One of President Obama's most prominent (and controversial) actions during his term was the passing of the Affordable Care Act (ACA) in 2010. The new legislation was one of the newest developments in American healthcare reform, introducing many new regulations with the goal of reducing uninsured Americans, reducing the burden of premiums for those with low income, and facilitating health insurance purchasing. But, like most sweeping reforms, the effects aren't seen until years after implementation. 

    Americans will see a 10% increase in premiums next year, leaving many wondering why this is happening, and whether or not the ACA has failed them. Health insurance premiums are on the rise, as health insurers are feeling the impact of the new legislation, which establishes a minimum level of service provided, and does not allow for insurers to reject those with preexisting conditions. United Health Group (UNH  ) reported a $650 million dollar loss in 2016, up from $475 million from last year. To understand why this is happening, the history of healthcare in America must be considered.

The ACA can be viewed as America's first attempt towards universal health care; the current political landscape simply will not allow for a socialized healthcare system to exist without being phased in at first. The defining provision of the ACA is the individual mandate: those who aren't covered by an employer or public health insurance plan, must purchase a plan from a private insurer or face penalties. By forcing everyone to be covered through a private insurer, this has the effect of replicating a universal health care system, while not being directly funded by the government, which American conservatives see as too "socialist". Before the individual mandate of the ACA, health insurers could deny coverage to those they deem as too expensive to insure-those with preexisting conditions. And those without health insurance could still receive medical treatment for life-threatening injuries, and when they couldn't pay, hospitals would charge everyone else more to recoup the losses; those with insurance would subsidize the uninsured. The very sick and the uninsured got a "free-ride", paid with the premiums of those with insurance. This would lead to insurance pool collapses: insurance companies would increase premiums to cover the burden of the sick and the uninsured. Those who were paying much more than the care they were receiving would drop their policies and leave, increasing the premiums of other healthy policyholders, who would then leave as well. The final result is an insurance pool filled with very sick policyholders with unaffordable premiums.

    With health insurance companies no longer being able to deny coverage to those with preexisting conditions, nor allowed to drop coverage to very sick individuals, the healthy subsidize the very ill, and the cost shared by everyone, instead of being passed onto others. With the individual mandate in place, relatively healthy individuals who can't leave anymore will bear the burden of the very sick. Oscar, a privately-held health insurance startup with 135,000 customers reported that only 200 very sick policyholders accounted for half the company's payouts, with a loss of $92 million last year. This, however, only explains part of the increase in premiums. In fact, simulations done by RAND Corporation, an American think-tank, show that healthcare premiums are actually be more expensive without the individual mandate.

    Some of the largest drivers of the growth of healthcare premiums are entirely out of insurers' and the ACA's control. Aetna (AET  ), now merging with Humana (HUM  ) has agreed to keep premiums as low as possible after facing backlash over increasing premiums by 21% last year. However, Aetna has defended its decision, stating that its profit margins are only 4.5%, as compared to pharmaceutical companies, which have a 16% margin, and other factors are driving up costs as well, such as the aging populace, increasing obesity rates, and advances in medical technology.

    Aetna has a point. The average life expectancy of Americans has increased from 62.9 to 77.9 years from 1940. 36.7% of people aged 60 use five or more drugs a day as compared to 7.9% of those aged 20-50; the number of elderly people who require long-term care is projected to double by 2050. It's also worth noting that will falling birth rates, a smaller amount of workers will be able to support the increasing healthcare costs of the more elderly. Even the shrinking pool of workers will start to cost more-obesity alone accounts for 12% of the healthcare spending growth recently, adding $4.2 trillion in treatment costs and lost economic output, all of which will push up premiums significantly.

    While the ACA was a major reform to the healthcare industry, it did not address the problems that made reform necessary. Without clear changes and planning to address America's changing population and lifestyle, health insurance premiums will continue to increase, with or without a socialized healthcare system.