The Affordable Care Act and Health Insurance Markets: Simulating the Effects of Regulation

By Christine Eibner; Amado Cordova et al. | Go to book overview
The changes, coupled with other policies introduced by the Affordable Care Act, are likely to affect enrollment, premiums, and the composition of the population enrolled in nongroup and small group plans. It is important for federal and state policymakers to understand the potential effects of these changes as they make decisions about setting up the health insurance exchanges.In this report, we use RAND’s Comprehensive Assessment of Reform Efforts (COMPARE) microsimulation model to examine these effects. Specifically, our analysis examines the likely effects of the Affordable Care Act on
the number of uninsured individuals
the number of enrollees in the nongroup and small group markets
the cost of premiums
the characteristics of enrollees.

We also consider the implications of two decisions confronting states: whether to expand their Medicaid programs to cover all adults with incomes below 138 percent of the FPL and whether to merge or combine their small group and nongroup risk pools. If risk pools are merged, enrollees in the small group and nongroup markets would face the same premiums for comparable coverage. If risk pools are split, premiums in the two markets could diverge. For ten representative states (Florida, Kansas, Louisiana, Minnesota, New Mexico, North Dakota, Ohio, Pennsylvania, South Carolina, and Texas), we estimate enrollment and premiums both with and without the Affordable Care Act. Then, for a subset of states, we conduct sensitivity analyses related to these critical state decisions.

The analysis is based on a microsimulation model, which—like all microsimulation approaches—has limitations. Current data on nongroup premiums are limited, and there are many uncertainties about how individuals and insurers will respond to the complex policy changes introduced by the Affordable Care Act. Nevertheless, state and federal policymakers must continue to implement the law, develop policy guidance and regulations, and make decisions about exchange operations, with little historical data available to gauge the potential effects of these decisions. Recognizing that all models have limitations, our analysis aims to provide decisionmakers with insight into the types of changes in enrollment and premiums that may occur as the Affordable Care Act is implemented.


Results: Number of Uninsured Individuals

Our analysis finds that for all ten states and the United States overall, the Affordable Care Act could lead to a substantial decline in the number of uninsured nonelderly people. We estimate that the 2016 uninsurance rate in the United States would be 19.6 percent without the Affordable Care Act, compared to 8.2 percent with the law, assuming that all states expand Medicaid. Across states, there is considerable variation in uninsurance levels in our 2016 estimates, ranging from a low of 5 percent in Minnesota to a high of 12 percent in Texas. States with larger immigrant populations, such as Texas and Florida, tend to have the highest uninsurance rates after Affordable Care Act implementation.

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The Affordable Care Act and Health Insurance Markets: Simulating the Effects of Regulation
Table of contents

Table of contents

  • Title Page i
  • Preface iii
  • Contents iv
  • Summary vi
  • Acknowledgments xi
  • I - Introduction 1
  • II - The Affordable Care Act and the Nongroup and Small Group Markets 3
  • III - Compare Background 6
  • IV - Results 20
  • V - Sensitivity Analysis 28
  • VI - Conclusion 34
  • References 37
  • Figures 41
  • Appendix A- Sensitivity to Mlr Assumptions 62
  • Appendix B- Key Assumptions 63
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