America Under the Affordable Care Act

Abstract

Using the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM), the authors estimate how the Patient Protection and Affordable Care Act would affect health insurance coverage and spending on acute care for the nonelderly. They find that, for example, under the ACA, the number of nonelderly adults without health insurance would decline by 27.8 million, the cost of uncompensated care provided to the uninsured would drop by 61 percent, the Medicaid expansion would enroll 16.8 million more people, and 43.8 million would be covered through health insurance exchanges (both nongroup and SHOP).

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Summary

With the enactment of the Health Care and Education Reconciliation Act of 2010 on March 30, 2010, the Patient Protection and Affordable Care Act (ACA) became law, fundamentally changing health insurance and access to health care in the United States. Using the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM), we estimate how the ACA would affect the types of health insurance coverage Americans have, the number of those without insurance, and America’s overall spending on health care. For ease of comparison, we simulate the ACA as if fully implemented in 2010 and contrast the results with HIPSM’s pre-reform baseline results for 2010. Our single-year estimates complement the 10-year cost estimates previously released by the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary, providing many results—particularly for coverage and transitions in coverage—that are either new or broken out by more detailed characteristics than in either of those estimates.

We estimate that:

• Under the ACA, the share of nonelderly adults without health insurance would decline by 27.8 million, from 18.6 to 8.3 percent. The number of uninsured would decline for all income categories, but the lowest-income would see the greatest declines. For example, the number of nonelderly uninsured below 200 percent of the federal poverty level (FPL) would drop by 19.4 million.
  
• Nearly 30 percent of those at all income levels who would have been uninsured without reform would be covered by Medicaid or the Children’s Health Insurance Program (CHIP), nearly 20 percent would be covered under the new health insurance exchanges, and an additional 10 percent would be covered by private insurance outside the exchanges. The other 40 percent would remain uninsured.
  
• Nearly 40 percent of those who would still be uninsured under the ACA are eligible for Medicaid or CHIP but would choose not to enroll. Just over a quarter would be undocumented immigrants who are ineligible for public insurance coverage or the coverage in new exchanges.
  
• Total spending on acute health care for the non-elderly by the government, employers, and individuals would increase by 4.5 percent under the ACA (excluding the savings from multiyear provisions) if it were fully implemented in 2010. Multiyear provisions such as Medicare and Medicaid savings and cost-containment programs were not simulated. Total costs to employers would be largely unchanged. Spending for most individuals would not change significantly, though many of those currently uninsured but ineligible for Medicaid or the most generous premium subsidies would spend more on premiums for new health insurance or individual mandate penalties.
  
• The cost of uncompensated care provided to the uninsured would drop by 61 percent. These reductions would allow federal and state governments to reduce spending on programs that now support the uninsured (not in our government baseline). Less uncompensated care could also result in lower private premiums and higher provider revenue.
  
• The expansion of Medicaid would enroll 13.1 million new adults and 3.7 million new children. The newly enrolled adults would be much less expensive to cover, on average, than current adult Medicaid enrollees.
  
• We estimate that 43.8 million nonelderly persons would be covered through health insurance exchanges. About half of these, 23.1 million, would be covered by nongroup (i.e., individually purchased, not employer-related) insurance purchased in the health insurance exchanges. The remainder would obtain coverage in an exchange through their employer.

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