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The Economic Benefits of the Affordable Care Act Jason Furman Chairman, Council of Economic Advisers Center for American Progress April 2, 2015 1 The Affordable Care Act Has Driven the Nation’s Uninsured Rate to the Lowest Level Ever Percent of Population Without Health Insurance, 1963-2015:Q1 Percent 25 20 Creation of Expansion of Medicare & Medicare & Medicaid to Medicaid People with Disabilities ACA 1st Open Enrollment 15 10 5 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: CEA analysis of National Health Interview Survey, Cohen et al. (2009), Klemm (2000), and CMS (2009); ASPE analysis of NHIS and Gallup-Healthways Well-Being Index data through March 4, 2015. Note: Data are quarterly starting in 2014:Q1. Data for earlier years are generally either annual or bi-annual. The NHIS is the best tool for studying trends in insurance coverage, but because NHIS data are not currently available after 2014:Q3, Gallup data are used to extrapolate the uninsured rate through 2015:Q1. 2 Improved Health Among the Newly Insured May Have Major Labor Market Benefits Percent of Working Age Adults Employed by Health Status Percent of adults ages 25-64 who are employed 100 90 80 70 60 50 40 30 20 10 0 Poor Fair Good Very good Excellent Self-reported health status Source: Current Population Survey, Annual Social and Economic Supplement, 2014. 3 The Affordable Care Act is Helping to Reduce Job Lock, Especially For Young Workers Young Adult Uninsured Rates, 1997:Q1-2013:Q4 Percent uninsured 40 Young adults (ages 19-25) 35 2013:Q4 30 25 20 Slightly older adults (26-35) 15 10 Dependent Coverage Expansion 5 0 1997 1999 Source: National Health Interview Survey; CEA calculations. 2001 2003 2005 2007 2009 2011 2013 4 The Affordable Care Act’s Coverage Expansion is Boosting Aggregate Demand Change in Health Care Services Employment Year-over-year percentage job gain 3.5 3.0 States with below median 2014 coverage gains 2.5 Main ACA Coverage Provisions Took Effect Feb-15 2.0 1.5 1.0 States with above median 2014 coverage gains 0.5 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Bureau of Labor Statistics; Gallup-Healthways Well-Being Index; CEA calculations. Note: In most states, we include only employment in the health care services industry. For seven states, health care services employment is reported jointly with social assistance employment, and for these states we use the broader category. No data are available for New Mexico. 5 Health Care Prices Have Been Rising at the Slowest Pace in Nearly 50 Years Health Care Price Inflation versus Overall Inflation Year-over-year inflation rate 14 12 Health care goods and services 10 8 6 Feb-15 4 2 All consumer goods and services 0 -2 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: Bureau of Economic Analysis; CEA calculations. 6 Health Care Spending Per Enrollee Has Grown Exceptionally Slowly in Both the Public and Private Sectors Growth in Real Per Enrollee Spending by Payer Average annual percent growth 7 6 5 5.5 5.2 2000-2007 2007-2010 4.2 4 2010-2013 3 2 2.4 1.4 1 0.4 0 -1 -1.0 -2 Private Insurance Medicare Source: Centers for Medicare and Medicaid Services; Bureau of Economic Analysis; CEA calculations. -0.5 -0.6 Medicaid 7 The Quality of Care Received by Hospital Patients Has Improved Since 2010, Corresponding to 50,000 Avoided Deaths Change in Rate of Patient Harm in U.S. Hospitals Percent change in harm rate since 2010 0 0% -2% -5 -10 -9% -15 -17% -20 2010 Source: Agency for Health Care Research and Quality; CEA calculations. 2011 2012 2013 8 The Average Family Premium in Job-Based Coverage is About $1,800 Below the 2000-2010 Trend and Savings Could Grow in the Years Ahead Average Premiums for Employer-Based Family Coverage Thousands of 2014 $ 26 Return to 2000-2010 Trend 24 22 20 Extrapolation of 2000-2010 Trend 18 16 14 2010 Continue 2014 Growth Rate Actual through 2014 2012 2014 2016 2018 2020 Source: Kaiser Family Foundation and Health Research and Education Trust, Employer Health Benefits Survey; Bureau of Economic Analysis; CEA calculations. 9 Deductibles Have Increased in Recent Years, but No Faster than Before the Affordable Care Act Average Deductible in Job-Based Single Coverage 2014 $ 1200 ACA Enacted 1000 800 Medical Expenditure Panel Survey, Insurance Component 600 400 200 0 2002 KFF/HRET Employer Health Benefits Survey 2004 2006 2008 2010 2012 2014 Source: Kaiser Family Foundation and Health Research and Education Trust, Employer Health Benefits Survey; Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey; Bureau of Economic Analysis; CEA calculations. 10 Premium Growth has Slowed Even More Sharply for Workers Than For Employers Growth in Family Premiums for Job-Based Coverage Annual percent growth, adjusted for inflation 10 9 2000-2010 8 7.2 2010-2014 7 6 5.6 5.1 5 4 3.4 3.0 3.5 3 2 1 0 Total premium Worker's contribution Employer's contribution Source: Kaiser Family Foundation and Health Research and Education Trust, Employer Health Benefits Survey; Bureau of Economic Analysis; CEA calculations. 11 The ACA and CBO’s Sharp Reductions in Health Care Spending Have Cut the Long-run Deficit Forecast More Than in Half CBO Projections of Spending on Major Health Care Programs Percent of GDP 6.25 August 2010 CBO Projections 5.75 5.25 March 2015 CBO Projections (incl. actuals through FY14) 4.75 4.25 2010 2012 2014 2016 2018 2020 Source: Congressional Budget Office; CEA calculations. Note: The August 2010 GDP estimates have been adjusted for major NIPA revisions in the summer of 2013. Without these revisions, the decline since August 2010 would be larger. 12