Study: Most Consumers To See Out-of-Pocket Costs Drop Under ACA

Most consumers who purchase health coverage through the Affordable Care Act's new insurance exchanges will see their out-of-pocket costs decease, although total health care spending will increase for all but Medicaid beneficiaries, according to a study released Thursday by the RAND Corporation, MedPage Today reports.

For the report -- titled "Effects of the Affordable Care Act on Consumer Health Care Spending and Risk of Catastrophic Health Costs" -- researchers examined how the law will affect overall health care spending via a microsimulation model for newly insured customers and consumers who change their source of insurance.

The report found that most consumers will experience a decrease in out-of pocket-costs. Specifically:

  • Consumers with incomes between 100% and 138% of the federal poverty level will see a decline in their out-of-pocket costs from $1,446 in 2016 without the ACA to $506 with the ACA;
  • Consumers with incomes between 138% and 400% of the poverty level will see their out-of-pocket costs decline from $1,969 to $1,224; and
  • Consumers with incomes over 400% of the federal poverty level will see their out-of-pocket spending decrease from $5,368 to $1,227.

The report noted that the highest income group would experience the largest decline in out-of-pocket spending largely "because many of these individuals are denied coverage on the individual market ... due to their health status."

The report also found that whether states expand their Medicaid programs under the ACA will have a significant effect on out-of-pocket spending. For example, individuals in states that do not expand their Medicaid program under the ACA will spend $1,831 in out-of-pocket costs in 2016, as opposed to $28 if they were covered through the program. Meanwhile, residents in states that do expand their Medicaid program will pay about $34 in out-of-pocket costs, compared with $1,463 without such coverage.

Overall Health Spending Will Increase for Most

However, the report concluded that most people will pay more overall health care costs under the ACA, largely because newly insured individuals are paying premiums for the first time. Specifically:

  • Consumers who are ineligible for subsidies and individuals who are purchasing coverage for the first time will spend about $7,202 in 2016 under the ACA, as opposed to $5,368 in 2016 without the law;
  • Consumers with incomes below 138% of the federal poverty line will spend $2,005 in 2016, $559 more than they would without the law; and
  • Consumers with incomes between 138% and 400% of the poverty line will spend $3,536, $1,567 more than they would otherwise pay.

The RAND study also determined that an additional 11.5 million people will gain Medicaid coverage by 2016, and those individuals' risk of spending at least 10% of their income on health costs will drop from 45% to 5% (Pittman, MedPage Today, 10/3).

Robin Crane
As I understand it, people are required to HAVE health insurance. They are NOT required to buy it through the marketplace, and they are not required to accept a subsidy. To the degree that is so, sob stories about being forced to go "on the dole" are untrue.
Carol Frandsen
It shifts the burden and takes it away from some of us---but here's what I mean. I have always been self-employed and paid for my own insurance---since 1997. I have survived rate increases and age group changes and changes to my plans, but I have always managed, through FRUGAL living, to pay for my health insurance. Even when I became a widow 4 years ago and lost my entire business because I lost my partner, I have managed to pay for it. NOW, according to the ACA and the government, I am too poor to buy health insurance on my own and will be thrown onto Medi-Cal, where I will be losing my wonderful family doctor of 15 years. A doctor that has seen me through several medical situations and my widow grief. Long story short---I want to pay for my own insurance. But now the taxpayers are going to subsidize me and I dont what them to! But I cannot purchase insurance through the exchanges at a good price out of shear competition like I could a year ago. I apologize.
Jim Spriggs
Those who will see a cost increase are those who do not already have insurance but instead have been living with the hope that they will remain healthy and not have to go to the emergency room for expensive and unnecessary care. The ACA will enable system streamlining to lower its cost: • Reducing wasteful administrative expenses. • Reducing marketing and underwriting costs. • Fewer and less expensive acute episodes. Remember the Romney/Ryan lie about "robbing the $716 billion from Medicare to pay for Obamacare?" It's really about eliminating waste from Medicare and using the savings to help defray ACA costs. The idea is to AVOID "borrowing from the government." Obamacare is hardly perfect but it's all we've got.
Robert Zimmerman
Frank your exactly right. the ACA does not actually create any savings, it simply shifts a bunch of money around and adds alot of bearuacracy. The answer to your question though of where does the money come from is simple: it comes from more government borrowing.
Frank Apgar
Read each statement critically and analyze carefully. Each category of presumed savings carries a specific assumed selection bias or very specific criteria around which the "savings" occur. When you read the headline, above all, keep in clear focus as to what the group will be that are assumed to be signing up on the exchange and who then experience "savings". Further, ask yourself since the report concludes that total healthcare spending will increase even though most consumers who purchase insurance on the exchange will see their out-of-pocket costs decrease, "Where does the money then come from to cover the total increase in cost in healthcare spending?"

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