, have substantially lower medical debt, fewer bankruptcies, and declines in housing evictions. There is much to defend on the merits!

But for progressives, defending the ACA is also the best plan for three strategic reasons. First, “the system” remains as “non-collapsing” today as it was amid alarmist predictions of its demise in the past. While recent policy changes by the Trump administration may strip some 10 million people of their insurance, the 165 million with employer-sponsored insurance and the 66 million with Medicare won’t be directly affected. And those who may lose their coverage have low rates of political engagement. There is unlikely to be widespread demand for remaking the entire system.

Second, the political prospects for single payer variants are no better—and perhaps appreciably worse—than in the past. Elimination of both the employer-based system (hence, the direct role of employers) and the presence of private insurers is particularly implausible when trust in the federal government to “do the right thing all or most of the time” is abysmally low. Our large and diffused private insurance system and state-managed Medicaid programs cushion most people from the effects of a malevolent federal government.

Even in better times and in progressive states, efforts to install a single payer system have consistently come up short. Vermont’s thoughtful multi-year effort to design a feasible single payer model imploded over its frightening funding demands (higher state taxes). In Colorado, a single payer referendum in 2016 failed by a margin of 4 to 1. It is unlikely that the innovative plan of the recently formed One Payer States group, which hopes to counter the concentrated resources of opponents by introducing referenda simultaneously in multiple states, will turn the political tide.

Third, the ACA, imperfect as it may be, fits the political contours of United States policy better than any alternative yet conceived. The Clinton health plan of 1993-94 proposed a comprehensive reform that was summarily rejected by the public, the Congress, and major interest groups. A band of would-be reformers who witnessed this mishap returned to the drawing board and, seeking insights from the defeat, fashioned the ACA, the sole successful major reform initiative since the enactment of Medicare and Medicaid in 1965. That success, like it or not, had much to do with the ACA’s retention of the employer-based system and its workable medley of measures—most notably, Medicaid expansion, income-related subsidies, the individual mandate, and the (intended) demise of preferred risk selection by insurers—that incrementally filled gaps in the status quo, precisely what Medicare and Medicaid have done since 1965. The political strength of the ACA model is evident in the cascade of state Medicaid expansions that have been achieved through referenda in reliably red states and in the numbers of Republicans, including the likes of Senator Josh Hawley and Representative Marjorie Taylor Greene, who have broken ranks with the party over the extension of premium tax credits.

The reasonable rejoinder to all of this is that the ACA has done little to render US health care, in the aggregate, affordable, especially relative to other wealthy countries. But even this criticism is less potent after the long recent period of slow US health care cost growth. Measured as a share of GDP, US health spending grew more slowly between 2009 and 2022 than in any other G7 country except Italy, though, of course, our spending per capita remains 50% higher than that of any of these countries. We would probably do better by emulating the practice of comparable Western systems that discipline health care spending by paying providers less than the US does. True enough, but the US federal government shows no sign of accepting such a commitment or of wanting to acquire the power to enforce it. While the American public wants less swiftly growing premiums, out-of-pocket payments, and deductions from wages and salaries, it is easily frightened by any hint of what it might have to give up to get there. “Answers” are in short supply and a single payer health system does not stand high on the list of priorities.

The test of a sound reform proposal is how well it reconciles the distinctive and respective logics of policy and politics. Aficionados of evidence-based everything should recognize that the research embraced by public policy is selectively filtered through the needs and demands of political actors. Hard-nosed realists should acknowledge that evidence does matter— at least when it goes, or can be made to go, with the political grain. The interfusion of policy and politics may repel some and mystify others, but we urge a collective tip of the hat to the process when it works—as it has done in the case of the ACA.

About the Author