The Patient Protection and Affordable Care Act as modified by the Health Care and Education Reconciliation Act of 2010, collectively known as the Affordable Care Act, was signed into law on March 23, 2010, and represents the biggest change to the U.S. health care system since Medicare was enacted in 1965. The act expands the Medicaid program, requires most individuals to obtain insurance or pay a penalty, provides subsidies to individuals who have low to moderate incomes and no affordable source of coverage, and imposes fines on business with more than 50 employees that do not offer adequate coverage to...

The Affordable Care Act changed the laws governing how health insurers set premiums in the nongroup and small group markets. The basic function of insurance is to pool risk across a group of individuals: Each enrollee contributes money to the pool in the form of a premium, and this money is then redistributed to pay for enrollees’ medical care. If the chance of having a high expenditure were unpredictable and did not vary systematically with such characteristics as age and health status, then everyone would be charged the same premium. However, because health spending is somewhat predictable, insurers have an...

COMPARE is a microsimulation model that estimates the effects of health policy changes at the national and state levels on health insurance enrollment decisions and premiums. The model uses a synthetic dataset with information on a nationally representative sample of individuals and their employers and estimates how they will react under different policy scenarios. In COMPARE, we used data from the Survey of Income and Program Participation (SIPP), the Medical Expenditure Panel Survey (MEPS), and the Kaiser Family Foundation/Health Research and Educational Trust (Kaiser/HRET) Survey of Employer Benefits to create a synthetic population of individuals, families, and firms that represents...

In this chapter, we present the results of our analysis, focusing on the nonelderly population (<65 years old). We compare estimated health insurance outcomes with and without implementation of the Affordable Care Act for 2016, the first year in which penalties for noncompliance with the individual mandate are fully phased in. We use the language “with and without” the Affordable Care Act rather than “before and after” the Affordable Care Act because estimates are standardized to reflect population characteristics and prices levels in a fixed year, 2016. In addition, estimates without the act eliminate all Affordable Care Act–related provisions,...

As part of the broader analysis of the impact of the Affordable Care Act on states, we looked at the sensitivity of the model results to implementation decisions that are available to states. First, we analyzed the implications of states’ decision to either split or merge the risk pools for the individual exchange and the SHOP exchange. Second, we investigated the effects of a state’s choice of whether or not to expand Medicaid eligibility to nearly everyone below 138 percent of the FPL in response to the Supreme Court’s ruling on the Affordable Care Act. For the analysis of split...

In this analysis, we used the COMPARE microsimulation model to estimate how the Affordable Care Act will influence coverage in the nongroup and small group markets, focusing on ten representative states. We then conducted sensitivity analysis that considered how outcomes might change in response to state decisions to merge nongroup and small group risk pools or to forgo the Affordable Care Act’s Medicaid expansion.

We found that all ten states can expect a large decline in uninsurance in response to the law, particularly if they expand Medicaid. In many states, the uninsurance rate will be reduced to levels between 6...