Friday, December 17, 2010

Health Reform Will Dramatically Lower Rate Of Uninsurance, Costs Of Uncompensated Care

Under the Patient Protection and Affordable Care Act (ACA), the number of uninsured adults younger than age 65 would drop by 27.8 million (from 18.6% to 8.3% of this population), and the cost of uncompensated health care provided to the uninsured would drop by 61%, according to the Urban Institute. The report, America Under the Affordable Care Act, also found that the Medicaid expansion would enroll an additional 16.8 million people, and 43.8 million people would be covered through health insurance exchanges (both nongroup and Small Business Health Options Program (SHOP)).

Although the number of uninsured would decline for all income levels, the greatest decline in uninsured would be among the lowest-income. For those with income below 200% of the federal poverty level (FPL), the number of uninsured would drop by 19.4 million.

Under the ACA, nearly 30% of non-elderly adults at all income levels who would have been uninsured without reform would be covered by Medicaid or the Children’s Health Insurance Program (CHIP); nearly 20% would be covered under the new health insurance exchanges; and another 10% would be covered by private insurance outside the exchanges. The remaining 40% would remain uninsured, but nearly 40% of these would be eligible for Medicaid or CHIP and would decline enrollment. In addition, slightly more than one-quarter of the remaining uninsured would be undocumented immigrants who do not qualify for either the public health care programs or the health insurance exchanges, the Urban Institute determined.

Expanded Medicaid would enroll 13.1 million new adults and 3.7 million new children, but coverage costs for the new adults enrolled would be much lower, on average, than the costs for current adult Medicaid enrollees, the report noted.

Health insurance exchanges would cover an estimated 43.8 million non-elderly adults, with about half of these (23.1 million) purchasing coverage individually and the remainder (20.7 million) obtaining their exchange coverage through their employer.

Total health care spending for the non-elderly by government, employers, and individuals would rise by 4.5% under the ACA (excluding savings from multiyear provisions) if it were fully implemented in 2010. The report did not explore multiyear provisions such as Medicare and Medicaid savings and cost-containment programs. Total costs to employers would be mostly unchanged. The Urban Institute found that spending for most individuals would not change significantly, although many of the existing uninsured who do not qualify for Medicaid or the most generous premium subsidies would spend more on premiums for new health insurance or individual mandate penalties.

The 61% reduction in the cost of uncompensated care would allow federal and state governments to reduce spending on programs that now support the uninsured (not in the Urban Institute’s government baseline). Less uncompensated care could also result in lower private premiums and higher provider revenue.

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.


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