ACA Helped Cut Overall OOP Spending, but Premiums Fell Only for Poorest

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A study released Monday found the Affordable Care Act (ACA) helped lower average out-of-pocket spending (OOP) overall, mainly because of reductions in spending among people eligible for the Medicaid expansion and cost-sharing and premium subsidies on the insurance exchanges. However, premium spending rose, mostly, because of large increases for those with higher incomes, said Anna Goldman, MD, MPA, one of the authors of the JAMA Internal Medicine study.

The Affordable Care Act (ACA) helped reduce out-of-pocket (OOP) spending by about 12%, but premiums also increased, according to a new study examining the impact of the ACA on household spending on healthcare.

The report, published in JAMA Internal Medicine, is the first study to try and quantify the impact of the ACA on household spending.

However, in an interview with The American Journal of Managed Care®, one of the authors of the study said the recent changes made to the ACA (removing the individual mandate and ending cost-sharing subsidies) will likely lead to a reversal for those groups who were most helped by the law.

The study used population-based data from the Medical Expenditure Panel Survey from January 1, 2012, through December 31, 2015, using a nationally representative sample of adults aged 18 to 64 years (n = 83,431). The sample was slightly more female than male (50.9% to 49.1%) and the median age was 40.3.

It examined changes in OOP spending, premium contributions, and total health spending (OOP plus premiums) after the ACA’s coverage expansions on January 1, 2014. The ACA expanded coverage through free or subsidized coverage for low and-middle income individuals and families who qualified.

OOP spending includes payments for inpatient stays, outpatient encounters, physician fees, and prescription drugs.

The sample was split into 4 income groups according to thresholds set by the ACA to define eligibility for Medicaid or subsidized insurance:

  • Lowest income: those with family incomes of 138% or less of the federal poverty level (FPL), the group eligible for Medicaid in states that expanded the program under the ACA.
  • Low income: those with family incomes of 139% to 250% of the FPL, most of whom were eligible for subsidized premiums and reduced cost-sharing on the ACA’s exchanges.
  • Middle income: those with family incomes of 251% to 400% of the FPL, who generally qualified for premium subsidies but not for reduced cost-sharing.
  • Higher income: those with family incomes above 400% of FPL, who are not eligible for subsidies.

The FPL for a family of 3 was $20,090 in 2015. Changes were assessed in the likelihood of exceeding affordability thresholds for each outcome and spending changes for income subgroups. High-burden spending was defined as more than 10% of family income for OOP expenses, more than 9.5% for premium payments, and more than 19.5% for OOP plus premium payments.

ACA implementation was associated with:

  • An 11.9% decrease (95% CI, −17.1% to −6.4%; P <.001) in mean OOP spending in the full sample
  • A 21.4% decrease (95% CI, −30.1% to −11.5%; P <.001) in the lowest-income group (138% of the FPL)
  • An 18.5% decrease (95% CI, −27.0% to −9.0%; P <.001) in the low-income group (139%-250% of the FPL)
  • A 12.8% decrease (95% CI, −22.1% to −2.4%; P = .02) in the middle-income group (251%-400% of the FPL)

Mean premium spending increased in the full sample (12.1%; 95% CI, 1.9%-23.3%) and the higher-income group (22.9%; 95% CI, 5.5%-43.1%). Combined OOP plus premium spending decreased in the lowest-income group only (−16.0%; 95% CI, −27.6% to −2.6%).

The odds of household OOP spending exceeding 10% of family income decreased in the full sample (odds ratio [OR], 0.80; 95% CI, 0.70-0.90) and in the lowest-income group (OR, 0.80; 95% CI, 0.67-0.97).

The odds of high-burden premium spending increased in the middle-income group (OR, 1.28; 95% CI, 1.03-1.59).

“We found that out-of-pocket spending by households dropped by about 12% in the population and that the decrease was even larger among poor and lower-income households,” said Anna Goldman, MD, MPA. “Conversely, we found that the average household premium contribution increased in the population as a whole and that the growth mostly occurred among higher-income households. So, overall, the ACA made important progress by achieving reductions in out-of-pocket medical spending across the population and by targeting that relief to the poor and low-income households.”

“But it didn't successfully curb the growth of premium contributions made by households, which have been growing steadily since the year 2000, and even with the improvements we saw in the area of out-of-pocket spending. Many American households continue to face burdensome medical costs.”

Goldman said the cost of medical care continues to rise over time and while the ACA did try to attempt to rein in the growth of costs, it wasn’t enough.

Premiums for insurance policies sold on the ACA exchanges have increased since the ACA’s debut, although subsidies have blunted the effects of these increases for many individuals. Meanwhile, private insurance deductibles increased by 12% from 2015 to 2016, outpacing incomes.

However, the study found that the ACA lessened the burden of medical spending in poor and low-income households, which is what Goldman said it was designed to do. The average drop in spending across the population was $73.75, but for the poorest groups, it was $83.77 and $94.80.

Lastly, Goldman said, “our study shows concretely that the ACA made real progress in improving affordability across the population and that this progress may be lost in light of recent efforts by the Republican-led government to dismantle the ACA. For example, the elimination of the individual mandate penalty could potentially destabilize the ACA marketplaces. And this could lead to losses of subsidized coverage for millions of lower-income adults.”

The authors of the paper concluded that ACA reforms that “could improve household spending burdens include expanding Medicaid in all states, increasing the generosity of cost-sharing and premium subsidies, and increasing the actuarial values of standard exchange plans.”

However, now that the administration has reversed some ACA components, Goldman, a primary care doctor at the Cambridge Health Alliance, a safety net institution in Massachusetts, said she feared that Medicaid work requirements would also mean that lower-income adults would lose access to health coverage.

She noted that in her state, health reform took place about a decade ago, but she said, “I still definitely have patients who have suffered health consequences of rewarding care because they are too expensive. I have a patient who ended up with severe kidney damage after he stopped taking his blood pressure medication because the copayments were too high and he did have insurance. But it was just expensive. That's one reason why it's important that we found improvements in the realm of out-of-pocket costs because out-of-pocket spending is faced at the point of care.”

“Reducing out-of-pocket spending is really important because it allows people to access care when they need it,” Goldman added.


Goldman AL, Woolhandler S, Himmelstein DU, et al. Out-of-pocket spending and premium contributions after implementation of the Affordable Care Act [published online January 22, 2018]. JAMA Intern Med. doi:10.1001/jamainternmed.2017.8060.