The Patient Protection and Affordable Care Act (ACA) – ‘Obamacare’ – is patterned after a 2006 Massachusetts reform, known as ‘Romneycare’, after then governor Mitt Romney. The results of Romneycare are not only of general interest, they are also useful for predicting likely outcomes of Obamacare. Via Austin Frakt, MIT economist Jon Gruber summarizes the Massachusetts experience.
The Patient Protection and Affordable Care Act (ACA) is the most comprehensive reform of the U.S. medical system in at least 45 years. The ACA transforms the non-group insurance market in the United States, mandates that most residents have health insurance, significantly expands public insurance and subsidizes private insurance coverage, raises revenues from a variety of new taxes, and reduces and reorganizes spending under the nation’s largest health insurance plan, Medicare. Projecting the impacts of such fundamental reform to the health care system is fraught with difficulty. …. This paper … begins by reviewing in broad details the structure of the ACA and then reviews evidence from a key case study that informs our understanding of the ACA’s impacts: a comparable health reform that was carried out in Massachusetts four years earlier.
- There has been a dramatic expansion of health insurance, reducing the uninsurance rate by 60-70%.
- No change in wait times for general and internal medicine practitioners have been observed.
- The share of the population with a usual source of care, receiving preventative care, and receiving dental care all rose.
- The rate of utilization of emergency care fell modestly.
- There has been a 40% decline in uncompensated care.
- The proportion of the population with employer-sponsored health insurance increased by 0.6%.
- The rate of employer offers of coverage grew from 70% to 76%.
- Mandate compliance has been very high: 98% compliance in reporting via tax filings of obtaining coverage or paying penalties.
- The administrative costs of health reform have been low. Overall implementation costs have been close to expectations.
- Premiums have fallen dramatically in the non-group market.
- Though group premiums have risen, they have not increased faster than one would expect from increases in other states in the region.
Jonathan Gruber, “The Impacts of the Affordable Care Act: How Reasonable Are the Projections?”, NBER Working Paper No. 17168, June 2011.
Jon Gruber (born 1965) is well-known in the area of public finance and health economics. He was a key architect of Massachusetts’ health insurance reform.