Here's What's Happened to Health Care Costs in America in the Obama Years
With the presidency of Barack Obama nearing an end, we felt it was high time to evaluate the impact of the landmark, signature law passed during his administration: Obamacare.
That’s not the law’s real name, of course. It’s the Affordable Care Act. It was enacted in 2010 to, among other things, provide subsidies to those who can’t afford health insurance, and to issue a mandate that everyone must have insurance so that the costs of coverage were spread across the population.
The degree to which Obamacare is working (or not) not only affects what we think about the Obama presidency. It will also have an impact on how people vote in the November presidential election—whether they want to continue on the path set by Obama by electing his former Secretary of State, Hillary Clinton, or make a sharp break from the status quo in the form of Donald Trump.
So what exactly has happened to health care costs and coverage since Barack Obama has been in office? Let’s break it down.
More People Are Covered
During the first quarter of 2008, 14.6% of Americans did not have health insurance coverage, according to a Gallup poll. The uninsured rate spiked to an all-time high of 18% in the third quarter of 2013—after the Affordable Care Act was passed, but before people were required to have insurance. By the first quarter of 2016, the uninsured rate had fallen to 11%, per the latest Gallup numbers.
The percentage of uninsured Americans today may be even lower, data from the National Health Interview Survey indicates. During the first quarter of 2016, only 8.6% of Americans of all ages lacked health insurance, compared with 9.2% the year before. Certain groups had much higher levels of being uninsured—nearly 25% of Latinos or Hispanics ages 18 to 64 lacked health insurance at the beginning of 2016—but data show that coverage rates across all ages groups and demographics are on the rise.
In terms of raw numbers, a 2012 CDC survey reported that an estimated 45.5 million Americans were uninsured at the time the study was conducted. The ranks of uninsured Americans were down to 36 million in 2014, falling further to 28.6 million in 2015. Data has not yet been released for 2016, but the U.S. Department of Health & Human Services announced earlier this year that some 20 million Americans—including 6.1 million young adults ages 19 to 25—have gained health insurance since the Affordable Care Act was passed in 2010.
Even as more people are being covered, however, the choices for coverage are decreasing. Major insurers such as UnitedHealth and Aetna are scaling back participation in Obamacare marketplaces for 2017. The result is that in one-third of the counties in the U.S., people who don’t have coverage through work will have a “choice” of only one insurance provider next year. Unsurprisingly, soaring insurance premiums are being projected as a consequence of the absence of competition. Speaking of which
Insurance Premiums Have Increased
While many middle- and low-income Americans get some or all of their insurance premiums subsidized by the government, people who are insured through their employers must rely on their companies to pay some of the bill. And the amounts for premiums paid by both employers and employees have risen substantially over the years.
In 2008, the average employer-sponsored family plan cost a total of $12,680, with employees footing $3,354 of the bill, according to Kaiser data. By 2016, the cost of the average employer family plan was up to $18,142 for the year, with workers picking up $5,277 of the tab.
These increased costs for employers and employees alike may seem steep—up around 50% over the past eight years—but they could have risen far higher had the Affordable Care Act never passed. The Kaiser study shows that average family premiums rose 20% from 2011 to 2016. That rate of increase is actually much lower than the previous five years (up 31% from 2006 to 2011) and the five years before that (up 63% from 2001 to 2006).
Pointing to data from Kaiser, a White House press release recently stated, “The average premium for a family with employer coverage is now almost $3,600 lower than if premium growth since 2010 had matched the decade preceding the Affordable Care Act.”
High-Deductible Plans Are Now Standard
Insurance premiums tell only part of the story for health care costs. Looking at health insurance plan prices today side-by-side with those of a decade ago is not an apples-to-apples comparison. For one thing, plans in the Obamacare era generally must cover more services than they were required to in the past, including things like preventive screenings and contraception at no extra charge to customers.
For another, the typical plan’s deductible is quite different nowadays. In 2008, high deductibles were the minority: 18% of covered workers had deductible of at least $1,000, per the Kaiser Family Foundation, up from only 10% in 2006. For workers with employer-sponsored plans at small firms, 35% had deductibles of $1,000 or more in 2008, up from 16% in 2006.
Fast-forward to 2016, and high-deductible plans have become standard: 51% of all covered workers, and 65% of workers in small firms, face deductibles of at least $1,000. Workers at smaller firms must pay an average of $2,069 out of pocket before insurance payments kick in, versus $1,238 for workers at firms with 200 or more employees.
Prescription Drug Spending Has Soared
Health insurance premiums may have risen in recent years, but prescription drug prices have risen faster still, resulting in more money being paid to Big Pharma by insurers and individual consumers alike.
A March 2016 report from the federal government estimated total prescription drug spending in the U.S. at $457 billion in 2015, representing 16.7% of all health care service expenditures. In 2012, by contrast, total drug spending was measured at $367 billion, for 15.4% of all health care service dollars. (Interestingly, in 2009, when $354 billion was spent on prescription drugs, they accounted for 16.7% of all health care spending, the same proportion as in 2015—only overall health spending was much lower in 2009.)
Some of the increase in drug spending is attributable simply to population growth, and to more prescriptions per patient being doled out by doctors. But old-fashioned price hikes bear much of the responsibility for higher drug spending.
Because co-pays have risen and high deductibles have become the norm in the Obamacare era, patients are paying more out of pocket for prescriptions than they did in the past. “The average patient cost exposure for brand prescriptions filled through a commercial plan has increased more than 25 percent since 2010, reaching $44 per prescription” in 2015, an IMS Health study reported earlier this year.
The figures above are averages, mind you. Customers with prescriptions for medications like EpiPens, which have been subjected to dramatic price increases year after year, know that costs have surged far above average in many cases.
As you can see, the results of Obamacare, and eight years of Barack Obama in office in general, are mixed in terms of their impact on health care costs in America. Today, Americans face higher health insurance premiums, vastly higher deductibles in health plans, and higher prescription drug costs than we ever have. But because millions more Americans have health coverage, and because things might have been even more costly had the Affordable Care Act never gone into effect, we may be better off, collectively.
Since 2010, the percentage of Americans with a generally unfavorable view of the health care reform law has consistently outnumbered those with a favorable view of Obamacare, according to the Kaiser Health Tracking Poll. It’s just not clear what the sizable anti-Obamacare faction would prefer as an alternative.