2 Studies Address Health Policy on Campaign Trail

Abstract

Medicare and the Affordable Care Act's effects on business are expected to be in the spotlight tonight when Representative Paul Ryan and Vice President Joe Biden square off in Danville, Kentucky, in their lone national debate. Two recent Health Policy Center studies take on each topic.

Contact: Stu Kantor, (202) 261-5283, skantor@urban.org

Washington, D.C., October 11, 2012—Medicare and the Affordable Care Act's effects on business are expected to be in the spotlight tonight when Representative Paul Ryan and Vice President Joe Biden square off in Danville, Kentucky, in their lone national debate. Two recent Health Policy Center studies take on each topic.

"Why Premium Support? Restructure Medicare Advantage, Not Medicare" brings evidence to bear on the question of premium support (also known as Medicare vouchers), which is at the center of Representative Ryan's proposal for Medicare reform.

The Study in Brief

• In theory, seniors using vouchers to purchase private or public insurance will harness the power of the marketplace to temper Medicare's rising bill.
• In practice, seniors already have the option to enroll in private Medicare Advantage plans, which compete directly with Medicare for participants. But the analysis finds that the private Medicare Advantage plans, on average, cost less than traditional Medicare in only 15 percent of the nation's counties. The graphic below distills the study.
• Rather than reducing costs, replacing traditional Medicare with vouchers for private plans would divide the market by beneficiaries' income and health status, undermine Medicare's market power to limit provider payments, and shift costs and risk to participants.

"Implications of the Affordable Care Act for American Business" shows that the law has a negligible impact on total employer-sponsored coverage and costs and makes small businesses -- for whom coverage expands the most -- financially better off.

The Study in Brief

• If the ACA had been fully implemented this year, employer-sponsored insurance would have covered over 4 million more people. In small, mid-size, and large firms alike, more workers and their families would have private insurance.
• For businesses in general, employer premium spending per person insured would not be affected by the law, remaining constant at about $3,600. But for small employers, spending would decline.
• The 2.7 percent increase in individuals covered by employer plans comes at a cost to employers equal to 0.0003 percent of total national wages.
• The study's estimates do not include the potential effects of cost containment initiatives in the ACA or strategies available to employers to reduce their costs by modifying their contributions or benefits.

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