ACA Effects on Out-of-Pocket Expenses and Premium Contributions

By February 6, 2018Commentary

It seems like a long-time ago, and it was ten years, that the Obama Administration was telling us that we could keep our existing health plans and premiums would be 10% lower if just passed that wonderful health reform law.  Didn’t quite turn out that way.  Research in the Journal of the American Medical Association attempts to defend the financial impact of the law but ends up pointing out just how badly it affected many people’s finances.   (JAMA Int. Med. Article)   The researchers used data on adults aged 18 to 64 from the Medical Expenditure Panel Survey from 2012 to 2015 (let’s just stipulate that if you did this study through 2017, the negative effects would be far greater, since they only include the first two years after the ACA insurance and Medicaid expansions, and the deleterious impacts accelerated in more recent years) to ascertain families contributions to health insurance premiums and their out-of-pocket health spending.  Households were divided into four income quartiles, defined by multiples of the federal poverty limit, which was around $20,000.  A high burden of out-of-pocket spending was defined as 10% of family income, but was lowered to 5% for the two lowest income quartiles.  So if you had $45,000 in household income, spending 5% on health care was a high burden, but if you made $50,000; you had to spend 10%, or $5000 more.  Seem fishy?  Similarly spending 9.5% of family income on health insurance premiums was defined as a high-burden.

For the whole sample population average annual out-of-pocket spending fell by 11.9% in the period after ACA implementation compared to before.  These existed in all four income groups, except the “high” income ($80,000 in family income, I am sure those people really feel like they are high income).  The reductions were highest in the lower-income quartiles; 21.4% in the lowest income one, 18.5% in the next lowest and 12.8% in the middle one.  Average annual premium contributions increased by 12.1% in the full sample, with the impact greatest in the “high” income quartile, really all in that group, since there was no increase in the other quartiles.  In analyses adjusted for health resource use, there continued to be declines in out-of-pocket spending but there were no changes in premium contributions.  Combined spending decreased only for the two lowest-income groups.  The odds of experiencing high-burden health spending declined only for the two lowest income groups and the middle-income group had a 28% greater likelihood of having a heavy burden of premium contributions.  And the lowest income group had a 16 times greater chance of having a heavy total health spending burden than did the highest income quartile, no change from before the ACA.  So much for relieving financial burden.

As I have noted before, you have to be careful about any research done by Woolhandler and Himmelstein; they are dedicated ideologues and single-payer fanatics.  But notwithstanding their selective use of data and analyses to try to make the effects of the ACA look beneficial, the reality is that it has made health care even more unaffordable for most people, particularly those who realistically are lower middle-income to middle-income, while heightening their tax burden to provide free health care to many people who don’t even try to work or engage in good health behaviors.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at

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