Higher Premiums — Why the Affordable Care Act Isn't to Blame
Many Americans blame rising premiums on the ACA. What they don't realize is that they would probably be paying even more without it.
Currently, under the Affordable Care Act (ACA) little has probably changed, other than new protections and benefits, for individuals who have health insurance through an employer. If the employer's plan is deemed unaffordable (ie, 9.69% of the household income or more),1 families and individuals now have the ability to purchase insurance at a lower cost through the ACA marketplace.
Although there are anecdotal accounts of some employers switching up plans on their employees, such occurrences are rare and most individuals have not been affected.
But what has affected everyone, and what is often erroneously attributed to the ACA, is the marked increase in insurance premiums. This is the case for insurance through an employer and through the ACA marketplace, even with government subsidies taken into account. The increases over the last several years have become a larger and more significant percentage of Americans' household incomes.
In fact, the increase in premiums, coupled with the ongoing stagnation of wages, has led to middle class families spending roughly 10.1% of their household income on health care. Naturally, they blame the ACA. What they don't realize is that they probably would have been paying even more without the ACA in place.2,3
Republicans have capitalized on this misunderstood concept and the resulting negative sentiment to mislead voters, turning them against the ACA and exacerbating the fallacy that the ACA is responsible for their health premiums going up.
Actually, only 3% of Americans have experienced astronomical increases in their insurance premiums, as a result of decreased market competition within the ACA.4 Decreased market competition is often cited by the GOP as a consequence of the ACA and more prevalent now. The truth is that it's Republicans' refusal to allow a public option in the insurance marketplace that has contributed to the decreased market competition and allowed insurance companies to spike up their rates in these select markets.
I would argue that the solution for the unfortunate 3% of Americans struggling to find health insurance is not to scrap the ACA. Instead, they should pressure their House and Senate representatives for a public option that would allow either more market competition in their state or, at the very least, an affordable alternative to private insurers.