Did The Aca Lower Healthcare Costs Not Entirely?

The Affordable Care Act did lower healthcare costs for some Americans, but it did not lower overall national healthcare spending. Millions gained insurance through subsidies and Medicaid expansion, which reduced their personal costs. However, the law did not fix the underlying drivers of high healthcare prices in the United States.

What Did the ACA Actually Do to Insurance Premiums?

The ACA created marketplaces where people could buy private insurance, often with government subsidies. For those who qualified, these subsidies made monthly premiums much more affordable. The Kaiser Family Foundation reports that in 2023, roughly 80% of marketplace enrollees had a plan with a premium of $10 or less per month after subsidies.

But the sticker price of premiums—the number before subsidies—rose steadily for years after the ACA launched. Insurance companies initially underpriced plans to attract customers, then raised rates sharply in 2016 and 2017. The average benchmark premium increased by over 100% between 2013 and 2018 in many states.

For people who did not qualify for subsidies, these increases were painful. Middle-income Americans earning too much for subsidies but not enough to afford unsubsidized plans often faced the worst of both worlds. The ACA made insurance cheaper for the poor and older adults, but not for everyone.

Did the ACA Lower Out-of-Pocket Costs for Patients?

Out-of-pocket costs like deductibles and copays tell a different story. The ACA required plans to cap annual out-of-pocket spending, which helps people with very high medical bills. In 2025, that cap is $9,450 for an individual and $18,900 for a family.

But deductibles on marketplace plans grew significantly. A study in Health Affairs found that average deductibles for silver plans—the most popular tier—rose from around $2,500 in 2014 to over $4,500 by 2020. This means many people had to pay thousands before their insurance kicked in at all.

For people with employer-sponsored insurance, deductibles also rose during this period. The ACA did not directly control what employers charged their workers. The law banned annual and lifetime limits, which helped people with very expensive conditions, but it did not make typical care cheaper for the average worker.

How Did Medicaid Expansion Affect Costs?

The ACA allowed states to expand Medicaid to cover adults with incomes up to 138% of the federal poverty level. As of 2025, 40 states and Washington DC have done this. Research published in the New England Journal of Medicine found that expansion states saw significant drops in uninsured rates and reductions in medical debt.

People in expansion states reported being less likely to skip care due to cost. They also had better access to prescription medications. For the newly insured through Medicaid, their personal healthcare costs dropped to nearly zero.

But expansion was not universal. The 10 states that have not expanded Medicaid left a coverage gap. Adults in those states with incomes below poverty often earn too little for marketplace subsidies but do not qualify for Medicaid. These people saw no cost reduction from the ACA at all.

Did the ACA Lower Overall National Healthcare Spending?

This is where the honest answer gets uncomfortable. National healthcare spending continued to grow after the ACA. The Centers for Medicare and Medicaid Services reports that national health expenditures rose from $2.6 trillion in 2010 to $4.5 trillion in 2022.

The ACA did slow the rate of growth in Medicare spending through various payment reforms. The law created the Center for Medicare and Medicaid Innovation, which tested new payment models. Some of these, like accountable care organizations, showed modest savings. But the overall trajectory of healthcare spending in the US remained far above that of other developed countries.

The fundamental problem is that the ACA did not address the price of healthcare services. The US pays more for drugs, hospital stays, and procedures than any other country. The ACA expanded who pays for care, but it did not change what care costs. A study in JAMA found that the US spends roughly twice as much per person on healthcare as comparable nations, and the gap has widened since the ACA passed.

What Did the ACA Do About Prescription Drug Costs?

The ACA included some provisions aimed at drug prices, but they were limited. It closed the Medicare Part D “donut hole”—a coverage gap where seniors paid full price for drugs. By 2020, this gap was fully closed, saving seniors thousands of dollars on medications.

The law also created a pathway for biosimilar drugs, which are cheaper copies of expensive biologic medications. This has slowly increased competition in the drug market. However, the ACA did not give the government the power to negotiate drug prices for Medicare, which many experts argue is the single most effective way to lower costs.

Drug prices continued to rise faster than inflation for most of the ACA era. The Inflation Reduction Act of 2022, not the ACA, finally granted Medicare some negotiation power, but those changes take effect gradually through 2029. For the first decade of the ACA, drug costs remained a major burden for many Americans.

What Common Misconceptions Exist About ACA Costs?

A widespread myth is that the ACA made healthcare affordable for everyone. It did not. The law reduced the number of uninsured by roughly 20 million people, according to the Congressional Budget Office. But many of those people still face high deductibles and copays. Being insured is not the same as having affordable care.

Another misconception is that the ACA caused premiums to skyrocket for everyone. This is not accurate. Premiums did rise sharply in the early years, but that was partly because insurers initially set prices too low. Since 2019, premium growth has actually been modest in most markets. The real story is that premiums were already rising before the ACA, and the law did not reverse that trend.

Some people also believe the ACA was a government takeover of healthcare. It was not. The law relied heavily on private insurance companies. It created regulated marketplaces where private insurers compete for customers. The government provided subsidies, but private companies still set most prices and administered the plans.

What to Watch For in the Future of Healthcare Costs

The biggest question is whether the US will ever address the root cause of high costs: the prices charged by hospitals, drug companies, and providers. The ACA proved that expanding coverage is possible without fixing prices. But coverage without cost control means the system remains expensive for everyone who pays taxes or premiums.

Some states are experimenting with their own solutions. Colorado and Washington have created public option plans that aim to lower premiums by capping what providers can charge. Early results from these programs are mixed but promising. If they succeed, they may offer a blueprint that the ACA did not.

Federal policy changes are also on the horizon. The Inflation Reduction Act’s drug price negotiation provisions will begin to take effect in 2026. This could meaningfully lower costs for Medicare beneficiaries, though it only applies to a small number of drugs initially. Whether future Congresses expand this power is unknown.