How 10 years of the ACA have shaped the insurance business—and what’s next

Affordable Care Act
We take a look back at some of the biggest ways the Affordable Care Act changed the insurance business. (Getty/zimmytws)

The Affordable Care Act (ACA) is celebrating its 10th birthday—marking a decade of change in how insurance companies do business. 

While the landmark healthcare law’s central focus was to broaden access to coverage, it also significantly accelerated a transition to alternative payment models (APMs) focused on value and instituted new reforms to ensure health plans cover certain benefits. 

Matt Eyles, CEO of America’s Health Insurance Plans, had a front-row seat to the evolution of the industry over the past 10 years.

“It really is a dramatically different industry today, not only in terms of how consumer-focused it is but also, I think, in terms of how our members think about integrating care across the entire continuum,” said Eyles, whose work with health payers began in late 2009. “The ACA has been a big part of the evolution in terms of how the industry thinks and operates.” 

RELATED: Why the ACA's impact on the individual market offers lessons for future health reform 

Here’s a look back at some of the biggest changes over the past decade to the insurance business: 

Dramatic expansion of coverage 

Prior to the ACA’s passage in 2010, about 46.5 million people lacked health insurance, according to data from the Kaiser Family Foundation (KFF). By 2016, that had declined to a record low of 26.7 million thanks in large part to reforms in the law, namely Medicaid expansion. 

By 2018, that had increased slightly to 27.9 million uninsured, according to KFF, as affordability challenges remain. Coverage gains began to stall the year prior, a trend that continues today. 

The coverage expansions both opened new business lines—and allowed startups to break into the market—and forced health insurers to take on members who might have previously been denied coverage for preexisting conditions. 

RELATED: ACA repeal would impact 102M people with preexisting conditions 

Despite the coverage gains, the large number of people who remain uninsured, and the growing number who are dropping out of their plans, is still a central topic in the health reform debate. Healthcare, and coverage in particular, has been the biggest issue of the Democratic presidential primary. 

Every candidate in the running put a plan on the table to address insurance coverage, ranging from simple fixes to shore up the ACA’s individual markets to the launch of a public option to a full single-payer transition. 

The coverage gains remain at risk, too, as the Texas v. Azar case challenging the legality of the entire law is set to go before the Supreme Court—leaving those who gained coverage under Medicaid expansion or the individual markets hanging in the balance. 

Launch of the medical loss ratio 

Among the slew of provisions in the ACA that change how insurance is regulated, the one with the largest impact on financials is likely the medical loss ratio (MLR). 

Under this rule, health plans covering individuals and small businesses must put 80% of their premium revenue toward paying healthcare claims or improving quality. For large group plans, that threshold in 85%. 

Beginning in 2012, should the threshold not be met, insurers are required to refund consumers. In some cases, a health plan may reimburse the funds in a premium discount, not in a direct check. 

RELATED: Insurers owe $1.3B in medical loss ratio rebates for 2019, KFF says 

In recent years, the medical loss ratio has proved a potentially stabilizing force for both insurers and consumers, according to a 2019 brief from The Commonwealth Fund.  

“In effect, the ACA’s loss ratio rule serendipitously serves a function similar to the ACA’s risk corridor provisions that were undermined by Republican opposition: the MLR rule partially shelters insurers in bad times and keeps them from unduly profiteering in good time,” the analysts wrote. 

A push toward value 

One of the unsung portions of the ACA is the impact it had in significantly accelerating the push for a move from fee-for-service care to a more value-based approach. The law led directly to the creation of the Center for Medicare & Medicaid Innovation (CMMI), which has built a slew of new payment models in Medicare—models that the private industry followed. 

The path hasn’t been particularly rosy for these models.  

An analysis published earlier this month looked back at a decade of value-based care progress and highlights two major challenges: the complexity of layering new models on top of a fee-for-service infrastructure and the complexity of the models themselves. 

RELATED: Healthcare CEOs expected more progress on value-based cares, survey finds 

For example, accountable care organizations, the headline program born from CMMI, have struggled with provider dropouts and have produced modest savings to date. 

“We are only at the beginning of the APM journey, and success has been modest at best,” the researchers wrote. “Even the most promising models are achieving savings of only a few promising points, and some of those savings are returned to providers through shared savings bonuses.” 

Eyles said health plans are committed to embracing value-based models but acknowledged that not every provider organization is ready to take on the cost of managing whole-person care. 

Rural providers, for example, may struggle to adapt to these payment approaches. 

“It hasn’t gone again probably as far or as fast as some people may have hoped in a 10-year period,” Eyles said. 

What the future holds 

While the ACA led to major reductions in the number of people without insurance, there’s still plenty of work be done to achieve the ultimate goal of universal coverage, Eyles said. Plenty of people who are covered also struggle with affordability, he said. 

For example, prescription drug prices have grown exponentially over the past decade, he said. The current COVID-19 pandemic underscores that challenge today. 

The ACA also opened the door for greater work around the social determinants of health, which is now a central focus for health plans.

“That’s a growing area where it was that was really sort of nascent back when the ACA [was passed],” Eyles said. “There was recognition around it but there wasn’t the energy.” 

RELATED: Just how much are health systems spending on social determinants? A new study puts a number on it 

Increasing use of technology is another key element of the ACA’s next decade, he said. Health plans use digital tools to inform members, offer virtual visits and other care and back up wellness initiatives. 

These tools are also useful for some of the other pressing problems facing the industry today, such as price transparency, he said.