The Affordable Care Act Five Years Later: Winners and Losers

It’s been five years since President Obama signed the Patient Protection and Affordable Care Act into law, and much of the health care landscape has changed as a result. The policy is smoothly running its course towards lower rates of uninsured Americans. In 2015, just 12.9% of the US adult population is uninsured, down from 16.4% when the law was passed in 2010.

The law set goals much broader than increased accessibility, though. A few months after the president signed the bill, he said, “This law will cut costs and make coverage more affordable for families and small businesses.” He went on to describe the unsustainability of spending 20% of the largest GDP in the world on our health care. So, how did we do?

I’m the first to admit that it’s probably a bit premature to assess the economic impact of such a large overhaul, but five years out, it might be interesting to look at some of the numbers. Just before the passage of the Affordable Care Act, CMS reported $2.5 trillion in US national health expenditures. For this past year, projections show national health expenditures to be $3.1 trillion.  This comes out to a growth rate of just about 4%, and these costs are projected to grow an average of nearly 6% over the next decade.  For comparison, the average annual inflation rate is usually around 1-2%.  Health care spending, then, definitely did outpace inflation by at least a factor of two. Naturally, I’m curious; where exactly did that $600 billion go?


Physicians who were unhappy with the results of the overhaul often cite declining reimbursements as a basis for their discontent. In 2009, the average physician made $173,680. By 2013 (the most recent data), this did increase to $187,200, pretty much keeping pace with inflation.  Therefore, I don’t think we can say that physicians really “lost” anything economically since the ACA’s passage, at least not yet. But it does seem that physician compensation wasn’t a major contributor to the growth of health care expenditures in excess of inflation. I’m going to say that physicians ended up neutral.

Insurance Companies

The Affordable Care Act went out of its way to single out health insurance companies’ profit margins. In fact, one of the main provisions set a threshold for “medical loss ratios,” or the percentage of collected premiums that insurance companies have to spend on actual medical reimbursement, at 80%. Naturally, the administration believed that this would curb health care expenditures by directly reducing insurance company profits.

To assess the results, let’s look at the five largest for-profit health insurance companies: United Health Group, Anthem, Aetna, Cigna, and Humana. I’m going to look at their net cash flows from operations – the amount of cash that was attained and attained only from regular insurance operations. I originally wanted to use net profits for this, but the complicated world of insurance mergers and acquisitions introduced a bunch of curve balls that made the data ineffective. So, in 2009, their net cash flows from operations were: $5.6 billion, $3.0 billion, $2.5 billion, $0.7 billion, and $1.4 billion, respectively. This totals $13.2 billion. Last year, cash flows from operations for these five companies were $8.1 billion, $3.4 billion, $3.4 billion, $2.0 billion, and $1.6 billion; totaling $18.5 billion.  This puts their operating cash flows at a notable 8% growth rate by year.

I want to emphasize that this back-of-the-envelope calculation could never conclude that this drove the increase in health care expenditures since the ACA’s passage. However, I think it’s fair to say that the insurance companies have done quite well since 2009. I’m going to say that they were winners.


The debate surrounding hospital performance after the Affordable Care Act has been all over the place. Increased paperwork for physicians and incentives for large electronic medical record systems have arguably paved the way for large hospitals to acquire small practices and grow. A larger population of insured patients means greater utilization of health care services, a plus for hospital income statements. But again, declining reimbursements, along with financial penalties designed to tie reimbursements to performance have hurt the bottom line.

Because most of these large hospitals are considered non-profits, they are not required to file their financial statements. Therefore, I’m going to use CMS reported numbers on “hospital care spending.” In 2009, CMS reported that the US spent $760.6 billion on hospital careThat grew to $936.9 billion in 2013 (the most recent report), an increase of 5.8% per year. It appears that over the past several years, quite a bit of spending has been funneled into US hospitals. Overall, I think that they were winners.

Pharmaceutical Companies

Let’s move on to another giant in the health care space: the pharmaceutical industry. They also stood to benefit from a larger body of insured Americans, Americans who would need prescription drugs and now have access to them. And the US government backed away from the prospect of negotiating down prices for costly pharmaceuticals, as other countries do. But the Affordable Care Act also included additional excise taxes on pharmaceutical companies, incentivized generic drugs more heavily, and created a system to approve biosimilars.

To see what happened, we can look at publicly reported data, and for reasons similar to the insurance company analysis, we’ll look at net cash flows from operations. This time, we’ll look at Pfizer, Merck, Johnson & Johnson, Eli Lilly, and Amgen, the five largest US pharmaceutical companies by revenue. Their 2009 net cash flows from operations were $16.6 billion, $3.4 billion, $16.6 billion, $4.3 billion, and $6.3 billion, totaling $47.2 billion. In 2014, they were $16.9 billion, $7.9 billion, $18.5 billion, $4.4 billion, and $8.6 billion, totaling $56.3 billion.  Here we see a growth rate of 3.9% over the five years. With cash flows outpacing the rate of inflation, I’m calling the pharmaceutical companies winners.

The American Consumer

I want to preface the following section by saying that the following calculations will strictly reference the financial effect on the average American. None of the following sentences argue whether or not the Affordable Care Act improved American quality of life. There are obviously huge benefits to insuring and providing access to care for millions of Americans, and effects on quality of care that are yet to be quantified, neither of which will be included in this financial calculation.

The Affordable Care Act introduced subsidies for health plans to working Americans, and expanded Medicaid programs in many states to help insure low-income individuals. However, complaints surfaced about wide coverage requirements that led to increased premiums once the exchanges finally opened. Let’s take a look at what the change was from before the law’s enactment. In 2009, the average American spent $2,500 out-of-pocket for health care expenses. In 2014, that is projected to have been $3,301, a 6.4% increase. Again, we see an outpacing of inflation, but this time of cost. Thus, on a strictly financial level, the American consumer was a loser.


Once more, these are really quick and dirty, back-of-the-envelope calculations, and leave much out what would make a robust economic study of the Affordable Care Act’s impact. I still think it’s interesting to look at what happened to the financials of some of the biggest players in health care 5 years after this lifetime’s largest governmental overhaul. We definitely spent more – quite a bit more. Hospitals, insurance companies and pharmaceutical companies have continued to do well, while the American consumer’s wallet has felt lighter. And it doesn’t look like a much has happened to physician salaries. While I’m quite certain that we are taking steps towards a healthier America, I only hope that our innovators will discover ways to curb the costs.

This post comes from out content partnership with the American Resident Project and was originally published on their website. For more thoughts from the American Resident Project fellows, click here.

Ramin Lalezari

Ramin Lalezari

    Ramin Lalezari is a fellow at the American Resident Project. He is currently a second year medical student at Washington University School of Medicine in St. Louis. He has a strong interest in health policy and often advocates in Jefferson City (Mo.) and Washington, D.C. He is currently the president of his medical school’s chapter of the American Medical Association, and served as a voting delegate to the Medical Student Section’s annual meeting.

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