Modeling the Long-Term Effects of the ACA

Our colleagues at the Wharton Public Policy Initiative have released a new Issue Brief, The Economic Realities of Replacing the Affordable Care Act, by LDI Senior Fellow Hanming Fang, PhD. In it, Dr. Fang uses a new model of labor and health insurance market dynamics to simulate the long-run effects of the ACA’s mechanisms, thus shedding some much-needed light on the repeal-and-replace debate.

While the results of the model and the CBO score of the GOP replacement bill are not strictly comparable, the direction of the predicted effects is striking.  The CBO estimates that the GOP bill could increase the level of uninsurance to 18% of the population under 65; the ACA model estimates that uninsurance could decrease to 4% in its sample under conditions of market equilibrium and full Medicaid expansion. 

Dr. Fang also uses the model to quantify the effects of specific elements of the ACA, such as the individual mandate, premium subsidies, and employer mandate. For example, the employer mandate had little effect on the uninsurance rate in the long run. These results are especially important as policymakers seek to understand the likely effects of any policy that seeks to replace all or part of the current system.

It’s worth reading, in its entirety.