The Bottom Line: How the Affordable Care Act Helps America's Families
Families USA, October 2011

Introduction

Over the last two decades, paying health insurance premiums and other health care bills has become increasingly hard for American families. As premiums have gone up each year and the cost of health care has escalated, more and more costs have been shifted to consumers through increases in deductibles and copayments and decreases in covered services. Middle-class and low-income families need relief from escalating health care costs. The Affordable Care Act, when fully implemented, will provide tangible and measurable relief to American families.

First, the Affordable Care Act will provide direct financial relief to millions of insured American families that struggle to pay health insurance premiums today. The new law will give families the option to shop for a plan in new state insurance marketplaces (called “exchanges”) and to receive a robust discount on their premiums (through a refundable “premium tax credit”). The Affordable Care Act will also help people who have insurance by protecting them from high deductibles, high copayments, and unexpected gaps in their insurance coverage in three ways: It will eliminate lifetime and annual limits on how much a health insurance plan will pay for covered benefits (so that plan payments don’t abruptly “run out”), it will cap how much a person must spend each year on deductibles and copayments for covered benefits, and it will provide additional help with out-of-pocket costs for lower-income families.

Second, the Affordable Care Act will help American families who are uninsured today by expanding affordable insurance options. Both the new premium tax credits and an expansion of Medicaid will provide new coverage options to families who could not afford coverage before. The Medicaid program will be available to families with incomes at or below 133 percent of the federal poverty level (about $30,000 in annual income for a family of four). For people with incomes above that level and up to 400 percent of poverty (about $90,000 for a family of four), the new premium tax credits will be there to help them afford coverage. And reducing the number of uninsured will reduce the “hidden health tax” that is imposed on insured families in the form of higher premiums to pay part of the cost of care provided to the uninsured.

Third, the Affordable Care Act will slow the growth of underlying health care costs and thus help all Americans. The new law contains a range of common-sense provisions that will both improve quality and bring down the growth in health care costs. The Affordable Care Act authorizes programs that improve the ways that doctors and hospitals coordinate care, programs that promote preventive services and practices, and programs that will develop and disseminate better information about new drugs and treatments to both patients and doctors. In addition, the Affordable Care Act will promote transparency, accountability, and competition among health insurance companies through both the new state exchanges and new standards for reviewing how premiums are set by insurers. By promoting greater competition and accountability, the Affordable Care Act will motivate insurance companies to hold down health care costs and premium increases while improving quality of care.

To measure the net bottom line impact of the Affordable Care Act on family budgets, our analysis used a sophisticated economic model built on publicly available data that was able to look simultaneously at all of the major provisions of the Affordable Care Act and to measure their impact on families in 2019. (Detailed descriptions of the methodology and model inputs are available online at www. familiesusa.org/resources/publications/reports/The-Bottom-Line.html.) We used the year 2019 for our analysis in order to capture the effects of the Affordable Care Act when it is fully implemented. Many key provisions of the new law go into effect in 2014, and providing a five-year window for implementation allows us to capture both full enrollment in programs that expand coverage and the effects of initiatives that are designed to slow the growth in health care costs.

Our examination found that both lower- and middle-income families will be financial winners, and both uninsured and insured families will come out ahead.