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RAND Solution

Shaping State Implementation of the Affordable Care Act

Challenge

As implementation of the Patient Protection and Affordable Care Act (ACA) unfolds, state governments face numerous decisions. With significant amounts of funding and residents' health at stake, states need strong evidence to inform their policy.

Context

Arkansas flag

State governments have significant discretion in shaping how the ACA affects their constituents. For instance, states may opt in or out of an expansion of Medicaid eligibility that would cover individuals with incomes below 138 percent of the federal poverty level—a choice introduced by the 2012 Supreme Court decision that upheld the ACA. Another series of decisions involves how to establish and operate state health insurance exchanges.

In order to understand the potential consequences of these choices and make evidence-based policy decisions, state officials require nonpartisan, objective research that scientifically estimates the ACA's potential effects on state and local economies, health insurance coverage, and government spending.

Using COMPARE, a sophisticated microsimulation model, researchers estimated how the ACA would affect coverage and health spending in Arkansas.

Project Description

Key stakeholders from Arkansas approached RAND about these potential effects on their state—and our experts quickly developed a detailed, timely analysis to assist state policymakers.

Using COMPARE, a sophisticated microsimulation model, researchers estimated how the ACA would affect coverage and health spending in Arkansas. COMPARE models how a “synthetic population” of households and firms would respond to health care policy changes based on economic theory and evidence from past changes. In order to reflect the real world, COMPARE accounts for a wide range of factors—from premiums and out-of-pocket-spending, to demographics, to government regulations. Using the model, RAND's experts determined the state-level economic effects of changes in spending and the health effects of changes in coverage.

Research Questions

  1. What are the coverage and spending impacts of the ACA on Arkansas?
  2. What are the broader economic effects of the changes in spending?
  3. What are the overall health effects of the ACA on Arkansans?

Key Findings

In Arkansas, ACA implementation may result in

  • 401,000 more individuals with health insurance
  • 1,100 deaths prevented annually by increased Medicaid enrollment
  • 6,200 new jobs from economic growth
  • $550 million in state GDP growth.

Impact

RAND's findings influenced Arkansas' decision to expand Medicaid. Governor Mike Bebee and legislators have made plans to implement expansion through private health insurance plans.

RAND continues to use the powerful COMPARE microsimulation model to assess the potential consequences of choices facing state governments, employers, families, and individuals.

For instance, researchers have projected the ACA's effects on Pennsylvania, where they testified multiple times before state legislators, then developed a quick follow-up report to address decisionmakers' evolving needs. RAND has also examined the coverage and spending implications of numerous states opting out of Medicaid expansion. These projects received attention in countless national and regional media outlets and have injected the wider policy discourse with a base of objective, rigorous research.

“This independent assessment…validates a call for action. Not only would we save lives, but we would also stabilize our health care system and benefit our economy. It also would help our state catch up to what other states already offer their citizens through the Medicaid program.”

Joseph W. Thompson, MD, Arkansas Surgeon General