Health Insurance Moments That Defined A Decade

Many would agree that health insurance reform ranked among the biggest political issue of the past decade. The Patient Protection and Affordable Care Act bookended the 2010s, from becoming law under President Obama to experiencing changes under President Trump, with legal challenges serving as a constant throughout. 

The state of healthcare in the United States remains a significant topic as we enter the 2020s and approach the 2020 presidential election. What happened in the past decade, of course, sets the stage for what will come in the next. To better understand where we’re going, let’s take a look back at where we’ve been.

The Pre-ACA Era

What was health insurance like at the onset of 2010, just before the ACA passed and took effect? The individual market wasn’t exactly the Wild West, but insurers did tend to have more flexibility over things like enrollment, rating and benefits.

Plans were not guaranteed issue

Major medical insurance plans sold in the private market pre-ACA were subject to medical underwriting. Based upon their health history, applicants could be charged more or denied coverage altogether. 

Policies could also exclude coverage for pre-existing health conditions. For example, an applicant with a history of clinical depression could be approved for coverage, but their policy wouldn’t cover any healthcare related to this pre-existing condition. 

If someone didn’t qualify for coverage, they could wind up uninsured. Or, they could obtain coverage through a high-risk pools. High-risk pools are nonprofit organizations created to offer comprehensive health insurance to those who were uninsurable due to pre-existing conditions. From 1976 to 2009, before the ACA was implemented, 35 states had established high-risk pools.

Rate setting was less restricted

In addition to medical history, insurers could also charge enrollees a higher rate based on their sex, a practice known as gender rating. Women who purchased health insurance on the individual market would typically pay a higher premium than men would for the exact same coverage — as much as 1.5 times more, according to research conducted before the ACA was implemented. 

These are just two examples of the many rate classifications back then; people of a similar age and in similar health could pay vastly different rates based on factors such as how long they’d been enrolled in the policy and even their occupation. 

Now, ACA health insurance companies can only account for the following when setting premiums: 

Age — Capped at three times higher for older people than younger ones.

Location — Competition, state and local rules, and cost of living can affect premiums.

Tobacco use — Insurers can charge tobacco users up to 50% more than those who don’t use it.

Individual vs. family enrollment — Plans that include a spouse and/or dependents can cost more.

Plan category — Bronze, silver, gold, platinum and catastrophic plans have different cost-sharing levels. Bronze plans tend to have the lowest monthly premiums and highest out-of-pocket costs, whereas the reverse is generally true of platinum plans

States can limit the impact these factors have on premiums.

Coverage looked different across plans 

Benefits were also quite varied across policies at the start of the 2010s. One individual major medical policy might have offered prescription drug and maternity benefits while another included maternity and not prescription drug and still another included neither of them. Insurers could also create policies with annual or lifetime limits on benefits. 

Of course, these are generalities. States did have their own laws related to underwriting practices, rate setting and minimum benefits covered. 

March 2010 — PPACA Becomes Law

President Obama signed the Patient Protection and Affordable Care Act into law on March 23, 2010. PPACA would become known as the Affordable Care Act, Obamacare or simply the ACA, and it was designed to make health insurance more accessible and affordable to Americans. 

It would take four years to implement the bulk of the ACA; however, some reforms took effect right away. A few key provisions that rolled out within the first year were as follows

  • Cost-free preventive services became available under all new plans. 
  • Pre-existing coverage exclusions for children under age 19 were eliminated. 
  • Insurers were prohibited from dropping coverage.
  • Lifetime dollar amounts were banned. 
  • Annual dollar limits on insurance coverage became regulated until their removal in 2014. 
  • Young adults could stay on their parents’ health insurance policy until age 26.

These early reforms, along with a rebounding economy, seemed to make an impact right away. An estimated 46.5 million Americans were uninsured at the time the ACA became law in 2010. By 2013, just before the ACA’s major provisions took effect, it had decreased to 44.4 million.

2013 — Open Enrollment Begins 

On Oct. 1, 2013, the first ACA open enrollment period began. All 50 states were required to establish their own health insurance exchange or participate in the federal exchange by that date. These marketplaces, as they would also be known, allowed consumers to shop for and enroll in an individual major medical insurance plan for the 2014 coverage year. 

At this time, subsidies, including premium tax credits and cost-sharing reductions, also became available to those who qualified based on income and enrolled through a state or federal exchange.

The first open enrollment lasted six months and ended on March 31, 2014; however, an extension was given to those who had started but not yet completed the enrollment process by March 31. 

Technical issues plagued the first open enrollment period, creating long wait times and preventing many people from using the federal exchange when it first rolled out. Troubleshooting commenced soon after, and shoppers were directed to an 800 number to apply over the phone if needed. 

Over 8 million people selected a health insurance plan through the state and federal exchanges from Oct. 1, 2013, through March 31, 2014 — this data also includes the April 19 extension.

2014 — ACA Takes Full Effect

By Jan. 1, 2014, the Obamacare era was in full swing. Open enrollment was underway and some of the law’s biggest reforms had rolled out. 

Health Insurance Marketplace

As mentioned above, the federal and state-based exchanges were established and opened for business on Oct. 1, 2013, the date on which open enrollment for 2014 individual health insurance plans began. 

Subsidies

Income-based premium tax credits and cost-sharing reductions became available to those who qualify for them and enroll through a state or federal exchange. Of all 2014 marketplace enrollees, 85% qualified for an advanced premium tax credit with or without a cost-sharing reduction. For individuals who did not qualify for a subsidy, they were able to still purchase from the federal marketplace or shop in the private market.

Individual Shared Responsibility Provision and Payment

The ACA’s individual mandate required those who went without minimum essential coverage to pay a tax penalty, unless they qualified for an exemption. Americans could experience a single lapse in coverage for up to three months out of the year without penalty. Exemptions included certain life circumstances (e.g. homelessness, eviction, death of a close family member) and economic hardships. This provision is no longer enforced (more on this below).

Special Enrollment Periods

Anyone who misses the annual open enrollment period may have to wait until the following year to secure another individual major medical plan, unless they qualify for a special enrollment period. Special enrollment became available, starting in 2014, to those who experience qualifying life events such as moving, giving birth to or adopting a child, or losing coverage due to circumstances such as job loss. 

Medicaid Expansion

The Affordable Care Act allows states to expand Medicaid eligibility to uninsured adults and children whose incomes are at or below 138% of the federal poverty level. Those who qualify may receive no-cost or low-cost coverage. 

As of now, 36 states have expanded Medicaid under the ACA. Nebraska is set to implement Medicaid expansion on Oct. 1, 2020. In expansion states, Medicaid enrollment increased by 34.4% between July 2013 and April 2019.

Additional key reforms in place as of Jan. 1, 2014, included the following

  • Insurers could not discriminate against individuals of any age with pre-existing medical conditions.
  • The practice of annual limits on benefits for group and individual health insurance plans was banned altogether. 
  • Employers with more than 50 full-time employees had to start offering ACA-qualified health insurance to their employees.

Beyond 2014 — Health Insurance Cost + Marketplace Shifts

The ACA has, of course, changed the health insurance landscape nationwide. Premium costs steadily increased year over year until they began to stabilize in 2019. Insurers exited and entered the individual market. And more Americans gained health insurance coverage, as the law set out to accomplish.

Premium Rates

It’s true that individual health insurance premiums have increased — dramatically, some years — since the ACA took effect. How much varied by state and market.

Overall, the average individual market premiums in the 39 states using the federal exchange were 105% higher in 2017 than in 2013, according to the U.S. Department of Health and Human Services. Average monthly premiums increased from $232 in 2013 to $476 in 2017.

Some reasons cited for rising rates include: 

  • Lower-than-expected pricing at launch.
  • Lower-than-expected enrollment.
  • Sicker-than-expected enrollees.
  • The individual mandate being too weak. (Again, this no longer exists.)

Year-over-year rate increases have slowed since Obamacare’s early days. Data for 2020 open enrollment showed gross premiums actually decreased for the second year in a row. Nationwide, premiums dropped an average of 4% for 2020.

Insurer Participation 

Insurer participation in the individual insurance market has fluctuated over the past six years. In 2014, there were an average of 5 insurers participating in each state’s ACA exchange. The number increased to an average of 6 in 2015 before steadily declining to 3.5 in 2018. However, the downward trend has reversed within the past two years. In 2019 and 2020, there were an average of 4 and 4.5 insurers per state, respectively. 

Twenty percent of federal exchange enrollees were limited to one insurer to choose from for plan year 2019, compared with 29% for the 2018 coverage year. By 2020, only 12% of enrollees had access to only one insurer.

Uninsured Population

Across the past decade, uninsured rates improved with the implementation of the ACA. At the time Obamacare was signed into law, approximately 46.5 million (17.8%) of Americans were uninsured.

Here is a snapshot of uninsured rates at various points throughout the decade:

  • 2014 — 35.9 million (13.5%); the uninsured population continues to decline following the first open enrollment period.
  • 2016 — 26.7 million (10%); after steadily declining every year, the uninsured rate reaches its lowest.
  • 2017 — 27.4 million (10.2%); the uninsured rate begins to increase slightly. 

Numbers vary by source and metrics used; however, they reflect similar trends. U.S. Census Bureau data shows 25.6 million (7.9%) uninsured in 2017 with an increase to 27.5 million (8.5%) in 2018. 

The Gallup National Health and Well-Being Index shows the percentage of uninsured adults at 18% in 2013 before dropping to 13.4% in 2014 and hitting the lowest point at 109% at the end of 2016 before steadily increasing until 13.7% by Q4 2018. 

As for why more people are becoming uninsured, reasons could include rising premiums as well as the elimination of the ACA’s individual mandate, which became effective Jan. 1, 2019. 

2016 — Obamacare in the Trump Era

During his 2016 campaign, President Trump promised to repeal Obamacare and replace it with something else. So far, none of the proposed legislation for a replacement plan has passed. 

Despite attempts to dismantle it, the ACA remains largely in effect, and the repeal of the individual mandate remains the most impactful change to date.

2019 — Tax Penalty Repealed

The federal tax penalty was officially eliminated as the result of tax legislation enacted in December 2017. The individual shared responsibility payment ceased to exist as of Jan. 1, 2019, thereby effectively eliminating the individual mandate (i.e., individual shared responsibility provision). 

Those without minimum essential coverage will no longer be penalized at the federal level, and exemptions are no longer required. That said, some states have established their own individual mandates and penalties. 

Ongoing Lawsuits

The ACA as a whole, along with individual aspects of it, has been challenged in court since it became law in 2010. Now, a December 2019 ruling leaves the law’s future in question.

As 2019 drew to a close, a federal appeals court ruled that the Affordable Care Act’s individual mandate provision is unconstitutional and ordered a lower court judge to reconsider whether the law itself should remain intact. 

Nineteen states requested a decision ahead of the 2020 presidential election, but the case will not be heard during the U.S. Supreme Court’s Curren term, which ends in June. If the Supreme Court does intend to hear the case, it would not be earlier than the next term, which begins in October 2020. 

Short-Term Health Insurance Amid the ACA

The Affordable Care Act doesn’t apply to short-term health insurance, which means temporary health insurance plans have never been subjected to the healthcare reform law’s requirements. Nonetheless, short-term plans have certainly seen some changes over the past decade. 

Because they are not subject to the ACA, short-term plan applicants may be denied coverage based on their health history. Policies don’t have include all of the ACA’s essential health benefits such as maternity and prescription drugs. Short-term health insurance has never been considered minimum essential coverage — when the federal mandate was in effect, enrollment in short-term coverage would not prevent you from owing a tax penalty.

As Obamacare fully took effect, short-term plans maintained relevancy. They provide benefits to those in between major medical insurance policies, and they can also be an option for individuals, families or people working in the gig economy who don’t qualify for ACA subsidies because they provide benefits for unexpected medical expenses at a premium that tends to be lower than that of an ACA plan — premiums tend to be lower because short term plans do not include all of the ACA-mandated essential health benefits.

Short-Term Policy Restrictions and Reversals

The Obama administration limited short-term plans to a maximum duration of three months without renewals in 2016. Concerns that short-term policies were being sold as primary coverage and adversely impacting the ACA risk pool were the catalyst for this action,

The change would be relatively short-lived. The Trump administration in June 2018 finalized rules that effectively reversed Obama-era limits and expanded short-term health insurance availability. As of October 2018, short-term policies could once again last up to 12 months, and insurers could once again renew or extend coverage for up to 36 months. 

While federal law may have allowed for their expansion, short-term plans do face state-level limitations and are not available in all 50 states.

Looking Ahead to The 2020s

Our nation’s quest for healthcare reform started several generations ago, and the ACA signifies a milestone rather than an endpoint. With the current administration focused on dismantling and replacing the ACA and the democratic candidates split over the best course of action (e.g., Medicare for all, public option, improving upon the ACA), the outcome of the 2020 presidential election will no doubt hold substantial influence over the trajectory of healthcare in this nation.