President Obama Takes Stock of Reform

July 13, 2016

In a nontraditional role for a sitting President, “Barack Obama, JD” entered a Special Communication in the Journal of the American Medical Association (JAMA) reflecting on the passage and impact of his signature legislative endeavor, the federal Affordable Care Act (ACA).

Relying on publicly available data, published research and data from government agencies, the President provided a detailed analysis of the effects of the ACA to date, along with specific conclusions and recommendations for policymakers to build on the ACA going forward.

According to President Obama, he decided to prioritize comprehensive health reform not only because of the gravity of the challenges facing the American health care system, but also because of “the possibility for progress.” Mr. Obama also noted that his “deeply held belief that health care is not a privilege for the few, but a right for all” contributed to his decision to pursue health reform.

President Obama highlighted the following successes of the ACA:

  • The decline in the number of uninsured Americans from 49 million in 2010 to 29 million by 2015, a 43% decrease (Figure 1).

jamaCharts_070716_1 - uninsuredRate

Figure 1. Decrease in Uninsured Rate Following the ACA’s Passage

  • Improvements in coverage for those previously insured, including expanded benefits, preventive services without copayments, the elimination of annual and lifetime coverage caps, and the phase-out of the Part D prescription drug coverage gap for Medicare recipients.
  • Reforms of the health care payment system, with value-based payment models that hold health care entities accountable   for outcomes, including an estimated 30% of Medicare payments that flow through such alternative payment models.
  • The potential for health care spending to be far lower than expected. For example, the President pointed to Congressional Budget Office projected Medicare costs of 20% less, or $160 billion less, in 2019, than projections prior to ACA implementation.
  • Notable improvements in the quality of care, such as a 17% reduction in the numbers of hospital-acquired infections from 2010 to 2014 and reductions in Medicare hospital readmissions (Figure 2).


Figure 2. Decrease in Hospital Readmission Rates Among Medicare Patients 

While reflecting on the positive improvements in coverage, costs and care, the President also acknowledged that too many Americans still strain to pay for health care coverage and services and must “navigate a complex, sometimes bewildering [health care] system.”

Mr. Obama admitted that insurers and policymakers are still coming to terms with a reformed insurance market that includes all individuals regardless of pre-existing conditions, which will likely require adjustments and recalibrations in the future. He emphasized that 19 states have yet to expand Medicaid coverage as authorized in the ACA (Figure 3). Despite some affordability improvements, he noted that many of those who remain uninsured want coverage but report being unable to afford it.


Figure 3. Greater Reductions in Uninsured Rates Occurred in Medicaid Expansion States

The President offered specific suggestions to policymakers to build on the progress to date, including:

  • Continue working to meet the Administration’s current goal of having at least half of Medicare payments made through alternative payment methods by 2018.
  • Increase financial assistance for uninsured individuals to purchase coverage and to help middle income families afford the premiums for coverage they have.
  • Enhance competition in health insurance marketplaces, particularly in areas where consumers are limited to a choice of one or two health insurance issuers. The President urged Congress to revisit the public plan option to compete alongside private insurers in areas where there is limited competition.
  • Address prescription drug costs through transparency, expanded rebates and federal price negotiation.
  • Implement the “Cadillac Tax” on high cost employer coverage, as proposed in the President’s 2017 budget, setting the floor for coverage subject to the tax based on premiums in the state exchange for the “gold” level plan (80 percent actuarial value).

California policymakers and stakeholders surely share in the successes the President highlighted, with dramatic reductions in the number of uninsured from nearly 7 million Californians pre-ACA to less than 3 million uninsured in 2016. More than 13 million Californians are enrolled in Medi-Cal, up from just 7.9 million in the 2012-13 fiscal year. Another 1.6 million Californians have comprehensive coverage through Covered California, the state’s newly formed ACA marketplace. California adopted and implemented a comprehensive structure of market reforms for individual and small employer coverage that made coverage accessible to individuals and firms regardless of health status or claims history.

Californians across the state are engaged in innovation, experimentation and system change to reduce costs, improve quality and measure health outcomes for the state’s residents. These efforts extend across all sectors of health care, and apply in both public and commercial health coverage. Covered California’s success includes healthy competition among health plans in most regions of the state, although several counties in Northern California have only three competing plans. With UnitedHealth Group’s recent departure from the state exchange, five of the state’s nineteen pricing regions will have only two plans available.

Mr. Obama also revealed the lessons he has drawn from health reform, which affected his approach to policy in other areas: Change is hard, special interests pose a continued obstacle to change, and pragmatism is important in both legislation and implementation.

California continues to work on health care and delivery system reform and to problem solve strategies to reach full coverage for all Californians. The President’s JAMA editorial offers provocative lessons and potential next steps for consideration to inform those efforts.