The Affordable Care Act: Seven Years Later - Jason Furman Senior Fellow, PIIE
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The Affordable Care Act:
Seven Years Later
Jason Furman
Senior Fellow, PIIE
The Century Foundation
Washington, DC
March 23, 2017
Peterson Institute for International Economics | 1750 Massachusetts Ave., NW | Washington, DC 20036Outline I. Coverage II. Cost III. Quality IV. Economic Performance V. Marketplace Stability
Outline I. Coverage II. Cost III. Quality IV. Economic Performance V. Marketplace Stability
Uninsured Rate Has Fallen to the Lowest Level on
Record
Uninsured Rate, 1963–2016
Percent
25
Creation of ACA First Open 2016
Medicare and Enrollment
20 Medicaid
15
10
5
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
ACA = Affordable Care Act
Note: Estimate for 2016 reflects only the first three quarters. Other estimates are full-year.
Sources: National Health Interview Survey and supplemental sources described in Council of Economic Advisers, 2014, “Methodological Appendix: Methods Used to Construct a
Consistent Historical Time Series of Health Insurance Coverage” (http://go.wh.gov/5oRwjJ).Both Younger and Older Adults, as Well as Kids,
Have Seen Substantial Coverage Gains
Uninsured Rates by Age, 1997–2016
Percent Uninsured
40 Year of ACA Dependent
Year
Coverage Expansion
35 Young Adults Before
(19-25) First ACA
Open
30 Enollment
25 Non-Elderly Adults,
Except Young
20 Adults (26-64)
15 Children
(Uninsured Rate Has Fallen for All Income Levels
Non-Elderly Uninsured Rate by Income
Percent Uninsured
40
2013 2015
36% reduction
30
33% reduction
20
10 31% reduction
0
< 138 138 to 400 > 400
Income as a Percent of the Federal Poverty Line
Sources: National Health Interview Survey; Council of Economic Advisers calculations.States that Expanded Medicaid Have Seen
Much Larger Gains in Health Insurance Coverage
Decline in Uninsured Rate from 2013 to 2015 vs.
Level of Uninsured Rate in 2013, by State
Decline in Uninsured Rate from 2013 to 2015 (Percentage Points)
10
CA
9 KY NV
8
7 Medicaid Expansion States FL
6
5
4 TX
3
2 VA
MA Medicaid Non-Expansion States
1
0
0 2 4 6 8 10 12 14 16 18 20 22 24
Uninsured Rate in 2013 (Percent)
Note: States are classified by Medicaid expansion status as of July 1, 2015.
Sources: American Community Survey; Council of Economic Advisers calculations.Expanded Coverage is Improving Access to Care,
Financial Security, and Health
Decline in Share Not Seeing a Doctor Due to Cost vs.
Decline in Uninsured Rate, by State, 2013–2015
Decline in Share Not Seeing a Doctor Due to Cost, 2013–2015 (p.p.)
7
6
5
4
3
2
1
0
-1
0 2 4 6 8 10 12 14
Decline in Uninsured Rate, 2013–2015 (p.p.)
Note: Sample limited to non-elderly adults. Percentage points denoted as p.p.
Sources: Behavioral Risk Factor Surveillance System; Council of Economic Advisers calculations.Millions More Workers Are Now Protected
Against Unlimited Out-of-Pocket Spending
Share of Workers in Single Coverage Without an
Out-of-Pocket Limit, 2006–2016
Percent of Enrolled Workers
30
2016
25
20
15
10
5
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Kaiser Family Foundation/Health Research and Educational Trust Employer Health Benefits Survey 2016.Outline I. Coverage II. Cost III. Quality IV. Economic Performance V. Marketplace Stability
Projections of National Health Expenditures Have
Fallen Sharply
Projected National Health Expenditures, 2010–2019
National Health Expenditures as a Percent of GDP
21
2019
Final Pre-ACA
Projections
20
19
18 Actuals and
Most Recent
Projections
17
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
ACA = Affordable Care Act
Note: Pre-ACA projections have been adjusted to reflect a permanent repeal of the sustainable growth rate following the methodology used by Stacey McMorrow and John
Holahan (2016, “The Widespread Slowdown in Health Spending Growth Implications for Future Spending Projections and the Cost of the Affordable Care Act, An Update,”
Washington: Urban Institute, and Princeton: Robert Wood Johnson Foundation). For consistency, actuals reflect the current estimates as of the most recent projections release.
Sources: National Health Expenditures Accounts and Projections; Council of Economic Advisers calculations.Health Care Prices Have Risen at the Slowest Rate
in 50 Years Since the ACA Was Enacted
Health Care Price Inflation vs. Overall Inflation,
1960–2017
Year-Over-Year Inflation Rate
14
Jan-2017
12 Health Care
Goods and
10 Services
8 All
Consumers
6 Goods and
Services
4
2
0
-2
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
ACA = Affordable Care Act
Sources: National Income and Product Accounts; author's calculations.Health Care Spending Per Enrollee Has Grown
Exceptionally Slowly in Public & Private Sectors
Real Per Enrollee Spending Growth, By Payer,
2000–2015
Average Annual Percent Growth
8
7 6.5 2000–2005
6 2005–2010
4.7
5 2010–2015
4 3.4
3 2.4
2 1.5
1 0.5
0
-1 -0.3 -0.2 -0.3
-2
-3
Private Insurance Medicare Medicaid
Note: Medicare growth rate for 2005–10 was calculated using the growth rate of non-drug Medicare spending in place of the growth rate of total Medicare spending for 2006 to
exclude effects of the creation of Medicare Part D. Inflation adjustments use the GDP price index.
Sources: National Health Expenditure Accounts; National Income and Product Accounts; Council of Economic Advisers calculations.The Pace of Deductible Growth Has Been Similar
to the Pace Prior to the ACA
Average Real Deductible in Employer-Based Single
Coverage, 2002–2016
Average Real Deductible (2016 Dollars)
1,500
Continuation of 2016
2002-2010 Trend
1,200
900 Medical Expenditure Panel
Survey, Insurance
Component
Continuation of
600
2002-2010 Trend
300 KFF/HRET Employer
Health Benefits Survey
0
2002 2004 2006 2008 2010 2012 2014 2016
ACA = Affordable Care Act; KFF/HRET = Kaiser Family Foundation/Health Research and Educational Trust
Note: Inflation adjustments use the GDP price index, including a Congressional Budget Office projection for 2016.
Sources: Medical Expenditure Panel Survey, Insurance Component; KFF/HRET Employer Health Benefits Survey 2016; National Income and Product Accounts; Council of
Economic Advisers calculations.Cost Growth Has Slowed in Employer Coverage—
Even More When Out-of-Pocket Costs Are Included
Growth in Real Costs for Employer-Based
Family Coverage, 2000–2016
Average Annual Percent Growth
8
7.2 2000–2010
7
2010–2016
6 5.6
5.1 5.2 5.1
5
4
3.1 3.1 3.1
3 2.4
2 1.5
1
0
Total Employee Employer Worker Total
Premium Contribution Contribution Contribution Premium +
+ Estimated Estimated
Premiums for Family Coverage
Out-of-Pocket Out-of-Pocket
Cost Cost
Note: Out-of-pocket costs were estimated by first using the Medical Expenditure Panel Survey to estimate the out-of-pocket share in employer coverage for 2000–2014 and then
applying that amount to the premium for each year to infer out-of-pocket spending. The out-of-pocket share for 2015 and 2016 was assumed to match 2014. Inflation adjustments
use the GDP price index. GDP price index for 2016 is a Congressional Budget Office projection.
Sources: Kaiser Family Foundation/Health Research and Educational Trust Employer Health Benefits Survey 2016; Medical Expenditure Panel Survey, Household Component;
Council of Economic Advisers calculations.Alternative Payment Models Can Improve the
Performance of the Health Care Delivery System
Percent of Traditional Medicare Payments Tied to
Alternative Payment Models, 2010–2019
Percent of Payments
60
Obama
50 Administration
Goals
40
30
Actual
20
10
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Note: The dates and percentages for the actual series are approximate.
Source: Centers for Medicare and Medicaid Services.Outline I. Coverage II. Cost III. Quality IV. Economic Performance V. Marketplace Stability
The Quality of Care Received by Hospital Patients
Has Improved Since 2010
Cumulative Percent Change in Rate of Hospital-
Acquired Conditions Since 2010, 2010–2015
Cumulative Percent Change in Rate of Hospital-Acquired Conditions Since 2010
0
0
-2
-5
-10 -9
-15
-17 -17
-20
-21
-25
2010 2011 2012 2013 2014 2015
Sources: Agency for Healthcare Research and Quality; Council of Economic Advisers calculations.Hospital Readmission Rates Have Fallen Sharply
in Recent Years
Sources: Centers for Medicare and Medicaid Services; Council of Economic Advisers calculations.Outline I. Coverage II. Cost III. Quality IV. Economic Performance V. Marketplace Stability
The Private Sector Has Added 16.2 Million Jobs in
84 Consecutive Months of Job Growth Since the
Affordable Care Act Became Law
Monthly Gain in Private-Sector Payroll Employment,
Job Gain/Loss 2008–2017
600,000
400,000 Feb-2017
200,000
0
-200,000
Twelve-Month
Moving Average
-400,000
-600,000
-800,000
-1,000,000
2008 2010 2012 2014 2016
Sources: Bureau of Labor Statistics, Current Employment Statistics; author's calculations.Almost All of the Net Increase In Employment Since
the ACA Became Law Has Been in Full-Time Jobs
Change in Number of Full-Time and Part-Time Workers
Since March 2010, 2010–2017
Millions of Workers
16
Feb-2017
14
12
10
Full-Time
8 Workers
6
4
Part-Time
2 Workers
0
-2
2010 2011 2012 2013 2014 2015 2016 2017
ACA = Affordable Care Act
Sources: Bureau of Labor Statistics, Current Population Survey; author's calculations.People Reporting Better Health Have Higher
Employment Rates and Earnings
Employment Outcomes for Prime Age Adults, by Health Status, 2015
Panel A: Share with Any Wage or Salary Earnings Panel B: Average Earnings, People With Earnings
Percent of Prime-Age Adults with Earnings Average Wage and Salary Earnings
100 70,000
61,000
90 82 82 60,000 55,000
80 77
50,000 47,000
70
60 39,000
52 40,000 36,000
50
30,000
40
30 22 20,000
20
10,000
10
0 0
Poor Fair Good Very Good Excellent Poor Fair Good Very Good Excellent
Self-Reported Health Status Self-Reported Health Status
Sources: Current Population Survey; Council of Economic Advisers calculations.The ACA, Along With Other Tax Policies, Has
Contributed to Reducing After-Tax Inequality
Change in Share of After-Tax Income by Income
Percentile: Changes in Tax Policy Since 2009 and ACA
Coverage Provisions, 2017
Change in Share of After-Tax Income (Percentage Points)
0.8
0.6
0.4
0.2
0.0
-0.2
-0.4
-0.6
-0.8
-1.0
Income Percentile
ACA = Affordable Care Act
Source: US Treasury, Office of Tax Analysis.CBO Estimates that the Affordable Care Act
Substantially Improved the Long-Term Budget
Outlook
Deficit Reduction Due to the Affordable Care Act,
2016–2035
Change in the Deficit (Billions)
0
-$353 Billion
-1,000
-2,000
-3,000
Reduction of Around
-4,000
$3.5 Trillion
-5,000
2016–2025 2026–2035
CBO = Congressional Budget Office
Note: CBO reports second-decade effects as a share of GDP. Amounts are converted to dollars using GDP projections from CBO's long-term budget projections.
Sources: CBO; Council of Economic Advisers calculations.The Life of the Medicare Trust Fund Has Been
Extended by 11 Years Since the ACA Became Law
Forecasted Year of Medicare Trust Fund Exhaustion,
2000–2016
Year of Exhaustion of the Medicare Hospital Insurance Trust Fund
2032
2016
2030
2028
2026
2024
2022
2020
2018
2016
2000 2002 2004 2006 2008 2010 2012 2014 2016
Source: Medicare Trustees.Outline I. Coverage II. Cost III. Quality IV. Economic Performance V. Marketplace Stability
Marketplace Premiums Have Converged to CBO’s
Prediction
Actual Marketplace Premiums vs. CBO Projection
Difference as a Percent of CBO Projection
10
5
1
0
-5
-10
-15
-16
-20
2014 2017
CBO = Congressional Budget Office
Source: Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation (2013; 2016).Some of the Large Premium Increases Likely
Reflect Initial Underpricing by Insurers
Annual Change in Benchmark Premium, by Quintile of
2014 Benchmark Premium, 2014–2017
Median Annual Percent Change in Benchmark Premium, 2014–2017
18
15
12
9
6
3
0
1 (Lowest) 2 3 4 5 (Highest)
Quintile of 2014 Benchmark Premium
Note: Premiums analyzed at the county level. Quintiles defined to have equal non-elderly populations. Data limited to states using HealthCare.gov in all years.
Sources: Department of Health and Human Services; American Community Survey; Council of Economic Advisers calculations.States With Larger Premium Increases Have Not
Seen Larger Decreases in Enrollment
Change in Marketplace Plan Selections vs.
Change in Benchmark Premium, 2016–2017, by State
Percent Change in Plan Selections
40
20
0
Observed Relationship
-20
-40
-60
Relationship Required to Permit
-80
a "Death Spiral" Under
Pessimistic Assumptions
-100
-10 0 10 20 30 40 50 60 70 80 90 100 110 120
Percent Change in Weighted Average Benchmark Premium
Note: Figure includes states that used the HealthCare.gov platform in both 2016 and 2017. The black line portrays the estimated relationship from regressing the log change in
plan selections on the log change in the benchmark premium. The red line portrays a relationship with the same intercept and a slope coefficient of -2. This slope coefficient
would permit a death spiral if claims costs for enrollees discouraged by higher premiums were half or less the costs of other enrollees, a relatively extreme assumption.
Sources: Department of Health and Human Services; Matt Fiedler, 2017, “New Data on Sign-ups Through the ACA’s Marketplace Should Lay “Death Spiral” Claims to Rest,”
Washington: Brookings Institution (https://www.brookings.edu/blog/up-front/2017/02/08/new-data-on-sign-ups-through-the-acas-marketplaces-should-lay-death-spiral-claims-to-
rest/).Most Marketplace Enrollees Are Fully Protected
from Benchmark Premium Increases
Premium for the Benchmark Plan for an Individual
Making $25,000 Per Year, 2017
Dollars per Month
350
300
250
Premium Tax
$150
200 Credit
$100
150
Individual
100 Contribution
$143 $143
50
0
Benchmark Premium Benchmark Premium
= $243/Month = $293/Month
Source: Council of Economic Advisers calculations.The Affordable Care Act:
Seven Years Later
Jason Furman
Senior Fellow, PIIE
The Century Foundation
Washington, DC
March 23, 2017
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