Effects of the Affordable Care Act on Consumer Health Care Spending and Risk of Catastrophic Health Costs

Effects of the Affordable Care Act on Consumer Health Care Spending and Risk of Catastrophic Health Costs

Sarah A. Nowak
Christine Eibner
David M. Adamson
Evan Saltzman
Copyright Date: 2013
Published by: RAND Corporation
Pages: 59
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  • Book Info
    Effects of the Affordable Care Act on Consumer Health Care Spending and Risk of Catastrophic Health Costs
    Book Description:

    This study examines the likely effects of the Affordable Care Act on average annual consumer health care spending and the risk of catastrophic medical costs. The analysis also considers how the decision to expand Medicaid would affect average annual consumer health spending and the risk of catastrophic medical costs for low-income individuals in two large states: Texas and Florida.

    eISBN: 978-0-8330-8365-4
    Subjects: Health Sciences

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iii)
  3. Abstract
    (pp. iv-iv)
  4. Table of Contents
    (pp. v-vi)
  5. Figures
    (pp. vii-vii)
  6. Tables
    (pp. viii-viii)
  7. Summary
    (pp. ix-xii)
  8. Acknowledgments
    (pp. xiii-xiii)
  9. 1. Introduction: Insurance Transitions and Consumer Health Care Spending Under the Affordable Care Act
    (pp. 1-6)

    The Affordable Care Act (ACA) is intended to expand Americans’ access to health care. Millions of Americans will become newly insured, and millions of others will change the source of their health insurance. These changes could have a significant impact on consumers’ health care spending.

    As the law’s name suggests, it is also intended to make health care more affordable for Americans. Escalating health care costs pose a substantial burden for Americans. Between 2001 and 2010, the share of working-age adults with medical expenses totaling 10 percent or more of income increased from 21 percent to 32 percent. At the...

  10. 2. Results: Individual Health Care Spending Under the ACA
    (pp. 7-19)

    In this chapter, we present our national-level results organized around consumer transitions into and between sources of coverage. These transitions consist of

    1. the previously uninsured newly acquiring insurance from one of three sources


    the new individual market under the ACA

    employer coverage, including the new SHOP exchanges and traditional ESI, which some previously uninsured individuals will acquire (because some employers may offer coverage as a result of the ACA, and some employees may be motivated to take up an existing employer plan)

    2. the previously insured changing their source of coverage

    from traditional ESI to Medicaid

    from traditional ESI to...

  11. 3. Two Case Studies: Texas and Florida
    (pp. 20-28)

    In our national-level analyses, we characterized the ACA’s effects on coverage and spending for people in three different income groups: those below 138 percent of the FPL, those between 138 and 400 percent, and those above 400 percent. To examine the effects of a state’s decision to expand Medicaid, we conducted a more granular analysis focused on two states: Texas and Florida. For this analysis, we assumed that the ACA is in effect, but under two alternative scenarios: with Medicaid expansion and without expansion. Because a state’s decision to expand Medicaid overwhelmingly affects lower-income populations, we focused this phase of...

  12. 4. Assumptions and Limitations
    (pp. 29-30)

    The COMPARE model, like other simulations of health care reform, has a number of limitations. First, the analysis presented here relies on the construction of “synthetic plans” in order to estimate consumer spending and the risk of catastrophic spending. For each type of insurance, metal tier, and level of affordable cost-sharing, we designed a single plan representative of a “typical” plan. Each of these synthetic plans represents what is actually a family of plans, with different mixes of deductibles, coinsurance, and maximum out-of-pocket levels. Therefore, our model may be unable to capture the full spectrum of variation in consumer spending...

  13. 5. Conclusions
    (pp. 31-33)

    The ACA will have varied impacts on individuals’ and families’ spending on health care, depending on their income levels and on their estimated 2016 insurance status without the ACA. For individuals newly gaining health insurance as a result of the law, we predict that average out-of-pocket expenditure and risk of catastrophic medical expenditure will decline. This is because the ACA requires all individuals to obtain health insurance coverage and sets minimum benefit generosity limits on plans to ensure that enrollees are protected from health-related financial risk. Out-of-pocket spending represents spending on co-payments, coinsurance, deductibles, and other consumer cost-sharing required by...

  14. Appendix: Overview of the COMPARE Model
    (pp. 34-42)
  15. References
    (pp. 43-46)