ACA reduced out-of-pocket spending—but premiums rose at near-equal rate

The implementation of the Affordable Care Act (ACA) was associated with an 11.9 percent decrease in average out-of-pocket spending, including a 21.4 percent decrease in the lowest-income group, according to a study of more than 80,000 U.S. adults.

But premium contributions increased by 12.1 percent overall, largely driven by the highest-income group, and many Americans are still experiencing a high burden of healthcare costs, Anna L. Goldman, MD, MPA, and colleagues reported in JAMA Internal Medicine.

The researchers studied a nationally representative sample of 83,431 adults preceding retirement age (mean age of 40) spanning the two years before the ACA took effect (2012 and 13) and the first two years after it was implemented (2014 and 15). They stratified the sample into four groups based on income level in relation to the federal poverty level (FPL).

For the lowest-income group—which would have been eligible for Medicaid in the states that expanded the program under the ACA—combined out-of-pocket and premium costs decreased by 16 percent.

“The reduction in out-of-pocket spending for low-income individuals (139 percent to 250 percent of FPL) that we observed suggests that the ACA’s exchange plans and cost-sharing subsidies were associated with a decreased burden of health care costs for this population,” Goldman and coauthors wrote. “Our finding from models controlling for use of health care services suggests that decreased use of medical services and drugs did not drive this decrease.”

Goldman et al. said the overall reduction in expenses may have been greater had 28 million Americans not remained uninsured. According to their data, only 6.5 percent of Americans became newly insured after the ACA. In addition, individual deductibles averaged $3,064 with the most-popular ACA plan compared to $1,478 in employer-sponsored plans.

The researchers also quantified the percentage of people experiencing high-burden spending, defined as more than 10 percent of family income for out-of-pocket expenses, more than 9.5 percent of income for premium payments and more than 19.5 percent of income for a combination of premiums and out-of-pocket expenses.

The odds of out-of-pocket spending exceeding 10 percent of family income decreased by 20 percent both in the full study sample and among the lowest income group. However, the odds of high-burden premium spending increased by 28 percent in the middle-income group, which was defined as family income 251 to 400 percent of the FPL. The FPL was $20,090 for a family of three in 2015.

However, out-of-pocket spending decreased by 8 percent in the middle-income group, partially offsetting the premium increases.

“The decrease in mean out-of-pocket expenditures by the middle-income group may reflect the modest 5.1 percent increase in coverage gained in this group under the ACA,” the authors wrote. “Although individuals in this income group were not eligible for subsidized cost-sharing on the exchange, the ACA’s provision that eliminated cost-sharing for preventive services may have decreased out-of-pocket spending. Although many individuals in this group were eligible for premium assistance through the ACA exchanges, the subsidies were apparently insufficient to prevent growth of premium contributions for this group or to reduce their total health spending.”

Goldman and colleagues said their analysis was the first to quantify the impact of the ACA on households’ premium contributions and out-of-pocket spending beyond the first year of implementation. They hope their findings may inform future policymakers’ future proposals.

“Reforms to the ACA that could improve household spending burdens include expanding Medicaid in all states, increasing the generosity of cost-sharing and premium subsidies, and increasing the actuarial values of standard exchange plans,” Goldman et al. wrote. “International experience suggests that a universal, comprehensive national health insurance program would most effectively reduce household spending and ameliorate disparities.”