The Affordable Care Act (ACA), or Obamacare as it is commonly known, has remained more or less intact since it was signed into law on March 23, 2010, despite more than 50 attempts to repeal it and many attempts to weaken it.
And despite all the doomsday forecasts, the insurance industry has survived and thrived in the Obamacare era.
The HealthCare.gov marketplace and the 18 state-based marketplaces entered their 10th year of operations in 2023 and enrolled a total of 16.3 million insurance customers.
- Ten years after its contentious introduction, Obamacare is thriving.
- Any American who does not have health care can use HealthCare.gov or one of the state-run versions of the site.
- About four out of five enrollees receive subsidies for the costs of their insurance.
- The subsidies are paid directly to the private insurance companies that participate in the program.
The primary goal of Obamacare was to make health insurance more affordable for all and to extend its reach to those who could get coverage because they were too poor to pay or too sick to qualify. It also aimed to extend coverage to self-employed people, who found it difficult or impossible to buy affordable insurance on the open market.
The new law made health insurance mandatory but that piece of the law was effectively abolished beginning in 2019.
Most importantly, the law offered government subsidies to cover all or part of the monthly cost of insurance for individuals below certain income levels. (Former President Donald Trump tried to cut off payments of some of these subsidies but a federal appeals court ordered in 2020 that the subsidies must be paid.)
The law forbade insurance companies from denying coverage or charging higher premiums to those with pre-existing conditions. And, it defined the minimum requirements for coverage, effectively outlawing junk policies that paid for little or nothing.
Ultimately, the purpose of these new insurance regulations was to extend health benefits to all Americans at an affordable price. While many people could benefit from the new law, insurance companies worried that it would be at their expense.
Yet, there were aspects of the law that the insurance companies failed to fully take into account. They include the vast number of new customers that they would acquire under the law and the stream of income from federal subsidies for lower-income customers that they would receive.
Nine out of 10 users of HealthCare.gov get income-based subsidies for the coverage. Users who are not eligible for subsidies can still choose a plan among four levels of coverage, labeled bronze, silver, gold, and platinum. Each level has its own deductibles and out-of-pocket costs but all meet government guidelines for coverage.
Oddly, insurance companies did not foresee the influx of business from millions of new clients or the financial benefit of a government subsidy program that transferred large sums of cash directly into their coffers.
Their new customers were mostly lower-income Americans who had previously not had access to affordable healthcare, and healthy young people who had gambled on going without it.
As of the 2022-2023 Open Enrollment Period, 16.3 million Americans had signed up for health insurance through the federal or state websites, and 90% of them received subsidies. That figure is still growing after all these years: 3.6 million of them were new enrollees, a 21% increase over the previous year. Four out of five of the new enrollees got subsidies that reduced their payments to $10 or less a month.
The percentage of Americans with health insurance now stands at 91.6%. That figure got a substantial boost during the COVID-19 pandemic, during which additional relief was added. But in 2010, the rate stood at 46.5% among Americans below the age of Medicare eligibility.
The big health insurance companies were not crushed by Obamacare, and neither were their shareholders.
Over the five years ending at the start of September 2023, UnitedHealth Group (UNH) stock rose from about $283 a share to about $476.
Cigna Group (CI) went from $213 to $276 during the same period.
Humana Inc. (HUM) went from $338 to $460.
Granted, the insurance giants got an unexpected boost in new enrollments during the COVID-19 pandemic. But they didn’t seem to lose much momentum after it, either.
How Many People Use the Obamacare Website?
A total of 16.3 million people signed up for 2023 health insurance plans through the federal and state Marketplaces that were set up through the Affordable Care Act. That included about 3.6 million who were new to the Obamacare system.
About four in five of HealthCare.gov users qualified for subsidies that lowered or eliminated their monthly costs for the insurance.
Has Obamacare Changed Much Over the Years?
The one big change in the federal heath insurance marketplace for 2023 is the elimination of a notorious flaw known as “the family glitch.”
Generally, only people who do not have access to affordable insurance coverage through an employer are eligible to get subsidized coverage through HealthCare.org. Until 2023, the guidelines based eligibility on the costs of “self-coverage” even if the applicant needed family coverage.
As of 2023, the rule has been changed so that individuals who need family coverage and qualify for subsidies can use the system.
Are Health Insurance Rates Still Going Up Despite Obamacare?
Health insurance costs are still going up, although it’s impossible to tell what effect, if any, the ACA has had on prices.
The Kaiser Family Foundation estimates that 2023 benchmark premiums for ACA coverage are up 4% over the previous year. (The benchmarks are the four distinct levels of insurance that are available in the Marketplace.)
The Bottom Line
Far from being victims of Obamacare, the insurance industry has enjoyed increased revenue from millions of new customers. This also means that at least one goal of the new law has been achieved: increased coverage, with the number of uninsured Americans falling to about 9% since the law went into effect.
Those new customers are primarily lower-income Americans whose insurance is heavily subsidized by the federal government and younger, healthier people who had not previously been insured.
Both are valued customers to the health insurance industry. The first cause a steady stream of government payments to the insurance companies. The second, with luck, need little healthcare and thus help flatten the growth curve of insurance costs for all.