Losses (and Gains) from Health Reform for Non‐Medicaid Uninsureds

Abstract

This article examines how the Affordable Care Act (ACA) would change financial resources for and transfers to the previously uninsured if they were to purchase coverage in the ACA insurance exchanges (marketplaces) in 2014. The results suggest that the law provides gains to some, relative to their spending in the pre‐ACA period, particularly those in poor health and with very low incomes, but it also potentially imposes financial losses on many, again compared to their experience when uninsured. We estimate changes in expected payments—defined as premiums plus expected out‐of‐pocket costs—from purchasing coverage and paying cost sharing post‐ACA, relative to expected out‐of‐pocket payments when being uninsured pre‐ACA, across population subgroups characterized by income, age, and health status. We also estimate changes in expected transfers to the previously uninsured under alternative assumptions on how much health care spending increases after the ACA.

Did Marketplace coverage really offer financial protection? Financial gains from the Affordable Care Act's private insurance policies among the previously uninsured

“…As a result, total OOP with insurance (depicted by the dark red bars) is greater than medical charges and greater than OOP without insurance across the potential scenarios consumers face on average. As illustrated in Figure 2, total OOP with insurance will exceed medical charges more than 80% of the time for the previously uninsured on average, which is consistent with previous findings of increases on average spending for most previously uninsured enrollees in the Marketplace (Pauly et al, 2018).…”

“…Additionally, I analyze results by ownership of seizable wealth, defined as having at least $50 worth of income or assets seizable in bankruptcy, and by health status, defined by diagnosis of at least one of the nine chronic illnesses most correlated with medical spending within the raw data on this population (these illnesses are angina, cancer, coronary heart disease, diabetes, heart attack, poor perceived mental health, any physical limitation, asthma, and emphysema). I include the premium with the direct OOP costs of care when discussing total OOP costs to reflect the total price of medical care consumers experience (Pauly et al, 2018).…”

“…But could the benefit design in the ACA's Marketplace policies emphasis on catastrophic coverage deter uninsured consumers who have access to this system of uncompensated care? Prior work suggests that previously uninsured enrollees would spend more on medical care with Marketplace coverage than by remaining uninsured, in large part because the uninsured incur very little medical expense (Hill, 2015; Pauly, Leive, & Harrington, 2018). On the other hand, evidence from Pauly, Leive, and Harrington (2015) suggests that many enrollees would realize a welfare improvement from reduced financial uncertainty.…”

Health insurers' use of quality improvement expenses to achieve a minimum medical loss ratio requirement

“…more generally, we add to the literature regarding the effects of various provisions within the ACA (see, e.g., Frean et al, 2017;French et al, 2016;Heim et al, 2021;Pauly et al, 2020).…”

Do insurers respond to active purchasing? Evidence from the Massachusetts health insurance exchange

“…2 1 Designing policies to combat adverse selection requires care because insurance take-up is voluntary, which means that policies addressing adverse selection among insurance plans may reduce insurance take-up among the healthy (Geruso et al, Forthcoming;Klein et al, 2022;Saltzman, 2021). The reasons for incomplete take-up are still uncertain; they may include time preferences and liquidity constraints (Baillon et al, 2022;Ericson & Sydnor, 2018), actuarial unfairness due to community rating and adverse selection (Pauly et al, 2020), and the presence of informal coverage by charity care and unpaid medical debts (Finkelstein et al, 2019;Mahoney, 2015). These complex issues can also affect the optimal design of cost sharing (Phelps, 2022).…”