December 20, 2014

Fiscal Impacts Vary as Key ACA Provisions Take Effect

  • The American health care system is a patchwork of public and private programs that serve citizens in different ways, depending on their age, military...

Insurance policies sold on the Affordable Care Act (ACA) exchanges went into effect Jan. 1 after a three-month open enrollment period marked by problems on the government’s Healthcare.gov website.

The federal government is operating insurance exchanges, also called “marketplaces,” for 36 states, while 14 other states and the District of Columbia set up their own.

An estimated 2.1 million people have signed up in the marketplaces.

Open enrollment will continue through the end of March. Uninsured individuals who do not purchase insurance by then can face penalties and will not have another chance to enroll until mid-November.

New Medicaid enrollees also began receiving benefits on Jan 1. Even without some December data, estimates indicate at least 4.4 million have gained coverage this way. The Medicaid expansion is being undertaken in 25 states, with the other states opting out.

A plethora of insurance-market reforms also took effect with the new year, including prohibitions against most lifetime limits on coverage and discrimination based on pre-existing conditions.

It is too soon to reach any conclusions about the fiscal impact of first-year enrollment in Obamacare coverage. Within the exchanges, competing forces are at work -- some could drive federal costs upward and others could hold them down.

The metric most likely to increase premium costs for the next year is the ratio of healthy to sick individuals obtaining coverage -- a mix more important than the age ratio of beneficiaries and the total number of individuals who ultimately sign up.