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 Montana, 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 Montana residents with health insurance will increase from 82 to 97 percent—a reduction in the uninsured of around 125,000.
- 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 18,000 will have coverage through the exchange.
- By 2016, 20 percent of the insured, nonelderly population (roughly 140,000) will have coverage through the exchange.
- Enrollment in Medicaid will increase by 51 percent (58,000), with the majority of the new enrollees being newly eligible adults.
- Total state government spending on health care will be 3 percent higher for the combined 2011–2020 period because of the ACA—mostly from increases in Medicaid costs. In dollar terms, this amounts to roughly $10 million in additional state spending in 2016, approximately $83 per year for each newly insured individual.
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:
* 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.