Understanding the Effects of Health Care Reform from a National Perspective

Published Aug 28, 2009

by Christine Eibner

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In January 2009, RAND launched the COMPARE website, a tool to help policymakers understand the possible effects of health care reform. The information on the COMPARE website synthesizes what is currently known about health care in the United States, provides information on health care policy proposals, and estimates the impact of commonly discussed policies. In this briefing the author presents an overview of COMPARE and shows the estimated effect of four policies: employer mandates, Medicaid and SCHIP expansions, individual mandates, and refundable tax credits. For each option, the impact on coverage varies substantially depending on how the policies are designed. Features such as eligibility rules for subsidies and penalties levied for noncompliance with mandates can have a large effect on the outcome of health care reform. None of the policy options considered would achieve universal coverage. However, an individual mandate with high subsidies and a high noncompliance penalty could reduce uninsurance by roughly 75 percent. Implementing such a mandate could result in approximately 96 percent of the U.S. population becoming insured. However, the effect of the individual mandate will depend both on the size of subsidies and the magnitude of the noncompliance penalty. From the government standpoint, tax credits and Medicaid expansions could lead to the largest increases in spending. State budgets could be affected by Medicaid and SCHIP expansions, if states are required to fund part of the new coverage. Costs associated with tax credits would likely be borne by the federal government.

The research described in this report was conducted in RAND Health, a division of the RAND Corporation.

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