For years, Jim Thornton felt his blood pressure rise in alarming tandem with his family’s health insurance premiums. From $1,200 in the early 2000s, the Thorntons’ monthly bill skyrocketed to more than $2,600, even after he dropped his children from the plan. “It just kept going up and up, and it was a trap – take it or leave it,” recalled the freelance writer, 64.

Thornton, a resident of Ambridge, was on the verge of dropping coverage altogether when the federal health insurance exchanges opened in 2014 as the centerpiece of the Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA) or “Obamacare.” Thornton cancelled his old insurance, qualified for subsidized coverage under the health care law – and was able to pay his entire annual bill with the $1,300 refund he received for half a month’s coverage under his former plan. “It has been a godsend for us,” he related.

Six years after the passage of the ACA, there is little debate over its biggest success in Pennsylvania: a state uninsured rate cut nearly in half – from 14 percent in 2013 to just 8 percent after the expansion of Medicaid two years later – and hundreds of thousands of covered Pennsylvanians, like Thornton, who would otherwise find health insurance unaffordable. All this has been accomplished without the deluge of new patients or vastly increased wait times for service that some had predicted, according to observers around the state.

“Undoubtedly, the Affordable Care Act has been immensely successful at getting new people covered,” said Dr. David Grande, a senior fellow and director of policy at the Leonard Davis Institute of Health Economics at the University of Pennsylvania, where he teaches medicine and is on the medical staff at two Penn-affiliated hospitals.

But significant challenges remain: rising insurance rates, insurance companies fleeing the program, escalating health care costs and lingering concerns over safety, efficiency and quality. Coverage rates aside, “the verdict is still out on the rest of it,” said Dennis Patrick Scanlon, professor of health policy and director of the Center for Health Care and Policy Research at Penn
State University.

Democrats around the state have cheered the legislation, citing the benefits for Pennsylvania’s most vulnerable residents. “Today, over 17.6 million Americans have health care, including children who can no longer be discriminated against by insurance companies because of pre-existing conditions,” said U.S. Sen. Bob Casey, who serves on the Senate Health, Education, Labor and Pensions Committee, and is a ranking member of the Subcommittee on Children and Families. “In Pennsylvania alone, 479,000 more have gained insurance since 2010, and hospital readmissions are dropping dramatically. The historic effects ACA has had on seniors, low-income communities and the uninsured is incomparable.”

But Republicans like state Rep. Matt Baker, Majority Chairman of the House Health Committee, took a dimmer view. “The future of Obamacare rests with Congress, as it is a federal law,” said Baker. “Some components are well-intentioned and others need to be repealed in (their) entirety, but Congress will ultimately decide what changes will be made. In the meantime, double-digit insurance rate increases continue and are unaffordable and unsustainable for many, and will continue to lead some to not be able to afford insurance as a direct result of Obamacare.”

Nearly 900,000 Pennsylvanians are currently covered through the first major ACA provision, which took effect in 2014. The exchanges allow individuals and small businesses to choose from a selection of privately administered, competitively priced health plans regulated by the Pennsylvania Insurance Department.

Roughly three-quarters of the 505,000 individual Pennsylvanians on the exchange qualify for federal subsidies, which are available to applicants earning up to 400 percent of the federal poverty level. Between lower net rates and the elimination of exclusions for pre-existing conditions, the exchange radically transformed the landscape of individual health insurance.

But the biggest statewide impact has come from Pennsylvania’s ACA-backed, federally funded Medicaid expansion, which went into effect in April 2015, three months after newly elected Gov. Tom Wolf set the plan in motion. As of April 2016, the Medicaid expansion had reached 625,970 newly eligible Pennsylvanians; nearly half are employed, and a similar percentage is younger than 35. “In some respects, it has the chance to have the greatest bang for the buck,” said Grande of the state’s expanded Medicaid program, which extended coverage to individuals with family incomes up to 138 percent of the federal poverty level. “It’s been a very effective way to reach a vulnerable population that previously struggled a lot to get insured.”

And within a year of the expansion, nearly 63,000 of the new Medicaid recipients had received addiction treatment – a priority of the Wolf administration, which has put the opioid crisis at the top of its public health agenda. “Medicaid has been a huge tool for us in that fight,” confirmed Kathaleen Gillis, a spokesperson for the Department of Human Services, which administers the Medicaid program.

But the fact that Pennsylvania waited a year later than many states to expand Medicaid speaks to the very issues that make the state a challenging environment for reform. Scanlon, for one, cites the complicated political geography of a “purple” state as an obstacle to change, noting that Pennsylvania’s powerful, Democratic-leaning urban centers can be at odds with the inclinations of its more conservative rural communities – especially given the partisan dynamic of the Obamacare debate.

“These changes are threatening to certain stakeholders,” explained Scanlon. “Health care’s a big business. Any decision you make, someone stands to win and someone stands to lose. People argue over turf.” Scanlon said those conflicts can slow the pace of health care initiatives – not only coverage, but also innovation in key areas like price, quality, technology and payment – relative to states with consistent leadership and
greater consensus. 

One very visible example: the short-lived experiment known as Healthy PA. A predecessor of the current Medicaid expansion, Healthy PA was a program of state-subsidized, private coverage options for low-income residents created under Wolf’s predecessor, Gov. Tom Corbett. Similar plans were floated in other Republican-controlled states, noted Gillis, as a way to extend coverage without signing on to a key Obamacare provision.

But more patients were able to enroll a year later when Healthy PA was replaced with expanded Medicaid, which simplified enrollment and extended eligibility requirements. “It reduced a lot of the bureaucracy that was associated with Healthy PA,” said Gillis – but more than a half-million Pennsylvanians waited an additional year for coverage.

The Pennsylvania insurance market is also finding its footing more slowly than those in neighboring blue states, according to Katherine Hempstead, a senior advisor and health insurance expert at the Robert Wood Johnson Foundation in Princeton, N.J. “The products came out priced really, really low – too low, because people didn’t anticipate what it would cost to cover the population,” said Hempstead. “The insurance companies lost a ton of money. Sizable increases are needed, because the prices
aren’t sustainable.”

Hempstead explained that more evolved insurance markets in New York and New Jersey meant that those states’ insurance carriers had a more accurate idea of costs, leading to more realistically priced exchange plans. Like the ACA, markets in those states already operated on a basis known as “guaranteed issue” – a guarantee of the right to obtain insurance regardless of health status – whereas Pennsylvania insurers used medical underwriting to exclude some patients and adjust pricing, essentially cherry-picking a healthier clientele.

While a boon for sicker patients, the shift to federal exchange plans – priced only according to age, location and smoking status – introduced a greater degree of uncertainty into the Pennsylvania market, where the average 2016 silver plan was sold for just $239. In contrast, a comparable 2016 plan cost $310 in neighboring New Jersey, where health care costs are otherwise similar.

“These past few years have been a process of learning for all the companies,” said Ron Ruman, a spokesperson for the Pennsylvania Insurance Department, which is currently evaluating proposed rate increases for 2017. “In the insurance world, three years is not much.” But it’s enough time for major providers like Highmark, Geisinger and UPMC to raise rates for a more diverse exchange clientele with higher-than-expected health care costs. (Most consumers won’t bear the brunt of premium increases, however, because subsidies will absorb much of
the difference.)

One upside to the Pennsylvania marketplace: stability. “The plans are being offered through established insurers who, in most cases, have been around for a long time doing business here,” said Ruman. Pennsylvania never had the kinds of experimental, nonprofit marketplace startups – co-ops, for example – that have failed in other states. Nor has it thus far suffered from the overly restrictive provider networks that generate complaints elsewhere, said Grande of Penn. In addition, the high-profile marketplace exit of United HealthCare, the biggest player on the national scene, will have only a minor impact in the Keystone State, where it has only about 6 percent of the overall market, Ruman said.

Dr. Ezekeiel Emanuel – photo credit: Candace DiCarlo

But even if rates somehow stabilize, experts say a long-term challenge will be to bring down spiraling health care costs – many of which are related to an overreliance on expensive hospital systems statewide, not just in Philadelphia. “We are hospital-centric, and that raises premiums,” said Dr. Ezekiel Emanuel, a renowned bioethicist who chairs the Department of Medical Ethics and Health Policy at the University of Pennsylvania. “We have too many hospital beds compared to other places in the country, and hospitals are going to have
to close.”

Emanuel is certainly in a position to know. A former special advisor for health policy at the White House Office of Management and Budget, he is credited as a key architect of the ACA; Obamacare was the focus of his 2014 book, “Reinventing American Health Care: How the Affordable Care Act Will Improve Our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error-
Prone System.” 

Despite all those adjectives, Emanuel was sunny on the topic of the ACA’s future in Pennsylvania, explaining that hospital closures would ultimately lead to greater value and stabilized costs. “And by the way, it doesn’t mean we’re going to get less care,” he emphasized. “It doesn’t mean we’re going to get worse care. In fact, we’re going to get better care.” By way of example, he noted that a joint replacement performed in an ambulatory urgent care center is not only far cheaper than the same operation performed in a hospital; it also puts the patient at far less risk of the community-acquired infections prevalent in American hospitals.

From the other end of the state, a similar sentiment was voiced by longtime health care advocate Karen Wolk Feinstein, president and CEO of the Jewish Healthcare Foundation, which operates the Pittsburgh Regional Health Initiative. On the plus side, Wolk Feinstein said, Pennsylvania’s extensive hospital network gave the system plenty of slack to absorb newly insured patients: “I think we can all agree that it’s better to have some insurance than no insurance.” 

But she noted that the ACA – with its copious, expensive paperwork and technology requirements, including a shift to electronic medical records – has had the unintended effect of encouraging smaller providers to consolidate for efficiency within larger hospital networks. “And there is little doubt that this has resulted in higher costs and lower quality,” Wolk Feinstein said. Like Emanuel, she believes that hospitals are undesirable for many services – and she also identified safety and quality as being areas where ACA goals have fallen short thus far.

“I’m registering as a skeptic – there is no way you can look across the board and say that quality is improving,” said Wolk Feinstein, noting that despite a slew of new ACA-related provisions aimed at improving hospital quality, preventable problems such as wrong-side surgery and pressure sores continue to occur at unacceptably high rates. “It’s not just about access. We have a long way to go.”

To shift non-emergency care away from hospitals, the ACA subsidizes community clinics – including FQHCs (federally qualified health centers), which operate under a federal mandate to charge sliding-scale fees in underserved areas. Grande noted that such clinics are particularly vital in immigrant neighborhoods – Northeast Philadelphia is one example – where many residents are ineligible for insurance as a result of a legislative compromise that excluded undocumented immigrants from ACA eligibility. “Even though Southeast Pennsylvania has a pretty robust network of availability, there are pockets of the city where there are stresses on the system related to access and demand,” Grande explained.

Ultimately, bringing more patients into the system – whatever their health or legal status – is among the most critical near-term challenges facing the ACA. From the standpoint of public health, covering more people is a no-brainer; from a fiscal perspective, a larger, more diverse patient pool spreads risk more evenly across insurers, which could theoretically stabilize costs.

The ACA will inevitably need more young, healthy consumers to offset costly new enrollees like Barbara White of Wilkinsburg. When the health exchanges launched in 2014, White, then 57, had been limping for two and a half years due to a degenerative joint condition, which was considered pre-existing under her employer’s grandfathered health plan. “I realized that with my insurance, any treatment I would have would not be covered,” recalled White, who needed multiple surgeries to avoid permanent disability.

So White quit her job in medical billing and – as a newly unemployed person – was eligible to sign up mid-year for a marketplace plan. A few months later, she had her hip replaced; two knee replacement surgeries followed, all of it made possible by the new healthcare law. Cases like hers “are the reason the Affordable Care Act was passed,” said White.

But while White’s story illustrates the promise the ACA holds for Pennsylvanians, it also illuminates the ongoing challenges of a system burdened by cost and complexity. Even with solid health coverage, White added that she spent at least $10,000 for out-of-pocket medical expenses in each of the last two years. And in order to qualify initially, she had to quit her job – a move that ultimately damaged her career, sending her onto the Medicaid rolls as she starts her own business from scratch.

That’s why White – like Thornton – quietly hopes the ACA will be replaced eventually by a cheaper, simpler single-payer system. For now, they are grateful for a program that, for all its drawbacks, offers indisputable advantages. “I was fortunate to have access to coverage,” said White, who is back on her feet and feeling good. “I’m not sure what I would done otherwise.”