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Health Services Research & Development

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HSR&D Citation Abstract

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The Effects of Health Reform on Public and Private Insurance in the Long Run

Frakt AB, Pizer SD, Iezzoni L. The Effects of Health Reform on Public and Private Insurance in the Long Run. Paper presented at: Physicians for a National Health Program Annual Meeting; 2010 Nov 10; Birmingham, AL.

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Starting in 2014 the Patient Protection and Affordable Care Act of 2010 (PPACA) expands eligibility for Medicaid, creates federally subsidized insurance exchanges, and mandates that all Americans obtain health insurance coverage. In 2018 it imposes an excise tax on high-premium insurance plans to help pay for the expanded coverage. If health costs continue to grow faster than inflation, this tax will affect a growing fraction of plans over time. Most analyses of PPACA have been limited to the standard 10-year budget planning horizon, so they do not study the impact of the tax as it grows. We use established methods and recent data to estimate the effects of Medicaid eligibility and tax rates on the likelihood of being covered by public or private insurance and then simulate the consequences of PPACA in 2014, 2018 and 2030. We find that the impact will start small, but will grow rapidly from 2020 to 2030 due to increasing effects of the tax. If the rate of growth of health care costs is not reduced, we predict that the proportion of workers and their families relying on public insurance will grow by 250% while the number qualifying for federally subsidized insurance through exchanges will grow steadily as well, putting state and federal budgets under increasing pressure.

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