ACA Implementation Led to Varied Out-of-Pocket, Premium Spending

January 25, 2018 - Affordable Care Act (ACA) implementation led to an 11.9-percent decrease in out-of-pocket spending but also a 12.1-percent increase in premium spending totals, according to a study published in JAMA Internal Medicine.

The landmark legislation helped to provide health insurance to over 20.5 million individuals, but researchers from the Cambridge Medical Alliance and Harvard Medical School may have found evidence that suggests ACA enrollees experience burdens associated with high premium costs.

The bill was intended to lower healthcare costs burdens for families and individuals, but data collected from Medical Expenditure Panel Survey (MEPS) from 2012 to 2015 show that the ACA has only made incremental progress in lowering enrollee care costs.

Even though the ACA provided premium assistance through cost-sharing subsidies (CSRs) —which have been cut via the Trump Administration — and tax credits, only low-income enrollees were likely to experience lower premium spending burdens.

“The ACA expanded health insurance coverage, mostly by offering free or subsidized coverage to low- and middle-income families,” researchers said. “Although these measures halved the uninsured rate, the acquisition of insurance among the previously uninsured might have influenced health care spending in different ways.”

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The survey data measured out-of-pocket spending the lowest-, low-, and middle-income groups within ACA enrollment populations and found that the odds of an individual incurring out-of-pocket costs (i.e., those exceeding 10 percent of their income) saw a 20.5-percent reduction after the ACA’s passage.

ACA enrollees in the lowest-income group had a 19.6-percent reduction in their odds of experiencing high-burden healthcare costs after the ACA. The low-income group experienced a 26.7-percent decrease in their adjusted odds of exceeding out-of-pocket spending limits while the lowest-income group had a 21.3-percent reduction.

The ACA made marginal progress in lowering the burden of healthcare costs of low-income individuals and families, but disparities in healthcare spending burden remained between higher- and lower-income groups.

“Before the ACA, a steep stepwise increase in high-burden total spending occurred as family income decreased,” researchers wrote. “The ACA did not alter this pattern; the odds of experiencing high-burden spending were approximately 16 times greater among the poor than among the higher-income group before the ACA and 14 times higher after the ACA.”

According to researchers, the ACA’s Medicaid expansion helped contribute to lower out-of-pocket spending within low-income groups but was not a policy change that was expected to lower consumer premiums.

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Only 17.8 percent of enrollees in the lower income groups paid insurance premiums before the ACA implementation, which led the authors to suggest that Medicaid expansion did not impact total ACA enrollee premium spending significantly.

The Medicaid expansion likely lowered out-of-pocket spending within the lowest income group because it alleviated copay responsibilities for low income enrollees. Middle-income enrollees also received out-of-pocket spending reductions because of the ACA’s provisions that eliminate cost-sharing.

“This consequence might have been greater if all states had accepted the ACA’s Medicaid expansion,” researchers added. “In the analysis of high-burden spending in this group, controlling for use of health care services slightly attenuated the decrease but did not substantially alter our findings.”

Additionally, researchers claimed that ACA’s initial CSRs and tax credits did help lower premium spending for the low-income enrollees but did not provide enough premium assistance for middle-income enrollees.

Individuals and families in the middle-income group, that qualify for partial ACA subsidies, experienced a 28.3 percent increase in the likelihood their premium spending would eclipse 9.8 percent of their annual income.

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“Although many individuals in [the middle-income group] were eligible for premium assistance through the ACA exchanges, the subsidies were apparently insufficient to prevent growth of premium contributions for this group or to reduce their total health spending,” researchers wrote.

Researchers further elaborated that uninsured individuals before the ACA’s implementation may have newly begun to pay premiums once the law was passed, with these individuals citing expensive costs as the reasons for later dropping their coverage.

“For instance, 85 percent of persons who remained uninsured after shopping on the exchanges failed to purchase coverage because it was too expensive,” researchers observed. “Insurance reforms, such as protections for preexisting conditions, may have lowered premiums for medically complicated individuals but increased them for others.”

As lawmakers look to either repeal or reform revenue and enforcement provisions in the highly-debated bill, researchers suggested that Congressional leaders can effectively reform the ACA through higher premium assistance that helps lower household spending.

“Reforms to the ACA that could improve household spending burdens include expanding Medicaid in all states, increasing the generosity of cost-sharing and premium subsidies, and increasing the actuarial values of standard exchange plans. International experience suggests that a universal, comprehensive national health insurance program would most effectively reduce household spending and ameliorate disparities,” they concluded.