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  • Jan 22, 2018

CHA Researchers Find Families' Out-of-Pocket Medical Costs Fell After Obamacare

New study is the first to estimate nationwide changes in household medical spending after the ACA.

CAMBRIDGE, Mass. – Families' out-of-pocket medical expenses decreased in the first two years after the Affordable Care Act was implemented, but their premium payments rose according to a new study by researchers at Harvard Medical School and the City University of New York at Hunter College. The findings, published today by JAMA Internal Medicine, indicate that the ACA shifted the spending burden from low to higher-income households, and from out-of-pocket spending to spending on premiums.

Savings on annual out-of-pocket expenses (any medical spending not covered by insurance) averaged $74 (12 percent), with poorer individuals seeing the biggest drop (21.4 percent) while those with higher incomes saw no change. In contrast, higher-income households bore the brunt of premiums' increase (23 percent), while premiums for other income groups did not change significantly. Overall, households' premiums rose by an average of $232 (or 12 percent).

The study used national data on 83,431 non-elderly adults, comparing households' medical spending during the two years before and after the full implementation of the ACA in 2014. The researchers assessed out-of-pocket outlays and premium contributions made by household members. In addition to analyzing how much families spent, the study examined "high-burden spending," such as paying more than 10 percent of income (or 5 percent for low income households) for out-of-pocket expenses. Premiums were considered "high-burden" if they exceed 9.5 percent of income (an affordability threshold specified in the ACA).

High-burden out-of-pocket spending fell by 20 percent overall, with the most substantial decrease seen among poorer individuals. In contrast, middle-income households (those with incomes between 250 percent and 400 percent of poverty) saw a 28 percent increase in high-burden premium spending, while other income groups experienced little change in this measure.

"Our findings suggest that the Affordable Care Act reduced out-of-pocket costs for many Americans," said the study's lead author Anna Goldman, MD, MPA, a primary care physician at Cambridge Health Alliance and a clinical fellow in medicine at Harvard Medical School. "While the law helped ease families' medical cost burden, it didn't stem the steady rise in families' premiums and left plenty of room for progress."

"It's not surprising that the ACA's effects were modest," continued Dr. Goldman. "Only 6.5 percent of Americans gained coverage through the ACA, while about 28 million remain uninsured. Moreover, efforts to make the ACA's financing budget-neutral limited the generosity of subsidies and may have reduced the law's potential to reduce medical spending."

"The ACA helped smooth out spending and make it more predictable," said Steffie Woolhandler, MD, MPH, a distinguished professor of public health at CUNY's Hunter College and lecturer in medicine at Harvard Medical School. "Fewer families were left with high out-of-pocket costs when they were sick, but paid more in up-front premiums. But the law fell far short of what many nations with single-payer systems have achieved; universal, comprehensive and affordable coverage."

"Recent moves by the administration and Congress to undermine the ACA could erase the gains we observed, or worse," said senior study author Danny McCormick, MD, MPH, a primary care physician at the Cambridge Health Alliance and an associate professor of medicine at Harvard Medical School. "The repeal of the ACA mandate, weakening of insurance standards and erosion of Medicaid will punish many lower-income Americans."

"Out-of-Pocket Spending and Premium Contributions after Implementation of the Affordable Care Act." Anna L. Goldman, MD, MPA, Steffie Woolhandler, MD, MPH, David U. Himmelstein, MD, David H. Bor, MD, and Danny McCormick, MD, MPH. JAMA Internal Medicine, Jan. 22, 2018.

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