Has any law in recent memory proved as controversial for as long as the Affordable Care Act?
The legislative package will be old enough to drive next year, yet it’s somehow the main reason the federal government remains shut down today. In exchange for their votes, Senate Democrats are demanding that the GOP roll back its Medicaid cuts and preserve insurance subsidies used by 20 million Americans. Without those subsidies, a person earning $28,000 a year will go from paying $325 a year for health coverage to paying $1,562, and 2 million people will become uninsured next year.
Donald Trump has seemed open to a deal, as have many congressional Republicans. “I am happy to work with the Democrats on their Failed Healthcare Policies, or anything else, but first they must allow our Government to re-open,” the president posted on Truth Social. But the Club for Growth and other conservative groups are pushing Congress to let the subsidies expire. And a hard-line legislative faction is refusing to finance what it describes as a costly, malfunctioning experiment. “Did democrats really shut down the federal government so they could tell us all how big of a failure Obamacare has been?” Representative Eli Crane of Arizona asked. “Wild strategy.”
On one thing, both sides agree: Health care is grotesquely unaffordable in this country. The average family with employer-sponsored insurance pays an astonishing $25,572 a year for coverage. Private insurers plan to bump up prices by 6.5 percent in 2026, the largest single-year increase since the passage of the ACA and more than double the overall rate of inflation. On top of that, the typical person spends $1,425 a year out of pocket on prescriptions and co-pays, and 25 million Americans lack any insurance at all. The system is a hyper-expensive shambles, one that tips 550,000 people into bankruptcy every year.
[Read: Americans are about to feel the government shutdown]
Yet another thing is true, even if few Americans know it or would agree with it: The ACA worked. It delivered affordable coverage to millions of families and helped bend the cost curve, as economists put it, stopping the share of GDP spent on medical services from rising. “It doesn’t get any press,” Jonathan Gruber, a professor at MIT and one of the country’s foremost health economists, told me. “It’s just phenomenal.”
It is phenomenal, its salutary effects not so much undersung as unbelievable. That’s in part because the country’s broader affordability crisis, evident in everything from the cost of bananas to the cost of rent, has obscured the law’s success. But it’s also because many of the law’s benefits are invisible, best measured in terms of dollars never spent. When health costs are so ridiculously high, it’s hard to grasp that they could be even higher.
Americans spend twice as much on insurance, doctor visits, hospitals, and drugs as residents of other wealthy countries, and for worse health outcomes. Half struggle to afford the care they need, and four in 10 adults have medical debt. Still, the ACA lowered the uninsurance rate from 16 to 8 percent, granting Medicaid to 20 million people and defraying costs for an additional 22 million as of this year. It also pushed expenses down overall. National health spending went from growing 6.9 percent a year before the law passed to 4.3 percent a year after. The share of the economy devoted to medical care stopped rising. The rate of inflation in the health-care sector slowed, even as Americans received more care. The Congressional Budget Office’s projections of future Medicare spending declined “dramatically.”
The ACA wasn’t the only reason for the cost curve bending. The rise of “narrow” insurance networks, which steer patients to low-cost providers; the shift from hospital-based to outpatient care; the rise of telemedicine; and the dearth of blockbuster drugs released in the aughts and 2010s mattered too. Still, a series of technical reforms and coverage provisions in the law helped squeeze spending out of the system.
Families benefited directly and indirectly. They got coverage and care, and had more money to spend on other things, in part because they started making more money. Indeed, a raft of studies shows that when employers spend more on benefits, they spend less on salaries. “If compensation is growing but more of it is going to health care, less of it is available to wages,” Katherine Baicker, an economist and the provost of the University of Chicago, told me.
There isn’t any literature showing that the reverse is true, Gruber told me, saying he could not think of a single “compelling empirical study” demonstrating that lower health-care costs drove up wages. But that doesn’t mean it doesn’t happen. It seemed to happen in the 1990s, when wages surged and health spending slowed. It seems to be happening now, quietly flushing billions of dollars into workers’ pockets.
[Read: The Project 2025 shutdown is here]
But nobody thinks a much-maligned law that passed 15 years ago is the reason they got a raise today. And nobody thinks of health care as affordable, because it isn’t. Even Americans with good insurance spend thousands of dollars a year on care, including on hefty co-pays and deductibles. Indeed, the form of medical spending that’s most obvious and painful to families—the price you pay at the pharmacy and the bill that comes in the mail from the hospital—has grown and grown, even after adjusting for inflation. Ironically, perhaps, that’s another reason for the slowdown in the growth of medical expenditures. When care is expensive, people avoid it.
If Congress does not extend the subsidies, a lot more Americans will have to forgo care. Even if it does, hundreds of thousands of Americans will still go bankrupt when they get sick. Washington could—and should—do much more to cut costs and squeeze inefficiencies out of the system. Enroll more people in Medicaid and Medicare. Allow the government to negotiate drug prices and set the cost of hospital procedures. Tackle the underinsurance crisis. Promote telemedicine and outpatient care. Limit premium increases. And more.
But the unpopularity of the ACA, and the filibuster-proof majority required to pass it, has tempered Democrats’ interest in passing another giant health-care bill. If Washington can’t keep the government open and protect the improvements that the Affordable Care Act already made, further reforms seem too much to hope for.
