Featured Research

from universities, journals, and other organizations

Out-of-pocket medical spending will drop for many under Affordable Care Act

Date:
October 1, 2013
Source:
RAND Corporation
Summary:
Making health care insurance more affordable is one key goal of the Affordable Care Act. A new study finds that out-of-pocket medical expenses will decline for most consumers who become newly insured or change their source of health insurance under the program.

Out-of-pocket medical expenses will decline for most consumers who become newly insured or change their source of health insurance under the federal Affordable Care Act, according to a new RAND Corporation study.

The study found that overall the Affordable Care Act will have a varied impact on health spending by individuals and families, depending primarily on their income and whether they would have been uninsured in 2016 without the program.

People who will be newly insured and do not qualify for government subsidies are those who are most likely to see increased total spending as they begin paying premiums for health coverage. Uninsured people who become newly insured under Medicaid will see the largest drop in spending.

Studying Florida and Texas in detail, researchers also estimated consumer spending in states that have chosen to not expand Medicaid. Compared to a hypothetical case in which Medicaid is expanded, the study found that overall health spending will increase for low-income people who remain uninsured or purchase private health insurance in the individual insurance market.

"Among the groups we studied, a clear benefit of the Affordable Care Act is that it will reduce the risk of facing catastrophic medical costs," said Christine Eibner, a study author and a senior economist at RAND, a nonprofit research organization. "Consumers with the lowest incomes will see the most-dramatic reductions of their risks."

Researchers used an updated version of the RAND COMPARE microsimulation model, which predicts the effects of health policy changes at state and national levels, to estimate how the Affordable Care Act is likely to change the out-of-pocket costs (co-pays and deductibles) as well as overall care spending (including plan premiums) for people who will become newly insured and people who will change their source of health coverage.

The study also examined the likely impact of the Affordable Care Act on out-of-pocket spending and the risk of facing catastrophic health costs for low-income people in Texas and Florida, two states that have decided not to expand Medicaid under the Affordable Care Act.

Among the study's findings:

  • The largest reduction in out-of-pocket spending will be for the 11.5 million consumers who become newly insured under an expanded Medicaid program, with the analysis predicting their annual out-of-pocket medical costs will fall from $1,463 to $34.
  • The largest increase in overall health costs is expected to be among people who become newly insured on the individual market and have incomes more than four times the federal poverty level. An estimated 3.3 million consumers are expected to spend $7,202 in 2016 under the Affordable Care Act, compared to $5,368 if the law was not in place.
  • Some low-income people in states that do not expand Medicaid could see higher health spending compared what would happen if Medicaid was expanded. For example, a Texas resident with an income below the federal poverty level who does not qualify for Medicaid will face costs of $1,831 per year, compared to $28 if they were covered by Medicaid.
  • Nationally, the 11.5 million people who become newly insured by Medicaid will see their risk of spending at least 10 percent of their income on medical costs drop from 45 percent to 5 percent.

The full report is available at: http://www.rand.org/pubs/research_reports/RR383.html


Story Source:

The above story is based on materials provided by RAND Corporation. Note: Materials may be edited for content and length.


Journal Reference:

  1. Sarah A. Nowak, Christine Eibner, David M. Adamson, Evan Saltzman. Effects of the Affordable Care Act on Consumer Health Care Spending and Risk of Catastrophic Health Costs. Rand Health, October 2013

Cite This Page:

RAND Corporation. "Out-of-pocket medical spending will drop for many under Affordable Care Act." ScienceDaily. ScienceDaily, 1 October 2013. <www.sciencedaily.com/releases/2013/10/131001151130.htm>.
RAND Corporation. (2013, October 1). Out-of-pocket medical spending will drop for many under Affordable Care Act. ScienceDaily. Retrieved September 20, 2014 from www.sciencedaily.com/releases/2013/10/131001151130.htm
RAND Corporation. "Out-of-pocket medical spending will drop for many under Affordable Care Act." ScienceDaily. www.sciencedaily.com/releases/2013/10/131001151130.htm (accessed September 20, 2014).

Share This



More Health & Medicine News

Saturday, September 20, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Could Grief Affect The Immune Systems Of Senior Citizens?

Could Grief Affect The Immune Systems Of Senior Citizens?

Newsy (Sep. 19, 2014) The study found elderly people are much more likely to become susceptible to infection than younger adults going though a similar situation. Video provided by Newsy
Powered by NewsLook.com
Jury Delivers Verdict in Salmonella Trial

Jury Delivers Verdict in Salmonella Trial

AP (Sep. 19, 2014) A federal jury has convicted three people in connection with an outbreak of salmonella poisoning five years ago that sickened hundreds of people and was linked to a number of deaths. (Sept. 19) Video provided by AP
Powered by NewsLook.com
How The 'Angelina Jolie Effect' Increased Cancer Screenings

How The 'Angelina Jolie Effect' Increased Cancer Screenings

Newsy (Sep. 19, 2014) Angelina's Jolie's decision to undergo a preventative mastectomy in 2013 inspired many women to seek early screenings for the disease. Video provided by Newsy
Powered by NewsLook.com
The Cost of Ebola

The Cost of Ebola

Reuters - Business Video Online (Sep. 18, 2014) As Sierra Leone prepares for a three-day "lockdown" in its latest bid to stem the spread of Ebola, Ciara Lee looks at the financial implications of fighting the largest ever outbreak of the disease. Video provided by Reuters
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins