NCPA - National Center for Policy Analysis

How Will Health Care Reform Affect Costs and Coverage?

April 12, 2011

The Patient Protection and Affordable Care Act (ACA) contains substantial new requirements aimed at increasing rates of health insurance coverage.  Because many of these provisions impose additional costs on state governments, officials need reliable estimates of the likely impact of the ACA in their state, says the RAND Corporation.

RAND researchers undertook a preliminary analysis of how the ACA's key coverage-related provisions would affect insurance coverage and state government health care spending in five states -- California, Connecticut, Illinois, Montana and Texas.  They used publicly available data to estimate how various coverage-expansion policies affect the number of people who newly obtain and/or change sources of health insurance, the types of plans in which they enroll, and changes in private- and public-sector spending.  Findings include:

  • The percentage of the state population with health care coverage will increase significantly in all five states.
  • The percentage of employees offered insurance will not change substantially, but a small number of employees in small firms (defined as those with fewer than 100 employees in 2016) will obtain employer-sponsored insurance through the state insurance exchanges.
  • Substantial numbers of the nonelderly will choose to buy coverage through the exchanges.
  • In most cases, the majority of new Medicaid enrollees will be newly eligible, but increased enrollment of those previously eligible will cost the states more because the federal government heavily subsidizes newly eligible enrollees.

Source: "How Will Health Care Reform Affect Costs and Coverage?" RAND Corporation, April 2011.

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