Did the Affordable Care Act Contain Costs?

While the Affordable Care Act (ACA) primarily focused on expanding coverage to many of the 46 million uninsured Americans at the time, it included various provisions that sought to slow the growth of health care spending. In an LDI Issue Brief two years ago, we looked at how the ACA provisions affected costs through 2015. We found little evidence that they had produced the changes necessary to “bend the cost curve,” although the double-digit growth rates of the 2000s had not returned. However, it is possible that the ACA’s changes have had more cumulative effects. This brief updates our earlier piece, and assesses the effects of the ACA on costs since its passage 10 years ago.

Summary

The ACA was designed to curb the growth of health care costs as it broadly expanded coverage. Through provider payment reductions, alternative payment models, and a commission to enforce growth targets, the ACA sought to rein in Medicare spending. Through a tax on high-cost employer plans and competition in individual marketplaces, it sought to influence spending in the private market as well. But a number of provisions were never implemented, limiting the ACA’s impact on costs. While statutory reductions in Medicare provider rates have slowed cost growth in Medicare, they are not likely to be sustainable in the long term. Changing the trajectory of cost growth remains a challenge for future reform efforts.