The Ongoing Quest For Affordable Care

From a practical standpoint, the ACA led payers, providers, and patients to adopt operating rules that support the shift from transactional to value-based care.

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It’s been a decade and a half since President Barack Obama signed the Affordable Care Act (ACA) into law on March 23, 2010. The ACA was designed to address the large number of Americans who didn’t have health insurance, either because coverage was unaffordable or because of exclusions based on preexisting conditions, as well as insured individuals who faced limits to their coverage or extremely high out-of-pocket costs.

I think it’s helpful to focus on this part of the origin story: the ACA sought to provide people with credible coverage through private/public insurance while simultaneously reducing healthcare costs. When we look at the goal of ensuring that more Americans have credible coverage, the metrics are relatively straightforward: In the years leading up to the passage of the ACA, between 14% and 16% of Americans were uninsured. By 2023, that number had fallen to 7.7%.

The beauty of the ACA is that it operated strategically within our healthcare system, increasing the number of Americans with health insurance through additional regulation and subsidies. From a practical standpoint, it has led payers, providers, and patients to adopt operating rules that support the shift from transactional to value-based care.

In 2021, enhanced premium tax credits (PTCs) were introduced to the ACA to help lower healthcare costs and boost enrollment. These PTCs were later extended until the end of 2025 in the Inflation Reduction Act. While they were always intended to be a temporary measure, their expiration (and the question of whether they should be extended) became a key point of contention in the recent government shutdown.

The ACA has relied on the Centers for Medicare and Medicaid Innovation Models and Medicare incentives through alternative payment models to move providers from fee-for-service to outcome-based reimbursement. This value-based care orientation prioritized preventative care. And yet, when it comes to assessing how successfully healthcare costs have been reduced, the results aren’t quite so clear.

With the expiration of the PTCs, many ACA enrollees will need to pay a higher share of their income for ACA plans in 2026. Inflation in private insurance premiums is also now likely to lead to higher premium contribution levels. And that’s not all: ACA marketplace insurers will be raising their premiums an average of 20% in 2026. That’s the largest rate increase since 2018.

The Root Issue

What’s easily missed in the often-contentious discussions around healthcare policy is that, no matter which side of the aisle you’re sitting on, it’s clear that our healthcare system is very expensive, and those costs are continuing to rise. Hospitalizations, doctor visits, prescription drugs… these all contribute to the ongoing increase in healthcare costs.

I don’t think the answer is more subsidies or extending existing subsidies. Temporary measures mean short-term solutions. I think we should be thinking bigger, identifying the structural reforms that will lower medical expenses overall—and, in turn, lower costs for consumers of health insurance.

This brings me to the need for value-based care models, such as Accountable Care Organizations (ACOs). In an ACO, groups of doctors, healthcare professionals, and hospitals collaborate to deliver high-quality care that improves health outcomes while managing costs. The focus is on a patient’s overall health. The patient’s medical history is considered when developing a treatment plan. Unnecessary or repeated medical tests and services are identified and avoided. ACOs operate like a collaborative healthcare team. Success is measured in long-term health outcomes, in the prevention of serious health issues, and in the avoidance of hospitalization.

ACOs are projected to generate savings exceeding $20B over the next decade. A 2024 report from the Congressional Budget Office (CBO) found that certain types of ACOs were associated with greater savings: ACOs led by independent physician groups, ACOs with a larger proportion of primary care providers, and ACOs with a higher initial baseline spending than the regional average.

Affordable care shouldn’t be reduced to a single political party’s issue. This is a mission for all of us: to adopt the bold structural reforms that will ensure high-quality care that delivers long-term positive outcomes for every patient.