Mark Duggan

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• Mark Duggan

• Professor of Business Economics and Public Policy
• The Wharton School at the University of
  Pennsylvania

• The Economic Impact
• of the Affordable Care Act

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Key Economic Impacts of the ACA

• Less job lock
• Lower tax on small business
• Slower growth in health care costs
• Lower federal deficit higher wage growth
• Phase-out of subsidies in exchanges
• Increase in marginal tax rates
• Employer mandate thresholds
• 50 full-time workers and 30 hours for full-time

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ESI Offer Rates were Declining Pre-ACA (KFF data)
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Subsidy Phase-Out and Cliff Lowers Work Incentives
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Which Dominates Important Given Employment Trends
Employment-to-Population Ratio for U.S. Residents
Ages 16 (BLS)
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Will ACA Slow Growth in Health Care Costs?

• Consider first Medicare Medicaid
• 6.4 of GDP in 2012 (CMS estimates)
• ACA Medicare changes lower spending
• Projected to be lower by 117 billion in 2022
• ACA Medicaid expansions almost offsets
• Increased by 94 billion in 2022
• MM account for 7.8 of GDP by 2022
• Compared with 7.9 without ACA

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ACA Effects on Private Health Insurance

• Excise tax on high-cost plans begins in 2018
• 40 tax beyond threshold
• Threshold grows at CPI after 2020
• Lowers premium growth and increases wage growth
• Health insurance exchanges
• Bronze (AV.6), silver (.7), gold (.8), platinum
  (.9)
• Many insurers offer several plans within area
• Enrollees pay full price difference b/w plans
• Stimulates insurer competition

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But Will Many Insurers Compete?
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Significant Within-State Premium Variation
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Will Exchanges Realize their Promise?

• Bumpy start for federal and state exchanges
• Enrollment lower than expected
• Similar design to Medicare Part D
• Also bumpy rollout but now largely considered a
  success
• Increased coverage and lowered RX prices
• Some key issues on horizon
• Regulating breadth of provider networks
• How optimally to risk-adjust?
• Smoothing transitions to/from Medicaid and ESI
• When to adjust subsidies after promotion, job
  loss, etc.