The Affordable Care Act is good at being the Affordable Care Act
I got an e-mail this morning from the Obama administration saying that "an important new study from the Rand Corporation published in Health Affairs finds that the Affordable Care Act was the preferred policy option for covering more Americans and controlling costs." And that's sort of true: The study itself concludes:
We evaluated how the recently enacted health reform law performed relative to a large number of alternative designs on measures of effectiveness and efficiency. We found that only a few different approaches would produce both more newly insured people and a lower cost to the government. However, these are characterized by design options that seemed politically untenable, such as higher penalties, lower subsidies, or less generous Medicaid expansion.
The reality, however, is that the universe of alternative designs included in the study was quite narrow. The study used a microsimulation model that essentially concluded that if you were building a health-care reform bill that looked pretty much like the Affordable Care Act -- individual mandate, exchanges, subsidies, Medicaid expansion, private insurance, etc. -- that the Affordable Care Act did a pretty good job. That is to say, if you agreed with the basic premises of the bill, then you can take comfort that the bill was written in a pretty smart way. If you think the bill should've been a lot more radical (in either direction), this study doesn't have much for (or against) you.
Some of the smaller insights generated by the microsimulation model won't surprise wonks but are useful to reiterate. The individual mandate is very effective at getting people covered. The simulation also predicts that it will increase the demand for employer-based health-care insurance, at least in the absence of other policies that make that insurance less attractive. Medicaid is a very cost-effective way to cover people; after a certain point, subsidies are less effective than penalties at getting people covered; and encouraging employer-based insurance is a very cheap way for the government to get people covered.
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