Last year, April 2010, the Office of the Actuary estimated the effect of the Affordable Care Act on Federal expenditures, insurance coverage of the U.S. population, and total national health expenditures.
Last month, February 2011, the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary conducted a sensitivity analysis of those April 2010 estimates using the OACT Health Reform Model. It was noted the scenarios presented in this recent analysis “have a relatively large financial impact for fiscal years 2014-2016 and a much smaller impact in 2017-2019.” Therefore, this recent analysis does show increases in cost compared to the April 2010 report due to:
- the expectations that individuals who will no longer receive coverage through their employer will receive “substantial subsidies through Medicaid or the Exchanges,” and
- it was assumed the impact would occur on workers in the first year of coverage expansion rather than assuming employers will take several years to decided on and implement any coverage reductions. It should be noted these estimates are cost through 2019.
OACT SENSITIVITY ANALYSIS AND APRIL 2010 EMPLOYER ASSUMPTION HIGHLIGHTS:
April 2010 report:
- Estimates included an assumption that roughly 20 percent of small employers would no longer offer health insurance due to the availability of coverage through a Health Insurance Exchange in each state.
- Furthermore, it was assumed that 5 percent of large employers would drop coverage preferring to pay the penalty for dropping coverage rather than the higher cost of sponsoring health insurance.
February 2011 analysis:
- Employees whose employers no longer offer coverage would be “heavily skewed” towards those with lower incomes, who will receive substantial subsidies through Medicaid or the Exchanges.
- Assumed an impact on workers to occur in 2014, the first year of coverage expansion.
- February 2011 analysis – If 50% of employers dropped coverage, the cost of the Exchange Subsidies (federal cost) increases by $250.5 billion to $788.4 billion.
- February 2011 analysis – 50% of employers dropping coverage equates to 20 million people losing their employer-sponsored insurance (ESI) which breaks out as follows: 350,000 will gain Medicaid coverage, 14 million will go to the exchange for coverage, and 5 million people will be left uninsured.
Impacts to Texas assuming the results of the analysis would include an increase of individuals joining the health insurance exchange, possibly raising cost to the state to operate the exchange. The state may also see a greater take-up of Medicaid coverage meaning additional projected costs for Medicaid caseloads in 2014, the next budget biennium. Additionally, Texas already sees a large number of uninsured individuals in the emergency rooms; adding more uninsured to the rolls could only further exacerbate the current situation.