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The Effect of Health Reform on Public and Private Insurance in the Long Run

51 Pages Posted: 10 Mar 2011  

Steven D. Pizer

Boston University - School of Public Health; Department of Veterans Affairs (VA)

Austin Frakt

Government of the United States of America - Department of Veterans Affairs (VA); Boston University - School of Medicine; Boston University - School of Public Health

Lisa Iezzoni

Harvard Medical School

Date Written: March 9, 2011

Abstract

We use established methods and recent data to estimate the effects of changes in premium taxes and Medicaid eligibility on the likelihood of being covered by public or private insurance. We find Medicaid expansion for working adults will crowd-out private insurance at a high rate and that premium taxes will make private coverage less attractive and public coverage more attractive to lower-income workers. We illustrate the implications of these findings by simulating the consequences of the Patient Protection and Affordable Care Act of 2010. As the high-premium excise tax affects increasing numbers of workers between 2018 and 2030, we predict that some will shift from private to public coverage, amplifying the effect of Medicaid expansion. The proportion of workers and their families covered by public insurance will grow from 6% in 2006 to about 14% in 2030 while about 5% will obtain subsidized coverage through exchanges. The fraction covered by private insurance will grow initially in response to the mandate and then decline in response to the tax.

Keywords: Health Insurance, Medicaid, Crowd-Out, Premium Tax, Affordable Care Act

JEL Classification: I18, I38, J32

Suggested Citation

Pizer, Steven D. and Frakt, Austin and Iezzoni, Lisa, The Effect of Health Reform on Public and Private Insurance in the Long Run (March 9, 2011). Available at SSRN: https://ssrn.com/abstract=1782210 or http://dx.doi.org/10.2139/ssrn.1782210

Steven D. Pizer (Contact Author)

Boston University - School of Public Health ( email )

150 S. Huntington Ave.
Mail Stop 152H
Boston, MA 02130
United States
857-364-6061 (Phone)
857-364-4511 (Fax)

HOME PAGE: http://www.hcfe.research.va.gov

Department of Veterans Affairs (VA)

810 Vermont Avenue NW
Washington, DC 20420
United States

Austin Frakt

Government of the United States of America - Department of Veterans Affairs (VA)

150 S. Huntington Ave (152H)
Boston, MA 02130
United States

Boston University - School of Medicine ( email )

Boston, MA 02118
United States

Boston University - School of Public Health ( email )

150 S. Huntington Ave (152H)
Boston, MA 02130
United States

Lisa Iezzoni

Harvard Medical School ( email )

330 Brookline Avenue
Boston, MA 02115
United States

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