The Impact of the Coverage-Related Provisions of the Patient Protection and Affordable Care Act on Insurance Coverage and State Health Care Expenditures in Connecticut

The Patient Protection and Affordable Care Act (ACA) contains substantial new requirements aimed at increasing rates of health insurance coverage. These include a mandatory expansion of Medicaid programs to cover individuals in households with incomes below 133 percent of the federal poverty level, a requirement that states develop and run health insurance exchanges through which individuals and small businesses can purchase health care coverage, a requirement that large and mid-sized employers—including state governments—provide qualifying coverage to employees or face the possibility of penalties, and a requirement that most individuals purchase or otherwise obtain coverage.* Because many of these provisions impose additional costs on the states, officials need reliable estimates of the likely impact of the ACA in their state. To demonstrate the usefulness of modeling for state-level decisionmaking, RAND undertook a preliminary analysis of the impact of the ACA on five states—California, Connecticut, Illinois, Montana, and Texas.

To estimate the ACA’s impact on coverage and health care spending in Connecticut, we used the RAND COMPARE (Comprehensive Assessment of Reform Efforts) microsimulation model.** The following represents our best estimates of the effect of the coverage-related provisions of the ACA, though there is, of course, considerable uncertainty associated with these projections. Unless otherwise indicated, all projections apply to the year 2016, the year that all of the provisions in the ACA related to coverage expansion will be fully implemented:

• The proportion of Connecticut residents with health insurance will increase from 89 to 95 percent—a reduction in the uninsured of 170,000.
• The nature of employer-sponsored coverage will change slightly after implementation of the ACA: There will be little change in the number of employees offered coverage, but approximately 40,000 employees will be covered through the exchange.
• By 2016, 10 percent of the insured, nonelderly population (roughly 310,000) will have coverage through the exchange.
• Enrollment in Medicaid will increase by 31 percent (130,000).
• Although state Medicaid spending will increase, total state government spending on health care will be 10 percent lower for the combined 2011–2020 period—mostly because of federal subsidies for residents who would have been covered by Connecticut’s state-run health insurance program, SAGA (State-Administered General Assistance). In dollar terms, this amounts to a $300 million reduction in state spending in 2016.

Reference

Girosi, Federico, Amado Cordova, Christine Eibner, Carole Roan Gresenz, Emmett B. Keeler, Jeanne S. Ringel, Jeffrey Sullivan, John Bertko, Melinda Beeuwkes Buntin, and Raffaele Vardavas, “Overview of the COMPARE Microsimulation Model,” Santa Monica, Calif.: RAND Corporation, WR-650, 2009. As of March 24, 2011:
http://www.rand.org/pubs/working_papers/WR650.html

Notes

* ACA also involves substantial changes to Medicare, insurance regulation, and other aspects of health care that could substantially impact state and private-sector costs and coverage—factors that are not included in this analysis.

** For a detailed description of the methods used in the RAND COMPARE microsimulation model, including a discussion of the parameters and assumptions used in the modeling, see Girosi et al., 2009.