Friday, August 30, 2013

A Definitive ACA Study

The Rand Corporation has recently released what I take to be a definitive analysis of the ACA and its affects on insurance markets. And it's all good news for Obamacare fans. Topline conclusions:
  • Assuming all States finally embrace the Medicaid expansion, the uninsured rate in the US will more than fall in half, from 19% to 8% of the population, leaving 22 million uninsured in 2016, half of whom are undocumented immigrants.
  • Comparing pre and post-ACA premiums on an apples to apples basis (holding age, smoking status and actuarial values constant) premiums will go down slightly across the US, though some states are projected to show substantial (up to 43%) increases.
  • The Rand simulation model results concluded that the individual mandate and subsidies would be sufficient to encourage strong Exchange participation among all age segments of the uninsured.
  • Like the CBO, Rand sees fairly steady levels of employer-based insurance, which means there will be no "dumping" of employees onto the Exchanges. This projection is supported by Rand's projection that the small business, small group premiums will not change from current, pre-ACA levels.
The biggest and most consistent criticisms of ACA is that it will cause premiums to rise dramatically; that young, healthy people will not sign up; and that employers will push employees out into the Exchanges. The Rand study says these criticisms are wrong. Since their conclusions back up what the CBO has already forecasted, I think this argument has been settled. And very soon, we will have real world results.

Here are some key charts from the study:

This chart shows summary numbers from this study, from the CBO, and from an earlier Urban Institute study:

This chart shows the overall drop in the uninsurance rate, and results for 10 specific states:

This shows how premiums, looked at on an apples to apples basis, decline slightly post-ACA, but do increase in a number of states:

With all the focus on whether the young "invincibles" will sign up, the conversation misses the dramatic extent to which premiums for the 50 and over age range will be reduced.

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