ACA Impact Analysis

This page is devoted to broad public policy impacts of the ACA. Elsewhere there are separate sections devoted to discussion ACA’s impact on employers , the health sector (with individual sections on private health insurance , hospitals , physicians , and other industry sub-components), and households (again, with individual sections on young adults , Medicare and Medicaid beneficiaries, etc.).

• Alliance for Health Reform provides on-line briefings and policy briefs related to health reform.
• Bipartisan Policy Center | Leaders’ Project on the State of American Health Care will focus on developing bipartisan approaches to implementation.
• Brookings Institution | Engleberg Center for Health Care Reform .
• Cato Institute has research related to universal health care and other health topics .
• Center for Budget and Policy Priorities, Health Reform .
• Congressional Budget Office. Key Issues in Analyzing Major Health Insurance Proposals . This was written before PPACA was enacted, but nevertheless is a rich source of information about the health system and potential effects of reform.
• Health Affairs | Health Reform lists articles from the leading journal of health policy thought and research.
• George Washington University | Health Reform GPS
• Heritage Foundation | Health Care Reform provides a market-oriented perspective on health reform.
• Kaiser Family Foundation | Research and Analysis provides a gateway to its own in-depth reports on health reform as implementation proceeds. The Scan provides roundup of other studies and developments related to health reform.
• New England Journal of Medicine | Reform Implementation .
• RAND Corporation | RAND Compare provides information and tools to help policymakers, the media, and other interested parties understand, design, and evaluate health policies, including health reform.
• UMASS, Center for Health Law and Economics. Funding Opportunities in the Affordable Care Act (P.L. 111-148)
• Urban Institute | Real-Time Policy Analysis provides analysis of the impact and key issues under health care reform (funded by Robert Wood Johnson Foundation).

Net Impact Assessment

Overall Impact

• American Action Forum (April 2015).Five Years After Passage: The ACA by the Numbers (4.28.15). This report attempts to synthesize many of the studies and cost estimates which have been produced in order to answer these questions.
  • The number of uninsured individuals has decreased, but not by as much as the Congressional Budget Office (CBO) originally predicted.
    • 15 million : fewer uninsured individuals since 2010
    • 35 million : individuals still without insurance
    • 12 million : more people enrolled in Medicaid since 2010
    • 11 million : individuals have insurance through a state or federal exchange
    • 7.7 million : individuals receiving subsidies for coverage through an exchange
    • $300 : average increase in annual deductibles for ESI from 2010-2014
    • $5,730 : average annual cap on out-of-pocket expenses for plans purchased through the exchange in 2014; $2,719 more than the average for ESI plans
    • $43 billion : projected individual mandate penalties over the next 10 years
    • $167 billion : mandate penalties paid by employers over the next 10 years
    • $42.6 billion : cost of ACA regulations implemented thus far
    • $1.2 trillion : federal cost for ACA coverage provisions over the next 10 years
    • $3.15 trillion : national health care expenditures in 2014
    • 17.9 : percent of GDP spent on health care in 2014

    “Five years after passage, there are few clear indications that the ACA has had its intended impact on cost of care and access to it. Meanwhile, the law costs significantly more than projected. We are unsure how many previously uninsured people have truly gained coverage because of the law. For many who have gained insurance coverage, they have not, in turn, been successful at gaining access to affordable care; they are paying premiums for plans that do not meet their needs and which include deductibles and coinsurance rates which inhibit the use of such coverage. National health care expenditures continue to rise, proving that we have been unsuccessful at bending the cost curve thus far. Going forward, health coverage policy solutions will need to focus on enlisting market forces to lower costs rather than merely subsidizing them.”

    • Physician Opinion. According to the 2014 Survey of America’s Physicians conducted by the Physician’s Foundation, the following responses were given to the question “What overall grade would you give the Affordable Care Act as a vehicle for healthcare reform?”
      • A – 3.7% of all respondents (4.1% among those under age 45; 3.4% age 46 or older)
      • B – 21.7% overall (25.8% under 46; 19.5% 46+)
      • C – 28.8% overall (33.1% under 46; 26.3% 46+)
      • D – 21.1% overall (19.0% under 46; 22.3% 46+)
      • E – 24.7% overall (18.0% under 46; 28.5% 46+)
      • This is based on 20,088 responses (response rate=3.1%; sampling error=1.6%).

      Winners vs. Losers

      Several analyses have sought to roughly calculate the overall number of “winners” compared to “losers.”

      • Analyses Showing Winners Would Outnumber Losers. These are listed in chronological order since some are in response to earlier estimates.
        • Kessler, Glenn. Ted Cruz’s claims on Obamacare focus on losers, not winners . Washington Post (10.18.13). Concludes “quite likely the number of winners from the law is larger than the losers.” The author does not do a full-blown net assessment, but points out that 25 million would gain coverage vs. only 7 million who would lose employer-provided coverage and 5 million who would be shifted out of non-group coverage.
        • Weigel, David. The Chart That Could Save Obamacare . Slate.com. 10.31.13. Concludes there will be 3% “potential losers;” 3% who will face “no real consequence;” 14% “clear winners” and 80% “largely unaffected.” The chart was originally created and tweeted by Justin Wolfers based on estimates provided by Jonathan Gruber in a New Yorkerinterview with Ryan Lizza.
        • Barro, Josh. Here’s What’s Wrong With That Obamacare ‘Winners And Losers’ Chart That Everyone Is Passing Around (10.31.13). Concludes that the Wolfers chart (see Weigel below) overstates the number of “clear winners” (14% should be 8%), nevertheless concluding that “it’s clear that Obamacare creates more winners than losers, but this chart and the analysis behind it don’t shed much light on the ratios.”
        • Conover, Chris. The Chart That Could Sink Obamacare . Forbes.com. 1.28.14. Written in response to the Wolfers chart cited by Weigel, this analysis concludes there will be 4 “losers” for every “winner” under the ACA. 55% will be “losers” including 13% who would be “big losers,” 15% “small losers” and 27% “minimal losers.” 12% would be “winners” including 4% who would be “big winners,” 7% “small winners” and 1% “minimal winners.”
        • Pauly, Mark; Adam Leive and Scott Harrington. The Price of Responsibility: The Impact of Health Reform on Non-Poor Uninsureds . NBER Working Paper 21565. September 2015. Examines the impact of the ACA on persons with incomes above 138% poverty (i.e., the population not eligible for Medicaid expansion). We find that the average financial burden will increase for all income levels once insured. Subsidy-eligible persons with incomes below 250 percent of the poverty threshold likely experience welfare improvements that offset the higher financial burden, depending on assumptions about risk aversion and the value of additional consumption of medical care. However, even under the most optimistic assumptions, close to half of the formerly uninsured (especially those with higher incomes) experience both higher financial burden and lower estimated welfare; indicating a positive “price of responsibility” for complying with the individual mandate.
        • Other Analyses Related to Winners and Losers.
          • Axios (1.20.17). The winners and losers if Obamacare is replaced.
            • Winners
              • Sick people. The law requires insurers to cover anyone with pre-existing conditions.
              • Low-income people. They gained coverage through expanded Medicaid, get biggest subsidies for private Obamacare coverage.
              • Older customers. They can only be charged three times as much as young adults.
              • Health care providers. Hospitals, doctors, and other providers have had to provide less uncompensated care because they’ve had more insured customers.
              • Insurers. The ones that specialized in low-income markets and got a good mix of customers have done well, but the ones that guessed the customer mix wrong have had losses and were more likely to.
              • Healthy people. They have to pay to subsidize sick people, have to buy more generous coverage.
              • Young adults. They have to pay more to control older customers’ premiums.
              • Middle-income people. They have to buy coverage, but get little to no subsidy.
              • Targets of Obamacare fees. Drug companies, health insurers, and medical device makers have all had to pay taxes and fees to finance the law. The health insurance and medical device taxes are temporarily suspended.

              ACA Impact on Access

              ACA Impact on Costs

              ACA Impact on Quality and Outcomes

              ACA Impact on Employment/Economy

              ACA Impact on Taxes

              The Tax Foundation reports : “The Joint Committee on Taxation recently released a 96 page report on the tax provisions associated with Affordable Care Act. The report describes the 21 tax increases included in Obamacare, totaling $1.058 trillion – a steep increase from initial assessment. The summer 2012 estimate is nearly twice the $569 billion estimate produced at the time of the passage of the law in March 2010. The Tax Foundation report includes an updated table as of summer 2012 showing the total amounts raised by each of the 21 new taxes over the 10 years between 2013-2022. These can be summarized as follows:

              • Taxes on high income taxpayers. $318 billion (30.1%) is for taxes targeting individuals above $200K and families above $250K in annual income.
              • Penalty payments. $161 billion (15.2%) is for penalty payments by individuals or employers who fail to comply with the individual or employer mandate.
              • Health industry taxes. $286 billion (27.0%) is for taxes on health insurers, medical device manufacturers and pharmaceutical companies.
              • All other taxes. $293 billion (27.7%) is for miscellaneous taxes on good and services (e.g., tanning bed tax) or limitations in existing tax preferences such as contributions to Flexible Spending Accounts and Health Savings Accounts.

              Also see ACA and Taxes for a detailed accounting.

              ACA Impact on the Federal Budget Deficit

              Short-Term Forecasts (10-Year)

              Long-Term Forecasts

              Analysis

              ACA Impact on Equity

              According to the NY Times, the ACA “was a starkly redistributive law.” That said, it both preserved and created a variety of horizontal and vertical inequities.

              Tax Subsidies for Private Health Insurance

              ESI and Non-Group Coverage Treated Differently. Historically, the tax exclusion created an inequity favoring workers and their families having employer-sponsored insurance (ESI) by providing them with higher implicit tax subsidies for private health insurance than their counterparts with identical income who were self-employed or purchased non-group coverage. The ACA reverses this by generally providing much higher subsidies for those who obtain their coverage on the Exchange than their counterparts with identical incomes who have access to “affordable” ESI.

              • Horizontal Inequity. The ACA creates two forms of horizontal inequity:
                • Subsidy Structure. Those with low incomes get much higher subsidies on the Exchange than they would if covered by ESI. For the lowest income families, the difference in tax subsidies can amount to more than $10,000. Conversely, those with the highest incomes generally get much higher subsidies via ESI than on the Exchange.
                • Affordability Firewall. A RAND Corporation study reports: “ To limit disruption to those with coverage, the ACA implements the employer mandate, which requires firms with more than 50 employees to offer health insurance or face penalties, and the individual “affordability firewall,” which limits subsidies to individuals lacking access to alternative sources of coverage that are “affordable”–do not exceed 9.5% of family income. Under the affordability firewall, all members of a family are ineligible for subsidies if at least one worker in the family has an ESI offer in which the employee’s contribution for a single premiumis less than 9.5 percent of the worker’s household income. However, the employee contribution for a family ESI plan may be substantially higher than the single contribution. In contrast,families who are eligible for premium subsidies on the Marketplaces pay no more than 9.5% of their income for a family premium, and many will pay considerably less, depending ontheir family’s income. As a consequence of the ACA’s affordability firewall, many households facing onerous employee contributions to ESI family premiums do not qualify for subsidiesfor purchasing coverage in the Marketplaces .”

                Net Impact on Equity

                • Henry J. Aaron and Gary Burtless. Potential Effects of the Affordable Care Act on Income Inequality. Brookings Institution (1.27.14).
                  • The Affordable Care Act (ACA) will improve the well-being and incomes of Americans in the bottom fifth of the income distribution. Under our broadest and most comprehensive income measure we project that incomes in the bottom one-fifth of the distribution will increase almost 6%; those in the bottom one-tenth of the distribution will rise more than 7%. These estimated gains represent averages. Most people already have insurance coverage that will be left largely unaffected by reform. Those who gain subsidized insurance will see bigger percentage gains in their income.
                  • Only when we count as income the full cost to the government of providing additional health insurance to the poor does the ACA have a meaningful and positive impact on the post-ACA incomes of the very poor.
                  • The benefits of the ACA to low-income families would have been greater if the enacted version of the law had been put into effect.

                  Equity Issues in Other Major Entitlements

                  Other major entitlements also contain significant inequities.

                  Social Security. Gene Steuerle summarizes major inequities in Social Security:

                  • “Working single parents, often abandoned mothers, are forced to pay for spousal and survivor benefits they cannot receive, often receiving at least $100,000 fewer lifetime benefits than some who don’t work, pay less Social Security tax, and raise no children.”
                  • “The system discriminates against two-earner couples, spouses who divorce before ten years of marriage, long-term workers, and those who beget or bear children before age 40.”
                  • Intergenerational inequity.
                    • Today, lifetime Social Security and Medicare benefits approximate $1 million for a couple with average incomes throughout their working lives. Rising by about $18,000 a year, benefits for a couple in 2030 are scheduled to grow to about $1-1/3 million.
                    • Meanwhile, the rate of return on contributions falls continually for each generation. Each year of delayed reform shifts more burdens to younger generations from older ones, with the largest impact on groups like blacks and Hispanics, in part because they comprise a larger share of those future generations with lower returns.