How might the Affordable Care Act's coverage expansion provisions influence demand for medical care?

Jean Marie Abraham
Milbank Quarterly 2014, 92 (1): 63-87

CONTEXT: The Affordable Care Act (ACA) is predicted to expand health insurance to 25 million individuals. Since insurance reduces the price of medical care, the quantity of services demanded by these newly covered individuals is expected to rise. In this article I provide a comprehensive picture of the demographics, health status, and medical care utilization of the population targeted for the ACA's expansion of coverage, contrasted with that of other nonelderly, insured populations. In addition, I synthesize the current evidence regarding the causal impact of insurance on medical care demand, drawing heavily on recent evidence from Massachusetts and Oregon.

METHODS: Using the 2008 to 2010 Medical Expenditure Panel Survey, I conducted bivariate and multivariate analyses to examine differences between the ACA target population and other insured groups. I used the results from the descriptive analysis and quasi-experimental literature to generate "back of the envelope" estimates of the potential impact of the coverage expansion on total medical care utilization by the noninstitutionalized US population.

FINDINGS: Comparisons of the potential ACA target population with the privately and publicly insured reveal that the former is younger and more likely to be male. The ACA target population, and particularly the uninsured with incomes under 200% of the federal poverty line, reports lower rates of several medical conditions relative to those of the privately and publicly insured. Future changes in rates of inpatient hospitalization and ED use among the newly insured could vary widely, based on descriptive findings and inferences from the quasi-experimental literature. Results also suggest moderate increases in ambulatory care. Total increases in overall demand for medical care by the newly insured comprise a modest proportion of the aggregate utilization.

CONCLUSIONS: With the expected increases in utilization resulting from the coverage expansion, stakeholders will need to monitor local health care delivery system capacity and respond where needed with policy- and/or market-based innovations.

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