The Affordable Care Act turned 13 last week, and I was asked to provide testimony before the House Committee on Ways and Means on how the law, as well as several recent expansions of it, failed to make healthcare more affordable. Here is a slightly modified version of what I told Congress.
The ACA has caused premiums to soar. Individual market premiums more than doubled in the first four years after its implementation, yet plans covered fewer doctors and hospitals. By 2021, the average ACA plan premium plus deductible for a family of four was about $25,000.
Since coverage is cost prohibitive, most enrollees need extremely large subsidies to afford these plans. Taxpayers pay for more than 80% of the premium on average and pick up almost all the cost of premium increases over time. This gives insurers significant pricing power and in turn leads to higher premiums — an inflationary spiral.
To understand the ACA’s effects on our healthcare system, it’s important to acknowledge some basic truths. First, the U.S. does not have a free market for healthcare. Half of U.S. healthcare spending comes from the government. Most of the rest is heavily impacted by government policy.