Study: Most Consumers To See Out-of-Pocket Costs Drop Under ACA

Most consumers who purchase health coverage through the Affordable Care Act's new insurance exchanges will see their out-of-pocket costs decease, although total health care spending will increase for all but Medicaid beneficiaries, according to a study released Thursday by the RAND Corporation, MedPage Today reports.

For the report -- titled "Effects of the Affordable Care Act on Consumer Health Care Spending and Risk of Catastrophic Health Costs" -- researchers examined how the law will affect overall health care spending via a microsimulation model for newly insured customers and consumers who change their source of insurance.

The report found that most consumers will experience a decrease in out-of pocket-costs. Specifically:

• Consumers with incomes between 100% and 138% of the federal poverty level will see a decline in their out-of-pocket costs from $1,446 in 2016 without the ACA to $506 with the ACA;
• Consumers with incomes between 138% and 400% of the poverty level will see their out-of-pocket costs decline from $1,969 to $1,224; and
• Consumers with incomes over 400% of the federal poverty level will see their out-of-pocket spending decrease from $5,368 to $1,227.

The report noted that the highest income group would experience the largest decline in out-of-pocket spending largely "because many of these individuals are denied coverage on the individual market ... due to their health status."

The report also found that whether states expand their Medicaid programs under the ACA will have a significant effect on out-of-pocket spending. For example, individuals in states that do not expand their Medicaid program under the ACA will spend $1,831 in out-of-pocket costs in 2016, as opposed to $28 if they were covered through the program. Meanwhile, residents in states that do expand their Medicaid program will pay about $34 in out-of-pocket costs, compared with $1,463 without such coverage.

Overall Health Spending Will Increase for Most

However, the report concluded that most people will pay more overall health care costs under the ACA, largely because newly insured individuals are paying premiums for the first time. Specifically:

• Consumers who are ineligible for subsidies and individuals who are purchasing coverage for the first time will spend about $7,202 in 2016 under the ACA, as opposed to $5,368 in 2016 without the law;
• Consumers with incomes below 138% of the federal poverty line will spend $2,005 in 2016, $559 more than they would without the law; and
• Consumers with incomes between 138% and 400% of the poverty line will spend $3,536, $1,567 more than they would otherwise pay.

The RAND study also determined that an additional 11.5 million people will gain Medicaid coverage by 2016, and those individuals' risk of spending at least 10% of their income on health costs will drop from 45% to 5% (Pittman, MedPage Today, 10/3).