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Health Care in a Post-ACA World: What Can History Tell Us?

I’m a fan of history. I’m even more a fan of what we can learn from history. While we await the Supreme Court’s constitutional prognosis of the Affordable Care Act (ACA), I’ve been reflecting on how – if at all – the past can inform us about the future. I’m not referring to the court’s decision itself. Instead, I’m pondering  what could happen to health insurance markets if all or part of the law is deemed unconstitutional.

The last major attempt for monumental health care reform was the failed Health Security Act proposed by President Clinton in 1993. Nearly 20 years later, we can examine the data and discuss whether Clinton’s proposal – even though it failed - had any effect on the growth of health insurance premiums.

A case in point is an analysis the Kaiser Family Foundation did a few years ago, which showed the that the annual percentage at which health insurance premiums grow reached a low of less than one percent in 1996, and has evolved to double digit increases since 2001.

Remember that, historically, there has always been a positive increase in annual premiums (average premiums have never gone down), and the dramatic peaks and valleys represented in the graph simply show the percentage increase. According to the study, the smallest increase occurred in 1996, soon after Clinton’s health reform act failed. The slowed growth in premiums at that time is often attributed to the advent of managed care, and somewhat attributed to health plans being under the microscope during a politically dicey time.

Well, what about after 1996? What accounted for the high percentage increases? Again, no clear answers – likely a combination of increases in underlying health care costs, the eventual “backlash” against managed care, a rebalancing of ledger sheets to make up for past losses, underwriting cycles, market and regulatory forces, and a movement away from health reform policy discussions.

Many are speculating about what changes in the market we would see if the ACA’s individual mandate to purchase health insurance is upheld, struck down with the entire ACA, or struck down and severed from the other ACA provisions. Would premiums parallel the increases in the late 1990s and early 2000s? Some would argue that by focusing on coverage, the ACA does little to control underlying health care costs. Others argue that excessive regulation will quell competitive markets. Still others argue that the individual mandate will keep premiums down by ensuring a large risk pool.

Whatever the outcome, CHI will provide analysis and insight on the implications for a long time to come.