Saturday, November 9, 2013

Better and Worse Off Under the ACA

There's a bit of a raging debate going on over whether people are going to be better or worse off under the coverage provisions of the ACA.  In the end, the math is almost impossible to do since it probably ultimately comes down to a household by household discussion and the cross-subsidies in the ACA are too complex to untangle without a lot more data and a lot more time than is available to the average blogger with a job (aka me).

But I thought I'd take a bit of a run at this, attempting to be charitable to the proponents.  Starting from the current CBO estimates of impact on coverage, I made the following assumptions:

1.  People who lose coverage are worse off - this assumption is because the CBO analysis is on gross numbers, meaning the coverage losses are not people who net lose coverage.

2.  People who acquire coverage with subsidies are better off - this is a charitable assumption since some people who acquire coverage with subsidies will still be paying more than they did prior to the ACA.  If their health care usage is low, they will be worse off.

3.  People who acquire coverage without subsidies are worse off - this is a slightly uncharitable assumption since some people who have high health usage will be better off depending on their prior insurance status.  However since group 2 is much larger than group 3, the net of these two assumptions is probably slightly charitable.

4.  People who acquire coverage through Medicaid are excluded.  The reason for this is the Medicaid expansion is entirely separable from the rest of the ACA and the noise in the market is all about the non-Medicaid part of the program.

5.  Nobody else is assumed to be better or worse off.  Of course this isn't true since those with employer insurance may be better or worse off depending on the cost impact on their policies and the actual amount of health care they use.  Those who pay taxes for the ACA are clearly worse off since their coverage, even if unchanged, costs more.  But again, the intent was to be charitable to the proponents of the ACA

If you aggregate it all, you get the following picture

So, the best case for the ACA is 15 to 20 million people better and worse off with slightly more better off than worse off.  And note, this is the best case solution.  It's likely that many who are now required to buy coverage, even with subsidies, will perceive themselves to be worse off because of the cash flow implications of paying for insurance regardless of usage.

And this is a long way short of the administration's positioning that the uninsured population will be eliminated and nobody will be made worse off.

The final point I'd make is that the gap between the positioning and the reality is going to get worse, not better, at least for the next couple of years.

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