The Affordable Care Act (ACA) was passed by the 111th Congress in 2010 with a goal of expanding insurance coverage and decreasing healthcare costs.
The law provides subsidies to millions of Americans to help cover the cost of health care, but even with these aid packages, many still struggle to afford adequate coverage.
Health insurance premiums have been steadily rising for years, creating a financial strain on American families and businesses alike. Too often, they are raised without warning or explanation, leaving consumers with little or no information regarding why these rates are being proposed.
According to a Kaiser Family Foundation (KFF) survey, individual market insurers expect median premium increases between 5% and 14% in 2023 due largely to increasing costs for hospitals, doctors, and drug companies.
KFF researchers observed that premiums were lower in states with highly competitive marketplaces or participating Medicaid insurers. For example, having three insurers in a rating region decreased benchmark premiums by 1.93 percent, while two or four additional providers increased them by 0.724% and 0.148%, respectively.
Increased out-of-pocket costs
One of the major shortcomings of the Affordable Care Act (ACA) was its inadequacy in protecting people against rising out-of-pocket (OOP) expenses. Despite efforts to lower premiums through advance premium tax credits, most Americans were still left vulnerable when faced with OOP costs.
Under the Affordable Care Act (ACA), plans must have an out-of-pocket maximum that limits total out-of-pocket spending on all benefits within a plan. While this limit helps those with significant healthcare needs, it does not address the overall costs of healthcare. With premiums projected to increase faster than wages in coming years, enrollees in private health plans would need to devote a larger share of their income towards out-of-pocket expenses when they reach their OOP limit in future years.
The Affordable Care Act has driven deductibles to record highs. They now account for one-quarter of median family income, more than enough to bankrupt a household if someone gets sick.
Deductibles in many markets are rising faster than premiums in recent years. For instance, group market deductibles rose 12% last year – four times faster than premiums did.
Deductibles make it harder for individuals to comparison shop for medical services and prevent them from seeking essential care like screenings or filling prescriptions when they can’t afford it. Furthermore, these costs may keep patients from seeking out care for chronic conditions that could cause more costly health issues in the future.
Co-pays are the fee you pay each time you visit a doctor or fill out a prescription. While not necessarily bad, co-pays can add up quickly in terms of health care costs.
Young consumers are especially susceptible to high co-pays, as this makes accessing essential services more costly for them.
The Affordable Care Act (ACA) offers premium subsidies, known as APTCs, to reduce health insurance costs for those who qualify. Unfortunately, younger consumers have received fewer APTCs than older ones.
Increased administrative costs
Administrative costs are not the sole cause of healthcare costs in America, but they do play a significant role in explaining why our system is more expensive than other countries’.
Research reveals that billing and insurance account for more than half of America’s administrative costs.
Ultimately, the Affordable Care Act seeks to reduce health care costs by requiring insurance companies to spend more of your premium dollars on medical services and quality improvement rather than advertising, overhead expenses or bonuses for executives.
If an insurer doesn’t meet this goal, they must offer you a rebate — this is known as the 80/20 rule.