Sixteen years after the Affordable Care Act was enacted, the promise of affordable healthcare remains unfulfilled, as rising costs and structural flaws continue to challenge the system.
When the Affordable Care Act (ACA) was signed into law in 2010, it was heralded for its dual promises: expanding healthcare coverage and making it more affordable. However, sixteen years later, only one of those promises has been realized. While coverage has indeed expanded, affordability has not followed suit. This outcome is not unexpected; it aligns with warnings I issued back in 2009 regarding the flawed mathematical foundation of the ACA’s subsidy structure, risk assumptions, and pricing incentives.
At the time, I argued that while the goal of expanding coverage was commendable, the financial framework supporting it was unsustainable. In a commentary for Fox News in 2009 titled “The Truth About Obama’s Health Care Plan,” I highlighted that the subsidies were based on unrealistic funding projections. The risk profile of new enrollees did not align with the actuarial forecasts that justified the law. Furthermore, the ACA inadvertently granted insurance companies increased control over the financial float—essentially the investment income generated from premium dollars collected before claims are paid—ensuring that insurers, rather than consumers, would benefit from the ACA’s design.
Regrettably, my concerns have materialized as predicted. The ACA successfully expanded insurance coverage, enrolling approximately 21 million Americans in marketplace plans while millions more gained Medicaid coverage. Yet, around 25 million individuals remain uninsured, and national health spending has surged to nearly $4.9 trillion in 2023, nearing one-fifth of the nation’s GDP. This situation reflects a transfer of financial burden rather than genuine progress, shifting costs from families to employers, from employers to government, and ultimately from government to taxpayers.
The core issue was evident from the outset. Premium tax credits were linked to income but were also contingent on the price of premiums themselves. As premiums have risen—an unrelenting trend—federal subsidy spending has increased correspondingly. This is a mathematical certainty, not merely a political talking point. The ACA also relied on the assumption that a significant influx of healthy, younger consumers would offset the costs associated with older, sicker individuals. Unfortunately, that influx never materialized. As I noted in a 2013 Fox column titled “How ObamaCare Is Dividing the U.S.,” the anticipated wave of low-cost enrollees failed to appear, resulting in marketplaces dominated by individuals with higher healthcare utilization and chronic conditions. The resulting cycle of rising premiums, insurer exits, and narrower networks was predictable for anyone willing to examine the data honestly.
This dilemma has been further complicated by employer behavior. Approximately two-thirds of Americans with private coverage are enrolled in self-funded employer plans. These employers could have served as a counterbalance to escalating prices. Instead, many have outsourced their purchasing power to the same insurers, third-party administrators, and pharmacy benefit managers whose profits are driven by the volume of premiums and the surplus generated by float. As I discussed in “Transparency Issues Under ObamaCare,” employers would not effectively curb costs unless they demanded genuine transparency and exercised real control over spending. Sixteen years later, most have yet to do so.
The outcome is a system where insurers wield more power than ever before. According to the National Association of Insurance Commissioners, insurers reported nearly $25 billion in net income in 2023, followed by approximately $9 billion in 2024, despite inflationary pressures on medical costs. Their financial model, which relies on premium reserves, investment income, and consolidated control of networks, has strengthened under the ACA rather than weakened. Meanwhile, employer-sponsored plans are facing increases exceeding 5 percent in 2025, with projections suggesting they could surpass 6.5 percent in 2026. Some employers may encounter hikes approaching 9 percent if they do not take decisive action. The average cost to insure a single worker now exceeds $16,500 annually.
The ongoing affordability crisis has once again triggered a familiar policy pendulum swing. In the 1990s, managed care was touted as the solution until rising resentment and hidden costs led to its collapse. The early years of the ACA brought optimism and expanded access, but the underlying flaws became apparent only after the system was fully tested at scale. The pendulum is now swinging once more toward new structural reforms.
As reported by The Washington Post, lawmakers are now proposing to redirect ACA subsidies directly to consumers through personal health accounts, rather than channeling them through insurers. This proposal marks a significant departure from the ACA’s original framework and aligns with the solution I advocated over fifteen years ago: empowering individuals, rather than intermediaries, to control healthcare dollars. However, the Post cautions that without proper safeguards, insurers may respond by selectively enrolling healthier individuals, leaving those with chronic illnesses facing soaring premiums. This scenario is precisely the danger I warned about from the outset. Simply shifting funds without restructuring incentives will only shuffle costs without addressing the root issues.
Recent commentary from Newt Gingrich echoes this sentiment. His assertion that achieving affordability necessitates transferring financial control from insurers to individuals aligns with the central thesis I articulated in 2009: genuine reform can only occur when consumers have control over their healthcare dollars and access to transparent information about their purchases. While Gingrich’s remarks addressed broader affordability issues across American life, his focus on consumer financial empowerment reflects the very principle that the ACA failed to incorporate.
The convergence of these ideas—consumer-directed subsidies, transparency mandates, employer empowerment, and restrictions on insurer manipulation—signals the precise moment I anticipated. The structural flaws that were mathematically inevitable in 2010 have now become national priorities in 2025. Policymakers are finally confronting what the data has been indicating for sixteen years: healthcare cannot be made affordable until the pricing system itself is restructured.
However, none of the emerging proposals will succeed unless we address the fundamental economic flaw of the ACA: the system still permits insurers to dominate pricing, control the float, and manipulate risk pools. Redirecting subsidies to consumers is insufficient unless it is accompanied by mandatory transparency, strict prohibitions on cherry-picking, and real incentives for employers to regain control over purchasing. Without these essential elements, we risk repeating the cyclical failures of managed care and the ACA, with the next collapse potentially being even more costly.
We have reached a moment of reckoning. The ACA achieved something valuable in expanding coverage, but it failed to ensure affordability because it overlooked the fundamental mathematics of rising costs. Healthcare has never been merely a political issue; it has always been a mathematical one.
Fifteen years ago, I predicted this moment would arrive. Now that it is here, the pressing question remains: will policymakers finally confront the underlying economics, or will they continue to shift costs around while pretending the existing structure is sound?
Source: Original article