Association for Public Policy Analysis & Management

The Affordable Care Act (ACA) has created new health insurance options for millions of Americans, both through expanded Medicaid coverage for adults with incomes below 133% FPL and through the availability of new, subsidized private coverage for households with income between 133% and 400% FPL. Existing research has documented the impact of the Medicaid expansion on household spending, but the ACA’s private coverage subsidies may represent a very large change in household expenditures for middle-income families. For example, the value of the average ACA premium tax subsidy is larger than the average Earned Income Tax Credit, and premium cost-sharing subsidies can reduce the maximum amount a family spends on out-of-pocket medical payments by thousands of dollars. Yet, little work explores the impact of the Act’s newly created private health insurance options on the out-of-pocket medical expenditures or non-medical consumption. One reasons for few studies in this area is that there are few identification strategies to estimate the impact of marketplace coverage on households.

We use the 2011–2015 Consumer Expenditure Survey, a nationally representative, household-level panel survey, to provide descriptive evidence on how the availability of marketplace coverage has affected coverage household premium spending, out-of-pocket medical expenditures, and non-medical consumption. We also use several recently proposed identification strategies –simulated tax credit eligibility and differences in state-level marketplace enrollment caused by website implementation delays – to provide estimates of marketplace coverage on coverage, out-of-pocket medical expenditures and non-medical consumption. In preliminary results we find that the expected size of marketplace tax subsidies is positively correlated with having non-group coverage, but is not related to changes in the having any private coverage, non-group or employer-sponsored. We also find that the expected size of the subsidy is negatively correlated with premium payments and out-of-pocket spending on prescription drugs. We also find that state-level enrollment is positively correlated with increased non-group coverage.

In addition to providing descriptive and causal evidence on the impact of new subsidized marketplace coverage under the ACA, we will also simulate the impact of alternative age-based health insurance tax subsidies under the American Health Care Act on household out-of-pocket health expenditures and other consumption. The results of this study will provide new evidence on the impact of health insurance marketplaces on economic wellbeing of low and middle-income families, and also help to quantify the impact of newly proposed options for health reform.