The Affordable Care Act (ACA) includes two provisions that will transfer billions of federal dollars into state economies: the expansion of Medicaid to cover the poorest segment of the population—those under 138 percent of the federal poverty level (FPL)—and subsidies for low- and medium-income people to buy health insurance—those between 100 percent and 400 percent of the FPL. The cost for these provisions is offset by increased revenue and decreased spending from a combination of reductions in Medicare payment increases to certain types of providers, including hospitals, reductions in payments to Medicare advantage plans, reductions in Disproportionate...

We used the RAND COMPARE microsimulation to model the coverage and spending impact of the ACA on Pennsylvania. We then applied the Regional Input-Output Modeling System (RIMS II) multipliers from the U.S. Bureau of Economic Analysis (BEA) to determine the broader economic effects of the changes in spending. We also calculated other implications of the ACA using relevant studies from the academic literature. All of these measures have been scaled to the regional level to provide additional visibility to the local effects of the ACA.

COMPARE is a microsimulation model that uses nationally representative data and economic theory to predict...

The results are presented in six major sections: level and sources of insurance coverage, changes in federal spending, economic effects of federal spending, state budgetary effects, effects on providers, and regional effects. We present estimates of the ACA’s impact on these outcomes both with and without the Medicaid expansion between 2014 and 2020.

Figure 1 shows the difference in the share of Pennsylvanians without insurance coverage in 2016 under pre-ACA policies, with the ACA but no expansion of Medicaid, and with the ACA and the expansion of Medicaid.¹⁵ With Medicaid expansion, the model estimates that all but 5 percent of...

With or without the expansion of Medicaid, the ACA will increase insurance coverage to hundreds of thousands of Pennsylvanians. However, the COMPARE model estimates that the expansion of Medicaid eligibility would increase Medicaid enrollment by 500,000 people (65 to 75 percent of whom would have been uninsured otherwise) and bring more than $2 billion in federal spending into the state annually. Should the state expand Medicaid, the additional spending will add more than $3 billion a year to the state’s GDP and support 35,000 to 39,000 jobs. But Medicaid expansion is not without cost for the state; we estimate that...