With the mid-summer humidity and heat, CHIR stayed cool indoors to catch up on the latest in health policy research. In July, we read studies that proposed policies to increase insurance coverage rates and forecasted insurance coverage and health expenditures for the next decade. 

Uninsurance Rates Have Fallen Significantly Following the Affordable Care Act – Several Policy Changes Could Further Increase Coverage

Primus, Wendell et al. Brookings. July 22, 2024. Available here.

Researchers from Brookings conducted a landscape assessment of major health reforms from the past century to examine the policies’ effects on insurance rates, then proposed additional policy reforms to sustain and further reduce the uninsurance rate. 

What it Finds

• The Affordable Care Act (ACA) cut uninsurance rates in half, from 20.8 percent in 2013 to 11.6 percent in 2022.
  • The greatest insurance coverage rates are in Medicaid expansion states, where only 5.1 percent of working-age citizens are uninsured.
• Recent policies have built on the success of the ACA and further expanded access to affordable health insurance, notable policies include extended premium subsidies and continuous Medicaid enrollment.
• Despite gains in coverage for citizens, uninsurance rates are three and half times higher for non-citizens (32.9 percent) and evidence demonstrates that providing public coverage for non-citizens is half as costly as providing public insurance to US-born adults. 
• The authors find evidence of several policies that could sustain and increase insurance coverage: extended premium subsidies, expanded Medicaid or expanded Marketplace eligibility, reinstated uninsurance penalties, and improved enrollment strategies. 
• There are various tradeoffs that policymakers can consider when determining whether and how to move forward with the proposed options.
  • Some of the proposed policies – extended premium subsidies, expanded Medicaid, expanded Marketplace eligibility– are estimated to increase the federal deficit over the next decade, but could provide an essential safety net for millions of people.
  • Restoring the tax penalty to purchase insurance could result in an increase in enrollment and decrease in premiums, but policymakers could make improvements to ensure the mandate is appropriately targeted and effective.
  • Improved enrollment strategies and 12-month continuous Medicaid enrollment could decrease insurance disparities for marginalized communities and produce $1.8 billion of savings.

Why it Matters

Evidence has shown that health insurance coverage is vital to individual and public health. Concerns about affording and accessing coverage are front of mind for many Americans. Major health insurance reforms and policies in recent decades have created dramatic gains in health insurance access and quality, leading to a historic low in uninsurance. This progress is substantial, and further policies could sustain or even increase these gains, including permanent extensions of premium tax credits, targeted investment and outreach for Marketplace enrollees, and continuous Medicaid eligibility.

Health Insurance Coverage Projections For The US Population And Sources Of Coverage, By Age, 2024–34

Hale, Jessica et al. Health Affairs. July 2024. Available here.

The Congressional Budget Office (CBO) Coverage Team analyzed recent survey and administrative enrollment data to approximate changes in health insurance rates for the next decade (2024 to 2034), if current policies and regulations remain in place.

What it Finds

• By 2034, the uninsurance rate is estimated to be 8.9 percent, a 2.7 percent increase from the 2023 rate, with the highest rates for immigrants and adults aged 19-44.
• The share of the population with multiple forms of coverage will decline by 27.6 percent (29 million in 2023 to 21 million in 2034). 
• Marketplace enrollment is expected to reach an enrollment high of 23 million individuals in 2025, but then decline by 7 to 8 million following the expiration of enhanced subsidies.
• Enrollment trends will vary across coverage types and reflect scheduled policy changes such as the expiration of enhanced subsidies for Marketplace plans, Medicaid continuous eligibility and redeterminations, and Children’s Health Insurance Program (CHIP) funding provisions.
  • Employer-based coverage is expected to expand after enhanced subsidies expire, which will also reduce enrollment in Marketplace plans.
  • With the affordability benefits of enhanced premium tax credits, CBO estimates that Marketplace enrollment will reach a historic high in 2025, with 23 million enrollees, but following the expiration of those subsidies, enrollment is expected to drop to 14 million individuals by 2034.
  • As states resume Medicaid eligibility redeterminations, CBO projects that Medicaid and CHIP enrollment will decline from 92 million to 78 million by 2026, and grow modestly until 2032.
• Demographic changes, such as an aging population and increased immigration, will also impact coverage and likely increase Medicare enrollment and the uninsurance rate, respectively.
  • CBO projects Medicare enrollment to reach 74 million individuals by 2034, a 21.3 percent increase from 61 million enrollees in 2023. 
  • The uninsurance rate for immigrants is expected to be four times the rate of the overall population. 

Why it Matters

Despite a historic low in the uninsured rate, the CBO estimates that insurance coverage could decline in the next decade as policies expire and change, in particular those related to the COVID-19 pandemic and the enhanced premium tax credits for Marketplace coverage. These projections are not destiny, and policymakers should be mindful of how policy reform and investment can further reduce uninsurance. In fact, the ability to influence coverage is evidence by the historic low in uninsurance, as concerted efforts to expand and improve the ACA led to affordable coverage options for millions of Americans. Policymakers should consider several additional actions that could maintain current coverage rates, if not increase them: Medicaid expansion, permanent extensions of premium tax credits, investment in targeted Marketplace outreach, continuous Medicaid eligibility, and others. Unless action is taken, the CBO’s projection may come to fruition, and millions of people could lose critical coverage.

National Health Expenditure Projections, 2023–32: Payer Trends Diverge As Pandemic- Related Policies Fade

Fiore, Jacqueline A. et al. Health Affairs. July 2024. Available here.

Researchers from the Centers for Medicare and Medicaid Services (CMS) used the Medicare Trustees Report and macroeconomic data to conduct actuarial and econometric modeling to forecast national health expenditures for the next decade (2023-2032).

What it Finds

• The growth in health care spending is projected to grow more rapidly than the gross domestic product (GDP), with health costs approaching 20 percent of the GDP by 2032.
  • Several factors are attributable to this increase: growth in personal and sector-wide prices, continued aging of the population, and increased demand for health care services.
• In 2023, spending for private health insurance is projected to increase 11.1 percent and total $1.14 trillion, which far exceeds projects for Medicare (growth of 8.4 percent and total of $1.0 trillion) and Medicaid (growth of 5.7 percent and total spending of $852 billion).
• Growth in spending by payer type will fluctuate over the next decade, as policies and demographic factors influence enrollment rates.
  • Medicare is expected to be the highest spender of the next decade, with an average growth rate of 7.4 percent, attributed mostly to increases in the aging population with slight spending offsets from the drug negotiation provision of the Inflation Reduction Act.
  • Following the resumption of state Medicaid eligibility redeterminations, enrollment is estimated to decline by 10.2 million (11.2 percent), though Medicaid spending will level out to an average growth rate of 6.2 percent by 2032.
  • Of the coverage options, private insurance enrollment and spending is projected to have the most variation: enrollment is expected to rise between 2023 and 2025, later dropping by over 7.3 million enrollees (19.2 percent) in 2026 after enhanced Marketplace subsidies expire. From 2027 to 2032, private insurance spending is projected to average 4.8 percent.
• Major services and goods, such as hospital services, physician services, and prescription drugs, are anticipated to have similar, stable growth rates until 2032.

Why it Matters

Health care spending in the United States is already enormous, and is expected to continue to grow exponentially in the next decade, outpacing even the growth of the GDP. While these spending trends are influenced by various factors, including enrollment and demographic changes, evidence indicates that high costs are attributable to high prices. These prices are not fixed, but can be changed through a variety of regulations and policy reforms. For example, research has shown that health system consolidation leads to significant price increases (with unclear, if any quality gains). Consequently, to mitigate price increases from consolidation, policymakers could strengthen anti-trust oversight, with support for state and federal regulatory agencies. Consolidation and anti-trust enforcement is merely one option among many – numerous reforms have been proposed to reduce healthcare prices and subsequently, spending. If policymakers aim to curb healthcare spending growth, they should consider proposals to regulate prices and act accordingly, rather than passively watch costs inevitably rise.