Even in states that did not adopt Medicaid expansion, the ACA has had an effect on income and health spending.
A new study finds that the Affordable Care Act (ACA) reduced income inequality by 10% in the U.S. in 2019 and warned that a possible Supreme Court ruling repeal of the law would have far-reaching impacts for the country.
The study, conducted by researchers at the Urban Institute, and funded by the Robert Wood Johnson Foundation, was released in the January edition of Health Affairs. The study noted that traditional measurements of poverty do not capture the impact of health care spending and health insurance coverage.
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The primary finding that the ACA reduced income inequality was somewhat dependent on geography. Because of an earlier Supreme Court ruling on the ACA, states have been permitted to opt out of the ACA's Medicaid expansion. As a result, states that expanded Medicaid have had more resources and higher enrollment, generally speaking, and states that have declined Medicaid expansion have had fewer resources for their programs and lower enrollments.
These differences showed up in the study: for an American in the bottom 10 percentile of income living in a non-Medicaid expansion state, their income increase due to the ACA was 18.8%, compared to what incomes would've been with no ACA in place. For low-income Americans in states that expanded their Medicaid programs, incomes were higher by an average of 22%.
The context: A pending Supreme Court ruling could end the ACA
The study specifically mentions a Supreme Court case currently being considered: California v. Texas, as providing context for the study. "It remains important to consider the consequences of repealing the law," the report noted. "Eliminating the ACA would significantly change the distribution of health insurance coverage and allocation of health care spending in the U.S."
Even in states that did not adopt Medicaid expansion, the ACA has had an effect on income and health spending, since all government health programs and insurance regulations were re-written to some degree by the health reform legislation. "Eliminating the ACA could also worsen other outcomes, such as access to primary care and prescription drugs," the report noted. "Prior studies have found that through 2015, the ACA substantially increased the share of nonelderly people who reported having a personal physician… and easy access to medication."
The report's authors also cautioned what repeal could mean in the context of the ongoing COVID-19 pandemic. "Based on a newly developed projection that accounts for the [COVID-19] pandemic, more than twenty million people would lose health insurance, primarily through decreases in Medicaid and nongroup coverage, if the ACA were to be repealed," the authors wrote.
Looking at poverty with health coverage in mind
The study used two models to measure poverty. One, the Supplemental Poverty Measure, found that taxes offset income gains under the ACA for Americans who were not in poverty. "Those with the lowest incomes as a percentage of the federal poverty level see their incomes increase under the ACA, whereas those at middle and higher incomes see little change," according to that analysis. However, the researchers found this measurement incomplete, noting that it does not take into account the value of financial assistance for insurance premiums under the ACA.
When those benefits are accounted for, the positive income effects of the ACA are also seen by middle-income Americans. On the other hand, higher-income Americans pay taxes that fund the ACA, and their wealth means they do not qualify for premium assistance, so they are less well-off under the ACA, the report said—if they do not receive insurance through their employment. Most—but not all—Americans among this class do have insurance coverage through their employer.
The report further found that income inequality under the ACA decreased for groups defined by race/ethnicity, age, and family educational attainment. Again, the income inequality decreased more in states that had adopted Medicaid expansion.
The researchers concluded that repealing the ACA would disproportionally burden low-income American families.
"In addition to gaining access to comprehensive health coverage, millions of uninsured people gained greater financial security by enrolling in the ACA," said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. "Any effort to eliminate or invalidate the ACA would have far-reaching consequences that include increased financial hardship for working families across the country."
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