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JAMA Forum Archive, 2012-2019: Health policy commentary from leaders in the field
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Expanding Health Care Coverage as a Step Toward Cost Control

President Obama’s federal health reform through the Affordable Care Act (ACA) is designed to significantly expand health insurance coverage. When it was initially passed in March 2010, the Congressional Budget Office (CBO) estimated that 32 million uninsured Americans individuals would gain coverage as a result, half through private insurance and half through expansion of Medicaid. The Supreme Court decision on June 28, 2012, largely upheld the ACA but rendered the expansion of Medicaid less certain by removing financial penalties on states that choose not to participate.

Andrew Bindman, MD

Taking the Supreme Court decision into consideration, the CBO reestimated the effect of the ACA and now predicts that 29 million uninsured individuals will gain coverage as a result of this law, including 18 million through private insurance and 11 million through Medicaid. The provisions that will have the largest effect on coverage expansion do not take effect until January 2014, but some elements of the law have already been implemented.

Effects of the ACA

Recently released findings from the US Census Bureau 2012 Current Population suggest that the ACA is already helping reduce the number of uninsured individuals. The survey includes information about 2011, the first full year following the passage of ACA. These are some of the key findings:

  • The percentage of people without health insurance decreased from 16.3% in 2010 to 15.7% in 2011, corresponding to a drop from 50 million uninsured to 48.6 million uninsured.

  • The percentage of people covered by private health insurance in 2011 was not statistically different from 2010, at 63.9%. This is the first time in the past 10 years that the rate of private insurance coverage has not decreased.

  • Contrary to concerns raised by opponents of the ACA, the percentage of people covered by employment-based health insurance in 2011 was not statistically different from 2010, at 55.1%.

  • The ACA contributes to ensuring the availability of Medicaid as a health insurance safety net by requiring states to maintain through 2014 the Medicaid eligibility standards that were in place in 2009. Consistent with this policy, the percentage covered by Medicaid increased from 15.8% in 2010 to 16.5% in 2011.

  • A provision of the ACA that was implemented in 2010 extends the age until which dependent children can remain on their parents’ insurance from 21 to 26 years of age. The biggest reduction in the percentage of uninsured was seen among those aged 19 to 25 years. The percentage of 19- to 25-year-olds without insurance decreased from 29.8% in 2010 to 27.7% in 2011.

Collective Benefits of Reducing the Uninsured

Left unsaid in the Census Bureau’s numerical report is any judgment about whether there are collective benefits in reducing the number of uninsured people. Although the benefits for those who gain insurance include better health, reduced mortality, and financial protection against high medical costs, the benefits for the population as a whole, the majority of whom are already insured, may be less obvious.

There are at least 3 major benefits of having a greater proportion of the population covered by health insurance:

First, a reduction in the number of uninsured will ease the public embarrassment associated with being a part of a society that, unlike any other in the industrialized world, tolerates having a large portion of its population lacking insurance coverage to facilitate access to health care.

Second, it reduces the shifting of costs of health care for the uninsured onto the insured. Financial analysis suggests that $1100, or 8%, of an average family’s health insurance premium in 2009 was attributable to the medical costs of the uninsured. With fewer uninsured, the amount an insured person pays for health insurance coverage can be reduced to more accurately reflect the true costs for someone purchasing coverage.

Third, and most importantly, expanding the number of people covered by health insurance may make it possible to work collectively toward a goal of reducing overall health care cost. The experience in Massachusetts, which is ahead of the rest of the nation in expanding coverage, suggests that achieving near-universal coverage may be a necessary step toward controlling health care costs. Dating back to at least the early 1990s, Massachusetts has been among the most expensive states in the nation for health care and health insurance costs. Nonetheless, these extraordinary high costs alone were not sufficient for stimulating policymakers to act to curtail them. It first took the step of getting nearly everyone under the tent of health care coverage. Within a few years of achieving near-universal coverage, Massachusetts passed a law linking the future rate of increase in health care costs to the state’s overall economic growth.

Perhaps it might have been possible to do this without first achieving near-universal coverage, but pursuit of a public policy to control health care spending may be much harder in a setting in which there are obvious inequities in health insurance coverage and access to care. Those who are fearful about how they would fare if there were cost controls, including many who actually have health insurance, would have good reason to question whether they could expect any limits on the availability of health care to be managed fairly when there are obvious inequities in access to care related to insurance coverage.

President Obama made his views evident in favor of a reduction in the number of uninsured people through the provisions in the ACA. The early returns suggest that his strategy is beginning to work, and with the full implementation of the ACA, the country will be on a course toward near-universal coverage. Meanwhile, the Republicans remain focused on wanting to repeal the ACA. Governor Mitt Romney is promoting health care policies that emphasize federal cost reductions rather than coverage expansion.

Both expanding coverage and reducing costs are important goals. Voters will need to decide whether they believe that coverage expansion is competing with cost control or whether it is a necessary step toward cost control—one that creates a perception of fairness so that as a society we can have the necessary trust to engage in a difficult process that will require shared sacrifice.

About the author: Andrew Bindman, MD, is Professor of Medicine, Health Policy, Epidemiology and Biostatistics at University of California, San Francisco (UCSF). He is the founder and Director of the University of California Medicaid Research Institute, a multicampus research program that supports the translation of research into policy.
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